EMPLOYMENT AGREEMENT
AGREEMENT, made August 22, 1996 by and between BAR TECHNOLOGIES INC.,
a Delaware corporation (the "Company") and XXXXXX X. XXXXXXX (the "Executive").
RECITALS
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In order to induce the Executive to serve as the President and Chief
Executive Officer 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.
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 its President and
Chief Executive Officer. In his capacity as the President and Chief Executive
Officer of the Company, the Executive shall report to the Board of Directors of
the Company (the "Board") and shall have the customary powers, responsibilities
and authorities of presidents and chief executive officers of corporations of
the size, type and nature of the Company, as it exists from time to time, and
as are assigned by the Board, including, without limitation, the determination
and execution of an orderly process of succession (including the transfer of
duties from the Executive to other officers of the Company, in contemplation of
the Executive's retirement upon the expiration of the Term hereof).
1.2 Subject to the terms and conditions of this Agreement, the
Executive hereby accepts employment as the President and Chief Executive
Officer of the Company commencing as of August 22, 1996, 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 Board. The Company shall use its best efforts to get the
Executive elected to the Board of the Company and appointed as Chairman of the
Board. In addition, 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 Board) or from serving, subject
to the prior approval of the Board, 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 Board
required therein 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 August 22, 1996
and, subject to the terms hereof, shall terminate on the earlier of (i)
September 30, 1999 (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 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 $350,000 per annum. Base
Salary shall be payable in accordance with the ordinary payroll practices of
the Company. During the Term of Employment, the Board of Directors shall, in
good faith, review and, if determined by the Board of Directors 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. 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 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; provided, however,
the Annual Bonus shall not be less than $100,000 for the fiscal years ending
September 30, 1997 and September 30, 1998 (the "Minimum Bonus"). If EBITDA (as
such term is defined in Appendix A attached hereto) equals or exceeds the
EBITDA targets, as set forth in the "Projections" section of the Registration
Statement of the Company dated as of August 1, 1996 (the "Registration
Statement"), for any fiscal year under this Agreement, the Annual Bonus shall
be at least $250,000; provided, however, that such methodology for the
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 Board, in
its 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.
The Annual Bonus shall be payable as soon as practicable after
September 30 of each fiscal 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 such Bonus Term. The proviso in the previous sentence shall not apply if
the Executive's employment is terminated pursuant to Section 6.1 of this
Agreement.
3.3 Signing Bonus. Within 30 days after the Executive's Term of
Employment commences, the Company shall pay the Executive a signing bonus of
$300,000 (the "Signing Bonus"). 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: if such resignation or termination occurs (i) on
or before September 30, 1997, 100%; (ii) after September 30, 1997 but on or
before September 30, 1998, 66.67%; or (iii) after September 30, 1998 but on or
before September 30, 1999, 33.33%.
4. Employee Benefits.
4.1 Stock Options. The Executive shall be entitled to the benefits
of an Option Agreement (the "Option Agreement"), which such 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 not be
eligible to receive any stock option or other equity incentive other than as
described in this Section 4.1.
4.2 Employee 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. In addition, the Company shall provide substantially
similar benefits as provided under The Birmingham Steel Corporation Management
Security Plan (the "Management Security Plan") dated as of July 27, 1993;
provided, however, that such benefits shall be subject to the same terms and
conditions as under the Management Security Plan; provided, further, that the
Executive shall be given credit for his Years of Employment (as such term is
defined in the Management Security Plan) at Birmingham Steel, which such
employment began January 1, 1994, without contribution by the Executive for
years prior to the commencement date of employment hereunder.
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. For
any calendar year in which the Executive is not employed for the entire period
of such calendar year, the Executive's vacation days shall be prorated pursuant
to the following formula: twenty multiplied by a fraction, the numerator of
which is the number of days during such calendar year that the Executive has
been actively employed by the Company and the denominator of which is 365. Any
vacation days not taken by March 31 of the following year 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 times Base Salary; (ii) payment for initiation fees
at a country club; (iii) the right to participate in any 401(k) plan which the
Company may establish; (iv) payment of reasonable legal fees relating to the
negotiation and execution of this Agreement, not to exceed $10,000 and (v)
long-term disability coverage providing a monthly benefit of $22,500.
5. Expenses. Subject to prevailing Company policy or such
guidelines as may be established by the Board, the Company will reimburse the
Executive for all reasonable expenses incurred by the Executive in carrying out
his duties.
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 other than for 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) prior to the end of the
Initial Term or any Renewal Term, the Company shall continue to pay Executive's
Base Salary and the Minimum Bonus for the longer of (i) the remainder of the
Term of Employment as in effect immediately prior to such 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 receive such payments, if
any, under applicable plans or programs to which he is entitled pursuant to the
terms of such plans or programs.
(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 or
material reduction in bonus opportunities; 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.
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 and
(ii) 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,
or provide any benefits specified herein, to the Executive shall thereupon
cease and terminate.
(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 Board, (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 Board specifying the
particulars of the conduct by the Executive set forth in any of clauses (i)
through (iv) above. Termination shall be effected by a majority vote of the
Board at a meeting at which the Executive shall have had the opportunity (along
with his counsel) to be heard, 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). As long as the Executive is on the Board, he shall
cooperate to cause a valid Board meeting to occur.
6.3 Disability. In the event of the Disability (as defined below)
of the Executive during the Term of Employment, the Term of Employment and the
obligation of the Company to make payments under Section 3 shall, except for
earned but unpaid salary and bonuses, cease six months after the date the
Executive's Disability occurs if either the Company or the Executive has given
notice of termination for reasons of Disability or, if later, the date the
Executive becomes entitled to benefits under the Company's long term disability
program with respect to such Disability. The term "Disability," for purposes
of this Agreement, shall mean the Executive's absence from the full-time
performance of the Executive's duties pursuant to a determination made in
accordance with the Company's disability plan that the Executive is disabled as
a result of incapacity due to physical or mental illness that lasts for at
least six months.
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.
6.5 No Further Notice, Compensation or Indemnity. 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; provided,
however, that any payment hereunder shall be offset by any compensation the
Executive earns with a new employer or from self-employment.
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 materials, 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 acquired by the
Executive prior to the date hereof.
7. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
c/o The Blackstone Group
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
To Executive:
Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
with a copy to:
Xxxx Xxx Xxxxxxxxx, Esq.
Xxxxxx Xxxxxxx & Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
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 businesses of
the Company, if such successor expressly agrees to assume the obligations of
the Company hereunder.
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, 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, (A) 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 (B) 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.
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 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 Commonwealth of
Pennsylvania 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 Commonwealth of Pennsylvania,
without reference to rules relating to conflicts of law.
16. Effect on Prior Agreements. 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.
17. Withholding. The Company shall be entitled to withhold from
payment any amount of withholding required by law.
18. Survival. Notwithstanding the expiration of the term of this
Agreement, the provisions of Section 11 hereunder shall remain in effect as
long as is necessary to give effect thereto.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
COMPANY
By________________________________
Name:
Title:
__________________________________
Xxxxxx X. Xxxxxxx
