EXHIBIT 10-B
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of August 1,
1998, by and between National Steel Corporation, a Delaware corporation (the
"Company"), with its principal office in Mishawaka, Indiana, and Xxxx X.
Xxxxxxx, a resident of Indiana ("Executive").
WHEREAS, both parties desire to enter into an agreement to reflect
Executive's executive capacities in the Company's business and to provide for
Executive's employment by the Company, upon the terms and conditions set forth
herein:
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Employment. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive's
duties and responsibilities, in accordance with the terms, conditions and
provisions hereinafter set forth.
1.1. Employment Term. The term of Executive's employment under this
Agreement shall commence as of the date hereof (the "Effective Date") and shall
continue until July 31, 2002, unless sooner terminated in accordance with
Section 5 or Section 6 hereof. The period commencing as of the Effective Date
and ending on the date on which the term of Executive's employment under the
Agreement shall terminate is hereinafter referred to as the "Employment Term."
1.2. Duties and Responsibilities. Executive shall serve as Senior Vice
President of Regional Operations for the Company and/or in such other senior
positions, if any, to which he may be appointed during the Employment Term.
During the Employment Term, Executive shall perform, on a full time basis, all
duties and accept all responsibilities incident to such positions as may be
assigned to him by the Company's Chief Executive Officer, or, if the Company's
Chief Executive Officer so specifies from time to time, by the Company's
President.
1.3. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary ("Base Salary"), commencing on the
Effective Date, at the annual rate of $250,000, payable in installments at such
times as the Company customarily pays its other senior level executives (but in
any event no less often than monthly). Executive's Base Salary shall be reviewed
annually for appropriate adjustment (but shall not be reduced below that in
effect on the Effective Date without Executive's written consent) by the
Company's President, Chief Executive Officer and Board of Directors (the
"Board") pursuant to normal performance review policies for senior level
executives.
1.4. Retirement and Benefit Coverages. During the Employment Term,
Executive shall be entitled to participate in all (a) employee pension and
retirement plans and programs ("Retirement Plans") and (b) welfare benefit plans
and programs ("Benefit Coverages"), in each case made available to the Company's
senior level executives as a group or to its employees generally, as such
Retirement Plans or Benefit Coverages may be in effect from time to time.
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1.5. Reimbursement of Expenses and Dues; Vacation; Perquisites. Executive
shall be provided with reimbursement of expenses related to Executive's
employment by the Company on a basis no less favorable than that which may be
authorized from time to time for senior level
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executives as a group, and shall be entitled to five (5) weeks of vacation
annually and holidays in accordance with the Company's normal personnel policies
for senior level executives in effect from time to time. In addition, Executive
shall be entitled to (i) the use of an automobile, including all operating and
maintenance expenses, (ii) reimbursement by the Company for reasonable
residential accommodations in the vicinity of the Great Lakes Division,
including reimbursement for any federal, state or local income taxes
attributable thereto, (iii) such professional tax, financial and estate planning
services as the Company provides for its senior level executives, and (iv) such
indemnification for authorized actions incident to his responsibilities for the
Company as is generally provided to senior executives of the Company.
1.6. Short-Term Incentive Compensation. Executive shall be entitled
to participate in the Company's Key Management Incentive Compensation Plan or
any other short-term incentive compensation programs established by the Company
for its senior level executives generally, and shall be eligible to receive such
short-term incentive compensation, depending upon achievement of certain annual
individual or business performance objectives specified and approved by the
Board (or a Committee thereof) in its sole discretion and as otherwise
determined in accordance with the terms of such plan(s) or program(s); provided,
however, that Executive's "target opportunity" under any such plan or program
shall be at least 40% of Executive's Base Salary (as determined in accordance
with the terms of such plan(s) or program(s)), and Executive shall be treated as
if he had performed services as the Company's Senior Vice President of Regional
Operations for the entire calendar year 1998.
1.7. Long-Term Incentive Compensation. Executive shall be entitled to
participate in the Company's 1993 Long-Term Incentive Plan or any other long-
term incentive compensation
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programs established by the Company for its senior level executives generally.
As of the Effective Date, Executive shall be granted options to purchase 30,000
shares of the Company's Class B Common Stock, which options shall vest and
become exercisable in three equal installments on each of the first three
anniversaries of the Effective Date.
2. Confidential Information. Executive recognizes and acknowledges that
by reason of Executive's employment by and service to the Company during and, if
applicable, after the Employment Term, Executive will continue to have access to
certain confidential and proprietary information relating to the business of the
Company, which may include, but is not limited to, trade secrets, trade "know-
how," customer information, supplier information, cost and pricing information,
marketing and sales techniques, strategies and programs, manufacturing processes
and equipment, computer programs and software and financial information
(collectively referred to as "Confidential Information"). Executive
acknowledges that such Confidential Information is a valuable and unique asset
of the Company and Executive covenants that Executive will not, unless expressly
authorized in writing by the Company's Chief Executive Officer, at any time
during the course of Executive's employment use any Confidential Information or
divulge or disclose any Confidential Information to any person, firm or
corporation except in connection with the performance of Executive's duties for
the Company and in a manner consistent with the Company's policies regarding
Confidential Information. Executive also covenants that at any time after the
termination of such employment, directly or indirectly, Executive will not use
any Confidential Information or divulge or disclose any Confidential Information
to any person, firm or corporation, unless such information is in the public
domain through no fault of Executive or
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except when required to do so by a court of law, by any governmental agency
having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order Executive to divulge, disclose or make accessible such
information, in which case Executive will inform the Company in writing promptly
of such required disclosure, but in any event at least two business days prior
to disclosure. All written Confidential Information (including, without
limitation, in any computer or other electronic format) which comes into
Executive's possession during the course of Executive's employment shall remain
the property of the Company. Except as required in the performance of
Executive's duties for the Company, or unless expressly authorized in writing by
the Company's President or Chief Executive Officer, Executive shall not remove
any written Confidential Information from the Company's premises, except in
connection with the performance of Executive's duties for the Company and in a
manner consistent with the Company's policies regarding Confidential
Information. Upon termination of Executive's employment, Executive agrees
immediately to return to the Company all written Confidential Information in
Executive's possession.
3. Non-Competition; Non-Solicitation; No Unfavorable Publicity;
Cooperation.
(a) During Executive's employment by the Company and for a period of
one year after Executive's termination of employment under Section 5.5 of this
Agreement, within the "Geographic Area," as defined below, Executive will not,
except with the prior written consent of the Company's Chief Executive Officer,
directly or indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or
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financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with, or use or permit
Executive's name to be used in connection with, any business or enterprise which
is engaged in making, producing, manufacturing or finishing steel products that
are in direct competition with steel products made, produced, manufactured or
finished by the Company. For the purposes of this Section, "Geographic Area"
shall mean the continental United States; provided, however, that if any court
of competent jurisdiction determines that the Geographic Area is too extensive
to require enforcement of this Subsection 3(a), the Geographic Area shall be the
portion of the United States east of the Mississippi River (or the largest other
such portion of the United States that such court deems not too extensive to
require enforcement of this Subsection 3(a)).
(b) The foregoing restrictions shall not be construed to prohibit the
ownership by Executive of less than one percent (1%) of any class of securities
of any corporation which is engaged in any of the foregoing businesses having a
class of securities registered pursuant to the Securities Exchange Act of 1934,
provided that such ownership represents a passive investment and that neither
Executive nor any group of persons including Executive in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising Executive's rights as a shareholder, or seeks to
do any of the foregoing.
(c) Executive further covenants and agrees that during Executive's
employment by the Company and for the period of one year thereafter, Executive
will not, directly or indirectly, (i) solicit, divert, take away, or attempt to
solicit, divert or take away, any
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of the Company's customers, or (ii) encourage any customer to reduce its
patronage of the Company.
(d) Executive further covenants and agrees that during Executive's
employment by the Company and for the period of one year thereafter, Executive
will not, except with the prior written consent of the Company's Chief Executive
Officer, directly or indirectly, solicit or hire, or encourage the solicitation
or hiring of, any person who was a managerial or higher level employee of the
Company at any time during the term of Executive's employment by the Company by
any employer other than the Company for any position as an employee, independent
contractor, consultant or otherwise. The foregoing covenant of Executive shall
not apply to any person after 12 months have elapsed subsequent to the date on
which such person's employment by the Company has terminated.
(e) During the Term and subsequent to Executive's termination of
employment with the Company, Executive agrees not to make any negative or
unfavorable statements or communications, and not to issue any written
communications or release any other written materials which would be materially
damaging to the Company, its officers, directors or affiliates, or its or their
reputation or standing, whether in the investor or financial community, the
steel industry or otherwise.
(f) Executive agrees to cooperate with the Company for a reasonable
period of time after the Employment Term by making himself available to testify
on behalf of the Company, in any action, suit or proceeding. In addition, for a
reasonable period of time, Executive agrees to be available at reasonable times
to meet and consult with the Company on
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matters reasonably within the scope of his prior duties with the Company so as
to facilitate a transition to his successor. The Company agrees to compensate
Executive at the highest rate of Base Salary applicable under Section 1.3 of
this Agreement during the Employment Term and to reimburse Executive for all
expenses actually incurred in connection with his provision of testimony or
consulting assistance.
4. Equitable Relief and Damages.
(a) Executive acknowledges and agrees that the restrictions contained
in Sections 2 and 3 are reasonable and necessary to protect and preserve the
legitimate interests, properties, goodwill and business of the Company, that the
Company would not have entered into this Agreement in the absence of such
restrictions and that irreparable injury will be suffered by the Company should
Executive breach any of the provisions of those Sections. Executive represents
and acknowledges that (i) Executive has been advised by the Company to consult
Executive's own legal counsel in respect of this Agreement, and (ii) that
Executive has had full opportunity, prior to execution of this Agreement, to
review thoroughly this Agreement with Executive's counsel.
(b) Executive further acknowledges and agrees that a breach of any of
the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 2 or 3 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company
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may be entitled. In the event that any of the provisions of Sections 2 or 3
hereof should ever be adjudicated to exceed the time, geographic, service, or
other limitations permitted by applicable law in any jurisdiction, it is the
intention of the parties that the provision shall be amended to the extent of
the maximum time, geographic, service, or other limitations permitted by
applicable law, that such amendment shall apply only within the jurisdiction of
the court that made such adjudication and that the provision otherwise be
enforced to the maximum extent permitted by law.
(c) Damages. If Executive breaches any of Executive's obligations
under Sections 2 or 3 hereof, and such breach constitutes "Cause," as defined in
Section 5.3 hereof, or would constitute Cause if it had occurred during the
Employment Term, the Company shall thereafter remain obligated only for such
compensation and other benefits, if any, as may otherwise be required in any
plans, policies or practices then applicable to Executive in accordance with the
terms thereof, and not for any compensation or other benefits under this
Agreement.
(d) Executive irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Sections 2 or 3 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in the United States District Court for the Northern District of
Indiana, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Indiana, (ii) consents to
the non-exclusive jurisdiction of any such court in
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any such suit, action or proceeding, and (iii) waives any objection which
Executive may have to the laying of venue of any such suit, action or proceeding
in any such court.
5. Termination. The Employment Term shall terminate upon the occurrence
of any one of the following events:
5.1. Disability. The Company may terminate the Employment Term if
Executive is unable substantially to perform Executive's duties and
responsibilities hereunder to the full extent required by the Company's
President or Chief Executive Officer by reason of illness, injury or incapacity
for six consecutive months, or for more than six months in the aggregate during
any period of twelve calendar months; provided, however, that the Company shall
continue to pay Executive's Base Salary until the Company acts to terminate the
Employment Term. If the Company terminates the Employment Term, Executive shall
be entitled to receive (i) any amounts earned, accrued or owing but not yet paid
under Section 1 above, and (ii) any other benefits, all in accordance with the
terms of any applicable plans and programs (or related agreements) of the
Company referred to in Section 1 above. Otherwise, the Company shall have no
further liability or obligation to Executive for compensation or benefits under
this Agreement. Executive agrees, in the event of a dispute under this Section
5.1, to submit to a physical examination by a licensed physician selected by the
Company's President or Chief Executive Officer.
5.2. Death. The Employment Term shall terminate in the event of
Executive's death. In such event, the Company shall pay to Executive's
executors, legal representatives or administrators, as applicable, an amount
equal to the installment of Executive's Base Salary set
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forth in Section 1.4 hereof for the month in which Executive dies. In addition,
Executive's estate or other appropriate beneficiary (as designated by Executive
in accordance with the terms of any applicable benefit plans or programs of the
Company) shall be entitled to receive (i) any other amounts earned, accrued or
owing but not yet paid under Section 1 above and (ii) any other benefits, all in
accordance with the terms of any applicable plans and programs (or related
agreements) of the Company referred to in Section 1 above. Otherwise, the
Company shall have no further liability or obligation under this Agreement to
Executive's executors, legal representatives, administrators, heirs or assigns
or any other person claiming under or through Executive.
5.3. Cause. The Company may terminate the Employment Term, at any time,
for "Cause" upon written notice, in which event all payments under this
Agreement shall cease, except for Base Salary to the extent already earned by
reason of services actually performed, but Executive shall remain entitled to
any other benefits in accordance with the terms of any applicable plans and
programs of the Company. For purposes of this Agreement, Executive's employment
may be terminated for "Cause" if (i) Executive is convicted of a felony, (ii) in
the reasonable determination of the Board, Executive has (x) committed an act of
fraud, embezzlement, or theft in connection with Executive's duties in the
course of Executive's employment with the Company, (y) caused intentional damage
or harm to the property, business or reputation of the Company, or intentionally
disclosed Confidential Information in breach of this Agreement, or (z) engaged
in gross misconduct or gross negligence in the course of Executive's employment
with the Company, or (iii) Executive has otherwise materially breached
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Executive's obligations under this Agreement and shall not have remedied such
breach within 15 days after receiving written notice from the Board specifying
the details thereof. For purposes of this Agreement, an act or omission on the
part of Executive shall be deemed "intentional" only if it was not due primarily
to an error in judgment or negligence and was done by Executive not in good
faith and without reasonable belief that the act or omission was in the best
interest of the Company.
5.4. Termination Without Cause and Constructive Discharge.
(a) The Company may remove Executive at any time, without Cause, from
the position in which Executive is employed hereunder, or Executive may
terminate employment with the Company at any time under circumstances comprising
Constructive Discharge, as defined in this Section 5.4, and in either such case
the Employment Term shall be deemed to have ended, by written notice to the
other party. If such notice is given by the Company to Executive before June 1,
2002, the Employment Term shall end no earlier than the 60th day following the
date such notice is given. If such notice is given by Executive, the Employment
Term shall end on the date such notice is given. In the event that such notice
is given, Executive shall be under no obligation to render any additional
services to the Company and, subject to the provisions of Section 3 hereof,
shall be allowed to seek other employment. Upon any such termination by the
Company or Executive, Executive shall be entitled to receive, as liquidated
damages for the failure of the Company to continue to employ Executive, (i) a
single sum payment in cash, within 30 days after the end of the Employment Term,
in the amount of Executive's annual Base Salary as of the last day of the
Employment Term; (ii) outplacement
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services for a period not to exceed 12 months; and (iii) continued participation
for Executive and Executive's eligible dependents in the Company sponsored
health care plan in which Executive participated on the last day of the
Employment Term, for a period of 12 months or, if earlier, until Executive
becomes covered under a group health care plan sponsored by another employer,
under equivalent terms and at substantially the same cost that would have
applied to Executive if the Employment Term had not ended. Such continued health
care coverage shall not reduce the period of health care continuation coverage
to which Executive would otherwise be entitled under applicable federal law. If
such Company sponsored health care plan does not by its terms allow Executive's
participation or continued participation, the Company shall obtain and pay all
premiums for insurance coverage on behalf of Executive and/or Executive's
eligible dependents that provides equivalent benefits as provided under such
Company sponsored health care plan or, at the Company's election, shall provide
such benefits from its own assets. Notwithstanding anything in this Agreement to
the contrary, on or after the date Executive attains age 65, no action by the
Company shall be treated as a removal from employment or Constructive Discharge
if on the effective date of such action Executive satisfies all of the
requirements for the executive or high policy-making exception to applicable
provisions of state and federal age discrimination legislation.
(b) Notwithstanding the provisions of Section 5.4(a) (other than the
last sentence), in the event that Executive executes a written release upon such
removal or Constructive Discharge, substantially in the form attached hereto as
Annex 1, (the "Release"), of any and all claims against the Company and all
related parties with respect to all matters arising
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out of Executive's employment by the Company (other than any entitlements under
the terms of this Agreement or under any other plans or programs of the Company
in which Executive participated and under which Executive has accrued a
benefit), or the termination thereof, Executive shall be entitled to receive, in
lieu of the payment described in Section 5.4(a)(i), which Executive agrees to
waive, a single sum payment in cash, within 30 days after the end of the
Employment Term, equal to twice the amount of Executive's annual Base Salary as
of the last day of the Employment Term.
(c) The term "Constructive Discharge" means a termination of the
Executive's employment by the Executive due to a failure of the Company or its
successors without the prior consent of the Executive to fulfill the obligations
under this Agreement in any material respect, including any non-payment or
reduction in the Base Salary or "target opportunity" (as described in Section
1.6) then in effect.
5.5. Voluntary Termination. Executive may voluntarily terminate the
Employment Term under circumstances that do not comprise Constructive Discharge,
upon written notice for any reason, and the Employment Term shall end on the
date such notice is given. In such event, no further payments shall be due
under this Agreement, except that Executive shall be entitled to any benefits
due in accordance with the terms of any applicable plan and programs of the
Company.
6. Payments Upon a Change of Control.
6.1. Definitions. For all purposes of this Section 6, the following terms
shall have the meanings specified in this Section 6.1 unless the context
otherwise clearly requires:
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(a) "Change of Control." For purposes of this Agreement, a "Change of
Control" shall mean:
(i) (A) If any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") acquires (by purchase, tender offer or
otherwise) or becomes the "beneficial owner" (as defined in rule 13d-3 under the
Exchange Act) of thirty percent (30%) or more of the combined voting power of
the then-outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities") and
(B) NKK Corporation ceases to be the beneficial owner, directly or indirectly,
of more than fifty percent (50%) of the total voting power of all the then
Outstanding Company Voting Securities; provided, however, that for purposes of
this subsection (i), the following acquisitions shall not constitute a Change of
Control: (1) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company, or (2) any acquisition by any entity
pursuant to a transaction which complies with each of clauses (A), (B) and (C)
of paragraph (iii) of this Subsection (a).
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board, provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened
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election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.
(iii) Consummation of a reorganization, recapitalization, merger,
acquisition of securities or assets by the Company or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) the individuals and entities who were the beneficial owners,
respectively, of the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of, respectively, the then outstanding
shares of common stock (in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding
Company Common Stock) and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, the Company or a corporation which as a result
of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries), and (B)
no Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, thirty percent (30%) or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination, or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
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prior to the Business Combination and (C) at least two-thirds of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(b) "Termination upon a Change of Control" shall mean a termination of
Executive's employment under Section 5.4 of this Agreement upon or within two
years after a Change of Control.
6.2. Notice of Termination. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 9 hereof. 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) briefly summarizes the
facts and circumstances deemed to provide a basis for a termination of
employment and the applicable provision hereof, and (iii) if the termination
date is other than the date of receipt of such notice, specifies the termination
date (which date shall not be more than 15 days after the giving of such
notice).
6.3. Compensation and Benefits. In no event following a Change of Control
shall the Company provide Executive with compensation or benefits, in each case,
less favorable than the most favorable of those provided under Sections 1.3-1.7
of this Agreement at any time during the 120-day period immediately preceding
the Change of Control or, if more favorable to Executive,
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those provided generally at any time after the Change of Control to other peer
executives of the Company.
6.4. Payments and Benefits upon Termination. Subject to the provisions of
Section 6.5 hereof, in the event of Executive's Termination upon a Change of
Control, Executive shall be entitled to receive (a) payments and benefits in
accordance with Section 5.4 of this Agreement, provided that such payments shall
include an additional amount equal to (i) in the case of payments otherwise due
under Subsection 5.4(a), the greater of (A) the average annual amount paid to
Executive under Section 1.6 of this Agreement for years prior to the year in
which Executive's Termination upon a Change of Control occurs or (B) Executive's
most recent "Target Bonus Percentage" (as determined under the Key Management
Incentive Compensation Plan) multiplied by his Base Salary as of the date of
his Termination upon a Change of Control, or (ii) in the case of payments
otherwise due under Subsection 5.4(b), two times the amount determined under the
preceding clause (i); and (b) within 30 days after Executive's Termination upon
a Change of Control, a single sum payment in cash in the amount of the
actuarially equivalent value (based on the 1994 Group Annuitants Mortality Table
and the annual rate of interest on 30-year Treasury securities for the second
calendar month preceding the Executive's Termination upon a Change of Control)
of any nonqualified unfunded retirement benefits to which Executive is entitled
under any plan, program or arrangement of the Company, acceptance of which
single sum payment shall constitute Executive's waiver of any claim or
entitlement to benefits under any such plan, program or arrangement.
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6.5. Certain Increase in Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Payment"), would constitute an "excess parachute payment" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), Executive shall be paid an additional amount (the "Gross-Up
Payment") such that the net amount retained by Executive from the Payment and
the Gross-Up Payment, after deduction of any excise tax imposed under Section
4999 of the Code and any federal, state and local income and employment tax and
excise tax imposed upon the Gross-Up Payment, shall be equal to the Payment.
For purposes of determining the amount of the Gross-Up Payment, Executive shall
be deemed to pay federal income tax and employment taxes at the highest marginal
rate of federal income and employment taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of Executive's residence on
the date of Executive's Termination upon a Change of Control, net of the maximum
reduction in federal income taxes that may be obtained from the deduction of
such state and local taxes.
(b) All determinations to be made under this Section 6.5 shall be made
by the Company's independent public accountant immediately prior to the Change
of Control (the "Accounting Firm"), which firm shall provide its determinations
and any supporting calculations both to the Company and Executive within 10 days
of the date of Executive's Termination upon a Change of Control. Within five
days after the Accounting Firm's determination, the Company
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shall pay (or cause to be paid) or distribute (or cause to be distributed) to or
for the benefit of Executive such amounts as are then due to Executive under
this Agreement.
(c) In the event that upon any audit by the Internal Revenue Service,
or by a state or local taxing authority, of the Payment or Gross-Up Payment, a
change is finally determined to be required in the amount of taxes paid by
Executive, appropriate adjustments shall be made under this Agreement such that
the net amount which is payable to Executive after taking into account the
provisions of Section 4999 of the Code shall reflect the intent of the parties
as expressed in subsection (a) above, in the manner determined by the Accounting
Firm.
(d) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company.
7. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive's employment to
the extent necessary to the intended preservation of such rights and
obligations.
8. Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
Mishawaka, Indiana, in accordance with National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be final,
binding and nonappealable, and judgment may be entered thereon by either party
in accordance with applicable law in any court of competent jurisdiction. This
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arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. If Executive prevails on any
material issue which is the subject of such arbitration or lawsuit, the Company
shall be responsible for all of the fees of the American Arbitration Association
and the arbitrators and any expenses relating to the conduct of the arbitration
(including the Company's and Executive's reasonable attorneys' fees and
expenses). Otherwise, each party shall be responsible for its own expenses
relating to the conduct of the arbitration (including reasonable attorneys' fees
and expenses) and shall share the fees of the American Arbitration Association.
9. Notices. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to:
Senior Vice President - Administration
National Steel Corporation
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000-0000
If to Executive, to:
Xxxx X. Xxxxxxx
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or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
10. Contents of Agreement; Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board and executed on its behalf by a duly authorized officer and by Executive.
(b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Executive under
this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the extent the Company would be required to perform if no such
succession had taken place.
11. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or
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application and shall not invalidate or render unenforceable such provision or
application in any other jurisdiction. If any provision is held void, invalid or
unenforceable with respect to particular circumstances, it shall nevertheless
remain in full force and effect in all other circumstances.
12. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or
power under this Agreement or existing at law or in equity shall be construed as
a waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.
13. Beneficiaries/References. Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
Executive's incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive's beneficiary, estate or other
legal representative.
14. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.
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15. Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive
shall bear all expense of, and be solely responsible for, all federal, state and
local taxes due with respect to any payment received under this Agreement.
16. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Indiana without giving effect to any conflict of
laws provisions.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
NATIONAL STEEL CORPORATION
_______________________ By:________________________________
XXXX X. XXXXXXX Name: Xxxxx X. Xxxxxxxxxx
Title: Senior Vice President - Administration
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