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Exhibit 10.46
EMPLOYMENT AGREEMENT
AGREEMENT, made October 1, 1998 by and between BAR TECHNOLOGIES, INC.,
REPUBLIC ENGINEERED STEELS, INC., AND RES ACQUISITION CORP., Delaware
corporations, (hereinafter "Company" shall refer to these entities and to the
survivor entity in any combination of such entities) and XXXXXX X. XXXXXXXX (the
"Executive").
RECITALS
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In order to induce the Executive to serve as the President and Chief
Operating Officer (the "COO") of the Company, the Company desires to provide the
Executive with compensation and other benefits on the terms and conditions set
forth in this Agreement.
The Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth. Executive
acknowledges that his acceptance of this Agreement is a release of claims to any
payments or benefits under any previous agreements with Republic Engineered
Steels, Inc., including, without limitation, the Change of Control Agreement,
which agreements are superseded by this Agreement.
It is therefore hereby agreed by and between the parties as follows:
1. EMPLOYMENT.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the term hereof as the President and
COO. In this capacity, the Executive shall report to the Chief Executive Officer
of the Company (the "CEO") and shall have the customary powers, responsibilities
and authorities of President and COO of corporations of the size, type and
nature of the Company, as it exists from time to time, and as are assigned by
the CEO. It is understood by the parties that the size, type, and nature of the
Company is expected to expand rapidly via acquisition or other business
combination and that Executive's duties will be commensurate with the duties of
a President and COO of such expanded enterprise.
1.2 Subject to the terms and conditions of this Agreement, the
Executive hereby accepts employment as the President and COO of the Company
commencing as of October 1, 1998, and agrees to devote his full business time
and efforts to the performance of services, duties and responsibilities in
connection therewith, subject at all times to review and control of the CEO.
During the term of Employment, the Executive also agrees to serve, if elected,
as an officer and/or director of any Subsidiary of the Company, without the
payment of any additional compensation therefor.
1.3 Nothing in this Agreement shall preclude the Executive from
engaging in charitable and community affairs, from managing any passive
investment (I.E., an investment with respect to which the Executive is in no way
involved with the management or operation of the entity in which the Executive
has invested) made by him in publicly traded equity securities or other property
(provided that no such investment may exceed 1% of the equity of any entity,
without the prior approval of the CEO) or from serving, subject to the prior
approval of the CEO,
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as a member of boards of directors or as a trustee of any other corporation,
association or entity, to the extent that any of the above activities do not
interfere with the performance of his duties hereunder. For purposes of the
preceding sentence, any approval by the CEO required herein shall not be
unreasonably withheld.
2. TERM OF EMPLOYMENT. The Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on October 1, 1998 and,
subject to the terms hereof, shall terminate on the earlier of (i) September 30,
2001, (the "Initial Term") or (ii) termination of the Executive's employment
pursuant to this Agreement; provided, however, that subsequent to the Initial
Term, the Executive's Term of Employment under this Agreement shall
automatically renew annually each October 1 for one year renewal terms (the
"Renewal Term"); unless the Company shall deliver to the Executive or the
Executive shall deliver to the Company written notice, at least 90 days prior to
the expiration of the Initial Term or any Renewal Term, that the Term of
Employment shall not be extended, in which case the Term of Employment will end
at its then scheduled expiration date and shall not be further extended except
by written agreement of the Company and the Executive.
3. COMPENSATION.
3.1 SALARY. During the Initial Term of the Executive's employment
under the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at the rate of not less than Two Hundred Seventy-Five Thousand
Dollars ($275,000) per annum. Base Salary shall be payable in accordance with
the ordinary payroll practices of the Company. During the Term of Employment,
the CEO shall, in good faith, review and, if determined by the CEO to be
appropriate, increase the Executive's salary at least annually and in accordance
with the Company's customary procedures and practices regarding the salaries of
senior executives, which procedures and practices, for example, will include a
review of the performance of the Company and the Executive, and any increase in
the cost of living during the relevant period. Increases in the rate of salary,
once granted, shall not be subject to revocation or decrease thereafter.
3.2 ANNUAL BONUS. (a) In addition to his base salary, the Executive
shall be eligible to receive an annual bonus (the "Annual Bonus"). Annual Bonus
amounts payable to the Executive shall be determined in the sole discretion of
the CEO and those members of the Board of Directors who were nominated and
elected at the request of Blackstone. Subject to the foregoing, the Annual Bonus
shall be determined in accordance with the Company's customary procedures and
practices regarding bonus awards to senior executives, which procedures and
practices, for example, shall include an evaluation of the Company's progress in
meeting its cash flow targets during the relevant period; notwithstanding the
foregoing, the Annual Bonus shall not be less than One Hundred Thousand Dollars
($100,000) for the fiscal years ending December 31, 1999 and December 31, 2000
(the "Minimum Bonus"). A pro rata amount will be added to the 1999 bonus for the
period October 1, 1998 through December 31, 1998. If EBITDA (as such term is
defined in paragraph (c) below) equals or exceeds the EBITDA targets hereafter
set by the CEO and/or the Board in consultation with Executive for any fiscal
year under this Agreement (except 1998), the Annual Bonus shall be at least One
Hundred Fifty Thousand Dollars ($150,000) (the "Target Bonus"); provided,
however, that such methodology for the
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determination of the Annual Bonus shall only be utilized until such time as a
formula based on increase in shareholder value is mutually agreed upon by the
parties hereto; provided, further, if due to conditions beyond the Executive's
control, the EBITDA targets are not met for any fiscal year during the Term of
this Agreement, or targets are not met under such other methodology as is being
utilized for any fiscal year during the Term of this Agreement, the CEO and the
Board, in their sole discretion, may override such targets, and award the
Executive an Annual Bonus irrespective of the achievement of such targets.
"Blackstone" shall mean, collectively, Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II L.P., Blackstone
Family Investment Partnership II L.P., The Blackstone Group L.P. and their
affiliates.
(b) The Annual Bonus shall be payable as soon as practicable after
December 31 of each calendar year in which such Annual Bonus was earned (the
"Bonus Term"); but in any event, the Annual Bonus shall be paid no later than 90
business days following the end of the Bonus Term; provided, however, no Annual
Bonus shall be payable unless the Executive is employed on the last day of each
such Bonus Term. The proviso in the previous sentence shall not apply if the
Executive's employment is terminated pursuant to Section 6.1 or 6.4 of this
Agreement.
(c) For purposes of this Section 3.2 "EBITDA" shall mean the
consolidated net income of the Company for the bonus period plus, to the extent
deducted in computing such consolidated net income, without duplication, the sum
of (a) income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) any special charges (including, without limitation,
any noncash fees or expenses incurred in connection with the Transactions) and
any extraordinary or non-recurring losses, (e) monitoring and management fees
paid to any of the funds, the Veritas Entities and/or their respective
Affiliates, (f) dividend payments on and mandatory redemptions of the Bethlehem
Preferred Stock, in each case made in accordance with the terms thereof and to
the extent permitted by Section 6.06(d), (g) noncash expenses incurred in
connection with an employee stock ownership plan and (h) other noncash items
reducing consolidated net income, minus, to the extent added in computing such
consolidated net income, without duplication, (i) interest income, (ii)
extraordinary or nonrecurring gains and (iii) other noncash items increasing
consolidated net income.
All terms and section references in the above definition of EBITDA shall have
the same meaning as in the Credit Agreement by and between Bar Technologies,
Inc., Bliss & Xxxxxxxx Steel Company, the Lenders named therein and Chemical
Bank Delaware dated as of April 2, 1996.
3.3 RETENTION BONUS. Executive shall receive a retention bonus of
One Hundred Seventy-Five Thousand Dollars ($175,000) ("Retention Bonus") within
30 days after the Executive's Term of Employment commences.
3.4 SIGNING BONUS. Executive shall receive a signing bonus of
$105,000 ("signing Bonus") within 30 days after the Executive's Term of
Employment commences. If the Executive resigns or the Executive's Term of
Employment is terminated for Cause (as defined in Section 6.2(b) hereof), the
Executive shall immediately repay the following portion of the Signing Bonus to
the Company (less the applicable portion of any federal, state or local income
tax paid
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by the Executive on the Signing Bonus): if such resignation or termination
occurs (i) on or before September 30, 1999, 100%; (ii) after September 30, 1999
but on or before September 30, 2000, 66.67%; or (iii) after September 30, 2000
but on or before September 30, 2001, 33.33%.
4. EMPLOYEE BENEFITS.
4.1 STOCK OPTIONS. The Executive shall be eligible to receive
through an option plan one and one-half percent (1.5%) of the total available
authorized and outstanding common shares plus options on a fully diluted basis
(including all equity or options of the entire management team) of the survivor
entity of the business combination between Bar Technologies, Inc. and Republic
Engineered Steels, Inc. Such option shall be subject to dilution that may result
from any other action or transaction involving shares of Company. The Executive
shall receive the benefits of an Option Agreement (the "Option Agreement"),
which Option Agreement shall be drafted subsequent to the signing of this
Agreement and which Option Agreement shall contain terms substantially similar
to the Option Term Sheet, a copy of which is attached hereto as Appendix A. The
Executive shall also be eligible to participate in a performance stock plan on a
pro rata basis like other key executives, said plan to be developed at a later
date.
4.2 EMPLOYEE WELFARE BENEFIT PROGRAMS, PLANS AND PRACTICES. The
Company shall provide the Executive while employed hereunder with coverage under
all welfare benefit programs, plans and practices (commensurate with his
position in the Company and to the extent permitted under any employee benefit
plan) in accordance with the terms thereof, which the Company makes available to
its senior executives.
4.3 VACATION. The Executive shall be entitled to twenty (20)
business days paid vacation each calendar year, which shall be taken at such
times as are consistent with the Executive's responsibilities hereunder. Any
vacation days not taken by March 31 of the following year, unless approved by
the CEO, shall be forfeited without pay.
4.4 ADDITIONAL PERQUISITES. During the Executive's employment
hereunder, the Company shall provide the Executive with (i) term life insurance
in an amount equal to two (2) times Base Salary; (ii) payment for initiation
fees at a social, dining, athletic or country club that the CEO has approved for
use by Executive for priority business entertainment purposes; (iii) the right
to participate in the 401(k) plan; (iv) long-term disability coverage providing
a monthly benefit of Fifteen Thousand Dollars ($15,000); (v) a one-thousand
dollar ($1,000) annual allowance for tax return preparation expenses; and (vi) a
one-time one-thousand dollar ($1,000) allowance for legal fees incurred in
reviewing this Agreement. Executive shall provide documentation of expenses
under items (v) and (vi) as requested by Company.
5. EXPENSES. Subject to prevailing Company policy or such guidelines as
may be established by the CEO, the Company will reimburse the Executive for all
reasonable expenses incurred by the Executive in carrying out his duties.
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6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION NOT FOR CAUSE OR FOR GOOD REASON. (a) The Company or
Executive may terminate the Executive's Term of Employment at any time for any
reason by written notice. If the Executive's employment is terminated (i) by the
Company at the end of the Initial or any Renewal Term by giving notice of
nonrenewal under Section 2, or by the Company prior to the end of the Initial
Term or any Renewal Term, for any reason other than Cause (as defined in Section
6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii)
by the Executive for Good Reason (as defined in Section 6.1(b) hereof) the
Company shall continue to pay Executive's Base Salary and the Minimum Bonus or
the Target Bonus, as applicable, for the longer of (i) the remainder of the
Initial Term or any Renewal Term, if applicable, in effect immediately prior to
the termination or (ii) one year, with such payments to be made in accordance
with the terms of Sections 3.1 and 3.2. In addition, Executive shall, during the
period that he continues to be compensated under this Agreement, continue
participation and benefits under Company's welfare benefit plans and programs
that he is otherwise participating in prior to cessation of employment; provided
that, if such participation and benefits cannot be provided under the terms of
the applicable plans or programs, the Company shall pay or reimburse Executive
his costs for substantially equivalent coverage.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary, a
reduction of the Minimum Bonus or Target Bonus, or a material change to the
formula used to determine bonus awards, provided that a change to such formula
that is mutually agreed to by the parties as contemplated under Section 3.2
shall not be "Good Reason" for this purpose; or
(ii) A substantial diminution or material adverse change in the
Executive's duties, responsibilities or reporting responsibility, unless due to
a promotion or increased responsibility; or
(iii) Relocation of Executive's primary work site to a location
more than fifty (50) miles from the Company's headquarters in Seven Hills, Ohio;
provided, however, that a relocation of the Company's headquarters within the
State of Ohio shall not constitute "Good Reason" for this purpose.
6.2 VOLUNTARY TERMINATION BY THE EXECUTIVE; DISCHARGE FOR CAUSE. (a)
In the event that the Executive's employment is terminated (i) by the Company
for Cause, as hereinafter defined or (ii) by the Executive other than for Good
Reason, Disability or death, the Executive shall only be entitled to receive (i)
any Base Salary accrued but unpaid prior to such termination, (ii) any earned
but unpaid bonus from a prior Bonus Term, and (iii) any benefits provided under
the employee benefit programs, plans and practices referred to in Section 4.2
hereof, in accordance with their terms. After the termination of the Executive's
employment under this Section 6.2, the obligations of the Company under this
Agreement to make any further payments,
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or provide any benefit specified herein, to the Executive shall thereupon cease
and terminate, except any benefits that may be required by federal or state law.
(b) As used herein, the term "Cause" shall be limited to (i) willful
gross misconduct by the Executive in the performance of his duties hereunder,
(ii) willful gross neglect by the Executive of his duties hereunder (other than
due to Disability, as such term is defined in Section 6.3 hereof) or repeated
and willful failure to follow reasonable instructions of the CEO, (iii) any
breach of the provisions of Section 11 of this Agreement by the Executive or
(iv) conviction or plea of guilty or nolo contendere by the Executive to any
felony (or indictable offense). Termination of the Executive pursuant to this
Section 6.2 shall be made by delivery to the Executive of written notice, given
at least 30 days prior to such Termination, from the CEO specifying the
particulars of the conduct by the Executive set forth in any of clauses (i)
through (iv) above. Termination shall be effective on the date set forth in the
notice, unless within 30 days after receiving such notice, the Executive shall
have cured Cause to the reasonable satisfaction of the Board of Directors;
provided, however, that no cure shall be possible for (A) any breach of Section
11 of this Agreement by the Executive or (B) a conviction or plea of nolo
contendere by the Executive to any felony (or indictable offense); and provided
further that Executive may be required to vacate Company premises prior to the
effective date of termination in those instances.
6.3 DISABILITY. In the event that Executive is unable to perform his
duties under this Agreement on account of a disability which continues for one
hundred eighty (180) consecutive days or more, or for an aggregate of one
hundred eighty (180) days in any period of twelve (12) months, Company may, in
its discretion, terminate Executive's employment hereunder and Company's
obligation to make payments under Section 3 shall, except for earned but unpaid
salary and bonuses, cease immediately upon such termination, or, if later, shall
cease on the date Executive becomes entitled to benefits under the Company's
long-term disability program. The Company may, in its discretion, require
written confirmation from a physician of Disability during any extended absence.
For purposes of this Agreement, "Disability," shall be defined by the terms of
the Company's long-term disability policy, or, in the absence of such policy, as
a physical or mental disability that prevents Executive from performing
substantially all of his duties under this Agreement and which is expected to be
permanent. The commencement date and expected duration of any physical or mental
condition that prevents Executive from performing his duties hereunder shall be
determined by a medical doctor selected by mutual agreement between Executive
and the Company.
6.4 DEATH. In the event of the Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing to
the Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary and a pro rata share of the prior year's Annual Bonus, shall
terminate upon the Executive's death, and benefits shall become payable under
the Company's life and accidental death insurance program in accordance with its
terms. 1.1
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6.5 NO FURTHER NOTICE, COMPENSATION OR INDEMNITY. (a) The Executive
understands and agrees that he shall not be entitled to any further notice,
compensation or indemnity upon Termination of Employment under this Agreement
other than amounts specified in this Section 6 and the Option Shares as set
forth in Appendix A hereto. Executive shall not have any obligation to seek
comparable employment following such termination or resignation. However, any
payment hereunder shall be offset by any compensation the Executive earns with a
new employer or from self-employment, but no such offset shall apply to any
compensation earned by Executive if his employment with Company is terminated
within twelve (12) months of a Change in Control (i) by the Company or successor
other than for Cause (as defined in Section 6.2) or (ii) by Executive for Good
Reason (as defined in Section 6.1).
(b) A "Change in Control" occurs on the first date on which the
holdings of Blackstone (as defined in Section 3.2 above) or Veritas, or the
combined holdings of Blackstone and Veritas, do not represent more than 50% of
the voting control of the Company. "Veritas" means "Veritas Entities or their
respective Affiliates", as that term is defined in the Credit Agreement by and
between Bar Technologies, Inc., Bliss & Xxxxxxxx Steel Company, the Lenders
named therein and Chemical Bank Delaware dated as of April 2, 1996.
6.6 THE EXECUTIVE'S DUTY TO PROVIDE MATERIALS. Upon the termination
of the Term of Employment for any reason, the Executive or his estate shall
surrender to the Company all correspondence, letters, files, contracts, mailing
lists, customer lists, advertising material, ledgers, supplies, equipment,
checks, and all other materials and records of any kind that are the property of
the Company or any of its subsidiaries or affiliates, that may be in the
Executive's possession or under his control, including all copies of any of the
foregoing; provided, however, the Executive shall not be required to surrender
his personal rolodex, telephone book and personal materials.
6.7 CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, if
it is determined that any portion of the sum of (i) the amounts paid or payable
to the Executive or for the Executive's benefit under the Agreement (the
"Agreement Benefits") and (ii) the amount of all other payments, and the value
of all other benefits received or to be received by the Executive or for the
Executive's benefit (collectively, along with Agreement Benefits, referred to as
"Benefits"), is likely to result in the imposition of a tax to the Executive or
his estate under Code Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), the aggregate present value of the
Agreement Benefits yet to be paid to the Executive shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Agreement, "Reduced
Amount" shall be an amount expressed as a single sum that maximizes the
aggregate present value of Agreement Benefits previously paid and yet to be paid
to the Executive without causing the aggregate of any Benefits previously paid
and yet to be paid to the Executive to be subject to taxation to the Executive
or his estate under Section 4999 of the Code. The provisions of this subsection
(a) and subsection (b) shall be applied in a manner that is consistent with the
provisions
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of subsection (c) below, and to the extent required, the provisions of
subsection (c) shall supersede the provisions of this subsection (a) and
subsection (b) to permit such consistency.
(b) If, determined in a manner consistent with subsection (a) above,
Agreement Benefits in excess of the Reduced Amount are paid to the Executive or
for his benefit, or the Internal Revenue Service asserts that the amount of
Benefits received by the Executive or for his benefit are in excess of the
amounts not subject to tax under Section 4999 of the Code, and such assertion is
determined to have a high probability of being successful, such excess amounts
(hereinafter referred to as "Overpayments") shall be treated for all purposes as
a loan to the Executive. The amount treated as a loan, together with interest at
the applicable federal rate provided for in Section 1274(d) of the Code, shall
be paid by the Executive to the Company as soon as practicable following the
date the Executive is notified in writing of such Overpayments.
(c) In the event that payment of any Benefits would result in all or
a portion of such payment to be subject to excise tax under Section 4999 of the
Code, then the Executive's payment shall be either (i) the full payment or (ii)
such lesser amount which would result in no portion of the payment being subject
to excise tax under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and local employment
taxes, income taxes, and the excise tax imposed by Section 4999 of the Code,
results in the Executive's receipt, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of the payment
may be taxable under Section 4999 of the Code.
(d) All determinations required to be made under this Amendment
shall be made by a nationally recognized accounting firm selected by the Company
(the "Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Executive and the
Company. All fees and expenses of the Accounting Firm shall be borne equally by
the Executive and the Company.
7. NOTICES. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company: Bar Technologies, Inc. and
Republic Engineered Steels, Inc.
x/x Xxxxx 000
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
with a copy to: R. Xxxxxxx Xxxxxxx, Esq.
McDonald, Hopkins, Xxxxx &
Xxxxx Co., L.P.A.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
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To Executive: Xxxxxx X. Xxxxxxxx
0000 Xxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
with a copy to:
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Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
8. SEPARABILITY; LEGAL FEES. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
9. ASSIGNMENT. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by the Executive (except by will or, in the case of the Options, by trust for
the benefit of the Executive's spouse and/or children or by operation of the
laws of intestate succession) or by the Company, except that the Company may
assign this Agreement to any successor (whether by merger, purchase or
otherwise) to all or substantially all of the stock, assets or business of the
Company. If this Agreement is not assumed by a successor to Company, the
Agreement may be terminated by Executive under the terms of Section 6.1(a) as a
termination for Good Reason.
10. AMENDMENT. This Agreement may only be amended by written agreement
of the parties hereto.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; NON-COMPETITION. (a) The
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Executive to divulge, disclose or make accessible such
information. For purposes of this Section 11(a), "Confidential Information"
shall mean non-public information concerning the financial data,
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strategic business plans, product development (or other proprietary product
data), customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, Bliss & Xxxxxxxx Industries Inc. or
their respective affiliates or customers, that, in any case, is not otherwise
available to the public (other than by the Executive's breach of the terms
hereof).
(b) In consideration of the Company's obligations under this
Agreement the Executive agrees that during the period of his employment
hereunder and for a period of twelve (12) months thereafter, without the prior
written consent of the Board, (i) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in, any business which is in competition with the business of
the Company and (ii) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, solicit or offer employment to any
person who has been employed by the Company at any time during the 12 months
immediately preceding such solicitation.
(c) For purposes of this Section 11, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects such
purchases, sales or dealings or renders such services. Nothing in this Section
11 shall be construed so as to preclude the Executive from investing in any
publicly or privately held company, provided the Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) The Executive agrees that this covenant not to compete is
reasonable under the circumstances and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations. The Executive and
the Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. The Executive agrees that any breach of
the covenants contained in this Section 11 would irreparably injure the Company.
Accordingly, the Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against the
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive. Notwithstanding the
expiration of the term of this Agreement, the provisions of this Section 11
hereunder shall remain in effect as long as is necessary to give effect thereto.
12. BENEFICIARIES; REFERENCES. The Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal
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representative. Any reference to the masculine gender in this Agreement shall
include, where appropriate, the feminine.
13. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. ARBITRATION. Except as otherwise provided in Section 11(d) hereof,
any dispute or controversy arising under or in connection with this Agreement
shall be resolved by binding arbitration held in the City of Cleveland, Ohio and
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at the time of the arbitration. Each party
shall bear its own expenses in connection with any such arbitration and joint
expenses shall be borne by both parties in equal portions.
15. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Ohio without reference to
rules relating to conflicts of law.
16. EFFECT ON PRIOR AGREEMENTS. With the exception of any retention
bonus otherwise payable to Executive on December 31, 1998 from Republic
Engineered Steels, Inc., this Agreement contains the entire understanding
between the parties hereto and supersedes in all respects any prior or other
agreement or understanding, both written and oral, between the Company, any
affiliate of the Company or any predecessor of the Company or affiliate of the
Company and the Executive, including, without limitation, any Change of Control
Agreement with Republic Engineered Steels, Inc. In accepting this Agreement,
Executive releases all claims to any payments or benefits under such agreement
or agreements.
17. WITHHOLDING. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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19. INDEMNIFICATION. Executive shall be provided with the same
indemnifications and directors and officers insurance coverages as apply to the
key officers and directors of the Company.
COMPANY
/s/ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx, CEO
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
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APPENDIX A
OPTION TERM SHEET
EQUITY OWNERSHIP
----------------
STOCK OPTIONS Upon the effective date of the Agreement pursuant
to a stock option agreement including, among other
provisions, the terms set forth below, the Company
shall grant the Executive nonqualified options (or
at Company's discretion, incentive stock options
with or without nonqualified options) to purchase
one and one-half percent (1.5%) of the total
Available Common Stock of Company. "Available
Common Stock" of the Company shall be defined as
the authorized and outstanding common shares plus
options on a fully diluted basis (including all
equity or options of the entire management team),
taking into account the effects of the
contemplated merger and any related transactions
to the merger.
OPTION TERM The option term shall be 10 years; provided,
however, that exercisable options shall expire
earlier upon termination of employment as follows:
Termination for Cause/Quit w/o Good Reason:
Immediately upon termination of employment.
Termination w/o Cause/Quit w/Good Reason: the
remaining term of the Agreement (i.e. during the
applicable salary continuation period) plus three
months.
A termination of employment at the expiration of
the Agreement on account of the Company's notice
of nonrenewal, or a termination during the term by
mutual agreement of the parties: One year after
termination of employment.
Death/Disability: One year after termination of
employment.
Unexercisable options will terminate upon
termination of employment, unless vesting
acceleration is explicitly provided for.
OPTION EXERCISE PRICE Options shall be granted at an exercise price
which is equal to the price per share paid by
Blackstone.
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EXERCISABILITY OF OPTIONS
--VESTING Options shall become exercisable with respect to
33 1/3% of the shares subject to such options on
each September 30, 1999, 2000, 2001 respectively,
if the Executive's Term of Employment continues
through and includes such dates.
Options shall expire and no longer be exercisable
following termination of employment by the Company
for Cause, resignation by the Executive without
Good Reason, or nonrenewal by Executive, but shall
accelerate and become fully exercisable upon the
earliest of (i) death, (ii) disability, (iii)
termination without Cause or resignation for Good
Reason (colletively, a "Good Termination"), or
(iv) on the first date on which the holdings of
Blackstone (as defined in Section 3.2 above) or
Veritas, or the combined holdings of Blackstone
and Veritas, do not represent more than 50% of the
voting control of the Company. "Veritas" means
"Veritas Entities or their respective Affiliates",
as that term is defined in the Credit Agreement by
and between Bar Technologies, Inc., Bliss &
Xxxxxxxx Steel Company, the Lenders named therein
and Chemical Bank Delaware dated as of April 2,
1996. If the Company gives notice of nonrenewal at
the expiration of the Initial or any renewal
terms, unvested options shall vest in accordance
with the schedule set forth above during the
applicable salary continuation period; options
that do not vest by that date shall terminate.
DILUTION OF STOCK OPTIONS The Executive's exercisable and unexercisable
options shall be subject to the same dilution as
may apply to all common stockholders, provided
that the anticipated transaction referred to in
Section 4.1 of the Agreement shall not have a
dilutive effect on the one and one-half percent
(1.5%) discussed herein.
ADJUSTMENTS In the event of any change in the outstanding
common stock by reason of a stock split, spin-off,
stock dividend, stock combination or
reclassification, recapitalization, consolidation
or merger, or similar event, the Board shall
adjust appropriately the number of shares subject
to options under this Term Sheet and make other
revisions as it deems are equitably required.
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NONTRANSFERABILITY Except as otherwise provided herein, the Executive
cannot sell or otherwise transfer the options and
shares purchased upon exercise of an option
("Option Shares") prior to a Public Offering that
includes Blackstone shares. Any sale of Option
Shares shall in all cases be completed in
compliance with applicable securities laws.
Transfers of Option Shares shall be permitted in
the event of death to beneficiaries of the estate,
and during lifetime to trusts, the beneficiaries
of which are the Executive, a charitable
institution or institutions selected by Executive,
or members of his family, and options may, in the
event of death, be exercised by beneficiaries or
the estate, subject in all cases to agreeing to be
bound by the same terms as the Executive. As a
condition to exercising options, the Executive
must agree to be bound by the terms of the
stockholders' agreement that will be drafted
subsequent to the Employment Agreement.
RIGHTS The Executive shall have the same voting, dividend
and other rights with respect to Option Shares as
the Company's other common stockholders.
REGISTRATION RIGHTS/PUBLIC
OFFERING OPTION SHARES: It is expected that the stockholder
agreement will provide piggyback rights.
OPTIONS: Immediately following the first Public
Offering that includes Blackstone shares, the
Company shall file, at its own expenses, an S-8 to
register the shares subject to option, which
shares shall be subject to an applicable "standard
underwriter lock-up agreement."
TAGALONG/DRAGALONG RIGHTS It is expected that the stockholder's agreement
will provide tagalong and dragalong rights.
PUTS AND CALLS Puts and calls for the options and Option Shares
shall be as set forth in Appendix B; PROVIDED,
HOWEVER, if there is a Change in Control prior to
a Public Offering, any Option Shares or
exercisable Options (i) may be put to the Company
at the difference between FMV and the exercise
price, but (ii) the Company shall not have a call;
PROVIDED, FURTHER, no put or call shall be
consummated if such put or call would result in a
violation of applicable law or the terms of any
financing documents. There shall be no puts or
calls subsequent to a Public Offering. An exercise
period
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(e.g., one year after termination of employment)
will otherwise be specified for puts and calls.
--FAIR MARKET VALUE ("FMV") If there is no public trading market for the
shares of the Company, the FMV of the shares will
be the per share price, as determined by the Board
in good faith; PROVIDED, HOWEVER, if the Executive
or Executive's beneficiaries or estate disagree
with the Board's determination, the FMV shall be
determined by an independent nationally
recognized, full service investment banker who
follows the Company and is reasonably acceptable
to both the Company and the Executive or
Executive's beneficiaries or estate.
--PUBLIC OFFERING Public offering shall mean the sale of the shares
of any class of the Company's stock to the public
pursuant to an effective registration statement
(other than a registration statement on Form S-4
or S-8 or any similar or successor form) filed
under the Securities Act of 1933, as amended.
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00
XXXXXXXX X
PUTS AND CALLS
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BAD TERMINATIONS GOOD TERMINATIONS
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FIRED FOR QUIT W/O FIRED W/O "CAUSE"/ QUIT DEATH/DISABILITY
"CAUSE" "GOOD WITH "GOOD REASON"
REASON"
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OPTION Any Option Any Option Any Option Shares can May put Option Shares
SHARES Shares can Shares can be Called at FMV prior to Company at FMV prior
be Called at be Called to a Public Offering. to a Public Offering.
the lesser of at the
cost or FMV. lesser of Any Option Shares may No put or call subsequent
cost or FMV. be put to the Company to a Public Offering.
at FMV prior to a
No Put. No put. Public Offering.
No put or call subsequent
to a Public Offering.
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OPTIONS All Options All Options Options shall remain Options shall remain
terminate terminate outstanding until outstanding until
without any without any termination of the termination of
payment. payment. Agreement plus 3 employment plus one year.
months.
May put Options to May put Options to
the Company at the Company at the
difference between difference between
FMV and the exercise FMV and the exercise
price prior to a price prior to a Public
Public Offering. Offering.
No put or call subsequent No put or call subsequent
to a Public Offering. to a Public Offering.
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* Options at Expiration of Employment Term: If employment terminates because
the Executive gives notice of intent not to renew, all options shall
terminate without payment at termination of employment in that event. If
employment is terminated because the Company elects not to renew the
Agreement, Executive shall vest in options during the applicable salary
continuation period under Section 6.1. Unvested options at the end of such
period shall terminate.
