Exhibit 10.8
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this “
Agreement ”), is entered into as of June 23, 2005
(the “ Effective Date ”), by and between H.I.G.
SteelCo Holdings, Inc., a Delaware corporation (the “
Company ”), and Jeff Bradley (the “
Employee ”).
WHEREAS, the Company desires to employ the Employee as
Chief Executive Officer; and
WHEREAS , the Company and the Employee have agreed upon
the terms and conditions for the Employee’s employment as set
forth herein.
NOW, THEREFORE
, in consideration of the promises
and of the mutual covenants contained herein, the Company and
Employee, each intending to be legally bound hereby, agree as
follows
1. Term . Except as otherwise
provided in Section 6 hereof, this Agreement shall
commence on the Effective Date and shall continue until the fourth
annual anniversary of the Effective Date (the “ Term
”).
2. Positions and Duties . During the
Term, the Employee will be employed as Chief Executive Officer of
the Company and as Chairman of CitiSteel USA, Inc. (“
CitiSteel ”). The Employee shall have the authority,
power and responsibility to perform, and shall perform, all duties
in connection with the business of the Company consistent with the
directives of the board of directors of the Company (the “
Board of Directors ”). The Employee shall report to
the Board of Directors. To the extent necessary to meet the
Company’s business goals, the Board of Directors may modify
the Employee’s duties or assign new duties to the Employee or
modify the Employee’s reporting relationships;
provided , that said modifications are consistent with those
duties typically performed by an executive officer of the Company.
The Employee further agrees to devote his full business time,
attention and efforts to the performance of his duties hereunder.
Unless the parties otherwise agree in writing, during the Term, the
Employee shall perform the services he is required to perform
pursuant to this Agreement at the Company’s offices, located
at its present or future locations in Claymont, Delaware;
provided , however , that the parties acknowledge and
agree that Executive will not be expected to relocate to the
Claymont, Delaware area until six (6) months after the
beginning of the Initial Term (or such later date as may be
specified by the Board of Directors) (such date, the “
Relocation Date ”), and that the Company shall
reimburse the Employee for any and all reasonable expenses he
incurs on or after the Closing Date and before the Relocation Date
related to travel between his current place of residence and the
Company’s offices and meals and lodging while working at the
Company’s offices; provided , further , that
the Company may from time to time require the Employee to travel
temporarily to other locations in connection with the
Company’s business and in accordance with Company’s
standard policies regarding travel for executive and senior
management employees.
3. Salary . The Employee’s
salary shall be at the rate of $275,000 per year (the “
Salary ”), payable in periodic installments in
accordance with the Company’s customary practice and prorated
for any period of less than a year during the Term.
4. Annual Bonus . The Employee shall
be eligible for a bonus (the “ Annual Bonus ”)
of up to $225,000 for each full fiscal year of CitiSteel (July
1-June 30) ending during the Term, commencing with the fiscal
year that begins on July 1, 2005, as described herein:
(a) two-thirds (2/3rds) of the Annual Bonus shall be an
amount (not to exceed $150,000) equal to 0.75% times the amount (if
any) by which EBITDA for the fiscal year exceeds Target EBITDA for
such fiscal year; and (b) one-third (1/3rd) of the Annual
Bonus shall be an amount (not to exceed $75,000) determined by the
Board in its discretion. “ Target EBITDA ” for
the fiscal year beginning July 1, 2005 shall equal
$60,000,000; for subsequent fiscal years, “ Target
EBITDA ” shall be an amount established prior to the
beginning of each such fiscal
year by the Board of Directors, in good-faith
consultation with the Employee. “ EBITDA ” for a
fiscal year means the sum of the amounts for the fiscal year of
(A) net income (or loss) after taxes of CitiSteel and its
direct and indirect subsidiaries on a consolidated basis (“
Net Income ”), plus (B) interest expense which
has been deducted in the determination of Net Income, plus
(C) federal, state and local taxes which have been deducted in
determining Net Income, plus (D) depreciation and amortization
expenses which have been deducted in determining Net Income, minus
(E) extraordinary gains which have been included in the
determination of Net Income, plus (F) the positive number
equal to extraordinary losses which have been included in the
determination of Net Income. The terms “extraordinary
gains” and “extraordinary losses” as used herein
shall be governed by GAAP. The amount of any Annual Bonus shall be
payable to the Employee as soon as practical after the date on
which the amount of the Annual Bonus is finally determined, but
only if the Employee is employed on such date (except as otherwise
provided in Section 9 below).
5. Restricted Stock Grant . The
Company shall grant the Employee restricted shares of the
Company’s common stock representing 0.6667% of the
Company’s outstanding common stock on the Closing Date. Such
shares shall be granted as soon as reasonably practicable, but not
later than ten (10) business days after, the Closing Date.
One-half of such shares (“ Time-Vesting Shares
”) shall vest over the following schedule: 25% on the first
annual anniversary of the Closing Date, and an additional 25% on
each of the next three (3) annual anniversaries of the Closing
Date, if and only if, in each case, the Employee is employed on the
applicable vesting date (subject to Section 9 below).
The other half of such shares (“ Performance-Vesting
Shares ”) shall vest in 25% increments, at the end of
each of the first four fiscal years following the Closing Date, if
and only if, in each such fiscal year (i) EBITDA equals or
exceeds Target EBITDA and (ii) the Employee is employed on
each applicable vesting date (subject to Section 9
below). If, in any such fiscal year, EBITDA is less than Target
EBITDA, the Performance-Vesting Shares that would otherwise have
vested for such fiscal year shall be forfeited. All of the
Employee’s Time-Vesting Shares, and all of the
Employee’s Performance-Vesting Shares that have not
previously been forfeited, which remain unvested at the time of a
Change of Control (as defined in Section 6 ) shall
accelerate and become fully vested immediately prior to the Change
of Control, if the Employee is employed on effective date of the
Change of Control. The restricted stock grant shall be subject to
such other terms and conditions (including transfer restrictions
and a right of repurchase by the Company applicable to vested
shares, as well as a voting agreement and an irrevocable proxy) as
shall be set forth in a restricted stock agreement evidencing the
grant.
6. Change of Control Bonus . In the
event of a Change of Control (as hereinafter defined), the Employee
shall be entitled to a cash bonus equal to the Equity Deficiency
(as hereinafter defined), if any, so long as the Employee is
employed on the effective date of such Change of Control. For
purposes of this Agreement:
(a) “ Change of Control
” shall mean (i) any sale, consolidation or merger which
results in the acquisition of all or substantially all of the
Company’s outstanding shares of capital stock by a single
person or entity or by a group of persons or entities acting in
concert; (ii) any acquisition in a single transaction or group
of related transactions of all or substantially all of the
outstanding shares of capital stock of H.I.G. Capital LLC, Inc., a
Cayman Islands corporation of which the Company is a wholly-owned
subsidiary (“ H.I.G. Capital ”), either alone or
together with all of the outstanding shares of capital stock of the
Company not directly owned by H.I.G. Capital, or (iii) any
sale or transfer of all or substantially all of the assets of the
Company and its direct and indirect subsidiaries (collectively, the
“ CitiSteel Group ”) after which the CitiSteel
Group retains no material business operations; provided ,
however , that the term “Change of Control”
shall not include any of the following: (x) a transaction or
transactions with affiliates of H.I.G. Capital (as determined by
the Board of Directors of H.I.G. Capital in its sole discretion);
(y) a transaction or transactions pursuant to which more than
fifty percent (50%) of the shares of voting stock of the
surviving or acquiring entity is owned and/or controlled (by
agreement or
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otherwise), directly or indirectly, by H.I.G.
Capital or any of its affiliates (as determined by the Board of
Directors of H.I.G. Capital in its sole discretion); or
(z) any transaction which results in aggregate Net Proceeds
(as hereinafter defined) of less than $150,000,000.
(b) “ Equity Deficiency
” shall mean (i) if the Employee’s Share (as
hereinafter defined) is less than $1,000,000, then an amount equal
to $1,000,000 minus the Employee’s Share, and (ii) in
all other cases, $0.
(c) “ Employee’s
Share ” shall equal (i) in the case of a Change of
Control involving a sale of stock of the Company (or a sale of the
stock of H.I.G. Capital, together with all of the outstanding
shares of capital stock of the Company not directly owned by H.I.G.
Capital), the amount of Net Proceeds actually received directly by
the Employee upon the Change of Control; (ii) in the case of a
Change of Control involving solely a sale of the stock of H.I.G.
Capital, the amount that would be payable to the Employee upon a
redemption of his Company stock immediately following such Change
of Control, where the price to be paid in such redemption would
equal (x) the aggregate Net Proceeds of such Change of Control
divided by the percentage of the Company’s stock not owned by
the Employee at the time of the Change of Control, minus
(y) the aggregate Net Proceeds of such Change of Control; and
(iii) in the case of a Change of Control involving a sale of
assets, the amount of Net Proceeds that would have been distributed
to the Employee as a stockholder of the Company in an extraordinary
dividend equal to the aggregate Net Proceeds paid upon the Change
of Control.
(d) “ Net Proceeds
” shall mean the amount, if any, by which Gross Proceeds (as
hereinafter defined) exceed Expenses (as hereinafter
defined).
(e) “ Gross Proceeds
” shall mean: (i) in the case of a Change of Control
effected through a sale, consolidation or merger which results in
the acquisition of all or substantially all of the Company’s
outstanding shares of capital stock by a single person or entity or
by a group of persons or entities acting in concert, the aggregate
proceeds actually received by all of the Company’s
stockholders in connection with such Change of Control;
(ii) in the case of a Change of Control effected through any
acquisition in a single transaction or group of related
transactions of all or substantially all of the outstanding shares
of capital stock of H.I.G. Capital together with all of the
outstanding shares of capital stock of the Company not directly
owned by H.I.G. Capital, the aggregate proceeds actually received
by all of the stockholders of H.I.G. Capital together with all of
the selling stockholders of the Company in connection with such
Change of Control; (iii) in the case of a Change of Control
effected solely through any acquisition in a single transaction or
group of related transactions of all or substantially all of the
outstanding shares of capital stock of H.I.G. Capital, the
aggregate proceeds actually received by all of the stockholders of
H.I.G. Capital; and (iv) in the case of a Change of Control
effected through the sale or transfer of all or substantially all
of the assets of the CitiSteel Group after which the CitiSteel
Group retains no material business operations, the aggregate
proceeds actually received by the CitiSteel Group in connection
with such Change of Control; in each of cases (i) through
(iv), before taking into account the amounts payable under this
Agreement and any other similar agreements; provided ,
however , that notwithstanding anything in this definition
to the contrary, for avoidance of doubt, any proceeds or other
funds that any affiliate of H.I.G. Capital actually receives or is
entitled to receive pursuant to any management agreement or other
agreement between such affiliate and H.I.G. Capital (or any of its
direct or indirect subsidiaries) shall not be included in the
calculation of “Gross Proceeds”. In each of cases
(i) through (iv), “Gross Proceeds” shall include
an additional amount, if any, equal to any contingent additional
consideration to be received following the Change of Control, with
such contingent additional consideration being valued in good faith
by the Board of Directors of the Company at its present value as of
the Closing Date, taking into consideration the expected delay in
payment and the likelihood of any applicable contingency being
satisfied.
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(f) “ Expenses ”
shall mean all indebtedness, fees, expenses and other monetary
obligations paid or payable to unaffiliated third parties
(including, without limitation, escrowed funds and investment
banking, legal, accounting and escrow fees and expenses and
indemnificati
