EXHIBIT 10.31
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (“
Agreement ”) dated as of February 27, 2008
(the “ Effective Date ”), among RathGibson,
Inc., a Delaware corporation (the “ Company ”),
and Richard E. Lore, Sr. (the “ Executive ” and,
together with the Company, the “ Parties
”).
WHEREAS, the Parties wish to establish
the terms of the Executive’s employment with the
Company.
Accordingly, the Parties agree as
follows:
1.
Employment and Acceptance
. The Company shall employ the
Executive, and the Executive shall accept employment, 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 the second
anniversary of the Effective Date (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 ), as adjusted,
Bonus (defined below in Section 4.2 ), and 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
President of the Mid-South Control Line division of the Company,
and shall report to the Chief Executive Officer of the Company (the
“ CEO ”), who is presently Harley
Kaplan.
3.2
Duties . The Executive will perform such executive
duties customarily performed by the presidents of companies in
similar lines of business as the Mid-South Control Line division of
the Company, including purchasing, marketing, overseeing daily
operations and running the business, along with such other duties
as may be assigned to the Executive by the CEO or his designees
from time to time. The Executive will devote all 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 (as defined below). 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:
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4.1
Base Salary . The Company will pay to the Executive an
annual base salary of $312,500 payable in accordance with the
customary payroll practices of the Company (“ Base
Salary ”), less applicable withholdings for federal,
state, and local taxes. The Board of Directors of the Company
(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 200% of Base Salary (“ Bonus
”) under a plan established by the Company or the Board (or a
committee thereof). The Executive’s target bonus shall
be 100% of Base Salary (the “ Target Bonus ”).
4.3
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.
4.4
Vacation . The Executive shall be entitled to four (4)
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.
4.5
General 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.
4.6
Automobile Expense
Reimbursement . The
Executive shall be entitled to receive reimbursement up to an
aggregate of $12,000 per year, payable in equal installments in
accordance with the Company’s regular payroll practices,
during the Term to lease or purchase an automobile regularly used
by the Executive to commute to and from the Company’s offices
and to pay insurance, maintenance and other expenses associated
with such automobile. As a condition to receiving
reimbursement of any expenses referred to in this Section
4.6 , the Executive will provide to the Company reasonable
evidence of the incurrence of such expenses.
4.7
Club Dues . During the Term, the Executive shall be
entitled to receive reimbursement up to $8,000 per year for the
annual dues associated with membership in two golf country clubs,
one of which is the New Orleans, Louisiana area and the other of
which is in the Houston, Texas area, along with reimbursement of
the Executive’s reasonable out of pocket expenses incurred by
the Executive associated with entertaining actual and potential
business contacts at such clubs. As a condition to receiving
reimbursement of any dues or expenses referred to in this
Section 4.7 , the Executive will provide to the Company
reasonable evidence of the incurrence of such due or
expenses.
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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 (as defined
below). 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 CEO, which is not remedied within
thirty (30) days after receipt of written notice from the Board or
the CEO 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. For purposes of this
Agreement, an “ Affiliate ” of the Company is
any other entity that is, directly or indirectly, controlled by RG
Tube Holdings LLC, a Delaware limited liability company, as of the
applicable time.
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.
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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, but not limited to, an officer of the
Company.
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:
(a)
the Executive’s accrued but unpaid
Base Salary and benefits set forth in Section 4.3 , if any,
to the date of termination; and
(b)
expenses reimbursable under Section
4.5 , Section 4.6 and Section 4.7 incurred
but not yet reimbursed by the Company to the Executive to the date
of termination ( 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 the
following, upon execution and delivery 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 (a “Release ”):
(a)
the Accrued Benefits;
(b)
the Executive’s accrued but unpaid
vacation, if any, to the date of termination;
(c)
continued Base Salary for twelve (12)
months after the date of termination, payable in monthly
installments; 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
applicable 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
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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, upon execution and delivery to the Company without
revocation of a Release: (a) the Accrued Benefits; and (b)
continued Base Salary for six (6) months after the date of
termination, payable in monthly installments, 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
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 and Mid-South Control
Line, Inc. (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
(collectively, the “ Protected Parties ”),
which is not readily available from sources outside the Company.
The confidential and proprietary information and, in any
material respect, trade secrets of the Protected Parties are among
their most valuable assets, including but not limited to, their
customer, supplier and vendor lists; databases; competitive
strategies; computer programs, frameworks, or models; marketing
programs; sales, financial, marketing, training and technical
information; product development (and proprietary product data);
and any other information, whether communicated orally,
electronically, in writing or in other tangible forms, concerning
how the Protected Parties create, develop, acquire or maintain
their products and marketing plans, target their potential
customers and operate their retail and other businesses. The
Protected Parties invested, and continue to invest, considerable
amounts of time and money in their process, technology, and
know-how;
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obtaining and developing the goodwill of
their customers; their other external relationships; their data
systems and data bases; and all the information described above
(hereinafter collectively referred to as “ Confidential
Information ”), and any misappropriation or unauthorized
disclosure of Confidential Information in any form would
irreparably harm the Protected Parties. The Executive
acknowledges that such Confidential Information constitutes
valuable, highly confidential, special and unique property of the
Protected Parties. The Executive shall hold in a fiduciary
capacity for the benefit of the Protected Parties all Confidential
Information relating to the Protected Parties and their businesses,
which shall have been obtained by the Executive during the
Executive’s employment by the Company (prior to and during
the Term) and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive
in violation of this Agreement). Except as required by law or
an order of a court or governmental agency with jurisdiction, the
Executive shall not, during the period the Executive is employed by
the Co
