EMPLOYMENT AGREEMENT
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THIS AGREEMENT ("Agreement") dated as of the 1st day of October,
1995, by and between OREGON STEEL XXXXX, INC., a Delaware corporation
("OSM") and XXX X. XXXXXX (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is a key senior executive officer of OSM,
who through his exceptional efforts has contributed materially to its
success in the past, is now so contributing to its success, and is
anticipated to continue to so contribute to the success of OSM in the
future;
WHEREAS, OSM desires that the Executive remain in the
employment of OSM, thereby assuring continuity of management and
policies responsible for OSM's success in the past and assuring OSM of
the efforts of the Executive during the term of this Agreement, and
the Executive desires to so remain in the employment of OSM;
WHEREAS, OSM desires to continue to employ the Executive as he
has been employed in the past and is employed at the present, thus
accommodating the desires and expectations set forth above, which OSM
can assure as an independent company;
WHEREAS, the Executive might elect at any time to terminate his
employment by OSM in the absence of an employment agreement with terms
and provisions comparable to the terms and provisions set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual promises herein set forth, the parties agree as follows:
1. EMPLOYMENT.
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1.1. TERM. OSM agrees to employ Executive and Executive
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agrees to be employed by OSM as its sole Sr. Vice President
Manufacturing - COO (or such other higher office to which Executive
may be promoted) upon the terms and conditions set forth herein for a
period beginning on the date hereof and continuing until June 1, 1991,
and from year to year thereafter until Executive shall have obtained
age 65, subject to the provisions herein relating to termination.
1.2. DUTIES. The Executive agrees faithfully to contribute
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to the management, operations and business of OSM and to perform such
other services as may be consistent with the duties of the sole Sr.
Vice President Manufacturing - COO (or such other higher office to
which Executive may be promoted) to the best of his ability, subject
to the directives of the Board of Directors of OSM, and to devote his
full time during normal working hours to such duties; provided,
however, that Executive's schedule and like amenities will be
continued, including commitments for civic and
public service, outside directorships, customer entertainment and
solicitation and passive investments or similar arrangements.
2. COMPENSATION.
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2.1 BASE SALARY. As compensation for the services to be
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performed by the Executive, OSM agrees to pay the Executive a base
salary at the rate of Two Hundred Forty Thousand Dollars ($240,000)
per year for each year of his employment hereunder, payable in
substantially equal monthly installments and reduced on a pro-rata
basis for any fraction of a year or month during which he is not so
employed. The Executive's base salary is subject to increase by the
Compensation Committee of the Board of Directors of OSM in conjunction
with periodic reviews of Executive compensation.
2.2 PROFIT PARTICIPATION, ESOP, RETIREMENT BENEFITS, ETC.
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In addition to his base salary, the Executive will participate in all
compensation and other benefit plans of OSM during the period that any
existing or future plans are in effect. Such compensation and
benefits plans presently include, without limitation, profit
participation, ESOP, retirement plan, and medical benefits plan.
3. BUSINESS EXPENSES. OSM will provide for the payment of,
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or reimbursement to the Executive of, travel or other out-of-pocket
expenses reasonably incurred by him in connection with his employment
hereunder.
4. VACATION BENEFITS. During the period of Executive's
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employment hereunder, the Executive will be provided by OSM with such
paid vacation privileges as are presently, or may in the future, be
within the policy of OSM.
5. PROPRIETARY RIGHTS. The Executive agrees that OSM will
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own and the Executive hereby waives all right, title and interest in
and to contributions made to the business and operations of OSM and
its subsidiaries by the Executive during the term of this Agreement or
prior thereto during his employment by OSM, including without
limitation, all ideas, suggestions, and other contributions made by
the Executive and all results and proceeds derived therefrom. Upon
termination of his employment, the Executive will surrender to OSM all
customer lists, records and other documents that he may have
pertaining to the business of OSM or its subsidiaries and will neither
make nor retain copies of any such documents. The provisions of this
paragraph will not:
(a) be affected by cessation or termination of
Executive's employment pursuant to the terms hereof or otherwise;
(b) apply to any information, matter or thing that is
in the public domain or that has been disclosed to others by OSM, its
subsidiaries, employees or agents.
6. CONFIDENTIAL INFORMATION. The Executive acknowledges
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that while employed by OSM, he will have access to confidential
records, customer lists, data, drawings, writings, or other materials
owned by OSM or its subsidiaries. The Executive agrees that during
the term of his employment hereunder he will not directly or
indirectly disclose to others or use for his own benefit or the
benefit of others any of the foregoing information, except in the
course of his employment hereunder and for the benefit of OSM and its
subsidiaries. All records, files, writings, drawings, lists, data and
similar materials and
information that the Executive will prepare, use or otherwise come
into contact with during the course of his employment by OSM will, as
between OSM and the Executive, at all times remain the sole property
of OSM. The provisions of this paragraph will not:
(a) apply to the operation of OSM or its business to
the extent that the Executive acquires information from parties other
than OSM or its subsidiaries;
(b) apply to any information, matter or thing that is
in the public domain or that has been disclosed to others by OSM or
its subsidiaries, employees or agents.
7. COVENANT NOT TO COMPETE.
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7.1. CONSTRAINTS. During the term of this
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Agreement, and for a period of twelve (12) months from the
termination or expiration of such employment, the Executive will not,
within the geographical area of the United States west of the
Continental Divide of the Unites States (not including Hawaii or
Alaska), directly or indirectly, (a) own, manage, operate, join,
control or be employed by, (b) participate in the ownership,
management, operation or control of, or (c) be connected in any manner
with any business of the type and character of business now engaged in
by OSM or its subsidiaries. The above constraint will not prevent the
Executive from making passive investments in enterprises engaged in
the steel business or the manufacture of pipe products.
7.2. ENFORCEABILITY. In the event any of the
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provisions of paragraph 7.1. above finally are determined by any court
to be void or unenforceable in any particular geographic area or as to
any particular constraints, this Agreement will be deemed modified so
as to eliminate therefrom the unenforceable constraint or its
application to the area in which it is enforceable and, except as so
modified, the Agreement will remain in full force and effect.
8. OFFICES AND DIRECTORSHIPS. While employed by OSM, the
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Executive agrees that if named to any appropriate internal
administrative committees, boards or similar standing or ad hoc groups
of OSM, and Executive agrees to so serve.
9. TERMINATION OF EMPLOYMENT.
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9.1. TERMINATION BY OSM. OSM may terminate the
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employment of Executive:
(a) for "Cause" as hereinafter defined;
(b) by affirmative action annually of a majority
of the Board of Directors of OSM at the annual meeting of the Board of
Directors of OSM; or
(c) by reason of the death or permanent disability
of Executive.
9.2. TERMINATION BY EXECUTIVE. Executive may
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terminate its Employment Agreement:
(a) for "Good Reason" as hereinafter defined; or
(b) upon six (6) months prior written notice to
the Board of Directors of OSM.
10. DEFINITIONS.
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10.1. "Beneficial Owner" and "person" shall have the
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meaning as is set forth in Rule 13d of the Securities Exchange Act of
1934, as amended.
10.2. "Cause," for the purposes of this Agreement,
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shall mean severance from OSM's employment because of (a) the
reduction in OSM's work force due to a substantial decrease in OSM's
business and the absence of any need during the foreseeable future for
the continued performance of the Executive's duties, (b) the willful
and continued failure by the Executive to substantially perform his
assigned duties with OSM (other than any such failure resulting from
incapacity due to physical or mental illness or any actual or
anticipated failure after the issuance of a Notice of Termination by
the Executive for Good Reason) after a written demand for substantial
performance is delivered to the Executive by OSM, which demand
specifically identifies the manner in which OSM believes that the
Executive has not substantially performed his duties, or (c) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to OSM, monetarily or otherwise. For purposes of
this Section, no act, or failure to act, on the part of the Executive
shall be deemed "willful" unless done, or omitted to be done, by the
Executive without good faith and without reasonable belief that the
action or omission was in the best interest of OSM.
10.3. "Good Reason" shall mean the occurrence, after a
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Change in Control, of any of the following circumstances without the
express written consent of the Executive, unless, in the case of
paragraphs (a), (b) or (f) below, such circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(a) a significant reduction by OSM in the duties
and responsibilities assigned to Executive from those assigned
immediately before the Change in Control;
(b) the harassment by OSM or the owners thereof of
Executive so as to adversely affect the performance of
Executive's assigned duties and responsibilities;
(c) a reduction by OSM in Executive's annual base
pay as in effect on the date the Change in Control occurs;
(d) a geographical relocation of Executive is
ordered by OSM to areas other than Portland, Oregon, or Napa,
California;
(e) the failure by OSM to pay any portion of
Executive's current compensation or to pay to Executive any portion of
an installment of deferred compensation under any deferred
compensation agreement of OSM within seven (7) days of the date of
such compensation is due; or
(f) Any purported termination of Executive's
employment by OSM that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 13.2.
Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
10.4. "Permanent Disability" shall mean a medically
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determined physical or mental impairment which prevents the Executive
from performing every duty of his occupation, and a prognosis that
such impairment will continue for at least one (1) year.
10.5. "Change in Control" shall mean the event or
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events described in Section 12.
10.6. "Directors" shall mean those individuals who are
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members of the Board of Directors of OSM.
11. TERMINATION BENEFITS.
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11.1 ELIGIBILITY FOR BENEFITS. The Executive shall be
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eligible for the benefits described in Section 11.2 if, concurrently
with or within thirty-six (36) months after a Change in Control, the
Executive's employment with OSM terminates, provided that such
termination of employment (a) is not on account of the Executive's
death or permanent disability, (b) is not by OSM for Cause, (c) is not
be the Executive for other than Good Reason.
11.2. TYPES AND AMOUNTS OF TERMINATION BENEFITS.
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(a) OSM shall pay to the Executive his full base
compensation through the date of termination at the rate in effect at
the time Notice of Termination is given, no later than the fifth (5th)
day following the date of termination, plus all other amounts to which
the Executive is entitled under any compensation or fringe benefit
plan of OSM, at the time such payments are due.
(b) In lieu of any further salary payments for a
period subsequent to the date of termination, OSM shall pay as
severance pay to the Executive, at the time specified in Section 11.3,
the following amounts:
(1) A lump sum severance payment equal to
three (3) times his "Annual Pay," consisting of annual base pay as in
effect as of the date of termination or immediately prior to the
Change in Control, whichever is greater, and the four (4) most recent
quarterly cash distributions from the OSM Profit Participation Plan;
and,
(2) An additional amount equal to the lump
sum present actuarial value of the excess, if any, of A over B where:
A is the normal retirement allowance to which
the Executive would have been entitled under the OSM Pension Plan
assuming that such Executive continued as an active participant under
such Plan, without change in his rate of Annual Pay, until the earlier
of his 65th birthday or the 10th anniversary of the date of Change of
Control; and
B is the normal retirement allowance to which
the Executive is actually entitled under the OSM Pension Plan as of
the date of Notice of Termination as provided in Section 13.2.
Present actuarial value shall be computed
using a 5.5 percent interest assumption and the 1971 Group Annuity
Male Mortality Table set back two (2) years and shall reflect the
value of any applicable early retirement subsidies under the Plan.
(c) OSM shall pay to an Executive all legal fees
and expenses incurred by Executive in seeking to obtain or enforce any
right or benefit provided to the Executive pursuant to this Agreement,
if the Executive is the prevailing party.
(d) OSM shall pay to an Executive all legal fees
and expenses incurred by Executive in seeking to obtain or enforce any
right or benefit provided to the Executive pursuant to this Agreement,
if the Executive is the prevailing party.
(e) OSM shall arrange to provide the Executive
with accident and group health insurance benefits substantially
similar to those which Executive was receiving immediately prior to
the Notice to Termination at the same cost to the Executive as OSM
charges other employees whose employment terminates at age 55 or older
with at least fifteen (15) years service. Benefits otherwise
receivable by the Executive pursuant to this subparagraph shall be
reduced to the extent similar benefits are actually received by the
Executive from any other source, and any such similar benefits shall
be reported to OSM.
11.3. TIME OF PAYMENT; ESTIMATED PAYMENTS. The
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payment provided for in Section 11.2(b) shall be made not later than
the fifth (5th) day following the Date of Termination; provided,
however, that if the amounts of such payments cannot be finally
determined on or before such date, OSM shall pay to the Executive on
such day an estimate, as determined in good faith by OSM, of the
minimum amount of such payments and shall pay the remainder of such
payments as soon as the amount thereof can be determined but in no
event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by OSM to the Executive, payable on the
fifth (5th) day after demand by OSM.
12. CHANGE IN CONTROL. Change in Control of OSM shall be
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deemed to have occurred if:
12.1 At any time less than a majority of the Directors
of OSM are individuals who were either elected by the Board of
Directors or nominated by the Board of Directors (or a committee of
the Board of Directors) for election by the stockholders of OSM;
12.2 At any time a majority of the Board of Directors
of OSM are individuals who, in connection with a single transaction or
a series of related transactions that effects a change in the
ownership of OSM, were either elected by the Board of Directors or
nominated by the Board of Directors (or a committee of the Board of
Directors) for election by the stockholders of OSM;
12.3. Any person (other than (a) an employee benefit
plan of OSM, or (b) a corporation owned directly or indirectly, by the
stockholders of OSM in substantially the same proportions as their
ownership of stock of OSM) is or becomes the Beneficial Owner,
directly or indirectly, of securities of OSM representing twenty-five
percent (25%) or more of the combined voting power of OSM's then
outstanding securities; or
12.4 (a) The stockholders of OSM approve a plan of
complete liquidation of OSM, other than in connection with the
complete cessation of the business activities conducted with OSM's
operating assets, or (b) an agreement is entered for the sale or
disposition by OSM of all or substantially all of OSM's assets except
pursuant to an order of a bankruptcy court having jurisdiction of OSM.
For purposes of clause (b), the term "the sale or disposition by OSM
of all or substantially all of OSM's assets" shall mean a sale or
other disposition transaction or series of related transactions
involving assets of OSM or of any direct or indirect subsidiary of OSM
(including the stock of any direct or indirect subsidiary of OSM) in
which the value of the assets or stock being sold or otherwise
disposed of (as measured by the purchase price being paid therefore or
by such other method as the Board of Directors determines is
appropriate in a case where there is no readily ascertainable
purchased price) constitutes more than two-thirds (2/3) of the fair
market value of OSM (as hereinafter defined). For purposes of the
preceding sentence, the "fair market value of OSM" shall be the
aggregate market value of OSM's outstanding common stock (on a fully
diluted basis) plus the aggregate market value of OSM's other
outstanding equity securities, if any. The aggregate market value of
OSM's common stock shall be determined by multiplying the number of
shares of OSM's common stock (on a fully diluted basis) outstanding on
the date of the execution and delivery of a definitive agreement with
respect to the transaction or series of related transactions (the
"Transaction Date") by the average closing price of OSM's common stock
for the ten (10) trading days immediately preceding the Transaction
Date. The aggregate market value of any other equity securities of
OSM shall be determined in a manner similar to that prescribed in the
immediately preceding sentence for determining the aggregate market
value of OSM's common stock or by such other method as the Board of
Directors shall determine is appropriate; provided that, in the event
that on the Transaction Date there is no public market for such common
stock or other equity security, the fair market value of the equity
securities or common stock shall be as reasonably determined by the
Board of Directors.
13. MISCELLANEOUS.
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13.1. BINDING COMMITMENT. Rights of Executive under this
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Agreement shall inure to the benefit of and be enforceable by the
Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees.
If Executive should dies while any amount would still be payable to
him hereunder had he continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to his designee, or if there is no such designee, to
his estate.
13.2 NOTICE. Any termination of Executive's employment by
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OSM or the Executive following a Change in Control shall be
communicated by written Notice of Termination to the Executive or OSM,
as the case may be in accordance with the terms hereof. "Notice of
Termination" shall mean a notice that shall indicate the specific
termination provision of this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provision so
indicated.
13.3. DATE OF TERMINATION. "Date of Termination" shall
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mean thirty (30) days after Notice of Termination is given. If, prior
to the Date of Termination (as determined without regard to this
proviso), the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, then the
Date of Termination shall be the date on which the dispute is finally
resolved, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of
a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefore has expired and no
appeal has been perfected); and provided, further, that the Date of
Termination shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice pursues
the resolution of such dispute with reasonable diligence. If the Date
of Termination occurs after the thirty-six (36) month period following
a Change in Control solely because of the operation of the preceding
sentence, the employment of Executive shall be considered to have been
terminated within the thirty-six (36) month period following a Change
of Control.
13.4. FORM OF NOTICE. Except as otherwise provided herein,
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notices and all other communications provided for under this Agreement
shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed to OSM or the
Executive, as the case may be. Notices to OSM shall be at its
principal office in Portland, Oregon. Notices to Executive shall be
addressed to him at his last known address as shown in the records of
OSM.
13.5. APPLICABLE LAW. The validity, interpretation,
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construction and performance of the obligations created under this
Agreement shall be governed by the laws of the State of Oregon unless
preempted by federal law. Application of the Internal Revenue Code or
the Securities Exchange Act of 1934 shall include application to any
successor provisions and amendments. Any payments provided for
hereunder shall be paid net of any applicable withholding required
under federal, state or local law.
13.6. VALIDITY. The invalidity or unenforceability of any
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provision of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in
full force and effect.
IN WITNESS WHEREOF the parties have executed this Agreement on
the date first hereinabove set forth.
OREGON STEEL XXXXX, INC.
By: /s/Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
/s/Xxx X. Xxxxxx
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Xxx X. Xxxxxx
