Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of August 7,
2003 to be effective as of the date this Agreement is approved by the United
States Bankruptcy Court for the Northern District of West Virginia (the
"Effective Date") and is entered into by and between WEIRTON STEEL CORPORATION,
a Delaware corporation (the "Company"), and XXXX X. XXXXXX (the "Employee").
WHEREAS, Employee and Company have previously entered into Employment
Agreements;
WHEREAS, the Company filed for protection under Chapter 11 of the
United States Bankruptcy Code ("Chapter 11") on May 19, 2003;
WHEREAS, in connection with its Chapter 11 filing, the Company has
arranged debtor in possession financing through Fleet Capital Corporation, as
agent, including a revolving loan facility and a term facility and (the
revolving loan and term facilities are collectively referred to herein as the
"DIP").
WHEREAS, effective August 1, 2003, the Company's Chief Executive
Officer resigned;
WHEREAS, the Company seeks to secure able management to oversee its
restructuring under Chapter 11;
WHEREAS, the Company made a number of commitments and representations
to the Employee in order to retain his services during the Chapter 11 process;
and
WHEREAS, the Company and the Employee intend to document the terms and
conditions of the Employee's continued employment in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
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1. Employment. The Company hereby employs Employee and Employee hereby
accepts employment from the Company upon the terms and conditions hereinafter
set forth, and all previously executed Employment Agreements between the parties
are hereby superseded and of no further force and effect.
2. Term. This Agreement and the employment of the Employee hereunder
shall commence on the Effective Date, and, except as this Agreement and the
Employee's employment hereunder are earlier terminated as provided in Section 9,
shall continue until the third anniversary of the Effective Date. The Term shall
automatically be extended for one additional month commencing on the last
business day of the first month of the Term and, if initially extended, on the
last business day of each succeeding month (each, an "Extension Date") unless
one party gives written notice to the other on or before an Extension Date of
its intention not to extend the Term. The date upon which the Term hereof, as
extended from time to time, shall expire is hereinafter referred to as the
"Expiration Date").
3. Duties. During the Term hereof, the Employee shall serve as
President and Chief Financial Officer of the Company ("President and Chief
Financial Officer") and of each of the Company's principal subsidiaries. The
Employee shall report to the Board of Directors of the Company, shall be
primarily responsible for the business, financial and administrative management
of the Company and shall perform such duties as are consistent with the role of
the President and Chief Financial Officer of the Company and such other duties,
not inconsistent therewith, as may be reasonably assigned by the Board of
Directors of the Company. The Employee shall devote his full business time and
attention to the performance of his duties hereunder, provided, with the consent
of the Chief Executive Officer of the Company ("CEO"), the Employee may (i)
devote a reasonable amount of time and effort to charitable, industry and
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community groups and (ii) serve as a director of other companies which do not
compete with the Company. For purposes of this Agreement, no approval of the CEO
shall be required for investments by the Executive in his personal portfolio
except for the acquisition or holding of 2% or more of the capital stock or
partnership interests of an entity that competes with the Company.
4. Compensation.
(a) Base Salary. The Company shall pay Employee a base salary
of $350,000 per year (such rate to be effective as of July 1, 2003) or
such greater amount as may from time to time be authorized by the
Committee. The amount in effect under this subsection 4(a) at a
relevant time is hereinafter referred to as "Base Salary". The Base
Salary shall be payable in such installments and at such times as
conform to the general payroll practices of Company.
(b) Chapter 11 Bonuses. The Company shall pay the Employee
Chapter 11 Bonuses not to exceed in the aggregate $1,400,000. No
Chapter 11 Bonus, or any installment thereof, shall be contingent upon
the Employee's being or remaining an employee of the Company on the
date such amount is payable; provided, however, if the Employee is
terminated from employment with the Company for Cause or resigns
without Good Reason (as such initially capitalized terms are defined in
Section 5), the Company shall have no obligation to pay any Contingent
Bonus after termination for Cause or resignation for Good Reason. The
Chapter 11 Bonuses shall consist of:
(i) Guaranteed Bonus. The Guaranteed Bonus shall be in the
aggregate amount of $600,000 and shall be paid in three cash
installments of $200,000 each, the first installment paid on
the Effective Date, the second installment on
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the thirtieth day after the Effective Date and the third
installment paid on the sixtieth day after the Effective Date,
provided, however, if the Employee resigns from employment
with the Company for reasons other than Good Reason or if he
is terminated from employment by the Company for Cause prior
to the 181st day after the Effective Date, he shall return to
the Company an amount determined by multiplying $600,000 by a
fraction, the numerator of which is the number of days between
the Effective Date and the Date of Termination and the
denominator is 181.
(ii) First Contingent Bonus. The First Contingent Bonus shall
be in the amount of $500,000 in cash and shall be paid within
five (5) business days of the earlier of (A) the closing of a
transaction in which the Company sells substantially all of
its assets and (B) the effective date of a plan of
reorganization in the Company's Chapter 11 case.
(iii) Second Contingent Bonus. The Second Contingent Bonus
shall be in an amount not to exceed $300,000 and shall be paid
if, but only if, the Company either (i) closes a transaction
with a gross sales price in excess of the then outstanding
balance of the DIP or (ii) receives a going concern valuation
rendered by an entity acting on behalf of the proponent of a
plan of reorganization in the Company's Chapter 11 case in
excess of the amount of the then outstanding DIP. The amount
of the Second Contingent Bonus shall be determined by
multiplying $550,000 by a fraction, the numerator of which is
the amount by which the gross sales proceeds of a transaction
or the going concern value, as applicable, exceeds the then
outstanding balance of the DIP
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and the denominator is the difference between 350,000,000 and
the then outstanding balance of the DIP. The Second Contingent
Bonus, to the extent earned, shall be paid in a single cash
payment on the earlier of the closing of the transaction for
satisfaction of the DIP.
(c) Automobile Expenses. The Company shall reimburse Employee
for his business-related automobile expenses in accordance with the
Company's policy generally applicable to its Senior Employees.
(d) Other Benefit Programs. The Company shall provide, during
the Term hereof, coverage for Employee under any plan qualified within
the meaning of Section 401(a) of the Internal Revenue Code, including
the Weirton Steel Corporation Retirement Plan (the "Retirement Plan"),
and each and all welfare plans, as defined in Section 3(1) of the
Employee Retirement Income Security Act ("ERISA"), including the
Insurance Program, and each other or successor benefit programs whether
or not so qualified or covered by ERISA, as applicable from time to
time to its executive level salaried employees;
(e) Supplemental Employee Retirement Plan. The Employee shall
be entitled to continue to participate in the Company's Supplemental
Employee Retirement Plan or any successor plan thereto (the "SERP") in
accordance with its terms.
(f) Perquisites. The Employee shall be eligible for, and shall
participate in, such perquisites as are generally available to
executive level salaried employees of the Company, including, but not
limited to participation in the Weirton Steel Corporation Executive
Healthcare Program upon the earlier of his completion of ten years of
service
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(including service rendered prior to the Effective Date) or his
termination of employment under Sections 10(b) or (c).
(g) Indemnification. The Employee shall be entitled to be
indemnified, and the Company hereby does indemnify the Employee, for
all causes of actions that arise or are alleged to arise during the
course of his employment with the Company to the fullest extent
permitted under the laws of the State of Delaware and the Company's
charter.
(h) Ratification of Prior Written Promises. The Company hereby
ratifies each and all prior written promises, including, but not
limited to grants of stock options, each in accordance with its written
terms. For purposes of this subsection (k), an employment agreement
shall not be a prior written promise.
5. Disclosure of Information. Employee recognizes and acknowledges that
Company's trade secrets and proprietary processes as they may exist from time to
time are valuable, special and unique assets of Company's business, access to
and knowledge of which are essential to the performance of Employee's duties
hereunder. Employee will not, during or after the term of his employment, in
whole or in part, disclose such secrets or processes acquired by virtue of his
employment hereunder or his service as a director to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
nor shall Employee make use of any such property for his own purposes or for the
benefit of any person, firm, corporation or other entity (except Company) under
any circumstances during or after the term of his employment, provided, that
after the term of his employment, these restrictions shall not apply to such
secrets and processes which are then in the public domain (provided that he was
not responsible, directly or indirectly, for such secrets or processes entering
the public domain without Company's consent).
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6. Inventions. Employee hereby sells, transfers and assigns to Company
or to any person or entity designated by Company all of the right, title and
interest of Employee in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable material made or
conceived by Employee, solely or jointly during the period of his employment
hereunder which relate to methods, apparatus, designs, products, processes or
devices, sold, leased, used or under consideration or development by Company, or
which otherwise relate to or pertain to the business, functions or operations of
Company. Employee shall communicate promptly and disclose to Company, in such
form as Employee may be required to do so, all information, details and data
pertaining to the aforementioned inventions, ideas, disclosures and improvements
and to execute and deliver to Company such formal transfers and assignments and
such other papers and documents as may be required of Employee to permit Company
or any person or entity designated by Company to file and prosecute the patent
applications and, as to copyrightable material, to obtain copyright thereof. Any
invention relating to the business of Company and disclosed by Employee within
one (1) year following the Date of Termination shall be deemed to fall within
the provisions of this Section, unless proved by Employee to have been first
conceived and made following the Date of Termination.
For purposes of Sections 5, 6 or 7 hereof unless the context otherwise
requires, the term "Company" shall include divisions, subsidiaries and
controlled affiliated entities of the Company, and "businesses" of Company shall
include businesses of any of such entities.
7. Nondisparagement. For the period commencing on the Effective Date
and continuing for 24 months following the Date of Termination, Employee will
not, in any form, disparage Company, its officers or directors or otherwise make
comment adverse to Company concerning any aspect of the business or practices,
past or present, of Company.
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8. Injunctive Relief. If there is a breach or threatened breach by
Employee of any of the provisions of Sections 5, 6 or 7 of this Agreement,
Company shall be entitled to an injunction from a court of competent
jurisdiction restraining Employee from such breach. Nothing herein shall be
construed as prohibiting Company from pursuing any other remedies against
Employee for such breach or threatened breach.
9. Termination. Unless earlier terminated in accordance with the
following provisions of this Paragraph 9, the Company shall continue to employ
the Employee and the Employee shall remain employed by the Company during the
entire Term (as extended from time to time) as set forth in Paragraph 1.
Paragraph 10 hereof sets forth certain obligations of the Company in the event
that the Employee's employment hereunder is terminated. Certain capitalized
terms used in this Paragraph 9 and Paragraph 10 hereof are defined in Paragraph
9(c) below.
(a) Death or Disability. Except to the extent otherwise
expressly stated herein, including without limitation, as provided in
Paragraph 10(a) with respect to certain post-Date of Termination
payment obligations of the Company, this Agreement shall terminate
immediately as of the Date of Termination in the event of the
Employee's death or in the event that the Employee becomes Disabled.
(b) Notification of Discharge for Cause or Resignation. In
accordance with the procedures hereinafter set forth, the Company may
discharge the Employee from his employment hereunder for Cause or
otherwise and the Employee may resign from his employment hereunder for
Good Reason or otherwise. Any discharge of the Employee by the Company
for Cause or resignation by the Employee for Good Reason shall be
communicated by a Notice of Termination to the Employee (in the case of
discharge) or
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the Company (in the case of resignation) given in accordance with
Paragraph 11 of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the
provision so indicated and (iii) if the Date of Termination is to be
other than the date of receipt of such notice, specifies the Date of
Termination (which date shall in all events be within fifteen (15) days
after the giving of such notice). No purported termination of the
Employee's employment for Cause shall be effective without a Notice of
Termination. The failure by the Employee to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Employee hereunder or
preclude the Employee from asserting such fact or circumstances in
enforcing the Employee's rights hereunder.
(c) Definitions. For purposes of this Paragraph 9 and of
Paragraph 10 hereof, the following capitalized terms shall have the
meanings set forth below:
(i) "Accrued Obligations" shall mean, as of the Date
of Termination, the sum of (A) the Employee's Base Salary
under Section 4(a) through the Date of Termination not
theretofore paid, (B) the amount of any bonus then due under
Sections 4(b) and 4(c), and any incentive compensation,
deferred compensation and other cash compensation accrued by
or on behalf of the Employee as of the Date of Termination to
the extent not theretofore paid, (C) any vacation pay, expense
reimbursements and other cash entitlements accrued by the
Employee as
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of the Date of Termination to the extent not theretofore
paid, (D) the SERP Funding, and (E) the Health Care Funding.
(ii) "Cause" shall mean (A) the willful and continued
failure of the Employee to perform substantially his duties
with the Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance
is delivered to the Employee by the Board which demand
specifically identifies the manner in which the Board believes
that the Employee has not substantially performed his duties,
or (B) the willful engaging by the Employee in illegal conduct
or gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this provision, no act or failure to
act on the part of the Employee shall be considered "willful"
unless it is done, or omitted to be done, by the Employee in
bad faith or without reasonable belief that the Employee's
action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board, a
direction of the CEO or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or
omitted to be done, by the Employee in good faith and in the
best interests of the Company. The cessation of employment of
the Employee shall not be deemed to be for Cause unless and
until there shall have been delivered to the Employee a copy
of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board
at a meeting of the Board called and held for such purpose,
after reasonable notice is provided to the Employee and the
Employee is given an opportunity,
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together with counsel, to be heard before the Board, finding
that, in the good faith opinion of the Board, the Employee is
guilty of the conduct described in subparagraph (A) or (B)
above, and specifying the particulars thereof in detail.
(iii) "Date of Termination" shall mean (A) in the
event of a discharge of the Employee by the Company for Cause
or a resignation by the Employee for Good Reason, the date the
Employee (in the case of discharge) or the Company (in the
case of resignation) receives a Notice of Termination, or any
later date specified in such Notice of Termination, as the
case may be, (B) in the event of a discharge of the Employee
without Cause or a resignation by the Employee without Good
Reason, the date the Employee (in the case of discharge) or
the Company (in the case of resignation) receives notice of
such termination of employment, (C) in the event of the
Employee's death, the date of the Employee's death, and (D) in
the event of termination of the Employee's employment by
reason of Disability, the date the Employee receives written
notice of such termination.
(iv) "Disability" shall mean upon 30 days prior
notice in writing in the event Employee has been so
incapacitated that he has been unable to perform the services
required of him hereunder for a period of at least 150 of 180
consecutive calendar days and such inability is continuing at
the time of the giving of such notice. Company, at its sole
cost and expense, shall continue to provide and keep in force
during the period of incapacity which remains after the Date
of Termination, but not after Employee attains age 65, income
replacement, sickness and accident, life insurance and health
insurance coverages for Employee and his
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dependents of the types provided by the group benefit plans of
Company for employees of the highest job classification under
Company's Program of Insurance Benefits for Salaried Employees
(the "Insurance Program"), which coverages shall be at a level
commensurate with those provided to employees in the highest
job classification.
(v) "Good Reason" shall mean any of the following:
(A) the assignment to the Employee of any duties inconsistent
in any respect with the Employee's position (including status,
offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 3 of this
Agreement (including removal as a member of the Board), or any
other action by the Company which results in a demotion in
such position, authority, duties or responsibilities or which
renders such position to be of less dignity, responsibility or
scope, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Employee; or (B) any failure by the
Company to pay when due or otherwise comply with any of the
provisions of Section 4 of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Employee, or (C)
the Company's requiring the Employee to be based at any office
or location other than the Company's headquarters in Weirton,
West Virginia or the Company's requiring the Employee to
travel on Company business to a substantially greater extent
than required immediately prior to the Effective Date.
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(vi) "SERP Funding" shall mean the difference
measured as of the Date of Termination and computed as a
single lump sum amount between (a) the aggregate amount
required as (1) a contribution to the trust created with
respect to Employee under the SERP and (2) a tax equalization
payment, in accordance with the terms of the SERP and such
trust, to fully fund the Company's obligation and the SERP
Benefit of the Employee, each as set forth in subsection 4(g),
and (b) the actual amount then funded in the trust created
with respect to the Employee under the SERP.
10. Obligations of the Company Upon Termination.
(a) Discharge for Cause, Resignation without Good Reason,
Death or Disability. In the event of a discharge of the Employee for
Cause or resignation by the Employee without Good Reason, or in the
event this Agreement terminates by reason of the death or Disability of
the Employee:
(i) the Company shall pay all Accrued Obligations to
the Employee, or to his heirs or estate in the event of the
Employee's death, in a lump sum in cash within thirty (30)
days after the Date of Termination; and
(ii) the Employee, or his beneficiary, heirs or
estate in the event of the Employee's death, shall be entitled
to receive all benefits accrued by him as of the Date of
Termination under the Qualified Plans and all other qualified
and nonqualified retirement, pension, profit sharing and
similar plans of the Company in such manner and at such time
as are provided under the terms of such plans and
arrangements; and
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(iii) all other obligations of the Company hereunder
shall cease forthwith, except as specifically set forth in
this Agreement.
(b) Discharge without Cause or Resignation for Good Reason. If
the Employee is discharged other than for Cause or disability or the
Employee resigns with Good Reason within one year of the happening of
an event of Good Reason:
(i) the Company shall pay to the Employee in a lump
sum in cash within thirty (30) days after the Date of
Termination the aggregate of the following amounts:
(A) all Accrued Obligations; and
(B) Within five (5) business days of the
Date of Termination, an amount, in a single cash
payment, equal to the sum of (i) one times the
Employee's Base Salary and (ii) the amount of all
federal, state, and municipal taxes (including
payroll and excise tax) imposed on the amount paid
under subsection B(i) and with respect to the amount
described in this subsection (B)(ii); it being the
intent of this section to cause the Employee to
receive, after payment of all taxes, an amount equal
to one times his Base Salary;
(i) "Good Reason" shall mean (A) the failure
of the Company to pay when due any amount described
in Section 4 or (B) the assignment to the Employee of
any duties inconsistent in any respect with the
Employee's position (including status, offices,
titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 3 of
the Agreement (including removal as a member of the
Board, or any other action by the Company which
results in demotion in such position, authority,
duties or responsibilities or which
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renders the Employee's position to be of less
dignity, responsibility or scope, excluding for this
purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied
by the Company promptly after receipt of notice
thereof given by the Employee, or (C) requiring the
Employee to be based other than at the Company's
general offices in Weirton, West Virginia except for
reasonable business travel.
(ii) the Employee shall be entitled to
receive all benefits accrued by him as of the Date of
Termination under all qualified and nonqualified
retirement, pension, profit sharing and similar plans
of the Company in such manner and at such time as are
provided under the terms of such plans; and
(iii) all stock options and other stock
interests or stock-based rights awarded to the
Employee by the Company on or before the Date of
Termination shall become fully vested and
nonforfeitable as of the Date of Termination and
shall remain exercisable until the earlier of (i) the
expiration date of such option, stock interest or
stock-based rights as set forth at the time of grant,
or (ii) the third anniversary of the Date of
Termination;
(iv) the Company shall instruct the trustee
of the Trust created with respect to the Employee
under the SERP to distribute the corpus of such Trust
to the Employee, and
(v) except as otherwise provided above or in
Paragraph 17 hereof, all other obligations of the
Company hereunder shall cease forthwith.
(c) Payment Obligations Absolute. The Company's obligation to
make the payments and the arrangements provided for herein shall be
absolute and unconditional,
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and shall not be affected by any circumstances, including, without
limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Employee or any other
party. Each and every payment made hereunder by the Company shall be
final, and the Company shall not seek to recover all or any part of
such payment from the Employee or from whomsoever may be entitled
thereto, for any reasons whatsoever.
(d) Contractual Rights to Benefits. This Agreement establishes
and vests in the Employee a contractual right to the benefits to which
he is entitled hereunder. The Employee shall not be obligated to seek
other employment in mitigation of the amounts payable or arrangements
made under any provision of this Agreement, and the obtaining of any
such other employment shall in no event effect any reduction of the
Company's obligations to make the payments and arrangements required to
be made under this Agreement.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) to the Board or the Company, to:
Weirton Steel Corporation
Xxxxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
(b) to the Employee, to:
Xxxx X. Xxxxxx
000 Xxxxxx Xx.
XxXxxxxx, XX 00000
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Addresses may be changed by written notice sent to the other party at
the last recorded address of that party.
12. Waiver of Breach. A waiver by Company or Employee of a breach of
any provision of this Agreement by the other party shall be in writing and shall
not operate or be construed as a waiver of any subsequent breach by the other
party.
13. Arbitration. Any dispute between Employee and Company arising under
this Agreement, whether or not a case or controversy, shall be resolved solely
by arbitration in Pittsburgh, Pennsylvania in accordance with the rules of the
American Arbitration Association, and judgment upon any award may be entered in
any court having jurisdiction thereof.
14. Legal Fees and Expenses. Company shall promptly reimburse Employee
for the reasonable legal fees and expenses incurred by Employee in connection
with enforcing any right of Employee pursuant to and afforded by this Agreement;
provided, however, that Company only will reimburse Employee for such legal fees
and expenses if, in connection with enforcing any right of Employee pursuant to
and afforded by this Agreement, either (i) a judgment has been rendered in favor
of the Employee by a duly authorized court of law; (ii) an arbitration award in
favor of the Employee has been issued; or (iii) Company and Employee have
entered into a settlement agreement providing for the payment to Employee of any
or all amounts due hereunder.
15. Entire Agreement; Governing Law. This Agreement contains the entire
agreement of the parties, superseding any prior agreement or arrangement between
the parties concerning the employment of Employee by Company, whether written or
oral, and any such agreements are null and void except that any prior stock
option agreements between the Company and the Employee shall continue to be
obligations of Company and Employee. This
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Agreement may be changed only by a writing signed by the party against whom
enforcement is sought. This Agreement shall be governed by the laws of the
State of Delaware, without regard to its principles of conflicts of laws.
16. Severability. If any provision of this Agreement or the application
thereof to any circumstance shall to any extent be held invalid or
unenforceable, the remainder of this Agreement shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law, but only
if and to the extent such enforcement would not materially and adversely
frustrate the parties' essential objectives as expressed herein.
17. Survival of Obligations. Except as otherwise specifically set forth
in this Agreement or as otherwise prohibited by law, all rights and obligations
of Employee, except such obligations as are created by Sections 9 and 10 hereof,
and all obligations of Company under this Agreement, shall cease on, and as of,
the Date of Termination.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
day first hereinabove written.
WEIRTON STEEL CORPORATION
By /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
Title: Chairman of the Board of Directors
/s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
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