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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated as of August 27, 1997, by
and between Metal Management, Inc., a Delaware corporation ("MTLM"), and
Xxxxxxx X. Xxxxxx ("Employee").
IT IS HEREBY AGREED:
1. EMPLOYMENT. On the terms and subject to the conditions set forth in
this Agreement, MTLM agrees to employ the Employee to perform such duties and
responsibilities as are consistent with such positions as may be assigned to
Employee, from time to time, by MTLM and are at least equivalent to those
duties and responsibilities performed by Employee as an employee of Proler
Southwest Inc. ("Proler Southwest"). Employee's duties hereunder shall be
performable for the Proler Southwest operations of MTLM only in the Houston,
Texas area, except that periodic trips to Proler Southwest's operations or
customers outside the Houston area or attending MTLM corporate meetings may be
required, and shall include, but not be limited to, participating in decisions
regarding finance, information systems, due diligence on financial and
operational aspects of acquisitions and the integration of acquisitions,
working with senior management of MTLM on budgets, contracts, scrap purchases
and personnel decisions for Proler Southwest. For as long as Employee is so
employed, he will devote his full business time, energy and ability to his
duties, except for incidental attention to the management of his personal
affairs.
2. TERM. The term of employment under this Agreement shall commence on
the date hereof (the "Commencement Date") and shall continue for a period of
five (5) years thereafter (the "Employment Period"); provided, however, that on
each anniversary of the Commencement Date, the Employment Period shall be
automatically extended for an additional one (1) year (for an aggregate
remaining term of 5 years) unless at least sixty (60) days before any such
anniversary, either the Employee or MTLM, as the case may be, notifies the
other of its desire not to further extend the Employment Period; and provided,
further, that the Employment Period may terminate sooner upon the occurrence of
certain events as described in Sections 5, 6 and 7 hereof. For purposes of
this Agreement, "Balance of the Term" shall mean the period beginning on the
date of termination of the Employment Period (the "Termination Date") and
ending on the date that the Employment Period would have ended pursuant to this
Section 2 due to lapse of time (assuming no further extensions of the
Employment Period beyond those already in effect as of the Termination Date),
without regard to Sections 5, 6 or 7 hereof.
3. COMPENSATION.
(a) Base Compensation. The base compensation to be paid to Employee
for his services under this Agreement shall be $225,000 per year,
payable in equal periodic installments in accordance with the usual
payroll practices
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of MTLM, but no less frequently than monthly commencing on the date
hereof. MTLM and the Employee agree that Employee's base
compensation shall be subject to annual review for cost of living
and merit factors, with any adjustments being mutually agreed
upon. The foregoing is hereafter referred to as Employee's "Base
Compensation."
(b) Bonuses. The parties acknowledge and agree that on the
Commencement Date, Proler Southwest shall pay Employee a bonus
equal to twenty-five percent (25%) of Employee's base salary during
the period from January 1, 1997 through the Commencement Date.
During the Employment Period, Employee shall earn a so-called
"guaranteed bonus" in regard to each year of employment by MTLM
equal to twenty-five percent (25%) of Employee's Base Compensation
under Section 3(a) hereof during such year. During the Employment
Period, Employee shall also be eligible to receive a so-called
"discretionary bonus" in regard to each year of employment by MTLM,
in an amount to be determined by the Executive Committee of MTLM in
consultation with Xxxxxxx X. Xxxxxx based primarily upon the
financial results of the Proler Southwest operating region during
such year, provided that the discretionary bonus for Employee shall
be determined in accordance with the bonus standards and criteria
then being used by the Executive Committee of MTLM to determine the
discretionary bonuses for senior management officers of MTLM.
4. FRINGE BENEFITS. MTLM shall furnish Employee with accident and health
insurance and reimbursement of all documented reasonable and necessary
out-of-pocket expenses incurred by Employee on behalf of MTLM by reason of
Employee's duties hereunder. Further, MTLM shall furnish Employee with all of
the additional fringe benefits made generally available by MTLM to its
executive officers recognizing that such fringe benefits may be changed from
time to time provided Employee will be deemed immediately eligible for any such
fringe benefits. Employee shall be entitled to take five (5) weeks of paid
vacation per year, and shall be paid on all national and state holidays, during
the Employment Period. Vacation allowances shall not be cumulative from year
to year. MTLM shall include Employee as a covered person under MTLM's
directors and officers insurance policy. MTLM shall furnish Employee with
appropriate office space, equipment, supplies, and such other facilities and
personnel as necessary or appropriate (de minimis use thereof by Employee for
personal reasons shall not be deemed a breach of this Agreement). MTLM will
pay the Employee's dues in such societies and organizations as MTLM deems
appropriate, and will pay on behalf of Employee (or reimburse Employee for)
documented reasonable out-of-pocket expenses incurred by Employee in attending
conventions, seminars, trade shows and other business meetings and business
entertainment and promotional expenses. MTLM shall permit Employee to continue
to use the automobile currently used by Employee as an employee of Proler
Southwest as of the Commencement Date and pay Employee an automobile allowance
of $500 per month.
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5. DEATH OR PERMANENT DISABILITY. If, during the Employment Period,
Employee dies (as confirmed by a certificate of death) or Employee is
permanently disabled such that, in the opinion of a physician selected by MTLM,
Employee is rendered incapable of performing the services contemplated under
this Agreement for a period of twelve (12) consecutive months by reason of
illness, accident, or other physical or mental disability ("Permanent
Disability"), this Agreement shall be deemed to be terminated as of the date of
such death or of the determination of Permanent Disability. Notwithstanding
the foregoing, the payments hereunder shall continue to be paid to the Employee
or his estate, as the case may be, for the Balance of the Term.
6. INVOLUNTARY TERMINATION. Except in the case of termination for Cause
pursuant to Section 7 hereof, if MTLM terminates Employee's employment
hereunder without Employee's consent, all of Employee's benefits under this
Agreement shall cease immediately upon the date of such termination, provided
that Employee shall continue to be entitled to receive the compensation
provided in Section 3 hereof for the Balance of the Term.
7. TERMINATION VOLUNTARY OR FOR CAUSE.
In the event: (i) Employee voluntarily terminates his employment
hereunder; or (ii) Employee's employment hereunder is terminated for Cause, all
of his benefits under this Agreement shall cease immediately upon the date of
such termination, provided that Employee shall be entitled to receive the
compensation provided in Section 3 hereof paid on a pro rata basis to the date
of such termination.
TERMINATION FOR CAUSE. Any of the following events shall be considered as
"Cause" for the immediate termination of the Employment Period by MTLM:
(a) final and non-appealable conviction of Employee for a
felony; or
(b) final and non-appealable conviction of Employee for
misappropriation by Employee of funds or property of
MTLM or the commission of other acts of dishonesty
relating to his employment; or
(c) willful breach or material neglect by Employee of
any of his material duties hereunder; or
(d) conduct on the part of Employee which is materially
adverse to any known interest of MTLM that continues
unabated, or uncured to the reasonable satisfaction
of Employer, after the expiration of 10 days
following receipt of written notice by Employee
from MTLM.
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Notwithstanding the foregoing, the Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a written termination notice signed by the Chairman of the Board of
Directors of MTLM.
ACCELERATION OF PAYMENTS.
For this Agreement, the following terms shall have the following meanings:
"Good Reason" shall mean the occurrence of any of the following events
without Employee's express written consent: (a) a reduction by MTLM of
Employee's compensation provided in Section 3 hereof; (b) any material breach
by MTLM of any provisions of this Agreement which is not cured by MTLM within
10 days following receipt by MTLM of written notice of such breach from
Employee; (c) a requirement by MTLM that Employee perform his duties outside
the Houston, Texas area, except that periodic trips to Proler Southwest
operations or customers outside Houston, Texas and periodic MTLM corporate
meetings outside Houston, Texas shall not be deemed to be a breach or (d) the
assignment of the Executive by MTLM without his consent to a position,
responsibility or duties of a material lesser status or degree of
responsibility than his position, responsibilities or duties as of the
Commencement Date.
A "Change of Control" shall be deemed to have occurred if any "person" as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as then in effect, other than: (i) MTLM; (ii) any "person" who on the
date hereof is a director or officer of MTLM; or (iii) Xxxxxx X. Xxxxx, Xxxxx
X. Xxxxx and Xxxxxxx X. Xxxxx and their respective affiliates and heirs, is or
becomes the "beneficial owner" as defined in Rule 13d-3 under such Act,
directly or indirectly, of securities of MTLM representing 51% or more of the
combined voting power of MTLM's then outstanding securities on a fully diluted
basis.
"Trigger Date" means the date on which a Triggering Event occurs.
"Triggering Event" means any of: (a) a Change of Control; (b) a
resignation of Employee as an employee of MTLM due to Good Reason; (c)
termination of the Employment Period under Section 5 hereof; or (d) involuntary
termination of the Employment Period, except in the case of termination for
Cause.
Occurrence of Triggering Event. Upon the occurrence of a Triggering
Event, Employee shall receive from MTLM a lump sum payment equal to the Base
Compensation provided under Section 3(a) hereof that otherwise would have been
payable to Employee for the Balance of the Term but for the occurrence of a
Triggering Event, plus any earned bonuses as set forth in Section 3(b) hereof
(determined on a pro rated basis in comparison to Employee's bonus, if any,
from the prior year) for the year in which the Triggering Event occurred.
Furthermore, any unvested stock options or unvested long term incentive plan
compensation shall immediately become vested and be exercisable for the 270
days following the date of the Triggering Event.
Time of Payment. All accelerated payments of Base Compensation, bonuses,
and long term incentive plan compensation due to Employee pursuant to this
Section shall be paid
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promptly but in any event within thirty (30) days after the Trigger Date. If
the full amount of such accelerated payments is not paid within five (5)
business days after the Trigger Date, such amounts shall be evidenced by a
promissory note from MTLM to Employee bearing interest at the rate of 12% per
annum from the Trigger Date until paid.
8. NON-COMPETITION. In addition to any other obligations of Employee
under any other agreement with MTLM, in order to assure that MTLM will realize
the benefits of this Agreement and in consideration of the employment set forth
in this Agreement, Employee agrees that he shall not, during the Employment
Period and for a period of sixty (60) months from the Termination Date:
(a) directly or indirectly, whether through an affiliate or otherwise,
alone or as a partner, joint venturer, member, officer, director,
employee, consultant, agent, independent contractor, stockholder, or
in any other capacity of any company or business, engage in any
business activity in the States of Texas or Mississippi, which is
directly or indirectly in competition with the business conducted by
MTLM or any subsidiary or affiliate of MTLM on the Termination Date;
provided, however; that, the beneficial ownership of less than 5% of
the shares of stock of any corporation having a class of equity
securities actively traded on a national securities exchange or
over-the-counter market shall not be deemed, in and of itself, to
violate the prohibitions of this section;
(b) directly or indirectly (i) induce any person which is a customer of
MTLM or any subsidiary or affiliate of MTLM on the Termination Date
to patronize any business directly or indirectly in competition with
the business conducted by MTLM or any subsidiary or affiliate of MTLM
on the Termination Date; (ii) canvass, solicit or accept from any
person which is a customer of MTLM or any subsidiary or affiliate of
MTLM on the Termination Date, any such competitive business, or (iii)
request or advise any person which is a customer of MTLM or any
subsidiary or affiliate of MTLM on the Termination Date to withdraw,
curtail or cancel any such customer's business with MTLM or any
subsidiary or affiliate of MTLM on the Termination Date;
(c) directly or indirectly employ, or knowingly permit any company or
business directly or indirectly controlled by him, to employ, any
person who was employed by any of MTLM or any then subsidiary or
affiliate of MTLM at or within six months prior to the Termination
Date, or in any manner seek to induce any such person to leave his or
her employment;
(d) directly or indirectly, at any time following the Termination Date,
in any way utilize, disclose, copy, reproduce or retain in his
possession any of MTLM's or any subsidiary's or affiliate's
proprietary rights or records, including, but not limited to, any of
their customer or price lists.
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The Employee agrees and acknowledges that the restrictions contained in
this Section 8 are reasonable in scope and duration and are necessary to
protect MTLM after the Commencement Date. If any provision of this Section 8
as applied to any party or to any circumstance is adjudged by a court to be
invalid or unenforceable, the same will in no way affect any other circumstance
or the validity or enforceability of this Agreement. If any such provision, or
any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form, such provision shall then be enforceable and shall be enforced. The
parties agree and acknowledge that the breach of this Section will cause
irreparable damage to MTLM and upon breach of any provision of this Section,
MTLM shall be entitled to injunctive relief, specific performance or other
equitable relief; provided, however, that this shall in no way limit any other
remedies which MTLM may have (including, without limitation, the right to seek
monetary damages).
9. CONFIDENTIALITY OF INFORMATION; DUTY OF NON-DISCLOSURE. The Employee
acknowledges and agrees that his employment by MTLM under this Agreement
necessarily involves his understanding of and access to certain trade secrets
and confidential information pertaining to the business of MTLM or any
subsidiary or affiliate of MTLM. Accordingly, the Employee agrees that after
the date of this Agreement at all times he will not, directly or indirectly,
without the prior written consent of MTLM, disclose to or use for the benefit
of any person, corporation or other entity, or for himself any and all files,
trade secrets or other confidential information concerning the internal affairs
of MTLM or any subsidiary or affiliate of MTLM, including, but not limited to,
confidential information pertaining to clients, services, products, earnings,
finances, operations, methods or other activities; provided, however, that the
foregoing shall not apply to information which is of public record or is
generally known, disclosed or available to the general public or the industry
generally. Further, the Employee agrees that he shall not, directly or
indirectly, remove or retain, without the express prior written consent of
MTLM, and upon termination of this Agreement for any reason shall return to
MTLM, any confidential figures, calculations, letters, papers, records,
computer disks, computer print-outs, lists, documents, instruments, drawings,
designs, programs, brochures, sales literature, or any copies thereof, or any
information or instruments derived therefrom, or any other similar information
of any type or description, however such information might be obtained or
recorded, arising out of or in any way relating to the business of MTLM or any
subsidiary or affiliate of MTLM or obtained as a result of his employment by
MTLM or any subsidiary or affiliate of MTLM. The Employee acknowledges that
all of the foregoing are proprietary information, and are the exclusive
property of MTLM. The covenants contained in this Section 9 shall survive
the termination of this Agreement.
10. GOODWILL. MTLM has invested substantial time and money in the
development of its products, services, territories, advertising and marketing
thereof, soliciting clients and creating goodwill. By accepting employment
with MTLM, the Employee acknowledges that the customers are the customers of
MTLM and its subsidiaries and affiliates, and that any goodwill created by
the Employee belongs to and shall inure to the benefit of MTLM.
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11. SUCCESSOR COMPANIES. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of MTLM, whether by merger, sale
of assets or otherwise.
12. NOTICES. Any notice or request to be given hereunder to either party
hereto shall be deemed effective only if in writing and either (1) delivered
personally to Employee (in the case of a notice to Employee) or to the
President of MTLM, or (2) sent by certified or registered mail, postage
prepaid, to the addresses set forth on the signature page hereof or to such
other address as either party may hereafter specify to the other by notice
similarly served.
13. ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of each of the parties
hereto, and shall also bind and inure to the benefit of Employee's heirs and
legal representatives and any successor or successors of MTLM by merger or
consolidation and any assignee of all or substantially all of MTLM's business
and properties; except as to any such successor or assignee of MTLM, neither
this Agreement nor any duties, rights or benefits hereunder may be assigned by
MTLM or by Employee without the express written consent of Employee or MTLM,
as the case may be.
14. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas without reference to its
choice-of-law principles.
15. MODIFICATION. No modification or waiver of any provision hereof shall
be made unless it be in writing and signed by both of the parties hereto.
16. SCOPE OF AGREEMENT. This Agreement constitutes the whole of the
agreement between the parties on the subject matter, superseding all prior oral
and written conversations, negotiations, understandings, and agreements in
effect as of the date of this Agreement.
17. SEVERABILITY. To the extent that any provision of this Agreement
may be deemed or determined to unenforceable for any reason, such
unenforceability shall not impair or affect any other provision, and this
Agreement shall be interpreted so as to most fully give effect to its terms and
still be enforceable.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the day and year first above written.
METAL MANAGEMENT, INC.
By:
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President
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Xxxxxxx X. Xxxxxx
Employee
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