Exhibit 10.1
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 D. XXXXXXX XXXX (the "Employee").
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 (collectively,
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 hire the Employee as its Chief Executive
Officer and 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 employment in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. Employment. The Company hereby employs Employee and Employee hereby
accepts employment from the Company upon the terms and conditions hereinafter
set forth.
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2. Term. This Agreement and the employment of the Employee hereunder
shall commence on the Effective Date and shall continue from month to month
thereafter until terminated either by the Company or by the Employee as provided
in Section 5.
3. Duties. During the Term hereof, the Employee shall serve as Chief
Executive Officer and a member of the Board of Directors of the Company ("CEO")
and of each of the Company's principal subsidiaries. The Employee shall report
to the Board of Directors (the "Board") of the Company, shall be primarily
responsible for the general management of the business and affairs of the
Company, including the Company's efforts to reorganize under Chapter 11, and
shall perform such duties as are consistent with the role of the CEO of the
Company and such other duties, not inconsistent therewith, as may be reasonably
assigned by the Board. The Employee shall devote his full business time and
attention to the performance of his duties hereunder, provided, however, with
the consent of the Board, the Employee may (i) devote a reasonable amount of
time and effort to charitable, industry and 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 Board shall be required for investments by
the Executive in his personal portfolio except for the acquisition or holding of
3% or more of the capital stock or partnership interests of an entity that
competes with the Company.
4. Compensation. The Employee's compensation shall consist of:
(a) Base Salary. The Company shall pay Employee a base salary
of $40,000 per month commencing on July 15, 2003, the date he commenced
employment with the Company, or such greater amount as may from time to
time be authorized by the Board. The amount in effect under this
subsection 4(a) at a relevant time is hereinafter referred
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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 $300,000 and shall be paid in
three cash installments of $100,000 each, the first
installment paid on the Effective Date, the second
installment on 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 $300,000 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.
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(ii) First Contingent Bonus. The First Contingent Bonus
shall be in the amount of $550,000 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 the assets of the
Company 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 $550,000 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 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 or satisfaction of the DIP.
(c) Expense Reimbursement. The Company shall reimburse
Employee for his travel and business entertainment expenses as follows:
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(i) Business Expenses. The Company shall reimburse
the Employee for his reasonable business related expenses in
accordance with its policy on reimbursements as generally
applicable to all employees as in effect from time to time.
(ii) Automobile. The Company shall provide to the
Employee, or reimburse the Employee for the costs of, use of
an automobile in accordance with its policy on use of an
automobile generally applicable to all senior employees as
effect from time to time.
(iii) Apartment and Living Expenses. The Company
shall pay the cost of or reimburse the Employee for the use of
an apartment in the Pittsburgh area and utilities and other
costs associated with the use of such apartment; including the
reasonable cost of renting furniture for such apartment and
the reasonable cost of furnishing such apartment on a
temporary basis, and for living expenses in Pittsburgh and
Weirton and for periodic travel from Pittsburgh to Employee's
permanent home as of the Effective Date.
(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, excluding
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"), as applicable from
time to time to its executive level salaried employees;
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(e) Supplemental Employee Retirement Plan. Employee shall not
be entitled to participate in the Company's Supplemental Employee
Retirement Plan or any successor plan thereto;
(f) 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.
5. Termination of Employment.
(a) Termination Events. This Agreement and the Employee's
employment with the Company shall terminate upon the death or
disability of the Employee, resignation by the Employee or termination
by the Company. Section 6 sets forth the amounts, if any, due the
Employee upon termination of the Agreement and termination of his
employment.
(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 the Company (in the case of resignation) given in
accordance with 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
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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 5 and of
Paragraph 6 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 Guaranteed Bonus under
Section 4(b) to the extent not then paid and not subject to an
obligation to return such amount, (C) the amount of any
Contingent Bonus earned but not then paid, and (D) any
vacation pay, expense reimbursements and other cash
entitlements accrued by the Employee as of the Date of
Termination to the extent not theretofore paid.
(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
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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 Board 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, 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) "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
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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
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.
(iv) "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.
(v) "Disability" shall mean the Employee's absence
from his duties under this Agreement for a period of fifteen
(15) business days for a physical or
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mental illness, injury or condition which, in the reasonable
belief of the Board renders it unlikely that the Employee will
be able to return to his duties on a substantially full time
duties within the next following three months.
6. 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 Company's plans and programs subject to
ERISA, and under 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
(iii) the Company's obligation to pay any Contingent
Bonus not then earned and all other obligations of the Company
hereunder shall cease forthwith.
(b) Discharge without Cause or Resignation for Good Reason. If
the Employee is discharged other than for Cause or the Employee resigns
with Good Reason within one year of the happening of an event of Good
Reason.
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(i) the Company shall pay the Employee the aggregate
of the following amounts:
(A) Within thirty (30) days after the Date
of Termination all Accrued Obligations; and
(B) Subject to the terms of Section 4(b),
the Company shall pay to the Employee in a single
cash payment such Contingent Bonus or Contingent
Bonuses under the terms of Section 4(b),
notwithstanding that the Employee is not an employee
of the Company;
(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) except as set forth in this subsection (b) or
otherwise specifically set forth in the Agreement, 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, 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.
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(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.
7. 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:
D. Xxxxxxx Xxxx
00000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxx Xxxxxxx, XX 00000
Addresses may be changed by written notice sent to the other party at
the last recorded address of that party.
8. 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.
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9. 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.
10. 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.
11. 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 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.
12. 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
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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.
13. 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 Section 6 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/ D. Xxxxxxx Xxxx
-----------------------------------------
D. Xxxxxxx Xxxx
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