EXHIBIT 10.16
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is effective as of November 1,
2003 (the "Effective Date") between International Steel Group Inc., a Delaware
corporation (the "Company"), and Xxxxxxxx X. Xxxxx ("Executive").
WHEREAS, prior to the Effective Date, Executive was the Vice President
- External Affairs & Public Policy of the Company, and as of the Effective Date,
executive desires to resign his position as Vice President - External Affairs &
Public Policy and continue to be an employee of the Company and represent the
Company in government affairs out of Washington, D.C.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions. Certain words or phrases used herein with
initial capital letters shall have the meanings set forth in paragraph 8 hereof.
2. Employment. The Company shall employ Executive, and Executive
accepts employment with the Company as of the Effective Date, upon the terms and
conditions set forth in this Agreement for the period beginning on the Effective
Date and ending as provided in paragraph 5 hereof (the "Employment Period").
3. Position and Duties.
(a) Executive hereby resigns his title of Vice President
- External Affairs & Public Policy as of the Effective Date. Executive
further resigns from any other directorship, office, or position of the
Company or any entity that is a subsidiary of, or is otherwise related
to or affiliated with, the Company to which he has been elected by the
Board of Directors of the Company (the "Board") (or to which he has
otherwise been appointed). During the Employment Period, Executive
shall continue to be an employee of the Company and shall represent the
Company in government affairs in Washington D.C.
(b) Executive shall report to the Chief Executive Officer
of the Company or such other officer of the Company as is designated by
the Chief Executive Officer.
(c) During the Employment Period, Executive shall devote
Executive's best efforts and Executive's full business time and
attention (except for permitted vacation periods and reasonable periods
of illness or other incapacity) to the business and affairs of the
Company, its subsidiaries and affiliates. Executive shall perform
Executive's duties and responsibilities to the best of Executive's
abilities in a diligent, trustworthy, businesslike and efficient
manner.
4. Compensation and Benefits.
(a) Salary. The Company agrees to pay Executive a salary
during the Employment Period in installments based on the Company's
practices as may be in effect from time to time. Executive's salary
shall be at the rate of $150,000 per year (the "Base Salary").
(b) Stock Options. (i) Executive was granted 154 stock
options pursuant to the Company's 2002 Stock Option Plan and the
agreement entered into between the Company and Executive with respect
to such stock options effective as of June 28, 2002 (collectively the
"Stock Option Plan"). With respect to Executive's stock options, (A)
38.5 of Executive's stock options vested on Xxxxx 00, 0000, (X) 23.5 of
Executive's stock options shall vest on the date following the
expiration of the revocation period set forth in subparagraph
9(b)(iii)(D) hereof if Executive has not exercised his right of
revocation pursuant to such paragraph prior to such date and (C) 10 of
Executive's stock options shall vest on January 1, 2004 if Executive
remains an employee of the Company until such date (collectively, the
"Vested Options"). The Vested Options shall remain outstanding until
the termination of such options in accordance with the terms of the
Stock Option Plan. Executive's remaining 82 stock options that were
granted under the Stock Option Plan (the "Forfeited Options") shall
immediately terminate as of the Effective Date and shall not be
exercisable as of the Effective Date.
(ii) In consideration of the cancellation of the
Forfeited Options, the Company shall pay Executive a cash
payment of $412,500. Such amount will be payable to Executive
as follows: (A) $200,000 shall be payable to Executive as a
lump sum as soon as practicable following Executive's
execution of this Agreement and the expiration of the
revocation period set forth in subparagraph 9(b)(iii)(D)
hereof without Executive having exercised his right of
revocation and (B) $212,500 shall be payable to Executive as a
lump sum on January 1, 2004.
(c) Additional Payment. The Company shall pay Executive a
cash payment equal to $58,543 (the "Additional Payment") in a lump sum
as soon as practicable following Executive's execution of this
Agreement and the expiration of the revocation period set forth in
subparagraph 9(b)(iii)(D) hereof without Executive having exercised his
right of revocation. Executive acknowledges that his Base Salary to be
received during the Employment Period (or in accordance with paragraph
6(b) hereof) and the Additional Payment will satisfy the Company's
obligation to pay any guaranteed payment under any contract or
agreement, whether written or oral, between the Company and Executive.
(d) Benefits. Executive shall be eligible during the
Employment Period to participate, on the same basis as other similarly
situated employees of the Company, in those benefit plans and programs
(including insurance, vacation and other benefits, but excluding, the
Company's Executive Severance Pay Plan and any other severance pay
program or policy of the Company) for which other similarly situated
employees of the Company are from time to time generally eligible, as
determined from time to time by the Board.
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5. Employment Period.
(a) Except as hereinafter provided, the Employment Period
and Executive's employment with the Company shall continue until, and
shall end upon, the second anniversary of the Effective Date.
(b) Notwithstanding (a) above, the Employment Period
shall end early upon the first to occur of any of the following events:
(i) Executive's death;
(ii) a Termination For Cause;
(iii) a Termination Without Cause; or
(iv) a Voluntary Termination.
6. Post-Employment Period Payments.
(a) At the end of the Employment Period for any reason,
Executive shall cease to have any rights to salary, equity awards or
other benefits and Executive shall be entitled to (i) any Base Salary
which has accrued but is unpaid and any unexpired vacation days which
have accrued under the Company's vacation policy but are unused, as of
the end of the Employment Period, (ii) any option rights or plan
benefits which by their terms extend beyond termination of Executive's
employment (but only to the extent provided in any option theretofore
granted to Executive or any other benefit plan in which Executive has
participated as an employee of the Company and excluding, except as
hereinafter provided in subparagraph 6(b), any severance pay program or
policy of the Company) and (iii) any benefits to which Executive is
entitled under Part 6 of Subtitle B of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("COBRA"). In
addition, Executive shall be entitled to the additional benefits and
amounts described in subparagraph 6(b), in the circumstances described
in such subparagraph.
(b) If the Employment Period ends early pursuant to
paragraph 5 on account of a Termination Without Cause, the Company
shall pay Executive the unpaid Base Salary to which he would have been
entitled if the Employment Period had continued until the second
anniversary of the Effective Date. Such payment shall be made in a lump
sum as soon as practicable following the Termination Without Cause. In
addition, if the Employment Period ends early pursuant to paragraph 5
on account of a Termination Without Cause prior to January 1, 2004, the
10 stock options described in paragraph 4(b)(i)(C) above shall vest on
the date of such Termination Without Cause and such stock options shall
remain outstanding until the termination of such options in accordance
with the terms of the Stock Option Plan.
7. Restrictive Covenant. Executive will be bound by the following
restrictive covenant. If Executive fails to abide by the following covenant, the
Company may cease any remaining payments or benefits payable to Executive
hereunder. Except as otherwise required
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by law or an order or decree issued by a court of competent jurisdiction,
Executive will keep in strict confidence, and will not, directly or indirectly,
at any time during or after Executive's employment with the Company or any
Controlled Group member, disclose, furnish, disseminate, make available or,
except in the course of performing Executive's duties of employment hereunder,
use any trade secrets or confidential business and technical information of the
Company or any Controlled Group member or their customers or vendors, including
without limitation as to when or how Executive may have acquired such
information. Such confidential information shall include, without limitation,
the Company's and any Controlled Group member's unique selling, manufacturing
and servicing methods and business techniques, training, service and business
manuals, promotional materials, training courses and other training and
instructional materials, vendor and product information, customer and
prospective customer lists, other customer and prospective customer information
and other business information. Executive specifically acknowledges that all
such confidential information, whether reduced to writing, maintained on any
form of electronic media, or maintained in Executive's mind or memory and
whether compiled by the Company, any Controlled Group member and/or Executive,
derives independent economic value from not being readily known to or
ascertainable by proper means by others who can obtain economic value from its
disclosure or use, that reasonable efforts have been made by the Company and the
Controlled Group members to maintain the secrecy of such information, that such
information is the sole property of the Company or the Controlled Group members
and that any retention and use of such information by Executive during
Executive's employment with the Company or any Controlled Group member (except
in the course of performing Executive's duties of employment hereunder) or after
the termination of Executive's employment shall constitute a misappropriation of
the Company's or any Controlled Group member's trade secrets.
8. Definitions.
(a) "Controlled Group" means the Company and any other
entity which is a member of the Company's controlled group (as such
term is defined in Sections 414(b) or 414(c) of the Internal Revenue
Code).
(b) "Termination For Cause" means the termination by the
Company or any subsidiary of Executive's employment with the Company or
any subsidiary as a result of (i) the commission by Executive of a
felony or a fraud, (ii) conduct by Executive that brings the Company or
any subsidiary or affiliate of the Company into substantial public
disgrace or disrepute, (iii) gross negligence or gross misconduct by
Executive with respect to the Company or any subsidiary or affiliate of
the Company or (iv) Executive's violation of paragraph 7 of this
Agreement.
(c) "Termination Without Cause" means the termination by
the Company or any subsidiary of Executive's employment with the
Company or any subsidiary for any reason other than a Termination for
Cause.
(d) "Voluntary Termination" means Executive's termination
of Executive's employment with the Company or any subsidiary for any
reason.
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9. Release by Executive. In exchange for the Company's payment to
Executive for Executive's Forfeited Options and the continuation of Executive's
employment during the Employment Period:
(a) Upon his termination of employment at the end of the
Employment Period, Executive agrees that he will execute a release of
all current or future claims, known or unknown, arising during the
Employment Period against the Company, its subsidiaries and its
officers, in a form approved by the Company; and
(b) (i) Executive for himself and his dependents,
successors, assigns, heirs, executors and administrators (and his and
their legal representatives of every kind), hereby releases, dismisses,
remisses and forever discharges the Company from any and all
arbitrations, claims (including claims for attorney's fees), demands,
damages, suits, proceedings, actions and/or causes of action of any
kind and every description, whether known or unknown, which Executive
now has as of the Effective Date or may have had prior to the Effective
Date for, upon, or by reason of any cause whatsoever, against the
Company ("claims"), including but not limited to:
(A) any and all claims, directly or indirectly,
arising out of or relating to: (i)
Executive's employment or service with the
Company prior to the Effective Date; (ii)
Executive's resignation as Vice President -
External Affairs & Public Policy of the
Company and any other position described in
paragraph 3 of this Agreement and (iii) the
termination of Executive's employment on the
second anniversary of the Effective Date.
(B) any and all claims of discrimination,
including but not limited to claims of
discrimination on the basis of sex, race,
age, national origin, marital status,
religion or disability, including,
specifically, but without limiting the
generality of the foregoing, any claims
under the Age Discrimination in Employment
Act, as amended (the "ADEA"), Title VII of
the Civil Rights Act of 1964, as amended,
the Americans with Disabilities Act of 1990,
the Family and Medical Leave Act of 1993 and
Ohio Revised Code Chapter 4112;
(C) any and all claims of wrongful or unjust
discharge or breach of any contract or
promise, express or implied; and
(D) any and all claims under or relating to any
and all employee compensation, employee
benefit, employee severance or employee
incentive bonus plans and arrangements, all
of which Executive agrees are forfeited upon
his resignation; provided that he shall
remain entitled to the amounts and benefits
described in paragraph 4 or 6 above.
Executive agrees that he intends to release
any and all workers compensation claims he
may have against the Company by this
Agreement, and further agrees to execute any
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documentation as may be reasonably required
to perfect such release when presented to
him by the Company.
(ii) Executive understands and acknowledges that
the Company does not admit any violation of law, liability or
invasion of any of his rights and that any such violation,
liability or invasion is expressly denied. The consideration
provided under this Agreement is made for the purpose of
settling and extinguishing all claims and rights (and every
other similar or dissimilar matter) that Executive ever had or
now may have against the Company to the extent provided in
this paragraph 9(b). Executive further agrees and acknowledges
that no representations, promises or inducements have been
made by the Company other than as appear in this Agreement.
(iii) Executive further understands and
acknowledges that:
(A) The release provided for in this paragraph
9(b), including claims under the ADEA to and
including the Effective Date, is in exchange
for the additional consideration provided
for in this Agreement, to which
consideration he was not heretofore
entitled;
(B) He has been advised by the Company to
consult with legal counsel prior to
executing this Agreement and the release
provided for in this paragraph 9(b), has had
an opportunity to consult with and to be
advised by legal counsel of his choice,
fully understands the terms of this
Agreement, and enters into this Agreement
freely, voluntarily and intending to be
bound;
(C) He has been given a period of twenty-one
days to review and consider the terms of
this Agreement, and the release contained
herein, prior to its execution and that he
may use as much of the twenty-one day period
as he desires; and
(D) He may, within seven days after execution,
revoke the release set forth in this
paragraph 9(b). Revocation shall be made by
delivering a written notice of revocation to
the Corporate Manager of Human Resources at
the Company. For such revocation to be
effective, written notice must be actually
received by the Corporate Manager of Human
Resources at the Company no later than the
close of business on the seventh day after
Executive executes this Agreement. If
Executive does exercise his right to revoke
this release, all of the terms and
conditions of the Agreement shall be of no
force and effect and the Company shall have
no obligation to satisfy the terms or make
any payment to Executive as set forth in
paragraph 4 or 6 of this Agreement.
(iv) Executive will never file a lawsuit or other
complaint asserting any claim that is released in this
paragraph 9(b).
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(v) Executive and the Company acknowledge that
his resignation is by mutual agreement between the Company and
Executive, and that Executive waives and releases any claim
that he has or may have to reemployment other than as
described in this Agreement.
(vi) For purposes of the above provisions of this
paragraph 9(b), the "Company" shall include its present and
former predecessors, subsidiaries, divisions, related or
affiliated companies, officers, directors, stockholders,
members, employees, heirs, successors, assigns,
representatives, agents, accountants and counsel.
10. Lockup Agreement. Notwithstanding any other provision of this
Agreement to the contrary, the Company shall not be required to take any action
or make any payment under this Agreement if such action or payment would result
in a violation of the terms of that certain lockup agreement, by and among
Xxxxxxx, Xxxxx & Co., UBS Securities LLC and Executive, dated as of September
30, 2003.
11. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
the Company is required to withhold pursuant to any applicable law, regulation
or ruling.
12. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, sent by reputable overnight
carrier or mailed by first class mail, return receipt requested, to the
recipient at the address below indicated:
Notices to Executive:
Xxxxxxxx X. Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Notices to the Company:
International Steel Group Inc.
Attn: Xxxxx X. Xxxxx, Corporate Manager of Human
Resources
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered,
sent or mailed.
13. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed,
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construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
14. Prevailing Party's Litigation Expenses. In the event of
litigation between the Company and Executive related to this Agreement, the
non-prevailing party shall reimburse the prevailing party for any costs and
expenses (including, without limitation, attorneys' fees) reasonably incurred by
the prevailing party in connection therewith.
15. Complete Agreement. This Agreement embodies the complete
agreement and understanding between the parties with respect to the subject
matter hereof and effective as of its date supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral (including, without limitation, the Executive Severance Pay Plan, any
employment agreement between Executive and the Company, whether written or oral,
and the Officer Cash and Stock Bonus Plan), which may have related to the
subject matter hereof in any way.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and both of which
taken together shall constitute one and the same agreement.
17. Successors and Assigns. This Agreement shall bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
heirs, executors, personal representatives, successors and assigns, except that
neither party may assign any rights or delegate any obligations hereunder
without the prior written consent of the other party. Executive hereby consents
to the assignment by the Company of all of its rights and obligations hereunder
to any successor to the Company by merger or consolidation or purchase of all or
substantially all of the Company's assets, provided such transferee or successor
assumes the liabilities of the Company hereunder.
18. Choice of Law. This Agreement shall be governed by the
internal law, and not the laws of conflicts, of the State of Ohio.
19. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth below.
INTERNATIONAL STEEL GROUP INC.
By:/s/ Xxxxxx X. Xxxx
---------------------------
Name: Xxxxxx X. Xxxx
Title: President and CEO
Date: November 12, 2003
/s/ Xxxxxxxx X. Xxxxx
------------------------------
XXXXXXXX X. XXXXX
Date: November 14, 2003
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