GULF STATES STEEL, INC. OF ALABAMA
000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
EXECUTIVE RETENTION AGREEMENT ("Agreement") by and between Gulf States
Steel, Inc. of Alabama, an Alabama corporation (the "Company"), and Xxxxx X.
Xxxxxxxxx (the "Executive"), dated as of the 19th day of October, 1999. Unless
otherwise provided, capitalized terms shall have the meaning provided in Section
2.
1. Purpose.
The Company has determined that it is in its best interests to assure
the continued dedication of the Executive, notwithstanding the occurrence of the
Trigger Event with respect to the Company, by providing Executive with: (A)
severance pay and other considerations in the event that: (i) the Executive's
employment is terminated during the Trigger Event Period other than for "Cause",
or (ii) Executive shall during such period terminate his employment for "Good
Reason"; and (B) an incentive to remain with the Company and work for a
successful reorganization of the Company within the Trigger Event Period.
2. Certain Definitions.
(a) "Cause" shall mean: (i) a material breach by the Executive of the
Executive's duties or responsibilities with the Company (other than as a result
of incapacity due to physical or mental illness) which is demonstrably willful
and deliberate on the Executive's part, which is committed in bad faith or
without reasonable belief that such breach is in the best interests of the
Company and which is not remedied in a reasonable period of time after receipt
of written notice from the Company specifying such breach; or (ii) the
conviction of the Executive of a felony involving moral turpitude.
(b) A "Change of Control Event" shall mean the first to occur of
either of the following events :
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of the Company or
(ii) the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors; provided,
however, that the following acquisitions shall not constitute a Change of
Control Event under this Section 2(b)(1): (i) any acquisition by the Company,
(ii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company; or
(2) The election or appointment of a Board of Directors of the
Company, a majority of whose members are not, as of the date of the Trigger
Event, members of the Board of Directors of the Company (the "Incumbent Board");
provided, however, that any individual becoming a director subsequent to the
date thereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board of Directors of the Company.
(c) "Disability" means a physical or mental infirmity which
renders the Executive incapable of performing his duties with the Company for
any consecutive or non-consecutive period of ninety (90) days during any twelve
month period, if the Executive remains so incapable of performing such duties at
the end of such 90 day period.
(d) "Good Reason" shall mean the assignment to the Executive of
any duties, position or responsibilities materially inconsistent with the
Executive's existing duties, position or responsibilities by the Company which
results in a material diminution in such duties, position or responsibilities,
which is not remedied by the Company promptly after receipt of notice thereof
given by the Executive to the Board of Directors of the Company.
(e) The "Trigger Event" shall mean the 1999 filing by the
Company of the petition with the United States Bankruptcy Court under Title 11
of the United States Bankruptcy Code.
(f) The "Trigger Event Period" shall mean the period commencing
on the date hereof, and ending on March 31, 2001, unless extended by the Board
of Directors of the Company.
3. Severance Payment and other Considerations.
(a) If, during the Trigger Event Period: (i) the Company shall
terminate the Executive's employment (other than for Cause or Disability); or
(ii) the Executive shall terminate his employment for Good Reason, the Company
shall (subject, however, to Sections 8(e) and 8(k)):
(1) Pay to the Executive in a lump sum in cash within 30 days
after the date of termination a severance payment in an amount equal to two and
three fourths months of the Executive's then base annual salary (provided,
however, that for the purposes hereof, such base salary shall be deemed to be
not less than his base salary on the date hereof), and the Company shall also
pay for any accrued vacation; and
(2) During the 18-month period following such date of
termination, continue at the Company's expense such Executive's coverage under
the Company group health insurance and/or group life insurance in which the
Executive was a participant and which the Company is providing to other
employees, provided, however, that such continuation of coverage (and payment by
-------- -------
the Company of the cost thereof) shall be provided only to the extent such
coverage is permissible under, and shall be subject to, the terms of such group
policies (and nothing shall require the Company to continue such coverage in
effect generally or restrict the right of the Company to modify or amend such
policies or programs), and provided further that
2
any such continuation of medical coverage shall be credited against any COBRA
requirements of the Company with respect to the Executive.
(b) If the Executive's employment shall be terminated by the Company
for Cause or Disability during the Trigger Event Period or if the Executive
shall terminate employment other than for "Good Reason" during such Period, this
Agreement shall terminate without any further obligations of the Company to the
Executive hereunder.
4. Incentive Payment for Successful Reorganization.
(a) If the bankruptcy court shall enter a final order confirming a
plan of reorganization for the Company during the Trigger Event Period or at any
time thereafter and on a date on which Executive remains employed by the
Company, the Executive shall on such date such final order is entered become
entitled to receive from the Company an amount equal to two and three fourths
months of Executive's then base salary (provided, however, that for the purposes
hereof, such base salary shall be deemed to be not less than his base salary on
the date hereof), subject, however, to Section 8(e). Such amount shall be
payable one-half on the date of the final order and the balance (the "Second
Installment") on the date of consummation of the plan or reorganization (the
"Consummation Date") thereof (without interest) so long as the Executive shall
be employed by the Company on such Consummation Date; but subject, however to
Section 4(b).
(b) Notwithstanding Section 4(a), the Second Installment shall become
immediately due and payable to the Executive if prior to the Consummation Date:
(i) a Change of Control Event as defined in Section 2(b)(1) or (b)(2) shall
occur and the Executive shall be employed by the Company on the date of such
Change in Control Event; (ii) the Company shall terminate the Executive's
employment other than for Cause; (iii) the Executive shall terminate his
employment for Good Reason; or (iv) the Executive shall die or suffer a
Disability while he is an employee of the Company.
5. Assumption of Agreement In Bankruptcy.
The Executive acknowledges that this Agreement shall be subject to
rejection by the bankruptcy court. The Company agrees to use reasonable efforts
to cause a bankruptcy court to approve the assumption of this Agreement.
6. No Employment Agreement.
The Executive acknowledges that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is "at will" and may be terminated by
the Company at any time, subject, however, to any obligations of the Company
hereunder or thereunder.
7. Confidential Information.
After termination of Executive's employment by Executive or by the
Company, the Executive shall continue to hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its
3
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement) and the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it. The obligations of
the Executive under this Section shall supplement and not supersede any duty of
confidentiality he may have under any other agreement with the Company or under
applicable law.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Alabama, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(b) This Agreement may not be terminated, amended or modified (or any
provision or condition waived) otherwise than by a written agreement executed by
the parties hereto.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: Xxxxx X Xxxxxxxxx
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
If to the Company: Gulf States Steel, Inc. of Alabama
000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
or to such other address as either party shall have furnished to the other in
writing in accordance herewith.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(e) The Company may withhold from any amount payable under this
Agreement such Federal, state or local taxes as shall be required by applicable
law to be withheld by the Company in respect of such amount (or in respect of
any other consideration provided by the Company hereunder).
(f) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
4
(g) The Executive shall not be obligated to seek other employment or
take any other action by way of mitigation of any amount payable to the
Executive hereunder. The Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any successful contest by the Executive of the
validity or enforceability of this Agreement or the liability of the Company
hereunder, or of any provision of this Agreement, plus interest on any delayed
payment at the rate of six percent per annum.
(h) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's heirs,
estate and legal representatives.
(i) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(j) This Agreement embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, or agreement of any
kind not expressly set forth in this Agreement shall affect, or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.
(k) The benefits provided under this Agreement shall be in addition
to any other benefits to which the Executive may be entitled under any other
Company programs or by law; provided, however, that any severance or vacation
payment made hereunder shall be reduced by any severance or vacation payments
otherwise required to be paid to the Executive under any other Company program
or under applicable law.
5
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
Executive
GULF STATES STEEL, INC. OF ALABAMA
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Chairman and Chief Executive Officer
6
