Exhibit
10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this “
Agreement ”) dated as of February 3, 2009
(the “ Effective Date ”), is between
RathGibson, Inc. (the “ Company ”) and Jon Smith
(the “ Executive ”) (together, the “
Parties ”).
WHEREAS, the Parties wish to establish
the terms of the Executive’s employment with the
Company.
WHEREAS, for purposes of this Employment
Agreement, an “ Affiliate ” of the Company is
any other entity that, either directly or indirectly, the Company
controls, the Company is controlled by, or the Company is under
common control with.
Accordingly, the Parties agree as
follows:
1.
Employment and Acceptance
. The Company shall employ the
Executive, and the Executive shall accept employment with the
Company, subject to the terms of this Agreement, on the Effective
Date.
2.
Term . Subject to earlier termination pursuant to
Section 5 of this Agreement, the employment relationship
hereunder shall continue from the Effective Date until February 3,
2010 (the “ Initial Term ”) and shall extend for
successive one (1) year terms thereafter, unless any Party shall
have given ninety (90) days written notice to the other, prior to
the expiration of the Initial Term or extended term, that it does
not wish to extend the Term. As used in this Agreement, the
“ Term ” shall refer to the period beginning on
the Effective Date and ending on the date the Executive’s
employment terminates in accordance with this Section 2 or
Section 5 . In the event that the Executive’s
employment terminates, the Company’s obligation to continue
to pay all Base Salary (defined below in Section 4.1 ), any
Bonus (defined below in Section 4.2 ) and any other benefits
then accrued shall terminate except as may be provided for in
Section 6 of this Agreement.
3.
Duties and Title
.
3.1
Title . The Executive shall serve in the capacity of
Chief Financial Officer, and shall report to the Chief Executive
Officer of the Company (the “ Chief Executive
Officer ”), who is currently Michael G. Schwartz, or such
other person as shall be designated by the Chief Executive Officer
from time to time.
3.2
Duties . The Executive will perform such duties as are
customarily performed by Chief Financial Officer of a company in
similar lines of business as the Company, including, without
limitation: (a) responsibility extending enterprise-wide for all
finance, accounting and tax matters, providing vision, leadership
and structure in ensuring compliance with all local, state and
federal requirements (including, without limitation, GAAP and
statutory accounting requirements and Sarbanes-Oxley requirements);
(b) functioning as a primary interface with the Company’s
equity sponsors, banking partners, Board audit committees and
external regulators; (c) assisting with the planning, execution and
measurement of strategy and tactics employed in meeting growth
objectives; and (d) such other duties as may be assigned to the
Executive by the Board of Directors of the Company (the “
Board ”), the Chief Executive Officer or their
respective designees from time to time. The Executive will
devote all of his full
business time and attention to the
performance of such duties and to the promotion of the business and
interests of the Company and its Affiliates. This Section
3.2 , however, shall not prevent the Executive, during the
Term, from serving as a member of the board of directors of civic
and charitable organizations, provided that such membership does
not materially interfere with the Executive’s performance of
his duties under this Agreement or conflict with Section 7.3
of this Agreement.
4.
Compensation and Benefits by the
Company . As
compensation for all services rendered pursuant to this Agreement,
the Company shall provide the Executive the following during the
Term:
4.1
Base Salary . The Company will pay to the Executive an
annual base salary of $250,000 payable in accordance with the
customary payroll practices of the Company (“ Base
Salary ”), less applicable withholdings for federal,
state, and local taxes. The Board will review annually the
Executive’s Base Salary for upward adjustment.
4.2
Bonus . The Executive shall be eligible to receive an
annual bonus of up to 100% of Base Salary (“ Bonus
”) under a plan established by the Company or the Board (or a
committee thereof) with respect to each fiscal year of the Company
during the Term, provided that the first Bonus shall be with
respect to the Company’s 2010 fiscal year (which begins on
February 1, 2009 and ends on January 31, 2010). Bonuses shall
be paid at the same time as paid to other executives of the Company
(i.e., after completion of the audit of the Company’s
financial statements for the fiscal year to which such Bonus
relates), but in no event later than the date that is two and
one-half (2½) months after the end of such fiscal year.
All Bonus amounts shall be reduced for applicable federal,
state and local taxes.
4.3
Relocation . The Company shall reimburse the Executive (on
a tax neutral grossed-up basis) for expenses reasonably incurred by
the Executive in connection with relocation from the
Executive’s home in Rochester Hills, MI to the Chicago, IL
area, including: (a) reasonable expenses associated with up to two
“house hunting” trips for the Executive and his spouse
to locate a home to acquire in the Chicago, IL area; (b) commission
associated with sale of the Executive’s existing home in
Rochester Hills, MI; (c) closing costs associated with the purchase
of a home by the Executive in the Chicago, IL area, (d) reasonable
costs associated with the packing, unpacking and moving of
household goods in connection with the relocation; and (e)
reasonable rental expenses for a temporary residence for the
Executive in the Chicago, IL area until the earlier of: (i) the
date on which the Executive acquires a home in the Chicago, IL
area; or (ii) sixty (60) days after the Effective Date.
4.4
Participation in Employee Benefit
Plans . The Executive
shall be entitled, if and to the extent eligible, to participate in
all of the applicable benefit plans of the Company, pursuant to the
terms of such plans. Notwithstanding the foregoing, the
Executive shall not, at any time, receive any personal loans from
the Company pursuant to any benefit plan or otherwise.
4.5
Vacation . The Executive shall be entitled to three (3)
weeks of paid vacation each fiscal year of the Company. The
carry-over of vacation days shall be in accordance with the
vacation policy of the Company. The Executive shall not be
entitled to payment for unused vacation days upon the termination
of his employment except as set forth in Section 6.2 below.
4.6
Expense Reimbursement
. The Executive shall be entitled
to receive reimbursement for all appropriate business expenses
incurred by him in connection with his duties under this Agreement
in accordance with the policies of the Company as in effect from
time to time.
5.
Termination of Employment
.
5.1
Death . The Executive’s employment hereunder
shall terminate immediately upon his death.
5.2
Disability . The Company may immediately terminate the
Executive’s employment due to his “ Disability
.” For purposes of this Agreement, “
Disability ” shall mean a good faith determination by
the Board in accordance with applicable law that as a result of a
physical or mental injury or illness, the Executive is unable to
perform the essential functions of his job with or without
reasonable accommodation for a period of: (i) ninety (90)
consecutive days; or (ii) one hundred eighty (180) days in any
twelve (12) month period.
5.3
By the Company for Cause
. The Company may immediately
terminate the Executive’s employment, for “Cause”
(as defined below), by action of the Board, upon written notice by
the Board to the Executive identifying the act or acts constituting
Cause. For purposes of this Agreement, “ Cause
” means: (i) the Executive’s willful and continued
failure (other than as a result of incapacity due to mental or
physical impairment) to substantially perform his duties hereunder,
which is not remedied within ten (10) days after receipt of written
notice from the Board specifying such failure; (ii) the
Executive’s failure to carry out, or comply with, any lawful
and reasonable directive of the Board or the Chief Executive
Officer, which is not remedied within thirty (30) days after
receipt of written notice from the Board or the Chief Executive
Officer specifying such failure; (iii) the Executive’s
conviction of or plea of nolo contendre to any felony or
other crime involving moral turpitude; (iv) the Executive’s
knowing unlawful use or possession of illegal drugs; or (v) the
Executive’s commission of a material bad faith act of fraud,
embezzlement, misappropriation, willful misconduct, gross
negligence, or breach of fiduciary duty, in each case against the
Company or any of its Affiliates.
5.4
By the Company without
Cause . The Company may
immediately terminate the Executive’s employment without
Cause at any time without prior notice.
5.5
By the Executive
. The Executive may terminate his
employment hereunder at any time, with or without “Good
Reason” (as defined below), upon thirty (30) days prior
written notice to the Company. The Executive’s
employment shall terminate as of thirty (30) days from the date
notice is given, unless, with respect to a notice regarding a
termination based on Good Reason, the Company corrects the
circumstances constituting Good Reason within such thirty (30) day
period. For purposes of this Agreement, “ Good
Reason ” means, without the Executive’s consent:
(i) a reduction in Base Salary; or (ii) a material adverse
reduction in the Executive’s employee benefits; provided,
however , that Good Reason shall not include acts which are
cured by the Company within thirty (30) days following the
Company’s receipt of written notice from the Executive of the
existence of circumstances constituting Good Reason. Any
notice of termination for Good Reason must be given within thirty
(30) days following the Executive’s learning of circumstances
constituting Good Reason.
5.6
Removal from any Boards and
Position . If the
Executive’s employment is terminated for any reason under
this Agreement, he shall be deemed to resign: (i) if a
member,
from the Board or any other board to
which he has been appointed or nominated by or on behalf of the
Company or any of its Affiliates; and (ii) from any position with
the Company or any of its Affiliates, including without limitation,
as an officer of the Company or any of its Affiliates.
6.
Obligations upon
Termination .
6.1
By the Company for Cause or by the
Executive Without Good Reason or Due to Death or
Disability . If: (i) the
Executive’s employment with the Company terminates due to his
death; (ii) the Company terminates the Executive’s employment
with the Company for Cause; (iii) the Company terminates the
Executive’s employment with the Company due to the
Executive’s Disability; or (iv) the Executive terminates his
employment with the Company without Good Reason, the Executive or
the Executive’s legal representatives (as appropriate), shall
be entitled to receive only the following, in each case, as soon as
reasonably practicable (but in any event within fifteen (15) days)
after such termination of employment:
(a)
the Executive’s accrued but unpaid
Base Salary and benefits set forth in Section 4.4 , if any,
to the date of termination; and
(b)
expenses reimbursable under Sections
4.3 and 4.6 incurred but not yet reimbursed to the
Executive to the date of termination (the items referred to in
clauses (a) and (b) , collectively, the “
Accrued Benefits ”), and no severance or other
benefits from the Company.
6.2
By the Company Without Cause or By the
Executive for Good Reason .
If the Company terminates the Executive’s employment
without Cause or if the Executive terminates his employment for
Good Reason, the Executive shall be entitled to receive only the
following, subject to execution and delivery by the Executive to
the Company, without revocation, of a valid general release of all
claims against the Company and its Affiliates, substantially in the
form attached hereto as Exhibit A , within thirty (30) days
following the date of such termination:
(a)
the Accrued Benefits, as soon as
reasonably practicable (but in any event within fifteen (15) days)
after timely execution and delivery by the Executive to the Company
of the release;
(b)
the Executive’s accrued but unpaid
vacation, if any, to the date of termination, as soon as reasonably
practicable (but in any event within fifteen (15) days) after
timely execution and delivery by the Executive to the Company of
the release;
(c)
Base Salary for twelve (12) months,
payable in equal installments in accordance with the
Company’s customary payroll practices, with such twelve (12)
month period to commence: (i) on the business day following the
date of termination, if the Executive executes and delivers the
release to the Company upon termination; or (ii) if the Executive
does not execute and deliver the release to the Company upon
termination, as soon as reasonably practicable (but in any event
within fifteen (15) days) after timely execution and delivery by
the Executive to the Company of the release, each of which shall be
treated as a separate payment for purposes of Section 409A of the
Internal Revenue Code (“ Section 409A ”);
and
(d)
continued coverage under the
Company’s medical and dental plans for twelve (12) months
after the date of termination; provided , that the Company
may provide such coverage through reimbursement of the cost of
continuation of group health coverage, pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1986, to the extent the
Executive is eligible and subject to the terms of the plan and the
law, and no other severance or other benefits from the
Company.
6.3
Election Not to Extend the
Term . If the Company
elects not to extend the Term pursuant to Section 2 of this
Agreement, unless the Executive’s employment with the Company
is earlier terminated pursuant to Section 5 of this
Agreement, termination of the Executive’s employment
hereunder (whether or not the Executive continues as an employee of
the Company thereafter) shall be deemed to occur on the close of
business on the day immediately preceding the next scheduled date
on which extension of the Term would otherwise begin and the
Executive shall be entitled to receive, subject to execution and
delivery to the Company without revocation of a release, within
thirty (30) days following the date of such termination: (a) the
Accrued Benefits, payable as soon as reasonably practicable (but in
any event within fifteen (15) days) after timely execution and
delivery by the Executive to the Company of the release; (b) Base
Salary for nine (9) months, payable in equal installments in
accordance with the Company’s customary payroll practices,
with such nine (9) month period to commence: (i) on the business
day following the date of termination, if the Executive executes
and delivers the release to the Company upon termination; or (ii)
if the Executive does not execute and deliver the release to the
Company upon termination, as soon as reasonably practicable (but in
any event within fifteen (15) days) after timely execution and
delivery by the Executive to the Company of the release, each of
which shall be treated as a separate payment for purposes of
Section 409A; and (c) continued coverage under the Company’s
medical and dental plans for nine (9) months after the date of
termination; provided, that the Company may provide such coverage
through reimbursement of the cost of continuation of group health
coverage, pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1986, to the extent the Executive is eligible
and subject to the terms of the plan and the law, and no other
severance or other benefits from the Company. If the
Executive elects not to extend the Term pursuant to Section
2 of this Agreement, unless the Executive’s employment
with the Company is earlier terminated pursuant to Section 5
of this Agreement, termination of the Executive’s employment
hereunder (whether or not the Executive continues as an employee of
the Company thereafter) shall be deemed to occur on the close of
business on the day immediately preceding the next scheduled date
on which extension of the Term would otherwise begin, and the
Executive shall be entitled to receive only the Accrued Benefits as
soon as reasonably practicable (but in any event within fifteen
(15) days) after such termination of employment, and no severance
or other benefits from the Company.
6.4
Nondisparagement
. Except in connection with any
legal dispute between the Parties or an order of a court or
governmental agency with jurisdiction, the Executive shall not at
any time (whether during or after the Term) publish or communicate
to any person or entity any “Disparaging” (as defined
below) remarks, comments or statements concerning the Company, any
of its Affiliates, or any of their respective present and former
members, partners, directors, officers, shareholders, employees,
agents, attorneys, successors and assigns, and the Company and its
Affiliates shall not at any time (whether during or after the Term)
publish or communicate to any person or entity any Disparaging
remarks, comments or statements concerning the Executive and shall
instruct their respective present members, partners, directors, and
officers to not at any time publish or communicate to any person or
entity any Disparaging
remarks, comments or statements
concerning the Executive. “ Disparaging ”
remarks, comments or statements are those that impugn the
character, honesty, integrity or morality or business acumen or
abilities in connection with any aspect of the operation of
business of the individual or entity being disparaged.
7.
Restrictions and Obligations of the
Executive .
7.1
Confidentiality
. i) During the course of the
Executive’s employment by the Company (prior to and during
the Term), the Executive has had and will have access to certain
trade secrets and confidential and proprietary information relating
to the Company and its Affiliates (the “ Protected
Parties ”) which is not readily available from sources
outside the Company.
