EMPLOYMENT AGREEMENT
Exhibit 10.16
This Agreement (herein so called) is made and entered into as of the 1st day
of January, 2006 by and between Metalico, Inc., a Delaware corporation (hereinafter referred to as
“Employer”), and Xxxxxx Xxxxxxxx (hereinafter referred to as “Employee”).
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee, and Employee desires to be employed by Employer,
as an executive subject to the direction and control of Employer, upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, and of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by Employer. Employer employs Employee, as of the date hereof (the “Effective
Date”) to render full-time services to Employer in a supervisory and managerial capacity, and to
manage its operations and that of its subsidiaries. Employee shall perform the duties that are
consistent with such position as he shall reasonably be directed to perform by Employer.
1.2 Acceptance of Employment. Employee accepts such employment and shall render the services
described above.
1.3 Place of Employment. Employee’s principal place of employment shall be Employer’s
business location in Union County, New Jersey, subject to reasonable travel as the rendering of the
services hereunder may require.
2. Term. The term of Employee’s employment by Employer hereunder (the “Employment Period”)
shall be for a period of three (3) years from the Effective Date terminating on December 31, 2008,
subject to the termination provisions of Sections 6.1 through 6.5 hereof. There shall be automatic
one (1) year extensions of the Employment Period thereafter unless this Agreement is terminated
upon 30 days written notice by Employee or Employer, unless superseded by subsequent Agreement by
the parties.
3. Compensation. During the Employment Period, for all services rendered by Employee under
this Agreement, Employer shall pay Employee an annual salary at the rate of $180,000 (“Base
Salary”) for year one (1), with such annual increases thereafter for years (2) and (3) as Employer
shall determine but expected to be in a range
of 3% to 5 % each calendar year. Employee’s salary shall be payable in accordance with the
customary payroll policy of Employer in effect at the time such payment is made, or as may
otherwise be mutually agreed upon by the parties. The base salary may be increased from time to
time at the discretion of the Board of Directors, taking into account Employer’s growth and
earnings. In addition, Employer shall provide to Employee an automobile with applicable insurance
comparable with other senior management.
3.1 Incentive Stock Options and Bonus Plan. Employee shall be eligible to participate in
Employer’s Executive Management Stock Option and Bonus Plan. Grants shall be made annually with
amounts based on individual and Company performance at the discretion of the Compensation Committee
of the Board of Directors. Stock option grants shall have vesting requirements and the strike
price shall be based on the fair market value on the date of grant. Bonuses shall be distributed
annually at the discretion of the Compensation Committee and the Board of Directors.
3.2 Changes in Common Stock of Employer. If from time to time during the term of this
Agreement:
3.2.1 There is a dividend of any security, stock split or other change in the character or
amount of any of the outstanding securities of Employer; or
3.2.2 There is any consolidation, merger or sale of all, or substantially all, of the assets
of Employer, then, in such event, any and all new, substituted or additional securities or other
property to which Employee is entitled by reason of his ownership of the Stock Options, Stock
Grants, stock purchases, or the shares deliverable upon their exercise or purchase shall be
immediately subject to the provisions of this Agreement and be included on a pro rata basis based
upon the number of vested and unvested shares then held by Employee for all purposes of this
Agreement with the same force and effect as the stock presently subject to this Agreement and with
respect to which such securities or property were distributed. Whenever a specific number of Stock
Options, Stock Grants, or stock purchases are stated in this Agreement, that number shall be
amended so as to reflect the original intention of the parties.
4. Benefits. Employee shall be entitled, during each calendar year, to four (4) weeks paid
vacation. Vacation shall vest with Employee on the first day of each calendar year. Employee
shall also be entitled to holidays, sick leave, and shall, along with his spouse and family, be
eligible for participation in such group insurance program, including hospitalization, major
medical, life, vision and dental as afforded general management of Employer. Employer shall
provide in the Employee’s name term life insurance in the face amount of not less than Two Hundred
and Fifty Thousand Dollars ($250,000), and subject to the provisions of Section 6.2, Employer may
elect to provide disability insurance. Employer agrees to reimburse Employee for all reasonable
out-of-pocket expenses incurred by Employee in the fulfillment of his duties hereunder, including
travel expenses. Such reimbursements shall be made promptly, within thirty
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(30) days of Employee’s submission to Employer of an itemized list of such expenses, together
with receipts therefore indicating the date upon and the purpose for which such expenses were
incurred and such other information as may be reasonably required from time to time by Employer to
substantiate such expenditures for federal income tax purposes.
5. Status as Employee. At all times during the Employment Period, Employee shall be deemed to
be an Employee of Employer for purposes of determining Employee’s coverage under and eligibility to
participate in, any Employee benefit plans or programs which Employer now has or may hereafter
initiate. In the event it is necessary to amend any such plan or program in order to assure that
Employee is not discriminated against thereunder, Employer shall promptly use its best efforts to
make all such amendments or cause the same to be made.
6. Termination.
6.1 Termination upon Death. If Employee dies during the Term, this Agreement shall
terminate, except that the representative of Employee’s estate shall be entitled to receive the
compensation herein provided for the month in which death occurs, the amount accrued and payable
under Section 4 hereof, except as otherwise stated herein. All unvested options granted the
Employee shall immediately be 100% fully vested and all rights and privileges granted Employee
shall accrue to the estate.
6.2 Termination upon Disability. If during the Term, Employee becomes physically or mentally
disabled, whether totally or partially, so that Employee is unable substantially to perform his
services hereunder for (i) a period of six consecutive months, or (ii) for shorter periods
aggregating six months during any consecutive twelve month period (Employee’s disability for such
period “Disability”), Employer may, at its option, at any time after the last day of the six
consecutive months of disability or the day on which such shorter periods of disability during any
consecutive twelve month period equal an aggregate of six months, by written notice to Employee,
terminate the Term of Employee’s employment hereunder. Nothing in this Section 6.2 shall be deemed
to extend the Term. Upon such termination, Employee shall be entitled to receive the compensation
herein provided for the month in which Disability occurs, the amount accrued and payable under
Section 4 hereof, except as otherwise stated herein. All unvested options granted the Employee
shall immediately be 100% fully vested and all rights and privileges granted Employee shall accrue
to the estate.
6.3 Termination for Cause. If Employee neglects his duties hereunder and such gross neglect
shall not be discontinued promptly after written notice thereof, is convicted of any felony, fails
or refuses to comply with the reasonable written policies of Employer or directives of the
executive officers of Employer that are not inconsistent with his position and such failure shall
not be discontinued promptly after written notice thereto, or materially breaches affirmative or
negative covenants or undertakings hereunder and such breach shall not be remedied promptly,
evidenced by proper Employer documentation or other written notice to Employee, Employer may at
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any time by thirty days written notice to Employee terminate the Term of Employee’s employment
hereunder. Except for accrued and unpaid salary and vacation to the date of termination, Employee
shall have no right to receive unvested options, grants or any compensation or benefit from
Employer hereunder.
6.4 Termination by Employer Without Cause. If Employee’s employment hereunder shall be
terminated by reason of a breach of this Agreement by Employer, Employer shall pay to Employee, as
liquidated damages and not as a penalty, in a lump sum immediately subsequent to the date of such
termination, an amount equal to the Base Salary of Employee for a twelve month period. It is
expressly understood and agreed that Employee shall not be obligated to mitigate the damages caused
by a termination of this employment for which he shall be entitled to such liquidated damages. It
is further expressly agreed and understood that said payments of liquidated damages shall be in
complete satisfaction of any and all claims, liabilities and damages of any nature whatsoever
relating to or growing out of Employee’s employment or Employer’s termination without cause of
Employee’s employment, except as otherwise stated herein. Also, all unvested options and stock
grants granted the Employee shall immediately be 100% fully vested.
6.5 Voluntary Termination. In the event Employee voluntarily terminates his employment with
Employer, during or after the Employment Period, Employee shall have no right to receive any
compensation or benefit from Employer hereunder, except for accrued and unpaid compensation and
vacation due on the date of such termination, except as otherwise stated herein.
6.6 Stock Options and Change in Control. Employer and Employee hereby acknowledge that, from
time to time, Employer has issued and may in the future issue to Employee options to purchase
shares of the capital stock of Employer, either pursuant to this Employment Agreement or otherwise
(the “Options”). Employer and Employee hereby agree that if there is a Change in Control (as
hereinafter defined) of Employer, then all of the Options and Grants then issued and outstanding to
Employee shall automatically and immediately become vested and exercisable (the “Vested Options”).
The date on which the Change in Control occurs shall be the “Vesting Date.” Employee’s right to
exercise the Vested Options shall expire on the third anniversary of the Vesting Date. For
purposes of this Section 6.6, a “Change in Control” shall mean the occurrence of: (a) the sale of
all or substantially all of the capital stock of Employer owned by Xxxxxx X. Xxxxxx or his
equivalent beneficial owner; (b) the resignation from the Board of Directors of Xxxxxx X. Xxxxxx
unless caused by his death or disability; (c) the acquisition at any time by a “person” or “group”
(as those terms are used in Sections 13(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (excluding, for this purpose, Employer or any subsidiary or any employee
benefit plan of Employer or any subsidiary) of beneficial ownership (as defined in Rule 13d-3 under
the Exchange Act) directly or indirectly, of securities representing 50% or more of the combined
voting power in the election of directors of the then-outstanding securities of Employer or any
successor of Employer; (d) the termination of service as directors, for any reason other than death
or disability from the Board of Directors of Employer (the
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“Board”), during any period of two (2) consecutive years or less, of individuals who at the
beginning of such period constituted a majority of the Board, unless the election of or nomination
for election of each new director during such period was approved by a vote of at least two-thirds
of the directors still in office who were directors at the beginning of the period; (e) approval by
the stockholders of Employer of any merger or consolidation or statutory share exchange as a result
of which the common stock of Employer shall be changed, converted or exchanged (other than a merger
or share exchange with a wholly-owned subsidiary of Employer) or liquidation of Employer or any
sale or disposition of 50% or more of the assets or earning power of Employer except for a tax free
distribution of any portion of Employer to its shareholders; or (f) approval by the stockholders of
Employer of any merger or consolidation or statutory share exchange to which Employer is a party as
a result of which the persons who were stockholders of Employer immediately prior to the effective
date of the merger or consolidation or statutory share exchange shall have beneficial ownership of
less than 50% of the combined voting power in the election of directors of the surviving
corporation following the effective date of such merger or consolidation or statutory share
exchange. “Change in Control” shall not include any reduction in ownership by Employer of a
subsidiary of Employer or any other entity designated by the Board in which Employer owns at least
a 50% interest (including, but not limited to, partnerships and joint ventures.)
7. Certain Covenants of Employee.
7.1 Covenants Against Competition. Employee acknowledges that (i) the principal businesses
of Employer involves diversified metals recycling and product manufacturing, and such other and
related activities as Employer may become involved in (collectively, the “Business”); (ii) the
Employer’s Business is national in scope; and (iii) his work for Employer has brought him and shall
continue to bring him into close contact with many confidential affairs not readily available to
the public. In order to induce Employer to enter into this Agreement, Employee covenants and
agrees that:
7.1.1 Non-Compete.
(a) During Employee’s employment with Employer, Employee shall not in the Eastern or
Midwestern United States, including any market region in which Employer, its subsidiaries or
affiliates has done or contemplates doing business, directly or indirectly, (i) engage in a
business which is competitive with the Employer’s Business for his own account; (ii) except for
employment by Employer, its subsidiaries or affiliates, enter the employ of, or render any services
to, any person engaged in such activities; or (iii) become interested in any person engaged in a
business which is competitive with the Employer’s Business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, employee, trustee,
consultant or in any other relationship or capacity; provided, however, that
Employee may own, directly or indirectly, solely as an investment, securities of any entity which
are traded on any national securities exchange or in the over-the-counter market if Employee (a) is
not a controlling person of, or a member of a group which controls, such entity, or
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(b) does not, directly or indirectly, own 1% or more of any class of securities of such
entity; and
(b) for a period of up to two (2) years following the termination (whether voluntary or
involuntary) of Employee’s employment with Employer or any of its affiliates or subsidiaries,
Employer may elect to enforce one-year covenants set forth below by paying to Employee for each
one-year period a lump sum amount equal to one hundred percent (100%) of his base salary. This
lump sum amount shall be paid within ten (10) days of Employee’s termination. The severance paid
shall constitute a payment to enforce the following covenants; (i) Employee shall not in the United
States of America directly or indirectly contract, solicit, sell to, serve or divert anyone who was
a transporter, supplier or customer of Employer or did business with Employer during Employee’s
employment with Employer; or (ii) Employee shall not within two hundred (200) miles of a plant
owned by the Employer, its subsidiary or an affiliate directly or indirectly engage in a business
which is competitive with the Employer’s business for his own account or as a partner, shareholder,
officer, director, principal, agent, employee, trustee, consultant or in any other capacity
directly or indirectly.
7.1.2. Confidential Information. During and after the term of Employee’s employment with
Employer, Employee shall keep secret and retain in strictest confidence, and shall not use for the
benefit of himself or others except in connection with the business and affairs of Employer, all
confidential matters of Employer and its subsidiaries or affiliates, including, without limitation,
trade “know-how”, secrets, customer lists, details of contracts, pricing policies, operational
methods, marketing plans or strategies, business acquisition plans, new personnel acquisition
plans, research projects, and other business affairs of Employer, its subsidiaries, or affiliates,
heretofore or hereafter, and shall not disclose them to anyone, either during or after employment
by Employer, except as required in the course of performing duties hereunder or with Employer’s
express written consent. Confidential matters shall not include information that is public
knowledge, obtained from third parties and/or required to be disclosed by law.
7.1.3 Property of Employer. All memoranda, notes, lists, records and other documents (and
all copies thereof) made or compiled by Employee or made available to Employee concerning the
business of Employer, its subsidiaries or its affiliates shall be Employer’s property and shall be
delivered to Employer promptly upon the termination of Employee’s employment with Employer, or at
any other time on request.
7.1.4. Employees of Employer. During Employee’s employment with Employer, and for a period
of two years following the termination (whether voluntary or involuntary) of Employee’s employment
with Employer or any of its subsidiaries or affiliates (the “Restricted Period”), Employee shall
not, directly or indirectly, solicit or encourage any Employee of Employer, its subsidiaries or its
affiliates to leave the employment of Employer, its subsidiaries or its affiliates.
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7.2 Rights and Remedies upon Breach. If Employee breaches, or threatens to commit a breach
of, any of the provisions of Section 7.1 (the “Restrictive Covenants”), Employer shall have the
following rights and remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in addition to, and not in
lieu of, any other rights and remedies available to Employer under law or in equity:
7.2.1 Accounting. The right and remedy to require Employee to account for and pay over to
Employer all compensation, profits, monies, accruals, increments or other benefits (collectively,
“Benefits”) derived or received by Employee as the result of any transactions constituting a breach
of any of the Restrictive Covenants, and Employee shall account for and pay over such Benefits to
Employer.
7.3 Injunctive Relief. Employee acknowledges that due to the confidential nature of his
employment relationship, any breach of the Restrictive Covenants by Employee shall cause
irreparable harm to Employer and Employer may, at its option, obtain injunctive relief. Employee
further acknowledges that the scope and content of the Restrictive Covenants are reasonable.
7.4 Severability of Covenants. If a Court of competent jurisdiction determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the
Restrictive Covenants shall not thereby be affected and shall be given full effect, without regard
to the invalid portions.
7.5 Blue-Penciling. If a Court of competent jurisdiction construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration of such provision or
the area covered thereby, such court shall have the power to reduce the duration or area of such
provision and, in its reduced form, such provision shall then be enforceable and shall be enforced.
7.6 Employer’s Default. If Employer defaults on payments due under Section 3(A) herein, then
unless Employer cures the default within sixty (60) days, the Restrictive Covenants shall be
terminated and declared null and void.
8. Indemnification. Employer shall indemnify and defend Employee if Employee is made a
party, or threatened to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that
Employee is or was an officer or director or Employee of Employer or any of its subsidiaries or
affiliates, in which capacity Employee is or was serving, against expenses (including reasonable
attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding to the fullest extent and in the manner
set forth in and permitted by the general corporation law of the state of incorporation of
Employer, and any other applicable law, as from time to time in effect.
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9. No Conflicting Agreement. Employee represents and warrants that as of the effective date
of this Agreement, he shall not be a party to any Agreement, contract or understanding which would
in any way restrict or prohibit him from undertaking or performing his employment in accordance
with the terms and conditions of this Agreement.
10. Other Provisions.
10.1 Notices. Any notice or other communication required or which may be given hereunder
shall be in writing and shall be delivered personally, telegraphed or telexed, or sent by
certified, registered or express mail, postage prepaid, and shall be deemed given when so delivered
personally, telegraphed or telexed, or if mailed, two days after the date of mailing, as follows:
| (i) if to Employer, to: | Metalico, Inc. | |||
| 000 Xxxxx Xxxxxx Xxxx | ||||
| Xxxxxxxx, XX 00000 | ||||
| (ii) if to Employee, to: | Xxxxxx Xxxxxxxx | |||
| 00 Xxxxxxx Xxxxx | ||||
| Xxxxxxx Xxxxx, XX 00000 |
10.2 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.
10.3 Waivers 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 party 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.
10.4 Governing Law. The parties hereto have relied on New Jersey law in negotiating this
Agreement, and it is expressly agreed that this Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey applicable to Agreements made and to be
performed entirely within such State, without regard to its conflicts of laws provisions.
10.5 Assignment. This Agreement, and the Employee’s rights and obligations hereunder, may
not be assigned by Employee. Employer may assign this Agreement and its rights, together with its
obligation, as stated in Section 6.6, hereunder
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in connection with any sale, transfer or other disposition of all or substantially all of its
assets or business, whether by merger, consolidation or otherwise.
10.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and the same instrument.
10.7 Heading. The headings in this Agreement are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
| METALICO, INC. | ||||||
| By: | ||||||
| President | ||||||
| XXXXXX XXXXXXXX | ||||||
| Employee | ||||||
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