1
Exhibit (10)-(46)
THIRD AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT made this 22nd day of FEBRUARY, 2000, among
XXXX X. XXXXXX, resident of Pittsburgh, Pennsylvania (hereinafter called the
"Executive"), COPPERWELD CORPORATION, a Delaware corporation (hereinafter called
"the Corporation"), and THE LTV CORPORATION, a Delaware corporation (hereinafter
called "LTV").
WITNESSETH:
WHEREAS, the Corporation and the Executive entered into an
Employment Agreement on August 30, 1988, for the employment of the Executive
with the Corporation as President and Chief Executive Officer (the "Original
Agreement"); and
WHEREAS, Executive and the Corporation entered into an
amendment to the Agreement on May 7, 1993 (the "Amendment");
WHEREAS, Executive and the Corporation entered into a second
amendment to the Agreement on November 10, 1999 (the "Second Amendment") (the
Original Agreement, Amendment and Second Amendment are collectively referred to
as the "Agreement");
WHEREAS, the Agreement has been restated, as set forth in
Exhibit A, which is attached to this Amendment, to incorporate into one document
solely for ease of reference the Original Agreement, the Amendment and Second
Amendment, and the terms of the Agreement are incorporated herein by reference
as though restated in full;
WHEREAS, LTV acquired all of the outstanding common stock of
the Corporation on November 10, 1999, and, as a result of such business
transaction, the Corporation is now a wholly owned subsidiary of LTV;
WHEREAS, the Corporation has been combined with the welded
tube and steel tube businesses of LTV and its Affiliates into one business unit
(hereinafter called "LTV Copperweld");
WHEREAS, the Corporation and LTV desire to employ the
Executive as an Executive Vice President of LTV and the President of LTV
Copperweld; and
WHEREAS, the Corporation, LTV and the Executive desire to make
further changes to the Agreement.
NOW, THEREFORE, in consideration of the mutual obligations
herein contained, the parties hereto, intending to be legally bound hereby,
covenant and agree that the Agreement shall be further amended, effective as of
November 10, 1999, as follows:
1. Section 1(a) of the Agreement is hereby deleted and the following
Section 1(a) is substituted in lieu thereof:
2
1. EMPLOYMENT
(a) The LTV Corporation ("LTV") hereby employs the
Executive to render services to LTV as an Executive Vice
President of LTV and the Corporation hereby employs the
Executive to render services to the Corporation as the
President of LTV Copperweld. The Executive shall devote his
full time and attention to rendering his services in the
general management of the business of the Corporation and
shall report to the Chief Executive Officer or Chief Operating
Officer of LTV and perform such other duties commensurate with
his position as may be specified from time to time by the
Chief Executive Officer or Chief Operating Officer of LTV.
2. Section 2 of the Agreement is hereby deleted and the following
Section 2 is substituted in lieu thereof:
TERM: This Agreement shall commence and shall be effective and
immediately binding as of November 10, 1999 (hereinafter
called "Effective Date") and continue until December 31, 2002,
unless earlier terminated as set forth in Sections 7, 10(a),
11 and 5 (which provides that the Executive may quit or retire
and receive a supplemental pension benefit as provided in
Section 5(b)(1)(i) before he reaches age 65, but after he
reaches age 55, if the Executive is continuously employed by
the Corporation until the date he attains age fifty-four and
provided the Executive gives the Corporation's Board of
Directors one year's written notice of his intent to do so,
unless the Corporation and the Executive mutually consent in
writing to a shorter notice period) (the "Term"). By way of
example, under Section 5 of the Agreement, the Executive may,
on his fifty-fourth birthday, give notice of his intention to
retire on his fifty-fifth birthday and, in that event, the
Executive is entitled to receive the supplemental pension
benefits as described in Section 5(b)(1)(i). Unless
specifically set forth herein to the contrary, the Executive's
rights and the Corporation's corresponding obligations under
Sections 4A, 5, 7, 8, 10 and 18 of this Agreement shall not
terminate on the termination of this Agreement, but shall
continue until all amounts due Executive thereunder are paid
in full. Thereafter, this Agreement shall remain in effect
from year to year in accordance with the terms hereof;
provided that the Corporation shall have the right to
terminate it at any time, in which case the Executive shall be
entitled to the benefits, if any, hereinafter set forth
(except in the case of a termination for cause), and the
Executive shall have the right to terminate the Agreement
provided he gives the Corporation written notice of his intent
to terminate at least twelve months before his anticipated
termination date, in which case the Executive shall be
entitled to the benefits, if any, hereinafter set forth.
3. Sections 4(a) and 4(b) of the Agreement are hereby deleted and the
following Sections 4(a) and 4(b) are substituted in lieu thereof:
3
(a) During the term of this Agreement, the
Corporation shall pay Executive, in equal monthly
installments, a salary at an annual rate of $500,000 or
greater (the "Annual Salary"). Such rate shall be reviewed
annually in accordance with the Corporation's policies to
determine whether Executive's Annual Salary should be
increased.
(b) As long as the Executive is an employee of
Corporation, if the Corporation, LTV or LTV Copperweld awards
its executive class of officers bonuses and/or additional
incentive compensation, the Executive shall be entitled to
equitably participate in such bonuses and/or additional
incentive compensation.
4. The following Section 4A is hereby made a part of the Agreement:
4A. DEFERRED COMPENSATION CREDIT. As soon as reasonably
practicable following the Effective Date, one million five
hundred thousand dollars ($1,500,000) of deferred compensation
(the "Deferral Amount") shall be credited to an account for
the Executive in the LTV Corporation Executive Deferred
Compensation Plan (the "EDC Plan") and shall be "funded" in a
"rabbi trust" previously created by LTV which provides funding
for the EDC Plan and other plans. Executive acknowledges that
he is an unsecured creditor of LTV with respect to his account
in the EDC Plan and that assets in the rabbi trust are not set
aside from general creditors of LTV.
(a) Two-thirds of the Deferral Amount and any
earnings and appreciation thereon shall become nonforfeitable
on the second anniversary of the Effective Date if the
Executive remains employed by the Corporation on such date,
and the remaining one-third of the Deferral Amount and any
earnings and appreciation thereon shall become nonforfeitable
on the third anniversary of the Effective Date if the
Executive remains employed by the Corporation on such date.
Notwithstanding the foregoing, and notwithstanding any
provisions of the EDC Plan, the Executive will forfeit any
rights to the Deferral Amount and any earnings or appreciation
thereon if, prior to the third anniversary of the Effective
Date, his employment with the Corporation is terminated for
cause as set forth in Section 10(a).
Notwithstanding any provisions of the EDC Plan to the
contrary, the Executive shall have the right to irrevocably
elect to receive an in-service lump sum distribution of the
non-forfeitable portion of his Deferral Amount on the two
dates such Deferral Amount becomes nonforfeitable as set forth
in Section 4A of this Agreement (the "Vesting Date"). An
election to receive such an in-service distribution shall be
made not later than 30 days following the signing of this
Third Amendment. Such distribution, if elected, shall be made
without penalty not later than 30 days following the Vesting
Date under one of the forms provided in Section 6.4 of the EDC
Plan which forms will include a lump sum distribution option.
The EDC Plan shall be amended as necessary to carry out the
foregoing provisions.
4
(b) Executive's right sin the Deferral Amount will
become nonforfeitable immediately on his death or permanent
disability (within the meaning of the Corporation's long term
disability plan applicable to the Executive at the time of
such disability) or termination by the Corporation for any
reason or no reason other than for cause as set forth in
Section 10(a). The Executive may elect payment of the
nonforfeitable portion of the Deferral Amount and any earnings
or appreciation thereon in accordance with the terms of the
EDC Plan. The Deferral Amount and any earnings and
appreciation thereon shall not be taken into account for
purposes of any pension or other benefit calculations under
any plan, policy, program or arrangement of the Corporation,
including, but not limited to the supplemental pension
benefits provided for in Section 5.
5. Section 5(b)(2)(i) of the Agreement is hereby deleted and the
following Section 5(b)(2)(i) is substituted in lieu thereof:
(b)(2)(i) If the Executive's employment is terminated
by the Corporation other than for cause, as set forth in
Section 10(a), or the Executive's employment is terminated as
a result of his permanent incapacity, as set forth in Section
7(d), the Executive shall be eligible to begin receiving the
supplemental pension benefit provided for in accordance with
Section 5(a) upon his reaching age 55, (or such later age as
he elects pursuant to the election procedure set forth in
Section (b)(1)(i) hereof, which procedure is incorporated
herein by reference) and upon completion of any time period
during which the Executive continues to receive the equivalent
of his Annual Salary as set forth in Section 7(d) or 10(b),
whichever is later, except that for purposes of calculating
the amount of the supplemental pension benefit, the percentage
set forth in Exhibit 1 shall be substituted for sixty percent
(60%) in paragraph 5(a)(1). For purposes of determining the
Executive's number of years of service, the period during
which he receives the equivalent of his Annual Salary after
being terminated on account of his permanent incapacity
pursuant to Section 7(d) or as a result of a change in control
as set forth in Section 10(d) shall be included in the number
of years that he was otherwise employed by the Corporation and
the equivalent of his Annual Salary paid during such period
shall be included in his annual compensation for the purpose
of calculating his Average Annual Compensation. The time
period during which he receives the equivalent of his Annual
Salary after being terminated pursuant to Section 10(b) shall
not be included in determining the number of years of service.
By way of illustration, if the Executive at age 60 is
terminated pursuant to Section 10(b) at which time he would
have more than 21 years of service, and he elects to receive
the supplemental pension benefit after reaching age 63, he
would receive 60% (the applicable percentage set forth in
Exhibit 1), of his Average Annual Compensation for purposes of
calculating his supplemental pension benefit in accordance
with Section 5(a).
5
By way of further illustration, if the Executive is
terminated pursuant to Section 10(b) at age 56, at which time
he would have more than seventeen years of service, and he
elects at age 59 to immediately receive a supplemental pension
benefit, he would receive 48% of his Average Annual
Compensation in making the calculation in Section 5(a) (the
applicable percentage set forth in Exhibit 1 at age 59). If,
assuming the same termination date, the Executive elects to
receive his pension after reaching age 62, he would receive
60% of his Average Annual Compensation in making the
calculation.
As a final example, if the Executive is terminated as
a result of his permanent incapacity in accordance with
Section 7(d) on his sixteenth employment anniversary date, and
he then receives the equivalent of his Annual Salary for three
years, his number of years of service would be nineteen
(sixteen years of employment and the receipt of the equivalent
of his Annual Salary for three years after being terminated on
account of his permanent incapacity) and, if he elects to
begin receiving his supplemental pension benefit at age 57, he
would receive 44% (the applicable percentage in Exhibit 1) of
his Average Annual Compensation for purposes of calculating
his supplemental pension in accordance with 5(a).
In addition, in calculating the amount of the offset
for Primary Social Security and the other offsets and
reductions listed in Section 5(a), it shall be conclusively
presumed that the Executive started to receive those benefits
as soon as he was eligible for them, without regard to whether
he was actually receiving them. To illustrate the foregoing,
in the preceding example, when the Executive was terminated at
age 56 pursuant to Section 10(b), and elected to receive an
immediate supplemental pension benefit after full payment of
his three year salary benefit, at which time he would be 59,
his supplemental pension would be equal to 48% of his Average
Annual Compensation. It would then be reduced for any pension
benefit under the Pension Plan as it currently exists because
under that Plan, there is a provision for an early retirement
benefit at age 55 or thereafter (with 5 years of continuous
service). Accordingly the Executive's benefit hereunder would
be reduced dollar-for-dollar by the amount which he could
receive at age 56 in the normal form of annuity payment from
the Pension Plan, whether or not he elects to receive benefits
at that time from the Pension Plan. Furthermore, when the
Executive attains age 62, he would then have become eligible
(under the law in force at the date of this Agreement), to
receive a primary social security benefit, and his
supplemental pension hereunder would be further reduced
dollar-for-dollar by the amount of such social security
benefit as he would have been entitled to receive whether or
not he elected to receive that social security benefit.
6. Section 5(c)(2) of the Agreement is hereby deleted and the following
Section 5(c)(2) is substituted in lieu thereof:
6
(c)(2) With respect to the supplemental pension
benefit payable under Section 5(a) or (b), the following
provisions shall apply: (1) after the payment of the
supplemental pension benefit commences, there shall be no
adjustments thereto for any subsequent increases in the
Executive's employer-provided retirement income benefits
payable under the qualified defined benefit plans, qualified
defined contribution plans, and/or qualified money purchase
plans of other employers or under Social Security or under the
Pension Plan; (2) any time period during which the Executive
or his surviving spouse is receiving the equivalent of the
Executive's Annual Salary after his termination or death shall
not be included in his years of service for purposes of
determining the percentage of his Average Annual Compensation
to be used in calculating the supplemental pension except, as
set forth in Section 5(b)(2)(i), for that time period during
which the Executive is receiving the equivalent of his Annual
Salary after being terminated on account of his permanent
incapacity in accordance with Section 7(d) or as a result of a
change in control as set forth in Section 10(d); and (3) the
phrase "years of service" shall include all that time since
the Executive's date of hire by the Corporation on June 16,
1984. In calculating years of service, if the Executive is
terminated without cause pursuant to Section 10(b) the number
of full calendar months that the date of his termination
exceeds his employment anniversary date shall be included, on
a pro-rata basis, in determining the applicable percentage set
forth in the schedule attached hereto as Exhibit 1. For
example, the Executive's employment anniversary is June 16;
therefore, if he is terminated on December 16, 2000, sixteen
years and six full calendar months after his date of hire, and
he elects to receive his supplemental pension benefit at age
65, the percentage of his Average Annual Compensation that
would be used in calculating his benefit would be 58.35
(one-half of the percentage between sixteen years of service
and seventeen years of service assuming receipt of the benefit
at age 65, as set forth in Exhibit 1). If the Executive
retires or is terminated as a result of his permanent
incapacity in accordance with 7(d), the number of months he
has been employed after his separation date will not be
included on a pro-rata basis in determining his years of
service (in the case of a termination pursuant to section
7(d), the Executive is already receiving credit for additional
years of service pursuant to Section 5(b)(2)).
7. Section 6 of the Agreement is hereby deleted and the following
Section 6 is substituted in lieu thereof:
6. COVENANT AGAINST COMPETITION.
(a) The Executive agrees that (i) at all times during
the term of this Agreement, (ii) for two years after the
Executive retires or is terminated for any reason, and (iii)
any time in which the Executive is receiving an Annual Salary
from the Corporation, or the equivalent of his Annual Salary
from the Corporation, after this Agreement has been terminated
(but for purposes of this Section 6(a), the payment of any
form of pension or retirement benefits to the Executive in
connection with his retirement from the Corporation in
accordance
7
with this Agreement (including Section 5 hereof), or under any
other qualified or nonqualified plans which provide retirement
benefit in accordance with the Corporation's policies
regarding the retirement of senior executives shall not be
considered to be Annual Salary or its equivalent), the
Executive will not directly or indirectly engage in any
business which is substantially competitive with any business
then actively conducted by LTV Copperweld and any other
business of LTV that the Executive at the time has a major
responsibility in the control and direction thereof, either as
owner, partner or officer, or employee of such a business, and
the Executive will not consult with any such competitive
business; provided, however, that ownership by the Executive
of not more than five percent (5%) of the outstanding shares
of stock of any such business listed on any national stock
exchange or of not more than twenty-five percent (25%) of the
stock of any such business not so listed shall not be deemed
to amount to a violation of this covenant.
If the Executive is first elected to be a director of any
business enterprise after the Effective Date, neither such
election nor the Executive's service as a director of such
business enterprise shall be deemed to amount to a violation
of this covenant if, prior to accepting any such directorship,
the Executive seeks and secures the prior approval of the
Board of Directors of the Corporation. Notwithstanding the
foregoing, the Executive is expressly permitted to continue to
serve as a director of any business enterprise of which he was
serving as a director as of the Effective Date, and he shall
not be deemed to be in violation of the foregoing covenant by
continuing such service from and after the Effective Date.
(b) In the event of a change in control, as the
result of which the Executive is entitled to benefits under
the LTV Corporation Change in Control Severance Pay Plan I
("LTV Change in Control Plan"), and elects to receive such
benefits, the covenant not to compete contained in Section
6(a) above shall become void and of no effect and the non
compete provisions of the LTV Change in Control Plan shall
control.
8. Section 10 of the Agreement is hereby deleted and the following
Section 10 is substituted in lieu thereof:
10. INVOLUNTARY TERMINATION OF EMPLOYMENT.
(a) The Corporation may terminate the employment of
the Executive for cause at any time, in which event this
Agreement shall automatically terminate in its entirety
(except for the obligations of the Executive set forth in
Section 6), and no further payments whatsoever shall be due to
the Executive or to any beneficiary or his estate hereunder.
Termination shall be deemed to be "for cause" only if such
termination is by reason of conviction of a felony or by
reason of any act, or failure to act, by the Executive, in bad
faith and to the material detriment of the Corporation, as
determined by the Board of Directors of the Corporation acting
reasonably upon the substantial evidence before it.
8
Notwithstanding the foregoing, the Board of Directors of the
Corporation may, in its discretion, if it feels warranted
under the circumstances, award some termination payment to the
Executive.
(b) If on or prior to December 31, 2002, the
Executive's employment is terminated other than for the
reasons set forth in Sections 7(d) or 10(a) of this Agreement
or under circumstances which would entitle Executive to
receive the benefits provided under the LTV Change in Control
Plan, the Corporation shall pay to the Executive from its
general funds, an amount equal to three (3) times the amount
of the Executive's Annual Salary in equal monthly installments
for thirty-six (36) months. In the event of the Executive's
death before payment in full, the remaining payments shall be
made to the beneficiary or beneficiaries designated by the
Executive to the Corporation in writing or, absent such a
designation, to his estate. If the Corporation terminates the
Executive's employment under this Section 10(b), it shall also
provide the following benefits to the Executive: (i)
continuation for a period of three years, or until the
Executive's death, whichever event occurs first, of that group
medical, dental and life insurance coverage which is generally
applicable to the Corporation's salaried employees; (ii)
continuation of the split dollar life insurance program
described in Section 4(c) of this Agreement; (iii) transfer to
the Executive of title to the vehicle which the Executive is
then using, free and clear of any liens (but the Executive
shall pay all taxes associated with the transfer); (iv)
executive outplacement services consistent with the level of
such services provided to other senior executives; and (v) the
payment of the portion of any award under the Management Bonus
Program to which the Executive would have been entitled for
the year in which the termination occurs, prorated based upon
the date of termination.
(c) If the Executive's employment is terminated on or
after January 1, 2003, the provisions of the LTV Corporation
Executive Severance Plan ("LTV Severance Plan") shall control;
provided, however that the definition for "for cause" set
forth in Section 10(a) shall be applied in determining a
Qualifying Termination under such Plan.
(d) The Compensation and Organization Committee of
the Board of Directors of LTV shall designate in a Committee
Action that Executive be an "Executive" covered by the LTV
Change in Control Plan as of the Effective Date, benefiting
from the provisions of Section 4 of such Plan, and Executive
shall remain covered by such Plan or any successor plan
applicable to comparably situated executives during the Term
of the Agreement.
9. Section 11 of the Agreement is deleted and the following Section 11
is substituted in lieu thereof:
11. CIRCUMSTANCES WHICH EXECUTIVE MAY CONCLUSIVELY DEEM
TO BE A TERMINATION WITHOUT CAUSE.
9
Notwithstanding any provision of this Agreement to
the contrary, the Executive shall be entitled to resign
voluntarily upon written notice to the Chief Executive Officer
of LTV within sixty (60) days of any of the following events,
but only if any such event shall have occurred on or prior to
December 31, 2002, and to have such resignation treated as a
termination by the Corporation without cause, thereby
entitling the Executive to all benefits under this Agreement
arising from such termination:
(1) a material change or announcement of a material
change in the Executive's position and offices with the
Corporation or LTV set forth in Section 1;
(2) a material change in the authority, duties or
responsibilities of the Executive; or
(3) a reduction in the Executive's Annual Salary or
annual incentive opportunity from its then current level.
For purposes of this section only, a material change in the
Executive's authority, duties and responsibilities shall not
be deemed to have occurred in the event such change is the
result of a closure or sale of a portion of the Corporation's
business for which the Executive has authority or
responsibility.
10. Section 12 of the Agreement is deleted and the following Section 12
is substituted in lieu thereof:
12. This Section has been intentionally omitted.
11. The following Section 18 is hereby made a part of the
Agreement:
18. CERTAIN ADDITIONAL PAYMENTS BY THE CORPORATION. Anything
in this Agreement to the contrary notwithstanding, if it shall
be determined (as hereafter provided) that any payment (other
than the Gross-Up payments provided for in this Section 18) or
distribution by the Corporation or any of its affiliates to or
for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including
without limitation any stock option, performance share,
performance unit, stock appreciation right or similar right,
or the lapse or termination of any restriction on or the
vesting of exercisability or any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code by reason of being considered
"contingent on a change in ownership or control" of LTV,
within the meaning of Section 280G of the Code or to any
similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes,
together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the
Executive shall be
10
entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment") from the Corporation. The
Gross-Up Payment shall be in an amount such that, after
payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including
any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to
the Payment.
12. As of the Effective Date, the Executive hereby forever waives any
and all rights he may have had pursuant to the provision of Section 11 of the
Original Agreement and the amendment to Section 11 as set forth in the May 7,
1993 Amendment, as a result of the acquisition of all the outstanding common
stock of the Corporation by LTV on November 10, 1999 and as a result of
Executive's change in responsibilities due to the combination of Copperweld with
the welded tube and steel tube businesses of LTV forming LTV Copperweld.
13. All other terms, provisions, sections and subsections of the
Agreement, are hereby restated, approved and ratified in all other respects.
IN WITNESS WHEREOF, the Executive has signed and sealed this Amendment
and the Corporation and LTV have caused this Amendment to be executed by a duly
authorized person and its Corporate seals to be hereunto affixed the day and
year first above written.
WITNESS: XXXX X. XXXXXX
/s/ Xxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxx (SEAL)
------------------------------------ -----------------------------------
ATTEST: COPPERWELD CORPORATION
/s/ N. Xxxxx Xxxxxxx By: /s/ J. Xxxxx Xxxxx
------------------------------------ -------------------------------
Secretary/Assistant Secretary (SEAL)
ATTEST: THE LTV CORPORATION
/s/ N. Xxxxx Xxxxxxx By: /s/ J. Xxxxx Xxxxx
------------------------------------ ------------------------------
Secretary/Assistant Secretary (SEAL)
11
SCHEDULE A
TO THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
------------------------------------------
EMPLOYMENT AGREEMENT
AGREEMENT made this _____ day of _________, between XXXX X.
XXXXXX, a resident of Pittsburgh, Pennsylvania (hereinafter called the
"Executive"), and COPPERWELD CORPORATION, a Delaware corporation, with offices
at Four Gateway Center, Pennsylvania (hereinafter called the "Corporation").
W I T N E S S E T H:
WHEREAS, the Corporation desires to employ the Executive as
President and Chief Executive Officer; and
WHEREAS, the Executive desires to accept employment with the
Corporation as its President and Chief Executive Officer.
NOW, THEREFORE, in consideration of the mutual obligations
herein contained, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. EMPLOYMENT.
----------
(a) The Corporation hereby employs the Executive to render
services to the Corporation as President and Chief Executive Officer. The
Executive shall devote his full-time and attention to rendering his services in
the general management of the business of the Corporation and shall report to
the Board of Directors and perform such other duties commensurate with his
position as may be specified from time to time by the Board of Directors or by a
committee or subcommittee thereof, as may be specified from time to time by the
Board of Directors.
(b) The Executive hereby accepts such employment and agrees
that he will during the continuance hereof devote his full-time and attention
and best talents and abilities to the duties of employment hereby accepted by
him.
(c) The Executive agrees to serve without additional
compensation as a Director or member of any committee of the Board of Directors
of the Corporation.
2. TERM. This Agreement shall commence on August 30, 1988 and continue
until December 31, 1995, unless earlier terminated as set forth in Sections 7,
10 and 11. Thereafter, this Agreement shall remain in effect on the same terms
as set forth herein, except that the Corporation shall have the right to
terminate it at any time, in which case the Executive shall be entitled to the
benefits, if any, hereinafter set forth (except in the case of a termination for
cause), and the Executive shall have the right to terminate the Agreement
provided he gives the Corporation written notice of his intent to terminate at
least twelve months before his anticipated
12
termination date, in which case the Executive shall be entitled to the benefits,
if any, hereinafter set forth.
3. PLACE OF EMPLOYMENT. The Corporation agrees that the Executive will
have his principal office at and will perform his principal duties at the
Corporation's headquarters office, Four Gateway Center, Pittsburgh,
Pennsylvania, or such other address to which the Corporation's headquarters may
be removed during the term of this Agreement. Notwithstanding the foregoing, the
Executive acknowledges that it may be necessary from time to time for him, in
the performance of his duties, to travel on behalf of the Corporation and to
perform such duties while temporarily away (for unpredictable periods of time)
from his principal office.
4. COMPENSATION. As compensation to the Executive for his performance
of the services to be rendered herein and for his performance of all the
additional obligations of employment imposed by common law or statutory law with
respect to his positions and offices with the Corporation, the Corporation
agrees to pay to the Executive and the Executive agrees to accept the following
salary, other compensation and benefits, in addition to the other compensation
and benefits provided under this Agreement:
(a) During the term of this Agreement, the Corporation shall
pay the Executive, in equal monthly installments, a salary at an annual rate of
$250,000, or such greater rate as the Board of Directors may from time to time
determine (the most recent rate, annualized, being herein referred to as the
"Annual Salary").
(b) As long as the Executive is an employee of the
Corporation, if the corporation awards its executive class of officers bonuses
and/or additional incentive compensation, the Executive shall be entitled to
equitably participate in such bonuses and/or additional incentive compensation
as determined and awarded in the discretion of the Compensation Committee of the
Board of Directors.
(c) The Executive shall be entitled to participate, so long as
he is an employee of the Corporation, in any and all of the Corporation's
present or future employee benefit plans, including without limitation pension
plans, profit-sharing plans, insurance plans, and other benefits, which are
generally applicable to the Corporation's executives; provided, however, that
the accrual and/or receipt by the Executive of benefits under and pursuant to
any such present or future employee benefit plan shall be determined and
controlled by the provisions of such plan. Without limiting the foregoing, the
Corporation agrees to provide $400,000 of split-dollar whole life insurance on
the Executive's life is subject to and covered by separate agreement, and the
latter is controlling.
5. SUPPLEMENTAL PENSION BENEFITS.
(a)(1) Should the Executive continue in the employ of the
Corporation until his retirement at age 62 (or later, if requested in writing to
do so by the Corporation), the Corporation shall pay, beginning with the month
following such retirement to the Executive in monthly installments for his
lifetime, from the general funds of the Corporation, a supplemental pension
benefit equal to the difference between (i) all amounts which the Executive
receives as
13
Primary Social Security benefits, plus the employer-provided retirement income
benefits payable under the then existing qualified defined benefit plan of the
Corporation, or any successor corporation (the "Pension Plan") and (unless
waived by the Compensation Committee of the Board of Directors of the
Corporation as more fully set forth at the end of this paragraph 5(a)(1)) under
the qualified defined benefit plans, qualified defined contribution plans and/or
qualified money purchase plans or other employers and (ii) sixty percent (60%)
of the average of the highest annual compensation paid by the Corporation to him
in any three consecutive calendar years of the ten most recently completed
calendar years ending on or prior to the date of his retirement (the "Average
Annual Compensation"). In determining the Executive's annual compensation, the
amounts to be included in this calculation shall be limited to his Annual Salary
and his yearly bonus and/or additional yearly incentive compensation (and for
this purpose, the Executive's yearly bonus and/or additional yearly incentive
compensation, if any, shall be deemed to have been paid, and shall be included
in his annual compensation, in the year that they are earned, even if they are
paid in a subsequent year) and shall include all other compensation and other
benefits received by the executive including, but not limited to, long-term
incentive bonuses such as stock option rights, and restricted stock. In
addition, and for the purpose of this calculation, the amount of the Executive's
annual compensation shall not be reduced by the amount of salary, bonus or
yearly incentive compensation the receipt of which the Executive elects to defer
pursuant to a plan or arrangement approved by and participated in by the
Corporation.
For purposes of the offsets referred to above, the phrase
"employer-provided retirement income benefits payable under the then existing
qualified defined benefit plans of the Corporation and under the qualified
defined benefit plans, qualified defined contribution plans, and/or qualified
money purchase plans of other employers," shall mean those benefits that are in
fact paid to the Executive under all such plans, provided that, (1) in the event
that the Executive is married on the date that he first becomes eligible for
employer-provided retirement income benefits under any qualified defined benefit
plan, the amount of the offset with respect to any such plan shall not be less
than the amount he would have received had there been a qualified joint and
survivor benefit in effect, and (2) in the case of a qualified defined
contribution plan or a qualified money purchase plan, the amount of the offset
shall be the benefit payable thereunder (i) in the form of a qualified joint and
survivor annuity if the Executive is married on the date the offset is
determined or (ii) in the form of a single life annuity if the Executive is not
married on the date the offset is determined, with the amount of the benefit
payable under each said annuity determined by the applicable purchase rates used
under the plan, or in the absence of such purchase rates, by the 1983 Group
Annuity Mortality Tables for Males and interest at the rate the Pension Benefit
Guaranty Corporation would use as of the date of determination to calculate the
present value of a lump sum distribution on plan termination. Also for purposes
of the offsets referred to above, the phrase "employer-provided retirement
income benefits payable under the then existing qualified defined benefit plans
of the Corporation and under the qualified defined benefit plans, qualified
defined contribution plans, and/or qualified money purchase plans of other
employers" shall not include any retirement income benefits attributable to
employer contributions made as a result of the Executive's election to reduce or
defer the receipt of his salary pursuant to a qualified cash or deferred
arrangement under Section 401(k) of the Internal Revenue Code of 1986 or
pursuant to any comparable arrangement permitted under current or subsequent
law.
14
The Executive shall have the right to request that the offsets
hereinabove set forth for amounts attributable to the qualified defined benefit
plans, qualified defined contribution plans, and/or the qualified money purchase
plans of other employers be waived, so that such amounts would not be taken into
account in calculating the amount of the supplemental pension benefit hereunder.
Such request for waiver shall be in writing and shall be addressed to all
members of the Compensation Committee of the Board of Directors of the
Corporation (or whatever committee then is performing the functions being
performed, as of the date of this agreement, by the Executive Compensation
Committee). The Committee shall render its decision on the Executive's request
as soon as practicable following receipt thereof. The Committee's decision will
be final and not subject to appeal.
5(a)(2) Upon the Executive's death following his retirement
pursuant to paragraph 5(a)(1), his surviving spouse shall be entitled to receive
in monthly installments during her lifetime, one-half of the supplemental
pension benefit that the executive was receiving or eligible to receive on the
date of his death. For all purposes of this Agreement, to qualify as a
"surviving spouse," the woman to whom the executive was married, and not
separated from (without respect to the cause of separation), on the date of the
Executive's death must be the same woman to whom the Executive was married, and
not separated from (without respect to the cause of separation) on the date he
retired or his employment was otherwise terminated.
5(b)(1)(i) If the Executive is continuously employed by the
Corporation until the date he attains age fifty-four, then, provided the
executive gives the Board of Directors one year's written notice of his intent
to do so (unless the parties mutually consent in writing to a shorter notice
period, which consent may be unreasonably withheld by the Corporation), he shall
be entitled to quit or to retire and receive a supplemental pension benefit, as
hereinafter described, before he reaches age 62 but before he reaches age 55,
but in no event sooner than one year from the date that the Board of Directors
receives his written notice (unless, as set forth above, the parties have
mutually consented in writing to a shorter notice period). As long as the
Executive satisfies the two foregoing conditions (i.e., continuous employment
until he attains fifty-four years of age, and the proper written notice of his
intent to quit or to retire), the actual date he retires, and the date he elects
to receive his supplemental pension benefits (which he has the option to defer
in order to increase the percentage of the Average Annual Compensation that
would be used in calculating his benefits pursuant to Section 5(a)) shall be
left to him, and the pension benefit will be paid on a monthly basis as on as
practicable after the date he elects in writing to receive it. Under such
circumstances, the Executive shall receive the supplemental pension benefit
described in Section 5(a), except that, for purposes of determining the amount
of the supplemental pension benefit, the applicable percentage set forth on the
schedule attached hereto as Exhibit I shall be substituted for sixty percent
(60%) in paragraph 5(a)(1). If the Executive quits or retires without having
given the proper written one-year's notice (or such shorter notice as the
parties may have consented to in writing, which consent may be unreasonably
withheld by the Corporation), neither he nor his spouse shall be entitled to any
supplemental pension benefits hereunder. By way of illustration, if the
Executive gives his one year written notice to the Board of Directors during his
fifty-sixth (56th) year, in which case he would be entitled to retire one year
later, at which time his latest attained age will be 57, he will be eligible to
receive at age 57 the difference between 44% of his Average Annual
15
Compensation (the applicable percentage set forth in Exhibit 1) and the
deductions or offsets described in Section 5(a). For a retiree age 57, there
are, as of the date of this agreement, no such deductions or offsets applicable.
However, when the Executive attains age 60, he may become entitled to a benefit
under the Pension Plan. At that time, therefore, his supplemental pension
benefit hereunder would be reduced to reflect the benefit which would be payable
in the normal form of annuity payment to the Executive under the Pension Plan,
even if he does not elect to receive it. Similarly, when the Executive reaches
age 62, thereby becoming entitled to a social security benefit, his supplemental
pension hereunder will be further reduced to reflect that social security
benefit whether or not the retired Executive elects to receive it. In all
respects other than the calculation of the Executive's Average Annual
Compensation, the supplemental pension benefits of the Executive will be
determined by reference to Section 5(a).
By way of further example, using the same notice and
retirement date as set forth in the preceding example, if the Executive retires
during his 57th year, he could defer receipt of his supplemental pension benefit
until he reaches age 62, at which time he could begin receiving a supplemental
pension equal to the difference between 60% of his Average Annual Compensation
(the applicable percent set forth in Exhibit 1) less any offsets or deductions
as described above.
As a final example, if the Executive quits his employment with
the Corporation without having given the requisite notice, then regardless of
his age or years of service with the Corporation, neither the Executive nor his
spouse will be entitled to any supplemental pension benefits under this
paragraph 5(b)(l)(i).
5(b)(1)(ii) If the Executive dies after having begun to
receive his supplemental pension, his surviving spouse, if any, shall receive
one-half of the supplemental pension benefit that he had been receiving pursuant
to paragraph (b)(1)(I) at the time of his death. If the Executive dies after
retiring pursuant to this Section, but before having begun to receive his
supplemental pension benefit (as would occur for example, if he defers receipt
of said benefit), the surviving spouse shall have the right to elect to begin
receiving a supplemental pension benefit equal to one-half of the supplemental
pension benefit that he executive would have been receiving at the time of his
death had he elected to have his supplemental pension begin on the first day of
the month following the date on which he died, to be payable as soon thereafter
as is practicable. The surviving spouse's election shall be made by providing
written notice to the Corporation's Director of Compensation and Benefits of the
Chairman of the Compensation Committee of the Board of Directors of the
Corporation of her desire to receive her supplemental pension benefit, which
written notice shall state the date she desires to begin receiving hr
supplemental pension benefit, and which election shall be binding and
irrevocable once payment s to have her commenced. If the surviving spouse elects
to receive her supplemental pension benefit after the first day of the month
following the date of the Executive's death, the amount of said benefit will be
equal to one-half of the amount the Executive would have received on the date
the surviving spouse begins receiving said benefit had the Executive lived to
that date. For example, if the Executive retired in his 57th year, and died one
year later, but before beginning to receive his supplemental pension benefit
until the Executive would have reached age 60, at which time she would receive
one-half of what he would have received had he lived until the date payment of
the supplemental pension benefit to the surviving spouse begins.
16
5(b)(2)(i) If the Executive is continuously employed by the
Corporation for at least five years, i.e., until June 16, 1989, and, thereafter,
the Executive's employment is terminated by the Corporation other than for
cause, as set forth in Section 10(a), or thereafter the Executive's employment
is terminated as a result of his permanent incapacity, as set forth in Section
7(d), the Executive shall be eligible to begin receiving the supplemental
pension benefit provided for in accordance with Section 5(a) upon his reaching
age 55, (or such later age as he elects pursuant to the election procedure set
forth in Section (b)(1)(i) hereof, which procedure is incorporated herein by
reference) and upon completion of any time period during which the Executive
continues to receive the equivalent of his Annual Salary as set forth in
sections 7(d) and 10(b), whichever is later, except that for purposes of
calculating the amount of the supplemental pension benefit, the percentage set
forth in Exhibit 1 shall be substituted for sixty percent (60%) in paragraph
5(a)(1). For purposes of determining the Executive's number of years of service,
the period during which he receives the equivalent of his Annual Salary after
being terminated on account of his permanent incapacity pursuant to Section 7(d)
shall be included in the number of years that he was otherwise employed by the
Corporation and the equivalent of his Annual Salary paid during that period
shall be included in his annual compensation for the purpose of calculating his
Average Annual Compensation. The time period during which he receives the
equivalent of his Annual Salary after being terminated pursuant to Section 10(b)
shall not be included in determining the number of years of service.
By way of illustration, if the Executive is terminated other
than for cause pursuant to Section 10(b) on his sixth employment anniversary
date, and he elects to receive the supplemental pension benefit after reaching
age 57, he would receive 7.3% (the applicable percentage set forth in Exhibit
1), of his Average Annual Compensation for purposes of calculating his
supplemental pension benefit in accordance with Section 5(a). If, assuming the
same termination date, he elects to receive the supplemental pension after
reaching 65 years of age, he would receive 23.3% of his Average Annual
Compensation in making the calculation set forth in 5(a).
By way of further illustration, if the Executive is terminated
pursuant to Section 10(b) at age 56, at which time he would have more than
seventeen years of service, and, after he has received full payment of the three
years' salary benefits as set forth in Section 10(b), he elects immediately to
receive a supplemental pension benefit, he would receive 48% of his Average
Annual Compensation in making the calculation in Section 5(a) (the applicable
percentage set forth in Exhibit 1 at age 59). If, assuming the same termination
date, the Executive elects to receive his pension after reaching age 65, he
would receive 60% of his Average Annual Compensation in making the calculation.
As a final example, if the Executive is terminated as a result
of his permanent incapacity in accordance with Section 7(d) on his sixth
employment anniversary date, and he then receives the equivalent of his Annual
Salary for three years, his number of years of service would be nine (six years
of employment and the receipt of the equivalent of his Annual Salary for three
years after being terminated on account of his permanent incapacity) and, if he
elects to begin receiving his supplemental pension benefit at age 57, he would
receive 17.3% (the
17
applicable percentage in Exhibit 1) of this Average Annual Compensation for
purposes of calculating his supplemental pension in accordance with 5(a).
In addition, in calculating the amount of the offset for
Primary Social Security and the other offsets and reductions listed in Section
5(a), it shall be conclusively presumed that the Executive started to receive
those benefits as soon as he was eligible for them, without regard to whether he
was actually receiving them. To illustrate the foregoing, in the preceding
example, when the Executive was terminated at age 56 pursuant to Section 10(b)
and elected to receive an immediate supplemental pension benefit after full
payment of his three year salary benefit, at which time he would be 59, his
supplemental pension would be equal to 48% of his Average Annual Compensation.
It would not be reduced for any pension benefit under the Pension Plan as it
currently exists because under that Plan, there is no provision for an early
retirement benefit prior to age 60. However, when the Executive attains age 60,
his supplemental pension benefit hereunder would be reduced dollar-for-dollar by
the amount which he could receive at age 60 in the normal form of annuity
payment from the Pension Plan, whether or not he elects to receive benefits at
that time from the Pension Plan. Similarly, if the Pension Plan is hereafter
amended to provide an earlier retirement benefit prior to a participant
attaining age 60 and the Executive becomes eligible for such a benefit, his
supplemental pension will be reduced by the amount which he could receive as an
early retirement benefit in the normal form of annuity payment from the Pension
Plan whether or not he elects to receive such benefit. Furthermore, when the
Executive attains age 62, he would then have become eligible (under the law in
force at the date of this Agreement), to receive a primary social security
benefit, and his supplemental pension hereunder would be further reduced
dollar-for-dollar by the amount of such social security benefit as he would have
been entitled to receive whether or not he elected to receive that social
security benefit.
5(b)(2)(ii) If the Executive dies after he begins receiving
his supplemental pension benefit as set forth in 5(b)(2)(i), his surviving
spouse, if any, shall be entitled to one-half of the supplemental pension
benefit that he was receiving at the time of his death. If the Executive dies
before age 55 whether before or after the termination of his employment with the
Corporation (but not after a termination of his employment by the Corporation
for cause pursuant to Section 10(a)) thereby never having received a
supplemental pension benefit as set forth in 5(b)(2)(i), the surviving spouse
shall be eligible to receive, beginning on the date the Executive would have
attained age 55 or on any later date selected by the surviving spouse, one-half
of the supplemental pension benefit the Executive would have been entitled to
receive had he lived and begun to receive his supplemental pension benefit as
set forth in 5(b)(2)(i) on the date payment of the supplemental pension benefit
to the spouse begins. If the Executive dies after age 55 whether before or after
the termination of his employment with the Corporation (but not after a
termination of his employment by the Corporation for cause pursuant to Section
10(a)) but before beginning to receive a supplemental pension benefit as set
forth in 5(b)(2)(i), the surviving spouse shall be eligible to receive,
beginning on the first day of the calendar month following the date of the
Executive's death or any later date selected by the surviving spouse, one-half
of the supplemental pension benefits the Executive would have been entitled to
receive had he lived and begun to receive his supplemental pension benefit as
set forth in 5(b)(2)(i) on the date payment of the supplemental pension benefit
to the spouse begins. Whether the executive dies before or after age 55, the
surviving spouse shall have the right to elect the receipt
18
of her supplemental pension benefit in accordance with the provisions and
procedures relating thereto as set forth in 5(b)(1)(i) and 5(b)(2)(i). For
example, if the Executive dies before age 55, the surviving spouse cannot elect
to begin to receive her supplemental pension until the Executive would have
reached age 55, and, as set forth in Section 5(b)(1)(ii), the surviving spouse
also has the right to elect receipt of her supplemental pension benefit on a
date he would have reached a later age. Similarly, if the Executive dies after
age 55 but before beginning to receive his supplemental pension benefit, the
surviving spouse can either elect to begin receiving her supplemental pension
benefit as soon as practicable thereafter, or she can elect to receive it at a
later date.
By way of further illustration, if the Executive dies on July
1, 1992, at which time he would have been continuously employed by the
Corporation for eight years, and the surviving spouse gives her written notice
of her desire to receive a supplemental pension commencing on February 19, 2001,
the date the Executive would have turned age 55, her supplemental pension would
be paid on the basis of 5% of the Executive's Average Annual Compensation (that
is, one-half (1/2) of 10%, the applicable percentage shown on Exhibit 1 after
eight years of service and receiving the pension at age 55). By way of further
example, if the Executive dies in his fifty-sixth year, at which time he would
have been continuously employed for at least 17 years, his surviving spouse will
be entitled to the three-year Annual Salary benefit as set forth in Section 8
and after that benefit has been completely paid to her, if she elects to
immediately thereafter receive the supplemental pension by giving the Board of
Directors written notice thereof, she will be entitled to a supplemental pension
paid on the basis of twenty-four percent (24%) of the deceased Executive's
Average Annual Compensation (that is, one-half (1/2) of forty-eight percent
(48%), the applicable percentage shown on Exhibit 1 at age 59).
(c)(1) If, at any age, the Executive's employment is
terminated by the Corporation for cause, as set forth in Section 10(a), no
supplemental pension benefits shall be payable under this Agreement.
(c)(2) With respect to the supplemental pension benefit
payable under Section 5(a) or (b), the following provisions shall apply: (1)
after the payment of the supplemental pension benefit commences, there shall be
no adjustments thereto for any subsequent increases in the Executive's
employer-provided retirement income benefits payable under the qualified defined
benefit plans, qualified defined contribution plans, and/or qualified money
purchase plans of other employers or under Social Security or under the Pension
Plan; (2) any time period during which the Executive or his surviving spouse is
receiving the equivalent of the Executive's Annual Salary after his termination
or death shall not be included in his years of service for purposes of
determining the percentage of his Average Annual Compensation to be used in
calculating the supplemental pension except, as set forth in Section 5(b)(2)(i),
for that time period during which the Executive is receiving the equivalent of
his Annual Salary after being terminated on account of his permanent incapacity
in accordance with Section 7(d), and, except as set forth in Section 10(d), for
that period beginning on the date of the Executive's deemed or actual
involuntary termination of employment without cause following a change in
control described in Section 11 of this Agreement and ending on the later of
December 31, 1998 or the third anniversary of said termination of employment;
and (3) the phrase "years of service" shall include all that time since the
Executive's date of hire by the Corporation on June 16, 1984. In
19
calculating years of service, if the Executive is terminated without cause
pursuant to Section 10(b), the number of full calendar months that the date of
his termination exceeds his employment anniversary date shall be included, on a
pro-rata basis, in determining the applicable percentage set forth in the
schedule attached hereto as Exhibit 1. For example, the Executive's employment
anniversary is June 16; theretofore, if he is terminated on January 16, 1993,
eight years and six full calendar months after his date of hire, and he elects
to receive his supplemental pension benefit at age 58, the percentage of his
Average Annual Compensation that would be used in calculating his benefit would
be 17.65% (one-half of the percentage between eight years of service and nine
years of service assuming receipt of the benefit at age 58, as set forth in
Exhibit 1). If the Executive retires or is terminated as a result of his
permanent incapacity in accordance with 7(d), the number of months he has been
employed after his separation date will not be included on a pro-rata basis in
determining his years of service (in the case of a termination pursuant to
Section 7(d), the Executive is already receiving credit for additional years of
service pursuant to Section 5(b)(2)).
(c)(3) In addition to the form of payment set forth under
Section 5(a) or (b), at the election of the Executive or his surviving spouse,
whichever is applicable, supplemental pension benefits may also be paid in the
form of sixty (60) equal monthly installment payments. The first such
installment payment shall be paid on the date that the Executive or surviving
spouse, whichever is applicable, would have commenced payments of supplemental
pension benefits under Section 5(a) or (b). Actuarial Equivalent amounts will be
used. A single lump sum, payable at early or normal retirement age, will be
determined based upon the Copperweld Corporation Pension Plan definition of
Actuarial Equivalent benefit. This single lump sum will be converted into sixty
(60) equal monthly installments using an interest rate for investment grade
corporate bonds with a five (5) year maturity determined within the 30 (thirty)
day period in which the Participant's benefit is to commence. Such determination
will be made by Copperweld's actuarial consultant and approved by Copperweld's
pension committee.
6. COVENANT AGAINST COMPETITION. The Executive agrees that (i) at all
times during the term of this Agreement, and (ii) for two years after the
Executive retires or is terminated for any reason, and (iii) any time in which
the Executive is receiving an Annual Salary from the Corporation, or the
equivalent of his Annual Salary from the Corporation, after this Agreement has
been terminated, the Executive will not directly or indirectly engage in any
business which is substantially competitive with any business then actively
conducted by the Corporation, either as owner, partner or officer, or employee
of such a business then actively conducted by the Corporation, either as owner,
partner or officer, or employee of such a business, and the Executive will not
consult with any such competitive business; provided, however, that ownership by
the Executive of not more than five percent (5%) of the outstanding shares of
stock of any such business listed on any national stock exchange or of not more
than twenty-five percent (25%) of the stock of any such business not so listed
shall not be deemed to amount to a violation of this covenant. With respect to
any directorship of business enterprises to which the Executive was first
elected after February 29, 1988, the maintenance or retention of such
directorship shall not be deemed to amount to a violation of this covenant if,
prior to accepting any such directorship, or prior to the acceptance of a
reelection of such directorship, the Executive seeks and secures the prior
approval of the Board of Directors of the Corporation. The
20
maintenance or retention of a directorship to which the Executive was first
elected prior to March 1, 1988 shall not be deemed to amount to a violation of
this covenant.
7. DISABILITY.
(a) If, because of illness or otherwise, the Executive should become disabled
from performing his duties hereunder, the Executive shall be entitled to a leave
of absence from the Corporation for the duration of any such disability for a
period or periods of up to, but not exceeding, one (1) year in the aggregate in
any four (4) consecutive years. During any such leave of absence, the
Executive's compensation and status as an employee hereunder shall continue as
provided herein; provided, however, that amounts, if any, payable to the
Executive under any Disability Income Plan of the Corporation will be offset
against the Executive's compensation which is payable under this Agreement.
(b) The Executive shall be deemed to be permanently incapacitated only if and
when either (i) such leaves of absence for disability shall have been continued
for more than one (1) year in the aggregate in any four (4) consecutive years,
or (ii) a single leave of absence for disability shall have continued for a
period of six (6) consecutive months and thereafter, upon impartial medical
advice which shall have been certified to the Corporation that the disability
under (i) or (ii) above is such that it will substantially impair the
Executive's ability to perform his duties hereunder.
(c) In calculating the four consecutive year period set forth in subsection (b)
hereof, that period shall be deemed to begin on the first day of the calendar
month during which the Executive is first absent on account of the state or
condition which leads to his permanent incapacity hereunder. In calculating the
period of six consecutive months referred to in subsection (b) hereof, that
period shall be deemed to begin on the first day of the calendar month in which
the Executive is first absent on account of the state or condition which leads
to his permanent incapacity hereunder.
(d) If the Executive becomes permanently incapacitated, as specified in Section
7(b) above, the Corporation may terminate the employment of the Executive
hereunder by giving the Executive (or his personal representative) written
notice of such termination during the continuance of such disability and, in
lieu of any further salary, the Corporation shall pay to the Executive as soon
as practicable, as a disability allowance, a sum equivalent to three (3) years'
salary at the Annual Salary rate in effect at the date of the permanent
incapacity, which sum shall be payable to the Executive or to his estate
(incompetent's or decedent's) in thirty-six (36) equal monthly installments. The
monthly installments described in the preceding sentence shall be reduced by the
monthly amounts (if any) payable to the Executive under any Disability Income
Plan of the Corporation after the date of the permanent incapacity therein
described. Such termination shall not effect the Corporation's obligations
hereunder apart from salary including, without limitation, the Corporation's
obligations, if any, under Section 5 hereof.
8. BENEFIT IN EVENT OF DEATH DURING EMPLOYMENT. If the Executive should
die during his employment with the Corporation, then an amount equal to three
times the Annual Salary in effect at the date of the Executive's death shall be
paid in thirty-six (36) equal monthly
21
installments to the beneficiary or beneficiaries designated by the Executive to
the Corporation in writing or absent such a designation, to his estate, which
payments will begin as soon as practicable after his death. Further, if the
Executive dies while in employment after attaining age 62 and prior to attaining
age 65, the amount payable under this Section 8 to his beneficiary or
beneficiaries, or to his estate, shall be reduced by 1/36th for each full month
after the Executive's sixty-second (62nd) birthday and the date he died. Amounts
payable hereunder shall be paid in equal monthly installments for thirty-six
(36) months or for that number of months between the date of the Executive's
death (after age 62) and the date he would have attained age 65 had he lived,
whichever is less.
9. WITHHOLDING OF APPROPRIATE TAXES. It is understood and agreed by the
parties hereto that the Corporation shall with-hold appropriate taxes from
compensation and with respect to any economic benefits herein provided when such
withholding is, in the reasonable judgment of the Corporation, required by law
or regulation.
10. INVOLUNTARY TERMINATION OF EMPLOYMENT.
(a) The Corporation may terminate the employment of the
Executive for cause at any time, in which event this Agreement shall
automatically terminate in its entirety (except for the obligations of the
Executive set forth in Section 6), and no further payments whatsoever shall be
due to the Executive or to any beneficiary or his estate hereunder. Termination
shall be deemed to be "for cause" only if such termination is by reason of
conviction of a felony or by reason of any act, or failure to act, by the
Executive, in bad faith and to the material detriment of the Corporation, as
determined by the Board of Directors of the Corporation acting reasonably upon
the substantial evidence before it. Notwithstanding the foregoing, the Board of
Directors of the Corporation may, in its discretion, if it feels warranted under
the circumstances, award some termination payment to the Executive.
(b) If, prior to reaching age 65, the Board of Directors
terminates the Executive's employment other than for the reasons set forth in
Sections 7(d) and 10(a) of this Agreement, the Corporation shall pay to the
Executive from its general funds, an amount equal to three (3) times the amount
of the Executive's Annual Salary; provided, however, the amount payable
hereunder shall be reduced by 1/36 for each full month after the Executive's
sixty-second (62nd) birthday to the date of termination. Amounts payable
hereunder shall be paid in equal monthly installments for thirty-six (36)
months, or for that number of months between the date of termination and the
Executive's sixty-fifth (65th) birthday, whichever is less. In the event of the
Executive's death before the expiration of such period, the remaining payments
hereunder shall be made to the beneficiary or beneficiaries designated by the
Executive to the Corporation in writing or, absent such a designation, to his
estate. If the Corporation terminates the Executive's employment under this
Section 10(b), it shall also continue to provide for a period of three years, or
until the Executive's death, whichever event occurs first, that group medical,
dental and life insurance coverage which is generally applicable to the
Corporation's salaried employees.
(c) If the Corporation terminates the Executive's employment
without cause prior to December 31, 1995, then, in addition to the equivalent of
the three years Annual Salary and benefit coverage set forth above, he shall be
provided with the benefit coverage set forth above
22
and receive, in equal monthly installments, the amount of his Annual Salary from
the date he is terminated until December 31, 1995. In addition, if the
Corporation terminates his employment without cause prior to June 30, 1989,
then, for purposes of determining his eligibility for a supplemental pension
benefit under 5(b)(2) and his years of service for purposes of Section 5(b)(2)
hereof it will be conclusively presumed that he was employed through June 30,
1989.
(d) If, within six months of a change of control described in
Section 11, (i) the Executive's positions and offices with the Corporation are
changed, or there is an official, formal announcement of an intention to do so,
and the Executive thereupon voluntarily resigns his employment with the
Corporation (which resignation is treated as a termination by the Corporation
without cause under Section 11), or (ii) the Executive's Annual Salary is
reduced from its current level, or there is an official, formal announcement of
an intention to do so, and the Executive thereupon voluntarily resigns his
employment with the Corporation (which resignation is treated as a termination
by the Corporation without cause under Section 11), or (iii) the Executive's
employment with the Corporation is terminated by the Corporation without cause,
then notwithstanding anything to the contrary, his and his surviving spouse's
eligibility for a supplemental pension benefit under Section 5 and the amount of
said supplemental pension benefit shall be determined as if, during the period
beginning on the date of said resignation or termination of employment and
ending on the later of December 31, 1998 or the third anniversary of said
resignation or termination of employment, he were employed by the Corporaiton
and in receipt of Annual Salary from the Corporation at the highest rate in
effect under Section 4(a) of this Agreement.
By way of illustration, if, as the result of a change in
control described in Section 11, the Executive's employment with the Corporation
terminates on his twelfth employment anniversary date under the circumstances
described in this Section 10(d), and if he elects to receive the supplemental
pension benefit under Section 5 after attaining age 55, he would receive 33.3%
(the applicable percentage set forth on Exhibit 1) of his Average Annual
Compensation for purposes of making the calculation under Section 5, based on
his fifteen years of service (twelve years of employment and three years of
presumed employment pursuant to this Section 10(d)). If, assuming the
termination of the Executive's employment with the Corporation under the same
circumstances, he elects to receive the supplemental pension benefit under
Section 5 after attaining age 65, he would receive 53.3% of his Average Annual
Compensation in making the calculation under Section 5.
By way of further illustration if, following the termination
of the Executive's employment with the Corporation under the same circumstances,
the Executive dies on July 1, 1997 and his surviving spouse elects to receive a
supplemental pension benefit under Section 5 commencing on February 19, 2001,
the date the Executive would have attained age 55, her supplemental pension
benefit would be paid on the basis of 16.65% of the Executives' Average Annual
Compensation (that is, one-half (1/2) of 33.3% the applicable percentage shown
on Exhibit 1 for fifteen years of service and a supplemental pension benefit
commencing at age 55).
11. CIRCUMSTANCES WHICH EXECUTIVE MAY CONCLUSIVELY DEEM TO BE A
TERMINATION WITHOUT CAUSE. In the event of any change in control of the
Corporation, defined to mean (a) the sale of substantially all of the
Corporation's assets to an unrelated party, or (b) a
23
merger of the Corporation with an unrelated party, or (c) Imetal's beneficial
ownership of less than 50% of the Corporation's issued and outstanding voting
shares together with an unrelated party's beneficial ownership of a quantity of
the Corporation's issued and outstanding voting shares equal to or greater than
the number of shares owned by Imetal, with the term "unrelated party" understood
to mean for purposes of this Article 11 any entity or group of related entities
(including individuals, partnerships, corporations or trusts) not directly or
indirectly controlled by the Corporation; or (2) if the Executive's positions
and offices with the Corporation set forth in Section 1 are changed or there is
an annoucement of an intention to so change them, or (3) if the Executive's
Annual Salary is reduced from its then current level; the Executive shall be
entitled to resign voluntarily within six (6) months of any of the foregoing
events, and to have such resignation treated as a termination by the Corporation
without cause, thereby entitling the Executive to all benefits under this
Agreement arising from such a termination.
Notwithstanding the foregoing, the following limitations and
restrictions shall apply with respect to the payment of amounts equal to the
Executive's Annual Salary and provision for benefits coverage: In the event any
change in control as set forth in (a), (b), and (c) of this paragraph 11 occurs
prior to December 31, 1995 and the Executive elects in accordance with the above
provisions to treat it as a termination without cause, the Executive shall be
entitled to the benefits set forth in section 10(b), 10(c) and 10(d) except that
in no event shall he be entitled to receive more than sixty (60) months of
salary continuation and benefits coverage, nothwithstanding anything contained
in this Agreement to the contrary.
12. FAILURE TO ELECT EXECUTIVE TO THE OFFICES PROVIDED HEREIN. If the
Board of Directors of the Corporation shall fail to elect or reelect the
Executive to the positions and offices described in Section 1 hereof for the
periods provided in this Agreement (for reasons other than that the Executive
shall have become permanently incapacitated or by reason of the operation of
Section 10 hereof), the Executive shall be entitled to treat such failure as a
termination by the Corporation without cause thereby entitling the Executive to
all benefits under this Agreement arising from such a termination.
13. SUPERSEDING EFFECT - ENTIRE AGREEMENT. This Agreement supersedes
any prior agreements or understanding, oral or written, with respect to
employment of the Executive and constitutes the entire agreement with respect
thereto. It cannot be changed or terminated orally and may be modified only by a
sub-sequent written agreement executed by both the parties hereto.
14. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
15. NON-ASSIGNABILITY BY EXECUTIVE. This is a personal services
agreement which may not be assigned by Executive. Any assignment in violation of
this covenant shall be null and void.
16. SUCCESSORS AND ASSIGNS. Except as otherwise provided in Section 15
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns.
24
17. PAYMENT OF LEGAL FEES AND COSTS. The Company hereby agrees to
reimburse Executive or his surviving spouse to the fullest extent permitted by
law, for any legal and other fees and expenses that Executive or his surviving
spouse may reasonably incur in connection with any action taken or contest
threatened or implemented relating to the enforcement, validity or
interpretation of any provision of the Plan, including actions brought to
establish entitlement to payments or benefits hereunder, regardless of the
outcome thereof, plus in the case of any money judgment obtained under this Plan
against the Company, interest at the rate of ten per cent (10%) per annum.
Executive or his surviving spouse shall present to the Company an itemized
statement, together with reasonable proofs of payment required by the Company
required by the Company, of all legal fees and expenses for which Executive or
his surviving spouse requests reimbursement. The Company shall reimburse
Executive or his surviving spouse within ten (10) days of receipt of such
itemized statement and documentation.
IN WITNESS WHEREOF, the Executive has signed and sealed this
Agreement and the Corporation has caused this Agreement to be executed by a duly
authorized person and its Corporate seal to be hereunto affixed the day and year
first above written.
WITNESS: XXXX X. XXXXXX
(SEAL)
---------------------------------- -------------------------------------
ATTEST: COPPERWELD CORPORATION
By: (SEAL)
---------------------------------- ----------------------------------
XXXXXXX X. XXXX, CHAIRMAN
EXECUTIVE COMPENSATION
COMMITTEE
