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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on this
2nd day of January, 1997, by and between IRON DYNAMICS, INC., an Indiana
corporation (the "Company") and XXXXX X. XXXXXXXX, a resident of Westlake, Ohio
(the "Employee"), and is joined in by Company's parent, Steel Dynamics, Inc.
("SDI") solely in connection with the obligations described in Section 10(e).
RECITALS
A. The Company intends to develop, implement, and exploit, for its own
and its Affiliates' use, as well as for license to others, one or more processes
(collectively, the "Process"), for the manufacture of a direct reduced iron
("DRI") product (the "Product") intended for use as a scrap steel substitute raw
material for the electric arc furnace production of new steel;
B. The Company further intends to identify, purchase and install
machinery, equipment, and controls (the "Equipment") in a manufacturing
facility which it will design and construct (the "Facility"), in which the
Process will be employed to manufacture the Product;
C. The Company wishes to engage the services of Employee as General
Manager, as contemplated herein, to act as a vice president of the Company with
broad executive duties to directly manage all phases of the Company's design,
construction, start-up, and operation of its Butler, Indiana Facility; and
D. Employee is willing to accept such employment on the terms and
conditions set forth in this Agreement.
ACCORDINGLY, the parties agree as follows:
1. POSITION AND DUTIES. For the term of this Agreement, but subject to
the terms and conditions hereof:
(a) Employment. Employee is hereby employed as the Company's
General Manager, to devote his full business time, skill, attention and
best efforts to the full range of management services associated with
his function as the Company's vice president charged with the
responsibility of developing and implementing the design, construction,
equipment purchase and installation, start-up, and operation of the
Facility, the development and operation of the Process, the
development, perfection, and use of the Product for the efficient and
economical introduction thereof into the melt mix of an electric arc
furnace for the production of new steel and the development and
supervision of the Company's sales, licensing, and sub-licensing
activities (hereinafter, and as further set forth in Section 1(b), the
Employee's "Duties").
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(b) Duties. The Employee's Duties shall include, without
limitation (a) the supervision of the Company's Technical Manager and
other technical staff, as well as the Company's advisors and
consultants, in the evaluation and design of the Process itself, from
raw material selection and preparation through melting and reduction of
the DRI, the direction, monitoring, and evaluation of test work and
general Process development and improvement, the reduction to practice
of the Process and the securing of any intellectual property protection
under both United States and non-domestic patent and other intellectual
property laws and regimes, and, in conjunction with the Technical
Manager and other Company and technical staff, advisors, and
consultants, to evaluate and determine the specification and selection
of Equipment, to review and evaluate vendor proposals, and to assist
with Facility design and construction, Equipment installation,
technical commissioning, and subsequent Process development and
improvement, and (b) the development, supervision, and responsibility
for implementation of the Company's Product sales and its licensing
program with Sumitomo Corporation of America and Sumitomo Corporation
pursuant to the Company's License Agreement with those companies, as
well as the Company's development, sales, or other licensing activities
within the "Exempt Territory" as defined in the License Agreement.
For purposes of this Agreement, "full business time"
shall mean full time during regular and, as needed, such extraordinary
hours as may be required from time to time.
The Employee shall not at any time while employed by
the Company or any of its Affiliates, including the Company's parent,
SDI, without the prior consent of the Company's Board of Directors,
knowingly acquire any financial interest in, directly or indirectly,
nor perform any services, whether as an employee, independent
contractor, stockholder, officer, director, principal, agent, partner,
consultant, or otherwise, for the benefit of any person, enterprise or
business in substantial competition with the Company's business or with
its Process or Product.
(c) Company Directorship. As soon as practicable after
Employee commences the performance of his Duties hereunder, but without
requiring the removal of any Company director then holding office, the
Company will use its best efforts to cause Employee to be elected to
the Company's Board of Directors.
(d) Additional Management Titles. Upon the further
determination by the Company's Board of Directors that Employee has
diligently and with professional excellence performed his Duties during
the development, construction, start-up, and initial operation of the
Facility, and the successful commercialization of the Process and the
Product, Employee will be named to the position of a vice-president of
SDI, subject to SDI Board of Directors' approval.
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2. TERM OF EMPLOYMENT. The term of this Agreement shall be deemed to
have commenced on January _____, 1997 and shall end on December 31, 2001,
subject to the provisions of Sections 5 and 6, and unless sooner terminated
pursuant to Section 7 of this Agreement. By mutual agreement, the parties may
extend the term of employment hereunder, or may succeed this Agreement with
another, but any extension of employment after December 31, 2001, absent a
mutual written extension or new agreement, shall only be deemed employment at
will, on a month-to-month basis, on the same terms and conditions set forth
herein.
3. COMPENSATION. For all services rendered by the Employee hereunder,
the Company shall pay the Employee as follows:
(a) Base Salary. The Company shall pay Employee a base salary
("Base Salary") of One Hundred Twenty Thousand Dollars (US$120,000) per
year, payable in weekly or other periodic installments (not less than
monthly), which shall be paid in accordance with the Company's normal
payroll practices with respect to salaried employees, subject to all
applicable payroll taxes and deductions. The Employee's Base Salary
shall be subject to an annual review and possible increase in
accordance with the usual practices and policies of the Company.
(b) Annual Bonus. During the term hereof, the Company shall
annually or more often review Employee's job performance and will pay
to the Employee an annual bonus ("Bonus"), in an amount not less than
Seventy-eight Thousand Dollars ($78,000) per year for each the first
two (2) years hereof, in such amount as the Board shall determine;
provided, however, that after the second year hereof, notwithstanding
Employee's designation as an officer of SDI in the manner contemplated
by Section 1, the Employee will be entitled to be treated as a
participant under the 1996 Steel Dynamics, Inc. Officer and Manager
Cash and Stock Bonus Plan, at the level of a "Manager" as described in
Section 3.12 therein. In the event that the term of this Agreement is
extended, or that the Agreement is succeeded by another employment
agreement, a portion of the Annual Bonus may be based upon a formula,
as agreed to by the parties, if at all, that might include a return on
assets measure regarding Company profits.
(c) Expense Reimbursement. During the term hereof, the Company
shall pay or reimburse Employee in accordance with the Company's normal
practices for any travel, hotel, and other expenses or disbursements
reasonably incurred or paid by the Employee in conjunction with his
services performed hereunder, upon presentation by Employee of itemized
accounts of such expenditures or such other supporting information as
the Company may from time to time require.
(d) Additional Reimbursements. The Company will reimburse
Employee, promptly upon presentation of paid receipts and/or bills
therefor, for Employee's moving costs, temporary living expenses,
closing costs associated with the sale of his current home and up to
One Thousand Five Hundred Dollars ($1,500) of the actual closing costs
for the
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purchase of his new home, together with a non-accountable amount of
One Thousand Dollar ($1,000). The Company will also reimburse Employee
for any loss of equity value in his current home, based upon the
higher of two (2) current appraisals (by a certified residential real
estate appraiser with an "MAI" designation or equivalent), from the
gross sale price actually realized upon sale. All reimbursed items
under this Section 3(d), if constituting taxable income to Employee,
shall be reimbursed to him on a grossed-up, tax-effected basis.
(e) Other Benefits. The Company shall provide to Employee the
same benefit package as presently provided by SDI to its employees,
including medical/dental benefits, disability insurance, life
insurance, paid holidays, and profit-sharing or other retirement plans,
including SDI's '401(k) Plan, but, in all cases, subject to the terms
and requirements of each such program or plan, and an annual paid
vacation of three (3) weeks (to be scheduled by agreement with the
Company).
(f) Stock Options. The Employee shall be entitled to and shall
receive from SDI, notwithstanding Employee's appointment as an officer
of SDI as contemplated by Section 1, two (2) Thirty-Thousand Dollar
($30,000.00) Incentive Stock Option grants per year as contemplated by
SDI's 1996 Incentive Stock Option Plan, for "Managers" as set forth in
Section 6.2 thereof, subject to all of the terms and conditions of the
Plan and to the Stock Option Agreement to be entered into between SDI
and the Employee thereunder. The semi-annual Thirty Thousand Dollar
($30,000.00) Option grants shall be measured by the fair market value
on each Grant Date of SDI's Common Stock, as specified under the Plan.
(g) Additional Stock Option and Other Payments. In addition to
the foregoing, and in recognition of Employee's potential loss of
existing compensation and/or employee benefits from his existing
employment, SDI will grant to the Employee, as of the Effective Date of
this Agreement, a one-time stock option grant of 33,600 shares of SDI
common stock pursuant to SDI's 1994 Incentive Stock Option Plan, with
an exercise price equal to fair market value of a share of common stock
determined under the Plan as of the Effective Date, subject in all
respects to the terms and conditions of the 1994 Incentive Stock Option
Plan, except that options for one-third (or 11,200 shares) will become
exercisable within six (6) months after the date of grant, with the
remainder becoming exercisable no later than the fifth anniversary of
the date of grant (unless otherwise further modified as provided
therein). The Employee will also receive, thirty (30) days after the
Effective Date of this Agreement (a) a one-time cash payment of Thirty
Thousand Dollars ($30,000), and (b) an additional cash payment of up to
Fifty Thousand Dollars ($50,000), the latter amount not to exceed the
difference between the anticipated 1996 bonus due to the Employee from
Employee's current employer and the amount of such bonus, if any, that
Employee actually receives on or before February 28, 1997; provided,
however, that the Employee shall make a diligent effort to collect the
full amount of his 1996 bonus. In the event that subsequent to February
28, 1997, the Employee is successful in obtaining his full 1996 bonus,
Employee agrees to repay the Company, if any, of any such duplicate
recovery, less any out-of-pocket
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expenses which the Employee may have incurred in connection with his
collection of such amount.
4. Effect of Termination of Employment.
(a) If for any reason, other than Employee's voluntary
resignation or termination as a result of Employee's death or
disability pursuant to Section 7 hereof, Employee is terminated prior
to the expiration of the term hereof, the Employee shall continue to
receive his Base Salary, plus his guaranteed or other annual Bonus, as
set forth herein, for the full term of this Agreement, payable in the
same manner as provided hereunder, subject only to Employee's duty to
mitigate under the law.
(b) If the Employee resigns voluntarily or ceases to be
employed by the Company or an Affiliate of the Company for "cause" as
described in Section 7(c) of this Agreement, all payments and benefits
described in Section 3 hereof shall terminate (except to the extent
previously already earned or vested).
(c) If the Employee dies or becomes disabled, as contemplated
by Section 7, 7(a) or 7(b), all further compensation or benefits
described in Section 3 shall immediately cease, except for any death
benefits and/or disability benefits provided under Company's life
insurance and/or disability plans under which Employee is enrolled, and
this Agreement shall be deemed terminated without further liability on
the part of the Company or the Employee; provided, however, that all
Stock Options theretofore granted which have not vested shall be
accelerated and shall thereupon vest immediately, and all Stock Option
rights provided under the 1994 Incentive Stock Option Plan or the 1996
Incentive Stock Option Plan shall transfer to the Employee's personal
representative.
5. CONFIDENTIAL INFORMATION: NON-DISCLOSURE. Except as specifically
permitted hereunder or as otherwise required for the benefit of the Company or
an Affiliate during the course of his employment hereunder, and while in the
employ of the Company or an Affiliate, or thereafter (regardless of how
termination of employment occurs hereunder), the Employee will not communicate
or divulge to or use for the benefit of himself or any other person, firm,
association, business, or enterprise, without the prior written consent of the
Company or the Affiliate, as the case may be, any Confidential Information (as
defined herein), whether in Employee's memory or in written, electronic, or any
other form, developed, owned or otherwise used by the Company or any of its
Affiliates and communicated to or developed, acquired or learned of by the
Employee during the course of or incident to his employment hereunder,
regardless of whether developed by the Employee in whole or in part. All
Confidential Information relating to the business of the Company or any of its
Affiliates, or to any Process or Product, which Employee shall use, encounter,
develop, or come into contact with shall become and remain the sole property of
the Company or its Affiliates.
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For purposes of this Agreement, and unless and to the extent
that such Confidential Information is required to be publicly disclosed or
becomes generally known to and available for use by the public other than as a
consequence of Employee's fault or the fault of any other person bound by a duty
of confidentiality to the Company or any of its Affiliates, "Confidential
Information" shall include but shall not be limited to information, in any form,
that would constitute a "trade secret" under the Indiana Uniform Trade Secrets
Act (IC [sec.]24-2-3-2) and shall extend to engineering, construction, set-up,
operating, actual and projected cost and other financial data, and production
information, not generally known about the Company and its Affiliates, regarding
its or their services and products, including the Process or the Product,
including information relating to research, development, purchasing, marketing
plans, computer software or programs, any copyrightable material, trade secrets
and proprietary information, Process or Product information, including (but not
limited to) information relating to the Company's DRI Process, its DRI Product,
or any aspect of the manufacture and use thereof, or its direct use or
conversion into a scrap iron substitute material for introduction into the melt
mix of an electric arc furnace in the steel manufacturing process and financial
information of every kind and character. The Employee may disclose Confidential
Information only to the extent that it becomes part of the public domain
otherwise than as a result of Employee's breach hereof, or is required to be
disclosed by operation of legal process or by the law, or consists of
information regarding the iron ore and steel manufacturing industries,
previously known to Employee, including knowledge about iron ore mining,
beneficiating, balling, induration and iron oxide reduction. If the Employee is
required by applicable law or regulation, or by legal process, to disclose any
Confidential Information, he will provide the Company with prompt notice thereof
so as to enable the Company to seek an appropriate protective order to prevent
or limit the effect of such disclosure. Upon termination of his employment
hereunder, the Employee agrees that he will not retain and will deliver to the
Company at such or any other times as the Company may request, all memoranda,
notes, plans, records, reports and other documents, including computer disks or
other electronic media (and all copies thereof) containing Confidential
Information that Employee may then possess or have under his control.
6. EMPLOYEE'S INVENTIONS. In consideration of the compensation and
other benefits payable by the Company and to be received by the Employee
hereunder, and as a condition to and as part of the consideration for Employee's
employment or continued employment hereunder, Employee hereby assigns and
transfers to the Company and agrees that the Company shall be the sole owner of
all inventions, discoveries, computer software programs and systems, processes
(including the Process), production methods and techniques (the "Inventions")
for the manufacture of the Product or for its use in steelmaking, and all
related equipment or devices heretofore or hereafter conceived, developed, or
made by the Employee, either alone or with others, in whole or in part, during
Employee's employment by the Company hereunder, which are useful in or directly
or indirectly related to the Company's business or to its Process or Products,
and which are conceived, developed, or made in the course of Employee's
employment hereunder, or which are developed or made from or by reason of
knowledge gained from or during such employment. The Company's business shall be
understood to encompass the development and implementation of the Process of
manufacturing DRI and using that Product as a scrap steel substitute material in
an electric arc furnace to manufacture new steel. The Company or its affiliates
shall have the right to use all such
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inventions or to license others to use or sublicense such Inventions, and all
such Inventions hereunder shall be considered as "work made for hire,"
belonging to the Company. This assignment shall include the assignment of all
patent, trademark, or copyright rights as may be obtained thereon, both
domestic and non-domestic, and the Employee agrees, upon request by the Company
and at the Company's expense, at any time during his employment hereunder or
thereafter, regardless of the reason for termination, that he will execute all
necessary or appropriate documents, assignments, applications, and the like,
whether during the term of this Agreement or thereafter, for use in the
preparation, application, prosecution, procurement, and maintenance of any such
domestic and non-domestic patents, trademarks, copyrights and/or patent
applications, trademark applications, and copyright applications as the Company
may desire, including any improvements thereon.
It is understood that all expenses in connection with any such
patents, trademarks, or copyrights, or applications in connection therewith or
improvements thereon, shall be borne by the Company. The Company shall be under
no obligation, however, to protect by patent, trademark, copyright, or
otherwise, any such Invention, except in the exercise of its own discretion, and
only then to such extent as it shall deem desirable. The Employee shall not be
entitled to any additional compensation for such Inventions. The Employee hereby
agrees promptly to disclose in writing to any officers or representatives
designated by the Company all such inventions, and further agrees not to
disclose any such Inventions, except as required by his employment or otherwise
as contemplated hereunder, without the express prior written consent of the
Company. Notwithstanding the foregoing, the provisions hereof shall not apply to
any invention not related to the Company's business and not resulting from any
work performed by the Employee for the Company, and developed by the Employee
entirely on his own time.
7. TERMINATION.
(a) This Agreement shall terminate upon the Employee's death,
except as specifically provided herein.
(b) The Company may terminate the Employee's employment
hereunder, upon thirty (30) days= written notice, if in the opinion of
the Board of Directors, Employee has suffered a physical or mental
disability that has continued or is expected to continue for a period
of one hundred eighty (180) consecutive days, and, as a result thereof,
the Employee will be unable to continue the proper performance of his
duties hereunder. For the purpose of determining disability hereunder,
the Employee agrees to submit to such reasonable physical and mental
examinations, if any, as the Board of Directors may request and for its
information and use.
(c) The Company may terminate the Employee's employment
hereunder Afor cause" (as hereinafter defined). If employment hereunder
is terminated for cause, the Employee's compensation and all other
rights not then vested under this Agreement shall terminate, upon
written notice of termination being given to the Employee. As used
herein,
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the term "for cause" means the occurrence of any of the following, in
addition to Employee's material non-performance:
(i) Employee's disregard of a direct, material order
of the Board of Directors of the Company, the substance of
which order involves a proper duty of the Employee hereunder;
(ii) Employee's breach of his obligations under
Sections 5 or 6 hereunder; or
(iii) Employee's fraud, dishonesty, or other
misconduct involving dishonesty or moral turpitude
Notwithstanding any termination of employment hereunder, whether for
reasons of non-renewal or otherwise, Employee shall continue to be
bound by the provisions of Sections 5, 6, and 9 hereof, which shall be
deemed to survive any such termination.
8. NOTICE. Any notice to be given by one party to another hereunder
shall be given as follows:
(a) If to the Employee:
Xx. Xxxxx X. Xxxxxxxx
00000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) If to the Company:
Iron Dynamics, Inc.
x/x Xxxxx X. Xxxxx, Xxxxxxxxx
Steel Dynamics, Inc.
0000 Xxxxxx Xxxx 00
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other person, or such other address, or by such other means
as either party shall provide by prior notice to the other hereunder.
Notice shall be deemed effective when personally served, when sent and
confirmed by facsimile (with "hard" copy follow-up by overnight
courier), or one (1) day after dispatch by overnight courier.
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9. NON-COMPETITION. Employee agrees that during the term of his
employment hereunder and, if this Agreement is neither extended nor renewed,
or, prior to expiration of the term described in Section 2, if Employee
voluntarily resigns, is terminated for cause as described in Section 7(c), or
otherwise continues to receive the compensation to which he is entitled
hereunder, for a period of two (2) years thereafter, he will neither directly
or indirectly, individually or on behalf of any other person, or as a partner,
stockholder, joint venturer, principal, agent, director, officer, employee,
consultant or in any other capacity or relationship, engage in any business or
employment, or aid or endeavor to assist any business or enterprise, which is
competitive with the Company's Process or Products or which operates or plans
to operate a Facility for the manufacture, sale, and/or use of a scrap iron
substitute material for use in steelmaking, within or located less than 200
miles beyond the geographic borders of the continental United States. The
Employee and the Company acknowledge that the foregoing time and geographic
limitations are reasonable, in that Employee has not been previously engaged in
the business of manufacturing the Product or any other scrap steel substitute
material, or of using the Process, that the Company will be doing pioneering
work in the development of its Process and its Product, and that nothing herein
shall be construed to preclude Employee from re-employment in his prior
industry or from engaging in any other endeavor not specifically proscribed
herein. It is agreed, however, that the geographic scope of the limitation is
divisible, and if declared invalid, should be redrawn so as to achieve the
maximum protection permissible for the Company and SDI, regarding the
manufacture, sale, or use of the Product or of any other scrap steel substitute
material.
10. MISCELLANEOUS.
(a) Waiver of Breach. The waiver by either the Company or the
Employee of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach of that or
any other provision hereof by either the Company or the Employee.
(b) Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by the Employee and the
Company and their respective legal representatives, successors and
assigns. Neither this Agreement nor any of the Employee's Duties or
obligations hereunder shall be assignable by the Employee.
(c) Governing Law; Exclusive Venue. This Agreement shall be
interpreted and construed in accordance with the laws of the state of
Indiana, and both the Company and the Employee specifically agree that
any disputes relating hereto shall be adjudicated solely in any state
or federal court in or for DeKalb County, Indiana. It is agreed that
this Agreement shall be construed as an Indiana contract, entered into
in the State of Indiana.
(d) As an inducement to the Company to enter into this
Agreement with Employee, Employee represents and warrants to the
Company that he is legally
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entitled to enter into this Agreement without violating any
employment, consulting, invention, non-competition or non-disclosure
agreement to which he is a party or by which he is bound, that he has
provided the Company with true, correct, and complete copies of any
agreements that impose any restrictions upon Employee's business or
employment activities, and that he will defend, indemnify and hold the
Company harmless to the extent of any loss, cost, or expense that may
be occasioned by reason of his breach of this representation and
warranty.
(e) In the event that the Company ceases business or that it
otherwise fails to achieve commercialization of the Process and the
Product; or in the event that the Company is not otherwise able to
perform its obligation of employment to Employee hereunder, then, in
lieu of any further liability by the Company hereunder, Employee shall
be entitled to be employed by SDI, in a comparable executive position,
with substantially equivalent compensation and benefits, as those
described in Section 3(a)-(g) hereof, for the balance of the term set
forth in Section 2 hereunder. If SDI tenders such employment offer to
Employee, and Employee does not accept such offer, including a written
contract of employment to supersede this Agreement except for the
provisions of Sections 5, 6, and 9, within thirty (30) days of its
tender to Employee, SDI shall have no further liability to Employee
hereunder.
(f) Complete Agreement. This instrument embodies the complete
agreement and understanding among the parties, written and oral, which
may have related to the subject matter hereof in any way and shall not
be amended orally, but only by the mutual agreement of the parties
hereto, in writing, specifically referencing this Agreement.
(g) Severability. If any provision, paragraph or subparagraph
of this Agreement is adjudged by any court to be void or unenforceable,
in whole or in part, this adjudication shall not affect the validity of
the remainder of this Agreement, and the Agreement shall be given
effect to the maximum extent permitted to accomplish the objectives of
the parties otherwise evident herein.
(h) Counterparts. This Agreement may be executed in one or
more separate counterparts, all of which taken together shall
constitute one and the same agreement.
(i) Effective Date. The Effective Date of this Agreement
shall be the date set forth at the outset hereof.
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IN WITNESS WHEREOF, this Agreement has been executed by the Company and
the Employee effective as of the date set forth at the outset of the Agreement.
/s/ Xxxx X. Xxxxxxx
IRON DYNAMICS, INC.
"COMPANY"
By: /s/ Xxxx X. Xxxxxxx
Title: Vice President
Date: January 2, 1997
/s/ Xxxx X. Xxxxxxx
STEEL DYNAMICS, INC.
By: /s/ Xxxx X. Xxxxxxx
Title: Vice President
Date: January 2, 1997
(For purposes solely of Section 10(e))
/s/ Xxxxx X. Xxxxxxxx
"EMPLOYEE" Xxxxx X. Xxxxxxxx
Date: January 2, 1997
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