Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) dated as of March 31, 2008 (the
“Effective Date”), is between RathGibson, Inc. (the “Company”) and Michael G.
Schwartz (the “Executive”) (together, the “Parties”).

WHEREAS, the Parties wish to establish the terms of the Executive’s employment
with the Company.

WHEREAS, for purposes of this Employment Agreement, an “Affiliate” of the
Company is any other entity that, either directly or indirectly, the Company
controls, the Company is controlled by, or the Company is under common control
with.

Accordingly, the Parties agree as follows:

1.

Employment and Acceptance.  The Company shall employ the Executive, and the
Executive shall accept employment with the Company, subject to the terms of this
Agreement, on the Effective Date.

2.

Term.  Subject to earlier termination pursuant to Section 5 of this Agreement,
the employment relationship hereunder shall continue from the Effective Date
until March 31, 2009 (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, any Bonus (defined below in Section 4.2),
and any other benefits then accrued shall terminate except as may be provided
for in Section 6 of this Agreement.

3.

Duties and Title.  

3.1

Title.  The Executive shall serve in the capacity of President and Chief
Operating Officer of the Company and shall report to the Chief Executive Officer
of the Company (the “Chief Executive Officer”), who is currently Harley B.
Kaplan, or such other person as shall be designated by the Chief Executive
Officer from time to time.

3.2

Duties.  The Executive will perform such duties as are customarily performed by
the President & Chief Operating Officer of a company in similar lines of
business as the Company, including, without limitation: (a) having full profit
and loss responsibility for the day-to-day operating results of current
businesses in North America, Europe and Asia and the integration of future
acquisitions; (b) providing executive and functional leadership to ensure that
people, processes and systems are in place in the front-end and back-end of the
Company’s businesses, market and customer synergies are fully recognized and
exploited, and revenue and profit growth are driven to increase shareholder
value; and (c) such other duties as may be assigned to the Executive by the
Board of Directors of the Company (the “Board”), the Chief Executive Officer or
their respective designees from time to time.  The Executive will devote all his
full business time and attention to the performance of such duties and to the
promotion of the

 

 

 

business and interests of the Company and its Affiliates.  This Section 3.2,
however, shall not prevent the Executive, during the Term, from serving as a
member of the board of directors of civic and charitable organizations, provided
that such membership does not materially interfere with the Executive’s
performance of his duties under this Agreement or conflict with Section 7.3 of
this Agreement.

4.

Compensation and Benefits by the Company.  As compensation for all services
rendered pursuant to this Agreement, the Company shall provide the Executive the
following during the Term:

4.1

Base Salary.  The Company will pay to the Executive an annual base salary of
$375,000 payable in accordance with the customary payroll practices of the
Company (“Base Salary”), less applicable withholdings for federal, state, and
local taxes.  The Board will review annually the Executive’s Base Salary for
upward adjustment.  

4.2

Bonus.  The Executive shall be eligible to receive an annual bonus of up to 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.  Notwithstanding the foregoing, the Bonus for the Company’s fiscal year
beginning February 1, 2008 and ending January 31, 2009 (the “2009 Fiscal Year”)
will be prorated depending upon the number of days in the 2009 Fiscal Year
remaining after the Effective Date.  Bonuses shall be paid at the same time as
paid to other executives of the Company, generally within 75 days after the end
of the fiscal year to which the Bonus relates.  All Bonus amounts shall be
reduced for applicable federal, state and local taxes.

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.  The Company will pay
COBRA premiums during the ninety (90) day waiting period before the Executive is
eligible for the Company’s health and dental plan.  The Company hereby waives
the one (1) year waiting period that would otherwise be applicable to the
Executive’s participation in the Company’s college scholarship program.
 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 three (3) weeks of paid vacation
each fiscal year of the Company.  The carry-over of vacation days shall be in
accordance with the vacation policy of the Company.  The Executive shall not be
entitled to payment for unused vacation days upon the termination of his
employment except as set forth in Section 6.2 below.    

4.5

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.

 

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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.”  For purposes of this Agreement, “Disability” shall
mean a good faith determination by the Board in accordance with applicable law
that as a result of a physical or mental injury or illness, the Executive is
unable to perform the essential functions of his job with or without reasonable
accommodation for a period of: (i) ninety (90) consecutive days; or (ii) one
hundred eighty (180) days in any twelve (12) month period.

5.3

By the Company for Cause.  The Company may immediately terminate the Executive’s
employment, for “Cause” (as defined below), by action of the Board, upon written
notice by the Board to the Executive identifying the act or acts constituting
Cause.  For purposes of this Agreement, “Cause” means: (i) the Executive’s
willful and continued failure (other than as a result of incapacity due to
mental or physical impairment) to substantially perform his duties hereunder,
which is not remedied within ten (10) days after receipt of written notice from
the Board specifying such failure; (ii) the Executive’s failure to carry out, or
comply with, any lawful and reasonable directive of the Board or the Chief
Executive Officer, which is not remedied within thirty (30) days after receipt
of written notice from the Board or the Chief Executive Officer specifying such
failure; (iii) the Executive’s conviction of or plea of nolo contendre to any
felony or other crime involving moral turpitude; (iv) the Executive’s knowing
unlawful use or possession of illegal drugs; or (v) the Executive’s commission
of a material bad faith act of fraud, embezzlement, misappropriation, willful
misconduct, gross negligence, or breach of fiduciary duty, in each case against
the Company or any of its Affiliates.  

5.4

By the Company without Cause.  The Company may immediately terminate the
Executive’s employment without Cause at any time without prior notice.

5.5

By the Executive.  The Executive may terminate his employment hereunder at any
time, with or without “Good Reason” (as defined below), upon thirty (30) days
prior written notice to the Company.  The Executive’s employment shall terminate
as of thirty (30) days from the date notice is given, unless, with respect to a
notice regarding a termination based on Good Reason, the Company corrects the
circumstances constituting Good Reason within such thirty (30) day period.  For
purposes of this Agreement, “Good Reason” means, without the Executive’s
consent: (i) a reduction in Base Salary; or (ii) a material adverse reduction in
the Executive’s employee benefits; provided, however, that Good Reason shall not
include acts which are cured by the Company within thirty (30) days following
the Company’s receipt of written notice from the Executive of the existence of
circumstances constituting Good Reason.  Any notice of termination for Good
Reason must be given within thirty (30) days following the Executive’s learning
of circumstances constituting Good Reason.  

5.6

Removal from any Boards and Position.  If the Executive’s employment is
terminated for any reason under this Agreement, he shall be deemed to resign:
(i) if a member, from the Board or any other board to which he has been
appointed or nominated by or on behalf of the Company or any of its Affiliates;
and (ii) from any position with the Company or any of its Affiliates, including
without limitation, as an officer of the Company or any of its Affiliates.

 

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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 incurred but not yet reimbursed to the
Executive to the date of termination (the items referred to in clauses (a) and
(b), collectively, the ”Accrued Benefits”), and no severance or other benefits
from the Company.

6.2

By the Company Without Cause or By the Executive for Good Reason.  If the
Company terminates the Executive’s employment without Cause or if the Executive
terminates his employment for Good Reason, the Executive shall be entitled to
receive only the following, upon execution 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)

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 the law, and no other severance or other benefits from the Company.

6.3

Election Not to Extend the Term.  If the Company elects not to extend the Term
pursuant to Section 2 of this Agreement, unless the Executive’s employment with
the Company is earlier terminated pursuant to Section 5 of this Agreement,
termination of the Executive’s employment hereunder (whether or not the
Executive continues as an employee of the Company thereafter) shall be deemed to
occur on the close of business on the day immediately preceding the next
scheduled date on which extension of the Term would otherwise begin and the
Executive shall be entitled to receive, upon execution and delivery to the
Company without revocation of a Release: (a) the Accrued Benefits; (b) continued
Base Salary for nine (9) months after the date of termination, payable in
monthly installments; and (c) continued coverage under the Company’s medical and
dental plans for nine (9) months after the date of

 

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termination; provided, that the Company may provide such coverage through
reimbursement of the cost of continuation of group health coverage, pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1986, to the extent the
Executive is eligible and subject to the terms of the plan and the law, and no
other severance or other benefits from the Company.  If the Executive elects not
to extend the Term pursuant to Section 2 of this Agreement, unless the
Executive’s employment with the Company is earlier terminated pursuant to
Section 5 of this Agreement, termination of the Executive’s employment hereunder
(whether or not the Executive continues as an employee of the Company
thereafter) shall be deemed to occur on the close of business on the day
immediately preceding the next scheduled date on which extension of the Term
would otherwise begin, and the Executive shall be entitled to receive only the
Accrued Benefits and no severance or other benefits from the Company.  

6.4

Nondisparagement.  Except in connection with any legal dispute between the
Parties or an order of a court or governmental agency with jurisdiction, the
Executive shall not at any time (whether during or after the Term) publish or
communicate to any person or entity any “Disparaging” (as defined below)
remarks, comments or statements concerning the Company, any of its Affiliates,
or any of their respective present and former members, partners, directors,
officers, shareholders, employees, agents, attorneys, successors and assigns,
and the Company and its Affiliates shall not at any time (whether during or
after the Term) publish or communicate to any person or entity any Disparaging
remarks, comments or statements concerning the Executive and shall instruct
their respective present members, partners, directors, and officers to not at
any time publish or communicate to any person or entity any Disparaging remarks,
comments or statements concerning the Executive.  “Disparaging” remarks,
comments or statements are those that impugn the character, honesty, integrity
or morality or business acumen or abilities in connection with any aspect of the
operation of business of the individual or entity being disparaged.

7.

Restrictions and Obligations of the Executive.  

7.1

Confidentiality.  i)  During the course of the Executive’s employment by the
Company (prior to and during the Term), the Executive has had and will have
access to certain trade secrets and confidential and proprietary information
relating to the Company and its Affiliates (the “Protected Parties”) which is
not readily available from sources outside the Company.  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; 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

 

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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 or any of its Affiliates (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 Company or at any time thereafter,
disclose any Confidential Information, directly or indirectly, to any person or
entity for any reason or purpose whatsoever, nor shall the Executive use it in
any way, except in the course of the Executive’s employment with, and for the
benefit of, the Protected Parties or to enforce any rights or defend any claims
hereunder, provided that such disclosure is relevant to the enforcement of such
rights or defense of such claims and is only disclosed in the formal proceedings
related thereto.  The Executive shall take all reasonable steps to safeguard the
Confidential Information and to protect it against disclosure, misuse,
espionage, loss and theft.  The Executive understands and agrees that the
Executive shall acquire no rights to any such Confidential Information.

(b)

All files, records, documents, drawings, specifications, data, computer
programs, intangible property (including but not limited to trade names,
registered and unregistered trademarks and service marks, brand names, patents,
and copyrights) and similar items relating thereto or to the business carried on
by the Company and its Affiliates, as well as all customer lists, specific
customer information, compilations of product research and marketing techniques
of the Company and its Affiliates, whether prepared by the Executive or
otherwise, coming into the Executive’s possession, shall remain the exclusive
property of the Company and its Affiliates, and the Executive shall not remove
any such items from their premises, except in furtherance of the Executive’s
duties under this Agreement.

(c)

It is understood that while employed by the Company, the Executive will promptly
disclose to it, and assign to it the Executive’s interest in any invention,
improvement or discovery made or conceived by the Executive, either alone or
jointly with others, which arises out of the Executive’s employment with the
Company (prior to and during the Term).  At the Company’s request and expense,
the Executive will assist the Company and its Affiliates during the Term and
thereafter in connection with any controversy or legal proceeding relating to
such invention, improvement or discovery and in obtaining domestic and foreign
patent or other protection covering the same.

(d)

As requested by the Company and at the Company’s expense, from time to time and
upon the termination of the Executive’s employment with the Company for any
reason, the Executive will promptly deliver to the Company all copies and
embodiments, in whatever form, of all Confidential Information in the
Executive’s possession or within his control (including, but not limited to,
memoranda, records, notes, plans, photographs, manuals, notebooks,
documentation, program listings, flow charts, magnetic media, disks, diskettes,
tapes and all other materials containing any Confidential Information)
irrespective of the location or form of such material.  If requested by the
Company, the Executive will provide the Company with written confirmation that
all such materials have been delivered to the Company as provided herein.

 

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7.2

Non-Solicitation or Hire.  During the Term and for a period of twelve (12)
months following the termination of the Executive’s employment for any reason,
the Executive shall not directly or indirectly (a) solicit or attempt to solicit
or induce, directly or indirectly, any party who is a customer or client of the
Company or any of its Affiliates, or who was a customer or client of the Company
or any of its Affiliates at any time during the twelve (12) month period
immediately prior to the date the Executive’s employment terminates, for the
purpose of marketing, selling or providing to any such party any services or
products offered by or available from the Company or any of its Affiliates, (b)
interfere with or attempt to interfere with any business relationships (whether
formed before, during, or after the Term) of the Company or any of its
Affiliates with their suppliers, or (c) hire or solicit or attempt to hire or
solicit or induce, directly or indirectly, any employee of the Company or any of
its Affiliates or any person, who was an employee of the Company or any of its
Affiliates during the six (6) month period immediately prior to the date the
Executive’s employment hereunder terminates, to terminate such employee’s
employment relationship with the Company or any of its Affiliates in order to
enter into a similar relationship with the Executive or any other person or
entity; provided however, that advertising for employment in any online careers
website, newspaper, trade journal or other publication available for general
distribution to the public without specific reference to any particular
employees shall not constitute a breach of this Section 7.2.  

7.3

Non-Competition.  During the Term and for a period of twelve (12) months
following the termination of the Executive’s employment for any reason, the
Executive shall not, whether individually as a director, manager, member,
stockholder, partner, owner, employee, consultant or agent of any business, or
in any other capacity, other than on behalf of the Company, organize, establish,
own, operate, manage, control, engage in, participate in, invest in, permit his
name to be used by, act as a consultant or advisor to, render services for
(alone or in association with any person, firm, corporation or business
organization), or otherwise assist any person or entity that engages in or owns,
invests in, operates, manages or controls any venture or enterprise which
engages or proposes to engage in any business conducted by the Company or any of
its Affiliates: (x) on the date of the Executive’s termination of employment
(including, without limitation, any business which the Company or any of its
Affiliates has specific plans to conduct in the future and as to which the
Executive is aware), or (y) within twelve (12) months prior to the Executive’s
termination of employment with the Company in the geographic locations where the
Company or any of its Affiliates engages or proposes to engage in such business
(the “Competitive Business”).  Notwithstanding the foregoing, the Executive may,
directly or indirectly own, solely as an investment, securities of any firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise engaged in the business of the Company which
are publicly traded on a national or regional stock exchange or on the
over-the-counter market if the Executive is not a controlling person of, or a
member of a group which controls, such entity and does not directly or
indirectly own 5% or more of any class of securities of such entity.  

7.4

Property.  The Executive acknowledges that all originals and copies of
materials, records and documents generated by him or coming into his possession
during his employment (prior to and during the Term) are the sole property of
the Company and its Affiliates (“Company Property”).  During the Term, and at
all times thereafter, the Executive shall not remove, or cause to be removed,
from the premises of the Company or any of its Affiliates, copies of any record,
file, memorandum, document, or equipment, or any other item relating to the
business of the Company or any of its Affiliates, except in furtherance of his

 

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duties under the Agreement.  When the Executive’s employment terminates, or upon
request of the Company at any time, the Executive shall promptly deliver to the
Company all Company Property in his possession or control.

8.

Remedies; Specific Performance.  The Parties acknowledge and agree that the
Executive’s breach or threatened or attempted breach of any of the covenants or
restrictions set forth in Section 7 will result in irreparable and continuing
damage to the Protected Parties for which there may be no adequate remedy at law
and that the Protected Parties shall be entitled to equitable relief, including
but not limited to, specific performance and injunctive relief as remedies for
any such breach or threatened or attempted breach.  The Executive also agrees
that such remedies shall be in addition to any and all remedies, including
damages, available to the Protected Parties against him for such breaches or
threatened or attempted breaches.  In addition, without limiting the Protected
Parties’ remedies for any breach by the Executive of any covenants or
restrictions set forth in Section 7, in the event of such breach, (i) the
Executive shall not be entitled to any payments set forth in Section 6 hereof,
except as required by law, and (ii) the Company will have no obligation to pay
any of the amounts that remain payable by the Company under Section 6.  

9.

Other Provisions.

9.1

Notices.  Any notice or other communication required or which may be given
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid or overnight mail and shall be deemed given when so delivered personally
or sent by facsimile transmission or, if mailed, four (4) days after the date of
mailing or one (1) day after overnight mail, as follows:

(a)

If to the Company, to:

RathGibson, Inc.

475 Half Day Road, Suite 210

Lincolnshire, IL 60069

Attention:  Chief Executive Officer

Telephone:  (800) 468-9459

Fax:  (608) 754-0605

(b)

If to the Executive, to the Executive’s home address reflected in the Company’s
records.

9.2

Entire Agreement.  This Agreement contains the entire agreement between the
Parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with respect thereto.  

9.3

Representations and Warranties by the Executive.  The Executive represents and
warrants that he is not a party to or subject to any restrictive covenants,
legal restrictions or other agreements in favor of any entity or person which
would in any way preclude, inhibit, impair or limit the Executive’s ability to
perform his obligations under this Agreement, including, but not limited to,
non-competition agreements, non-solicitation agreements or confidentiality
agreements.

 

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9.4

Waiver and Amendments.  This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms and conditions hereof may be
waived, only by a written instrument signed by the Parties or, in the case of a
waiver, by the Party waiving compliance.  No delay on the part of any Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any right, power or privilege
hereunder, nor any single or partial exercise of any right, power or privilege
hereunder, preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.

9.5

Governing Law, Dispute Resolution and Venue.  

(a)

This Agreement shall be governed and construed in accordance with the laws of
the State of New York applicable to agreements made and/or to be performed
entirely within that State, without regard to conflicts of laws principles.  

(b)

The Parties agree irrevocably to submit to the exclusive jurisdiction of the
federal courts or, if no federal jurisdiction exists, the state courts, located
in the City of New York, Borough of Manhattan, for the purposes of any suit,
action or other proceeding brought by any Party arising out of any breach of any
of the provisions of this Agreement and hereby waive, and agree not to assert by
way of motion, as a defense or otherwise, in any such suit, action, or
proceeding, any claim that it is not personally subject to the jurisdiction of
the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that the provisions of this Agreement may not be enforced in or by
such courts.  In addition, the Parties agree to the waiver of a jury trial.  

9.6

Assignment.  This Agreement, and all of the Executive’s rights and duties
hereunder, shall not be assignable or delegable by the Executive.  Any purported
assignment or delegation by the Executive in violation of the foregoing shall be
null and void ab initio and of no force and effect.  This Agreement may be
assigned by the Company to a person or entity which is an Affiliate or a
successor in interest to substantially all of the business operations of the
Company.  Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such Affiliate or successor
person or entity; provided that, in the event such Affiliate person or entity is
unable to satisfy the obligations owed to the Executive under this Agreement,
the Company shall remain liable for such obligations.  

9.7

Successors; Binding Agreement.  This Agreement shall inure to the benefit of and
be binding upon personal or legal representatives, executors, administra­tors,
successors, heirs, distributees, devisees and legatees.

9.8

Counterparts.  This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
instrument.

9.9

Headings.  The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning of terms contained herein.

9.10

Severability.  If any term, provision, covenant or restriction of this
Agreement, or any part thereof, is held by a court of competent jurisdiction of
any foreign, federal, state, county or local government or any other
governmental, regulatory or

 

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administrative agency or authority to be invalid, void, unenforceable or against
public policy for any reason, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected or impaired or invalidated.  The Executive
acknowledges that the restrictive covenants contained in Section 7 are a
condition of this Agreement and are reasonable and valid in temporal scope and
in all other respects.  

9.11

Judicial Modification.  If any court determines that any of the covenants in
Section 7, or any part of any of them, is invalid or unenforceable, the
remainder of such covenants and parts thereof shall not thereby be affected and
shall be given full effect, without regard to the invalid portion.  If any court
determines that any of such covenants, or any part thereof, is invalid or
unenforceable because of the geographic or temporal scope of such provision,
such court shall reduce such scope to the minimum extent necessary to make such
covenants valid and enforceable.

9.12

Tax Withholding.  The Company is authorized to withhold from any benefit
provided or payment due hereunder, the amount of withholding taxes due any
federal, state or local authority in respect of such benefit or payment and to
take such other action as may be necessary in the opinion of the Board to
satisfy all obligations for the payment of such withholding taxes.

9.13

Conformance with Code Section 409A.  The Parties hereto agree to negotiate in
good faith should any amendment to the Agreement be required in order to comply
with Section 409A of the Internal Revenue Code.  

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IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby,
have executed this Agreement as of the day and year first above mentioned.

THE EXECUTIVE:

/s/ Michael G. Schwartz                                    

Name:

Michael G. Schwartz

THE COMPANY:

RATHGIBSON, INC.

By: /s/ Harley B. Kaplan                                   

Name:  Harley B. Kaplan

Title:    Chairman & CEO

 

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EXHIBIT A

SEPARATION AGREEMENT AND GENERAL RELEASE

RathGibson, Inc. (the “Company”) and Michael G. Schwartz (the “Executive”)
(together, the “Parties”) entered into an employment agreement, effective March
31, 2008 (the ”Employment Agreement”).  The Parties hereby agree that this
Separation Agreement and General Release (the “Agreement”) sets forth their
complete agreement and understanding regarding the termination of the
Executive’s employment with the Company.

1.

Separation Date.  The Executive’s employment with the Company will terminate
effective [_______________] (the “Separation Date”).  The Executive agrees to
return all property belonging to the Company and its Affiliates no later than
the Separation Date.  Except as specifically provided below, the Executive shall
not be entitled to receive any benefits of employment following the Separation
Date.

2.

Consideration of the Company.  In consideration for the releases and covenants
by the Executive in this Agreement, the Company will provide the Executive with
the following:  [insert consideration as set forth in the Employment Agreement]

3.

Executive Release of Rights.  The Executive (defined for the purpose of this
Paragraph 3 as the Executive and the Executive’s agents, representatives,
attorneys, assigns, heirs, executors, and administrators) irrevocably, fully,
and unconditionally releases the Released Parties (defined as the Company, its
Affiliates, each of their respective affiliated companies, parents,
subsidiaries, predecessors, successors, assigns, divisions, related entities and
any of their respective past or present employees, officers, agents, insurers,
attorneys, administrators, officials, directors, shareholders, employee benefit
plans, and the sponsors, fiduciaries, or administrators of the Company’s
employee benefit plans) from any and all liability, claims, demands, actions,
causes of action, suits, grievances, debts, sums of money, agreements, promises,
damages, back and front pay, costs, expenses, attorneys’ fees, and remedies of
any type, arising or that may have arisen out of or in connection with the
Executive’s employment with or termination of employment from the Company, from
the beginning of time to the date hereof, including but not limited to claims,
actions or liability under:  (1) Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination
in Employment Act, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Workers’ Adjustment and Retraining Notification Act, the
Executive Retirement Income Security Act of 1974, the New York State Human
Rights law, or the Administrative Code of the City of New York, all as amended;
(2) any other federal, state or local statute, ordinance, or regulation
regarding employment, termination of employment, or discrimination in
employment, and (3) the common law relating to employment contracts, wrongful
discharge. defamation, or any other matter.

4.

Waiver of Reinstatement.  The Executive waives any reinstatement or future
employment with the Company or any of its Affiliates and agrees never to apply
for employment or otherwise seek to be hired, rehired, employed, re-employed, or
reinstated by the Company or any of its Affiliates.

5.

No Encouragement of Claims.  The Executive agrees not to encourage or assist any
person who files a lawsuit, charge, claim or complaint against the Released
Parties unless the

 

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Executive is required to render such assistance pursuant to a lawful subpoena or
other legal obligation.  

6.

Cooperation of the Executive.  The Executive agrees to cooperate with the
Company and its Affiliates in any reasonable manner as the Company or any of its
Affiliates may request, including but not limited to furnishing information to
and otherwise consulting with the Company; and assisting the Company in any
litigation or potential litigation or other legal matters, including but not
limited to meeting with and fully answering the questions of the Company or its
representatives or agents, and testifying and preparing to testify at any
deposition or trial.  The Company agrees to reimburse the Executive for any
reasonable out of pocket expenses incurred as a result of such cooperation.  

7.

Non-admission/Inadmissibility.  This Agreement does not constitute an admission
by the Company or any of its Affiliates that any action it took with respect to
the Executive was wrongful, unlawful or in violation of any local, state, or
federal act, statute, or constitution, or susceptible of inflicting any damages
or injury on the Executive, and the Company and its Affiliates each specifically
deny any such wrongdoing or violation.  This Agreement is entered into solely to
resolve fully all matters related to or arising out of the Executive’s
employment with and termination from the Company, and its execution and
implementation may not be used as evidence, and shall not be admissible in a
subsequent proceeding of any kind, except one alleging a breach of this
Agreement.

8.

Severability.  The provisions of this Agreement shall be severable and the
invalidity of any provision shall not affect the validity of the other
provisions.

9.

Governing Law.  This Agreement shall be governed by and construed in accordance
with the laws and judicial decisions of the State of New York, without regard to
its principles of conflicts of laws.

10.

Scope of Agreement.  The Executive understands that he remains bound to those
provisions in the Employment Agreement, which survive the termination of the
Executive’s employment, including but not limited to, those provisions in
Section 7 of the Employment Agreement.  Except as specifically set forth in such
provisions, this Agreement contains the entire agreement and understanding
between the Executive and the Company concerning the matters described herein,
and supersedes all prior agreements, discussions, negotiations, understandings
and proposals of the Parties.  The terms of this Agreement cannot be changed
except in a subsequent document signed by both Parties.

11.

Revocation Period.  The Executive has the right to revoke this Agreement for up
to seven (7) days after he signs it.  In order to revoke this Agreement, the
Executive must sign and send a written notice of the decision to do so,
addressed to [name] at [insert title, and address], and that written notice must
be received by the Company no later than the eighth (8th) day after the
Executive signed this Agreement.  If the Executive revokes this Agreement, the
Executive will not be entitled to any of the consideration from the Company
described in paragraph 2 above, except to the extent required by law.  

 

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12.

Voluntary Execution of Agreement.  The Executive acknowledges that:

a.

the Executive has carefully read this Agreement and fully understands its
meaning;

b.

the Executive had the opportunity to take up to twenty one (21) days after
receiving this Agreement to decide whether to sign it;

c.

the Executive understands that the Company is hereby advising him, in writing,
to consult with an attorney before signing it;

d.

the Executive is signing this Agreement, knowingly, voluntarily, and without any
coercion or duress; and

e.

everything the Executive is receiving for signing this Agreement is described in
the Agreement itself or in his Employment Agreement, and no other promises or
representations have been made to cause the Executive to sign it.

13.

Nondisclosure.  The Executive shall not disclose the contents or substance of
this Agreement to any third parties, other than the Executive’s attorneys,
accountants, or as required by law and shall instruct each of the foregoing not
to disclose the same.

EXECUTIVE

____________________________________

Name:  Michael G. Schwartz

RATHGIBSON, INC.

By:

Name:  

Title:  

 

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