Exhibit 10.1
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September 7, 2004
Mr. John Wasz
518 Woodlake Drive
Louisville, KY 40223
Dear John,
This letter is to confirm our recent discussions concerning your current
employment with Commonwealth and subsequent employment by IMCO Recycling, Inc.
or Commonwealth Industries, Inc. (sometimes collectively referred to herein as
the "Company") following the proposed merger of Commonwealth into IMCO (the
"Merger").
We are pleased to extend the following to you, as authorized by Commonwealth's
Management Development and Compensation Committee:
1. Base Salary. Your base salary will be increased to $360,000 to reflect your
new responsibility as the leader of our aluminum rolling operations. This salary
increase will be effective as of September 1, 2004.
2. Bonus Opportunity.
o For 2004, your target bonus opportunity under the Commonwealth Executive
Variable Pay Plan will remain unchanged at 100% of your base salary with a
maximum bonus opportunity of 150% of your base salary.
3. Bonus Opportunity for 2005
o Contingent upon the merger closing, your target bonus opportunity for 2005
will be adjusted to 75% of your base salary with a maximum bonus opportunity of
150% of your base salary. These changes would take effect upon the merger
closing and any awards will be subject to the new management incentive
compensation plan that the Company will adopt following the merger.
4. Change of Control Agreement
o You agree to execute and deliver that certain amendment to your Severance
Agreement dated as of February 1, 1996, in the form attached to this letter.
5. Waiver of Certain terms.
The proposed Merger shall not trigger any payment under your Severance
Agreement dated February 1, 1996 nor shall it accelerate the stock options and
restricted stock that will be granted to you by the Company and described below
in this letter. Therefore, you hereby agree effective as of the date of this
letter:
Any merger, consolidation, combination or exchange of shares between
Commonwealth Industries, Inc. (the "Company") and IMCO Recycling Inc. (the "IMCO
Transaction") shall not qualify as a "Change in Control" as that term is defined
under:
(1) Section 1(c) of your Severance Agreement with the Company, dated February
1, 1996 ("Severance Agreement"); and
(2) the Company's 1997 Stock Incentive Plan, as amended and restated, and any
award agreement thereunder, pertaining to the accelerated vesting of your stock
option or restricted stock awards granted by the Commonwealth Management
Development and Compensation Committee by their action of September 3, 2004.
6. Grant of Equity Incentives
As partial consideration for your agreement to amend your existing Severance
Agreement as provided above, you will be granted the following stock option and
restricted stock awards under the terms of the Commonwealth Industries, Inc 1997
Stock Incentive Plan effective as of the date of this letter and subject to the
vesting conditions described below, as approved by the Commonwealth Management
Development and Compensation Committee, provided that paragraph 8 of such Plan
relative to a change in control shall not be applicable to the merger with IMCO
with respect to the options and restricted shares granted by this paragraph 6:
o A grant of stock options equivalent to $300,000 on the date of this letter.
The stock options will "cliff-vest" 3 years from the date of this letter; and
vesting is also contingent upon the closing of the merger with IMCO.
o A grant of restricted shares equivalent to $150,000 on the date of this
letter, to vest one-third (rounded down) on the first anniversary of the merger
closing date; one third on the second anniversary, and the remainder on the
third anniversary. Vesting is also contingent upon the closing of the merger
with IMCO.
o A grant of restricted shares equivalent to $150,000 on the date of this
letter, to vest upon the achievement of certain performance goals determined by
the Chief Executive Officer prior to December 31, 2007. Vesting is also
contingent upon the closing of the merger with IMCO.
For the avoidance of doubt, if the merger with IMCO does not occur within the
time period provided in the Merger Agreement, the above-described grants will
terminate and be void as of such merger termination date and be of no further
force or effect.
7. Severance Payment for Involuntary Termination.
Subject to and effective upon the closing of the merger, we hereby agree to
provide you with a special severance payment in an amount equal to 1.5 times
your base salary and target bonus plus 18 months of continued health coverage
(COBRA period to run concurrently) following (i) the involuntary termination of
your employment without Cause (absent a change of control) or (ii) a termination
of your employment following your decision not to relocate to a location other
than greater Louisville when requested to do so by the IMCO or Commonwealth.
This special severance payment shall be in lieu of any other applicable
severance benefit under any other severance plan or arrangement of IMCO or
Commonwealth in effect following the closing of the merger, and shall not be
paid in the event of any payment under the change of control agreement
referenced in item 4 above. For purposes of this paragraph, "Cause" means (1)
willful and continuing failure to perform duties of employment (2) gross
misconduct, fraud or dishonesty involving the company (IMCO or Commonwealth and
their respective affiliates, (the "Company")) (3) breach of duty of loyalty to
the Company, (4) impeding a Board of Directors investigation or (5) conviction
of a felony.
8. Discretionary Bonus Payment.
As partial consideration for your agreement to amend your existing Severance
Agreement as provided above, and subject to the closing of the merger, you will
be paid a lump sum cash discretionary bonus payment in the amount of $600,000,
such amount to be paid within 10 days following the closing of the merger with
IMCO.
Closing of the Merger.
Notwithstanding anything to the contrary contained herein, in the event the
merger with IMCO does not close within the time provided in the merger agreement
dated as of June 16, 2004, the provisions of sections 3,4,5,6, 7 and 8 above
shall be of no effect and shall be null and void.
Entire Agreement.
Except for the Severance Agreement, as amended as provided in Section 4 hereof,
this Agreement and the Amendment to Severance Agreement attached hereto
constitute the entire agreement of the parties with respect to the subject
matter hereof and supercedes and cancels any prior or contemporaneous agreements
with respect to such subject matter; provided, however, this sentence shall not
be construed to cancel any awards granted under the 1997 Stock Option Plan. This
Agreement does not constitute an agreement conferring any term of employment and
your employment with Commonwealth, and with the Company subject to the merger,
shall be "at will" and may be terminated by you or Commonwealth (and the Company
after the merger) at any time. This Agreement shall be governed and construed by
the laws of the State of Kentucky, without reference to its choice of laws
principles.
Sincerely,
/S/ Steven J. Demetriou
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Steven J. Demetriou
ACCEPTED AND AGREED
Effective as of September 7, 2004
/S/ John Wasz
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John Wasz
Attachment - Amendment to Severance Agreement