99-100, Shin Direct; 2/26/92 Tr. at 58-60, Forand Direct.)
184. The individual Defendants and Wechsler realized that the recent imposition by Broken Hill Proprietary of the 12 1/2% Australian tariff import royalty on future licensing contracts made it virtually impossible to enter into new 55% aluminum-zinc agreements, and that the result would be the further shrinking of BIEC revenues.
185. In June 1990, after a BIEC Board Meeting, Forand told the key management employees of BIEC -- Forand, Borzillo, Shin, Connolly and Wechsler -- that Broken Hill Proprietary had advised him to design and implement a plan to "harvest" (i.e., downsize or liquidate) BIEC. (2/25/92 Tr. at 156, Shin Cross; 2/26/92 Tr. at 118, Forand Cross; 2/12/92 Tr. at 101, Wechsler Direct; Pl.'s Exs. 36, 164 at 254-56.)
186. Beginning in 1990, the individual Defendants and Wechsler met and discussed their options for leaving BIEC. Planning meetings occurred in the spring and fall of 1990. (2/25/92 Tr. at 156-58, Shin Cross; 2/26/92 Tr. at 118-20, Forand Cross; 2/12/92 Tr. at 100-01, Wechsler Direct.) Forand consulted with attorney Ed Fedok in the spring of 1990 on such issues as the Defendants' right to get into the 55% aluminum-zinc business without Broken Hill Proprietary's agreement, and the impact on those rights if Broken Hill Proprietary elected to "harvest" BIEC (i.e., liquidate or downsize BIEC). (2/26/92 Tr. at 118-20, Forand Cross.)
187. In February 1991, Broken Hill Proprietary rejected the East Coast Market Mill project, which was the last pending investment alternative for BIEC. (2/26/92 Tr. at 61, Forand Direct.)
188. In March 1991, after Broken Hill Proprietary rejected the East Coast Market Mill project, Forand, in conjunction with the other individual Defendants and Wechsler, drafted a document listing several desirable outcomes for the group ("desirable outcomes memo"). (2/26/92 Tr. at 60-61, Forand Direct; Defs.' Ex. 285.) The desirable outcomes memo represented a consensus of discussions between the individual Defendants and Wechsler. (2/26/92 Tr. at 63, Forand Direct.)
189. The first option was negotiating with BIEC to receive severance payments calculated through a multiplier factor. The group justified asking for severance pay compensation in excess of the contracted amount because Broken Hill Proprietary had inhibited BIEC's ability to generate revenue and profits through the imposition of the tariff import royalty in the prospective licensing contracts. (2/25/92 Tr. at 104, Shin Direct.)
190. The second option was to form a company owned by the group, which would run BIEC's licensing business pursuant to an agreement with Broken Hill Proprietary. (2/25/92 Tr. at 104, Shin Direct.)
191. The third option was for the group to continue working at BIEC with modified employment contracts. (2/25/92 Tr. at 104-05, Shin Direct.)
192. The fourth option was to accept BIEC's termination, with the group receiving one year severance pay and gaining the immediate freedom to compete with BIEC. (2/25/92 Tr. at 104-05, Shin Direct.)
193. By the spring of 1991, the individual Defendants began to regularly consult with outside counsel, Ed Fedok and G. Thompson Bell of Stevens & Lee, the law firm which Ed Fedok had joined. Meetings were held with Stevens & Lee in March, May and June 1991. (2/25/92 Tr. at 165, Shin Cross; 2/26/92 Tr. at 120-21, Forand Cross; 2/21/92 Tr. at 71-73, Borzillo Cross.)
194. On March 25, 1991, Wechsler, Forand, Borzillo, Shin and Connolly entered into a "Gentlemen's Agreement" in which they promised to act as a group in all negotiations with BIEC and Broken Hill Proprietary. (2/12/92 Tr. at 99, Wechsler Direct; 2/26/92 Tr. at 114-15, Forand Cross; Pl.'s Exs. 39, 175 at 438-39.)
195. In early June 1991, everyone at BIEC had the expectation that their employment at BIEC would be terminated at the end of the month. (2/12/92 Tr. at 105, Wechsler Direct.)
196. By memoranda dated May 8, 1991 and June 20, 1991, Wechsler voiced his opposition to what he perceived to be plans to extract a large and unwarranted payment from BIEC and to compete with BIEC in violation of the Defendants' employment contracts. By his own choice, Wechsler was no longer involved in the Defendants' discussions after June 20, 1991. (2/12/92 Tr. at 103-08, 110-11, 113-14, Wechsler Direct; 2/14/92 Tr. at 68-71, Wechsler Redirect; 2/26/92 Tr. at 121-24, Forand Cross; 2/25/92 Tr. at 160-65, 167-68, Shin Cross.)
197. Surprised and upset by Wechsler's memos, Borzillo, Shin and Forand responded in writing to Wechsler, expressing their outrage and shock at Wechsler's implication that the group would in any way attempt to defraud or "rip off" BIEC or Broken Hill Proprietary. (2/19/92 Tr. at 105, Borzillo Direct; 2/25/92 Tr. at 106-07, Shin Direct; Defs.' Exs. 95, 96.)
198. Having listened to and evaluated the credibility of Wechsler's, Forand's, Borzillo's, and Shin's testimony, we find no evidence of bad faith or bad dealing on the part of any of these individuals. In light of the obvious credibility problems here -- Forand, Borzillo and Shin were in the midst of ending what had been long-term employment relationships with BIEC and Wechsler was being considered for a promotion to President of BIEC -- we refuse to give any weight to the unreliable finger-pointing by each of these individuals in their memoranda and at trial. Rather, we find that from May 1991 through June 28, 1991, each of these individuals feared imminent termination from BIEC and each took steps to protect what he perceived to be legitimate employment options. (2/12/92 Tr. at 103-08, 110-11, 113-14, Wechsler Direct; 2/25/92 Tr. at 160-65, 167-68, Shin Cross; 2/26/92 Tr. at 121-24, Forand Cross; 2/19/92 Tr. at 106-07, Borzillo Direct; Pl.'s Exs. 6, 7; Defs.' Exs. 95, 96.)
199. The June 28, 1991 BIEC Board Meeting was attended by Doyle, Tune and Wechsler and for parts of the meeting by the individual Defendants. (2/25/92 Tr. at 109, 126, Shin Direct.)
200. At the June Board Meeting, Forand, Borzillo, Shin and Connolly were presented with letters of termination, terminating their employment contracts "without cause" as of July 28, 1991, (2/14/92 Tr. at 54, Wechsler Cross; 2/26/92 Tr. at 65, Forand Direct; Defs.' Exs. 83, 84, 85, 86) and Wechsler was named the new President of BIEC. (2/26/92 Tr. at 65, Forand Direct.)
201. New contracts were tendered to Borzillo, Shin and Connolly. These contracts provided for increased base salaries, eliminated the previous bonus provisions (effectively reducing their compensation by one-third), added a benefits and pension package (for which the Defendants had long been lobbying), and required each Defendant to release BIEC and Broken Hill Propriety from any liability with respect to their employment relationship. (2/25/92 Tr. at 110, 171-72, Shin Direct and Cross; 2/21/92 Tr. at 75-76, Borzillo Cross.) Borzillo, Shin and Connolly rejected BIEC's offer. (2/25/92 Tr. at 110, Shin Direct.)
202. As reflected in the minutes of the June 28, 1991 Board Meeting, Doyle advised BIEC's employees that BIEC provided the opportunity for growth, not harvesting, and that BIEC and its employees were considered vital and important assets to Broken Hill Proprietary. (Pl.'s Ex. 188.)
203. Immediately following the BIEC Board Meeting, on the same day, the individual Defendants assembled at the Stevens & Lee law firm for a meeting with their counsel. (Joint Stipulation - Pl.'s Proposed Finding number 142.)
204. Forand, Borzillo, Shin and Connolly allege that BIEC breached the severance pay provision for each of the individual Defendants by paying them only three (3) months' severance pay when the severance pay provision in the employment contract mandates a twelve (12) month severance pay payment. (2/26/92 Tr. at 66, Forand Direct; 2/25/92 Tr. at 116, Shin Direct.) The relevant portions of the employment contract for each individual Defendant provides:
If employer terminates the employment relationship without cause after December 31, 1987, employee shall be entitled to receive three (3) months' salary from the date of notice of termination as severance pay. If employer terminates the employment relationship without cause and for corporate or holding company reasons unrelated to the performance of the business of employer or the performance of employee, employee shall be entitled to receive twelve (12) months' salary from the date of notice of termination as severance pay. (Emphasis added).
(Pl.'s Exs. 50, 58, 61, 62.)
205. Wechsler testified that the employment relationships with Forand, Borzillo, Shin and Connolly were terminated for corporate or holding company reasons on grounds that the contracts operated "to the detriment of the overall Company [Broken Hill Proprietary's] good." (Defs.' Ex. 289 at 354.) On the basis of this testimony, there is insufficient evidence to conclude that the Defendants were terminated for "holding company reasons unrelated to the performance of the business of" BIEC, and therefore, entitled to severance payments pursuant to the termination clause cited above in Finding 204.
IX. FORMATION OF GLOBAL STEEL SERVICES.
206. After receiving their termination letters, Forand and Borzillo discussed forming a new company. They included Shin (who had been recuperating from surgery) in the discussions in mid-July 1991. (2/25/92 Tr. at 121, Shin Direct.) Although Connolly is retired and has never performed any services for Global Steel Services, Connolly has been identified as a possible consultant for Global Steel Services and has been referred to as part of the Global Steel Services team in at least one Global Steel Services proposal. (Pl.'s Exs. 2, 111.)
207. Forand, Borzillo and Shin's prior employment contract with BIEC contained both a covenant not-to-compete and a confidentiality and non-disclosure provision. (Pl.'s Exs. 50, 58, 61, 62.)
208. The covenant not-to-compete clause provided:
(d) Notwithstanding any other provision in this section 7 to the contrary, the covenants of employee not to compete with employer for a period of twelve (12) months after the termination of the employment relationship shall not be binding upon employee if employer terminates the employment relationship without cause. (Emphasis added).