Exhibit 10.16
May 11, 2002
Name
Address
City/State/Zip
Dear:
Ryerson Tull, Inc. ("RTI") considers it essential to the best interests
of its stockholders to foster the continuous employment of key management
personnel of RTI and its subsidiaries (collectively, the "Company"). In this
connection, the Board of Directors of RTI (the "Board") recognizes that, as is
the case with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of RTI and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company. In order to induce you to
remain in the employ of the Company and in consideration of your agreement set
forth in Subsection 2(ii) hereof, RTI agrees that you shall receive the
severance benefits set forth in this letter agreement ("Agreement") in the event
your employment with the Company is terminated subsequent to a "change in
control of the Company" (as defined in Section 2 hereof) or in connection with a
"potential change in control of the Company" (as defined in Section 2 hereof)
under the circumstances described below. This Agreement shall constitute an
amendment and restatement of and shall supersede any prior agreement entered
into between you and RTI with respect to these matters. In the event that you
receive severance benefits hereunder, such benefits shall be in lieu of, and you
shall not be entitled to receive, any benefits or payments under any other
severance plan, policy or agreement of or with the Company. In addition, if you
are or become entitled to benefits from the Company pursuant to another
agreement providing for benefits on account of a change in control or the law of
a jurisdiction other than the United States or any state or territory thereof as
a result of an event for which benefits are payable to you pursuant this
Agreement, the benefits paid to you pursuant to this Agreement shall be reduced
by the amount paid to you pursuant to such other agreement or law.
1. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect through December 31, 2000; provided, however, that
commencing on January 1, 2001 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, during
the preceding year but not later than June 30 of
Page 2
such preceding year, RTI shall have given notice that it does not wish to extend
this Agreement. Notwithstanding the preceding sentence: (i) if your employer is
a direct or indirect subsidiary of RTI, this Agreement shall terminate on the
date on which RTI ceases to own, directly or indirectly, at least 80 percent of
your employer for any reason which does not constitute a change in control of
the Company, and (ii) if a change in control of the Company or a potential
change in control of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in effect for a
period of twenty-four (24) months beyond the month in which such change in
control or potential change in control of the Company occurred unless earlier
terminated under clause (i) next above.
3. Change in Control; Potential Change in Control. (i) No benefits shall
----------------------------------------------
be payable hereunder unless there shall have been a potential change in control
or a change in control of the Company, as set forth below. For purposes of this
Agreement, a "change in control of the Company" shall be deemed to have occurred
if:
(A) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than (w) the Company, (x) a trustee or other fiduciary holding voting
securities under an employee benefit plan of the Company, (y) an
underwriter temporarily holding voting securities pursuant to an offering
of such securities, or (z) a corporation owned, directly or indirectly, by
the security holders of RTI in substantially the same proportions as their
ownership of voting securities of RTI, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of voting securities of RTI (not including in the voting securities
beneficially owned by such person any voting securities acquired directly
from RTI or its affiliates) representing 20% or more of the combined voting
power of RTI's then outstanding voting securities;
(B) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board and any new director (other
than a director designated by a person who has entered into an agreement
with RTI to effect a transaction described in clauses (A), (C) or (D) of
this Subsection 2(i)) whose election by the Board or nomination for
election by RTI's security holders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved ("Continuing Directors"), cease for
any reason to constitute a majority thereof;
(C) there occurs a merger or consolidation of RTI with any other
corporation, other than a merger or consolidation which would result in the
voting securities of RTI outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding voting securities under
an employee benefit plan of the Company, at least 60% of the combined
voting power of the voting securities of RTI or such surviving entity
outstanding immediately after such merger or consolidation, or a merger or
consolidation effected to implement a recapitalization of RTI (or similar
transaction) in which no person acquires more than 50% of the combined
voting power of RTI's then outstanding voting securities;
Page 3
(D) the holders of voting securities of RTI approve a plan of
complete liquidation of RTI or an agreement for the sale or disposition by
RTI of all or substantially all of RTI's assets; or
(E) there occurs:
(x) a sale or disposition, directly or indirectly, other than to
a person described in subclause (w), (x) or (z) of clause (A) of this
Subsection 2(i), of voting securities of your employer, any direct or
indirect parent company of your employer or any company that is a
subsidiary of your employer and is also a significant subsidiary (as
defined below) of RTI (your employer and such a parent or subsidiary
being a "Related Company"), representing 50% or more of the combined
voting power of the securities of such Related Company then
outstanding;
(y) a merger or consolidation of a Related Company with any
other corporation, other than:
(1) a merger or consolidation which would result in the
voting securities of the Related Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any
trustee or other fiduciary holding voting securities under an
employee benefit plan of the Company, at least 60% of the
combined voting power of the voting securities of the Related
Company or such surviving entity outstanding immediately after
such merger or consolidation;
(2) a merger or consolidation effected to implement a
recapitalization of the Related Company (or similar transaction)
in which no person acquires more than 50% of the combined voting
power of the Related Company's then outstanding voting
securities; or
(3) a merger or consolidation which would result in 50% or
more of the combined voting power of the surviving company being
beneficially owned by RTI or by a majority owned direct or
indirect subsidiary of RTI; or
(z) the sale or disposition of all or substantially all the
assets of a Related Company to a person other than RTI or a majority
owned direct or indirect subsidiary of RTI.
Notwithstanding any other provision of this Agreement, no change in control of
the Company shall be deemed to have occurred under this Subsection 2(i) if (I)
such transaction includes or involves a sale to the public or a distribution to
the stockholders of RTI of more than 50% of the voting securities of your
employer or a direct or indirect parent of your employer, and (II) your employer
or a direct or indirect parent of your employer agrees to become a successor to
RTI under this Agreement or you are covered by an agreement providing for
benefits upon a change
Page 4
in control of your employer following an event described clause (E). For
purposes of this Agreement, the term "significant subsidiary" has the meaning
given to such term under Rule 405 of the Securities Act of 1933, as amended.
(ii) For purposes of this Agreement, a "potential change in control of the
Company" shall be deemed to have occurred if:
(A) RTI enters into an agreement, the consummation of which would
result in the occurrence of a change in control of the Company;
(B) any person (including RTI) publicly announces an intention to
take or to consider taking actions which if consummated would constitute a
change in control of the Company;
(C) any person, other than (w) the Company, (x) a trustee or other
fiduciary holding voting securities under an employee benefit plan of the
Company, (y) an underwriter temporarily holding voting securities pursuant
to an offering of such securities, or (z) a corporation owned, directly or
indirectly, by the security holders of RTI in substantially the same
proportions as their ownership of voting securities of RTI, who is or
becomes the beneficial owner, directly or indirectly, of voting securities
of RTI representing 9.5% or more of the combined voting power of RTI's then
outstanding voting securities, increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by such person on the
date hereof; or
(D) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a potential change in control of the Company has occurred.
You agree that, subject to the terms and conditions of this Agreement, in the
event of a potential change in control of the Company, you will remain in the
employ of the Company until the earliest of (i) a date which is six (6) months
from the occurrence of such potential change in control of the Company, (ii) the
termination by you of your employment by reason of Disability or Retirement, as
defined in Subsection 3(i), or (iii) the occurrence of a change in control of
the Company. If your employment is terminated by the Company without Cause (as
defined in Subsection 3(ii) below) coincident with or prior to a change in
control of the Company and within twelve (12) months after the occurrence of a
potential change in control of the Company and a change in control of the
Company occurs within six (6) months after such termination, you shall be
entitled to the compensation and benefits hereunder as if your termination of
employment without Cause followed a change in control of the Company; provided,
however, that no benefits shall be payable under this sentence if prior to the
change in control of the Company, RTI ceased to own, directly or indirectly, at
least 80% of the voting securities of your employer.
(iii) The foregoing to the contrary notwithstanding, a change in control of
the Company shall not be deemed to have occurred with respect to you if:
(A) the event first giving rise to the potential change in control of
the Company involves a publicly announced transaction or publicly announced
proposed transaction which at the time of the announcement has not been
previously approved by
Page 5
the Board and you are "part of a purchasing group" (as defined below)
proposing the transaction;
(B) you are part of a purchasing group which consummates the change
in control transaction; or
(C) the change in control of the Company would otherwise occur under
Subsection 2(i)(D) due to the sale of a significant subsidiary, which
significant subsidiary constitutes all or substantially all of the assets
of RTI and you are not employed by RTI or the significant subsidiary which
is the subject of the transaction.
For purposes of this Agreement, you shall be deemed "part of a purchasing group"
if you are an equity participant or have agreed to become an equity participant
in the purchasing company or group (except for (A) passive ownership of less
than 1% of the stock of the purchasing company or (B) ownership of equity
participation in the purchasing company or group which is otherwise not deemed
to be significant, as determined prior to the change in control of the Company
by a majority of the non-employee Continuing Directors).
3. Termination Following Change in Control. If a change in control
---------------------------------------
of the Company, as defined in Section 2 hereof, shall have occurred, you
shall be entitled to the benefits provided in Subsection 4(iii) hereof upon
the subsequent termination of your employment during the term of this
Agreement unless such termination is (A) because of your death, Disability
or Retirement, (B) by the Company for Cause, or (C) by you other than for
Good Reason.
(i) Disability; Retirement. If, as a result of your incapacity due to
----------------------
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given
you shall not have returned to the full-time performance of your duties,
your employment may be terminated for "Disability". Termination by the
Company or you of your employment based on "Retirement" shall mean
termination on or after your normal retirement age in accordance with the
Company's retirement policy generally applicable to its salaried employees
or in accordance with any retirement arrangement established with your
consent with respect to you.
(ii) Cause. Termination by the Company of your employment for "Cause"
-----
shall mean termination upon (A) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such
failure resulting from your incapacity due to physical or mental illness or
any such actual or anticipated failure after the issuance of a Notice of
Termination by you for Good Reason as defined in Subsections 3(iv) and
3(iii), respectively) after a written demand for substantial performance is
delivered to you by the Board, which demand specifically identifies the
manner in which the Board believes that you have not substantially
performed your duties, or (B) the willful engaging by you in conduct which
is demonstrably and materially injurious to the Company, monetarily or
otherwise. For purposes of this Subsection 3(ii), no act, or failure to
act, on your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that your
action or omission was in the best interest of the Company. Notwithstanding
the foregoing, you shall not
Page 6
be deemed to have been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership of the Board
at a meeting of the Board called and held for such purpose (after reasonable
notice to you and an opportunity for you, together with your counsel, to be
heard before the Board), finding that in the good faith opinion of the Board you
were guilty of conduct set forth above in clauses (A) or (B) of the first
sentence of this Subsection 3(ii) and specifying the particulars thereof in
detail.
(iii) Good Reason. You shall be entitled to terminate your employment
-----------
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a change in
control of the Company of any of the following circumstances unless, in the
case of paragraphs (A), (E), (F), (G) or (H), such circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination, as defined in Subsections 3(v) and 3(iv), respectively, given
in respect thereof:
(A) the assignment to you of any duties inconsistent with your
status as an executive officer of the Company or a substantial adverse
alteration in the nature or status of your responsibilities from those
in effect immediately prior to the change in control of the Company
other than any such alteration primarily attributable to the fact that
the Company may no longer be a public company;
(B) a reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from time to
time;
(C) the Company's requiring that your principal place of
business be at an office located more than 50 miles from where your
principal place of business is located immediately prior to the change
in control of the Company, except for required travel on the Company's
business to an extent substantially consistent with your business
travel obligations immediately prior to the change in control of the
Company;
(D) the failure by the Company, without your consent, to pay to
you any portion of your current compensation, or to pay to you any
portion of an installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days of the date
such compensation is due;
(E) the failure by the Company to continue in effect any
compensation plan in which you participate immediately prior to the
change in control of the Company which is material to your total
compensation, including but not limited to the Ryerson Tull Annual
Incentive Plan (the "Annual Incentive Plan"), Ryerson Tull 1995
Incentive Stock Plan and Ryerson Tull 1999 Incentive Stock Plan
(collectively, the "Incentive Stock Plans"), Ryerson Tull Supplemental
Retirement Plan for Covered Employees (the "Supplemental Plan"),
Ryerson Tull Nonqualified Savings Plan (the "Nonqualified Savings
Plan"), Ryerson Tull Pension Plan (the "Pension Plan") the Ryerson
Tull Savings Plan or the J.M. Tull Metals Company, Inc. Employees'
Profit Sharing Plan (either, the "Savings Plan") or any substitute or
alternative plans adopted prior to the change in control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company
Page 7
to continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms
of the amount of benefits provided and the level of your participation
relative to other participants, as existed at the time of the change in
control;
(F) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Company's pension, life insurance, medical, health and accident, flexible
spending or disability plans or programs in which you were participating at
the time of the change in control of the Company, the taking of any action
by the Company which would directly or indirectly materially reduce any of
such benefits or deprive you of any material fringe benefit enjoyed by you
at the time of the change in control of the Company, or the failure by the
Company to provide you with the number of paid vacation days to which you
are entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at the time
of the change in control of the Company;
(G) the failure of RTI to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement, as contemplated in
Section 5 hereof; or
(H) any purported termination of your employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of
Subsection 3(iv) below (and, if applicable, the requirements of Subsection
3(ii) above); for purposes of this Agreement, no such purported termination
shall be effective.
Your right to terminate your employment pursuant to this Section 3 shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of your employment by
---------------------
the Company or by you shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 6 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean (A) if your
-------------------------
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Subsection 3(ii) or 3(iii) above or for any
other reason (other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to Subsection 3(ii)
above shall not be less than thirty (30) days, and in the case of a termination
pursuant to Subsection 3(iii) above shall not be less than fifteen (15) nor more
than sixty (60) days, respectively, from the date such Notice of Termination is
given); provided that if within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this proviso), the party receiving such Notice of
Termination notifies the other
Page 8
party that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally determined, either by mutual
written agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected) but shall be deemed to be within the twenty
four (24) month period following a change in control of the Company; provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay you your full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary) and continue you
as a participant in all compensation, benefit and insurance plans and programs
in which you were participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with this Subsection
3(v). Amounts paid under this Subsection 3(v) are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability. Following a
--------------------------------------------------
change in control of the Company, as defined by Subsection 2(i), upon
termination of your employment or during a period of Disability you shall be
entitled to the following benefits:
(i) During any period that you fail to perform your full-time duties with
the Company as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Pension Plan, Supplemental Plan, Annual Incentive Plan, Savings Plan
and Nonqualified Savings Plan during such period, until this Agreement is
terminated pursuant to Subsection 3(i) hereof. Thereafter, in the event your
employment shall be terminated, your benefits shall be determined under the
Company's retirement, insurance and other compensation plans and programs then
in effect in accordance with the terms of such plans and programs.
(ii) If your employment shall be terminated by the Company for Cause or by
you other than for Good Reason, Disability, death or Retirement, the Company
shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan of the Company at the time
such payments are due, and the Company shall have no further obligations to you
under this Agreement.
(iii) If your employment by the Company shall be terminated (a) by the
Company other than for Cause, Retirement or Disability, or (b) by you for Good
Reason, then you shall be entitled to the compensation and benefits provided
below:
(A) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation plan or program of the Company, at the time such payments are
due, except as otherwise provided below.
Page 9
(B) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to you a lump sum severance payment (together with the payments
provided in paragraphs C, D and E below, the "Severance Payments") equal to
two times the sum of (x) your annual base salary in effect immediately
prior to the occurrence of the circumstance giving rise to the Notice of
Termination given in respect thereof, and (y) the greater of (I) your
target award under the Annual Incentive Plan or similar successor plan for
the year in which the Date of Termination occurs, or (II) the average
annual amount of the Award paid to you pursuant to the Annual Incentive
Plan or similar successor plan with respect to the five years immediately
preceding that in which the Date of Termination occurs, such average annual
amount being calculated by aggregating all such Awards paid with respect to
such five years and dividing such aggregate amount by the number of years
for which such an Award was actually paid to you.
(C) Notwithstanding any provision of the Annual Incentive Plan, the
Company shall pay to you a lump sum amount under that plan at least equal
to the sum of (x) any incentive compensation under the Annual Incentive
Plan which has been allocated or awarded to you for a completed fiscal year
or other measuring period preceding the Date of Termination but has not yet
been paid, and (y) a pro rata portion to the Date of Termination for the
current fiscal year or other measuring period of the amount equal to the
Target Award percentage applicable to you under the Annual Incentive Plan
or similar successor plan on the Date of Termination times your annual base
salary then in effect.
(D) In lieu of shares of common stock of RTI ("RTI Shares") issuable
upon exercise of outstanding stock options granted to you under RTI's stock
option plans (including outstanding options previously granted to you under
the Ryerson Tull 1996 Incentive Stock Plan (the "RT 1996 Stock Plan"),
collectively, ("Options")) (which Options shall be cancelled upon the
making of the payment referred to below), you shall receive an amount in
cash equal to the product of (i) the excess of (x) in the case of incentive
stock options (as defined in section 422A of the Internal Revenue Code of
1986, as amended (the "Code")) ("ISOs"), granted after the date of this
Agreement (without regard to any renewal hereof), the closing price of
RTI's shares as reported on the New York Stock Exchange Composite
Transactions on or nearest the Date of Termination, or in the case of all
other Options (other than ISOs granted prior to the date of this Agreement
(without regard to any renewal hereof)), the Change in Control Price (as
defined below), over (y) the per share exercise price of each Option then
held by you (whether or not then fully exercisable), times (ii) the number
of RTI Shares covered by each such Option. For purposes of this Agreement,
the "Change in Control Price" means: (1) with respect to a merger or
consolidation of RTI described in Subsection 2(i)(C) in which the
consideration per share of RTI's common stock to be paid for the
acquisition of shares of common stock specified in the agreement of merger
or consolidation is all in cash, the highest such consideration per share;
(2) with respect to a change in control of the Company by reason of an
acquisition of voting securities described in Subsection 2(i)(A), the
highest price per share for any share of RTI's common stock paid by any
holder of any of the securities representing 40% or more of the combined
voting power of RTI giving rise to the change in control of the Company;
and (3) with respect to a change
Page 10
in control of the Company by reason of a merger or consolidation of RTI
(other than a merger or consolidation described in Clause (1) next above),
stockholder approval of an agreement or plan described in Subsection
2(i)(D), a change in the composition of the Board described in Subsection
2(i)(B) or a change in control of the Company pursuant to Subsection
2(i)(E) (relating to mergers, consolidations and sales of securities or
assets of a Related Company), the highest price per share of common stock
reported on the New York Stock Exchange Composite Transactions (or, if such
shares are not traded on the New York Stock Exchange, such other principal
market on which such shares are traded) during the sixty (60) day period
ending on the date the change in control of the Company occurs.
(E) To the extent not otherwise vested in accordance with the terms
and conditions of the Incentive Stock Plans or the RT 1996 Stock Plan, you
shall be fully vested in any restricted shares issued thereunder and be
fully vested in any performance shares that you would have earned under the
Incentive Stock Plans or the RT 1996 Stock Plan, as applicable, for the
calendar year in which the change in control of the Company occurs had the
applicable performance targets for such calendar year been satisfied with
respect to such shares.
(F) The Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of
the Code to any payment or benefit provided hereunder). Such payments shall
be made at the later of the times specified in paragraph (J) below, or
within five (5) days after your request for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may
require.
(G) In the event that you become entitled to any payments provided for
hereinabove (the "Contract Payments"), if the Contract Payments or other
portion of the Total Payments (as defined below) will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code, the Company shall
pay to you, no later than the fifth day following the Date of Termination,
an additional amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the Contract Payments
and such other Total Payments and any federal and state and local income
and other payroll taxes and Excise Tax upon the payment provided for by
this paragraph (G), shall be equal to the Contract Payments and such other
Total Payments.
(H) For purposes of determining whether any of the payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by you in connection with a
change in control of the Company or your termination of employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a change in
control or any person affiliated with the Company or such person) payable
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a change in
control or
Page 11
any person affiliated with the Company or such person (together with the
Contract Payments, the "Total Payments"), shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code and all
"excess parachute payments" within the meaning of Section 280G(b)(l) of the
Code shall be treated as subject to the Excise Tax unless in the opinion of
tax counsel selected by RTI's independent auditors and reasonably
acceptable to you, such other payments or benefits (in whole or in part) do
not constitute parachute payments, including by reason of Section
280G(b)(4)(A) of the Code or such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4)(B) of the Code in excess of the
base amount allocable to such reasonable compensation within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise
Tax, (ii) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the amount of
the Total Payments or (B) the amount of excess parachute payments within
the meaning of Section 280G(b)(l) of the Code (after applying clause (i)
above), and (iii) the value of any noncash benefits or any deferred payment
or benefit shall be determined by RTI's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on the Date of
Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
(I) In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time of
termination of your employment, you shall repay to the Company at the time
that the amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal
and state and local income tax imposed on the Gross-Up Payment being repaid
by you if such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction) plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time of the termination of your
employment (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in respect of such excess
(plus any interest payable with respect to such excess) at the time that
the amount of such excess is finally determined.
(J) The payments provided for in paragraphs (B), (C) and (D) above,
shall be made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Company shall pay to you
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the
Page 12
thirtieth day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by
the Company to you payable on the fifth day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(iv) If your employment shall be terminated (A) by the Company other
than for Cause, Retirement or Disability or (B) by you for Good Reason,
then for a twenty-four (24) month period after such termination, the
Company shall arrange to provide you with: (1) life, disability, accident
and health insurance benefits substantially similar to those which you are
receiving immediately prior to the Notice of Termination, (2) financial
advisory services similar to those provided currently to executives of the
Company, if any, and (3) outplacement services. Benefits otherwise
receivable by you pursuant to this Subsection 4(iv) shall be reduced to the
extent comparable benefits are actually received by you during the
twenty-four (24) month period following your termination, and any such
benefits actually received by you shall be reported to the Company. Any
rights that you have to continuation of life, disability, accident or
health coverage under applicable state or federal law shall be in addition
to those provided under this Agreement.
(v) If your employment shall be terminated (A) by the Company other
than for Cause, Retirement or Disability or (B) by you for Good Reason,
then in addition to the retirement benefits to which you are entitled under
the Pension Plan and Supplemental Plan or any successor plans thereto, the
Company shall pay you in cash at the time and in the manner provided in
paragraph (J) of Subsection 4(iii), a lump sum equal to the excess of (x)
the actuarial equivalent of the retirement pension (taking into account any
early retirement subsidy associated therewith and determined as a straight
life annuity commencing at age sixty-five (65) or any earlier date, but in
no event earlier than the second anniversary of the Date of Termination
whichever annuity yields a greater benefit) which you would have accrued
under the terms of the Pension Plan and Supplemental Plan (without regard
to any amendments to any such plans made subsequent to a change in control
of the Company and on or prior to the Date of Termination, which amendment
adversely affects in any manner the computation of retirement benefits
thereunder), determined as if you were fully vested thereunder and had
accumulated (after the Date of Termination) twenty-four (24) additional
months of age and service credit thereunder at the higher of the rate of
average compensation during the twelve (12) months prior to the change in
control of the Company or the rate of average compensation used to
calculate your benefits under such plans immediately preceding the Date of
Termination, over (y) the actuarial equivalent of the retirement pension
(taking into account any early retirement subsidy associated therewith and
determined as a straight life annuity commencing at age sixty-five (65) or
any earlier date, but in no event earlier than the Date of Termination
whichever annuity yields a greater benefit) which you had then accrued
pursuant to the provisions of the Pension Plan and the Supplemental Plan.
For purposes of this Subsection 4(v), "actuarial equivalent" shall be
determined using the same assumptions utilized under the Pension Plan for
purposes of determining alternative forms of benefits immediately prior to
the change in control of the Company.
(vi) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment
Page 13
or benefit provided for in this Section 4 be reduced by any compensation earned
by you as the result of employment by another employer, by retirement benefits,
by offset against any amount claimed to be owed by you to the Company, or
otherwise, except as provided in Subsection 4(iv).
(vii) In addition to all other amounts payable to you under this Section 4,
you shall be entitled to receive all benefits payable to you under the Pension
Plan, the Savings Plan, Supplemental Plan and Nonqualified Savings Plan and any
other plan or agreement relating to retirement benefits.
5. Successors; Binding Agreement. (i) RTI will require any successor
-----------------------------
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of RTI to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that RTI or the Company would be required to perform it if no such
succession had taken place. Failure of RTI to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation from the Company in the
same amount and on the same terms as you would be entitled to hereunder if you
terminate your employment for Good Reason following a change in control of the
Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. In the event a successor of RTI assumes and agrees to perform this
Agreement, by operation of law or otherwise, the term "RTI", as used in this
Agreement, shall mean such successor and the term "Company" shall mean,
collectively, such successor and the affiliates of such successor.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention of the Board
with a copy to the Secretary of RTI, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
-------------
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject
Page 14
matter hereof have been made by either party which are not expressly set forth
in this Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Illinois. All
references to sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of RTI and the Company under
Section 4 shall survive the expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Settlement of Disputes; Arbitration. All claims by you for benefits
-----------------------------------
under this Agreement shall be directed to and determined by the Board and shall
be in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to you in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to you for a review of the
decision denying a claim and shall further allow you to appeal to the Board a
decision of the Board within sixty (60) days after notification by the Board
that your claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Chicago, Illinois, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that you
shall be entitled to seek specific performance of your right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to RTI the enclosed copy of this letter which will then
constitute our agreement on this subject.
Sincerely,
RYERSON TULL, INC.
By __________________________________
Vice President - Human Resources
Agreed to this ____________ day
of ______________________, 2002
_______________________________
(Signature)