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.
Xxxxxxx (the "Executive"), dated as of the 7th day of April, 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 a
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 a Trigger Event Period other than for "Cause",
or (ii) Executive shall during such period terminate his employment for "Good
Reason"; and/or (B) In the event of a Trigger Event defined in Section 2(d)(3)
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) "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.
(c) "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.
(d) A "Trigger Event" shall mean the first to occur of any 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 prom-
ulgated 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 Trigger Event under this Section 2(d)(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 (iii) any acquisition of the Company
by any corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, no Trigger Event has
occurred under Section 2(d)(3);
(2) The election or appointment of a Board of Directors of the
Company, a majority of whose members are not, as of the date hereof, members of
the Board of Directors of the Company (the "Incumbent Board"); provided,
however, that any individual becoming a director subsequent to the date hereof
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; or
(3) The filing by or against the Company of a petition with a
United States Bankruptcy Court under Title 11 of the United States Bankruptcy
Code.
(e) The "Trigger Event Period" shall mean the period commencing on
the occurrence of a Trigger Event, 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 twelve
(12) 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;
(2) Deliver to the Executive a written instrument canceling any
debt (including principal and accrued interest) owed by the Executive to the
Company for any purchase, if any, prior to the date hereof, of any limited
partnership interest in GSS Management LLC ("GSSM"); provided, however, that
Executive shall, in such case, concurrently with the delivery by the Company of
such written instrument of debt cancellation: (i) deliver one or more
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written instruments to the Company (as reasonably requested by the Company) in
which Executive: (x) disclaims, surrenders and forever relinquishes any and all
claims to any limited partnership or other ownership interest in GSSM, whether
absolute or contingent, and (y) disclaims, surrenders and forever relinquishes
any and all claims to the return or refund of any and all payments made by him
with respect to such limited partnership interest other ownership interest or in
GSSM and any damage claims he may have in respect of the purchase of such
interest; (ii) deliver to the Company duly endorsed all evidence of such limited
partnership or other ownership interest in GSSM; and (iii) execute and deliver
any and all documents required by the Company to transfer such interest, if any,
to the Company; and
(3) 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
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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 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 a Trigger Event described in Section 2(d)(3) occurs during the
Trigger Event Period and a 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 twelve (12) 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 first Anniversary Date (the "Anniversary Date") thereof (without
interest), so long as the Executive shall be employed by the Company on such
Anniversary 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 Anniversary Date:
(i) a Trigger Event as defined in Section 2(d)(1) or (d)(2) shall occur and the
Executive shall be employed by the Company on the date of such Trigger 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.
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5. Assumption of Agreement In Bankruptcy.
The Executive acknowledges that this Agreement may be subject to
rejection in the event of a bankruptcy filing by or against the Company. The
Company agrees to use reasonable efforts to cause a bankruptcy court to approve
the assumption of this Agreement in the event of a bankruptcy filing.
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 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. Xxxxxxx
00 Xxxxx Xxx Xxxx
Xxxx, XX 00000
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If to the Company: Gulf States Steel, Inc. of Alabama
000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxx
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.
(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.
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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. Xxxxxxx
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Xxxxx X. Xxxxxxx
GULF STATES STEEL, INC. OF ALABAMA
By: /s/ Xxxxxx Xxxxxx
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Chairman and Chief Executive Officer
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