Document:

Exhibit 10.1

                 PURCHASE OPTION AND INDEMNIFICATION AGREEMENT

         THIS PURCHASE OPTION AND INDEMNIFICATION AGREEMENT,  entered into as of
the 1st day of January,  2000 by and between  LAND  O'LAKES,  INC.,  a Minnesota
cooperative  corporation with its corporate  offices at 1275 Red Fox Road, Arden
Hills,  Minnesota 55112 ("Land  O'Lakes") and AGRIBRANDS  INTERNATIONAL,  INC. a
Missouri corporation with its corporate offices at 9811 South Forty Drive, St.
Louis, Missouri 63124 ("Agribrands").

                                   WITNESSETH:

         WHEREAS,  Land  O'Lakes  owns and  operates an animal feed  business in
Poland through its wholly owned Polish  subsidiary known as LOL Ltd. Sp. z o.o.,
a limited  liability  company duly organized and validly existing under the laws
of the  Republic of Poland with its  corporate  offices at ul.  Gornoslaska  14,
00-432  Warszawa,  Poland  (hereinafter  referred  to as "LOL Ltd.") and through
Pozbac S.A. a Polish corporation under the control of and solely operated by LOL
Ltd. who owns a controlling interest therein (hereinafter referred to as "Pozbac
S.A."),  and  collectively  Land O'Lakes animal feed business in Poland shall be
hereinafter referred to as the "Business"; and

         WHEREAS,  Land O'Lakes desires that Agribrands or one of its Affiliates
make certain  personnel,  technology,  trademarks and services  available to LOL
Ltd. for its use in operating the Business; and

         WHEREAS, Agribrands and its Affiliates desire to acquire an option from
Land O'Lakes for the Business; and

         WHEREAS,  Agribrands  is willing to enter into certain  agreements,  or
cause its Affiliates to enter into certain agreements to provide such personnel,
technology,  trademarks  and services to LOL Ltd. (such  agreements  hereinafter
referred to as the Ancillary  Agreements)  provided that Land O'Lakes  grants to
Agribrands an option to purchase an interest in LOL Ltd., and provided that Land
O'Lakes  grants  Agribrands  indemnification  for the  risks of  supplying  such
personnel,   technology,   trademarks   and  services  to  the   Business;   and

         WHEREAS,  upon the terms and conditions  contained herein, Land O'Lakes
is willing to grant Agribrands or any of its Affiliates an option to purchase an
interest  in  LOL  Ltd.,  and  provide  an  indemnification  for  certain  risks
associated with supplying personnel, technology, trademarks and services;

         NOW,  THEREFORE,  in consideration of the mutual premises and covenants
contained herein, the parties agree as follows:

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         ARTICLE I - DEFINITIONS.

         "Affiliate"  shall mean any  person  and/or  entity  that  directly  or
         indirectly  through  one  or  more  intermediaries,   controls,  or  is
         controlled  by, or is under  common  control  with the person or entity
         specified.

         "Agricultural  Products"  shall  mean  products  formulated  to provide
         nourishment  to or  care  of  horses  (whether  or  not  agricultural),
         laboratory  or zoo animals (but not including Pet Products sold to such
         institutions) and agricultural animals (whether  terrestrial,  aquatic,
         or  aviary)  including  by way of  illustration,  but  not  limitation,
         commercial livestock,  commercial poultry,  fish, reptiles or shellfish
         raised  in  commercial  agriculture  facilities;   rabbits  raised  for
         commercial  purposes;  animals raised for fur; wild or game birds;  and
         services for the care and feeding of such  animals.  Except as provided
         elsewhere in this Agreement, "Agricultural Products" shall also include
         accessories,  health  products and services for the care and feeding of
         horses, zoo animals, laboratory animals and agricultural animals.

         "Ancillary Agreements" shall mean that certain Technology and Trademark
         License Agreement,  commencing January 1, 2000 between LOL Ltd. and AGX
         TECH Licensing and Services Limited Liability Company,  or that certain
         Formulation Agreement,  commencing January 1, 2000 between LOL Ltd. and
         Agribrands  Europe Espana S.A., and that certain  Secondment  Agreement
         commencing January 1, 2000 between Land O'Lakes and Agribrands.

         "Average  EBITDAR"  shall mean the average Net Earnings plus  interest,
         taxes,  depreciation,  amortization,  and royalties  ("Earnings  Before
         Interest, Taxes, Depreciation, Amortization, and Royalties") for a
         complete three calendar year period.

         "Business"  shall mean Land O'Lakes  animal feed  business in Poland as
         operated by LOL Ltd.,  including LOL Ltd.'s  interest in and control of
         Pozbac S.A., collectively referred to as the "Business".

         "Closing  Date"  shall mean the date on which the last of the  required
         approvals from any relevant Polish authorities is obtained enabling the
         closing of a sale by Land O'Lakes and a purchase by  Agribrands  or one
         of its  Affiliates of an interest in LOL Ltd. as set forth in Article 3
         below.

         "Net Earnings" shall mean LOL Ltd.  revenues  generated by operation of
         the  Business  less all costs and expenses  incurred by LOL Ltd.  which
         include:  royalties,  operating expenses,  depreciation,  amortization,
         interest  expenses,  and income  taxes,  but before  Profit  Sharing as
         applied pursuant to U.S. generally accepted accounting principles.

         "Profit Sharing" shall have the meaning set forth in Article 5 below.

         "Royalties"  shall mean amounts paid to Agribrands  and its  Affiliates
         under  that  certain   Technology  and  Trademark  License   Agreement,

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         commencing  January 1, 2000 between LOL Ltd. and AGX TECH Licensing and
         Services Limited Liability Company.

         "Territory"  shall mean those areas  existing  within a Fifty (50) mile
         radius surrounding each of the Animal Product production  facilities of
         the Business in the Republic of Poland,  including  the  facilities  in
         Paslek, Miescisko, Grodzisk, and Kozmin.

         "U.S.A ", "US" and  "United  States"  shall  each  refer to the  United
         States of America.

         ARTICLE 2 - OPTION TO PURCHASE.

         Land O'Lakes grants to  Agribrands,  or at the discretion of Agribrands
to any of its  Affiliates,  during the period of exercise  provided in Article 3
below,  an exclusive  option to purchase the Business by purchasing  One Hundred
percent (100%) of the interest in LOL Ltd.,  subject to the terms and conditions
herein. As of December 20, 1999 the authorized  shares of LOL Ltd.  (hereinafter
referred to as "Shares")  consist of 92,913  shares of 111.00 Polish Zloty each.
The parties agree that any alteration (increase or decrease) of LOL Ltd.'s share
capital  resulting in the issuance or  cancellation of Shares will not interfere
with the  purchase of an  ownership  interest in LOL Ltd. by  Agribrands  or its
Affiliates as Article 3 below provides for the purchase of a certain  percentage
of Shares existing at the moment of exercising of an option.

         ARTICLE 3 - PERIOD OF EXERCISE.

         (a)      On or after December 31, 2002 through  December 31, 2003, upon
                  thirty (30) days prior  written  notice,  Agribrands or one of
                  its  Affiliates  may  inform  Land  O'Lakes  of its  desire to
                  purchase  fifty-one percent (51 %) interest in LOL Ltd. (as of
                  December  20,  1999  calculated  as 51% of  92,913  or  47,386
                  Shares), and, subject to obtaining the approvals required from
                  the relevant  Polish  authorities,  if any,  Agribrands or its
                  Affiliate  shall deliver within Ten (10) days from the Closing
                  Date  fifty-one  percent (51 %) of the Purchase  Price to Land
                  O'Lakes  via wire  transfer to an account  designated  by Land
                  O'Lakes.

         (b)      After December 31, 2004 through December 31, 2006, upon thirty
                  (30)  days  prior  written  notice,  Agribrands  or one of its
                  Affiliates  may inform Land  O'Lakes of its desire to purchase
                  all of Land  O'Lakes  remaining  interest in LOL Ltd.  (either
                  Forty-nine  percent (49%) interest in LOL Ltd. (as of December
                  20,  1999  calculated  as 49% of 92,913 or 45,527  Shares)  if
                  Agribrands or one of its Affiliates  has previously  exercised
                  its first  purchase  option under  Article 2(a) above,  or One
                  Hundred  percent  (100%) of Land O'Lakes  interest in LOL Ltd.
                  (as of December 20, 1999 92,913 Shares),  if Agribrands or one
                  of its Affiliates  did not exercise its purchase  option under
                  Article 2(a) above),  and,  subject to obtaining the approvals
                  required  from  the  relevant  Polish  authorities,   if  any,
                  Agribrands or its Affiliate shall deliver within Ten (10) days
                  from the  Closing  Date the balance of the  Purchase  Price to
                  Land  O'Lakes via wire  transfer to an account  designated  by
                  Land O'Lakes.

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         (c)      In the event that Land O'Lakes or any of its Affiliates  gives
                  Agribrands  or any of its  Affiliates  notice of its intent to
                  terminate any of the Ancillary Agreements at any time prior to
                  December 31, 2006, then this Option  Agreement shall terminate
                  and  Agribrands  and its  Affiliates  shall be  entitled  to a
                  period of Ninety (90) days in which to provide  written notice
                  to Land  O'Lakes of its desire to purchase all of Land O'Lakes
                  interest  in LOL Ltd.  subject  to the  terms  and  conditions
                  herein (either  Forty-nine  percent (49%) interest in LOL Ltd.
                  (as of December 20, 1999 calculated as 49% of 92,913 or 45,527
                  Shares) if Agribrands or one of its  Affiliates has previously
                  exercised the purchase option under Article 2(a) above, or One
                  Hundred  percent  (100%) of Land O'Lakes  interest in LOL Ltd.
                  (as of December 20, 1999 92,913 Shares),  if Agribrands or one
                  of its Affiliates  did not exercise the purchase  option under
                  Article 2(a) above),  and,  subject to obtaining the approvals
                  required  from  the  relevant  Polish  authorities,   if  any,
                  Agribrands or its Affiliate shall deliver within Ten (10) days
                  from the  Closing  Date the balance of the  Purchase  Price to
                  Land  O'Lakes via wire  transfer to an account  designated  by
                  Land O'Lakes.

         (d)      In the event that  Agribrands or any of its  Affiliates  gives
                  Land O'Lakes or any of its Affiliates  notice of its intent to
                  terminate  any of the Ancillary  Agreements  prior to December
                  31, 2006, then Agribrands and its Affiliates shall be entitled
                  to a period of Ninety  (90) days in which to  provide  written
                  notice to Land  O'Lakes of its desire to purchase  all of Land
                  O'Lakes  interest  in  LOL  Ltd.  subject  to  the  terms  and
                  conditions herein (either Forty-nine percent (49%) interest in
                  LOL Ltd. (as of December 20, 1999  calculated as 49% of 92,913
                  or 45,527 Shares),  if Agribrands or one of its Affiliates has
                  previously  exercised  the purchase  option under Article 2(a)
                  above, or One Hundred percent (100%) of Land O'Lakes  interest
                  in LOL Ltd.  (as of  December  20,  1999  92,913  Shares),  if
                  Agribrands  or one of its  Affiliates  did  not  exercise  the
                  purchase  option under  Article 2(a) above),  and,  subject to
                  obtaining  the  approvals  required  from the relevant  Polish
                  authorities, if any, Agribrands or its Affiliate shall deliver
                  within Ten (10) days from the Closing  Date the balance of the
                  Purchase Price to Land O'Lakes via wire transfer to an account
                  designated by Land O'Lakes.

         ARTICLE 4 - PURCHASE PRICE.

         For each exercise of an option by  Agribrands or one of its  Affiliates
under  Article 3 above the  Purchase  Price for the shares of LOL Ltd.  shall be
calculated  as of the date  that  Land  O'Lakes  receives  written  notice  from
Agribrands, or one of its Affiliates, and shall be the greater of:

         (a)      Five (5X) times Average  EBITDAR  calculated in U.S.  Dollars,
                  less the liabilities  assumed by Agribrands or retained by LOL
                  Ltd., for the three complete calendar years preceding the date
                  of the receipt by Land O'Lakes of written notice by Agribrands
                  or its  Affiliate of the exercise of an option,  calculated in

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<PAGE>

                  accordance with U.S. generally accepted accounting  principles
                  applied on a consistent basis;

                  Or,

         (b)      The value of the fixed assets of the  Business,  provided such
                  value  shall  not be more  than  Eight  Million  U.S.  Dollars
                  ($8,000,000), calculated as the sum of:

                  (i)      The original cost of all fixed assets of the Business
                           owned by LOL Ltd. less accumulated depreciation, plus
                           the book value of all working  capital,  inventories,
                           and account  receivables,  excluding all cash,  debt,
                           and  intercompany   balances  at  the  Closing  Date;
                           calculated in accordance with U.S. generally accepted
                           accounting principles on a consistent basis;

                           Plus,

                  (ii)     LOL  Ltd.'s  pro rata  share  (based  upon LOL Ltd.'s
                           ownership  interest in Pozbac  S.A.) of the  original
                           cost of all  fixed  assets of the  Business  owned by
                           Pozbac S.A. less accumulated  depreciation,  plus the
                           book value of all working capital,  inventories,  and
                           account  receivables,  excluding all cash,  debt, and
                           intercompany balances at the Closing Date; calculated
                           in accordance with U.S. generally accepted accounting
                           principles on a consistent basis.

         The parties  agree to bear an equal fifty  percent of all for any stamp
duty or tax  associated  with the  exercise of such option that is levied by any
relevant Polish authority.

         ARTICLE 5 - PROFIT SHARING.

         (a)                As  and  for  Profit  Sharing,  Agribrands  shall be
                  entitled  to forty  (40%)  percent of the Net  Earnings of LOL
                  Ltd. from January 1, 2000 through the earlier to occur of:

                  (i)      The Closing  Date  pursuant to Article 3(a) hereof or
                           if said option is not  executed  under  Article  3(a)
                           then  the  Closing  Date  pursuant  to  Article  3(b)
                           hereof, or

                  (ii)     December 31, 2006; or

                  (iii)    The expiration or termination of any of the Ancillary
                           Agreements.

         (b)      Within one hundred and eighty days following the close of each
                  fiscal year of LOL Ltd.,  Agribrands may request payment,  net
                  of the withholding taxes which would have been payable by Land
                  O'Lakes on distribution of a dividend from LOL Ltd. for any or

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<PAGE>

                  all of the  amounts  accrued  for all prior  fiscal  years but
                  unpaid under Article 5(a) above,  or may allow such amounts to
                  accrue and upon the exercise of the purchase option be applied
                  as a reduction of the Purchase  Price  payable to Land O'Lakes
                  without deduction for such hypothetical withholding taxes.

         (c)      Neither  Agribrands nor any of its  affiliates  shall bear any
                  financial  responsibility  for losses incurred by LOL Ltd. and
                  shall have no obligation  to loan or  contribute  funds to LOL
                  Ltd.

         ARTICLE 6 - NON-COMPETITION.

         (a)      Agribrands and Affiliates

                  (i)      The  parties   agree  that  for  good  and   valuable
                           consideration,  the receipt and adequacy of which are
                           hereby  acknowledged,   that  within  the  Territory,
                           Agribrands   shall  not,  and  shall  not  permit  an
                           Affiliate of  Agribrands  to directly or  indirectly,
                           either for Agribrands' own benefit or for the benefit
                           of an  Affiliate  (i)  distribute,  market,  or  sell
                           Agricultural  Products  or  otherwise  engage  in any
                           retail  or  wholesale   activity  in  any  manner  or
                           capacity (e.g. through any form of ownership or as an
                           advisor,    principal,   agent,   partner,   officer,
                           director, employer, consultant, or otherwise) that is
                           principally  engaged in by the  Business  on the date
                           hereof, provided,  however, that nothing herein shall
                           restrict  Agribrands or its Affiliates from providing
                           certain  services to Land O'Lakes and its  Affiliates
                           under the Ancillary  Agreements.;  or (ii) induce, or
                           attempt to induce or  influence  (other than by means
                           of  general  advertising)  any  customer,   supplier,
                           distributor,  licensee or other business  relation of
                           the  Business  to cease  such  relationship  with the
                           Business,   or  in  any  way   interfere   with   the
                           relationship;  provided however,  that nothing herein
                           is intended to limit  Agribrands'  ability to compete
                           with Land  O'Lakes and its  Affiliates  to the extent
                           not prohibited herein.

                  (ii)     Said restriction on competition shall commence on the
                           date  first  above  written  and  continue  until the
                           earlier of the following:

                           (1)      The acquisition of any  interest in LOL Ltd.
                                    by  Agribrands  and/or  its Affiliates under
                                    Article 3 above; or

                           (2)      Eighteen (18)  months  beyond  the  date  of
                                    termination   of   any  of   the   Ancillary
                                    Agreements; or

                           (3)      December 31, 2006.

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                  (iii)    Agribrands  hereby  acknowledges  that the geographic
                           boundaries,  scope of prohibited  activities  and the
                           time duration of this  non-competition  provision are
                           reasonable  and are no broader than are  necessary to
                           protect the  legitimate  business  interests  of Land
                           O'Lakes.

         (b)      Land O'Lakes and Affiliates

                  (i)      If  Agribrands  or one of its  Affiliate  acquires an
                           ownership interest in LOL Ltd. under Article 3 above,
                           then  within the  Republic  of Poland,  Land  O'Lakes
                           shall not,  and shall not permit an Affiliate of Land
                           O'Lakes to  directly or  indirectly,  either for Land
                           O'Lakes'  own  benefit  or  for  the  benefit  of  an
                           Affiliate   (i)   distribute,    market,    or   sell
                           Agricultural  Products  or  otherwise  engage  in any
                           retail  or  wholesale   activity  in  any  manner  or
                           capacity ( e.g.  through any form of  ownership or as
                           an  advisor,   principal,  agent,  partner,  officer,
                           director, employer, consultant, or otherwise) that is
                           principally  engaged in by the  Business  on the date
                           hereof, provided,  however, that nothing herein shall
                           restrict   Land  O'Lakes  or  its   Affiliates   from
                           providing  certain  services  to  Agribrands  and its
                           Affiliates;  or (ii) induce,  or attempt to induce or
                           influence   (other   than   by   means   of   general
                           advertising)  any  customer,  supplier,  distributor,
                           licensee or other  business  relation of the Business
                           to cease such relationship  with the Business,  or in
                           any way  interfere  with the  relationship;  provided
                           however,  that  nothing  herein is  intended to limit
                           Land O'Lakes'  ability to compete with Agribrands and
                           its Affiliates to the extent not prohibited herein.

                  (ii)     Said restriction upon Land O'Lakes ability to compete
                           shall  commence,  if at all, upon the  acquisition of
                           any  interest  in LOL Ltd. by  Agribrands  and/or its
                           Affiliates  under Article 3 above and shall  continue
                           until the earlier of the following:

                           (1)      Eighteen  (18) months from the date on which
                                    Agribrands  by itself or  together  with its
                                    Affiliates   acquires  one  hundred  percent
                                    (100%) ownership interest in LOL Ltd.

                           (2)      June 30, 2008.

                  (iii)    Land O'Lakes hereby  acknowledges that the geographic
                           boundaries,  scope of prohibited  activities  and the
                           time duration of this  non-competition  provision are
                           reasonable  and are no broader than are  necessary to
                           protect  the   legitimate   business   interests   of
                           Agribrands.

         ARTICLE 7 - LAND O'LAKES' REPRESENTATIONS AND WARRANTIES.

         As a material inducement to Agribrands to enter into this Agreement and
with the  understanding  that  Agribrands  and its  Affiliates  shall be relying
thereon in  consummating  this  Agreement,  Land O'Lakes  hereby  represents and

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warrants as to the best of its  knowledge as of the date first above  written as
follows:

         (a)      Organization  and  Standing.  Land  O'Lakes  is a  cooperative
                  corporation  duly  organized,  validly  existing  and in  good
                  standing under the laws of the State of Minnesota, and has all
                  requisite  power and authority to consummate the  transactions
                  contemplated  hereby.  LOL Ltd. is a limited liability company
                  duly organized,  validly existing,  and in good standing under
                  the laws of the Republic of Poland.

         (b)      Authorization.  All necessary consents and approvals, internal
                  to the organization,  have been obtained for the execution and
                  performance of this Agreement.

         (c)      Breaches.  The  execution,  delivery and  performance  of this
                  Agreement   and   the   consummation   of   the   transactions
                  contemplated  hereby  do  not  and  shall  not  result  in any
                  material  breach  of any of the  terms or  conditions  of Land
                  O'Lakes' articles or certificate of incorporation or bylaws or
                  any mortgage, bond, indenture, agreement, contract, license or
                  other  instrument  or  obligation  to which Land  O'Lakes is a
                  party  or to  which  the  Business  is  subject.  To the  best
                  knowledge  of  Land  O'Lakes,  the  execution,   delivery  and
                  performance  of this  Agreement  and the  consummation  of the
                  transactions  contemplated hereby do not and shall not violate
                  any statute or regulation or any judgment, writ, injunction or
                  decree of any court  threatened  or entered in a proceeding or
                  action  in which  Land  O'Lakes  may be bound or to which  the
                  Business may be subject.

         (d)      Default. Land O'Lakes is not in default with respect to any of
                  its obligations or liabilities pertaining to the Business.

         (e)      Commitments.  Land  O'Lakes  has not  entered  into any  other
                  contracts for the sale of all or any part of the Assets or the
                  Business,  and there are not any first  rights of  refusal  or
                  options to  purchase  the Assets or the  Business  or any part
                  thereof.

         (f)      Information  Furnished by Land O'Lakes. All of the information
                  furnished by Land O'Lakes to  Agribrands,  including,  without
                  limitation,  the financial and statistical  data in connection
                  with the Business has been true, accurate and complete and has
                  not omitted any material fact.

         (g)      Stock of LOL Ltd. The authorized shares of LOL Ltd. consist of
                  92,913  shares  (herein  referred to as "the  Shares")  all of
                  which are owned by Land O'Lakes. Land O'Lakes has good, valid,
                  and  marketable  title to  one-hundred  percent  (100%) of the
                  Shares  free  and  clear  of  all  liens,   claims,   security
                  interests,  charges  and  other  encumbrances  of any  kind or
                  nature (hereinafter collectively referred to as "Liens"). Land

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                  O'Lakes shall not offer or transfer title to any of the Shares
                  to any other party, nor encumber the Shares during the term of
                  this Agreement.

         (h)      Technology and Trademark License. Land O'Lakes agrees to enter
                  into a  license  agreement  with LOL  Ltd.  for the use of the
                  Technology  and  Trademarks  in the  Republic of Poland for an
                  initial  period  of  three  years,  renewable  thereafter  for
                  consecutive three year terms. The license shall be in the form
                  of the license agreement  attached hereto,  marked Appendix A,
                  and incorporated herein by reference.

         ARTICLE 8 - AGRIBRANDS' REPRESENTATIONS AND WARRANTIES.

         As a material  inducement to Land O'Lakes to enter into this  Agreement
and with the  understanding  that  Land  O'Lakes  shall be  relying  thereon  in
consummating this Agreement, Agribrands represents and warrants as follows:

         (a)      Organization  and Standing.  Agribrands is a corporation  duly
                  organized,  validly  existing and in good  standing  under the
                  laws of Missouri,  with full power and authority to consummate
                  the transactions contemplated hereby.

         (b)      Authorization.  All necessary consents and approvals, internal
                  to the organization,  have been obtained for the execution and
                  performance of this Agreement.

         (c)      Breaches.  The  execution,  delivery and  performance  of this
                  Agreement   and   the   consummation   of   the   transactions
                  contemplated  hereby  do  not  and  shall  not  result  in any
                  material   breach  of  any  of  the  terms  or  conditions  of
                  Agribrands's  articles  or  certificate  of  incorporation  or
                  bylaws or any mortgage, bond, indenture,  agreement, contract,
                  license or other  instrument or obligation to which Agribrands
                  is a  party.  To  the  best  of  Agribrands's  knowledge,  the
                  execution,  delivery and performance of this Agreement and the
                  consummation of the  transactions  contemplated  hereby do not
                  and shall not violate any statute, regulation, judgment, writ,
                  injunction  or decree of any court  threatened or entered in a
                  proceeding or action in which Agribrands may be bound.

         (d)      General.  The representations and warranties contained in this
                  Article 8 shall be correct in all  respects  on and as of each
                  Closing  Date  with  the  same  force  and  effect  as if such
                  representations  and warranties had been made on and as of the
                  Closing Date.

         ARTICLE 9 - TRANSFER OF TITLE TO SHARES.

         The  ownership  title to shares paid for under  Article 3 shall pass to
Agribrands, or any of its Affiliates,  within three (3) days following tender by
Agribrands  or such  Affiliates  of the  Purchase  Price for such shares to Land
O'Lakes.

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         ARTICLE 10 - EVIDENCE OF TRANSFER OF SHARES.

         Upon  the  transfer  of title  to  shares  under  Article  9,  within a
reasonable amount of time the parties shall sign a pro forma document confirming
that the  ownership  of shares of LOL Ltd.  has  passed  from  Land  O'Lakes  to
Agribrands or one of its Affiliates.  The parties recognize and acknowledge that
the shares pass at the time  specified in Article 9,  however the parties  agree
that the  execution  of said pro  forma  document  may be used as  evidence  and
confirmation of the transfer as such may be required by Polish authorities.

         ARTICLE 11 - INDEMNIFICATION.

         (a)      Land O'Lakes and its  Affiliates  agree to indemnify  and hold
                  harmless  Agribrands and its Affiliates,  and their respective
                  directors,  officers,  employees,  agents from and against all
                  claims,  demands,   actions,  causes  of  action,   judgments,
                  liabilities,  losses,  damages,  costs and expenses (including
                  but not limited to attorneys fees and expenses) which:

                  (i)      Relate  to or arise  out of the  ownership,  use,  or
                           operation  of the  Business,  or interest in LOL Ltd.
                           prior  to  January  1,  2000  whether  such  claim is
                           asserted before or after January 1, 2000; or

                  (ii)     Relate  to or arise  out of the  ownership,  use,  or
                           operation  of the  Business,  or interest in LOL Ltd.
                           occurring  after January 1, 2000 through the delivery
                           of any of the shares of LOL Ltd. to Agribrands or its
                           Affiliates  whether such claim is asserted  before or
                           after the  delivery of such shares to  Agribrands  or
                           its  Affiliates,  except for  willful  misconduct  or
                           fraud by the  employees of  Agribrands  working under
                           contract for LOL Ltd.; provided,  however,  that this
                           Agreement does not negate or alleviate any obligation
                           of Land O'Lakes and Agribrands  and their  respective
                           Affiliates  to indemnify and hold harmless each other
                           and each  parties'  respective  Affiliates  under the
                           terms of any of the Ancillary Agreements.

         ARTICLE 12 - COVENANTS OF THE PARTIES.

         (a)      Agribrands  and its  Affiliates  agrees  to apply to  effect a
                  change of the  business  name of LOL Ltd.  to a business  name
                  selected by Agribrands  provided the new name does not include
                  the words  "Land  O'Lakes" or "LOL,"  within  thirty (30) days
                  after  transfer  of  ownership  of  any  shares  of  LOL  Ltd.
                  purchased by Agribrands or its Affiliates under the provisions
                  of Article 3 above by taking  action to amend the  articles of
                  the notorial  deed for LOL Ltd.  with the full  assistance  of
                  Land  O'Lakes.  Furthermore,  Agribrands  agrees that within a
                  reasonable  time,  not to exceed six months,  upon transfer of
                  ownership  of any  shares  of LOL  Ltd.  it  shall,  with  the
                  cooperation of Land O'Lakes, cease using the business name and

                                       10
<PAGE>

                  commence  operations  under its new name to the fullest extent
                  allowed under applicable law.

         (b)      Agribrands  and Land O'Lakes and their  respective  Affiliates
                  agree to comply with the relevant rules, regulations,  laws of
                  the  Republic  of  Poland  regarding  the sale  and  transfer,
                  purchase  and  acquisition  of an  interest  in  LOL  Ltd.  by
                  Agribrands or its Affiliates as  contemplated  herein.  To the
                  extent   that  the  parties   must  file  or  record   certain
                  information  with  any  relevant  Polish  authorities  to gain
                  approval for any transaction  contemplated herein, the parties
                  agree to cooperate  with one  another.  All costs and expenses
                  relating to such  requirements of the Polish  authorities that
                  are  not  expressly   assigned  in  this  Agreement  shall  be
                  allocated  on an equal  fifty  per  cent  basis  between  Land
                  O'Lakes and Agribrands or its Affiliates. Each party shall pay
                  its own  incidental  costs  and  expenses  including,  without
                  limitation,  legal, accounting, and consulting fees and travel
                  expenses.

         ARTICLE 13 - SURVIVAL UPON TERMINATION.

         Upon  termination  of this  Agreement as provided under Article 3(c) or
(d) above, all further  obligations under this Agreement will terminate,  except
for the  following  provisions  which shall  remain in effect for the  specified
period of time:

         (a)      Article 6 relating to restrictions on competition  which shall
                  continue according to the specified period of time therein;

         (b)      Article 7 and  Article 8 relating to the  representations  and
                  warranties  made by the  parties  which shall  continue  for a
                  period of ninety (90) days;

         (c)      Article 11 (b)  relating to  indemnification  by LOL Ltd.  for
                  liabilities  related to the  ownership  and  operation  of the
                  Business, which shall continue for a period of two (2) years;

         (d)      Article 12 (a)  relating  to the  covenants  of the parties to
                  change the name of LOL Ltd.,  which shall  survive  until such
                  date as such covenants are fully performed.

         (e)      Article  12(b)  relating  to the  covenants  of the parties to
                  cooperation  and compliance in transferring an interest in LOL
                  Ltd. to Agribrands or its Affiliate  which shall survive until
                  such date as such covenants are fully performed.

         (f)      Article  15  relating  to the use of  binding  arbitration  to
                  resolve  disputes  arising  under this  Agreement  which shall
                  continue indefinitely;

         (g)      Article 16 relating to the choice of law which will be applied
                  in the  construction,  interpretation  and performance of this
                  Agreement which shall continue indefinitely;

                                       11
<PAGE>

         ARTICLE 14 - NOTICES.

         Any notices or communications  permitted or required hereunder shall be
deemed  sufficiently  given if sent  (i) by an  internationally  recognized  air
courier service,  or (ii) by telecopy,  or (iii) by facsimile as set forth below
or to such other address as any party may notify the other party in writing:

         If to Agribrands, to:                  If to Land O'Lakes, to:

         9811 South Forty Drive                 1275 Red Fox Road
         St. Louis, Missouri 63124              Arden Hills, Minnesota 55112
         Facsimile Number: (314) 812-0403       Facsimile Number: (651) 634-8017
         Attention: General Counsel             Attention: Bob DeGregorio

                                                Copy to:
                                                Land O'Lakes, Inc.
                                                4001 Lexington Avenue N.
                                                Arden Hills, MN 55126
                                                Facsimile Number: 651-481-2832
                                                Attn:  Law Department

         ARTICLE 15 - DISPUTE RESOLUTION.

         In the event that any dispute is not  resolved  as provided  for above,
then all such disputes  arising under this Agreement,  including but not limited
to the validity and  enforceability  of any provision of this Agreement shall be
finally  submitted to binding  arbitration in accordance with the  International
Arbitration  Rules of the American  Arbitration  Association in effect as of the
date of this  Agreement.  The number of arbitrators  shall be one and shall be a
person  familiar  with the legal  system of the United  States and  Poland.  All
arbitral  proceedings  will be held in Chicago,  Illinois,  U.S.A.  and shall be
conducted in the English  language.  The  decisions of the  arbitrator  shall be
final and  nonappealable.  The arbitration award shall be final and binding upon
the parties, not subject to appeal and shall deal with the question of the costs
and legal fees incurred in connection with the arbitration proceeding.

         ARTICLE 16 - APPLICABLE LAW.

         The  construction,  interpretation  and  performance  of this Agreement
shall be governed by and construed in  accordance  with the internal laws of the
State of Illinois, U.S.A.

         ARTICLE 17 - MISCELLANEOUS.

         (a)      Binding  Effect;  Assignment.  This Agreement shall be binding
                  upon, and shall inure to the benefit of, the parties and their
                  affiliates   and   their    respective    successors,    legal

                                       12
<PAGE>

                  representatives  and  assigns.  Except as  expressly  provided
                  herein, nothing herein shall create or be deemed to create any
                  third party  beneficiary  rights in any person or entity not a
                  party to this Agreement. No assignment of this Agreement or of
                  any rights or  obligations  hereunder may be made by any party
                  (by operation of law or  otherwise)  without the prior written
                  consent of the other party; provided, however, that Agribrands
                  may assign this option to any of its affiliates. Any attempted
                  assignment  without  the  required  consents  shall  be  void.

         (b)      Counterparts.  This  Agreement  shall be  executed  in two (2)
                  counterparts,  each of which shall be deemed an original,  but
                  all of  which  together  shall  constitute  one and  the  same
                  instrument.  In  pleading  or proving  any  provision  of this
                  Agreement,  it shall not be necessary to provide more than one
                  such counterpart.

         (c)      Section  Headings.  The  section  headings  contained  in this
                  Agreement are inserted for  convenience  of reference only and
                  shall not otherwise affect the meaning of interpretation of or
                  be deemed to be a substantive part of this Agreement.

         (d)      Waiver.  The  failure of either  party at any time or times to
                  enforce or require  performance of any provision  hereof shall
                  in no way  operate  as a waiver  or  affect  the right of such
                  party at a later time to enforce the same. No waiver by either
                  party  of  any  condition  or  the  breach  of  any  provision
                  contained in this Agreement,  whether by conduct or otherwise,
                  in  any  one or  more  instances,  shall  be  deemed  to be or
                  construed  as a  further  or  continuing  waiver  of any  such
                  condition or breach,  or a waiver of any other condition or of
                  any breach of any other provision contained in this Agreement.

         (e)      Severability.   If  any  provision  of  this  Agreement  shall
                  hereafter  be  held to be  invalid  or  unenforceable  for any
                  reason, that provision shall be reformed to the maximum extent
                  permitted to preserve the parties'  original  intent,  failing
                  which it shall be severed from this Agreement with the balance
                  of the  Agreement  continuing  in full force and effect.  Such
                  occurrence   shall  not  have  the  effect  of  rendering  the
                  provision in question invalid in any other  jurisdiction or in
                  any other case or  circumstances  or of rendering  invalid any
                  other  provisions  contained  herein to the  extent  that such
                  other provisions are not themselves  actually in conflict with
                  any applicable law.

         (f)      Entire  Agreement.  This Agreement  cancels and supersedes all
                  previous  agreements  and  understandings,  oral  or  written,
                  between the parties with respect to the subject matter hereof.
                  No  modification  of this Agreement or waiver of any provision
                  or right  hereunder  will be binding  upon either party unless
                  signed in  writing  by an  authorized  representative  of such
                  party.

                                       13
<PAGE>

         (g)      Controlling  Language.  The official text of this Agreement is
                  in the English  language.  If the Agreement is translated into
                  any other  language for the  convenience of the parties or any
                  other  person,  the  English  language  text shall  govern any
                  question with respect to interpretation.

          IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be
executed by their duly authorized  representatives  as of the day and year first
above written.

Agribrands International, Inc.                      Land O'Lakes, Inc.
("Agribrands")                                      ("Land O'Lakes)

By:___________________________                      By:_________________________
Name: ________________________                      Name:_______________________
Title: _______________________                      Title:______________________

                                       14Exhibit 10.20.1

                                                                  April 15, 1999

Dr. T. Grant John
989 Whitetale Lane
Westchester, Pennsylvania 19382

                            Re: Employment Agreement
                            ------------------------

Dear Dr.  John:

           Special Metals Corporation (the "Company"), desires to employ you on
the terms set forth herein, and by your signature below you have indicated that
you desire to be employed by the Company on the terms set forth herein. In
consideration of the mutual covenants contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which
consideration are hereby acknowledged, the parties agree as follows:

           1. Duties. You shall serve as the Executive Vice President and Chief
Operating Officer of the Company, with responsibility for all operations of the
Company's core business, including the commercial functions, performing all
duties reasonably or necessarily relating to your position as shall be assigned
to you from time to time by the Chief Executive Officer and/or Board of
Directors of the Company, devoting your full business time, attention, best
energies and abilities to the performance of such duties. During the Employment
Period (as defined below), your employment hereunder shall be your exclusive
employment, and you shall not be engaged in any other trade or business, without
the consent of the Company. You shall report to the Chief Executive Officer and
Board of Directors of the Company. You will be appointed to the Boards of
Directors of the Company and various other subsidiaries of the Company, and
shall enjoy the duties and privileges of such directorships as provided by the
by-laws of these respective corporations, after satisfactory service prior to or
by the end of the first year of your employment with the Company. You shall
serve on these Boards without further compensation.

           2. Term. The initial term of employment with the Company shall be for
the period commencing on April 19, 1999 or earlier (the "Commencement Date") and
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 2

ending on April 19, 2002 or the third anniversary of the Commencement Date; and
the term shall be automatically extended for an additional period of one year
and upon each one year anniversary date thereafter upon the terms and conditions
set forth herein (the "Employment Period"), unless either party gives six (6)
months prior written notice of his or its intention not to extend the term of
this Agreement prior to the end of the initial term or any extended term;
however, in all events, this Agreement shall expire in all respects on April 19,
2004.

           3. Base Salary. Your base salary shall be at least Two Hundred
Seventy-five Thousand Dollars ($275,000) per annum. Your base salary shall be
payable in periodic installments no less frequently than on a monthly basis. You
shall be eligible for salary increases based on your performance periodically
during the term of this Agreement. Salary reviews will be in accordance with the
Company's salary review policy then applicable.

           4. Incentive Compensation. On the Commencement Date of your
employment, you will be eligible to receive a contingent grant of restricted
shares of the Company's stock, the number of which shares will be determined by
dividing forty percent (40%) of your base salary by the value of the Company's
shares on the Commencement Date (i.e. $275,000 x 40% = $110,000 / share value as
of the Commencement Date = number of restricted shares) (the "Restricted
Shares"). The share value as of the Commencement Date shall be calculated in
accordance with the terms of the Company's Nonqualified Stock Option Agreement
and Long-Term Stock Incentive Plan (collectively referred to herein as "Stock
Option Plan"). One half of the Restricted Shares so determined will vest subject
to your continued employment on each of the first three anniversary dates of the
Commencement Dates in equal one- third pro rata amounts each year; and the
balance of the Restricted Shares so determined will be vested based upon your
achievement of your performance objectives that are reasonably consistent with
the business objectives of the Company and as negotiated with the Chief
Executive Officer. During your first ninety (90) days of employment, you and the
Chief Executive Officer will set goals and times of achievement which cover a
mutually agreed upon time schedule to result in vesting of the Restricted Shares
that are dependent upon your performance. The Restricted Shares will vest within
twelve (12) months of the Commencement Date if you have achieved your
performance objectives within that time, unless the completion date of the
performance goals that are agreed to with the Chief Executive Officer is
mutually agreed to be at a later date. The vested Restricted Shares that you are
eligible to receive will be transferred to you twenty-four (24) months after the
vesting date or at a later date elected by you (such election to be made at
least 24 months before the scheduled transfer date, unless the Company consents
to a shorter election period). All incentive compensation based upon the
Company's shares will be adjusted for splits, dilution, dividends and other such
events as set forth in the Company's Stock Option Plan. Your achievement of your
performance objectives will be assessed by
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 3

the Chief Executive Officer at the end of your first year with the Company, and
on or about each anniversary of the Commencement Date, unless there is mutual
agreement that a longer time is required.

           As of the second year of your employment and for the remainder of
your Employment Period, you will eligible to participate in, and be subject to,
the Company's Guide to Incentive Compensation Program as it may then exist, at
the forty percent (40%) target level as defined in the applicable plan. Since
the incentive compensation that you will be eligible to receive for the first
four months of the year 2000 overlaps with the first year of your employment,
the incentive compensation that you will be eligible to receive for the balance
of the year 2000 will be prorated to eight-twelfths for the eight remaining
months of that year.

           5. Pension Plan. You shall be entitled to participate in the
Company's pension plan. The Company agrees that to supplement the Company's
pension plan, it will multiply your pension benefits as if you were fully vested
by one and two-thirds (12/3) after three (3) years of employment, so that you
will have five (5) years vested after three (3) years of employment, and it will
continue to be multiplied as if you were fully vested by one and two-thirds
(12/3) for the balance of your service until the termination of your employment.

           6. Other Benefits.

                     6.1 Stock Option Grant. During the Employment Period, you
will be eligible to participate in the Company's Stock Option Plan as it may
then exist. Upon the Commencement Date, you will receive a grant of forty
thousand (40,000) shares, vesting one-third (1/3) on each of the first three (3)
anniversary dates of the Commencement Date, as described in the Stock Option
Plan.

                     6.2 Employee Fringe Benefits. During the Employment Period,
you will be eligible to participate in the standard employee fringe benefits
plans, including, without limitation, 401(k), medical, dental and life insurance
and other fringe benefits, pursuant to their respective terms and conditions as
they may be modified, amended or terminated from time to time. If your
employment with the Company is terminated between April 19, 2002 and April 19,
2004 for any reason, except for "cause" as defined in paragraph 9.3(e) in this
Agreement, and at that time your present wife remains married to you, but is not
covered by any medical benefits under the Company's medical benefits plan, the
Company will at that time provide medical benefits to her until she becomes
eligible for Medicare on or before she reaches age 65. If your employment is
terminated for "cause," your wife will not receive the Company's medical
benefits.
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 4

                     6.3 Reimbursement of Business Expenses. The Company will,
upon substantiation thereof, reimburse you for all reasonable expenses incurred
by you in connection with the Company's business affairs. You must regularly
submit to the Company's Chief Executive Officer a statement of these expenses
and comply with such other accounting and reporting requirements that the
Company may from time to time establish.

                     6.4 Vacation. You are entitled to four (4) weeks vacation
per calendar year.

           7. Automobile; Club Membership. The Company will reimburse you for
your use of your personal car for Company business when automobile
transportation is called for and it is reasonable to expect you to use your
personal car. Such reimbursement shall be at the mileage rate typically paid at
the time by the Company for reimbursement for use of a personal car for Company
business. In addition, the Company will reimburse you for one club membership
pursuant to the terms of its applicable policy relating to same with the
approval of the Chief Executive Officer in advance and with reimbursement at a
level consistent with Company established practice. The foregoing reimbursement
arrangements may be modified by the Company from time to time.

           8. Change of Control. "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition, in one or a series of related transactions, of all or substantially
all of the assets of the Company to any "person" or "group" (as such terms are
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), (ii) any person or
group is or becomes the "beneficial owner" (as defined in Rules 13d-3 and l3d-5
under the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power of the voting
stock of the Company, including by way of merger, consolidation or otherwise or
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board (together with any new directors
whose election by such Board or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors of the Company, then still in office, who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board; provided that in no event shall the first initial public offering of the
Company's equity securities pursuant to an effective registration statement
under the Securities Act of 1933 be deemed to constitute a Change of Control.
Notwithstanding the foregoing, a "Change of Control" shall not include (i) any
acquisition of voting securities or assets of the Company by Societe
Industrielle Materiaux Avance ("SIMA"), LWH Holding S.A.,
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 5

Advanced Materials Investments Holding S.A. or any of their respective
affiliates or stockholders, or (ii) the acquisition of SIMA by the Eramet Group.

           9. Termination.

                     9.1 By the Company. The Company may terminate your
employment with the Company:

                               (a) at any time upon ninety (90) days advance
written notice for any reason other than for "cause" (as defined below) or for
no reason ("Termination Without Cause"), subject to the requirement that the
Company pay to you the amounts set forth in Subsection 9.3 hereof;

                               (b) at any time without notice for "cause" (as
defined below);

                               (c) upon your death;

                               (d) in the event of your disability preventing
you from rendering services to the Company consistent with your duties hereunder
for a period of six (6) consecutive months; or

                               (e) by not extending the Employment Period.

                     9.2 By the Employee. You may terminate your employment with
the Company:

                               (a) at any lime upon ninety (90) days advance
written notice;

                               (b) if there is a Change in Control of the
Company, and, as a result, there is a material change in your authority or job
responsibilities which results in lower salary or less responsibility than your
assignment as Executive Vice President; or

                               (c) for "Good Reason," upon ninety (90) days
advance written notice and the Company's failure to cure the "Good Reason"
within the ninety (90) day period. "Good Reason" is defined as (i) any material
breach of this Agreement by the Company; (ii) any material reduction in your
authority or job responsibilities which results in lower salary or less
responsibility than your assignment as Executive Vice President; (iii) any
required relocation of your position from Huntington, West Virginia without your
consent; or (iv) the creation by the Company of intolerable working conditions.
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 6

                     9.3 Payments upon Termination.

                               (a) Upon termination of this Agreement by the
Company during the Employment Period, pursuant to Subsection 9.1 (a) and 9.2(c)
hereof, the Company shall provide you with:

                                          (A) severance pay at your base salary
           in effect as of the date of such termination, payable in accordance
           with the Company's normal payroll cycle until the end of the
           Employment Period or for one year after the date of termination,
           whichever is longer;

                                          (B) incentive compensation, profit
           sharing payments and stock options shall be subject to accelerated
           vesting, but payable after the date of such termination, subject to
           the terms of the Company's incentive compensation and profit sharing
           and stock option plans, provided, however, that you shall be entitled
           to only so much of the Restricted Shares of incentive compensation
           for which your performance objectives are achieved, and further
           provided, however, that your right to exercise vested options shall
           be extended for a period of one (1) year following the termination,
           notwithstanding any contrary language in the plan documents; and

                                          (C) continued employee fringe benefits
           as in effect immediately prior to such termination subject to the
           terms of the Company's employee fringe benefits plans, pension plan
           and the supplement to the pension plan referred to in Section 5 of
           this Agreement until the end of the Employment Period, or for one
           year after the date of termination, whichever is longer.

                               (b) The payments specified in the preceding
paragraph (a) of this Subsection 9.3 shall be in full satisfaction of any and
all claims that you may have against the Company or any subsidiary or affiliate
thereof and, as a condition to the making of such payments by the Company, you
and the Company shall be required to execute mutual releases of claims arising
from events or occurrences prior to the date of such Termination without Cause
or Change of Control or termination by you for Good Reason if there is no
disagreement about the payments that you are owed, provided, however, that any
disagreement about the payments will be subject to arbitration as set forth in
paragraph 14.6 of this Agreement.

                               (c) Upon termination of this Agreement by the
Company pursuant to clauses (c), (d) or (e) of Subsection 9.1 hereof, or by you
pursuant to Subsection 9.2(b) hereof, you or your estate, as the case may be,
shall not be entitled to any compensation, severance, or any other benefits
and/or payments hereunder, except for base salary, bonus and profit sharing,
stock options and pension benefits
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 7

earned and vested as of the date of such termination, and the proceeds of all
applicable life and disability insurance policies.

                               (d) Upon termination of this Agreement by the
Company for cause, pursuant to Subsection 9.1(b), or by you for any reason,
pursuant to Subsection 9.2(a), you shall not be entitled to any compensation,
severance, or any other benefits and/or payments hereunder, except for base
salary, bonus, profit sharing, stock options and pension benefits earned and
vested as of the date of such termination.

                               (e) A termination for "cause" is defined as: (i)
your willful neglect of your duties hereunder; (ii) conviction for, or entry of
a pleading of guilty or nolo contendre by you with respect to a felony; (iii)
material, knowing and intentional failure to comply with applicable laws with
respect to the execution of the Company's business operations; (iv) theft,
fraud, embezzlement, dishonesty or similar conduct which has resulted or is
likely to result in material economic damage to the Company or any of its
affiliates or subsidiaries; (v) repeated failure to perform the directives of
the Chief Executive Officer and/or the Company's Board of Directors, or (vi)
dependence or addiction to alcohol or use of drugs (except those legally
prescribed by and administered pursuant to the directions of a practitioner
licensed to do so under the laws of the state or county of licensure) which in
the opinion of the Chief Executive Officer and Company's Board of Directors
interferes with your ability to perform your assigned duties and
responsibilities. If you are terminated for cause under subparagraphs (i),
(iii), (iv), (v) or (vi), you will be entitled to thirty (30) days prior written
notice and the opportunity to cure, and if, in the Company's sole discretion,
you have not cured the cause for your termination within that time, the Company
shall have the right to declare your employment terminated.

           10. Relocation. You agree to move to Huntington, West Virginia as
soon as practical, and you shall be entitled to the Company's relocation policy.

           11. Non-Disclosure; Non-Competition; Non-Solicitation.

                     11.1 Proprietary Information.

                               (a) You agree, that all information and know-how,
whether or not in writing, of a private, secret or confidential nature
concerning the business or financial affairs of the Company, or any subsidiary
or affiliate of the Company, (collectively, "Proprietary Information") is and
will be the exclusive property of the Company, or such subsidiary or affiliate,
as the case may be. By way of illustration, but not limitation, Proprietary
Information includes manufacturing methods, processes or techniques; inventions;
products; projects; developments; compositions; plans; research data; financial
data; trade secrets; patents; personnel data; computer
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 8

programs; designs; and client and supplier lists, whether or not copyrightable,
trademarkable or licensable. You shall not disclose any Proprietary Information
to others outside the Group (as defined below) or use the Proprietary
Information for any unauthorized purposes without written approval by an officer
of the Company, either during or after your employment, unless and until such
Proprietary Information has become public knowledge without your fault. For
purposes hereof, the "Group" shall mean the Company, any subsidiary or
affiliate.

                               (b) You agree that all files, letters, memoranda,
reports, records, data, sketches, drawings, notebooks, notes, specifications,
computer programs, listings, or other written, photographic, or other tangible
material containing Proprietary Information, whether created by you or others,
which comes into your custody or possession, is the exclusive property of the
Group, to be used by you only in the performance of your duties for the Company
and will remain in the custody of the Company if for any reason you leave your
employment with the Company and it will not be available to you after
termination of your employment.

                               (c) You agree that your obligation not to
disclose or use information, know-how and records of the types set forth in
paragraphs (a) and (b) above also extends to such types of information,
know-how, records and tangible property of customers of the Company or suppliers
to the Company or other third parties who may have disclosed or entrusted the
same to the Company or to you in the course of the Company's business.

                     11.2 Developments.

                               (a) You will make full and prompt disclosure to
the Company of all patents, inventions, improvements, ideas, concepts,
approaches, discoveries, methods, developments, software, and works of
authorship, whether or not copyrightable, patentable, trademarkable or
licensable, which are created, made, conceived or reduced to practice by you or
under your direction or jointly with others in connection with your employment
by the Company and relating to clients or prospective clients of the Company,
whether or not during normal working hours or on the premises of the Company
(all of which are collectively referred to in this Agreement as "Developments").

                               (b) You agree to cooperate fully with the
Company, both during and after your employment with the Company, with respect to
the procurement, maintenance and enforcement of patents, copyrights, licenses
and trademarks (both in the United States and foreign countries) relating to
Developments. To the extent that such cooperation requires the expenditure of
any money, the Company will be responsible for the payment of any such money. If
pursuant to this Section 11.2 you assist the Company subsequent to the
termination of your
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Dr. T. Grant John
April 15, 1999
Page 9

employment with the Company, the Company will compensate you for your time at a
rate to be mutually agreed upon. You will sign all papers, including, without
limitation, copyright applications, trademark applications, patent applications,
license applications, declarations, oaths, formal assignments, assignments of
priority rights and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interest in any Developments.

                     11.3 Non-Competition.

                               (a) During your Employment Period with the
Company and for an additional period equal to eighteen (18) months after the end
of the Employment Period or until the end of Payments upon Termination set forth
in Subsection 9.3 hereof, whichever is longer, and regardless of the reason for
the termination of your employment, you will not, without the Company's prior
written approval, directly or indirectly:

                                          (i) hire any employee of the Group or
           recruit, solicit or induce, or attempt to induce, any employee or
           consultant of the Group to terminate his employment or consulting
           relationship with, or otherwise cease his relationship with, the
           Group; or

                                          (ii) solicit, divert or take away, or
           attempt to divert or to take away, the business or patronage of any
           of the clients, customers or accounts, or prospective clients,
           customers or accounts, of the Group which were contacted, solicited
           or served by the Group at any time during or prior to the term of
           this Agreement; or

                                          (iii) engage (whether for compensation
           or without compensation), directly or indirectly, as an individual
           proprietor, partner, stockholder, officer, employee, member, agent,
           independent contractor, consultant, director, joint venturer,
           investor, lender, or in any other capacity whatsoever (other than as
           the holder of not more than one percent (1%) of the total outstanding
           stock of a publicly-held company), in the business of developing,
           producing, marketing or selling products or services in the high
           performance nickel alloy and superalloy industry throughout the world
           (a "Competitive Business'). You acknowledge and agree that your
           engagement (whether for compensation or without compensation),
           directly or indirectly, as an individual proprietor, partner,
           stockholder, officer, employee, member, agent, independent
           contractor, consultant, director, joint venturer, investor, lender,
           or in any other capacity whatsoever (other than as the holder of not
           more than one percent (1%) of the total outstanding stock of a
           publicly-held company), with or for any Competitive Business shall be
           deemed to constitute engagement in a Competitive Business. You
           acknowledge and agree that your
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 10

           duties for the Company require you to conduct business worldwide and
           that the Group's business, clients, customers, accounts or
           prospective business, customers or accounts are and/or could be
           worldwide.

                               (b) If any restriction set forth in this
Subsection 11.3 is found by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or over too great
a range of activities or in too broad a geographic area, it shall be interpreted
to extend only over the maximum period of time, range of activities or
geographic areas to which it may be enforceable.

                               (c) The restrictions contained in this Subsection
11.3 are necessary for the protection of the business and goodwill of the Group
and are considered by you to be reasonable for this purpose, and you acknowledge
that but for your agreement to comply with such restrictions the Company would
not have entered into this Agreement. You agree that for purposes of this
paragraph the services to be provided by you hereunder are special, unique
and/or extraordinary and that any breach of this Subsection 11.3 will cause the
Group substantial and irreparable damage and, therefore, in the event of any
such breach, in addition to such other remedies which at law or in equity may be
available, the Group will have the right to seek specific performance,
injunctive relief and attorneys' fees, costs and disbursements to enforce its
rights hereunder and without the necessity of posting any bond. The period of
time during which the restrictions contained in Subsection 11.3 shall be in
effect shall be extended by the length of time during which you are in breach of
any such restrictions, as determined by any court of competent jurisdiction.

                     11.4 Survival of Obligations. The obligations of the
Employee under Subsections 11.1, 11.2 and 11.3 will survive the termination of
this Agreement.

           12. Notices.

           All notices under this Agreement must be in writing and must be
delivered by hand or by facsimile transmission or mailed by certified or
registered mail, postage prepaid, return receipt requested, to the parties as
follows:

           If to the Company:

                               Special Metals Corporation
                               4317 Middle Settlement Road
                               New Hartford, NY 13413-5392
                               Attention:  Donald R.  Muzyka
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 11

           with a copy to (which shall not constitute notice):

                               David S. Poppick, Esq.
                               Epstein Becker & Green, P.C.
                               One Landmark Square
                               Stamford, CT 06901-2704
                               Facsimile:  203-324-9291

           If to you: To the address set forth on the first page of this
Agreement; with a copy to (which shall not constitute notice):

                               Robert M. Goldich
                               Wolf, Block, Schorr and Solis-Cohen,
                               LLP 111 South 15th Street
                               Philadelphia, PA 19102-2678 Facsimile:
                               215-977-2334

or to such other address as is specified in a notice complying with this Section
12. Any such notice is deemed given on the date delivered by hand or facsimile
transmission or three days after the date of mailing.

           13. Other Agreements.

           You hereby represent that you are not bound by the terms of any
agreement with any previous employer or other party to refrain from competing,
directly or indirectly, with the business of such previous employer or any other
party, except as disclosed to the Company. You further represent that your
performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by you in confidence or in trust prior
to your employment with the Company.

           14. Miscellaneous.

                     14.1 Modification. This Agreement constitutes the entire
Agreement between the parties with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
None of the Company's employee handbooks, manuals, or policy statements shall
explicitly or implicitly create any additional rights or obligations with
respect to your employment except as otherwise explicitly provided herein. This
Agreement may not be amended, modified or revised except by a writing signed by
the parties.
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Dr. T. Grant John
April 15, 1999
Page 12

                     14.2 Successors and Assigns. This Agreement is binding upon
and inures to the benefit of both parties and their respective heirs, executors,
trustees, administrators, successors and assigns, including any corporation with
which or into which the Company may be merged or which may succeed to its assets
or business, although your obligations are personal and may be performed only by
you.

                     14.3 Captions. Captions have been inserted in this
Agreement solely for convenience of reference, and in no way define, limit or
affect the scope or substance of any provision of this Agreement.

                     14.4 Severability. The provisions of this Agreement are
severable, and invalidity of any provision does not affect the validity of any
other provision. In the event that any court of competent jurisdiction
determines that any provision of this Agreement or the application thereof is
unenforceable because of its duration or scope, the parties agree that the court
in making such determination will have the power to reduce the duration and
scope of such provision to the extent necessary to make it enforceable, and that
the Agreement in its reduced form is valid and enforceable to the full extent
permitted by law.

                     14.5 Delays or Omissions. No delay or omission by the
Company in exercising any right under this Agreement (including without
limitation, any failure to strictly enforce any provision hereof) shall operate
as a waiver of that or any other right. A waiver or consent given by the Company
on any one occasion shall be effective only in that instance and shall not be
construed as a bar or waiver of any right on any other occasion.

                     14.6 Submission to Jurisdiction. Each party to this
Agreement hereby irrevocably and unconditionally:

                               (a) (i) agrees that any suit, action or
proceeding asserting a breach of this Agreement shall be instituted only with
the American Arbitration Association ("AAA") located in the State of New York,
(ii) consents and submits to the jurisdiction of such suit, action or proceeding
instituted by the other, (iii) agrees that the parties will share equally all
fees and expenses of the AAA (not including each party's own attorneys' fees and
costs), subject to the right of the AAA to award such fees and costs to the
prevailing party as part of any arbitration award; and (iv) the arbitration
award shall be final and binding subject to enforcement in any other
jurisdictions by suit on the judgment or in any other manner provided by law;
and

                               (b) (i) waives any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement brought as specified in Subsection 14.6(a),
(ii) waives any claim
<PAGE>

Dr. T. Grant John
April 15, 1999
Page 13

that any such suit, action or proceeding has been brought in an inconvenient
forum, and (iii) agrees not to plead or claim either of the foregoing.

                     14.7 Acknowledgment. You hereby acknowledge that you have
read this Agreement carefully; you have been afforded sufficient time to
understand the terms and effects of this Agreement; you have been given the
opportunity to consult with counsel and in fact have been advised by counsel as
to all terms and effects of this Agreement prior to executing this Agreement, or
have knowingly, freely and voluntarily declined to do so; any ambiguity that
might be alleged to exist herein shall not be construed against or in favor of
any party hereto; you are voluntarily entering into and executing this
Agreement; neither the Company nor its agents or representatives have made any
representations inconsistent with the terms and effects of this Agreement; no
promise, inducement, or agreement not expressed herein has been made to you; and
you fully understand and voluntarily accept the terms and conditions of this
Agreement.

                     14.8 Governing Law. This Agreement is to be interpreted and
construed under and governed by the laws of State of New York.

           If the foregoing is acceptable to you, please execute the duplicate
original of this letter in the space provided below and return one fully
executed original to me.

                                     Very truly yours,

                                     SPECIAL METALS CORPORATION

                                     By: _______________________________
                                         Donald R. Muzyka
                                         President and Chief Executive Officer

ACCEPTED AND AGREED to this
_______ day of April, 1999

-------------------------------
T. Grant John

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