Exhibit 10.2
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") is made and
entered into as of this 9th day of July, 1997, by and between Steel of West
Virginia, Inc. ("Steel") and SWVA, Inc. ("SWVA"), both Delaware corporations
with offices at 00xx Xxxxxx xxx 0xx Xxxxxx, Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
(together, the "Company"), and Xxxxxxx X. Xxxx (the "Executive"), whose
residence address is 00 Xxxxx Xxxxx, Xxxxxxxxxx, Xxxx Xxxxxxxx, 00000.
WHEREAS, Executive is currently serving as the Chief Executive Officer and
President of the Company; and
WHEREAS, the Board of Directors of the Company recognizes that, as is the
case with publicly held corporations generally, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Company and
its stockholders; and
WHEREAS, the Board of Directors of the Company believes it is in the best
interest of the Company to enter into this Agreement with Executive in order to
assure continuity of management of the Company and to reinforce and encourage
the continued attention and dedication of Executive to his assigned duties
without distraction in the face of potentially
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disruptive circumstances arising from the possibility of a change in control
of the Company, although no such change is now contemplated; and
WHEREAS, the Board of Directors of the Company has approved and authorized
the execution of this Agreement with Executive;
NOW, THEREFORE, in consideration of the foregoing and of the covenants and
agreements herein contained, and intending to be legally bound, the parties
hereby agree as follows:
1. DEFINITION OF CHANGE OF CONTROL.
As used herein, "Change of Control" means any of the following events:
(a) Steel or SWVA is a party to a merger or combination under the
terms of which any person or group as that term is used in Rule 13d-5
under the Securities Exchange Act of 1934 own 20% or more of the
shares in the resulting company, or
(b) at least 50% in fair market value of Steel or SWVA's assets are
sold; or
(c) at least 20% in voting power in election of directors of Steel's
or SWVA's capital stock is acquired by any one person or group as
that term is used in Rule 13d-5 under the Securities Exchange Act
of 1934; or
(d) the individuals comprising the Board of Directors of the
Company on the date hereof cease to comprise a majority of the Board
of Directors of Steel or SWVA.
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As used herein, "Cause" means any act of fraud against the Company, or
conviction of a felony, or Executive's knowingly engaging in acts materially
detrimental to Steel or SWVA; provided that Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to Executive a copy of a resolution, duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board of Directors of Steel
at a meeting of the Board called and held for such purpose (after reasonable
notice to Executive and an opportunity for Executive, together with his counsel,
to be heard before the Board), stating that in the good faith opinion of the
Board, Executive was guilty of conduct constituting "Cause" as set forth above
and specifying the particulars thereof in detail.
2. SEVERANCE BENEFITS.
(a) Upon the date of the occurrence of a Change of Control, the
Company shall pay to Executive in a lump sum in cash an amount equal to the
greater of (i) 125% of Executive's annual base salary for the year in which such
Change of Control occurs, and (ii) 125% of Executive's annual base salary for
the year preceding the year in which such Change of Control occurs. At the
discretion of Executive, such payment shall be made, on a pro rata basis,
bi-monthly during the 12 months following Executive's termination.
(b) Following the occurrence of a Change of Control, the Company
shall cause health insurance coverage (substantially similar to the coverage
maintained by the Company for the Employee prior to the Change of Control) to be
maintained for Executive at the Company's expense for a period of 12 months.
3. EFFECT ON EXISTING BENEFIT PLANS.
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This Agreement contains the entire understanding between the parties
hereto, and supersedes any prior agreement between the Company and Executive,
with regard to severance payments resulting from a Change of Control, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of any kind elsewhere provided. No provision
of this Agreement shall be interpreted to mean that Executive is subject to
receiving fewer benefits that those available to him without reference to this
Agreement.
4. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit
of, Executive, Steel and SWVA, and their respective successors and assigns.
5. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have
been waived, nor shall there by an estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
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constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
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6. NO MITIGATION.
The amount of any payment or benefit provided for in this Agreement
shall not be reduced by any compensation earned by Executive as the result of
employment by another employer, by retirement benefits after the date of
termination or otherwise.
7. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and
except as provided in Section 7(b) neither party may assign or delegate any of
its rights or obligations hereunder without first obtaining the written consent
of the other party.
(b) This Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by his personal and legal
representatives, executors, administrators, successors, heirs, distributee,
devisee and legatees. If Executive should die while any amounts would still
be payable to Executive hereunder if the Executive had continued to live, all
such amounts, shall be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee or other designee or if there is no such
designee, to Executive's estate.
8. NOTICES.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement (provided that all
notices to the Company shall be directed to the attention of the Board of
Directors of the Company with a copy to the Secretary of the Company), or to
such other address as either party may have furnished to the other in writing in
accordance herewith.
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9. AMENDMENTS.
No amendments or additions to this Agreement shall be binding unless
in writing and signed by both parties.
10. SECTION HEADINGS.
The section headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
11. SEVERABILITY.
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
12. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware
without regard to the choice of laws principles thereof.
13. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitration award in any court having jurisdiction.
14. REIMBURSEMENT.
In the event the Company purports to terminate Executive for Cause,
but it is determined pursuant to Section 13 that Cause did not exist for such
termination, or if in any event it is determined pursuant to Section 13 that the
Company has failed to make timely
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payment of any amounts owed to Executive under this Agreement, Executive
shall be entitled to reimbursement for all reasonable costs, including
attorneys' fees, and expenses, incurred in challenging such termination or
collecting such amounts. Such reimbursement shall be in addition to all
rights to which Executive is otherwise entitled under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
Executive Steel of West Virginia, Inc.
By:
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Xxxxxxx X. Xxxx
SWVA, Inc.
By:
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