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EXHIBIT 10.8
FORM OF MANAGEMENT RETENTION AGREEMENT FOR
SENIOR EXECUTIVE OFFICERS
THIS MANAGEMENT RETENTION AGREEMENT is entered into on this 26th day of
April 2000, by and between OLYMPIC STEEL, INC. (the "Company"), and
("Employee").
WITNESSETH:
WHEREAS, Employee is an executive officer of the Company and an
integral part of its management;
WHEREAS, the Company desires to assure itself of continuity of
management in the event of any threatened or actual Change in Control (as
hereafter defined);
WHEREAS, the Company desires to provide inducements for Employee not to
engage in activity competitive with the Company;
WHEREAS, the Company desires to assure itself, in the event of any
threatened or actual Change in Control, of the continued performance of services
by Employee on an objective and impartial basis and without distraction by
concern for his employment status and security; and
WHEREAS, Employee is willing to continue in the employ of the Company
but desires assurance that his responsibilities and status as an executive of
the Company will not be adversely affected by any threatened or actual Change in
Control.
NOW, THEREFORE, the Company and Employee agree as follows:
1. OPERATION OF AGREEMENT. This Agreement shall be effective and
binding immediately upon its execution, but, anything in this Agreement to the
contrary notwithstanding, this Agreement shall not be operative unless and until
there has been a Change in Control while Employee is in the employ of the
Company. The term "Change in Control" shall mean, but not be limited to: (a) the
first purchase of shares pursuant to a tender offer or exchange (other than a
tender offer or exchange by the Company and/or any affiliate thereof) for all or
part of the Company's Common Shares of any class or any securities convertible
into such Common Shares and Employee has elected not to tender or exchange his
Common Shares; (b) the receipt by the Company of a Schedule 13D or other advice
indicating that a person is the "beneficial owner" (as that term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of twenty percent (20%) or
more of the Company's Common Shares calculated as provided in paragraph (d) of
said Rule 13d-3; (c) the date of approval by shareholders of the Company of an
agreement providing for any consolidation or merger of the Company in which the
Company will
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not be the continuing or surviving corporation or pursuant to which
shares of capital stock, of any class or any securities convertible into such
capital stock, of the Company would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of common
stock of all classes of the Company immediately prior to the merger would have
the same proportion of ownership of common stock of the surviving corporation
immediately after the merger; (d) the date of approval by shareholders of the
Company of any sale, lease, exchange, or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets of the
Company; (e) the adoption of any plan or proposal for the liquidation (but not a
partial liquidation) or dissolution of the Company; or (f) the date (the
"Measurement Date") on which the individual who at the beginning of a two
consecutive year period ending on the Measurement Date, ceases, for any reason,
to constitute at least a majority of the Board of Directors of the Company,
unless the election, or the nomination for election by the Company's
shareholders, of each new director during such two-year period was approved by
an affirmative vote of the directors (including Employee) then still in office
who were directors at the beginning of said two-year period. Notwithstanding the
foregoing, if (i) any person's ownership interest in the Company increases to
20% or more, solely as a result of the Company repurchase of its shares, or (ii)
Michael D. Siegal increases his ownership interest to 20% or more, such
ownership shall not be considered a Change in Control for purposes of
subparagraph (b) above.
Upon the occurrence of a Change in Control while Employee is in the
employee of the Company, this Agreement shall become operative.
2. EMPLOYMENT, CONTRACT PERIOD.
(a) Subject to the terms and conditions of this Agreement, upon the
occurrence of a Change in Control, the Company shall continue to employ Employee
and Employee shall continue in the employ of the Company for the period
specified in paragraph 2(b) (the "Contract Period"), in the position and with
the duties and responsibilities set forth in Section 3.
(b) The Contract Period shall commence on the date of occurrence of
a Change in Control and, subject only to the provisions of Section 5 and of
Section 6 below, shall continue for a period of two (2) years to the close of
business on the second anniversary of such date.
3. POSITION, RESPONSIBILITIES, DUTIES. At all times during the Contract
Period, Employee shall hold the position and have the duties and
responsibilities held by Employee as (CEO) or (COO) of the Company (Employee's
position as of the date of this Agreement) or such other position,
responsibilities, and duties as Employee may have had immediately before the
Change in Control occurred, or to which the Company and Employee may agree in
writing. Throughout the Contract Period, Employee shall devote
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substantially all of his time and attention during normal business hours to the
business and affairs of the Company, consistent with past practice, except for
reasonable vacations and periods of illness or incapacity, but nothing in this
Agreement shall preclude Employee from devoting reasonable periods of time to
charitable and community activities, and from managing his personal investments.
4. COMPENSATION DURING CONTRACT PERIOD.
(a) During the Contract Period, the Company shall pay Employee: (i)
a salary at a rate not less than Employee's base salary in effect immediately
before the occurrence of a Change in Control, or such higher rate as may be
determined from time to time by the Board of Directors of the Company, and (ii)
bonuses in amounts which are not less than the amounts Employee would have
received during the Contract Period if the determination of bonuses during the
Contract Period was made on the same basis as in effect immediately before the
occurrence of a Change in Control. Payments of direct compensation pursuant to
this paragraph 4(a) shall be made periodically on the same schedule as in effect
immediately before the occurrence of a Change in Control.
(b) During the Contract Period, Employee shall be and continue to be
a full participant in any and all benefit plans in which executives of the
Company participate and which are in effect immediately before the occurrence of
the Change in Control, including, without limitation, the Employees' 401(k)
Plan, Profit Sharing Plan, automobile allowance, country club dues and any group
insurance, medical, dental, hospitalization or life insurance, disability
insurance and other employee benefit plans, programs, or arrangements or any
equivalent successor plans, programs, or arrangements that may thereafter be
adopted by the Company and provide Employee at least the same reward
opportunities that were provided to him immediately before the occurrence of
such Change in Control (collectively, "Employee Benefits"). Nothing in this
Agreement shall impair or diminish the ability of the Company to modify, amend
or eliminate any Employee Benefit prior to a Change in Control.
(c) During the Contract Period Employee shall be entitled to
perquisites, including, without limitation, an office, secretarial and clerical
staff, in each case at least equal to those attached to his office immediately
before the occurrence of the Change in Control, as well as to reimbursement,
upon proper accounting, of reasonable expenses and disbursements incurred by him
in the course of his duties.
5. EFFECT OF DEATH OR DISABILITY.
(a) If Employee dies during the Contract Period, the Company shall
pay Employee's designated beneficiary (or, in the event of the decease of or
failure to designate a beneficiary, Employee's personal representative) the base
salary, provided for
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in paragraph 4(a) above for a 12-month period commencing with the date of death,
but without prejudice to any payments otherwise due Employee in respect of his
death.
(b) If, during the Contract Period and before his employment
hereunder is otherwise terminated, Employee is prevented due to illness or
accident from performing his duties under this Agreement for a period of six
consecutive months, the Contract Period shall be deemed to end at the end of
such six month period, but without prejudice to any payments otherwise due
Employee in respect of his disability. During the period of any such disability
before the end of the Contract Period, the Company shall pay Employee the
compensation provided for in Section 4, at the rate being paid at the onset of
the disability, reduced by any payments paid to Employee for the same period
because of disability under any disability or pension plan of the Company. If
employee recovers from his disability before the end of the Contract Period, he
shall be reinstated as an active employee for the remainder of the Contract
Period under and subject to all of the terms of this Agreement.
6. TERMINATION FOLLOWING A CHANGE IN CONTROL. Following a Change in
Control, Employee's employment may be terminated during the Contract Period:
(a) by the Company for "cause." For purposes of this Agreement,
"cause" means Employee (i) is convicted of a felony, a crime of moral turpitude
or any crime involving the Company (other than pursuant to actions taken at the
direction or with the approval of the Board of Directors); (ii) is found by
reasonable determination of the Board of Directors made in good faith, to have
engaged after the Change-in-Control in (A) willful misconduct, (B) willful or
gross neglect, (C) fraud, (D) misappropriation, or (E) embezzlement in the
performance of his duties hereunder; or (iii) breaches in any material respect
the terms and provisions of this Agreement and fails to cure such breach within
ten days following written notice from the Company specifying such breach. The
Company may terminate the Employee's employment hereunder on written notice
given to the Employee at any time following the occurrence of any of the events
described in clauses (i) and (ii) above and on written notice given to the
Employee at any time not less than 30 days following the occurrence of any of
the events described in clause (iii) above. The Employee shall have no right to
receive any compensation or benefit hereunder on and after the effective date of
the notice provided in the preceding sentence other than salary, bonus and other
benefits earned and accrued, and reimbursement under this Agreement for expenses
incurred, prior to the effective date of such notice.
(b) by Employee (i) for any reason, or no reason, within the
twelve-month (12) period commencing with the date of the Change in Control or
(ii) for "good reason" at any time during the balance of the Contract Period.
For purposes of this Agreement, "good reason" shall mean the occurrence of any
of the following:
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(i) any reduction in aggregate direct remuneration, or any material
reduction in position, responsibilities, or duties provided for
pursuant to this Agreement or in the aggregate of Employee Benefits,
perquisites, or fringe benefits provided for pursuant to this
Agreement;
(ii) any good faith determination by Employee that, as a result of a
Change in Control, he is unable to carry out the responsibilities,
duties, authorities, powers, or functions attached to his position as
contemplated by this Agreement;
(iii) imposition by the Company of any requirement that Employee's
principal place of work be relocated to a place more than 25 miles from
Employee's principal place of work immediately before a Change in
Control or that Employee travel in connection with his employment to a
significantly greater degree than was customary for Employee
immediately before a Change in Control; or
(iv) any liquidation, dissolution, consolidation, or merger of the
Company or transfer of all or a significant portion of its assets
unless a successor or successors (by merger, consolidation, or
otherwise) to which all or a significant portion of its assets have
been transferred shall have assumed all of the duties and obligations
of the Company under this Agreement.
Termination by Employee for good reason as provided in paragraph 6(b) shall not
be deemed a voluntary termination of employment by Employee for purposes of this
Agreement, any plan, practice, benefit, or arrangement of the Company, or any
other agreement between Employee and the Company.
7. SEVERANCE COMPENSATION. If, following the occurrence of a Change in
Control and during the Contract Period, the Company terminates Employee's
employment other than for cause pursuant to paragraph 6(a) above or Employee
terminates his employment pursuant to paragraph 6(b) above (the effective date
of any such termination being hereafter referred to as the "Termination Date"),
then, subject to Employee's obligations with respect to non-competition
(paragraph 9), the Company shall, as severance pay, pay to Employee and provide
him and his dependents, beneficiaries, and estate with the following:
(a) a lump-sum payment, payable within thirty (30) days after the
Termination Date, equal to 2.99 times the average of the last three full
calendar years' Base Salary, Bonus and dollar value of all Employee Benefits
(other than medical, dental, disability and life insurance coverage); and
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(b) during a two-year period after the date of termination of
employment, Employee and his dependents, beneficiaries, and estate
shall continue to be entitled to the medical, dental, disability and
life insurance coverage referred to in paragraph 4(b) and the
perquisites referred to in paragraph 4(c) as if Employee's employment
were not terminated and continued through the end of such two-year
period.
8. LIMITATION ON PAYMENTS. Notwithstanding any other provision of this
Agreement, in the event that any payment or benefits provided by the Company (or
an affiliate) to the Employee under or outside of the terms of this Agreement
would constitute a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), the payments or benefits
provided hereunder shall be reduced to the extent necessary so that no portion
thereof shall be subject to the excise tax imposed by Section 4999 of the Code,
but only if, by reason of such reduction, the Employee's net after tax benefit
shall exceed the net after tax benefit if such reduction were not made. "Net
after tax benefit" for purposes of this paragraph 8 shall mean the sum of:
(i) the total amount payable to the Employee under this Agreement,
PLUS
(ii) all other payments and benefits which the Employee receives or
is then entitled to receive from the Company and any of its
affiliates that would constitute a "parachute payment" within
the meaning of Section 280G of the Code, LESS
(iii) the amount of federal income taxes payable with respect to the
payments and benefits described in clauses (i) and (ii) above
calculated at the maximum marginal income tax rate for each
year in which such payments and benefits shall be paid to the
Employee (based upon the rate in effect for such year as set
forth in the code at the time of the first payment of the
foregoing), LESS
(iv) the amount of excise taxes imposed with respect to the
payments and benefits described in clauses (i) and (ii) above
by Section 4999 of the Code.
All calculations under this paragraph 8 shall be made by the Company in
consultation with its outside auditors, whose fees shall be paid by the Company.
9. NON-COMPETITION. During a period ending two (2) years following the
Termination Date, if Employee is receiving payments under paragraph 7(a),
Employee shall not take a management position with (i) any steel service center
or distributor within those portions of the United States wherein the Company is
conducting business on the
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Termination Date, or (ii) a business engaged in direct competition with any
other significant business carried on by the Company on the Termination Date,
nor shall he become a principal of or assume control of a business which so
engages in competition on or after the Termination Date; provided, however, that
in no event shall ownership of less than five percent (5%) of the equity of a
corporation, limited liability company or other business entity, standing alone,
be deemed competition with the Company within the meaning of this paragraph 9.
The sole remedy of the Company for breach of this non-competition covenant shall
be the forfeiture of the payments called for under paragraph 7.
10. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement
shall create any right or duty on the part of the Company or Executive to have
Employee remain in the employ of the Company before any Change in Control.
11. WITHHOLDING. The Company may withhold from any amounts payable
hereunder, all federal, state, city, or other taxes as may be required pursuant
to any applicable law, or government regulation or ruling.
12. LEGAL FEES. The Company shall pay and be solely responsible for any
and all attorneys' fees and related fees and expenses incurred by Employee as a
result of any claim, action, or proceeding arising out of the enforcement of, or
any challenge to the validity or enforceability of, this Agreement or any
provision hereof; provided, however, that the Company shall not be obligated to
pay any attorneys' fees or related fees and expenses incurred by Employee in
bringing an unsuccessful action to enforce this Agreement.
13. NOTICES. For purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given (i) when given by personal delivery, (ii) one business day after being
sent by overnight courier service, or (iii) five business days after being
mailed by U.S. registered or certified mail, return receipt request, postage
prepaid, to the addresses set forth below:
If to Company: Olympic Steel, Inc.
5096 Richmond Road
Bedford, Ohio 44146
If to Employee:
with a copy, in any
case to: Marc H. Morgenstern, Esq.
Kahn, Kleinman, Yanowitz & Arnson Co., L.P.A.
1301 East Ninth Street, Suite 2600
Cleveland, Ohio 44114
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14. GENERAL PROVISIONS.
(a) There shall be no right of set-off or counterclaim in respect of
any claim, debt, or obligation against any payment to Employee provided for in
this Agreement, other than as specifically provided in paragraph 9 above.
(b) This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in exercising
any rights, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right, power or privilege
nor any single or partial exercise of any such right, power or privilege,
preclude any other or further exercise thereof or the exercise of any other such
right, power or privilege.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio without regard to principles of conflict of
law.
(d) In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall remain in full force and effect to the
fullest extent permitted by law. In the event that any provision hereof shall be
determined to be invalid or unenforceable, the parties will negotiate in good
faith to replace such provision with another provision which will be valid or
enforceable which is as close as practicable to the provision held invalid or
unenforceable.
(e) This Agreement shall be binding upon and inure to the benefit of
Employee, his heirs, and legal representative, the Company, and any successor
organization or organizations which shall succeed to substantially all of the
business and property of the Company, whether by means of merger, consolidation,
acquisition of substantially all of the assets of the Company or otherwise,
including by operation of law.
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IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement on the day and year first above written.
OLYMPIC STEEL, INC.
By:
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Name:
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Title:
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Employee
