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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This AGREEMENT, made effective as of January 1, 1998 (the "Effective
Date"), by and between J&L Specialty Steel, Inc., a Pennsylvania corporation
(the "Company") and Xxxx X. Xxxxxxx (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to employ Employee and Employee desires to
be employed by the Company upon the terms and conditions set forth herein,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed as follows:
1. EMPLOYMENT.
(a) Effective January 1, 1998, the Company hereby agrees
to employ Employee as Executive Vice President,
Finance and Administration and Chief Financial
Officer, Secretary of the Company. Employee shall
report directly to the President and Chief Executive
Officer of the Company and shall perform such duties
as are customarily performed by a person holding the
position of Chief Financial Officer in businesses as
that engaged in by the Company. In addition, the
Purchasing and Traffic, Human Resources and Law
Departments of the Company, or areas of comparable
responsibility, shall report directly to Employee and
Employee should render such other services as may be
assigned to him from time to time by the Board or the
Chief Executive Officer.
(b) Employee hereby agrees to be employed as Executive
Vice President, Finance and Administration and Chief
Financial Officer, Secretary of the Company. Employee
agrees that he shall at all times faithfully and to
the best of his ability, perform all of the duties
that may be required of him pursuant to the terms of
this Agreement.
(c) As long as the principal offices of the Company are
located in Pittsburgh, Pennsylvania, the Employee's
principal place of employment shall be at the
principal offices of the Company, with appropriate
secretarial support, at the Company's expense.
(d) The Company represents and warrants to Employee that
this Agreement has been duly and validly authorized
and executed by and on behalf of the Company in
accordance with its Articles of Incorporation and
bylaws and that it constitutes the lawful and valid
obligation of the Company.
(e) The Employee represents and warrants to the Company
that he is free to accept employment hereunder and
that he has no prior or other obligations
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or commitments of any kind that would in any way
hinder or interfere with his acceptance of, or the
full performance of, such employment.
2. TERM.
Unless earlier terminated in accordance with the provisions of
Paragraph 4 below, this Agreement shall continue for an
initial period beginning as of the Effective Date and ending
three (3) years from the Effective Date ("the Initial Term").
3. COMPENSATION AND RELATED MATTERS.
(a) Base Salary. During the Employee's employment
hereunder, the Company shall pay to the Employee an
annual base salary effective January 1, 1998 of
$240,000 and Employee shall receive such amount less
such deductions as are required by law or that
Employee may elect in accordance with Company policy
and procedure. For each contract year after 1998, the
Board shall set Employee's annual base salary prior
to the beginning of such year, provided that such
annual base salary may not be lower than the previous
year's annual base salary.
The base salary shall be payable in equal periodic
installments in accordance with the Company's salary
practices. The base salary payments hereunder shall
not in any way limit or reduce any other obligation
of the Company hereunder, and no other compensation,
benefit or payment hereunder shall in any way limit
or reduce the obligation of the Company to pay the
Employee's base salary hereunder.
(b) Restricted Shares. The Company shall reserve as an
equity performance bonus up to thirty six thousand
(36,000) restricted shares of the Company's common
stock, (the "Shares"), in accordance with the terms
and conditions of the Company's 1993 Stock Incentive
Plan, or successor plan, and pursuant to such other
terms and conditions as may be established by the
Incentive Based Compensation Committee of the
Company's Board of Directors. The Company shall
recommend to the Incentive Based Compensation
Committee that shares be awarded to Employee on or
before the dates and in the amounts set forth below:
January 1, 1998 - 18,000 shares
January 1, 1999 - 18,000 shares
(c) Profit Sharing. During the term of this Agreement,
Employee shall be designated a participant in the
Senior Management Incentive Plan (the "Incentive
Plan") at a new Incentive Award Schedule A, Position
Level B (80% maximum award potential) with
performance levels (Threshold, Targets and Maximum
performance levels) consistent with other performance
levels set forth in the Incentive Plan, as the same
may be amended from time to time.
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(d) Supplemental Retirement Plan. Employee shall be
deemed a participant in the Company's Executive
Benefit Plan whose participation began prior to May
1, 1992, and on the Effective Date shall be credited
with Years of Service under such Plan beginning on
December 1, 1979. Employee's supplemental benefit
shall be paid to him in accordance with the terms of
the Executive Benefit Plan or in a lump sum
(calculated in accordance with the terms of the
Executive Benefit Plan) within thirty (30) days
following termination of this Agreement by the
Company without Cause or by the Employee with Good
Reason.
(e) Memberships. During the term of Employee's employment
hereunder Employee shall receive reimbursement from
the Company for membership and club dues of the
Employee at a downtown luncheon club, a health club
and a country club of his choice, and for such other
memberships and club dues as the Chief Executive
Officer of the Board determines are reasonable and
necessary for the purpose of promoting and
maintaining the business of the Company. It is
further agreed that if Employee's employment under
the Agreement terminates because of Employee's
election to retire under the provisions of any of the
Company's qualified or non-qualified pension plans,
Company shall, to the extent it has the right to do
so under applicable club rules and membership
contracts, assign to Employee (or, in the case of
Employee's death, to his spouse at the time of his
death, if any, otherwise to his heirs) such existing
memberships in such clubs.
(f) Expenses. During the term of the Employee's
employment hereunder, the Employee shall receive
reimbursement from the Company for all reasonable
expenses incurred by the Employee in performing
services hereunder, including, without limitation,
all expenses of travel and living expenses while away
from home on business at the request of or in the
service of the Company, provided that such expenses
are incurred and accounted for in accordance with the
standard policies and procedures established by the
Company for reimbursement of expenses.
(g) Vacation. In addition to all holidays provided other
employees of the Company, Employee shall be entitled
to vacation in accordance with standard Corporate
policy.
(h) Automobile. During the term of this Agreement, the
Company shall make available to the Employee, at his
request and for his use (without personal mileage
reimbursement), an automobile registered and owned by
the Corporation of a class at least comparable to the
car now provided to Employee by the Company.
(i) Other Benefits. The Employee shall be entitled to
participate in the same manner as other executives of
the Company in such life insurance,
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medical, dental, disability, pension and retirement
plans and other programs as may be approved from time
to time by the Company for the benefit of its
executives, except any other such plan or program
with respect to which Employee voluntarily executes a
legally effective waiver. Except as provided in
Paragraph 3(k) hereof, nothing herein shall affect
the Company's right to amend, modify or terminate any
retirement or other benefit plan at any time for any
reason.
(j) Gross-Up. The reimbursements and benefits provided
under Paragraphs 4(e) and (h) shall be grossed-up for
federal, state and local income taxes actually
payable thereon by Employee, such that after giving
effect to such taxes the Employee will retain an
amount equal to such pre-tax reimbursement.
(k) Amendment. Despite authority to amend and terminate
the Incentive Plan, the 1993 Stock Incentive Plan and
the Executive Benefit Plan contained in those plans,
the Company agrees that it will not, at least until
December 31, 2000 (unless the Agreement, as amended,
is sooner terminated pursuant to Paragraph 4
thereof), either terminate any of those plans, or
amend them in any way that would reduce the benefits
to which the Employee would otherwise become entitled
thereunder without the prior written consent of
Employee.
4. TERMINATION OF EMPLOYMENT.
This Agreement and the Employee's employment hereunder may be
terminated without any breach of this Agreement only under the
following circumstances during the term of this Agreement:
(a) Termination by Employee. Employee may terminate his
employment with the Company for Good Reason or for
any other reason by giving the Company not less than
thirty (30) days prior written notice of the
termination of his employment. For purposes of this
Agreement, "Good Reason" shall mean any failure by
the Company to comply with any material provision of
this Agreement.
(b) Death. The Employee's employment hereunder shall
terminate upon his death.
(c) Disability. If (i) the Employee is deemed disabled
under the Company's Disability Benefit Plan, or any
successor plan in which Employee participates, and
the Employee shall have been absent from his duties
hereunder, with the approval of a physician selected
or approved by the Company, for a period of six (6)
consecutive months during the term of this Agreement,
and (ii) within thirty (30) days after written notice
of termination is given by the Company to the
Employee (which may occur at or after the end of such
six (6) month period) the Employee shall not
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have returned to the performance of the duties
hereunder on a full-time basis; then the Company may
terminate the Employee's employment hereunder.
(d) Termination by Company. The Company may immediately
terminate the Employee's employment hereunder for
Cause or for any reason other than for Cause by
giving Employee not less than thirty (30) days prior
written notice. For purposes of this Agreement,
"Cause" shall mean (i) the willful and continued
failure by Employee to substantially perform his
duties hereunder (other than any such failure
resulting from Employee's incapacity due to physical
or mental illness) after demand for such substantial
performance is delivered by Company specifically
identifying the manner in which the Company believes
Employee has not substantially performed his duties,
(ii) his conviction of or plea of guilty or nolo
contendere to a felony or other crime involving moral
turpitude or misappropriation of funds, (iii) the
willful engaging by the Employee in misconduct which
is materially injurious to the Company, monetarily or
otherwise.
(e) Effect of Termination. If Employee is appointed to
the Company's Board of Directors, any termination of
this Agreement will automatically act as a
resignation of Employee from the Company's Board,
effective as of the date of termination.
5. COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) Disability. During any period that the Employee is
deemed disabled under the Company's Disability
Benefit Plan or any successor plan in which Employee
participates ("Disability Period"), the Employee
shall continue to receive his full base salary,
profit sharing bonuses and restricted stock awards,
together with the benefits and participation rights
stated above, at the rate then in effect for such
period until the expiration of the Initial Term or if
the Initial Term has ended, until the expiration of
any renewal periods. Payments so made to the Employee
during the Disability Period shall be reduced by the
sum of the amounts, if any, payable to the Employee
under any disability benefit plans of the Company.
After expiration of the Initial Term or any extension
periods, Employee may be entitled to receive any
disability benefits provided by the Company as well
as any other benefits payable under any Company
welfare, pension or benefit plans in which Employee
participates, but Employee shall not be entitled to
receive the Severance Payment (as hereinafter
defined).
(b) Death, Termination by Company for Cause or
Termination by Employee Without Good Reason. If the
Employee's employment shall be terminated as a result
of Employee's death under Paragraph 4(b) hereof or
for Cause under Paragraph 4(d) hereof, or by Employee
under Paragraph 4(a) hereof for any reason other than
Good Reason, the Company shall pay the Employee his
full base salary through the date of termination at
the rate in
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effect at the time a notice of termination is given
plus all accrued and unpaid benefits (including all
life insurance, profit sharing bonus, pension, health
and welfare benefits in which the Employee was a
participant in accordance with the terms of such
plans) and the Company shall have no further
obligations whatsoever under this Agreement except as
expressly provided otherwise in this Agreement or
under any plan or benefit stated above.
(c) Termination by Company Other Than for Cause;
Termination by Employee for Good Reason. If the
Employee's employment is terminated by the Company
other than for Cause, or if Employee shall terminate
his employment for Good Reason, then Employee shall
be entitled to receive, within thirty (30) days of
termination, a lump sum payment equal to the sum of
his annualized base salary in the year of termination
and profit sharing bonus (as calculated below) for
the greater of (i) the balance of the Initial Term,
or (ii) for two (2) years, plus all accrued and
unpaid benefits (including the awarding of any shares
of restricted stock that have not yet been awarded
under Paragraph 3(b) hereof) that Employee would have
earned or accrued during such period had his
employment not been so terminated (including years of
service and participation for such period under the
Executive Benefit Plan) to the extent permitted by
law or under the terms of any qualified welfare or
pension plan (collectively, the "Severance Payment").
The Employee's profit sharing bonus for purposes of
this Paragraph 5(c) shall be calculated by applying
the average of the two highest percentages used to
calculate the amounts earned by Employee under the
Incentive Plan in any of the five (5) immediately
preceding years.
(d) Retirement. In no event shall Employee be entitled to
receive the Severance Payment if this Agreement
terminates as a result of Employee's election to
retire under the provisions of any of the Company's
qualified or non-qualified pension plans.
Notwithstanding any provision in the Executive
Benefit Plan to the contrary and regardless of
whether Employee is vested under such plan, in the
event of termination as described in Paragraph 5(c),
the Employee's retirement benefit payable under the
Executive Benefit Plan shall be paid to the Employee
in a single lump-sum payment as soon as practical
following the occurrence of the event which gives
rise to the right to payment. Such lump-sum payment
shall be calculated in accordance with the terms of
the Executive Benefit Plan and this Agreement and
shall be in full satisfaction of any right the
Employee may have to payment of a retirement benefit
under the Executive Benefit Plan. To the full extent
necessary to carry out the intent of the foregoing,
this Agreement shall also be deemed to have amended
the Executive Benefit Plan, effective as of the
effective date of this Agreement.
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6. CORPORATE BOARDS AND OTHER MEMBERSHIPS.
As long as the Employee is Executive Vice President, Finance
and Administration and Chief Financial Officer, Secretary of
the Company, any corporate boards of directors on which the
Employee wishes to serve must have the prior approval of the
Chief Executive Officer of the Company. At such time as the
Employee ceases to act as Executive Vice President, Finance
and Administration and Chief Financial Officer, Secretary of
the Company, the Employee may serve on additional boards of
directors subject to the terms of this Agreement, including
Paragraph 8 hereof.
7. NON-DISCLOSURE OF INFORMATION.
(a) Employee shall not, directly or indirectly, disclose
to any person or entity for any reason, or use for
his own personal benefit, any Confidential
Information (as defined below) either during his
employment with the Company or at any time
thereafter.
(b) Employee shall, at all times take all precautions
necessary to protect from loss or disclosure by him
of any and all documents or other information
containing, referring to or relating to such
Confidential Information. Upon termination of his
employment with the Company the Employee shall
promptly return to the Company any and all documents
or other tangible property containing, referring to
or relating to such Confidential Information, whether
prepared by him or others.
(c) Notwithstanding any provision to the contrary in this
Paragraph 7, this paragraph shall not apply to
information which the Employee is legally required to
disclose or to information which must be disclosed in
connection with the performance of Employee's duties
hereunder or to information which has become part of
the public domain or is otherwise publicly disclosed
through no fault or action of the Employee. If
Employee has reason to believe that he may be legally
required to disclose Confidential Information, he
shall give the Company reasonable notice prior to
disclosure so that it may seek to protect the
confidentiality of such information.
(d) For purposes of this Agreement "Confidential
Information" means any information relating in any
way to the business of the Company disclosed to or
known to the Employee as a consequence of, result of,
or through the Employee's employment by the Company
which consists of technical and non-technical
information about the Company's products, processes,
programs, strategic plans, concepts, forms, business
methods, data, any and all financial and accounting
data, marketing, customers, customer lists, and
services and information corresponding thereto
acquired by the Employee during the term of the
Employee's employment by the
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Company. Confidential Information shall not include
any of such items which are published or are
otherwise part of the public domain, or freely
available from trade sources or otherwise.
8. RESTRICTIONS ON COMPETITION.
In consideration of the Company entering this Agreement,
Employee covenants and agrees that for a period of two (2)
years (or one (1) year in the case of retirement under
Paragraph 5(d) hereof) following the termination of Employee's
employment under Paragraphs 5(a), (b), or (d) hereof, Employee
shall not, directly or indirectly engage in, participate in or
assist, as principal or agent, officer, director, employee,
franchisee, consultant, shareholder, or otherwise, alone or in
association with any other person, corporation or other
entity, any business within the stainless steel industry whose
activities, services or products are directly or indirectly
competitive with the activities, services or products of the
Company or its subsidiaries anywhere in the United States;
provided, however, that the foregoing restriction shall not
apply in the case of ownership of the stock of a company which
is traded either on a national or a regional stock exchange or
over-the-counter, where Employee directly or indirectly owns
less than 5% of the stock of such company or in the case that
Employee is offered a position of President or higher with a
stainless steel sheet, strip or plate producer (and a
comparable position in title, compensation and responsibility
is not offered with Usinor or its affiliates, in the United
States or a mutually agreeable foreign country).
9. RESTRICTIONS ON SOLICITATION.
(a) Employee agrees that during his employment with the
Company he shall not, directly or indirectly, solicit
the trade of or trade with, or otherwise do business
with, any customer or prospective customer of the
Company for any direct or indirect competitor of the
Company. In consideration of the Company entering
this Agreement, Employee further agrees that during
the period, if any, in which he is bound by the
restrictions on competition set forth in Paragraph 8
hereof, Employee shall not, directly or indirectly,
solicit the trade of or trade with, any customer or
prospective customer of the Company on behalf or for
the benefit of any direct or indirect competitor of
the Company, or directly or indirectly, solicit or
induce, or attempt to solicit or induce, any employee
of the Company to leave the Company for any reason
whatsoever or hire any employee of the Company.
(b) During his employment with the Company, Employee
shall not take any action which might divert from the
Company any opportunity which would be within the
scope of any present or contemplated future business
of the Company.
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10. SURVIVAL AND ENFORCEMENT.
(a) The provisions set forth in Paragraphs 7, 8 and 9 of
this Agreement shall survive the termination of
Employee's employment with the Company, or the
expiration of this Agreement, as the case may be, and
shall continue to be binding upon Employee in
accordance with their respective terms.
(b) Employee recognizes and acknowledges that the
services to be rendered by him hereunder are of a
special and unique character and that the
restrictions on Employee's activities contained in
this Agreement are required for the Company's
reasonable protection. Employee agrees that if he
shall breach Paragraphs 7, 8 or 9 of this Agreement,
the Company will be entitled, if it so elects, to
institute and prosecute proceedings at law or in
equity to obtain damages with respect to such breach
or to enforce the specific performance of this
Agreement by Employee or to enjoin Employee from
engaging in any activity in violation hereof.
(c) Notwithstanding Paragraph 13 of this Agreement, the
parties hereto agree that any actions to enforce
Paragraphs 7, 8 or 9 of this Agreement shall be
brought before the Court of Common Pleas of Allegheny
County, and the parties hereto hereby consent to the
jurisdiction of such court. If any provision or
provisions of Paragraphs 7, 8 or 9 shall be deemed
invalid or unenforceable, either in whole or in part,
this Agreement shall be deemed amended to delete or
modify, as necessary, the offending provision or
provisions and to alter the bounds thereof in order
to render it valid and enforceable.
11. NOTICES.
For the purpose of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when
delivered or, unless otherwise specified, mailed by United
States certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Employee: Xxxx X. Xxxxxxx
000 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
If to the Company: J&L Specialty Steel, Inc.
c/o Chief Executive Officer
Xxx XXX Xxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
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or to such other address as any party may have furnished to
the others in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
12. KEY MAN LIFE INSURANCE.
During the Initial Term and any extension of the Initial Term,
Employee agrees to be subject to physical examinations for the
purpose of determining his insurability for life insurance for
the benefit of the Company. Employee further agrees to execute
and deliver any documents that may be necessary for the
Company to obtain any such insurance on Employee.
Notwithstanding the foregoing provisions, Employee understands
and agrees that the Company shall have no obligation to
purchase or maintain any key man life insurance on Employee.
13. ARBITRATION.
Except as otherwise provided in Paragraph 10 hereof, any claim
or controversy arising out of or relating to this Agreement or
any breach thereof shall be settled by arbitration, in
accordance with the then current rules of the American
Arbitration Association before a panel of three arbitrators.
Any such arbitration shall take place in Pittsburgh, PA.
Judgment upon the written award rendered by a majority of the
arbitrators may be entered in the court having jurisdiction
thereof. The written decision of a majority of the arbitrators
shall be valid, binding and final, and shall be a condition
precedent to any legal action that any party may contemplate
against the other, except to compel arbitration pursuant
hereto.
14. VALIDITY.
The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
15. COUNTERPARTS.
This Agreement may be executed in one or more counterparts
each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
16. MODIFICATION.
This Agreement sets forth the entire agreement and
understanding of the parties concerning the subject matter
hereof and supersedes all prior agreements, arrangements and
understandings between the parties hereto. No representation,
promise, inducement or statement of intention has been made by
or on behalf of either party hereto that is not set forth in
this Agreement. This Agreement may
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not be amended or modified except by written instrument
executed by the parties hereto.
17. BINDING EFFECT ON AND ASSIGNMENT BY EMPLOYEE.
The terms and provisions of this Agreement shall be binding on
and inure to the benefit of the Employee, his heirs at law,
legatees, distributees, executors, administrators and other
legal representatives. Neither this Agreement nor any of the
Employee's interests, rights or obligations hereunder shall be
assignable by the Employee.
18. ATTACHMENT.
Except as required by law, the right to receive payments under
this Agreement shall not be subject to anticipation, sale,
pledge, encumbrance, charge, levy, or similar process or
assignment, and any attempt to do so shall be null and void.
19. BINDING EFFECT ON AND ASSIGNMENT BY COMPANY.
The terms and provisions of this Agreement shall inure to the
benefit of and be binding upon the Company and any corporate
or other successor of the Company which shall acquire,
directly or indirectly, by merger, acquisition, consolidation,
purchase, or otherwise, all or substantially all of the equity
or assets of the Company. Nothing in the Agreement shall
preclude the Company from consolidating or merging into or
with or transferring all or substantially all of its equity or
assets to another person or entity. The Company may freely
assign this Agreement and any portion of its rights and
interests herein. In such event, such other person or entity
shall assume this Agreement and all obligations of the Company
hereunder. Upon such consolidation, merger, or transfer of
equity or assets and assumption, the term the "Company" as
used herein, shall mean such other person and this Agreement
shall continue in full force and effect.
20. WAIVERS.
Any waiver by a party of any breach of this Agreement by any
other party shall not be construed as a continuing waiver or
as a consent to any subsequent breach by any other party.
Except as otherwise expressly set forth herein, no failure on
the part of any party hereto to exercise and no delay in
exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise
of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy.
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21. HEADINGS.
The headings of the paragraphs of this Agreement have been
inserted for convenience of reference only and shall in no way
restrict or modify any of the terms or provisions hereof.
22. GOVERNING LAW.
This Agreement shall be governed and construed and the legal
relationship of the parties determined in accordance with the
laws of applicable to contracts executed and to be performed
solely in Pennsylvania.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the
11th day of March, 1998.
EMPLOYEE J&L SPECIALTY STEEL, INC.
/s/ XXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXXXXX
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Name: Xxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
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