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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number 1-10244
WEIRTON STEEL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 06-1075442
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
</TABLE>
400 THREE SPRINGS DRIVE, WEIRTON, WEST VIRGINIA 26062-4989
(Address of principal executive offices)
(Registrant's telephone number, including area code)
(304) 797-2000
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Common Stock ($.01 par value) of the Registrant
outstanding as of July 31, 1996 was 42,586,627.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- ----------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES............................................... $335,580 $319,048 $676,480 $673,734
OPERATING COSTS:
Cost of sales...................................... 309,401 273,986 620,153 573,171
Selling, general and administrative expense........ 10,102 8,678 19,616 16,884
Depreciation....................................... 15,669 14,831 30,174 29,966
Restructuring charge............................... 16,959 -- 16,959 --
Provision for profit sharing....................... -- 3,088 -- 19,160
Insurance recoveries............................... -- (7,502) -- (41,502)
-------- -------- -------- --------
Total operating costs......................... 352,131 293,081 686,902 597,679
---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS........................... (16,551) 25,967 (10,422) 76,055
-------- -------- -------- --------
Interest expense................................... (10,753) (10,437) (21,486) (20,939)
Interest income.................................... 1,120 1,139 2,917 2,050
ESOP contribution.................................. (652) (652) (1,305) (1,305)
-------- -------- -------- --------
(10,285) (9,950) (19,874) (20,194)
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES....................... (26,836) 16,017 (30,296) 55,861
Income tax (benefit) provision..................... (5,233) 3,123 (5,908) 10,824
-------- -------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM................. (21,603) 12,894 (24,388) 45,037
Extraordinary loss on early extinguishment of
debt............................................. 5,431 6,718 5,431 6,718
-------- -------- -------- --------
NET INCOME (LOSS)....................................... $(27,034) $ 6,176 $(29,819) $ 38,319
======== ======== ======== ========
PER SHARE DATA:
Weighted average number of common shares and
equivalents (in thousands)....................... 42,347 43,757 42,347 43,761
Net income (loss) per share before extraordinary item... $ (0.51) $ 0.29 $ (0.58) $ 1.03
Extraordinary loss on early extinguishment of debt...... (0.13) (0.15) (0.13) (0.15)
-------- -------- -------- --------
NET INCOME (LOSS) PER COMMON SHARE...................... $ (0.64) $ 0.14 $ (0.71) $ 0.88
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
2
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WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
-------------- ------------
<S> <C> <C>
ASSETS:
Cash and equivalents, includes restricted cash of $2,045 and $1,373... $ 113,979 $ 131,811
Receivables, less allowances of $7,518 and $8,688..................... 156,056 150,213
Inventories........................................................... 253,111 255,360
Deferred income taxes................................................. 49,245 49,245
Other current assets.................................................. 5,715 7,400
-------------- ------------
Total current assets............................................. 578,106 594,029
Property, plant and equipment, net.................................... 583,633 586,430
Intangible asset...................................................... 31,412 31,412
Deferred income taxes................................................. 93,428 86,205
Other assets and deferred charges..................................... 14,687 15,945
-------------- ------------
Total assets..................................................... $1,301,266 $1,314,021
=========== ==========
LIABILITIES:
Current liabilities................................................... $ 252,744 $ 253,726
Long term debt obligations............................................ 407,945 407,869
Long term pension obligations......................................... 105,069 94,689
Postretirement benefits other than pensions........................... 322,204 317,893
Other long term liabilities........................................... 27,238 25,348
-------------- ------------
Total liabilities................................................ 1,115,200 1,099,525
-------------- ------------
Redeemable stock........................................................... 17,254 15,868
Stockholders' equity:
Common stock, $0.01 par value; 50,000,000 shares authorized;
42,586,627 and 42,289,944 shares issued.............................. 426 423
Additional paid-in capital............................................ 455,208 454,197
Retained earnings (deficit)........................................... (285,173) (255,354)
Other stockholders' equity............................................ (1,649) (638)
-------------- ------------
Total stockholders' equity....................................... 168,812 198,628
------------- ------------
Total liabilities, redeemable stock and stockholders' equity..... $1,301,266 $1,314,021
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</TABLE>
The accompanying notes are an integral part of these statements.
3
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WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1996 1995
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES...................................... $ 11,263 $ 52,818
CASH FLOWS USED BY INVESTING ACTIVITIES
Expenditures for property, plant and equipment............................ (27,377) (19,211)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
Repayment of debt obligation.............................................. -- (118,800)
Proceeds from issuance of debt obligation................................. -- 125,000
Deferred financing costs.................................................. -- (4,325)
Other, principally net book overdrafts.................................... (1,718) 4,612
-------- --------
Net cash provided (used) by financing activities............................... (1,718) 6,487
-------- --------
NET CHANGE IN CASH AND EQUIVALENTS............................................. (17,832) 40,094
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD.................................... 131,811 62,905
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD.......................................... $113,979 $102,999
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of capitalized interest................................ $ 21,484 $ 22,971
Income taxes paid......................................................... -- 5,193
</TABLE>
The accompanying notes are an integral part of these statements.
4
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WEIRTON STEEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, OR IN MILLIONS OF DOLLARS AS INDICATED)
NOTE 1
BASIS OF PRESENTATION
The Consolidated Condensed Financial Statements presented herein are
unaudited. Weirton Steel Corporation and/or Weirton Steel Corporation together
with its wholly-owned subsidiary, Weirton Receivables, Inc., are hereafter
referred to as the "Company." Certain information and footnote disclosures
normally prepared in accordance with generally accepted accounting principles
have been either condensed or omitted pursuant to the rules and regulations of
the Securities and Exchange Commission. Although the Company believes that all
adjustments necessary for a fair presentation have been made, interim periods
are not necessarily indicative of the financial results for a full year. As
such, these financial statements should be read in conjunction with the
financial statements and notes thereto included or incorporated by reference in
the Company's 1995 Annual Report on Form 10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain prior amounts have been reclassified, where necessary, to conform
to the presentation in the current period.
NOTE 2
INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
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<S> <C> <C>
Raw materials..................................... $ 66,511 $ 77,557
Work-in-process................................... 79,184 86,491
Finished goods.................................... 107,416 91,312
-------- -------------
$253,111 $ 255,360
======== ==========
</TABLE>
NOTE 3
EARNINGS PER SHARE
The weighted average number of common shares and equivalents used in the
calculation of income (loss) per common share were 42,347,048 and 43,757,259 for
the three months ended June 30, 1996 and 1995, respectively, and 42,346,818 and
43,760,799 for the six months ended June 30, 1996 and 1995, respectively.
NOTE 4
RESTRUCTURING CHARGE
On May 29, 1996, the Company announced that it was reducing its supervisory
and managerial workforce by approximately 200 employees, or 20%. The
restructuring charge associated with this reduction was $17.0 million and
related primarily to early retirement and termination benefits. The
restructuring charge was recorded in the second quarter of 1996. The Company
expects the cash costs over the initial twelve months after the reduction to be
approximately $7.5 million, with the remainder extending beyond that period.
5
<PAGE> 6
NOTE 5
ENVIRONMENTAL COMPLIANCE
In December 1993, the Company was informed by the West Virginia Division of
Environmental Protection ("DEP") that the United States Environmental Protection
Agency ("EPA") was considering initiating a "multimedia" enforcement action
against the Company. Multimedia actions involve coordinated enforcement
proceedings related to water, air and waste-related issues stemming from a
number of federal and state statutes and rules. In October 1995, the Company
received a Notice of Violation from the EPA alleging seven violations of DEP
regulations for air pollution control, which may result in fines and penalties.
Additionally, the EPA has conducted inspections of the Company's facilities
regarding waste-related issues.
Although no multimedia enforcement action has been commenced against the
Company, the Company has continued to meet with representatives of the EPA
regarding the alleged violations, as well as environmental compliance issues
related to air, water and waste disposal. The Company and the EPA are attempting
to resolve these issues during a six-month negotiating period which extends to
September 15, 1996. The EPA has indicated that it would expect a negotiated
settlement to include necessary corrective steps to address noncompliance issues
and a civil penalty. The EPA has indicated that consideration would be given to
offsetting a portion of any cash penalty through the performance of supplemental
environmental projects. If a settlement is not reached by September 15, 1996,
the EPA has indicated that it would likely commence a civil enforcement action
against the Company. Based on its review of the matters involved and discussions
to date with representatives of the EPA, while no assurance can be given, the
Company does not believe that any fines, penalties or costs to remediate would
have a material effect on the Company's financial position or results of
operations. However, it is expected that related capital expenditure projects
and required changes in operating practices will increase future operating
costs, which may have a significant effect on future operating results.
NOTE 6
FINANCING ARRANGEMENTS
On June 27, 1996, the Company closed an offer to purchase $65.0 million
aggregate principal amount of its outstanding 10 7/8% Senior Notes due October
15, 1999, and $35.0 million aggregate principal amount of its outstanding
11 1/2% Senior Notes due March 1, 1998. The Company also entered into a
definitive purchase agreement on that date for the sale of $125.0 million
aggregate principal amount of 11 3/8% Senior Notes due 2004.
On July 3, 1996, the sale of the 11 3/8% Senior Notes was closed with the
Company receiving approximately $118.7 million of net proceeds, after deducting
the original issue discount and the offering expenses payable by the Company.
The 11 3/8% Senior Notes were sold under Regulation 144A and are not registered
under the Securities Act of 1933. The covenants covering the 11 3/8% Senior
Notes are substantially similar to the covenants covering its previously
existing senior note obligations. Approximately $106.0 million of the net
proceeds from the sale were used to repurchase $65.0 million aggregate principal
of the 10 7/8% Senior Notes and $35.0 million aggregate principal amount of the
11 1/2% Senior Notes. The second quarter of 1996 results include a $5.4 million
extraordinary after tax loss associated with the early extinguishment of debt
and includes the premiums paid to repurchase the notes and the recognition of
previously deferred financing costs associated with the retired debt.
In connection with the sale of the 11 3/8% Senior Notes the Company entered
into a registration rights agreement under which the Company agreed to file a
registration statement within 45 days of the issue date with respect to a
registered offer to exchange the 11 3/8% Senior Notes for notes substantially
similar to the 11 3/8% Senior Notes (the "Exchange Offer"). The Company also
agreed to use its reasonable best efforts to cause the Exchange Offer to be
declared effective within 135 days of the issue date. The Company's registration
statement relating to the 11 3/8% Senior Notes was declared effective on August
9, 1996. The Exchange Offer commenced on August 13, 1996 and is scheduled to
expire on September 11, 1996.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion and analysis of the Company's financial condition and
results of operations should be read together with the unaudited consolidated
condensed financial statements and notes thereto. The unaudited consolidated
condensed financial statements of Weirton Steel Corporation include the accounts
of its wholly-owned subsidiary Weirton Receivables, Inc. ("WRI"). Weirton Steel
Corporation and/or Weirton Steel Corporation together with its subsidiary are
hereafter referred to as the "Company."
In April 1994, the Company's No. 9 Tandem (the "No. 9 Tandem") sustained
major damage from a fire which occurred while the unit was undergoing
maintenance. This cold rolling facility had traditionally supplied approximately
70% to 80% of the coils required by the Company's tin and chrome plating
operations. The Company began rebuilding and repairing operations immediately to
restore the No. 9 Tandem. Startup operations began early in the fourth quarter
of 1994 and the Company resumed normal operations in late 1994.
Following the fire that damaged the No. 9 Tandem, the Company adjusted its
production during the balance of 1994 to a product mix more heavily comprised of
hot rolled products, while tin mill product shipments were decreased
significantly. The shift from tin mill products to sheet products resulted in
the realization of lower selling prices during the period in which the No. 9
Tandem was not in service. Sheet products such as hot rolled products generally
provide lower profit margins than more highly processed products such as tin and
chrome plate. The Company's expectations were that it would regain its share of
the tin mill products market over a relatively short period of time following
the No. 9 Tandem's return to full operations in the first quarter of 1995.
Severe weather conditions, however, caused the late planting of major food crops
in the Midwestern states and consequently, the demand for tin mill products was
soft in early 1995. As a result, the pace at which the Company's market share of
tin mill products recovered was slower than expected.
Throughout 1995 the Company gradually achieved a more traditional product
mix and by the first quarter of 1996 had reacquired a share of the tin mill
products market comparable to that prior to the fire. The resumption of the
Company's normal operating configuration in the first quarter of 1996 had a
significant effect on its volume of shipments, as well as its product mix
compared to the first half of 1995.
The Company maintains insurance for property damage applicable to its
production facilities, including the No. 9 Tandem. Insurance recoveries for
property damage associated with events of this type require the recognition of a
new cost basis for the rebuilt facility. As a result, the Company recognized in
the third quarter of 1995 and the second quarter of 1994 adjustments that
totaled $53.7 million to the carrying value of the No. 9 Tandem. Total spending
to restore the No. 9 Tandem was approximately $77.6 million.
The Company also maintains insurance for business interruption. Insurance
recoveries of $20.0 million and $34.0 million were received in the first quarter
of 1994 and first quarter of 1995, respectively, for the No. 9 Tandem business
interruption claim. The Company's claim for business interruption related to the
No. 9 Tandem was settled in 1995.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
In the second quarter of 1996, the Company recognized a net loss of $27.0
million or $0.64 per common share, compared to net income of $6.2 million or
$0.14 per common share for the same period in 1995. The second quarter of 1996
results included a pretax restructuring charge of $17.0 million associated with
the approximately 20% reduction of the supervisory and managerial workforce, and
an extraordinary after tax loss of $5.4 million for costs recognized in
conjunction with the refinancing of $100 million of the Company's senior note
obligations. The second quarter of 1995 results included a favorable pretax
adjustment of $7.5 million for a business interruption insurance recovery
related to an outage at its hot strip mill in 1991 and an extraordinary after
tax loss of $6.7 million associated with the early extinguishment of debt.
Excluding the effect of these non-recurring items, and their resulting effects
on the provision for profit sharing and income taxes, the net loss for the
second quarter of 1996 would have been $8.0 million or $0.19 per share compared
to net income of $6.7 million or $0.15 per share in the second quarter of 1995.
Net sales in the second quarter of 1996 were $335.6 million, an increase of
$16.5 million or 5.2% from the second quarter of 1995. Total shipments in the
second quarter of 1996 were 706 thousand tons compared to second quarter of 1995
shipments of 630 thousand tons.
7
<PAGE> 8
While demand for the Company's products continued to be strong in the
second quarter of 1996, selling prices, particularly with respect to sheet
products, were lower than in the second quarter of 1995. Sheet product sales for
the second quarter of 1996 declined $11.8 million to $200.0 million. Shipments
of sheet product in the second quarter of 1996 were 487 thousand tons compared
to 460 thousand tons in the second quarter of 1995. Even though second quarter
of 1996 sheet product shipments increased from 1995, lower selling prices
resulted in lower sheet product revenues during the second quarter of 1996
compared to 1995.
The second quarter of 1996 revenues from tin mill products were $135.6
million on shipments of 219 thousand tons compared to $107.3 million on
shipments of 170 thousand tons for the same period in 1995, reflecting the
recovery of the Company's tin mill product market share. The increase in tin
mill product revenue is primarily attributable to increased volume; however the
revenue increase due to volume was partially offset by lower average selling
prices due to the resumption of a customer mix similar to that experienced prior
to the No. 9 Tandem outage.
Operating costs excluding non-recurring items, for the second quarter of
1996 were $475 per ton compared to $478 per ton for the second quarter of 1995.
The operating costs for the second quarter of 1996 were adversely affected by an
unplanned blast furnace outage in April 1996, as well as higher raw material and
energy costs. These increased costs compared to the first quarter of 1995 were
offset by the absence of a profit sharing provision in 1996.
Operating profit excluding the non-recurring items, was $1 per ton for the
second quarter of 1996 compared to $29 per ton for the same period in 1995. The
decrease is due to lower selling prices and higher operating costs, as described
above, in the second quarter of 1996; offset by overall improved product mix and
the absence of a profit sharing provision in 1996.
Selling, general and administrative expenses were $10.1 million for the
second quarter of 1996 or an increase of $1.4 million compared to the second
quarter of 1995. The increase is primarily due to higher benefit costs and
increased outside purchased services.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
In the first half of 1996, the Company recognized a net loss of $29.8
million or $0.71 per common share, compared to net income of $38.3 million or
$0.88 per common share for the same period in 1995. The first half of 1996
results included a pretax restructuring charge of $17.0 million associated with
the approximately 20% reduction of the supervisory and managerial workforce and
the $5.4 million extraordinary after tax loss. The first half of 1995 results
included a favorable pretax adjustments of $41.5 million for the No. 9 Tandem
and hot strip mill business interruption insurance recoveries and the
extraordinary after tax loss of $6.7 million associated with the 1995 early
extinguishment of debt. Excluding the effect of these non-recurring items, and
their resulting impact on the provision for profit sharing and income taxes, net
loss for the first half of 1996 would have been $10.7 million or $0.25 per
share, compared to net income for the first half of 1995 of $19.2 million or
$0.45 per share.
Net sales in the first half of 1996 were $676.5 million, an increase of
$2.8 million from the first half of 1995. Total shipments in the first half of
1996 were 1,418 thousand tons compared to first half of 1995 shipments of 1,335
thousand tons.
While demand for the Companys' products continued to be strong in the first
half of 1996, selling prices, particularly with respect to sheet products, were
lower than in the first half of 1995. Sheet product sales for the first half of
1996 declined $53.6 million to $400.0 million. Shipments of sheet product in the
first half of 1996 were 977 thousand tons compared to 985 thousand tons in the
first half of 1995. Even though first half of 1996 sheet product shipments were
generally similar to the same period in 1995, lower selling prices resulted in
lower sheet product revenue during the first half of 1996 compared to 1995.
The first half of 1996 revenues from tin mill products were $276.5 million
on shipments of 441 thousand tons compared to $220.1 million on 351 thousand
tons for the same period in 1995, reflecting the recovery of the Company's tin
mill product market share. The increase in tin mill product revenue is primarily
attributable to increased volume; however the revenue increase due to volume was
partially offset by lower average selling prices due to the resumption of a
customer mix similar to that experienced prior to the No. 9 Tandem outage.
8
<PAGE> 9
Operating costs excluding the effect of the non-recurring items, for the
first half of 1996 and 1995 were $472 per ton. Operating costs in the first half
of 1996 were adversely affected by an unplanned blast furnace outage in April
1996, as well as higher raw material and energy costs. These increased costs
compared to 1995 were offset by the absence of a profit sharing provision in
1996.
Operating profit excluding the effects of non-recurring items, was $5 per
ton for the first half of 1996 compared to $33 per ton for the same period in
1995. The decrease is due to lower selling prices and higher operating costs, as
described above, offset by an overall improved product mix and the absence of a
profit sharing provision in 1996.
Selling, general and administrative expenses were $19.6 million for the
first half of 1996 or an increase of $2.7 million compared to the first half of
1995. The increase is primarily due to higher benefit costs and increased
outside purchased services.
During the first half of 1996 the Company recognized interest income of
$2.9 million compared to $2.1 million in the first half of 1995. This increase
in interest income is primarily due to a higher level of invested funds during
the first half of 1996 compared to the same period in 1995.
The Company is currently conducting local negotiations with its represented
work force. The Company's current bargaining agreements are scheduled to expire
on September 26, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Company had cash and equivalents of $114.0 million
compared to $131.8 million as of December 31, 1995. This decrease in cash and
equivalents is due primarily to the payment during the first half of 1996 of
$24.2 million of profit sharing.
On June 27, 1996, the Company closed an offer to purchase $65.0 million
aggregate principal amount of its outstanding 10 7/8% Senior Notes due October
15, 1999, and $35.0 million aggregate principal amount of its outstanding
11 1/2% Senior Notes due March 1, 1998. The Company also entered into a
definitive purchase agreement on that date for the sale of $125.0 million
aggregate principal amount of 11 3/8% Senior Notes due 2004.
On July 3, 1996, the sale of the 11 3/8% Senior Notes was closed with the
Company receiving approximately $118.7 million of net proceeds after deducting
the original issue discount and the expenses payable by the Company. The 11 3/8%
Senior Notes were sold under Regulation 144A and are not registered under the
Securities Act of 1933. The covenants covering the 11 3/8% Senior Notes are
substantially similar to the covenants covering its previously existing senior
note obligations. Approximately $106.0 million of the net proceeds from the sale
were used to repurchase $65.0 million aggregate principal amount of the 10 7/8%
Senior Notes and $35.0 million aggregate principal amount of the 11 1/2% Senior
Notes. The second quarter of 1996 results include a $5.4 million extraordinary
after tax loss associated with the early extinguishment of debt.
The refinancing of the 11 1/2% Senior Notes and the 10 7/8% Senior Notes
reduced the aggregate indebtedness maturing in 1998 and 1999 from $77.2 million
and $149.7 million, respectively, to $42.2 million and $84.7 million,
respectively.
In connection with the sale of the 11 3/8% Senior Notes the Company entered
into a registration rights agreement under which the Company agreed to file a
registration statement within 45 days of the issue date with respect to a
registered offer to exchange the 11 3/8% Senior Notes for notes substantially
similar to the 11 3/8% Senior Notes (the "Exchange Offer"). The Company also
agreed to use its reasonable best efforts to cause the Exchange Offer to be
declared effective within 135 days of the issue date. The Company's registration
statement relating to the 11 3/8% Senior Notes was declared effective on August
9, 1996. The Exchange Offer commenced on August 13, 1996 and is scheduled to
expire on September 11, 1996.
As of June 30, 1996 and December 31, 1995, after reductions for amounts in
place under its letter of subfacility, WRI had a base amount of participation
interests available for cash sales under the Company's Receivables Participation
Agreement of approximately $74.1 million and 71.6 million, respectively.
The Company's net deferred tax assets were $142.7 million as of June 30,
1996, which consisted primarily of the carrying value of net operating loss
carryforwards and other tax credits and net deductible temporary differences
available
9
<PAGE> 10
to reduce the Company's cash requirements for the payment of future federal
income tax. The increase in deferred tax assets since December 31, 1995, of $7.2
million, primarily represents net operating loss carryforwards generated by the
Company in 1996. The valuation of the deferred tax assets are based upon the
Company's current assessment of the realizability of such assets.
INVESTMENT IN FACILITIES
Expenditures for property, plant and equipment for the first half of 1996
totaled $27.4 million. The Company's planned capital expenditures for 1996 are
approximately $84.6 million and include spending for a major blast furnace
reline expected to begin in the latter half of 1996. The Company expects to fund
its capital expenditures program with cash generated from operations or cash on
hand, and if necessary, from proceeds from the sale of participation interests
under the Receivables Participation Agreement.
ENVIRONMENTAL COMPLIANCE
The Company is continuing negotiations with the EPA regarding alleged
violations of environmental laws and regulations, as well as, compliance issues
related to air, water and waste disposal. Although at this time it is not
possible to determine the eventual outcome of these negotiations, the Company
will likely be required to pay fines and penalties, commit to environmental
related capital expenditure projects and incur higher operating costs related to
its environmental compliance programs. The Company may also be required to
conduct remediation activities at certain waste disposal sites. At this time, it
is not possible to determine if any remediation activities would be subject to
indemnification by National Steel Corporation. The time period related to the
EPA negotiations extends to September 15, 1996. Based on its review of the
matters involved and discussions to date with representatives of the EPA, while
no assurance can be given, the Company does not believe that any fines,
penalties or costs to remediate would have a material effect on the Company's
financial position or results of operations. However, it is expected that
related capital expenditures projects and required changes in operating
practices will increase future operating costs, which may have a significant
effect on future results of operations.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
10
<PAGE> 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 22, 1996, the Company's Annual Meeting of Stockholders was held and
the following proposals were voted upon:
(1) Affirmation of the five nominees for a three-year term on the Board of
Directors:
<TABLE>
<CAPTION>
VOTES
VOTES FOR WITHHELD
---------- ----------
<S> <C> <C>
James B. Bruhn.............................................. 49,914,009 6,247,608
Craig T. Costello........................................... 45,604,754 10,556,863
Robert J. D'Anniballe....................................... 51,469,860 4,691,757
Mark G. Glyptis............................................. 52,937,547 3,224,070
Phillip A. Karber........................................... 53,064,507 3,097,110
</TABLE>
(2)Affirmation of Arthur Andersen LLP as the Company's Independent
Accountants for the fiscal year ending December 31, 1996:
For 50,002,511 Against 2,451,628 Abstain
3,707,478
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit 4.1--First Supplemental Indenture dated as of August 12, 1996,
between the Company and Bankers Trust Company, as trustee, relating to the
Company's 10 3/4% Senior Notes due 2005.
Exhibit 4.2--Second Supplemental Indenture dated as of August 12, 1996,
between the Company and Bankers Trust Company, as trustee, relating to the
Company's 11 1/2% Senior Notes due 1998.
Exhibit 10.1--Employee Agreement between Richard K. Riederer and the
Company dated April 24, 1996.
Exhibit 10.2--Employee Agreement between David L. Robertson and the Company
dated March 11, 1996.
Exhibit 10.3--Employee Agreement between Earl E. Davis, Jr. and the Company
dated December 20, 1995.
Exhibit 27.--Financial Data Schedule for the six months ended June 30,
1996.
(B) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K on May 29, 1996, and
June 27, 1996.
11
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEIRTON STEEL CORPORATION
(Registrant)
/s/ MARK E. KAPLAN
By: ----------------------------
Mark E. Kaplan.
Controller (Principal Accounting
Officer)
August 14, 1996
12
<PAGE> 1
Exhibit 4.1
================================================================
WEIRTON STEEL CORPORATION
AND
BANKERS TRUST COMPANY,
as Trustee
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF AUGUST 12, 1996
10 3/4% Senior Notes Due 2005
Supplementing the Indenture Dated as of June 12, 1995
=================================================================
1
<PAGE> 2
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of August 12,
1996 (the "First Supplement"), is between Weirton Steel Corporation, a
corporation duly organized and existing under the laws of the State of Delaware
(the "Issuer"), and Bankers Trust Company, a New York banking corporation, as
trustee (the "Trustee").
RECITALS OF THE ISSUER
WHEREAS, pursuant to the terms of the Indenture dated as of
June 12, 1995 (the "Original Indenture"), between the Issuer and the Trustee,
the Issuer has issued $125,000,000 aggregate principal amount of its 10 3/4%
Senior Notes due 2005 (the "Securities"); and
WHEREAS, Section 7.1 of the Original Indenture provides for
the execution and delivery by the Issuer and, subject to the provisions of
Section 7.4 of the Original Indenture, by the Trustee, of one or more
supplemental indentures, without the consent of the holders of the Securities,
for the purposes specified therein; and
WHEREAS, such purposes include, inter alia, "to make such
other provisions in regard to matters or questions arising under [the Original]
Indenture or under any supplemental indenture as the Board of Directors may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of the Securities"; and
WHEREAS, the Board of Directors of the Issuer deems it
desirable to permit its Subsidiaries to issue Preferred Stock to the Issuer and
to wholly owned Subsidiaries of the Issuer; and
WHEREAS, the supplementing of Section 3.9 of the Original
Indenture as set forth in this First Supplement does "not adversely affect the
interests of the holders of the Securities"; and
WHEREAS, all things necessary to make this First Supplement,
when executed and delivered by the Trustee, the valid agreement of the Issuer
in accordance with its terms have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
1
<PAGE> 3
SECTION 1.1 DEFINITIONS. Except as otherwise expressly
provided herein, all capitalized words and terms used herein shall have the
respective meanings ascribed thereto in the Original Indenture.
SECTION 1.2 AMENDMENT OF ORIGINAL INDENTURE. The first
paragraph of Section 3.9 of the Original Indenture is hereby amended and
restated in its entirety to read as follows (corrective language is indicated
in italics for convenience of reference):
SECTION 3.9 LIMITATIONS ON Indebtedness. The
Issuer will not, and will not permit any Subsidiary to, create, incur,
assume, become liable for or guarantee the payment of (collectively, an
"incurrence") any Indebtedness (including Acquired Indebtedness), other
than Permitted Indebtedness, or permit any Subsidiary to issue any
Preferred Stock other than Preferred Stock that is issued to and held by
the Issuer or a wholly owned Subsidiary of the Issuer (so long as the
Issuer or a wholly owned Subsidiary of the Issuer owns such Preferred
Stock); PROVIDED the Issuer may incur, and may permit any Subsidiary to
incur, Indebtedness (including Acquired Indebtedness) if (a) at the time
of such event and after giving effect thereto, on a PRO FORMA basis, the
ratio of Consolidated EBITDA to Consolidated Fixed Charges for the four
fiscal quarters immediately preceding such event for which financial
information is available consistent with the Issuer's prior practice,
taken as one period and calculated on the assumption that such
Indebtedness had been incurred on the first day of such four-quarter
period and, in the case of Acquired Indebtedness, on the assumption that
the related acquisition (whether by means of purchase, merger or
otherwise) also had occurred on such date with the appropriate adjustments
with respect to such acquisition being included in such PRO FORMA
calculation, would have been greater than 1.75 to 1, and (b) no Default or
Event of Default shall have occurred and be continuing at the time or as a
consequence of the incurrence of such Indebtedness.
SECTION 1.3 CONSTRUCTION WITH ORIGINAL INDENTURE. All of the
covenants, agreements and provisions of this First Supplement shall be deemed
to be and construed as part of the Original Indenture and vice versa to the
same extent as if fully set forth verbatim therein and herein and shall be
fully enforceable in the manner provided in the Original Indenture. Except as
provided in this First Supplement, the Original Indenture shall remain in full
force and effect and the terms and conditions thereof are hereby confirmed.
2
<PAGE> 4
SECTION 1.4 CONFLICT WITH TRUST INDENTURE ACT OF 1939. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under the Trust Indenture Act to be part of and
govern the Original Indenture or this First Supplement, the latter provision
shall control. If any provision hereof modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this First Supplement as so modified or
to be excluded, as the case may be.
SECTION 1.5 EFFECT OF HEADINGS. The Section headings herein
are for convenience only and shall not affect the construction hereof.
SECTION 1.6 SEPARABILITY CLAUSE. In case any provision in
this First Supplement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the fully extent permitted by law.
SECTION 1.7 BENEFITS OF FIRST SUPPLEMENT AND ORIGINAL
INDENTURE. Nothing in this First Supplement or the Original Indenture or in the
Securities, express or implied, shall give to any Person other than the parties
hereto and thereto and their successors hereunder and thereunder and the
Holders of Securities, any benefit or any legal or equitable right, remedy or
claim under this First Supplement or the Original Indenture. Neither this First
Supplement nor the Original Indenture may be used to interpret another
indenture, loan agreement or debt agreement of the Issuer or any of its
Subsidiaries. No such other indenture or loan or debt agreement may be utilized
to interpret this First Supplement or the Original Indenture.
SECTION 1.8 GOVERNING LAW. This First Supplement shall be
deemed to be a contract under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State,
except as may otherwise be required by mandatory provisions of law.
SECTION 1.9. INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS OF ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or
upon any obligation, covenant or agreement contained in this First
Supplement shall be had against any incorporator, as such, or against any
past, present or future stockholder, officer or director, as such, of the
Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or
by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise.
3
<PAGE> 5
SECTION 1.10 COUNTERPARTS. This First Supplement may be
executed in any number of counterparts, each of which shall be an
original; but such counterparts shall together constitute but one and the
same instrument.
SECTION 1.11 EFFECTIVENESS. This First Supplement shall
become effective in accordance with the provisions of Article Seven of the
Original Indenture.
SECTION 1.12 NO REPRESENTATION. The Trustee makes no
representation as to the validity or sufficiency of this First Supplement. The
recitals contained herein shall be taken as statements of the Issuer and the
Trustee accepts no responsibility for their correctness.
4
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplement to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
WEIRTON STEEL CORPORATION
/s/ DAVID L. ROBERTSON
--------------------------------
By: David L. Robertson
Title: Executive Vice President-
Human Resources and
Corporate Law
Attest:
/s/ WILLIAM R. KIEFER
- --------------------------------
By: William R. Keifer
Title: Vice President-Law
and Secretary
BANKERS TRUST COMPANY, as Trustee
/s/ JACQUELINE M. BARTNICK
--------------------------------
By: Jacqueline M. Bartnick
Title: Assistant Vice President
Attest:
/s/ KEVIN WEEKS
- --------------------------------
By: Kevin Weeks
Title: Assistant Treasurer
5
<PAGE> 1
Exhibit 4.2
================================================================
WEIRTON STEEL CORPORATION
AND
BANKERS TRUST COMPANY,
as Trustee
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF AUGUST 12, 1996
11 1/2% Senior Notes Due 1998
Supplementing the Indenture Dated as of March 1, 1993,
as amended by a First Supplemental Indenture
dated as of July 25, 1995
=================================================================
1
<PAGE> 2
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of August 12,
1996 (the "Second Supplement"), is between Weirton Steel Corporation, a
corporation duly organized and existing under the laws of the State of Delaware
(the "Issuer"), and Bankers Trust Company, a New York banking corporation, as
trustee (the "Trustee").
RECITALS OF THE ISSUER
WHEREAS, the Issuer has issued its 11 1/2% Senior Notes due
1998 (the "Securities"), pursuant to the terms of the Indenture dated as of
March 1, 1993, between the Issuer and the Trustee, as amended and supplemented
by a First Supplemental Indenture dated as of July 25, 1995 (as so amended and
supplemented, the "Original Indenture"); and
WHEREAS, the Issuer and the Trustee have executed and
delivered a First Supplemental Indenture dated as of July 25, 1995 amending the
Original Indenture (the "First Supplement"); and
WHEREAS, Section 7.1 of the Original Indenture provides for
the execution and delivery by the Issuer and, subject to the provisions of
Section 7.4 of the Original Indenture, by the Trustee, of one or more
supplemental indentures, without the consent of the holders of the Securities,
for the purposes specified therein; and
WHEREAS, such purposes include, inter alia, "to make such
other provisions in regard to matters or questions arising under [the Original]
Indenture or under any supplemental indenture as the Board of Directors may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of the Securities"; and
WHEREAS, the Board of Directors of the Issuer deems it
desirable to permit its Subsidiaries to issue Preferred Stock to the Issuer and
to wholly owned Subsidiaries of the Issuer; and
WHEREAS, the supplementing of Section 3.9 of the Original
Indenture as set forth in this Second Supplement does "not adversely affect the
interests of the holders of the Securities"; and
WHEREAS, all things necessary to make this Second Supplement,
when executed and delivered by the Trustee, the valid agreement of the Issuer
in accordance with its terms have been done.
1
<PAGE> 3
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
SECTION 1.1 DEFINITIONS. Except as otherwise expressly
provided herein, all capitalized words and terms used herein shall have the
respective meanings ascribed thereto in the Original Indenture.
SECTION 1.2 AMENDMENT OF ORIGINAL INDENTURE. The first
paragraph of Section 3.9 of the Original Indenture, is hereby further amended
and restated in its entirety to read as follows (corrective language is
indicated in italics for convenience of reference):
SECTION 3.9 LIMITATIONS ON Indebtedness. The
Issuer will not, and will not permit any Subsidiary to, create, incur,
assume, become liable for or guarantee the payment of (collectively, an
"incurrence") any Indebtedness (including Acquired Indebtedness), other
than Permitted Indebtedness, or permit any Subsidiary to issue any
Preferred Stock other than Preferred Stock that is issued to and held by
the Issuer or a wholly owned Subsidiary of the Issuer (so long as the
Issuer or a wholly owned Subsidiary of the Issuer owns such Preferred
Stock); PROVIDED the Issuer may incur, and may permit any Subsidiary to
incur, Indebtedness (including Acquired Indebtedness) if (a) at the time
of such event and after giving effect thereto, on a PRO FORMA basis, the
ratio of Consolidated EBITDA to Consolidated Fixed Charges for the four
fiscal quarters immediately preceding such event for which financial
information is available consistent with the Issuer's prior practice, taken
as one period and calculated on the assumption that such Indebtedness had
been incurred on the first day of such four-quarter period and, in the case
of Acquired Indebtedness, on the assumption that the related acquisition
(whether by means of purchase, merger or otherwise) also had occurred on
such date with the appropriate adjustments with respect to such acquisition
being included in such PRO FORMA calculation, would have been greater than
1.75 to 1, and (b) no Default or Event of Default shall have occurred and
be continuing at the time or as a consequence of the incurrence of such
Indebtedness.
2
<PAGE> 4
SECTION 1.3 CONSTRUCTION WITH ORIGINAL INDENTURE.
All of the covenants, agreements and provisions of this Second Supplement shall
be deemed to be and construed as part of the Original Indenture and vice versa
to the same extent as if fully set forth verbatim therein and herein and shall
be fully enforceable in the manner provided in the Original Indenture. Except
as provided in this Second Supplement, the Original Indenture shall remain in
full force and effect and the terms and conditions thereof are hereby
confirmed.
SECTION 1.4 CONFLICT WITH TRUST INDENTURE ACT OF 1939. If any
provision hereof limits, qualifies or conflicts with a provision of the
Trust Indenture Act that is required under the Trust Indenture Act to be
part of and govern the Original Indenture or this Second Supplement, the
latter provision shall control. If any provision hereof modifies or
excludes any provision of the Trust Indenture Act that may be so modified
or excluded, the latter provision shall be deemed to apply to this Second
Supplement as so modified or to be excluded, as the case may be.
SECTION 1.5 EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
SECTION 1.6 SEPARABILITY CLAUSE. In case any provision in this
Second Supplement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the
fully extent permitted by law.
SECTION 1.7 BENEFITS OF SECOND SUPPLEMENT AND ORIGINAL INDENTURE.
Nothing in this Second Supplement or the Original Indenture or in the
Securities, express or implied, shall give to any Person other than the
parties hereto and thereto and their successors hereunder and thereunder
and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Second Supplement or the Original
Indenture. Neither this Second Supplement nor the Original Indenture may
be used to interpret another indenture, loan agreement or debt agreement
of the Issuer or any of its Subsidiaries. No such other indenture or loan
or debt agreement may be utilized to interpret this Second Supplement or
the Original Indenture.
SECTION 1.8 GOVERNING LAW. This Second Supplement shall be
deemed to be a contract under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State,
except as may otherwise be required by mandatory provisions of law.
3
<PAGE> 5
SECTION 1.9. INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS OF ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or
upon any obligation, covenant or agreement contained in this Second
Supplement shall be had against any incorporator, as such, or against any
past, present or future stockholder, officer or director, as such, of the
Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or
by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise.
SECTION 1.10 COUNTERPARTS. This Second Supplement may be
executed in any number of counterparts, each of which shall be an
original; but such counterparts shall together constitute but one and the
same instrument.
SECTION 1.11 EFFECTIVENESS. This Second Supplement shall
become effective in accordance with the provisions of Article Seven of the
Original Indenture.
SECTION 1.12 NO REPRESENTATION. The Trustee makes no
representation as to the validity or sufficiency of this Second Supplement. The
recitals contained herein shall be taken as statements of the Issuer and the
Trustee accepts no responsibility for their correctness.
4
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this
Second Supplement to be duly executed, and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first above
written.
WEIRTON STEEL CORPORATION
/s/ DAVID L. ROBERTSON
----------------------------------
By: David L. Robertson
Title: Executive Vice President-
Human Resources and
Corporate Law
Attest:
/s/ WILLIAM R. KIEFER
- ---------------------------------
By: William R. Keifer
Title: Vice President-Law
and Secretary
BANKERS TRUST COMPANY, as Trustee
/s/ JACQUELINE M. BARTNICK
----------------------------------
By: Jacqueline M. Bartnick
Title: Assistant Vice President
Attest:
/s/ KEVIN WEEKS
- ---------------------------------
By: Kevin Weeks
Title: Assistant Treasurer
5
<PAGE> 1
EXHIBIT 10.1
April 24, 1996
Richard K. Riederer
President & Chief Executive Officer
Weirton Steel Corporation
400 Three Springs Drive
Weirton, WV 26062
Dear Dick:
This letter is intended to set forth the terms which were agreed to by
yourself (the "Employee") and the Board of Directors of Weirton Steel
Corporation (the "Company") concerning your employment as President and Chief
Executive Officer of the Company. The agreed terms and conditions of your
employment are as follows:
1. (a) TERM. The term of employment under this Agreement
shall commence on November 16, 1995 (the "Effective Date") and end on
the date this Agreement is terminated by either the Company or the
Employee as hereinafter provided in this Section.
(b) TERMINATION BY THE COMPANY. The Company may, at its
election, terminate the employment of the Employee and related
obligations of the Company under this Agreement as follows:
<PAGE> 2
(1) FOR DISABILITY. Upon 30 days prior written notice in the
event the Employee has been so incapacitated that he has been unable
to perform the services required of him hereunder for a period of 180
consecutive days and such inability is continuing at the time of such
notice. The Company, at its sole cost and expense, shall continue to
provide and keep in force during the period of incapacity which
remains after such termination, but not after age 65, such income
replacement, medical, dental and life insurance coverages for the
Employee and his dependents of the types provided by the group benefit
plans of the Company for employees of the highest job classification
under the Company's Program of Insurance Benefits for Salaried
Employees (the "Insurance Program"), which coverages shall be at a
level not less favorable to the Employee than those coverages being
provided at the date hereof. It is the intention of the Parties that
in the event a termination for disability occurs, that Employee shall
receive benefits under the Long-Term Disability Insurance Program
maintained by the Company, and shall continue to accrue Pension
Service with the Company consistent with such Program.
(2) FOR JUST CAUSE. "For just cause" upon written notice of
such termination to the Employee. Termination of the Employee's
employment by the Company shall constitute a termination "for just
cause" only if such termination is for one of the following reasons:
(x) conviction of a felony punishable by a prison sentence of more
than one year; (y) habitual use of drugs without a prescription or
2
<PAGE> 3
habitual, excessive use of alcohol to the extent that any of such uses
materially interferes with the Employee's performance of his duties;
or (z) refusal or failure, after written notice, by the Employee to
perform or discharge duties and responsibilities appropriate to his
position as President and Chief Executive Officer which are properly
assigned to him by the Board of Directors, which refusal or failure
amounts to an extended and gross neglect of his duties to the Company.
Except as otherwise specifically set forth in this Agreement or as
otherwise prohibited by law, all rights and obligations of the
Employee, except such obligations as are created by Sections 5, 6 and
7 hereof, and all obligations of the Company under this Agreement,
shall cease and terminate on, and as of, the date of termination of
employment for just cause.
(3) WITHOUT CAUSE. Without cause by not less than 5 days
prior notice in writing, provided that the Company shall pay to the
Employee the monthly portion of his then applicable Base Salary for a
period of 24 months after the month in which termination occurs
payable as follows: (i) a lump sum payment equal to 12 months salary,
within 10 days following the date of termination, and (ii) the monthly
portion of such salary for the 13th through 24th months, paid on the
last day of each such month, continue to accrue pension service
including with respect to the SERP's, and provide for the Employee the
medical, dental, and life insurance, which were provided to the
Employee immediately prior to such notice, for a period of
3
<PAGE> 4
24 months after such termination, (iii) during such 24 month period
the employee shall continue to accrue service under the Company's
pension benefit program, as currently in effect. If the Company is
entitled to terminate the employment of the Employee in accordance
with section 1(b)(1) or if the Employee is at the time under an
incapacity of a nature or type which would entitle the Company to
terminate such employment but for the passage of the 180 consecutive
day period set forth in section 1(b)(1), the Company shall not be
deemed to have terminated his employment pursuant to this section
1(b)(3).
(4) IMPLIED TERMINATION. The Company shall be deemed to have
terminated this Agreement in accordance with section 1(b)(3) from and
after the date (x) the Employee is assigned duties other than those of
President and Chief Executive Officer, (y) the Employee is required to
report other than to the Board of Directors of the Company, or (z) the
Employee is required to reside other than in the Greater Pittsburgh
Area in order to perform his duties for the Company.
(c) TERMINATION BY THE EMPLOYEE. The Employee may at his
election, terminate his employment under this Agreement as follows:
(1) UPON NOTICE. The Employee may terminate his employment
hereunder upon 90 days written notice thereof to the Company, and from
and after the date of such termination, the Company shall have no
further obligations under this
4
<PAGE> 5
Agreement, except as required by law or as specifically set forth
herein; PROVIDED, that upon the receipt of such written notice, the
Company may terminate the employment of the Employee at any earlier
date of its choosing after receipt of such written notice and prior to
the expiration of the 90 day notice period.
(2) CHANGE OF CONTROL. Within 180 days after the occurrence
of any of the following events, the Employee may elect, by notice to
the Company, to terminate his employment hereunder and the Company
shall pay to the Employee simultaneously with such termination, an
amount equal to two times the Base Salary, and provide to the Employee
the insurance policy described in paragraph 2(c) hereof with the
premium paid through the calendar year in which such termination
occurs and for two calendar years thereafter; and the Company will
provide to the Employee the benefits described in its (ii) and (iii)
of section 1(b)(3) of this Agreement.
(i) Fifty percent (50%) or more of the shares of the
Company's Common Stock is acquired, directly or indirectly,
by an individual, partnership, corporation, trust or
unincorporated organization (collectively "Person") or by
Persons acting with a common design, either formally or
informally.
(ii) The Company merges with or into another Person
and is not the survivor of such merger, or is the
5
<PAGE> 6
survivor in such merger under circumstances where the Company
becomes a subsidiary of another Person, or the Company sells
substantially all of its assets to another Person or Persons;
or
(iii) The Board of Directors of the Company includes
three or more Independent Directors, as defined in Article
Fifth of the Restated Certificate of Incorporation of the
Company, who were not selected by or nominated with the
approval of a majority of the Independent Directors of the
Company in office on the date hereof (the "Present
Independent Directors") or who were not selected by, or
nominated with the approval of, a majority of the Independent
Directors selected or nominated by a majority of the Present
Independent Directors.
The Employee shall have no further obligation under this Employment
Agreement from and after such termination except as provided in
paragraph 5, 6, and 7 hereof.
2. COMPENSATION.
(a) SALARY AND BONUS. the Company shall pay the Employee (x)
a salary of $375,000 per year which sum shall be subject to annual
review (the "Base Salary"), payable in such installments and at such
times as conform to the general payroll practices of the Company, plus
(y) a cash bonus under the Company's Performance Incentive Plan. The
maximum amount of cash bonus payable to the Employee under the
Performance
6
<PAGE> 7
Incentive Plan for fiscal years of the Company subsequent to 1995
shall be set by the Management Development and Compensation Committee
of the Board of Directors. In the event employment is terminated prior
to the end of any fiscal year except pursuant to Section 1(b)(2) or
1(c)(1), the bonus, if any, for the fiscal year in which termination
occurs shall be pro rated by multiplying the bonus amount by a
fraction, the numerator of which is the number of days elapsed in the
fiscal year to and including the date such termination becomes
effective and the denominator of which is 365. If the employment is
terminated pursuant to Section 1(b)(2) or 1(c)(1) no bonus shall be
paid with respect to the fiscal year in which such termination occurs.
(b) AUTOMOBILE AND EXPENSES. the Company shall make available
to the Employee a Company car suitable to the Employee and his status,
and shall, in accordance with its regular accounting practices,
reimburse the Employee for all reasonable expenses incurred by the
Employee in connection with his duties under this Agreement.
(c) LIFE INSURANCE. The Company will provide to the Employee
life insurance which shall pay to any beneficiary designated by the
Employee the amount of $1,500,000 at the time of death. This Life
Insurance shall be in addition to the Group Life Insurance provided
for below.
(d) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. Employee shall
participate in the Supplemental Executive Retirement
7
<PAGE> 8
Programs (SERP's) maintained by the Company. Contributions to the SERP
shall be in such amounts as may be actuarily required to provide
Employee with a retirement benefit (from all sources contemplated by
the SERP's) equivalent to 70% of his final average earnings, upon the
completion of 10 years of service with the Company.
(e) OTHER BENEFIT PROGRAMS. The Company shall provide, during
the term hereof, coverage for the Employee under the Insurance
Programs applicable from time to time to its salaried employees of the
highest job classification. In the event that employment is terminated
pursuant to Section 1 under circumstances where the Company has an
obligation after the date of termination to continue coverages under
one or more health care plans in the Insurance Program, or otherwise,
such coverages in all cases shall be coordinated with similar or
comparable coverages thereafter provided to the Employee by any third
party employer, with such third party coverages being deemed primary
and the coverages maintained by the Company being deemed secondary or
supplementary, so as to be reduced on a dollar-for-dollar basis by the
amount of benefits payable under such third party coverages. The
Employee shall submit to any required physical examination and shall
provide any required information in connection with the acquisition or
maintenance of any insurance pursuant to this Agreement. Except for
the Company's Profit Sharing Plan, the Employee shall be eligible for,
and participate in, such other fringe benefits as are generally
available to salaried employees of the Company of the highest job
classification, and nothing in
8
<PAGE> 9
this Agreement shall be deemed to preclude the Company from granting
such additional remuneration or benefits to the Employee as it shall
determine in its sole discretion.
(f) STOCK OPTIONS. In addition to those stock options
previously granted to the Employee, the Company shall grant to the
Employee no later than the effective date of this Agreement, pursuant
to its 1987 Stock Option Plan (the 'Option Plan"), one or more
non-qualified stock options to purchase an aggregate of 40,000 shares
of its common stock at an option price of $4.375 per share.
(g) COUNTRY CLUB PRIVILEGES. The Company shall make available
to the Employee a membership in Williams Country Club located in
Weirton, West Virginia and/or such other club and/or clubs as may be
suitable to the Employee for business purposes. In this regard, the
Company will reimburse Employee for annual dues, membership and other
club fees, and assessments. Business expenses for entertainment at
such club or clubs will be reimbursed pursuant to the Company's
entertainment policies. Employee will bear sole responsibility for
expenditures of a personal nature incurred at such club or clubs.
3. DUTIES. The Employee is engaged as the President and Chief
Executive Officer of the Company and shall perform and discharge well
and faithfully the duties commensurate with such position which may be
assigned to him from time to time by the Company, through its Board of
Directors, in connection
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<PAGE> 10
with the conduct of its business. If the Employee is elected or
appointed a director or officer of the Company or any subsidiary
thereof the Employee will serve in such capacity without further
compensation.
4. EXTENT OF SERVICES. The Employee shall devote his entire business
time, attention and energies to the businesses of the Company and
shall not during the term of this Agreement be engaged in any other
business activity, whether or not such business activity is pursued
for gain, profit or other pecuniary advantage; but this shall not be
construed as prohibiting the Employee from serving or continuing to
serve as a Director of Portico Funds, Inc., or as an Officer or
Director of any civic, educational, or charitable institution; or
investing his personal assets in businesses which do not compete with
the Company in such form or manner as will not require any significant
services on the part of the Employee in the operation of the affairs
of the companies in which such investments are made and in which his
participation is solely that of an investor. The Employee may serve as
a director of a company having businesses not engaged in the business
of producing, manufacturing or selling primary metals, including
steel, as authorized in advance by the Management Development and
Compensation Committee of the Board of Directors. The Employee may
purchase securities in any corporation whose securities are regularly
traded, on a stock exchange PROVIDED that such purchases shall not
result in his collectively beneficially owning at any time 1% or more
of the
10
<PAGE> 11
equity securities of any corporation engaged in a business competitive
to that of the Company.
5. DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges
that the Company's trade secrets and proprietary processes as they may
exist from time to time are valuable, special and unique assets of the
Company's business, access to and knowledge of which are essential to
the performance of the Employee's duties hereunder. The Employee will
not, during or after the term of his employment, in whole or in part,
disclose such secrets or processes acquired by virtue of his
employment hereunder or his service as a director to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever, nor shall the Employee make use of any such property for
his own purposes or for the benefit of any person, firm, corporation
or other entity (except the Company) under any circumstances during or
after the term of his employment, PROVIDED, that after the term of his
employment, these restrictions shall not apply to such secrets and
processes which are then in the public domain (provided that he was
not responsible, directly or indirectly, for such secrets or processes
entering the public domain without the Company's consent).
6. INVENTIONS. the Employee hereby sells, transfers and assigns to the
Company or to any person, or entity designated by the Company all of
the entire right, title and interest of the Employee in and to all
inventions, ideas, disclosures and improvements, whether patented or
unpatented, and
11
<PAGE> 12
copyrightable material made or conceived by the Employee, solely or
jointly during the period of his employment hereunder which relate to
methods, apparatus, designs, products, processes or devices, sold,
leased, used or under consideration or development by the Company, or
which otherwise relate to or pertain to the business, functions or
operations of the Company. The Employee shall communicate promptly and
disclose to the Company, in such form as the Employee may be required
to do so, all information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements and to
execute and deliver to the Company such formal transfers and
assignments and such other papers and documents as may be required of
the Employee to permit the Company or any person or entity designated
by the Company to file and prosecute the patent applications and, as
to copyrightable material, to obtain copyright thereof. Any invention
relating to the business of the Company and disclosed by the Employee
within one (1) year following the termination of employment shall be
deemed to fall within the provisions of this Section unless proved to
have been first conceived and made following such termination.
7. NON-COMPETITION. In the event that (x) the Employee is terminated
by the Company except pursuant to Section 2(b)(2) and the Employee is
paid any required amounts in accordance with the terms of such
termination and the Company is performing its other obligations under
the Agreement, or (y) employment is terminated by the Employee when
the Company is not in breach; then for a period of two years following
the
12
<PAGE> 13
termination of employment the Employee will not engage in Significant
Competitive Acts against the Company. For purposes of Sections 5, 6,
and 7, unless the context otherwise requires, the term "Company" shall
include divisions, subsidiaries and controlled affiliated entities of
the Company, and "businesses" of the Company shall include businesses
of any of such entities. "Significant Competitive Acts" shall consist
of any of the following acts: entering into employment with a Company
engaged in the business of producing, manufacturing, or selling
primary metals including steel, inducing employees to leave the employ
of the Company, or tortiously interfering with any business
relationship of the Company, including, without limitation, any of
their respective customers, vendors, suppliers, lessors or lessees.
8. INJUNCTIVE RELIEF. If there is a breach or threatened breach of any
of the provisions of Sections 5, 6 or 7 of this Agreement, the Company
shall be entitled to seek and obtain an injunction in a Court of
competent jurisdiction restraining the Employee from such breach.
Subject to Section 12, nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies for such
breach or threatened breach.
9. PRIOR EMPLOYMENT AGREEMENTS. This Agreement supersedes any and all
employment agreements between the Company and the Employee and such
agreements are null and void except that any prior stock option
agreements between the Company and the
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<PAGE> 14
Employee shall continue to be obligations of the Company and the
Employee.
10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and be sent by registered mail to his
residence in case of the Employee, or to the Secretary, Weirton Steel
Corporation, Three Springs Drive, Weirton, West Virginia 26062, in the
case of the Company.
11. WAIVER OF BREACH. A waiver by the Company or the Employee of a
breach of any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any subsequent breach by the
other party.
12. ARBITRATION. Subject to the provisions of the first sentence of
Section 8 hereof, any dispute between the Employee and the Company
arising under this Agreement, including the terms of the stock option
agreement under the Option Plan to be entered into in accordance with
Section 2(e) hereof, whether or not a case or controversy, shall be
resolved in the first instance solely by arbitration in New York, New
York in accordance with the rules of the American Arbitration
Association.
13. LEGAL FEES AND EXPENSES. The Company shall promptly reimburse the
Employee for the reasonable legal fees and
14
<PAGE> 15
expenses incurred by the Employee in connection with enforcing any
right of the Employee pursuant to and afforded by this Agreement;
PROVIDED, HOWEVER, that the Company only will reimburse the Employee
for such legal fees and expenses if, in connection with enforcing any
right of the Employee pursuant to and afforded by this Agreement,
either (i) a judgment has been rendered in favor of the Employee by a
duly authorized court of law, (ii) an arbitration award in favor of
the Employee has been given in accordance with Section 12 hereof or
(iii) the Company and the Employee have entered into a settlement
agreement providing for the payment to the Employee of any or all
amounts due hereunder.
14. ENTIRE AGREEMENT; GOVERNING LAW. This instrument contains the
entire agreement of the parties, superseding any prior agreement or
arrangement, whether written or oral. It any be changed only by a
writing signed by the party against whom enforcement is sought. This
Agreement shall be governed by the laws of the State of Delaware
without regard to its principles of conflicts of laws.
If you agree that the foregoing items accurately reflect the agreed
terms of your employment as President and Chief Executive Officer of Weirton
Steel Corporation, please indicate by signing below and returning one copy to
the Secretary of the Corporation. You should, of course, retain the other copy
for your records.
15
<PAGE> 16
WEIRTON STEEL CORPORATION
By: /s/WILLIAM R. KIEFER
-------------------------------
William R. Kiefer
Title: Vice President-Law
----------------------------
AGREED TO:
/s/RICHARD K. RIEDERER
- -----------------------
Richard K. Riederer
Dated:
--------------
16
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (the "Agreement") is dated as of March 11,
1996, and is entered into between WEIRTON STEEL CORPORATION, a Delaware
corporation (the "Company"), and DAVID L. ROBERTSON (the "Employee").
WHEREAS, Employee and the Company desire to embody in this Agreement
the terms and conditions of Employee's employment by the Company;
NOW, THEREFORE, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee and the
Employee hereby accepts employment from the Company upon the terms and
conditions hereinafter set forth.
2. TERM. (a) The term of employment under this Agreement shall
commence on the date hereof and end on the date this Agreement is terminated by
either the Company or the Employee as hereinafter provided in this Section 2.
(b) The Company may, at its election, terminate the
employment of the Employee and related obligations of the Company under this
Agreement as follows:
(1) FOR DISABILITY. Upon 30 days prior notice in the
event the Employee has been so incapacitated that he has been unable to perform
the services required of him hereunder for a period of 150 of 180 consecutive
days and such inability is continuing at the time of such notice. The Company,
at its sole cost and expense, shall continue to provide and keep in force during
the period of incapacity which remains after such termination, but not after age
65, such income replacement,
<PAGE> 2
sickness and accident and health insurance coverages for the Employee and his
dependents of the types provided by the group benefit plans of the Company for
employees of the highest job classification under the Company's Program of
Insurance Benefits for Salaried Employees (the "Insurance Program"), which
coverages shall be at a level commensurate with other executive vice presidents.
(2) FOR JUST CAUSE. "For just cause" upon notice of such
termination to the Employee. Termination of the Employee's employment by the
Company shall constitute a termination "for just cause" only if such termination
is for one of the following reasons: (x) conviction of a felony punishable by a
prison sentence of more than one year; (y) habitual use of drugs without a
prescription or habitual, excessive use of alcohol to the extent that any of
such uses materially interferes with the Employee's performance of his duties;
or (z) refusal or failure, after written notice, by the Employee to perform or
discharge duties and responsibilities appropriate to his position as Executive
Vice President, Administration which are properly assigned to him by the Chief
Executive Officer of the Company or the Board of Directors, which refusal or
failure amounts to an extended and gross neglect of his duties to the Company.
Except as otherwise specifically set forth in this Agreement or as otherwise
prohibited by law, all rights and obligations of the Employee, except such
obligations as are created by Sections 6, 7 and 8 hereof, and all obligations of
the Company under this
2
<PAGE> 3
Agreement, shall cease and terminate on, and as of, the date of termination of
employment for just cause.
(3) WITHOUT CAUSE. Without cause by not less than five
days prior notice in writing, provided that within 15 days of the effective
date of such termination the Company shall pay to the Employee a single lump
sum amount equal to twice his then current annual Base Salary and provide for
the Employee the medical, dental, life and disability insurance, which were
provided to the Employee immediately prior to such notice, for a period of 24
months after such termination. If the Company is entitled to terminate the
employment of the Employee in accordance with subsection (1) or if the Employee
is at the time under an incapacity of a nature or type which would entitle the
Company to terminate such employment but for the passage of the 180 consecutive
day period set forth in subsection (1), the Company shall not be deemed to have
terminated his employment pursuant to this subsection (3).
The Company shall be deemed to have agreed to a termination in
accordance with this subsection (3) from and after the date, without the
consent of the Employee (which may be obtained before or after the relevant
event), (x) the Employee is assigned duties other than those of Executive Vice
President, Administration, (y) the Employee is required to report other than to
the Chief Executive Officer or the Board of Directors of the Company, or (z)
the Employee is required to reside other than in Weirton, West Virginia or the
Greater Pittsburgh Area in order to perform his duties for the Company.
3
<PAGE> 4
(c) The Employee may terminate his employment hereunder
upon 90 days notice thereof to the Company, and from and after the date of such
termination, the Company shall have no further obligations under this Agreement,
except as required by law or as specifically set forth herein; provided, that
upon the receipt of such written notice, the Company may terminate the
employment of the Employee at any earlier date of its choosing after receipt of
such written notice and prior to the expiration of the 90 day notice period.
3. COMPENSATION.
(a) SALARY AND BONUS. The Company shall pay the
Employee a salary (the "Base Salary") of $195,000 per year as may be from time
to time increased by the Board of Directors of the Company (the "Board") or any
authorized committee thereof, provided that such increases shall be
commensurate with those granted to any other Executive Vice President of the
Company. The Base Salary shall be payable in such installments and at such
times as conform to the general payroll practices of the Company. The Employee
shall be eligible to participate in the Company's Performance Incentive Plan
(the "Bonus Plan") at a level commensurate with other Executive Vice Presidents
of the Company. In the event the Employee's employment is terminated prior to
the end of any fiscal year of the Company, except pursuant to Section 2(b) (2)
or 2 (c), the bonus, if any, payable pursuant to the Bonus Plan for the fiscal
year in which termination occurs shall be pro-rated by multiplying the bonus
amount by a fraction, the numerator of which is the number of days elapsed in
the fiscal
4
<PAGE> 5
year to and including the date termination becomes effective and the
denominator of which is 365. If the Employee's employment is terminated
pursuant to Section 2(b) (2) or 2(c) no bonus shall be paid with respect to the
fiscal year in which such termination occurs.
(b) AUTOMOBILE AND EXPENSES. The Company shall make
available to the Employee an automobile in accordance with the Company's
automobile policy generally applicable to Executive Vice Presidents.
(c) LIFE INSURANCE. The Company will provide to the
Employee life insurance which shall pay to any beneficiary designated by the
Employee an amount equal to four (4) times the Base Salary in effect at the
time of death while the Employee is actively employed or subject to the
post-termination benefit extension provisions of Section 2(b) (3). Upon
termination in accordance with Section 2(b) (1) or, after Employee is age
59-1/2, in accordance with Section 2(b) (3) or 2(c), or, if later, the
expiration of the benefit extension provisions of Section 2(b) (3), the Company
will deliver to the Employee a fully paid life insurance policy which shall pay
to any beneficiary designated by the Employee an amount equal to $250,000 and
which shall be owned by the Employee.
(d) OTHER BENEFIT PROGRAMS. The Company shall provide,
during the term hereof, coverage for the Employee under the Insurance Program as
applicable from time to time to its salaried employees of the highest job
classification and commensurate with coverage of other Executive Vice
Presidents.
5
<PAGE> 6
In the event that employment is terminated pursuant to Section 2 under
circumstances where the Company has an obligation after the date of termination
to continue coverages under one or more healthcare plans in the Insurance
Program, or otherwise, such coverages in all cases shall be coordinated with
similar or comparable coverages thereafter provided to the Employee by any
third party employer, with such third party coverages being deemed primary and
the coverages maintained by the Company being deemed secondary or
supplementary, so as to be reduced on a dollar-for-dollar basis by the amount
of benefits payable under such third party coverages. The Employee shall submit
to any required physical examination and shall provide any required information
in connection with the acquisition or maintenance of any insurance pursuant to
this Agreement. The Employee shall be eligible for, and participate in, such
other fringe benefits, including club dues, as are generally available to
salaried employees of the Company of the highest job classification and
commensurate with other executive vice presidents, and nothing in this
Agreement shall be deemed to preclude the Company from granting such additional
remuneration or benefits to the Employee as it shall determine in its sole
discretion. If this Agreement is terminated in accordance with Section 2(b) (1)
or, after the Employee is age 59-1/2, in accordance with Section 2(b) (3) or
2(c), then the Company shall provide to Employee and his dependents medical
benefits commensurate with the medical benefits provided to retired employees
at Class 56 and above.
6
<PAGE> 7
The Employee shall not receive compensation pursuant to the Profit Sharing Plan
of the Company.
(e) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The
Employee shall be entitled to participate in the Company's Supplemental
Executive Retirement Plan ("SERP"), established in 1994 for management
employees in Job Class 56 and above, upon Employee's commencement of
employment. The Company shall (x) credit the Employee with five (5) years of
"Benefit Service" (as defined in the SERP) under the SERP and (y) fund the
trust related to the SERP for such years of Benefit Service, upon Employee's
commencement of employment.
(f) STOCK OPTIONS. From time to time, the Company shall
cause to be granted to the Employee stock options to purchase common stock of
the Company or, in lieu thereof or in addition thereto, stock appreciation
rights, in amounts and at such times as are commensurate with those granted to
executive vice presidents of the Company.
(g) VACATION. The Company shall grant the Employee four
(4) weeks of fully compensated vacation per year under this Agreement.
4. DUTIES. The Employee is engaged as the Executive Vice
President, Administration of the Company and shall perform and discharge well
and faithfully the duties commensurate with such position which may be assigned
to him from time to time by the Chief Executive Officer or the Board in
connection with the conduct of the Company's business, including, but not
limited to, management of the Human Resources, Legal, Economic Development
7
<PAGE> 8
and Public and Community Relations functions. If the Employee is elected or
appointed a director or officer of the Company or any subsidiary thereof during
the term of this Agreement, the Employee will serve in such capacity without
further compensation.
5. EXTENT OF SERVICES. The Employee shall devote his entire
business time, attention and energies to the businesses of the Company and shall
not during the term of this Agreement be engaged in any other business activity,
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage; but this shall not be construed as preventing the Employee
from investing his personal assets in businesses which do not compete with the
Company in such form or manner as will not require any significant services on
the part of the Employee in the operation of the affairs of the companies in
which such investments are made and in which his participation is solely that of
an investor, except that the Employee may serve as a director of a company
having businesses which do not compete with the Company or as otherwise
authorized by the Board of Directors, so long as such service does not interfere
with his duties and services hereunder, and except that the Employee may
purchase securities in any corporation whose securities are regularly traded,
provided that such purchases shall not result in his collectively owning
beneficially at any time 1% or more of the equity securities of any corporation
engaged in a business competitive to that of the Company.
8
<PAGE> 9
6. DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges
that the Company's trade secrets and proprietary processes as they may exist
from time to time are valuable, special and unique assets of the Company's
business, access to and knowledge of which are essential to the performance of
the Employee's duties hereunder. The Employee will not, during or after the term
of his employment, in whole or in part, disclose such secrets or processes
acquired by virtue of his employment hereunder or his service as a director to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, nor shall the Employee make use of any such property for his
own purposes or for the benefit of any person, firm, corporation or other entity
(except the Company) under any circumstances during or after the term of his
employment, provided, that after the term of his employment, these restrictions
shall not apply to such secrets or processes which are then in the public domain
(provided that he was not responsible, directly or indirectly, for such secrets
or processes entering the public domain without the Company's consent).
7. INVENTIONS. The Employee hereby sells, transfers and assigns to the
Company or to any person, or entity designated by the Company all of the entire
right, title and interest of the Employee in and to all inventions, ideas,
disclosures and improvements, whether patented or unpatented, and copyrightable
material made or conceived by the Employee, solely or jointly during the period
of his employment hereunder which relate to
9
<PAGE> 10
methods, apparatus, designs, products, processes or devices, sold, leased, used
or under consideration or development by the Company, or which otherwise relate
to or pertain to the business, functions or operations of the Company. The
Employee shall communicate promptly and to disclose to the Company, in such form
as the Employee may be required to do so, all information, details and data
pertaining to the aforementioned inventions, ideas, disclosures and improvements
and to execute and deliver to the Company such formal transfers and assignments
and such other papers and documents as may be required of the Employee to permit
the Company or any person or entity designated by the Company to file and
prosecute the patent applications and, as to copyrightable material, to obtain
copyright thereof. Any invention relating to the business of the Company and
disclosed by the Employee within one (1) year following the termination of
employment shall be deemed to fall within the provisions of this Section unless
proved to have been first conceived and made following such termination.
8. NON-COMPETITION. In the event that (x) the Employee is terminated by
the Company except pursuant to Section 2(b) (2) and the Employee is paid any
required amounts in accordance with the terms of such termination and the
Company is performing its other obligations under this Agreement, or (y)
employment is terminated by the Employee when the Company is not in breach, for
a period of two years following the termination of employment the Employee will
not engage in Significant Competitive Acts against the Company.
10
<PAGE> 11
For purposes of Sections 5, 6, 7 and 8, unless the context otherwise
requires, the term "Company" shall include divisions, subsidiaries and
controlled affiliated entities of the Company, and "businesses" of the Company
shall include businesses of any of such entities. "Significant Competitive
Acts" shall consist of any of the following acts: (i) inducing employees to
leave the employ of the Company or (ii) tortuously interfering with any
business relationship of the Company, including, without limitation,
relationships with customers, vendors, suppliers, lessors or lessees.
9. INJUNCTIVE RELIEF. If there is a breach or threatened breach by the
Employee of any of the provisions of Sections 6, 7 or 8 of this Agreement, the
Company shall be entitled to an injunction from a court of competent
jurisdiction restraining the Employee from such breach. Subject to Section 12,
nothing herein shall be construed as prohibiting the Company from pursuing any
other remedies for such breach or threatened breach.
10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and if sent by registered mail to his residence
in case of the Employee, or to the Secretary, Weirton Steel Corporation, Three
Springs Drive, Weirton, West Virginia 26062, in the case of the Company.
11. WAIVER OF BREACH. A waiver by the Company or the Employee of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by the other party.
11
<PAGE> 12
12. ARBITRATION. Subject to the provisions of the first sentence of
Section 9 hereof, any dispute between the Employee and the Company arising
under this Agreement, whether or not a case or controversy, shall be resolved
solely by arbitration in Pittsburgh, Pennsylvania in accordance with the rules
of the American Arbitration Association, and judgment upon any award may be
entered in any court having jurisdiction thereof.
14. LEGAL FEES AND EXPENSES. The Company shall promptly reimburse the
Employee for the reasonable legal fees and expenses incurred by the Employee in
connection with enforcing any right of the Employee pursuant to and afforded by
this Agreement; provided, however, that the Company only will reimburse the
Employee for such legal fees and expenses if, in connection with enforcing any
right of the Employee pursuant to and afforded by this Agreement, either (i) a
judgment has been rendered in favor of the Employee by a duly authorized court
of law, (ii) an arbitration award in favor of the Employee has been made or
(iii) the Company and the Employee have entered into a settlement agreement
providing for the payment to the Employee of any or all amounts alleged by the
Employee to be due hereunder.
15. ENTIRE AGREEMENT; GOVERNING LAW. This instrument contains the
entire agreement of the parties, superseding any prior agreement or
arrangement, whether written or oral. It may be changed only by a writing
signed by the party against whom enforcement is sought. This Agreement shall be
governed by the
12
<PAGE> 13
laws of the State of Delaware without regard to its principles of conflicts of
laws.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
day first hereinabove written.
WEIRTON STEEL CORPORATION
By /s/Richard K. Riederer
-----------------------
Title: President and CEO
/s/ DAVID L. ROBERTSON
-------------------------
David L. Robertson
13
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of the date written below by and between
WEIRTON STEEL CORPORATION, a Delaware corporation, with its principal executive
offices located at Three Springs Drive, Weirton, West Virginia 26062
(hereinafter called the "Corporation") and the individual employee whose name
and address appear on the signature page hereto (hereinafter called
"Employee").
The parties hereto agree as follows:
FIRST: TERM AND DUTIES: The term of this Agreement shall
commence on the date hereof and shall continue until terminated in accordance
with Paragraph Second. During the term hereof, Employee shall serve as a
full-time, salaried employee of the Corporation. Employee's duties, title,
salary and other benefits shall be as agreed upon from time to time between
Employee and the Corporation.
SECOND: ELIGIBILITY FOR TERMINATION BENEFITS: (a) Subject to
paragraph (d) of Paragraph Third, if Employee's employment with the Corporation
is terminated by the Corporation without just cause, Employee shall receive
such benefits hereunder ("Termination Benefits") as determined in accordance
with Paragraph Third, provided Employee, if requested, remains in the
employment of the Corporation for a period not exceeding 60 days following
receipt of a written notice of such termination. For purposes of this
Agreement, termination of Employee's employment by the Corporation shall
constitute a termination for "just cause" only if such termination is for one
of the following reasons: (i) conviction of a felony punishable by a prison
sentence of more than one year; (ii) habitual use of drugs without a
prescription or habitual, excessive use of alcohol to the extent that any of
such uses materially interferes with Employee's performance of his duties; or
(iii) refusal or failure, after notice, by Employee to perform or discharge
duties and responsibilities appropriate to his position, which refusal or
failure amounts to an extended and gross neglect of his duties to the
Corporation. Except as otherwise specifically set forth in this Agreement or as
otherwise prohibited by law, all rights of Employee, and all obligations of the
<PAGE> 2
Corporation under this Agreement, shall cease and terminate on, and as of, the
date of termination of employment for just cause.
(b) The Corporation shall be deemed to have agreed to a
termination in accordance with paragraph (a) of this Paragraph Second from and
after the date (i) the Employee is assigned duties or responsibilities
significantly inconsistent with and less than the Employee's position, duties,
responsibilities or status with the Corporation as in effect upon execution of
this Agreement, (ii) the Employee's base salary, excluding any bonus or other
compensation derived from any employee benefit plan, is ever reduced below any
level attained by the Employee, or (iii) the Employee is required to reside
other than in the Greater Pittsburgh Area in order to perform his duties for
the Corporation; PROVIDED, that such action is taken without the Employee's
consent, and within 30 days after the occurrence of any such event the Employee
notifies the Corporation that he is so deeming the Corporation to have elected
to terminate his employment, whereupon the Corporation shall be deemed to have
terminated such employment as of the date of any such action or the date of
such notice at the option of the Employee. If the date of termination is deemed
to be a date earlier than the date of such notice, and the Corporation, upon
receipt of such notice, promptly takes all actions hereunder required in the
event of such termination, no intervening delay in taking such actions may be
construed as a violation of this Agreement.
THIRD: AMOUNT AND DURATION OF TERMINATION BENEFITS:
(a) Upon the termination of Employee's employment on any
date in accordance with Paragraph Second (the "Termination Date"), Employee
shall be treated as being an inactive employee for 18 months following the
Termination Date, and Employee shall receive a total of 18 months base salary
(excluding vacation or special pay) in effect at the Termination Date as
follows: (i) 12 months base salary to be paid in one lump sum within 10 days
following the Termination Date; (ii) starting in the 13th month following the
Termination Date and ending in the 18th month following the Termination Date,
six months base salary to be paid in six monthly installments. Any income
earned by Employee from employment, or otherwise from a trade or business, in
the 13th through the 18th month following the Termination Date (excluding any
self-employment income), shall reduce on a dollar-for-dollar basis the
compensation payable to Employee during such months pursuant to this paragraph.
2
<PAGE> 3
Employee shall report all such other compensation to the Corporation.
Furthermore, for a period of 18 months following the Termination Date, the
Corporation shall (iii) continue to provide coverage for Employee and
applicable dependents under all benefit plans of the Corporation providing life
insurance or health, disability, hospitalization and major medical insurance at
such levels as are not less than those in effect at the time of the Termination
Date; and (iv) to the extent allowable under applicable law, cause Employee to
continue to earn service credit for all purposes under any pension or
retirement plan maintained by the Corporation in which Employee participated at
the time of the Termination Date; PROVIDED, HOWEVER, that the coverage referred
to in clause (iii) shall be suspended during any period in which and to the
extent Employee is eligible for similar coverage under another employer plan.
Notwithstanding the above, the Corporation shall not be obligated as provided
in this Paragraph Third during any period when employee does not comply with
Paragraph Fourth. For all other purposes, Employee's employment shall terminate
on the Termination Date.
(b) Nothing in paragraph (a) of this Paragraph Third shall be
construed to require the Corporation to maintain any employee or management
benefit program solely for the purpose of covering or providing benefits to
Employee.
(c) The Corporation shall promptly reimburse Employee for the
reasonable legal fees and expenses incurred by Employee in connection with
enforcing any right of Employee pursuant to paragraph (a) or (b) of Paragraph
Second, or paragraph (a) of this Paragraph Third; PROVIDED, HOWEVER, that the
Corporation will only reimburse Employee for such legal fees and expenses if,
in connection with enforcing any right of Employee pursuant to this Agreement,
either (i) a judgment has been rendered in favor of Employee by a duly
authorized court of law, or (ii) the Corporation and Employee have entered into
a settlement agreement providing for the payment to Employee of any or all
amounts due hereunder.
(d) Notwithstanding any other provision of this Agreement, if
the Employee's employment with the Corporation is terminated for any reason and
(i) the Employee has attained 65 years of age, (ii) for the 2-year period
immediately prior to such termination the Employee is employed in a bona fide
executive or a high policy-making position and (iii) the Employee is entitled
to
3
<PAGE> 4
an immediate nonforfeitable annual retirement benefit from a pension, profit
sharing, savings, or deferred compensation plan, or any combination of such
plans, of the Corporation, which equals in the aggregate, at least $44,000, the
Employee will not be entitled to any Termination Benefits hereunder.
FOURTH: CONFIDENTIALITY AND NON-COMPETITION:
(a) Employee shall not, during the term hereof or subsequent
to the Termination Date, divulge, furnish or make accessible
to anyone (otherwise than as consented to by the Corporation)
any knowledge or information, techniques, plans, trade or
business secrets or confidential information relating to the
business of the Corporation or with respect to any other
confidential or secret aspect of the business of the
Corporation, nor shall Employee make any use of the same for
his own purposes or for the benefit of anyone under any
circumstances; provided that, after the Termination Date,
these restrictions shall not apply to such knowledge,
techniques, plans, trade or business secrets or confidential
information which is then in, or subsequently becomes part
of, the public domain, except because of disclosure by
Employee without the Corporation's consent.
(b) Except with the consent of the Corporation and provided
the Corporation has made the payment required under clause (i) of paragraph (a)
of Paragraph Third, for a period of one year after the Termination Date,
Employee shall not engage in any business (whether as an officer, director,
owner, employee, partner or other direct or indirect participant and except for
and to the extent of any business engaged in by Employee at the Termination
Date and consented to by the Corporation) competing with any portion of the
steel business in which the Corporation is actively engaged in the United
States as of the Termination Date. For such period, Employee also shall not
interfere with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Corporation and any customer, supplier, lessor, lessee
or employee of the Corporation.
(c) It is the desire of the parties that the provisions of
this Paragraph Fourth be enforced to the fullest extent permissible under the
laws and public policies in each jurisdiction in which enforcement might be
sought. Accordingly, if any particular portion of this Paragraph Fourth be
adjudicated as invalid or unenforceable, this Paragraph Fourth shall be deemed
4
<PAGE> 5
amended to delete therefrom such portion so adjudicated, such deletion to apply
only with respect to the operation of this Paragraph Fourth in the particular
jurisdiction so adjudicating. If there is a breach or threatened breach of this
Paragraph Fourth by Employee, the Corporation shall be entitled to an
injunction restraining Employee from such breach, but nothing herein shall be
construed as prohibiting the Corporation from pursuing any other remedies for
such breach or threatened breach.
FIFTH: DISABILITY: If Employee is unable to render full-time
services to the Corporation of the character required to perform the duties of
his employment with the Corporation with reasonable efficiency for a period of
six consecutive months, commencing after the date hereof, by reason of illness,
disability or incapacity and the Corporation terminates Employee's employment
thereafter, Employee shall not be entitled to any Termination Benefits
hereunder; provided, that this Paragraph Fifth shall not apply in any case
where Employee, upon such termination, would not qualify under any program of
long-term disability benefits provided by the Corporation.
SIXTH: WAIVER OF BREACH: A waiver by the Corporation or
Employee of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by the
other party.
SEVENTH: ENTIRE AGREEMENT: This Agreement contains the entire
understanding and agreement between the parties and cannot be amended, modified
or supplemented in any respect, except by an agreement in writing signed by the
party against whom enforcement of any amendment, modification or supplement is
sought.
EIGHTH: SUCCESSORS AND ASSIGNS: This Agreement shall inure to
the benefit of and be binding upon the Corporation and its successors and
assigns including, without limitation, any corporation or other entity which
may acquire all or substantially all of the capital stock, assets and/or
business of the Corporation or with or into which the Corporation may be
consolidated or merged, and Employee, his heirs, executors, administrators and
legal representatives.
NINTH: GOVERNING LAW: This Agreement shall be governed by
the laws of the State of West Virginia.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day written below.
WEIRTON STEEL CORPORATION
Dated: December 20, 1995 By: /s/ RICHARD K.RIEDERER
------------ ----------------------------
Title: President & CEO
-------------------------
EMPLOYEE
Name: /s/ EARL E. DAVIS, JR.
--------------------------
Earl E. Davis, Jr.
Vice President and CFO
Address: R.D. 1, Box 478C
St. Joseph Drive
Steubenville, OH
6
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