Exhibit 10.14
McD Draft 3/9/98
NSM
Nakornthai Strip Mill Public Co., Ltd.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of March 12,
1998, is between NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED (the "Company")
and JOHN W. SCHULTES, an individual ("Employee").
BACKGROUND INFORMATION
A. The Company desires to employ Employee as its President and Chief
Executive Officer,
B. Employee is willing to serve in such capacities and undertake the
responsibilities of such positions on the terms and conditions contained herein.
STATEMENT OF AGREEMENT
Section 1. Employment and Term. Subject to the terms and conditions
of this Agreement, the Company shall employ Employee as its Chief Executive
Officer and President during the Term (as hereinafter defined). Employee's
employment by the Company pursuant to this Agreement shall commence on the date
hereof and, subject to the terms and conditions of this Agreement, shall
continue until March 12, 2006 (the "Term). During the Term, Employee shall be
expected to perform such duties and carry out such responsibilities as may be
reasonably assigned to him from time to time by the Board of Directors of NSM
Management Company (the "Management Co.").
Section 2. Compensation and Benefits. Except as otherwise provided
herein, as compensation for his services to the Company, Employee shall receive
during the Term:
(a) A base salary payable in accordance with the Company's
usual pay practices (and in any event no less frequently than monthly) at the
initial rate of $240,000, or equivalent currencies at the Employee's option, per
annum, with increases of 5% per annum (calculated on a cumulative, compounded
basis) during the Term;
(b) At the discretion of the Management Co., an annual bonus
based on the Company's return on equity, profitability, operating efficiency and
adherence to capital expenditure budgets and construction timetables, payable in
such manner and in such amount as determined by the Management Co., with the
bonus formula designed to target bonuses of up to the higher of two times annual
base salary or one-half percent (0.5%) of net income (calculated assuming an
effective tax rate of 40% was paid by the Company), bonus payments shall be made
before April 1 of the year following the year for which the amend is made;
(c) Reimbursement for all expense reasonably incurred on
behalf of the Company, and to such periods of sick leave allowance as are
reasonable and appropriate for all senior offices of the Company;
(d) Rights to participate in any insurance, employee
retirement, benefit or welfare plan that is generally available to senior
officers of the Company, with participation in and benefits under any such plan
shall be on the terms and subject to the conditions specified in the governing
documents of the particular plan;
(e) A car and a driver (or if not provided by the Company,
additional compensation to cover the cost of a car and driver) to be used for
transportation to and from the office during working hours and for business
activities and personal use outside working hours;
(f) First class coverage health, accident and life insurance
for Employee, his wife and children until the age of 21; and an annual health
check-up for Employee and his wife at a qualified provider in Asia or the United
States;
(g) One round trip business class air fare each year to the
USA or Europe for Employee, his wife and children until the age of 21;
(h) Tuition payment for the children of Employee until high
school graduation at the International School Eastern Seaboard (ISE) in Chonburi
or an equivalent school in the area;
(i) Four weeks paid vacation; and
(j) Housing. A single family house for Employee and his family
to be built by the Company outside burapha Golf Course as already planned and
partially purchased. The Employee has the right to purchase the house and
property of book value at anytime during the term of the Agreement. Operation
cost will be paid by the Company. If the Employee purchases house and property,
the base salary will be increased commensurate with the Company's cost
reduction.
(k) Relocation. Upon expiration of the Term of the Agreement,
the death of the Employee or Termination without Cause, the Company will pay
relocation expenses to the United States or Europe per the Employee's or his
estate's executors' discretion.
(l) Tax Planing. Personal tax counsel for the Employee during
and upon expiration of the Term and for the Employee's family in case of death
during the Term.
(m) Travel Costs. Reimbursement of travel cost for the
Employee' wife to accompany on up to four (4) business trips per year.
Section 3. Stock Options. It is the intent of the Company based on
the Management Co.'s decision to institute a stock option plan within twelve
months from the date hereof for the benefit of Employee (and perhaps other
selected employees), pursuant to which Employee will be granted options to
acquire capital stock in the Company for an aggregate price
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such that Employee can reasonably except (based on assumptions, conditions and
circumstances selected by the Management Co. and existing at the time of the
grant of options) a $2,000,000 gain on such stock if the options are exercised
at the expiration of the Term. Such gain is predicated on substantially meeting
the financial projections of the high-yield bond transaction of March 1998.
Results exceeding these projections are intended to be rewarded with a
proportionally increased gain above $2,000,000 and/or additional incentive
compensation.
Section 4. Termination.
(a) Employee's employment with the Company may be terminated
at any time with or without Cause (as hereinafter defined) by the Company upon
notice. If the Employee's employment is terminated by the Management Co. for
Cause, then his compensation shall terminate on the effective date of
termination. "Cause" shall mean (i) a felony conviction of Employee involving
dishonesty or moral turpitude, or (ii) willful misconduct, fraud, embezzlement
or flagrant dereliction of duty in the performance or nonperformance of his
duties hereunder, provided, however, that the Management Co. shall provide
Employee with written notice of any of the events enumerated in the preceding
clause 4(a)(ii) and shall give Employee thirty (30) days from such notice to
effect a cure of any such event when and if such a cure is reasonably possible
in the Company's sole discretion. If the Management Co. terminates Employee's
employment without Cause, then the Company shall continue to pay Employee's base
salary as severance pay for the remainder of the Term. In addition, the Company
shall pay at the customary time for any bonus payments last paid to the Employee
during the Term pursuant to subsection 2(b), prorated on a per diem basis for
partial fiscal years. To the extent three annual bonus payments have not
previously been paid to the Employee, such continuation of Employee's salary and
bonus following termination without Cause, if any, shall not be interrupted or
cease as a result of his death or disability. If Employee terminates his
employment other than for the reasons provided in subsection 4(b) (which
termination must be upon at least thirty (30) days notice) then his right to any
and all compensation hereunder shall terminate on the day he terminates such
employment.
(b) If the Management Co., the Company, any Affiliate of the
Management Co., or the Company or any third party that purchases a controlling
interest in the Management Co. or any Affiliate of the Company (whether by
merger, consolidation sale of all or substantially all of its assets, or sale of
a majority of the capital stock of the Company or the capital stock of any
Affiliate), materially changes Employee's duties, responsibilities or authority
with the Company without his consent other than for Cause, Employee shall have
the right to terminate his employment with the Company upon notice, in which
event the Company shall continue to pay Employee's base salary as severance pay
for the remainder of the Term; in addition, the Company shall pay a one-time
severance bonus payment equal to the average of the annual bonus payments
previously paid to the Employee during the Term pursuant to subsection 2(b),
prorated on a per diem basis for partial fiscal years. Such continuation of
salary and payment of such one-time severance bonus, if any, shall not be
interrupted or cease as a result of Employee's death or disability.
(c) The continued payment of salary and the one-time severance
bonus pursuant, as the case may be, to subsections 4(a) and 4(b) shall be the
exclusive payment due Employee upon the termination of his employment with the
Company pursuant to this Agreement.
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All other compensation, benefits and prerequisites shall cease as of the
effective date of such termination and no other payments or benefits shall be
due hereunder.
(d) If, due to physical or mental disability, the Employee
shall be unable to perform substantially all of his duties for a continuous
period of six (6) months, either the Employee or the Employer may by notice
terminate the Employee's employment under, equal to and in the same periodic
installments as his base salary, as provided in Section 2 less any amounts
payable to the Employee under any benefits paid by Workmen's Compensation, or
under any other state disability benefits, including the Employer's long-term
disability policy called for by Section 2(f), but only during the remaining
period of the original eight (8) year term hereof.
Section 5. Covenant Not to Compete.
(a) Definitions.
(i) The term "Affiliate" means any corporation, limited
liability company partnership, person or other entity which, directly or
indirectly, through one or more intermediaries, is controlled by or is under
common control with the Company, or with Employee, as the case may be;
(ii) The term "Compete" means to manage, operate, control
or participate in, or have any ownership interests in or make loans to, or aid
or advise as an employee, consultant or otherwise, whether directly or
indirectly, any business (whether an individual, sole proprietorship,
partnership, corporation, firm joint venture, trust or other entity) which is
engaged in directly or indirectly, the business of manufacturing, distributing
or selling scrap steel substitutes including, but not limited to, coal-based DRI
or flat-rolled steel products;
(iii) The term "Restricted Period" means the period
during which Employee is employed by the Company and for a period of one (1)
year thereafter and the period during which the Employee's base salary shall
continue to be paid by the Company under Section 4(b);
(iv) The term "DRI" means direct reduced iron; and
(v) The term "Restricted Area" means, with respect to
scrap substitutes and DRI, the entire world, and, with respect to flat-rolled
steel product, the countries that currently make up the ASEAN.
(b) General Covenant. During the Restricted Period neither Employee
nor any Affiliate of Employee shall Compete with the Company in the Restricted
Area, except if terminated without cause.
(c) Additional Covenants. During the Term of Employee's employment
with the Company and thereafter, neither Employee nor any Affiliate of Employee
shall, directly or indirectly (whether as owner, principal, employee, partner,
lender or venture with or consultant to any person, firm, partnership,
corporation or other entity): (i) cause or seek to cause any of the Company's
suppliers, purchasing agents or customers to cease transacting
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business with the Company; (ii) cause or seek to cause any of the Company's
prospective suppliers, purchasing agents or customers, as identified in writing
by the Company at the time of termination purchasing agents or customers not to
transact business with the Company or (iii) cause or seek to cause any of the
Company's employees to terminate their employment with the Company.
(d) Permitted Activities. The foregoing shall not be deemed to
prohibit Employee or any Affiliate of Employee from owning shares of capital
stock of the Company, from owning investments in publicly traded or privately
held companies where Employee and his Affiliates own less than 1% of the
outstanding capital stock (provided that such investments do not violate any
policies of general application established from time to time by the Company),
from serving as a director, trustee or officer of or otherwise participating in
educational, welfare, professional, industry or trade, social, religious and
civic organizations which do not compete with the Company. Employee shall also
have the right to serve as a director of a corporation which does not Compete
with the Company.
(e) Suspension of Restricted Period. In the event Employee breaches
the restriction contained in subsection 5(b) hereof, such breach shall suspend
and toll the running of the Restricted Period from the date of such breach until
such time as such violation ceases.
Section 6. Confidential Information. Employee shall maintain in
strict confidence and shall not, directly or indirectly, divulge, transmit,
publish, release or otherwise use or cause to be used in any manner to Compete
with or that is contrary to the interests of the Company, any confidential or
proprietary information relating to Company's systems, operations, formulas,
processes, computer programs and databases, records, development data and
reports, quality control specifications, cost analysis, flow charts, know-how,
customer lists, supplier lists, marketing data, personnel data, or any
information relating to sales, financial structure or pricing, and other
information of like nature. The restriction expires thirty (30) months from
termination of employment. Employee acknowledges that all information regarding
the Company compiled or obtained by, or furnished to, Employee in connection
with his employment or association with the Company is confidential and
proprietary information and the Company's exclusive property. Upon demand by the
Company, Employee shall surrender to the Company all original and facsimile
records, documents and data in his possession pertaining to the company. The
Employee is allowed to keep all records and documents which were in his
possession before his initial employment with the Company on October 1, 1995.
Notwithstanding the foregoing, the Company permits and encourages
conference participation and participation and publication of Company
information designed to promote the image and recognition of the Company's
leadership in the steel and scrap substitute industries. The Company also
encourages continuing employee education and the use of Company information for
such purposes. The foregoing covenant of confidentiality has no temporal,
geographical or territorial limitation.
Notwithstanding the foregoing, this provision does not apply to the
extent, and only to the extent, such information: (a) is clearly obtainable in
the public domain, (b) becomes obtainable in the public domain through no fault
of Employee's, (c) was not acquired by
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Employee in connection with his employment or affiliation with the Company, or
(d) is required to be disclosed by rule of law or by order of a court or
governmental body or agency, (e) is required to be disclosed under the
provisions of the high yield bond offering, private debt placement, equity
investment, and the associated contracts and agreements.
Section 7. Independent Significance. The restrictive covenants
contained herein shall be construed as independent of the other provisions of
this Agreement, and the existence of any claim or cause of action of Employee,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any of the restrictive covenants
contained herein.
Section 8. Severability. All provisions of this Agreement are
intended to be severable. In the event any provision or restriction contained
herein is held to be invalid or unenforceable in any respect, in whole or in
part, such finding shall in no way affect the validity or enforceability or any
other provisions of this Agreement. The parties hereto further agree that any
such invalid or unenforceable provision shall be deemed modified so that it
shall be enforced to the greatest extent permissible under law.
Section 9. Nonwaiver. No failure or delay be either party in
exercising such party's rights hereunder shall operate as a waiver thereof and
no single or partial exercise thereof shall preclude any further exercise of any
right, power, or privilege by such party.
Section 10. Notices. All notices and other communications hereunder
shall be in writing and shall be either personally delivered or mailed by
certified mail, return receipt requested, addressed as follows:
if to the Company: Nakornthai Strip Mill Public Company Limited
9 Ramkhamhaeng Road
19th Floor, UM Tower
Suanluang, Bangkok 10250
Attention: Board of Directors
if to Employee: John W. Schultes
Burapha Golf
JHL Village 14 H
Bowin, Sriracha, Chonburi 20230
or such other address as either party notifies the other by certified mail or
personal delivery. Notice shall be deemed given when personally delivered or
when deposited in the United States mail.
Section 12. Expenses. In any legal action brought to enforce the
provisions of this Agreement, the non-prevailing party will, upon demand, pay to
the prevailing party the amount of any and all reasonable expenses, including
the reasonable fees and expenses of such prevailing party's counsel, which any
such prevailing may incur in connection with (a) the exercise
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or enforcement of any of its rights hereunder, or (b) the failure by the
non-prevailing party to perform or observe any of the provision hereof.
Section 13. Miscellaneous.
(a) This Agreement is for personal services to be provided by
Employee and shall not be assigned or transferred by Employee to, and Employee's
obligations hereunder shall not be performed by, any other party.
(b) Employee represents and warrants that he is not under any
obligation, contractual or otherwise, to any person, firm, corporation or entity
which would prevent his entering into this agreement or performing his
obligations hereunder.
(c) This Agreement contains the entire agreement between the
parties hereto regarding the subject matter hereof and supersedes all prior ad
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written.
(d) Headings shall not be considered part of this Agreement.
They are included solely for convenience and are not intended to be full or
accurate descriptions of the contents hereof.
(e) This Agreement shall be governed by, and construed in
accordance with, the laws of Ohio.
(f) This Agreement shall inure to the benefit of Employee and
the Company and their respective representatives, successors and permitted
assigns and shall bind the Company and Employee and their respective
representatives, successors and permitted assigns. The Company shall have the
right, without Employees consent, to assign or transfer this Contract or the
benefits or obligations hereof or any part hereof to the Company's lenders.
(g) The Company represents and warrants to Employee as
follows:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of The Kingdom of Thailand and has
all requisite corporate power and authority to enter into, execute, and deliver
this Agreement, fulfill its obligations hereunder and consummate the
transactions contemplated hereby: and
(ii) The execution and delivery of, performance of
obligations under, and consummation of the transactions contemplated by this
Agreement have been duly authorized and approved by all requisite corporate
action by or in respect of the Company, and this Agreement constitutes a legally
valid and binding obligation of the Company enforceable against the Company by
Employee in accordance with its term.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
/s/ John W. Schultes
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JOHN W. SCHULTES
NAKORNTHAI STRIP MILL PUBLIC
COMPANY LIMITED
By: /s/ Sawasdi Horrangruang
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Its: Chairman
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