Exhibit (c)(4)
Employment Agreement, dated November 10, 1998, by and between Steel
of West Virginia, Inc., and Xxxxxxx X. Xxxx.
EMPLOYMENT AGREEMENT
AGREEMENT, dated this 10th day of November, 1998, by and between Steel of
West Virginia, Inc. (the "Company") and Xxxxxxx X. Xxxx ("Executive").
WITNESSETH:
WHEREAS, the Company is engaged in the business of manufacturing steel and
steel products, fabricating steel components, truck trailers, off-highway
construction equipment, industrial lift trucks, accessories for the mining
industry and related services (the "Business");
WHEREAS, Executive is and has been employed by the Company in the
capacities of President and Chief Executive Officer;
WHEREAS, the Company is entering into an Agreement and Plan of Merger dated
November 10, 1998 by and among Roanoke Electric Steel Corporation ("Parent"),
SWVA Acquisition, Inc. ("Acquisition") and the Company (the "Merger Agreement")
pursuant to which, among other things, Acquisition will make a tender offer for
the shares of Company (the "Offer"), and Acquisition will be merged into the
Company (the "Merger"); and
WHEREAS, pursuant to and simultaneous with the acceptance and payment
for the Shares in the Offer, the Company wishes to retain the services of
Executive as the President and CEO of the Company; and Executive wishes to
assume the position of President and CEO of the Company;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Company and Executive agree as follows:
1. Employment and Other Positions:
(a) The Company hereby agrees to employ Executive, and Executive
hereby agrees to serve, subject to the provisions of this Agreement, as an
employee of Company in accordance with the terms of this Agreement. Executive
agrees to devote all of his business time, attention and energies to the
performance of the duties assigned to him hereunder, and to perform such duties
faithfully, diligently and to the best of his abilities and subject to such
laws, rules, regulations and policies from time to time applicable to the
Company's employees. Except as otherwise provided herein, Executive is
permitted to pursue outside interests, including, but not limited to charitable
work, membership in trade associations, industry boards, and on the boards of
directors of other companies, provided that such outside interests do not
interfere with the performance of his duties and obligations hereunder, and
further provided that Executive receives the prior consent of the Board of
Directors of the Company which consent will not be
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unreasonably withheld. Executive agrees to refrain from engaging in any activity
that does, will or could reasonably be deemed to conflict with the best
interests of the Company. Without limiting the generality of the foregoing,
Executive shall perform the duties associated with the positions of President
and CEO, and such other duties and responsibilities as are from time to time
assigned to Executive by the Board of Directors of the Company consistent with
such positions, at his current office location, or in such other capacity or at
such other locations as may be mutually agreed by Company and Executive.
(b) In addition to the employment specified above, in accordance with
Section 6.8 of the Merger Agreement, Executive shall be appointed to the Board
of Parent and thereafter nominated for such position at the next annual meeting
of stockholders of Parent, and Parent will appoint Executive as a director of
the Company for such terms as he shall serve as a director of Parent during the
term of this Agreement.
2. Term: This Agreement shall commence upon acceptance and payment for
the Shares in the Offer , as set forth in the Merger Agreement, and shall
expire on the third (3rd) anniversary thereof (the "Term"), unless sooner
terminated in accordance with Section 7 hereof; except that, if the Effective
Time of the Merger shall not occur within one hundred and twenty (120) days of
the Outside Date for the Offer, all as defined in the Merger Agreement, Company
or Parent may declare the Agreement null and void, and other than for any
amounts payable by reason of Section 8(b) hereof, and, notwithstanding anything
herein otherwise to the contrary, neither Company nor Parent shall have any
further responsibility for any payments of any amounts or for the provision of
any benefits to Executive under this Agreement.
3. Compensation:
(a) Base Salary: Executive's base salary shall be at the annual
rate of Two Hundred and Twenty-Five Thousand Dollars ($225,000) (the "Annual
Base Salary") during the Term, payable in accordance with the Company's regular
payroll practices. All applicable withholding taxes shall be deducted from such
payments. Annual Base Salary may be increased (but not decreased), from time to
time during the Term, in the exercise of the good faith discretion of the
Company's Board of Directors.
(b) Incentive Plan: Executive shall receive additional compensation,
if and as provided in any incentive compensation plan applicable to Executive,
adopted, in the sole discretion of the Board of Directors of the Company, from
time to time (herein referred to as the "Incentive Amount"). The current
Incentive Plan applicable to Executive is described in Schedule 1 attached
hereto and incorporated herein by reference.
4. Benefits: Executive shall be eligible to participate in such benefit
plans, including but not limited to stock option and similar plans and officers'
and directors' liability insurance, as are, or from time-to-time hereafter may
be, provided by the Company or Parent for executive employees and/or directors
(except salary Incentive Plans or similar incentive
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compensation plans, other than stock option plans of Parent or any other
subsidiary of Parent, except as described in Section 3(b) above and as set forth
in the Merger Agreement), and as permitted by the terms of such plans Where
different plans covering substantially similar benefits are provided by each of
the Company and Parent, Executive shall participate, if permitted by the terms
of the plan, in the plan that provides the higher level of benefits (except that
Executive shall not be entitled to simultaneously participate in plans of both
of the Company and Parent covering the same or substantially similar benefits).
All benefits shall be provided to Executive in accordance with the terms and
conditions of such benefit plans and programs as are maintained by the Company
or Parent, as such plans are amended from time to time.
5. Reimbursement of Expenses: The Company shall reimburse Executive for
reasonable and necessary business expenses of Executive for travel, meals and
similar items incurred in connection with the performance of Executive's duties,
and which are consistent with such guidelines as the Board of Directors of the
Company may from time to time establish. All payments for reimbursement of such
expenses shall be made to the Executive only upon the presentation to the
Company of appropriate vouchers or receipts, if, and in such form as may be,
required by such guidelines, from time to time.
6. Confidentiality, Non-Competition, Etc.:
(a) Executive acknowledges that: (i) the Business is highly
competitive and that Executive's employment by the Company will require that
Executive have access to and knowledge of confidential information of the
Company which may include, but shall not be limited to, the identity of the
Company's customers, the identity of the representatives of customers with whom
the Company has dealt, the kinds of products and services provided by the
Company to customers and offered to potential customers, the manner in which
such products are manufactured and such services are performed or offered to be
manufactured or performed, the needs of actual or prospective customers, pricing
information, information concerning the creation, acquisition or disposition of
products and services, computer software applications and other programs,
personnel information and other trade secrets not generally known to the public
(the "Confidential Information"); (ii) the direct and indirect disclosure of any
such Confidential Information to existing or potential competitors of the
Company would place the Company at a competitive disadvantage and would do
damage, monetary or otherwise, to the Company's business; and (iii) the engaging
by Executive in any of the activities prohibited by this Section 8 would
constitute improper appropriation and/or use of such Confidential Information.
Executive expressly acknowledges the trade secret status of the Confidential
Information and that the Confidential Information constitutes a protectible
business interest of the Company.
(b) For purposes of this Section 6, the "Company" shall be construed
to include the Company and its parents, subsidiaries and affiliated companies of
each engaged in the Business, including any divisions or subsidiaries managed by
Executive.
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(c) During Executive's Term of employment, and at all times after the
termination of Executive's employment, by expiration of the Term or otherwise,
Executive shall not, directly or indirectly, whether individually, as a
director, stockholder, owner, partner, employee, principal or agent of any
business, or in any other capacity, make known, disclose, furnish, make
available or utilize any of the Confidential Information, other than in the
proper performance of the duties contemplated herein, or as expressly permitted
herein, or as required by a court of competent jurisdiction or other
administrative or legislative body; provided that, prior to disclosing any of
the Confidential Information as required by a court or other administrative or
legislative body, Executive shall promptly notify the Company so that the
Company may seek a protective order or other appropriate remedy. Executive
agrees to return all Confidential Information, including all photocopies,
extracts and summaries thereof, and any such information stored electronically
on tapes, computer disks or in any other manner to the Company at any time upon
request by the Company and upon the termination of his employment for any
reason.
(d) During Executive's employment hereunder, Executive shall not
engage in "Competition" with the Company. For purposes of this Agreement,
"Competition" by Executive shall mean Executive's engaging in, or otherwise
directly or indirectly being employed by or acting as a consultant or lender to,
or being a director, officer, employee, principal, agent, stockholder, member,
owner or partner of, or permitting his name to be used in connection with the
activities of any other business or organization anywhere in the United States
which competes, directly or indirectly, with the Business of the Company. This
provision shall not, however, prevent Executive from owning 19.9% or less of any
publicly traded company which may compete with the Company, provided Executive
has no active participation with such company, including but not limited to
serving on such company's board of directors.
(e) Executive acknowledges that the services to be rendered by him to
the Company are of a special and unique character, which gives this Agreement a
peculiar value to the Company, the loss of which may not be reasonably or
adequately compensated for by damages in an action at law; and that a material
breach or threatened breach by him of any of the provisions contained in this
Section 6 will cause the Company irreparable injury. Executive therefore
agrees that the Company shall be entitled, in addition to any other right or
remedy, to a temporary, preliminary and permanent injunction, without the
necessity of proving the inadequacy of monetary damages or the posting of any
bond or security, enjoining or restraining Executive from any such violation or
threatened violations.
(f) Executive further acknowledges and agrees that, due to the
uniqueness of his services and confidential nature of the information he will
possess, the covenants set forth herein are reasonable and necessary for the
protection of the Business and goodwill of the Company.
(g) Should a court of competent jurisdiction determine that any of the
restrictions set forth in this Section 6, including those as regards the scope
of Executive's
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activities restricted, the duration of the restriction or the geographic scope
of the restriction, is overly broad or unenforceable as written, the parties
agree that this Agreement shall be deemed amended to reduce any or all of such
restrictions to those deemed appropriate and enforceable by such court.
7. Termination:
(a) The employment of Executive hereunder shall terminate on the first
to occur of the following:
(i) the date of Executive's death, adjudicated incompetency or
adjudicated bankruptcy;
(ii) the date on which Executive shall have experienced a
Disability (as defined below), and the Board of Directors of the Company
gives Executive notice of termination on account of Disability;
(iii) the date on which Executive shall have engaged in conduct
which constitutes Cause (as defined below), and the Board of Directors of
the Company gives Executive notice of termination for Cause;
(iv) the date on which Executive gives the Company notice of
termination for Good Reason (as defined below); or,
(v) expiration of the Term.
(b) For purposes of this Agreement, "Disability" shall mean an
illness, injury or other incapacitating condition as a result of which Executive
is unable to perform the services required to be performed under this Agreement
for a period of one hundred eighty (180) consecutive days during the Term;
provided, however, that if long term disability insurance benefits payable to
Executive pursuant to any policy of disability insurance then maintained by the
Company or Parent for the benefit of employees commences during such 180-day
period, the amount payable to Executive for such benefits shall be deducted from
the Annual Base Salary payable to Executive for as long as such benefits are
payable. Executive agrees to submit to such medical examinations as may be
necessary to determine whether a Disability exists, pursuant to such reasonable
requests made by the Board of Directors of the Company, from time to time.
(c) For purposes of this Agreement, "Cause" shall mean the occurrence
of any of the following:
(i) Executive's willful and continued failure to substantially
perform his duties with the Company, other than by reason of physical or
mental illness;
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(ii) Executive's conviction of, guilty plea, to plea of nolo
contendere or confession to, a felony or misdemeanor involving fraud, theft
or other Class 1 or Class 2 misdemeanor;
(iii) Executive willfully or negligently engaging in conduct
which is demonstrably and materially injurious to the Company, monetarily
or otherwise;
(iv) Any attempt of Executive to obtain any personal profit from
any transactions in which the Executive has an interest which is adverse to
the Company unless Executive shall first obtain the consent of the
Company's Board of Directors; or,
(v) Executive's breach of any material term of this Agreement.
Notwithstanding the foregoing, Cause shall not be deemed to have occurred
in the case of Section 7(c)(i), (iii), (iv) or (v) until Company shall have
given Executive notice of the facts that constitute Cause and Executive shall
have failed to cure such Cause within ten (10) business days.
(d) For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following:
(i) Company's failure to maintain Executive's job privileges
and responsibilities in a manner generally consistent with and reasonable
for the position of President and CEO of the Company;
(ii) Company's breach of any of the material terms of this
Agreement;
(iii) Relocation of Executive's principal office outside of the
Huntington, West Virginia area, without Executive's prior consent; or
(iv) The occurrence of a Change in Control, meaning: a change
in control of Parent of a nature that would be required to be reported
(assuming such event has not been "previously reported") in response to
Item 1(a) of the Current Report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act"); provided that, without limitation, such
a Change in Control shall be deemed to have occurred at such time as (i)
any Person is or becomes the "beneficial owner" (as defined in Rule 13d-3
or Rule 13d-5 under the Exchange Act as in effect on January 1, 1996),
directly or indirectly, of 20% or more of the combined voting power of
Parent's voting securities; (ii) the Incumbent Board of Parent ceases for
any reason to constitute at least the majority of the Board; provided,
however, that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by Parent's shareholders was
approved by a vote of at least 75% of the directors comprising the
Incumbent Board (either by a specific vote or by
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approval of the proxy statement of Parent in which such person is named as
a nominee for director, without objection to such nomination) shall be, for
purposes of this clause (ii), considered as though such person were a
member of the Incumbent Board; (iii) all or substantially all of the assets
of Parent are sold, transferred or conveyed if the transferee is not
controlled by Parent (control meaning the ownership of more than 50% of the
combined voting power of such entity's voting securities); or (iv) Parent
is merged or consolidated with another corporation or entity and, as a
result of such merger or consolidation, less than 75% of the outstanding
voting securities of the surviving or resulting corporation or entity shall
be owned in the aggregate by the former shareholders of Parent.
Notwithstanding anything in the foregoing to the contrary, no Change in
Control shall be deemed to have occurred for purposes of this Agreement by
virtue of any transaction (i) which results in the Executive or a group of
Persons which includes the Executive, acquiring, directly or indirectly,
20% or more of the combined voting power of Parent's voting securities; or
(ii) which results in Parent, any subsidiary of Parent or any profit-
sharing plan, employee stock ownership plan or employee benefit plan of the
Company or Parent or any of Parent's subsidiaries (or any trustee of or
fiduciary with respect to any such plan acting in such capacity) acquiring,
directly or indirectly, 20% or more of the combined voting power of
Parent's voting securities.
Notwithstanding the foregoing, Good Reason shall not be deemed to have
occurred in the case of Section 7(d)(i) or (ii) until Executive shall have
given Company notice of the facts that constitute Good Reason and Company
shall have failed to cure such Good Reason within ten (10) business days.
8. Compensation in Event of Termination; Survival:
(a) Upon termination of Executive's employment for any reason, this
Agreement shall terminate and the Company shall have no further obligation to
Executive except as set forth in this Section 8; provided that, the provisions
set forth in Sections 6 (with the exception of Section 6(d)), 11 and 12 hereof
shall remain in full force and effect after the termination of Executive's
employment.
(b) In the event Executive's employment is terminated pursuant to
Sections 7(a)(i) through (iii) or (v) prior to the expiration of the Term,
Executive or his estate, conservator or designated beneficiary, as the case may
be, shall be entitled to payment of any accrued but unpaid Annual Base Salary,
accrued but unpaid Incentive Amount, and reimbursement of incurred business
expenses (upon the conditions set forth in Section 5 hereof), all through the
date of termination, subject, however, to the Company's right to pursue any
claims for any damages which it may incur by reason of termination in accordance
with Section 7(a)(iii). Following any such termination, neither Executive nor
his estate, conservator or designated beneficiary shall be entitled to receive
any other salary or other payment provided for hereunder
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with respect to any period after such termination, except as Executive may
otherwise be entitled pursuant to any employee benefit plan.
(c) In the event Executive's employment is terminated pursuant to
Section 7(a)(iv) , in addition to the payment of amounts payable under Section
8(b) above, Executive shall be entitled to receive, as his sole and exclusive
remedy, the Annual Base Salary, payable for the remainder of the Term, payable
in installments in accordance with the Company's regular payroll practices,
after deduction of all applicable withholding taxes and similar payments, which
sum shall not be offset by any amounts otherwise earned by Executive during such
period, and Executive shall have no duty to seek other employment during such
period.
9. Assignment: The duties assumed hereunder by Executive shall not be
assignable by Executive. It is further agreed that neither Executive or any
beneficiary of any amount hereunder shall have any right to commute, sell,
assign, transfer or otherwise convey the right to receive any payment hereunder,
except as expressly provided herein or in the applicable plan, etc., which
payments and the right thereto are expressly declared to be non-assignable and
non-transferable, and in the event of any attempted assignment or transfer,
Company shall have no further liability hereunder. Company may only assign this
Agreement as contemplated in Paragraph 10 hereof.
10. Successors and Assigns; Binding Agreement: This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective heirs, administrators, executors, successors and assigns, and upon
any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company's assets and Business.
11. Return of Company Property: Executive agrees that, promptly following
the termination of his employment for any reason, he shall return all property
of the Company, its subsidiaries, affiliates and any divisions thereof which is
then in or thereafter comes into his possession, including, but not limited to,
documents, contracts, agreements, plans, photographs, books, notes,
electronically stored data and all copies of the foregoing, as well as any
materials or equipment supplied by the Company to Executive.
12. Resignation as Director: Executive shall, promptly following the
termination of his employment for any reason, resign as a director of Parent and
as a director of Company, respectively, to the extent that he is serving in
either of those capacities at the time of termination.
13. Entire Agreement: This Agreement sets forth the entire agreement
between the parties with respect to its subject matter and merges and supersedes
all prior discussions, agreements and understandings of every kind and nature
between them, including any prior employment agreement, whether written or oral,
between the Company and Executive as of the effective date of the Term, and
neither party shall be bound by any term or condition with respect
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to the subject matter of this Agreement other than as expressly set forth or
provided for herein. This Agreement may not be changed or modified except by an
agreement in writing, signed by the parties hereto.
14. Each Party the Drafter: This Agreement and the provisions contained
in it shall not be construed or interpreted for or against any party to this
Agreement because that party drafted or caused that party's legal representative
to draft any of its provisions.
15. Waiver: The failure of either party to this Agreement to enforce any
of its terms, provisions or covenants shall not be construed as a waiver of the
same or of the right of such party to enforce the same. Waiver by either party
hereto of any breach or default by the other party of any term or provision of
this Agreement shall not operate as a waiver of any other breach or default.
16. Severability: In the event that any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remainder of the Agreement shall
not in any way be affected or impaired thereby. Moreover, if any one or more of
the provisions contained in this Agreement shall be held to be excessively broad
as to duration, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent allowed
by applicable law.
17. Arbitration: Any controversy or claim arising out of or related to
this Agreement or the breach thereof shall be settled by arbitration to be
conducted in Roanoke, Virginia, in accordance with the rules of American
Arbitration Association. The decision of the arbitrator shall be final and
binding and judgment upon the award rendered thereby may be entered in any court
having competent jurisdiction thereof. The expenses of the arbitration shall be
shared equally by the Company and Executive; except that each of the parties
hereto shall be individually responsible for any and all attorneys,
accountants, consultants or other expert witness fees and expenses incurred by
such party in relation to such arbitration.
18. Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, without regard to its
conflict of law rules.
19. Descriptive Headings: The paragraph headings and recitals contained
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
20. Counterparts: This Agreement may be executed in one or more
counterparts, which, together, shall constitute one and the same agreement.
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21. Guarantee: Parent hereby joins in this Agreement to guarantee the
performance of the covenants and agreements herein made by the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
THE COMPANY EXECUTIVE
By: /s/ Xxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxx
---------------------------- ----------------------
Its: Vice President and
Chief Financial Officer
PARENT
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Its: Chairman of the Board, President,
Treasurer and Chief Executive Officer
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SCHEDULE A
CURRENT INCENTIVE PLAN
From the Effective Date of the Employment Agreement and for fiscal year
1998-1999, the Incentive Compensation Plan applicable to the Agreement pursuant
to Section 3(b) shall be as follows:
Employee shall be paid, in addition to Annual Base Compensation, on a
monthly basis, an amount equal to two percent (2%) of the monthly gross
profits of the Company (exclusive of profits of Parent or subsidiaries of
Parent than SWVA, Inc., Xxxxxxxx Steel, Inc., and Steel Ventures, Inc.), if
any, before profit sharing contributions and taxes, but after deduction of
only such interest expense as would have been attributable to the
financing in place for the Company immediately prior to acceptance and
payment for the Shares in the Offer, as set forth in the Merger Agreement,
all as determined by the Company's certified public accountants (the
"Incentive Amount").
Beginning in fiscal year 1999-2000, and thereafter, the Incentive Plan
applicable to the Agreement shall be such Incentive Plan as is, from time
to time, determined by the Board of the Company.
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