EMPLOYMENT AGREEMENT
AGREEMENT, made on May 20, 1999 by and between Republic Technologies
International (Bar Technologies, Inc. and Republic Engineered Steels, Inc.), and
RES Acquisition Corp., a Delaware limited liability company and Delaware
corporations (hereinafter "Company" shall refer to these entities and to the
survivor entity in any combination of such entities) and Xxxxxx Xxxxxxx (the
"Executive").
RECITALS
In order to induce the Executive to serve as the Executive Vice President
and General Manager--Steel Manufacturing of the Company, the Company desires to
provide the Executive with compensation and other benefits on the terms and
conditions set forth in this Agreement.
The Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the term hereof as the Executive Vice
President and General Manager--Steel Manufacturing. In this capacity, the
Executive shall report to the President of the Company (the "President") and
shall have the customary powers, responsibilities and authorities of an
executive vice president and general manager--steel manufacturing of
corporations of the size, type and nature of the Company, as it exists from time
to time, and as are assigned by the President. It is understood by the parties
that the size, type, and nature of the Company is expected to expand rapidly via
acquisition or other business combination and that Executive's duties will be
commensurate with the duties of an executive vice president and general
manager--steel manufacturing of such expanded enterprise.
1.2 This Agreement is contingent on the consummation of the merger
or other business combination of Republic Technologies International (Bar
Technologies, Inc and Republic Engineered Steels, Inc) and USS/KOBE's Lorain
steelmaking and bar producing division. This Agreement shall have no force or
effect if this condition is not satisfied.
1.3 Subject to the terms and conditions of this Agreement, the
Executive hereby accepts employment as the Executive Vice President and General
Manager--Steel Manufacturing of the Company commencing as of July 1 1999, or
such other date as the transaction described in subsection 1.2 above is
consummated, and agrees to devote his full business time and efforts to the
performance of services, duties and responsibilities in connection therewith,
subject at all times to review and
control of the President. During the term of Employment, the Executive also
agrees to serve, if elected, as an officer and/or director of any Subsidiary of
the Company, without the payment of any additional compensation therefor.
1.4 Nothing in this Agreement shall preclude the Executive from
engaging in charitable and community affairs, from managing any passive
investment (i.e., an investment with respect to which the Executive is in no way
involved with the management or operation of the entity in which the Executive
has invested) made by him in publicly traded equity securities or other property
(provided that no such investment may exceed 1% of the equity of any entity,
without the prior approval of the President) or from serving, subject to the
prior approval of the President, as a member of boards of directors or as a
trustee of any other corporation, association or entity, to the extent that any
of the above activities do not interfere with the performance of his duties
hereunder. For purposes of the preceding sentence, any approval by the President
required herein shall not be unreasonably withheld.
2. Term of Employment. The Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on July 1, 1999 and, subject
to the terms hereof, shall terminate on the earlier of (i) September 30, 2001,
(the "Initial Term") or (ii) termination of the Executive's employment pursuant
to this Agreement; provided, however, that subsequent to the Initial Term, the
Executive's Term of Employment under this Agreement shall automatically renew
annually each October 1 for one year renewal terms (the "Renewal Term"); unless
the Company shall deliver to the Executive or the Executive shall deliver to the
Company written notice, at least 90 days prior to the expiration of the Initial
Term or any Renewal Term, that the Term of Employment shall not be extended, in
which case the Term of Employment will end at its then scheduled expiration date
and shall not be further extended except by written agreement of the Company and
the Executive.
3. Compensation.
3.1 Salary. During the Initial Term of the Executive's employment
under the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at the rate of not less than Two Hundred and Thirty-five
Thousand Dollars ($235,000) per annum. Base Salary shall be payable in
accordance with the ordinary payroll practices of the Company. During the Term
of Employment, the CEO shall, in good faith, review and, if determined by the
CEO to be appropriate, increase the Executive's salary at least annually and in
accordance with the Company's customary procedures and practices regarding the
salaries of senior executives, which procedures and practices, for example, will
include a review of the performance of the Company and the Executive, and any
increase in the cost of living during the relevant period. Increases in the rate
of salary, once granted, shall not be subject to revocation or decrease
thereafter.
3.2 Annual Bonus. (a) In addition to his base salary, the Executive
shall be eligible to receive an annual bonus (the "Annual Bonus"). Annual Bonus
amounts payable to the Executive shall be determined in the sole discretion of
the CEO and
those members of the Board of Directors who were nominated and elected at the
request of Blackstone. Subject to the foregoing, the Annual Bonus shall be
determined in accordance with the Company's customary procedures and practices
regarding bonus awards to senior executives, which procedures and practices, for
example, shall include an evaluation of the Company's progress in meeting its
cash flow targets during the relevant period; notwithstanding the foregoing, the
Annual Bonus shall not be less than Seventy-five Thousand Dollars ($75,000) for
the fiscal years ending December 31, 1999 and December 31, 2000 (the "Minimum
Bonus"). If EBITDA (as such term is defined in paragraph (c) below) equals or
exceeds the EBITDA targets hereafter set by the CEO and/or the Board in
consultation with Executive for any fiscal year under this Agreement, the Annual
Bonus shall be at least One Hundred and Twenty-five Thousand Dollars ($125,000)
(the "Target Bonus"); provided, however, that such methodology for the
determination of the Annual Bonus shall only be utilized until such time as a
formula based on increase in shareholder value is mutually agreed upon by the
parties hereto; provided, further, if due to conditions beyond the Executive's
control, the EBITDA targets are not met for any fiscal year during the Term of
this Agreement, or targets are not met under such other methodology as is being
utilized for any fiscal year during the Term of this Agreement, the CEO and the
Board, in their sole discretion, may override such targets, and award the
Executive an Annual Bonus irrespective of the achievement of such targets.
Executive's Annual Bonus for 1999 shall not be prorated to reflect partial
employment during such year to the extent he forfeits any 1999 bonus from his
former employer. "Blackstone" shall mean, collectively, Blackstone Capital
Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II
L.P., Blackstone Family Investment Partnership II L.P., The Blackstone Group
L.P. and their affiliates.
(b) The Annual Bonus shall be payable as soon as practicable after
December 31 of each calendar year in which such Annual Bonus was earned (the
"Bonus Term"); but in any event, the Annual Bonus shall be paid no later than 90
business days following the end of the Bonus Term; provided, however, no Annual
Bonus shall be payable unless the Executive is employed on the last day of each
such Bonus Term. The proviso in the previous sentence shall not apply if the
Executive's employment is terminated pursuant to Section 6.1 or 6.4 of this
Agreement.
(c) For purposes of this Section 3.2 "EBITDA" shall mean the
consolidated net income of the Company for the bonus period plus, to the extent
deducted in computing such consolidated net income, without duplication, the sum
of (a) income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) any special charges (including, without limitation,
any noncash fees or expenses incurred in connection with the Transactions) and
any extraordinary or non-recurring losses, (e) monitoring and management fees
paid to any of the funds, the Veritas Entities and/or their respective
Affiliates, (f) dividend payments on and mandatory redemptions of the Bethlehem
Preferred Stock, in each case made in accordance with the terms thereof and to
the extent permitted by Section 6.06(d), (g) noncash expenses incurred in
connection with an employee stock ownership plan and (h) other noncash items
reducing consolidated net income, minus, to the extent added in computing such
consolidated net income, without duplication, (i) interest income, (ii)
extraordinary or nonrecurring gains and (iii) other noncash items increasing
consolidated net income.
All terms and section references in the above definition of EBITDA shall have
the same meaning as in the Credit Agreement by and between Bar Technologies,
Inc., Bliss & Xxxxxxxx Steel Company, the Lenders named therein and Chemical
Bank Delaware dated as of April 2, 1996.
3.3 Signing Bonus. Executive shall receive a signing bonus of Three
Hundred Thousand Dollars ($300,000) ("Signing Bonus") within 30 days after the
Executive's Term of Employment commences; provided that this amount shall be
reduced dollar for dollar by the amount of any severance, continuing
compensation, deferred bonus, or other benefit (other than a qualified
retirement plan benefit) that is or will be paid to the Executive by USS/KOBE or
U.S. Steel. Furthermore, if the Executive resigns or the Executive's Term of
Employment is terminated for Cause (as defined in Section 6.2(b) hereof), the
Executive shall immediately repay the following portion of the Signing Bonus to
the Company (less the applicable portion of any federal, state or local income
tax paid by the Executive on the Signing Bonus): If such resignation or
termination occurs (i) on or before June 30, 2000, 100%; (ii) after June 30,
2000 but on or before June 30, 2001, 66.67%; or (iii) after June 30, 2001 but on
or before September 30, 2001, 33.33%.
4. Employee Benefits.
4.1 Stock Options. The Executive shall be eligible to receive
through an option plan one percent (1.00%) of the total available authorized and
outstanding common shares plus options on a fully diluted basis (including all
equity or options of the entire management team) of the survivor entity of the
business combination between Bar Technologies, Inc. and Republic Engineered
Steels, Inc. Such option shall be subject to dilution that may result from any
other action or transaction involving shares of Company, including the
anticipated combination with USS/KOBE's Lorain steelmaking and bar producing
division. The Executive shall receive the benefits of an Option Agreement (the
"Option Agreement"), which Option Agreement shall be drafted subsequent to the
signing of this Agreement and which Option Agreement shall contain terms
substantially similar to the Option Term Sheet, a copy of which is attached
hereto as Appendix A. The Executive shall also be eligible to participate in a
performance stock plan on a pro rata basis like other key executives, said plan
to be developed at a later date.
4.2 Employee Welfare Benefit Programs, Plans and Practices. The
Company shall provide the Executive while employed hereunder with coverage under
all welfare benefit programs, plans and practices (commensurate with his
position in the Company and to the extent permitted under any employee benefit
plan) in accordance with the terms thereof, which the Company makes available to
its senior executives.
4.3 Vacation. The Executive shall be entitled to twenty (20)
business days paid vacation each calendar year, which shall be taken at such
times as are consistent with the Executive's responsibilities hereunder. Any
vacation days not taken by March 31 of the following year, unless approved by
the CEO, shall be forfeited without pay.
4.4 Additional Perquisites. During the Executive's employment
hereunder, the Company shall provide the Executive with (i) term life insurance
in an amount equal to two (2) times Base Salary; (ii) payment for initiation
fees at a social, dining, athletic or country club that the CEO has approved for
use by Executive for priority business entertainment purposes; (iii) the right
to participate in the 401(k) plan; (iv) long-term disability coverage providing
a monthly benefit of Twelve Thousand Five Hundred Dollars ($12,500); and (v) a
one-thousand dollar ($1,000) annual allowance for tax return preparation
expenses. Executive shall provide documentation of expenses under item (v) as
requested by Company.
5. Expenses. Subject to prevailing Company policy or such guidelines as
may be established by the CEO, the Company will reimburse the Executive for all
reasonable expenses incurred by the Executive in carrying out his duties.
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company or
Executive may terminate the Executive's Term of Employment at any time for any
reason by written notice. If the Executive's employment is terminated (i) by the
Company at the end of the Initial or any Renewal Term by giving notice of
nonrenewal under Section 2, or by the Company prior to the end of the Initial
Term or any Renewal Term, for any reason other than Cause (as defined in Section
6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii)
by the Executive for Good Reason (as defined in Section 6.1(b) hereof) the
Company shall continue to pay Executive's Base Salary and the Minimum Bonus or
the Target Bonus, as applicable, to the later of (i) June 30, 2002 or (ii) the
date that is one year from the date of such termination, with such payments to
be made in accordance with the terms of Sections 3.1 and 3.2. In addition,
Executive shall, during the period that he continues to be compensated under
this Agreement, continue participation and benefits under Company's welfare
benefit plans and programs that he is otherwise participating in prior to
cessation of employment; provided that, if such participation and benefits
cannot be provided under the terms of the applicable plans or programs, the
Company shall pay or reimburse Executive his costs for substantially equivalent
coverage.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary, a
reduction of the Minimum Bonus or Target Bonus, or a material change to the
formula used to determine bonus awards, provided that a change to such formula
that is mutually agreed to by the parties as contemplated under Section 3.2
shall not be "Good
Reason" for this purpose; or
(ii) A substantial diminution or material adverse change in
the Executive's duties, responsibilities or reporting responsibility, unless due
to a promotion or increased responsibility; or
(iii) Relocation of Executive's primary work site to a
location more than fifty (50) miles from the Company's headquarters in Akron,
Ohio; provided, however, that a relocation of the Company's headquarters within
the State of Ohio shall not constitute "Good Reason" for this purpose.
6.2 Voluntary Termination by the Executive; Discharge for Cause. (a)
In the event that the Executive's employment is terminated (i) by the Company
for Cause, as hereinafter defined or (ii) by the Executive other than for Good
Reason, Disability or death, the Executive shall only be entitled to receive (i)
any Base Salary accrued but unpaid prior to such termination, (ii) any earned
but unpaid bonus from a prior Bonus Term, and (iii) any benefits provided under
the employee benefit programs, plans and practices referred to in Section 4.2
hereof, in accordance with their terms. After the termination of the Executive's
employment under this Section 6.2, the obligations of the Company under this
Agreement to make any further payments, or provide any benefit specified herein,
to the Executive shall thereupon cease and terminate, except any benefits that
may be required by federal or state law.
(b) As used herein, the term "Cause" shall be limited to (i) willful
gross misconduct by the Executive in the performance of his duties hereunder,
(ii) willful gross neglect by the Executive of his duties hereunder (other than
due to Disability, as such term is defined in Section 6.3 hereof) or repeated
and willful failure to follow reasonable instructions of the CEO, (iii) any
breach of the provisions of Section 11 of this Agreement by the Executive or
(iv) conviction or plea of guilty or nolo contendere by the Executive to any
felony (or indictable offense). Termination of the Executive pursuant to this
Section 6.2 shall be made by delivery to the Executive of written notice, given
at least 30 days prior to such Termination, from the CEO specifying the
particulars of the conduct by the Executive set forth in any of clauses (i)
through (iv) above. Termination shall be effective on the date set forth in the
notice, unless within 30 days after receiving such notice, the Executive shall
have cured Cause to the reasonable satisfaction of the Board of Directors;
provided, however, that no cure shall be possible for (A) any breach of Section
11 of this Agreement by the Executive or (B) a conviction or plea of nolo
contendere by the Executive to any felony (or indictable offense); and provided
further that Executive may be required to vacate Company premises prior to the
effective date of termination in those instances.
6.3 Disability. In the event that Executive is unable to perform his
duties under this Agreement on account of a disability which continues for one
hundred eighty (180) consecutive days or more, or for an aggregate of one
hundred eighty (180) days in any period of twelve (12) months, Company may, in
its discretion, terminate Executive's employment hereunder and Company's
obligation to make payments under Section 3 shall, except for earned but unpaid
salary and bonuses, cease immediately
upon such termination, or, if later, shall cease on the date Executive becomes
entitled to benefits under the Company's long-term disability program. The
Company may, in its discretion, require written confirmation from a physician of
Disability during any extended absence. For purposes of this Agreement,
"Disability," shall be defined by the terms of the Company's long-term
disability policy, or, in the absence of such policy, as a physical or mental
disability that prevents Executive from performing substantially all of his
duties under this Agreement and which is expected to be permanent. The
commencement date and expected duration of any physical or mental condition that
prevents Executive from performing his duties hereunder shall be determined by a
medical doctor selected by mutual agreement between Executive and the Company.
6.4 Death. In the event of the Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing to
the Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary and a pro rata share of the prior year's Annual Bonus, shall
terminate upon the Executive's death, and benefits shall become payable under
the Company's life and accidental death insurance program in accordance with its
terms.
6.5 No Further Notice, Compensation or Indemnity. (a) The Executive
understands and agrees that he shall not be entitled to any further notice,
compensation or indemnity upon Termination of Employment under this Agreement
other than amounts specified in this Section 6 and the Option Shares as set
forth in Appendix A hereto. Executive shall not have any obligation to seek
comparable employment following such termination or resignation. However, any
payment hereunder shall be offset by any compensation the Executive earns with a
new employer or from self-employment, but no such offset shall apply to any
compensation earned by Executive if his employment with Company is terminated
within twelve (12) months of a Change in Control (i) by the Company or successor
other than for Cause (as defined in Section 6.2) or (ii) by Executive for Good
Reason (as defined in Section 6.1).
(b) A "Change in Control" occurs on the first date on which the
holdings of Blackstone (as defined in Section 3.2 above) or Veritas, or the
combined holdings of Blackstone and Veritas, do not represent more than 50% of
the voting control of the Company. "Veritas" means "Veritas Entities or their
respective Affiliates", as that term is defined in the Credit Agreement by and
between Bar Technologies, Inc., Bliss & Xxxxxxxx Steel Company, the Lenders
named therein and Chemical Bank Delaware dated as of April 2, 1996.
6.6 The Executive's Duty to Provide Materials. Upon the termination
of the Term of Employment for any reason, the Executive or his estate shall
surrender to the Company all correspondence, letters, files, contracts, mailing
lists, customer lists, advertising material, ledgers, supplies, equipment,
checks, and all other materials and records of any kind that are the property of
the Company or any of its subsidiaries or affiliates, that may be in the
Executive's possession or under his control, including all copies of any of the
foregoing; provided, however, the Executive shall not be required to
surrender his personal rolodex, telephone book and personal materials.
6.7. Certain Reduction of Payments.
(a) Anything in this Agreement to the contrary notwithstanding, if
it is determined that any portion of the sum of (i) the amounts paid or payable
to the Executive or for the Executive's benefit under the Agreement (the
"Agreement Benefits") and (ii) the amount of all other payments, and the value
of all other benefits received or to be received by the Executive or for the
Executive's benefit (collectively, along with Agreement Benefits, referred to as
"Benefits"), is likely to result in the imposition of a tax to the Executive or
his estate under Code Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), the aggregate present value of the
Agreement Benefits yet to be paid to the Executive shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Agreement, "Reduced
Amount" shall be an amount expressed as a single sum that maximizes the
aggregate present value of Agreement Benefits previously paid and yet to be paid
to the Executive without causing the aggregate of any Benefits previously paid
and yet to be paid to the Executive to be subject to taxation to the Executive
or his estate under Section 4999 of the Code. The provisions of this subsection
(a) and subsection (b) shall be applied in a manner that is consistent with the
provisions of subsection (c) below, and to the extent required, the provisions
of subsection (c) shall supersede the provisions of this subsection (a) and
subsection (b) to permit such consistency.
(b) If, determined in a manner consistent with subsection (a) above,
Agreement Benefits in excess of the Reduced Amount are paid to the Executive or
for his benefit, or the Internal Revenue Service asserts that the amount of
Benefits received by the Executive or for his benefit are in excess of the
amounts not subject to tax under Section 4999 of the Code, and such assertion is
determined to have a high probability of being successful, such excess amounts
(hereinafter referred to as "Overpayments") shall be treated for all purposes as
a loan to the Executive. The amount treated as a loan, together with interest at
the applicable federal rate provided for in Section 1274(d) of the Code, shall
be paid by the Executive to the Company as soon as practicable following the
date the Executive is notified in writing of such Overpayments.
(c) In the event that payment of any Benefits would result in all or
a portion of such payment to be subject to excise tax under Section 4999 of the
Code, then the Executive's payment shall be either (i) the full payment or (ii)
such lesser amount which would result in no portion of the payment being subject
to excise tax under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and local employment
taxes, income taxes, and the excise tax imposed by Section 4999 of the Code,
results in the Executive's receipt, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of the payment
may be taxable under Section 4999 of the Code.
(d) All determinations required to be made under this Amendment
shall be made by a nationally recognized accounting firm selected by the Company
(the "Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Executive and the
Company. All fees and expenses of the Accounting Firm shall be borne equally by
the Executive and the Company.
7. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company: Republic Technologies International
(Bar Technologies, Inc. and
Republic Engineered Steels, Inc.)
0000 Xxxxxxx Xxxxxxx
Xxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
with a copy to: R. Xxxxxxx Xxxxxxx, Esq.
McDonald, Hopkins, Xxxxx &
Xxxxx Co., L.P.A.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
To Executive: Xxxxxx Xxxxxxx
00000 Xxxxxxx Xx.
Xxxx Xxxx, Xxxx 00000
with a copy to: Xxx X. Xxxxxx
00000 Xxxxxx Xxxx, Xxxxx X-0
Xxxx Xxxx, Xxxx 00000
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
8. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
9. Assignment. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be
assignable or otherwise subject to hypothecation by the Executive (except by
will or, in the case of the Options, by trust for the benefit of the Executive's
spouse and/or children or by operation of the laws of intestate succession) or
by the Company, except that the Company may assign this Agreement to any
successor (whether by merger, purchase or otherwise) to all or substantially all
of the stock, assets or business of the Company. If this Agreement is not
assumed by a successor to Company, the Agreement may be terminated by Executive
under the terms of Section 6.1(a) as a termination for Good Reason.
10. Amendment. This Agreement may only be amended by written agreement of
the parties hereto.
11. Nondisclosure of Confidential Information; Non-Competition. (a) The
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Executive to divulge, disclose or make accessible such
information. For purposes of this Section 11(a), "Confidential Information"
shall mean non-public information concerning the financial data, strategic
business plans, product development (or other proprietary product data),
customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, Bliss & Xxxxxxxx Industries Inc. or
their respective affiliates or customers, that, in any case, is not otherwise
available to the public (other than by the Executive's breach of the terms
hereof).
(b) In consideration of the Company's obligations under this
Agreement the Executive agrees that during the period of his employment
hereunder and for a period of twelve (12) months thereafter, without the prior
written consent of the Board, (i) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in, any business which is in competition with the business of
the Company and (ii) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, solicit or offer employment to any
person who has been employed by the Company at any time during the 12 months
immediately preceding such solicitation.
(c) For purposes of this Section 11, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects such
purchases, sales or dealings or
renders such services. Nothing in this Section 11 shall be construed so as to
preclude the Executive from investing in any publicly or privately held company,
provided the Executive's beneficial ownership of any class of such company's
securities does not exceed 1% of the outstanding securities of such class.
(d) The Executive agrees that this covenant not to compete is
reasonable under the circumstances and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations. The Executive and
the Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. The Executive agrees that any breach of
the covenants contained in this Section 11 would irreparably injure the Company.
Accordingly, the Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against the
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive. Notwithstanding the
expiration of the term of this Agreement, the provisions of this Section 11
hereunder shall remain in effect as long as is necessary to give effect thereto.
12. Beneficiaries; References. The Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
the Executive's death, and may change such election, in either case by giving
the Company written notice thereof. In the event of the Executive's death or a
judicial determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Any reference to the masculine gender in
this Agreement shall include, where appropriate, the feminine.
13. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. Arbitration. Except as otherwise provided in Section 11(d) hereof, any
dispute or controversy arising under or in connection with this Agreement shall
be resolved by binding arbitration held in the City of Cleveland, Ohio and
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at the time of the arbitration. Each party
shall bear its own expenses in connection with any such arbitration and joint
expenses shall be borne by both parties in equal portions.
15. Governing Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Ohio without reference to
rules relating to conflicts of law.
16. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding, both written and oral, between the
Company, any affiliate of the Company or any predecessor of the Company or
affiliate of the Company and the Executive.
17. Withholding. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
19. Indemnification. Executive shall be provided with the same
indemnifications and directors and officers insurance coverages as apply to the
key officers and directors of the Company.
COMPANY
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx, CEO
EXECUTIVE
/s/ Xxxxxx Xxxxxxx
----------------------------------------
Xxxxxx Xxxxxxx
Appendix A
OPTION TERM SHEET
EQUITY OWNERSHIP
Stock Options Upon the effective date of the Agreement pursuant to a stock
option agreement including, among other provisions, the terms
set forth below, the Company shall grant the Executive
nonqualified options (or at Company's discretion, incentive
stock options with or without nonqualified options) to
purchase one percent (1.00%) of the total Available Common
Stock of Company. "Available Common Stock" of the Company
shall be defined as the authorized and outstanding common
shares plus options on a fully diluted basis (including all
equity or options of the entire management team), taking into
account the effects of the contemplated merger and any related
transactions to the merger.
Option Term The option term shall be 10 years; provided, however, that
exercisable options shall expire earlier upon termination
of employment as follows:
Termination for Cause/Quit w/o Good Reason: Immediately upon
termination of employment.
Termination w/o Cause/Quit w/Good Reason: the remaining term
of the Agreement (i.e. during the applicable salary
continuation period) plus three months.
A termination of employment at the expiration of the Agreement
on account of the Company's notice of nonrenewal, or a
termination during the term by mutual agreement of the
parties: One year after termination of employment.
Death/Disability: One year after termination of employment.
Unexercisable options will terminate upon termination of
employment, unless vesting acceleration is
explicitly provided for.
Option Exercise Options shall be granted at an exercise price which is equal
Price to the price per share paid by Blackstone.
EXERCISABILITY OF OPTIONS
--Vesting Options shall become exercisable with respect to 33 1/3% of
the shares subject to such options on each June 30, 2000,
2001, 2002 respectively, if the Executive's Term of Employment
continues through and includes such dates.
Options shall expire and no longer be exercisable following
termination of employment by the Company for Cause,
resignation by the Executive without Good Reason, or
nonrenewal by Executive, but shall accelerate and become fully
exercisable upon the earliest of (i) death, (ii) disability,
(iii) termination without Cause or resignation for Good Reason
(collectively, a "Good Termination"), or (iv) on the first
date on which the holdings of Blackstone (as defined in
Section 3.2 above) or Veritas, or the combined holdings of
Blackstone and Veritas, do not represent more than 50% of the
voting control of the Company. "Veritas" means "Veritas
Entities or their respective Affiliates", as that term is
defined in the Credit Agreement by and between Bar
Technologies, Inc., Bliss & Xxxxxxxx Steel Company, the
Lenders named therein and Chemical Bank Delaware dated as of
April 2, 1996. If the Company gives notice of nonrenewal at
the expiration of the Initial or any renewal terms, unvested
options shall vest in accordance with the schedule set forth
above during the applicable salary continuation period;
options that do not vest by that date shall terminate.
Dilution The Executive's exercisable and unexercisable options shall be
of Stock Options subject to the same dilution as may apply to all common
stockholders, provided that the anticipated transaction
referred to in Section 4.1 of the Agreement shall not have a
dilutive effect on the one percent (1.00%) discussed herein.
Adjustments In the event of any change in the outstanding common stock by
reason of a stock split, spin-off, stock dividend, stock
combination or reclassification, recapitalization, conso-
lidation or merger, or similar event, the Board shall adjust
appropriately the number of shares subject to options under
this
Term Sheet and make other revisions as it deems are equitably
required.
Nontransfer- Except as otherwise provided herein, the Executive cannot sell
ability or otherwise transfer the options and shares purchased upon
exercise of an option ("Option Shares") prior to a Public
Offering that includes Blackstone shares. Any sale of Option
Shares shall in all cases be completed in compliance with
applicable securities laws. Transfers of Option Shares shall
be permitted in the event of death to beneficiaries of the
estate, and during lifetime to trusts, the beneficiaries of
which are the Executive, a charitable institution or
institutions selected by Executive, or members of his family,
and options may, in the event of death, be exercised by
beneficiaries or the estate, subject in all cases to agreeing
to be bound by the same terms as the Executive. As a condition
to exercising options, the Executive must agree to be bound by
the terms of the stockholders' agreement that will be drafted
subsequent to the Employment Agreement.
Rights The Executive shall have the same voting, dividend and other
rights with respect to Option Shares as the Company's other
common stockholders.
Registration Option Shares: It is expected that the stockholder agreement
Rights/Public will provide piggyback rights.
Offering
Options: Immediately following the first Public Offering that
includes Blackstone shares, the Company shall file, at its own
expenses, an S-8 to register the shares subject to option,
which shares shall be subject to an applicable "standard
underwriter lock-up agreement."
Tagalong/ It is expected that the stockholder's agreement will provide
Dragalong Rights tagalong and dragalong rights.
Puts and Calls Puts and calls for the options and Option Shares shall be as
set forth in Appendix B; provided, however, if there is a
Change in Control prior to a Public Offering, any Option
Shares or exercisable Options (i) may be put to the Company at
the difference between FMV and the exercise price, but (ii)
the Company shall not have a call; provided, further, no put
or call shall be consummated if such put or call would result
in a violation of applicable law or the terms of any financing
documents. There shall be no puts or calls subsequent to a
Public Offering. An exercise period (e.g., one year after
termination of employment) will otherwise be specified for
puts and calls.
--Fair Market If there is no public trading market for the shares of the
Value ("FMV") Company, the FMV of the shares will be the per
share price, as determined by the Board in good faith;
provided, however, if the Executive or Executive's
beneficiaries or estate disagree with the Board's
determination, the FMV shall be determined by an independent
nationally recognized, full service investment banker who
follows the Company and is reasonablely acceptable to both the
Company and the Executive or Executive's beneficiaries or
estate.
--Public Public offering shall mean the sale of the shares of any
Offering class of the Company's stock to the public pursuant to an
effective registration statement (other than a registration
statement on Form S-4 or S-8 or any similar or successor form)
filed under the Securities Act of 1933, as amended.
Appendix B
PUTS AND CALLS
BAD TERMINATIONS GOOD TERMINATIONS
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Fired for Quit w/o Fired w/o "Cause"/ Quit Death/Disability
"Cause" "Good with "Good Reason"
Reason"
----------------------------------------------------------------------------------------------------------------
Option Any Option Any Option Any Option Shares can be May put Option Shares to
Shares Shares can be Shares can be Called at FMV prior to a Company at FMV prior to a
Called at the Called at the Public Offering. Public Offering.
lesser of cost lesser of cost
or FMV. or FMV. Any Option Shares may be
put to the Company at FMV
No Put. No put. prior to a Public Offering. No put or call subsequent to
a Public Offering.
No put or call subsequent
to a Public Offering.
----------------------------------------------------------------------------------------------------------------
Options All Options All Options Options shall remain Options shall remain
terminate terminate outstanding until termination outstanding until termination
without any without any of the Agreement plus 3 of employment plus one
payment. payment. months. year.
May put Options to the May put Options to
Company at the difference Company at the difference
between FMV and the between FMV and the
exercise price prior to a exercise price prior to a
Public Offering. Public Offering.
No put or call subsequent to No put or call subsequent to
a Public Offering. a Public Offering.
----------------------------------------------------------------------------------------------------------------
* Options at Expiration of Employment Term: If employment terminates because
the Executive gives notice of intent not to renew, all options shall
terminate without payment at termination of employment in that event. If
employment is terminated because the Company elects not to renew the
Agreement, Executive shall vest in options during the applicable salary
continuation period under Section 6.1. Unvested options at the end of such
period shall terminate.
