CHANGE IN CONTROL
AGREEMENT
THIS AGREEMENT
(“Agreement”), made and entered into this 24th day of
July, 2008 (the “Effective Date”), by and between A.M.
Castle & Co., a Maryland corporation (the
“Company”), and Scott F. Stephens (the
“Executive”);
WHEREAS, the
Company wishes to assure itself of the continuity of the
Executive’s service and has determined that it is appropriate
that the Executive receive certain payments in the event that the
Executive’s employment is involuntarily terminated following
a change in control as more fully described below; and
WHEREAS, the
Company and the Executive accordingly desire to enter into this
Agreement on the terms and conditions set forth below;
NOW, THEREFORE, in
consideration of the premises and mutual covenants set forth
herein, IT IS HEREBY AGREED, by and between the parties as
follows:
1.
Relationship to Other Agreements . Unless and until a Change
of Control (as defined in paragraph 3) occurs, no benefits or other
payments shall be payable under this Agreement. If a Change of
Control occurs during the Term of this Agreement (as defined in
paragraph 2), this Agreement shall supersede that certain Severance
Agreement between the Company and the Executive, dated
July 24, 2008 (the “Severance Agreement), and any and
all other agreements between the Executive and the Company
regarding the payment of benefits upon a termination of the
Executive’s employment with the Company. If the Executive is
entitled to severance pay or other benefits pursuant to the terms
of this Agreement, the Executive shall not be eligible to receive
any severance pay or other benefits pursuant to the terms of any
other severance agreement or arrangement of the Company (or any
affiliate of the Company), including any arrangement of the Company
(or any affiliate of the Company) providing benefits upon
involuntary termination of employment.
2.
Agreement Term . The “Term” of this Agreement
shall begin on the Effective Date and shall continue through the
first one-year anniversary of the Effective Date; provided,
however, that as of the first one-year anniversary of the Effective
Date, and on each one-year anniversary thereafter, the Term shall
automatically be extended for one additional year unless, not later
than 30 days prior to such applicable anniversary date, either
party shall have given written notice to the other party that it
does not wish to extend the Term; and provided, further, that if a
Change in Control shall have occurred within 90 days of such
termination dates, the Term of this Agreement shall automatically
be deemed extended and shall continue for a period of twenty-four
calendar months beyond the calendar month in which such Change in
Control occurs.
3.
Certain Definitions . In addition to terms otherwise defined
herein, the following capitalized terms used in this Agreement
shall have the meanings specified below:
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(a)
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Cause . The term “Cause” shall
mean:
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(i) Executive’s willful theft or
embezzlement, or willful attempted theft of embezzlement, of
intangible assets or property of the Company;
(ii) Any
willful act knowingly committed by Executive that subjects the
Company or any officer of the Company to any criminal liability for
such act;
(iii) The
Executive’s engaging in egregious misconduct involving
serious moral turpitude to the extent that, in the reasonable
judgment of the Company, the Executive’s credibility and
reputation no longer conform to the standard of the Company’s
executives;
(iv) Gross
and willful misconduct by Executive that results in a material
injury to the Company;
(v) Willful dishonesty of Executive that
results in a material injury to the Company;
(vi) Willful malfeasance by Executive,
provided that such malfeasance, in fact, has an injurious effect on
the Company;
(vii) Executive’s willful
insubordination or willful refusal to perform assigned duties
provided that such assigned duties are consistent with the job
duties of the Executive and that the Executive shall have an
opportunity of 30 days after notice from the Company to cure
any such act or failure to act;
(viii) Executive’s material breach of
this Agreement which continues for 30 days after notice from
the Company.
(b) Change in Control . The term “Change in
Control” shall mean any of the following that occur after the
Effective Date:
(i) Ownership, whether direct or indirect,
of shares in excess of twenty-five percent (25%) of the outstanding
shares of common stock of the Company by a Person (as that term is
used in Section 13(d)(3) or 14(d)(2) of the Exchange Act)
other than Simpson Estates;
(ii) The
occurrence of any transaction relating to the Company required to
be described pursuant to the requirements of Item 5(f) of Schedule
14(a) of Regulation 14(a) of the Securities Act of 1934 as
promulgated by the Security and Exchange Commission; or
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(iii) Any
change in the composition of the Board of Directors of the Company
(the “Board”) over a two-year period which results in a
majority of the then present directors of the Company not
constituting a majority two years later, provided that in making
such determination, directors who are elected by or upon the
recommendation of the then current majority of the Board shall be
excluded.
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(a)
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Code . The term “Code” means
the Internal Revenue Code of 1986, as amended.
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(b)
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Good Reason . The term “Good Reason”
shall mean:
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(i)
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a
material diminution in the Executive’s base
compensation;
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(ii)
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a
material diminution in the Executive’s authority, duties, or
responsibilities;
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(iii)
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a
material diminution in the authority, duties, or responsibilities
of the person to whom the Executive is required to
report;
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(iv)
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a
material diminution in the budget over which the Executive retains
authority;
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(v)
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a
material change in the geographic location at which the Executive
must perform services for the Company; or
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(vi)
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any
other action or inaction that constitutes a material breach by the
Company of this Agreement.
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For purposes of
this Agreement, in order for a termination of employment by the
Executive to be considered to be on account of Good Reason, the
following conditions must be met by the Executive:
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(A)
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the
Executive provides written notice to the Company of the existence
of the condition(s) described in this subparagraph
(c) potentially constituting Good Reason within 90 days
of the initial existence of such conditions, and
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(B)
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the
Company fails to remedy the conditions within 30 days of such
notice, and
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(C)
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the
Executive actually terminates employment with the Company within
six months of providing the notice described in this subparagraph
(c).
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3
The term
“Termination Date” means the date on which the
Executive’s employment with the Company and its affiliates
terminates for any reason, including voluntary resignation. If the
Executive becomes employed by an entity into which the Company has
merged, or by the purchaser of substantially all of the assets of
the Company, or by a successor to such entity or purchaser, a
Termination Date shall not be treated as having occurred for
purposes of this Agreement until such time as the Executive
terminates employment with the successor and its affiliates
(including, without limitation, the merged entity or purchaser). If
the Executive is transferred to employment with an affiliate
(including a successor to the Company, and regardless of whether
before, on, or after a Change in Control), such transfer shall not
constitute a Termination Date for purposes of this Agreement except
if the termination of the Executive is for Good Reason, as provided
herein.
4.
Payments and Benefits . Subject to the terms and conditions
of this Agreement, if the Executive’s employment is
terminated during the Term of this Agreement after a Change of
Control (A) by the Company for a reason other than for Cause
or (B) by the Executive for Good Reason, the Executive shall
be entitled to:
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(a)
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lump sum severance payment equal to
two times the Executive’s annual base salary in effect
immediately prior to the Termination Date.
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(b)
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a
lump sum payment in an amount equal to the annual short-term
incentive compensation to which the Executive would have been
entitled had he continued in the employ of the Company through the
last day of the calendar year in which his Termination Date occurs
and had the applicable incentive target(s) for such calendar year
been met, pro-rated for the number of days during the calendar year
that the Executive was employed prior to the Termination
Date.
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(c)
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for
each performance cycle for which an award to the Executive is
outstanding under the Company’s long-term incentive
compensation plan and with respect to which the Executive has
performed services to his Termination Date, a lump sum payment in
an amount equal to the target number of shares granted to the
Executive in the long-term incentive compensation plan to which the
Executive would have been entitled had he continued in the employ
of the Company through the last day of such performance cycle
multiplied by the fair market value of the shares on the
Termination Date, pro-rated for the number of days during the
applicable performance cycle that the Executive was employed prior
to the Termination Date.
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(d)
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if
the Executive is vested in the Company’s tax-qualified
defined benefit plan at the time his employment terminates, he
shall be entitled to an amount equal to the actuarial equivalent of
the additional amount that Executive would have earned under such
plan had he accumulated three(3)
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additional continuous years of
service for benefit crediting purposes. Such amount shall be paid
to Executive in an actuarially equivalent cash lump sum at
Executive’s normal retirement age (as defined in such
tax-qualified defined benefit plan), unless the Executive chooses
the option provided under Code Section 409A as outlined in
paragraph 8 herein.
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(e)
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continued health benefit coverage
for the Executive and the Executive’s qualified beneficiaries
as provided in section 4980B of the Code (“COBRA”)).
Such COBRA continuation coverage shall be provided to the Executive
and the Executive’s qualified beneficiaries only if and to
the extent that the Executive (or his qualified beneficiaries, as
applicable) makes a timely and proper election to be covered under
COBRA and makes timely payments for the cost of such coverage;
provided, however, that such COBRA coverage shall be at the
Company’s expense for the period beginning on the day after
the Termination Date and ending on the earlier of (i) the
first anniversary of the Termination Date or (ii) the date on
which the Executive commences employment with another
employer.
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(f)
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for
the period beginning on the Termination Date and ending on the
earlier of (i) the first anniversary of the Termination Date
and (ii) the date on which the Executive commences employment
with another employer, the Executive shall be permitted the use of
a Company-owned or leased automobile on the terms and conditions
set forth in the Company’s Automobile Policy.
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For the
avoidance of doubt, the Executive shall not be entitled to any
benefits under this Agreement if his termination of employment
occurs on account of his death, disability, or voluntary
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