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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
AMENDMENT NO. 1
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended December 31, 1997
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: 33-70578
REPUBLIC ENGINEERED STEELS, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 52-1635079
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
410 OBERLIN ROAD SW
MASSILLON, OHIO 44648
(330) 837-6000
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(Address, Including Zip Code, and Telephone Number, Including Area Code
of Registrant's Principal Executive Offices)'
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark 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 / / No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 19,706,578 shares of common
stock, $.01 par value, as of January 30, 1998.
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EXPLANATORY NOTE
This Amendment No. 1 on Form 10-Q/A amends and restates in their entirety
the following items of Part II of the Quarterly Report on Form 10-Q of Republic
Engineered Steels, Inc. for the fiscal quarter ended December 31, 1997: Item 5.
Other Information and Item 6. Exhibits and Reports on Form 8-K.
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
On October 23, 1997 the Board of Directors of Republic Engineered
Steels, Inc. (the "Company") approved a Severance Agreement and a Change of
Control Agreement for the six most senior executive officers of the
Company. The officers for whom such agreements were approved were Russell
W. Maier, Harold V. Kelly, James B. Riley, Joseph F. Lapinsky, Stephen S.
Higley and John C. Vaught (each a "Senior Manager" and, collectively, the
"Senior Managers").
Each Severance Agreement provides that, in the event that the Company
terminates the employment of a Senior Manager other than for disability or
Cause (as defined), the Senior Manager is entitled to a lump sum payment
equal to 200% of his total compensation during the year preceding the
termination of his employment (300% in the case of Mr. Maier). In the
event that a Senior Manager's employment is terminated by the Company for
disability, the Senior Manager is entitled to benefits provided by the
Company's disability plan. A Senior Manager is not entitled to the
benefits under his Severance Agreement if he has benefits under a Change of
Control Agreement.
Each Change of Control Agreement provides that the Senior Manager
party thereto is entitled to the benefits provided for by the Severance
Agreement to which he is a party upon a termination of his employment by
the Company within 24 months following a Change of Control (as defined)
other than for Cause (as defined) or disability or upon a termination by
the Senior Manager of his employment for Good Reason (as defined) within 24
months following a Change of Control (as defined). Each Change of Control
Agreement also provides that Senior Manager's outstanding stock options
will automatically vest upon such a termination of employment. To the
extent that the payments provided to the Senior Manger under the Change of
Control Agreement are subject to an excise tax, the Change of Control
Agreements provide that the Company is obligated to make an additional lump
sum payment to make the Senior Manager whole. The Change of Control
Agreements provide that the Company is required to deposit in a "rabbi
trust" within ten days after a Change of Control the total amount necessary
to make the payments contemplated by the Change of Control Agreements. The
Change of Control Agreements provide that, in consideration of the
foregoing payments, the Senior Manager agrees to be bound by a covenant not
to compete for the one year period following termination of employment and
to
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provide the Company with a release from all employment related claims.
Reference is made to the form of Severance Agreement and the form of
Change of Control Agreement filed herewith as Exhibits for the full terms
thereof. Terms specified as being "(as defined)" are used as defined in
the respective agreements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 - Form of Severance Agreement.
10.2 - Form of Change of Control Agreement.
27 - Financial Data Schedule, incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1997.
(b) Report on Form 8-K
The Company did not file any Current Reports on Form 8-K during the
fiscal quarter ended December 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned thereunto duly authorized.
REPUBLIC ENGINEERED STEELS, INC.
By: /s/ Russell W. Maier
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Russell W. Maier
President and
Chief Executive Officer
By: /s/ James Burns Riley
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James Burns Riley
Executive Vice President
and Chief Financial Officer
Date: July 9, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
10.1 Form of Severance Agreement.
10.2 Form of Change of Control Agreement.
27 Financial Data Schedule, incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 1997.
</TABLE>
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FORM OF
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT dated as of _________ __, 1997 between REPUBLIC
ENGINEERED STEELS, INC., a Delaware corporation (the "Company"), and ________
________ (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company recognizes continued contributions by Employees to the
growth of the Company and in appreciation and recognition of Employee's efforts,
the Company desires to provide Employee with an incentive to remain in the
Company's employ; and
WHEREAS, the Company has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of the
Employee; and
WHEREAS, the Company desires to induce the Employee to remain in the
employment of the Company by providing for certain severance benefits; and
WHEREAS, the Employee desires to continue employment with the Company
subject to the terms and conditions hereinafter provided.
NOW, THEREFORE, the parties hereto intending to be legally bound hereby
agree to the following.
1. DEFINITIONS. The capitalized terms used herein shall have the
meanings ascribed to them below.
"Cause" shall mean (i) willful or gross neglect by Employee of his
duties and other obligations to the Company that is not cured within fifteen
(15) days after Employee receives notice thereof, (ii) willful misconduct in the
performance by Employee of his duties, (iii) the commission of any act of fraud,
misappropriation or embezzlement in the performance by Employee of his duties,
(iv) the diversion of any corporate opportunity of the Company, or (v) the
commission of a felony resulting in the Employee's conviction, by trial or plea,
and which, as determined in good faith by the Board of Directors of the Company,
constitutes a crime involving moral turpitude.
"Disability" shall mean Disability as defined in the Disability Plan.
"Disability Plan" shall mean the Company's Salaried Employees'
Disability Income Plan as in effect on the date hereof.
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2. TERM. This Agreement shall commence on the date hereof and shall
terminate after Employee's employment has terminated and the Company has fully
performed all of its obligations resulting therefrom, if any.
3. TERMINATION AND DISABILITY.
(a) In the event the Employee becomes Disabled, the Employee shall
receive benefits that at the least are at the levels and on the terms provided
in the Disability Plan.
(a) In the event the Company wishes to terminate the Employee (which
for purposes hereof shall include a layoff for an indefinite term other than as
the result of a Disability), the Company shall communicate such termination by a
Notice of Termination and, if the termination is for Cause, the Notice of
Termination shall indicate the termination provisions in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee. Termination by the
Company shall not be effective without a Notice of Termination.
(b) The termination of the Employee by the Company hereunder shall be
effective on the date on which a Notice of Termination is given (hereinafter the
"Date of Termination").
4. SEVERANCE COMPENSATION UPON CERTAIN TERMINATIONS OF EMPLOYMENT BY THE
COMPANY.
(a) In the event that the Company shall terminate the Employee's
employment other than for Disability or Cause, THEN the Company shall pay to
the Employee as severance compensation (hereinafter "Severance Compensation")
an amount equal to two (2) [three (3)] times the Employee's total
compensation for the twelve (12) month period immediately preceding the Date
of Termination. The Employee's total compensation shall mean (i) the
Employee's annual base salary in effect on the Date of Termination, which
base salary shall include for purposes of this Agreement any supplemental
amount payable under the Company's program known as "Target 60", (ii) the
annual amount then paid by the Company to lease an automobile for Employee or
the amount of any automobile allowance provided to Employee, (iii) the annual
cost of life insurance then furnished to him by the Company, and (iv) the
annual cost to the Company of any other benefits then provided to Employee
that are not required to be provided under this Agreement after the Date of
Termination (including without limitation under any cafeteria plan or other
supplemental benefit program) and the amount contributed by the Company on
behalf of the Employee for the calendar year ending immediately prior to the
Date of Termination to any pension plan of the Company The Severance
Compensation shall be due and payable in a lump sum, in cash, on the fifth
day following the Date of Termination. In addition to the payment of
Severance Compensation hereunder, in the event that the Company shall
terminate the Employee's employment other than for Disability or Cause,
Employee, together with his dependents, will continue following such
termination of employment to participate fully, with no contribution to
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the cost required of him or them, in all accident and health plans maintained or
sponsored by the Company immediately prior to the Date of Termination, or to
receive substantially the equivalent coverage (or the full value thereof in
cash) from the Company, until the second anniversary of the Date of Termination.
(b) If (1) the Employee dies during his employment, (2) the Employee
voluntarily resigns as an employee of the Company, or (3) the Company terminates
the Employee's employment for Cause (as defined herein) by a Notice of
Termination in accordance with subsection (a) of this Section, then the
Company's sole obligation hereunder shall be payment to the Employee (or his
representative) of any compensation due the Employee through the Date of
Termination, and no further payments of any kind shall thereafter be required to
be made by the Company to the Employee hereunder.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL
RIGHTS.
(a) The Employee shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Employee as the
result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Employee's existing rights, or rights which would accrue solely as
a result of the passage of time, under any benefit plan, incentive plan,
securities or option plan, or bonus plan. Notwithstanding the foregoing, in the
event that Employee has any rights under the Change of Control Agreement of even
date herewith between Employee and the Company as a result of the termination of
Employee's employment, then this Agreement shall be of no force and effect with
respect to said termination and the Change of Control Agreement shall set forth
all of the rights and obligations of the parties with respect to the termination
of employment.
6. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and or assets of the Company, to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession or assignment had
taken place. Any failure of the Company to obtain such agreement prior to the
effectiveness of any such succession or assignment shall be a material breach of
this Agreement and shall be deemed to be a termination by the Company of
Employee's employment with the Company without Cause. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the Agreement provided for in this Section 6 or which otherwise
becomes
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bound by all the terms and provisions of this Agreement by operation of law. If
at any time during the term of this Agreement the Employee is employed by any
corporation a majority of the voting securities of which is then owned by the
Company, "Company" as used in Sections 3 and 4 hereof shall in addition include
such employer. In such event, the Company agrees that it shall pay or shall
cause such employer to pay any amounts owed to the Employee pursuant to Section
4 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Employee's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Employee's devisee, legatee, or other designee or, if
there be no such designee, to the Employee's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered, sent by recognized overnight
delivery service, charges prepaid or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company:
Republic Engineered Steels
410 Oberlin Road, S.W.
Massillon, OH 44648-0579
ATTN:
----------------------
If to the Employee:
---------------------------
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or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
8. AMENDMENT, WAIVER. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Employee and the Company. No waiver by either party
hereto at any time of any breach of the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
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9. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
REPUBLIC ENGINEERED STEELS, INC.
By
-----------------------------------
Title:
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---------------------------------------
Employee
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FORM OF
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made this ____day of ___________, 1997, by and between _______
________ ("Executive") and Republic Engineered Steels, Inc. (the "Company"),
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders for the
Company to agree to provide benefits under circumstances described below to
Executive; and
WHEREAS, the Board recognizes that the possibility of a change of control
of the Company, followed by a termination of the Executive's employment or a
reduction in his responsibility or compensation, is unsettling to the Executive
and wishes to make arrangements at this time to help assure his continuing
dedication to his duties to the Company and its shareholders, notwithstanding
any attempts by outside parties to gain control of the Company; and
WHEREAS, the Board believes it important, should the Company receive
proposals from outside parties, to enable the Executive, without being
distracted by the uncertainties of his own employment situation, to perform his
regular duties;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. If, within 24 months following a Change of Control that occurs at any
time prior to the fifth anniversary of the date hereof, Executive's employment
with the Company or any successor thereto by merger or acquisition is terminated
(a) by the Company or successor other than for "Cause" (as defined in paragraph
3 below) or as a result of the death or total disability, or (b) by Executive
for "Good Reason" (as defined in paragraph 3 below), then:
i. The Company will pay to Executive within 30 days of such
termination of employment a lump-sum cash payment equal to 200%
[300%] of the aggregate of (A) his then-current annual base
salary (or, if his base salary has been reduced at any time
after the Change of Control, his base salary in effect prior
to the reduction), which base salary shall include for
purposes of this Agreement any supplemental amount payable
under the Company's program known as "Target 60", (B) the
annual amount then paid by the Company to lease an automobile
for Executive or the amount of any automobile allowance provided
to Executive, (C) the annual cost of life insurance then
furnished to him by the Company and (D) the annual cost to the
Company of any other benefits then provided to Executive that
are not required to be provided under this Agreement (including
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under any cafeteria plan or other supplemental benefit program)
and the amount contributed by the Company on behalf of the
Executive for the calendar year ending immediately prior to the
termination to any pension plan of the Company.
ii. All of Executive's outstanding stock options, restricted shares
and other similar incentive interests and rights that have not
vested but that would have vested had his employment continued
until the second anniversary of such termination will become
immediately and fully vested.
iii. Executive, together with his dependents, will continue following
such termination of employment to participate fully, with no
contribution to the cost required of him or them, in all
accident and health plans maintained or sponsored by the Company
immediately prior to the Change of Control, or receive
substantially the equivalent coverage (or the full value thereof
in cash) from the Company, until the second anniversary of such
termination.
iv. The Company will promptly reimburse Executive for any and all
legal fees and expenses incurred by him as a result of such
termination of employment, including without limitation all fees
and expenses incurred in connection with efforts to enforce the
provisions of this Agreement.
2. A Change of Control will occur for purposes of this Agreement if
a. any individual, corporation, partnership, company, or other
entity (a "Person"), which term shall include a "group" (within
the meaning of section 13(d) of the Securities Exchange Act of
1934 (the "Act")) who does not currently own directly or
indirectly 20% or more of the combined voting power of the
Company's outstanding securities becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Act) of securities of the
Company representing more than 20% of the combined voting power
of the company's then-outstanding securities.
b. the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the
stockholders approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets;
PROVIDED, HOWEVER, that if the merger, plan of liquidation or
sale of substantially all assets is not consummated following
such stockholder
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approval and the transaction is abandoned, then the Change of
Control shall be deemed not to have occurred.
c. the Board of Directors of the Company is no longer selected in
accordance with the qualification standards (the "Qualification
Standards") set forth in the Certificate of Incorporation as in
effect on the date hereof and a change occurs in its composition
that results in fewer than a majority of the directors being
Continuing Directors, which term shall mean for purposes of this
Agreement, persons who either (i) were Group C Directors
selected in accordance with the Qualification Standards or (ii)
are elected, or nominated for election, with the affirmative
vote of at least a majority of the directors of the Company who
are Continuing Directors described in clause (i) or this clause
(ii) of this sentence or at the time of such election or
nomination.
d. the Company shall after the date of this Agreement issue common
stock in an aggregate amount equal to or greater than 35% of the
number of shares of common stock outstanding on the date of this
Agreement (after making such adjustments as are appropriate to
account for stock splits, reverse stock splits, stock dividends
or other similar events) or the Company shall after the date of
this Agreement otherwise issue voting securities or securities
convertible into voting securities that give the holder thereof,
assuming full conversion of the convertible securities, combined
voting power that in the aggregate is equal to or greater than
35% of the voting power of the Company's common stock on the
date of this Agreement (after making such adjustments as are
appropriate to account for stock splits, reverse stock splits,
stock dividends or other similar events).
e. both (i) (A) any division or subsidiary of the Company with
respect to which the Executive is the chief executive officer or
sole managing officer sells to a party or parties that are not
Affiliates of the Company (as the term Affiliate is defined in
the Act) or otherwise disposes of all or substantially all of
its assets, (B) any joint venture that the Company controls
which is managed by the Executive sells to a party or parties
that are not Affiliates of the Company or otherwise disposes of
all or substantially all of its assets or (C) the Company sells
or transfers to a party or parties that are not Affiliates of
the Company more than 50% of the combined voting power of any
such subsidiary or its control of any such joint venture or
effects a merger, consolidation or other similar transaction
involving any such subsidiary having such an effect and (ii) the
Company or one of its Affiliates does not offer to employ the
Executive after the transaction in a substantially equivalent
position on substantially similar terms as are in effect prior
to the transaction, it being understood that a position may be
substantially equivalent even if there is a change in title, so
long as the
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position is an officer level position, or in the areas of the
business for which the Executive is responsible.
3. a. "Cause" means only:
(i) the Executive's willful and substantial misconduct with
respect to the business and affairs of the Company, or any subsidiary or
affiliate thereof;
(ii) the Executive's gross neglect of duties, dishonesty,
deliberate disregard of any material rule or policy of the Company or the
commission by the Employee of any other action with the intent to injure the
Company, or any subsidiary or affiliate thereof;
(iii) the Executive's commission of an act involving
embezzlement or fraud or commission of a similar felony.
b. "Good Reason" means any one or more of the following occurring
without Executive's express written consent:
(i) Failure by the Company to maintain Executive in
substantially equivalent positions, with substantially equivalent titles, that
he held immediately prior to the Change of Control or downgrading of his
responsibilities or authority. If, following the Change of Control, the Company
is part of a controlled group of entities, Executive's responsibilities and
authority will be deemed for this purpose to have been reduced unless he is
given and retains the same responsibilities and authority with the entity that
controls the group as he held with the Company immediately prior to the Change
of Control.
(ii) Reduction of Executive's base salary.
(iii) Material reduction in the health, disability or life
insurance benefits that the Company was providing Executive immediately prior to
the Change of Control.
(iv) Failure by the Company to provide Executive with the
opportunity to participate in any executive compensation or benefit plan or
program that is then generally available to other senior executives of the
Company.
(v) Relocation of Executive's principal place of business
more than 30 miles from the its location immediately prior to the Change of
Control.
4. In the event that it is determined that any payment or benefit
provided by the Company to or for the benefit of Executive, either under this
Agreement or otherwise, will be subject to the excise tax imposed by section
4999 of the Internal Revenue Code or any successor provision ("section 4999"),
the Company will, prior to the date on which any amount of the excise tax must
be paid or withheld, make an additional lump-sum payment (the "gross-up
payment") to Executive. The gross-up payment will be sufficient, after giving
effect to all federal, state and other taxes and charges (including interest and
penalties, if any) with respect to the gross-up
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payment, to make Executive whole for all taxes (including withholding taxes) and
any associated interest and penalties, imposed under or as a result of section
4999.
All determinations to be made under this paragraph 4 shall be made at the
Company's cost and expense by the firm that serves as the Company's independent
public accountant immediately prior to the Change of Control, or if such firm is
unwilling or unable to make such determination by such other certified public
accounting firm reasonably acceptable to the Company as may be designated by the
Executive in writing (in either case, the "Firm"), which shall provide
reasonable supporting calculations to the Company and the Executive. If the
Internal Revenue Service asserts a claim that, if successful, would require the
Company to make a gross-up payment or an additional gross-up payment, the
Company and Executive will cooperate fully in resolving the controversy with the
Internal Revenue Service. The Company will make or advance such gross-up
payments as are necessary to prevent Executive from having to bear the cost of
payments made to the Internal Revenue Service in the course of, or as a result
of, the controversy. The Firm will determine the amount of such gross-up
payments or advances and will determine after final resolution of the
controversy whether any advances must be returned by Executive to the Company.
The Company will bear all expenses of the controversy and will gross Executive
up for any additional taxes that may be imposed upon Executive as a result of
its payment of such expenses.
5. If the Company fails to timely make any payment to the Executive that
is required to be made hereunder, the amount not timely paid shall bear interest
after the date it is due hereunder at the rate of 18% per annum until it is
paid.
6. Within ten (10) days after a Change of Control Date, the Company shall
deposit in a trust designed in accordance with Revenue Procedure 92-64 or any
successor thereto having a trustee independent of the Company and any successor
thereto an amount equal to the total amount necessary to make the payments
contemplated by paragraph 1. The Executive shall be entitled to receive funds
held in such trust from the trustee upon the Executive's delivery to the trustee
of a written certification by the Executive that a termination of his employment
has occurred and that as a result, the Executive is entitled to payment under
paragraph 1 of this Agreement. Any funds which the Executive so receives shall
be credited against the amount owed by the Company to the Executive pursuant to
this agreement. The Company shall pay any and all expenses of establishing and
maintaining the trust.
7. If the Company is at any time before or after a Change of Control
merged or consolidated into or with any other corporation or other entity
(whether or not the Company is the surviving entity), or if substantially all of
the assets thereof are transferred to another corporation or other entity or if
a transfer of assets or voting power or control described in subparagraph e. of
paragraph 2 occurs, the provisions of this Agreement will be binding upon and
inure to the benefit of the corporation or other entity resulting from such
merger or consolidation or the acquirer of such assets, voting power or control,
and this paragraph 7 will apply in the event of any subsequent merger or
consolidation or transfer of assets, voting power or control.
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In the event of any merger, consolidation, or sale of assets, voting
power or control described above, nothing contained in this Agreement will
detract from or otherwise limit Executive's right to participate or privilege of
participation in any stock option or purchase plan or any bonus, profit sharing,
pension, group insurance, hospitalization, or other incentive or benefit plan or
arrangement which may be or become applicable to executives of the corporation
resulting from such merger or consolidation or the corporation acquiring such
assets, voting power or control of the Company.
In the event of any merger, consolidation or sale of assets, voting
power or control described above, references to the Company in this Agreement
shall unless the context suggests otherwise be deemed to include the entity
resulting from such merger or consolidation or the acquirer of such assets,
voting power or control of the Company.
8. All payments required to be made by the Company hereunder to Executive
or his dependents, beneficiaries, or estate will be subject to the withholding
of such amounts relating to tax and/or other payroll deductions as may be
required by law.
9. There shall be no requirement on the part of the Executive to seek
other employment or otherwise mitigate damages in order to be entitled to the
full amount of any payments and benefits to which Executive is entitled under
this Agreement, and the amount of such payments and benefits shall not be
reduced by any compensation or benefits received by Executive from other
employment.
10. Nothing contained in this Agreement shall be construed as a contract
of employment between the Company and the Executive, or as a right of the
Executive to continue in the employ of the Company, or as a limitation of the
right of the Company to discharge the Executive with or without Cause; the
Executive may, subject to the terms and conditions of this Agreement, have the
right to receive upon termination of his employment the payments and benefits
provided in this Agreement and shall not be deemed to have waived any rights he
may have either at law or in equity in respect of such discharge.
11. In consideration, among other things, for the provisions of paragraph
9 hereof, the Executive agrees that during a period commencing on the date (the
"Date of Termination") Executive's employment with the Company is terminated in
a manner that entitles Executive to the payments and benefits described in
paragraph 1 hereof and ending one year thereafter (the "Covenant Period"), the
Executive will not, directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control of, or be
connected as an officer, employee, partner, director or otherwise with, or
(other than through the ownership of not more than five percent (5%) of the
voting stock of any publicly held corporation) have any financial interest in,
or aid or assist anyone else in the conduct of, a business which at the time of
such termination competes in the United States with a business conducted by the
Company or by any group, division or subsidiary of the Company (collectively
with the Company, the "Company Group") on the Date of Termination.
Notwithstanding the foregoing, employment of Executive by a business that
competes with the business of the Company Group, or retention of Executive as a
consultant by any such business shall not violate this paragraph if Executive's
duties and
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actions for the business are solely for groups, divisions or subsidiaries that
are not engaged in a business that competes with a business conducted by the
Company Group. No business shall be deemed to be a business conducted by the
Company Group unless the Company Group was engaged in the business at the Date
of Termination and continues to be engaged in the business and at least
twenty-five percent (25%) of the Company's consolidated gross sales and
operating revenues, or net income, is derived from, or at least twenty-five
percent (25%) of the Company's consolidated assets are devoted to, such business
and no business shall be deemed to compete with a business conducted by the
Company Group unless at least twenty-five percent (25%) of the consolidated
gross sales and operating revenues, or net income, of any consolidated group
that includes the business, is derived from, or at least twenty-five percent
(25%) of the consolidated assets of any such consolidated group are devoted to,
such business.
12. During the Covenant Period, Executive shall not solicit on behalf of
himself or any other person the services, as employee, consultant or otherwise,
of any person who on the Date of Termination is employed by the Company Group,
whether or not such person would commit any breach of his contract of service in
leaving such employment, except for any employee (a) whose employment is
terminated by the Company Group or any successor thereof prior to such
solicitation of such employee, (b) who initiates discussions regarding such
employment without any solicitation by Executive, (c) who responds to any public
advertisement unless such advertisement is designed to target, or has the effect
of targeting, employees of the Company Group, or (d) who is initially solicited
for a position other than by Executive and without any suggestion or advice from
Executive. Nothing herein shall restrict businesses which employ Executive or
retain him as an executive from soliciting from time to time employees of the
Company Group, if (x) such solicitation occurs in the ordinary course of filling
the business's employment needs, and (y) the solicitation is made by persons at
the business other than Executive who have not become aware of the availability
of any specific employees as a result of the advice of Executive.
13. Paragraphs 11 and 12 shall be of no force or effect if Executive's
employment is terminated and he is not as a result thereof entitled to any
payments or benefits under paragraph 1 hereof or if, within twenty (20) days
after the date of the termination of his employment, he waives his right to such
payments and benefits in writing.
14. It shall be a condition to Executive's right to receive any payments
under paragraph 1 hereof that Executive shall have executed and delivered to the
Company after the termination of his employment a release in substantially the
form attached hereto as Exhibit A, as such form may be changed by the Company to
reasonably account for changes in any applicable law, and that any applicable
waiting periods for the effectiveness of the release shall have elapsed and
expired.
15. No amendment, change, or modification of this Agreement may be made
except in writing, signed by both parties.
16. Payments made by the Company pursuant to this Agreement shall be in
lieu of payments and other benefits, if any, to which Executive may be entitled
under any other severance agreement or severance plan of the Company.
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17. The provisions of this Agreement shall be binding upon and shall inure
to the benefit of Executive, his executors, administrators, legal
representatives and assigns, and the Company and its successors.
18. The validity, interpretation, and effect of this Agreement shall be
governed by the laws of the State of Delaware.
19. The Company shall have no right of set-off or counterclaims, in
respect of any claim, debt, or obligation, against any payments to Executive,
his dependents, beneficiaries or estate provided for in this Agreement.
20. The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
21. No right or interest to or in any payments or benefits hereunder shall
be assignable by the Executive; provided, however, that this provision shall not
preclude him from designating one or more beneficiaries to receive any amount
that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the person or
persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to his
estate. The term "beneficiaries" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount, or if no
beneficiary has been so designated, the legal representative of the Executive's
estate.
22. No right, benefit, or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt, or obligation, or to
execution, attachment, levy, or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void, and of no effect.
IN WITNESS WHEREOF, Republic Engineered Steels, Inc. and Executive have
each caused this Agreement to be duly executed and delivered as of the date set
forth above.
REPUBLIC ENGINEERED STEELS, INC.
By:
----------------------------------
Title:
-------------------------------
Agreed:
- -----------------------------
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EXHIBIT A
RELEASE
In consideration of the payments the undersigned Executive is to receive
under the Change of Control Agreement dated as of __________, 1997 between
Executive and Republic Engineered Steels, Inc. (the "Company"), Executive does
for himself, his heirs, executors and assigns, forever release and discharge
Company, its stockholders, directors, officers, employees, agents and
representatives, successors and assigns (hereafter collectively the "Persons")
from any claims Executive may now have, or will have, against them in connection
with his employment or termination from employment with the Company. Executive
confirms and agrees that it is his intention by this general release to release
the Persons from any and all claims, demands, damages, actions, grievances or
suits of any and every nature, known or unknown, from the commencement of his
employment with the Company to the date of this release, including, but not
limited to, claims arising under federal or state statutes, including claims
brought under the Age Discrimination in Employment Act, as amended, 29 U.S.C.
Sections 621-634, the Americans with Disabilities Act, as amended, 42 U.S.C.
Sections 12101 ET SEQ., Title VII of the Civil Rights Act of 1964, as amended,
42 U.S.C. Sections 2000e ET SEQ., the Civil Rights Act of 1991, 42 U.S.C.
Sections 1981 ET SEQ., the Labor Management Relations Act of 1947, as amended,
29 U.S.C. Sections 141 ET SEQ., or at common law, for wrongful discharge, breach
of contract, or any other claims growing out of any legal restriction on the
Company's right to terminate its employees and further including, without
limitation, any claim for disability compensation, bonuses, vacation or
severance pay. Notwithstanding the foregoing, this general release shall not
release the Company from its obligations under the Change of Control Agreement.
THIS RELEASE AFFECTS CERTAIN RIGHTS EXECUTIVE MAY HAVE UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED, AND THEREFORE, EXECUTIVE SHOULD
CONSULT WITH AN ATTORNEY BEFORE EXECUTING THIS RELEASE. BY EXECUTING THIS
RELEASE, EXECUTIVE CERTIFIES THAT IN ACCORDANCE WITH 29 U.S.C. SECTION 626(f),
EXECUTIVE HAS CAREFULLY READ THE FOREGOING RELEASE, KNOWS AND UNDERSTANDS THE
CONTENTS AND EFFECTS THEREOF, AND IS EXECUTING THIS RELEASE KNOWINGLY,
VOLUNTARILY, FREELY AND AFTER THE OPPORTUNITY FOR CONSULTATION WITH COUNSEL.
EXECUTIVE FURTHER CERTIFIES THAT THE COMPANY HAS GIVEN EXECUTIVE THE OPPORTUNITY
TO CONSIDER THIS RELEASE FOR A PERIOD OF TWENTY-ONE DAYS PRIOR TO ITS EXECUTION,
AND THAT NEITHER THE COMPANY, NOR ANY OF ITS OFFICERS, DIRECTORS, STOCKHOLDERS,
EMPLOYEES, AGENTS, REPRESENTATIVES, AFFILIATES, SUBSIDIARIES, PARENT OR HOLDING
COMPANIES, SUCCESSOR OR ASSIGNS, NOR ANY OF ITS OFFICERS, EMPLOYEES, AGENTS OR
REPRESENTATIVES HAVE MADE ANY REPRESENTATIONS CONCERNING THE TERMS, CONDITIONS
OR EFFECTS OF THIS RELEASE OTHER THAN THOSE CONTAINED HEREIN. FURTHERMORE, THE
PARTIES ACKNOWLEDGE THAT THIS RELEASE MAY BE REVOKED BY EXECUTIVE WITHIN SEVEN
(7) DAYS FOLLOWING THE EXECUTION HEREOF, BY SENDING WRITTEN NOTICE OF REVOCATION
VIA CERTIFIED MAIL TO THE COMPANY, IN WHICH CASE THE COMPANY SHALL HAVE NO
OBLIGATION HEREUNDER.
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