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Exhibit 10.9
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into this 1st day of
December, 1997, by and between XXXXXX X. XXXXXX (the "Executive") and METAL
MANAGEMENT, INC., a Delaware corporation (the "Company").
WHEREAS, the Company desires to employ the Executive and the Executive
desires to accept such employment;
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements contained herein, the Company and the Executive do hereby agree as
follows:
1. Employment and Duties.
(a) On the terms and subject to the conditions set forth in this
Agreement, the Company agrees to employ the Executive as the Chief Executive
Officer of the Company to perform such duties and responsibilities as are
consistent with such positions.
(b) Directorship. The Executive is currently a member of the
Company's Board of Directors (the "Board of Directors"), and throughout
the Employment Period (as hereafter defined) the Company shall cause the
Executive to be nominated for election to the Board of Directors. Failure of
the Company to so nominate the Executive, or the failure of the stockholders of
the Company to elect the Executive to the Board of Directors following
nomination, shall constitute "Good Reason" for the Executive to resign pursuant
to Section 14(e) below and any such resignation shall be deemed a termination
by the Company pursuant to Section 14(a) below.
(c) Executive Committee. Reference is hereby made to that certain
Stockholders' Agreement for Metal Management, Inc. dated December 1, 1997 by
and among Xxxxxx X. Xxxxx, T. Xxxxxxxx Xxxxxxxx, the Executive, Xxxxx X. Xxxxx,
Xxxxxxx X. Xxxxx and the Company (the "Stockholders' Agreement"). The Board of
Directors has amended the Bylaws of the Company in order to create an Executive
Committee (the "Executive Committee") of the Board of Directors, which
Executive Committee is authorized to act on behalf of and in the name of the
Board of Directors during the periods between meetings of the full Board of
Directors, including in regard to certain actions specified in Section 1.2 of
the Stockholders' Agreement. The Executive Committee shall consist of the
Chairman of the Board of Directors, the President and Chief Operating Officer
of the Company, and the Chief Executive Officer of the Company, and one or more
other senior company executives chosen by the Executive Committee. As the
Chief Executive Officer of the Company, the Executive shall be a member of the
Executive Committee during the Employment Period, and as such the Executive
shall participate in all decision-making by the Executive Committee. All
actions by the Executive Committee shall be by majority vote, excepting,
however, that no action may be taken by the Executive Committee without the
unanimous consent of (i) Xxxxxx X. Xxxxx or his successor on the Executive
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Committee, Xxxxx X. Xxxxx, (ii) T. Xxxxxxxx Xxxxxxxx for so long as he is
employed by the Company, and (iii) Xxxxxx X. Xxxxxx for so long as he is
employed by the Company.
2. Performance. The Executive accepts the employment described in
Section 1 above, and agrees to faithfully and diligently perform the duties and
responsibilities described therein. The Executive shall devote time and
attention to matters of the Company such that the Executive's services to the
Company constitute his primary business activity. The Company acknowledges
that the Executive may (i) engage in charitable and community affairs
(including serving on the board of directors or similar management body of any
charitable or community organization), (ii) serve on the board of directors of
or act as a consultant to other companies which are not engaged in a business
that directly or indirectly competes with the Company Business (as defined in
Section 18 below), and (iii) make personal investments. The Company further
acknowledges and agrees that Executive will devote a portion of his time and
energies to the entities set forth on Exhibit A attached hereto.
3. Term. The term of employment under this Agreement shall commence on
the date of this Agreement (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 year unless at least
sixty (60) days before any such anniversary, either the Executive or the
Company, 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
shall terminate upon the earliest to occur of the events described in Section
14 hereunder. For purposes of this Agreement, "Balance of the Term" shall mean
the period beginning on the date of termination and ending on the date that the
Employment Period would have ended pursuant to this Section 3 due to lapse of
time (assuming no further extensions of the Employment Period beyond those
already approved as of the date of termination), without regard to Section 14.
4. Salary. For all the services to be rendered by the Executive
hereunder, the Company agrees to pay, during the Employment Period, a base
salary ("Salary") at an initial rate of Two Hundred and Seventy-Five Thousand
Dollars ($275,000.00) per Contract Year, payable in the manner and frequency in
which the Company's payroll is customarily handled. For purposes of this
Agreement, "Contract Year" shall mean a one-year period commencing on the
Commencement Date or on any anniversary of the Commencement Date. The Company
may increase the Executive's Salary at any time, or from time to time, during
the Employment Period, provided, however, that the Company may not at any time
reduce the Salary from its then-current level. In no event shall the Salary
paid hereunder with respect to any Contract Year be less than the base salary
paid to Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx and T. Xxxxxxxx Xxxxxxxx with respect
to such Contract Year, so long as they are then employed by the Company.
5. Incentive Compensation. In addition to the Executive's Salary,
the Company shall pay to the Executive, during the Employment Period, additional
compensation ("Incentive Compensation") calculated as follows:
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(a) Stock Warrants. On the Commencement Date, the Company shall
grant the Executive warrants to purchase three hundred seventy-five
thousand (375,000) shares of common stock of the Company at an exercise price
of Five Dollars and 91/100 ($5.91) per share and warrants to purchase three
hundred fifty thousand (350,000) shares of common stock of the Company at an
exercise price equal to the lesser of (a) seventy-five percent (75%) of the
closing price per share of the Company's common stock on the last trading date
prior to the Closing, and (b) $12.00 per share, subject to all federal and
state securities and other laws. All warrants issued pursuant to this Section
5(a) shall be governed by and subject to all conditions, terms and restrictions
in the actual warrant which is attached hereto as Attachment A and hereby
incorporated by reference.
(b) [THIS SECTION INTENTIONALLY LEFT BLANK.]
(c) Other Stock Terms.
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i) [THIS SECTION INTENTIONALLY LEFT BLANK.]
ii) The Company represents and warrants to the Executive
that the grant of warrants to purchase shares of common stock
of the Company hereunder shall be an exempt acquisition under
Section 16(b) of the Securities Exchange Act of 1934.
iii) The Executive acknowledges that the Company's
common stock is publicly traded and is subject to various federal
and state securities laws and that the shares acquired upon the
exercise of the warrants (collectively the "Shares") are being
issued pursuant to such laws and agrees that he will comply with
any and all applicable laws and regulations governing the Shares.
iv) The Company shall use its best efforts to file as
soon as practicable, and shall use its best efforts to cause
to remain effective, a registration statement(s) as may be
necessary to permit the Executive to sell in the public market any
and all Shares acquired hereunder upon exercise in the case of the
Shares received on exercise of the warrants, provided, that
Executive understands and agrees that this Section 5(c)iv) shall be
subject to any restrictions on transfer contained in that certain
Stockholders' Agreement by and among the Company, Executive,
Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxx and T.
Xxxxxxxx Xxxxxxxx, and nothing contained in this Section 5(c)(iv)
shall be deemed to impose any obligation upon the Company to take
any action whatsoever that, in the opinion of the Executive
Committee, would or might delay or hinder any material transaction
involving the Company, including but not limited to any of the
Company's acquisitions or any of the Company's debt or equity
financings, or that would or might be deemed to be a default or
violation of any of the Company's contracts in regard to any of
such
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transactions or financings, including but not limited to any
"blackout" periods imposed by the Company's underwriters.
(d) Stock-Based Plans. The Executive shall be eligible to
participate in and receive awards under any other stock-based plans of the
Company pursuant to Section 12 below.
(e) [THIS SECTION INTENTIONALLY LEFT BLANK.]
6. Cash Bonus Compensation. The Executive shall be entitled to the
following bonus compensation:
(a) Annual Cash Bonus. On each anniversary of the Commencement
Date, the Executive shall be entitled to a minimum annual cash bonus (the
"Annual Cash Bonus") in an amount equal to twenty-five percent (25%) of his
Salary for the Contract Year then ended, or, in the event the Employment Period
is terminated for any reason during a Contract Year, a prorated amount equal to
twenty-five percent (25%) of the Executive's Salary in such Contract Year
multiplied by a fraction, the numerator of which is the number of calendar days
in which the Executive was employed by the Company during such Contract Year
and the denominator of which is 365. The Company shall pay the Annual Cash
Bonus to the Executive no later than thirty (30) days after the end of such
Contract Year or, in the event the Employment Period is terminated during the
Contract Year, five (5) days after the date the Employment Period is
terminated. In no event shall the Annual Cash Bonus percentage used to
calculate the Executive's Annual Cash Bonus with respect to any Contract Year
be less than the guaranteed annual cash bonus percentage used to calculate any
guaranteed annual cash bonus paid to Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx and T.
Xxxxxxxx Xxxxxxxx with respect to such Contract Year, so long as they are then
employed by the Company.
(b) Additional Bonus. The Executive shall be eligible to receive
additional cash bonuses pursuant to Section 12 below.
7. Vacation. In accordance with the policies and rules governing the
vacation of other members of the Executive Committee, the Executive shall be
entitled to take vacations with pay, during each year of service under this
Agreement, to be taken during the year at such time or times as may be approved
by the Company. Such vacation shall be at least six (6) weeks, but no less
than the vacation granted Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx and T. Xxxxxxxx
Xxxxxxxx, so long as they are then employed by the Company. Unless otherwise
established for members of the Executive Committee, unused vacation days shall
not be accumulated from one year to the next.
8. Sick Leave. In accordance with the policies and rules governing the
sick leave of Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx and T. Xxxxxxxx Xxxxxxxx, the
Executive shall be allowed paid sick leave during each year of service under
this Agreement. Unless otherwise established for members of the Executive
Committee, unused sick leave shall not be accumulated from one year to the
next.
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9. Disability Benefit. If at any time during the Employment Period
the Executive is unable to perform fully his duties hereunder for a period
of six (6) consecutive months by reason of illness, accident, or other physical
or mental disability (as confirmed by competent medical evidence) and such
condition may reasonably be expected to be permanent ("Total Disability"), the
Executive shall be entitled to receive (i) any accrued but unpaid Salary,
Annual Cash Bonus (determined in accordance with Section 6(a)), and prorated
vacation, and any other amounts accrued but unpaid as of the date of
termination, and (ii) any and all disability benefits then available to Xxxxx
X. Xxxxx, Xxxxxx X. Xxxxx and T. Xxxxxxxx Xxxxxxxx, so long as they are then
employed by the Company. In the event there is then no established policy
regarding disability benefits afforded to Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx and
T. Xxxxxxxx Xxxxxxxx or such benefits afforded to Xxxxx X. Xxxxx, Xxxxxx X.
Xxxxx and T. Xxxxxxxx Xxxxxxxx are less than seventy percent (70%) of the
Executive's then-current Salary and Annual Cash Bonus for the Balance of the
Term, then the Executive shall be entitled to receive periodic payments of
seventy percent (70%) of his then-current Salary and Annual Cash Bonus
(determined pursuant to Section 4 of this Agreement) for the Balance of the
Term. If any dispute regarding the existence of the Executive's Total
Disability arises, each party shall appoint a physician and such physicians
shall jointly appoint a third physician, the decision of any two (2) of such
physicians regarding the existence of Total Disability shall be binding upon
the parties. Notwithstanding the foregoing provision, the amounts payable to
the Executive pursuant to this Section 9 shall be reduced by any amounts
received by the Executive with respect to any such incapacity pursuant to any
insurance policy, plan, or other employee benefit provided to the Executive by
the Company.
10. Death Benefit. In the event of the death of the Executive during
the Employment Period, the Company shall pay (i) any accrued but unpaid
Salary, Annual Cash Bonus (determined in accordance with Section 6(a)) and
prorated vacation, and any other amounts accrued but unpaid as of the date of
termination, and (ii) any and all death benefits then available to Xxxxx X.
Xxxxx, Xxxxxx X. Xxxxx and T. Xxxxxxxx Xxxxxxxx. In the event there is then no
established policy regarding death benefits afforded to Xxxxx X. Xxxxx, Xxxxxx
X. Xxxxx and T. Xxxxxxxx Xxxxxxxx or such benefits afforded Xxxxx X. Xxxxx, T.
Xxxxxx X. Xxxxx and T. Xxxxxxxx Xxxxxxxx are less than a lump-sum payment equal
to the Executive's then-current Salary and Annual Cash Bonus otherwise payable
to the Executive for the one-year period immediately following the Executive's
death, then the Company shall pay as a survivor's benefit a lump-sum amount
equal to the Executive's then-current Salary and Annual Cash Bonus that would
otherwise be payable to the Executive pursuant to Section 4 of this Agreement
for the one-year period immediately following the Executive's death. The
benefits payable under this Section 10 shall be paid to the person or persons
designated by the Executive on the form provided by the Company or, in the
absence of such a designation, as follows: (i) to the Executive's spouse if she
survives him; (ii) if the Executive's spouse fails to survive the Executive,
then in equal shares to the Executive's children who survive him; or (iii) if
neither Executive's spouse nor any child survives the Executive, then all to
the Executive's estate.
11. Insurance. During the Employment Period, the Company shall apply
for, procure and pay for, in the Executive's name and for the Executive's
benefit, with the
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Executive's designee as the beneficiary, life insurance owned by the Executive
in the following amounts: $1,000,000 through a term life policy and $1,000,000
through a whole life policy. The Executive shall submit to any medical or
other examination and execute and deliver any application or other instrument
in writing reasonably necessary to effectuate such insurance.
12. Other Compensation, Benefits and Perquisites. The Executive's
Salary shall be as described in Section 4 above; his stock Incentive
Compensation shall be as described in Section 5 above; his Annual Cash Bonus
shall be as described in Section 6(a) above; his vacation shall be as described
in Section 7 above; and his sick leave, disability benefit, death benefit and
insurance shall be as described in Sections 8, 9, 10 and 11 above,
respectively. In addition to the aforesaid types of compensation, benefits and
perquisites, the Executive shall be entitled to participate in all other types
of compensation, benefits and perquisites then available to Xxxxx X. Xxxxx,
Xxxxxx X. Xxxxx and T. Xxxxxxxx Xxxxxxxx, such as, but not limited to: cash
bonuses in addition to guaranteed cash bonuses; stock option plans; 401-K
plans; welfare plans; business travel policies; car allowance; medical
insurance; dental insurance; dues, fees and costs (including travel) associated
with membership and participation in professional, educational and other clubs
and organizations, and attendance at professional, educational and other
programs, presentations, workshops, seminars and conventions. The Executive's
participation in all such other types of compensation, benefits and perquisites
shall be identical to those of Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx, excepting
only that the amount of the Executive's cash bonus (if any) in addition to his
Annual Cash Bonus, and also the level of the Executive's participation in stock
option grants and stock option plans (if any), shall be determined and granted
by the Board of Directors from time to time based upon the Executive's
responsibilities and performance, and shall not necessarily be in the same
amounts or levels as are received by Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx.
Notwithstanding anything to the contrary, however, for so long as both
Executive and T. Xxxxxxxx Xxxxxxxx are employed by the Company, Executive's
compensation, benefits and perquisites (including, but not limited to: Salary;
Incentive Compensation; Annual Cash Bonus; additional cash bonus; vacation;
sick leave; disability benefit; death benefit; insurance; warrants; stock
option grants and plans; 401(k) plans; welfare plans; business travel policies;
car allowance; medical insurance; dental insurance; dues, fees and costs
(including travel) associated with membership and participation in
professional, educational and other clubs and organizations, and attendance at
professional, educational and other programs, presentations, workshops,
seminars and conventions; and Company auto and other reimbursement policies)
shall be identical in all respects to those of T. Xxxxxxxx Xxxxxxxx. Without
limiting the generality of the foregoing, it is expressly agreed: that
Executive's car allowance from the Company shall never be less than One
Thousand Dollars ($1,000) per month, provided that any portion of such car
allowance that is not being used to pay for the Executive's car shall be paid
by the Company to the Executive as additional compensation in regard to such
month; that the Executive shall also be fully reimbursed by the Company for all
gas, oil, repairs, maintenance and insurance in regard to such car; and that
the Company shall supply and pay all of the costs, fees and charges in regard
to a Company phone at the Executive's home office (if any), a car phone, and a
cellular phone. The Executive understands and agrees that the Executive
Committee shall be permitted from time to time to establish an annual dollar
limitation upon the Company's expenditures in regard to dues, fees and costs
(including travel) associated with membership and participation in
professional, educational and other clubs and organizations, and attendance at
professional,
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educational and other programs, presentations, workshops, seminars and
conventions, other than the Institute of Scrap Recycling Industries (ISRI),
incurred by any member of the Executive Committee, which limitation shall be
identical with respect to each member of the Executive Committee: provided that
so long as the Company's common stock as of the first trading day of each
fiscal year of the Company is trading at or above Ten Dollars ($10.00) per
share, such annual limitation for such year shall not be less than Twenty
Thousand Dollars ($20,000.00) per member of the Executive Committee.
13. Business Expense Reimbursement. The Company shall reimburse the
Executive for the reasonable, ordinary, and necessary business expenses
incurred by him in connection with the performance of his duties hereunder,
including, but not limited to, ordinary and necessary travel, entertainment and
phone expenses. The Executive shall provide the Company with an accounting of
his expenses, which accounting shall clearly reflect which expenses are
reimbursable by the Company. The Executive shall provide the Company with such
other supporting documentation and other substantiation of reimbursable
expenses as will conform to Internal Revenue Service regulations or other
requirements. All such reimbursements shall be payable by the Company to the
Executive within a reasonable time after receipt by the Company of appropriate
documentation thereof; provided, however, the Company shall have no obligation
to reimburse any expenses for which appropriate and customary back-up
documentation is not provided within ninety (90) days following accrual of the
obligation in question.
14. Termination.
(a) Unilateral Termination. The Employment Period may be
terminated by either party at any time by written notice of termination given
to the other party at least ninety (90) days in advance of the termination date
stated in such notice.
(b) Termination for Just Cause. The Company shall have the
option to terminate the Employment Period, effective upon written notice
of such termination to the Executive, for Just Cause as determined by the
Executive Committee. For purposes of this Agreement, the term "Just Cause"
shall mean the occurrence of any one or more of the following events:
i) The willful and continued failure by the Executive to
substantially perform his duties with the Company (other than
any such failure resulting from termination by the Company
pursuant to Section 14(a), Total Disability, retirement or death)
after a demand for substantial performance is delivered to the
Executive that specifically identifies the manner in which the
Company believes that the Executive has not substantially
performed his duties, and the Executive fails to resume
substantial performance of his duties on a continuous basis within
fourteen (14) days of receiving such demand; provided, that if it
is not reasonably possible for the Executive to resume such
substantial performance within such fourteen (14) days, then such
fourteen (14) day time period shall be
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extended to that minimum period of time during which it is
reasonably possible for the Executive to resume such substantial
performance;
ii) The willful engaging by the Executive in conduct which
is demonstrably and materially injurious to the Company,
monetarily or otherwise and the Executive's failure to cease
engaging in such conduct within fourteen (14) days after a demand
for such cessation is delivered to the Executive by the Company
that specifically identifies such conduct; provided, however, that
if it is not reasonably possible for the Executive to cease such
conduct within such fourteen (14) days, then such fourteen (14)
day time period shall be extended to that minimum period of time
during which it is reasonably possible for the Executive to cease
such conduct; or
iii) The Executive's conviction of a felony or a misdemeanor
which materially impairs the Executive's ability substantially to
perform his duties with the Company.
For purposes of this subsection (b), an act, or failure to act, on the
Executive's part, shall not be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without a reasonable belief that
his action or omission was in the best interest of the Company.
(c) Termination Upon Death. The Employment Period shall
automatically terminate upon the death of the Executive, without further
action by the Company.
(d) Termination Upon Disability. The Employment Period shall
terminate thirty days after the Company notifies the Executive of a
determination of Total Disability (as defined above) of the Executive, provided
the Executive does not dispute such determination as provided in Section 9
hereof, in which case the date of termination for Total Disability shall be the
date the Executive is determined to have a Total Disability pursuant to Section
9 hereof.
(e) Termination for Good Reason. The Executive shall have the
right to resign for Good Reason (as defined below) and any such
resignation shall be deemed a termination by the Company pursuant to Section
14(a). For purposes of this Agreement, "Good Reason" shall mean (i) any
material breach by the Company of its obligations hereunder, including without
limitation any material breach of the Company's obligations under Sections
1(b) or 1(c) above, which is not cured within fourteen (14) days of written
notice from the Executive to the Company describing such breach, (ii) any
transfer of the Executive's principal work location to a location outside the
downtown business district of Chicago, Illinois, (iii) the termination of the
Employment Period by the Executive for any reason or no reason at all at any
time during the one-year period immediately following the date of a Change in
Control, or (iv) the termination of the Employment Period by the Executive for
any reason or no reason at all at any time during the one-year period
immediately following the date the Executive receives notice
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of non-renewal from the Company pursuant to Section 3 herein. For purposes of
this Agreement, a "Change in Control" of the Company shall mean:
i) [THIS SECTION INTENTIONALLY LEFT BLANK.]
ii) [THIS SECTION INTENTIONALLY LEFT BLANK.]
iii) A change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company
is then subject to such reporting requirement, that was not
approved by the Executive Committee, provided that, without
limitation, a Change in Control shall be deemed to have occurred
if the following events occur without the affirmative vote of the
Executive Committee:
a) any "person" (as defined in Sections 13(d) and 14(d)
of the Exchange Act), other than Xxxxxx X. Xxxxx, Xxxxx
X. Xxxxx and Xxxxxxx X. Xxxxx and their respective heirs,
trusts, estates, personal representatives, legatees and
assigns, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company's then
outstanding securities computed on a fully diluted basis
(assuming the conversion of all outstanding convertible
securities of the Company and the exercise of all options and
warrants which, at the time of determination, are vested and
are exercisable at a price less than the then market price of
the Company's Common Stock),
b) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), there shall cease to be a majority of the Board of
Directors of the Company comprised as follows: individuals who
at the beginning of the Employment Period constitute the Board
of Directors and any new director(s) whose election by the
Board of Directors or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the Employment Period or whose
election or nomination for election was previously so
approved, or
c) the shareholders of the Company (a) approve a merger
or consolidation of the Company or a subsidiary of the
Company with any other corporation, other than a merger with
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Xxxxx Iron & Metal, Inc., and other than a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least eighty percent (80%) of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(b) approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all
or substantially all the Company's assets.
15. Surrender of Properties. Upon termination of the Executive's
employment with the Company, regardless of the reason therefor, the Executive
shall promptly surrender to the Company all property provided him by the
Company for use in relation to his employment and, in addition, the Executive
shall surrender to the Company any and all sales materials, lists of customers
and prospective customers, price lists, files, records, models, or other
materials and information of or pertaining to the Company or its customers or
prospective customers or the products, business, and operations of the Company.
16. Chicago Headquarters. The Company acknowledges that the Executive
shall be based within the City limits of Chicago, Illinois, during the
Employment Period.
17. Severance Pay.
(a) Notwithstanding any other provision of this Agreement, if the
Employment Period is terminated by the Company pursuant to Section 14(a), the
Company shall pay the Executive (i) any accrued but unpaid Salary, prorated
Annual Cash Bonus (determined in accordance with Section 6(a)) and prorated
vacation, and any other amounts accrued but unpaid as of the date of
termination, and (ii) a lump-sum severance payment equal to the greater of (A)
the Executive's then-current Salary and Annual Cash Bonus for the Balance of
the Term, or (B) the product of 5.00 multiplied by the Executive's highest
total annual cash compensation (as reported by the Company on Internal Revenue
Service Form W-2) earned by the Executive in any one of the three (3) calendar
years immediately preceding the calendar year in which the termination occurs.
In addition, (i) the Company shall continue all medical, dental and life
insurance benefits at no cost to the Executive for the greater of (A) twelve
(12) months, commencing on the date of termination of the Employment Period, or
(B) the Balance of the Term (the provision by the Company of any such group
health benefits shall not be considered continuation coverage pursuant to
Section 4980B of the Internal Revenue Code of 1986, as amended, and such
continuation coverage shall commence on the date that benefits provided
hereunder cease), and (ii) the ownership of all warrants and options granted to
the Executive by the Company under this Agreement shall be immediately and
fully vested in the Executive and shall remain outstanding and exercisable
until the expiration date of such warrants and options (without regard to any
early termination of such options or warrants resulting from the Executive's
termination of employment). Other than as provided herein, if the Employment
Period is terminated by the Executive pursuant to Section 14(a) or by the
Company as provided
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in Section 14(b) of this Agreement, the Company shall pay to the Executive any
accrued but unpaid Salary, prorated Annual Cash Bonus (determined in accordance
with Section 6(a)) and prorated vacation, and any other amounts accrued but
unpaid as of the date of termination. Any benefit payable pursuant to this
Section 17 shall be paid to the Executive in a lump-sum within five (5) days
after the termination of the Employment Period.
(b) In the event that the Executive becomes entitled to the
severance payments as provided herein, if it is determined that any of
such payments will be subject to the tax or any other similar state or local
excise taxes (the "Excise Tax") imposed by Section 4999 of the Code (or any
similar tax that may hereafter be imposed), the Company shall "gross-up" such
severance payments so that the amount received by the Executive after payment
of such Excise Tax shall be equal to the amount to which the Executive was
entitled prior to application of such Excise Tax.
18. Restrictive Covenants. In addition to any other obligation of the
Executive under any other agreement with the Company, in order to assure that
the Company will realize the benefits of this Agreement and in consideration of
the employment set forth in this Agreement, the Executive agrees that he shall
not during the Employment Period and for a period of thirty-six (36) months
from the termination of the Employment Period; provided, that, in the event the
Employment Period is terminated by the Company pursuant to Section 14(a) on or
before the second anniversary of the Commencement Date, the thirty-six (36)
month period provided herein shall be reduced to a twelve (12) month period;
and provided further, that, in the event the Employment Period is terminated by
the Company pursuant to Section 14(a) after the second anniversary of the
Commencement Date, the thirty-six (36) month period provided herein shall be
reduced to a thirty (30) month period:
(a) directly or indirectly, 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 any state in which the Company owns a scrap metal yard or
scrap metal processing facility on the date of termination of such Employment
Period which is directly or indirectly in competition with the Company
Business; 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 the Company or any subsidiary or affiliate of the Company on
the date of the termination of such Employment Period to patronize any business
directly or indirectly in competition with the Company Business; (ii) canvass,
solicit or accept from any person that is a customer of the Company or any
subsidiary or affiliate of the Company on the date of the termination of the
Employment Period, any such competitive business, or (iii) request or advise
any person that is a customer of the Company Business on the date of the
termination of the Employment Period to withdraw, curtail, or cancel any such
customer's business with the Company or any affiliate or subsidiary of the
Company;
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(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 the Company or any subsidiary or affiliate of
the Company on the date of the termination of the Employment Period or within
six months prior to the date of termination of the Employment Period, or in any
manner seek to induce any such person to leave his or her employment;
(d) For purposes of this Agreement, "Company Business" shall mean
scrap iron or scrap metal recycling and/or processing conducted by the
Company or its subsidiaries or affiliates and any other business that the
Company or its subsidiaries or affiliates may be engaged in (other than real
estate development) at the time of the termination of the Employment Period.
(e) [THIS SECTION INTENTIONALLY LEFT BLANK.]
(f) The Executive agrees and acknowledges that the restrictions
contained in this Section 18 are reasonable in scope and duration and are
necessary to protect the Company after the Commencement Date. If any provision
of this Section 18 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 the Company and upon breach of any provision
of this Section, the Company 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 the Company may have (including, without
limitation, the right to seek monetary damages).
(g) [THIS SECTION INTENTIONALLY LEFT BLANK.]
19. Confidentiality of Information: Duty of Non-Disclosure. The
Executive acknowledges and agrees that his employment by the Company under this
agreement necessarily involves his understanding of and access to certain trade
secrets and confidential information pertaining to the business of the Company.
Accordingly, the Executive agrees that after the date of this Agreement at all
times, whether during or after the termination of the Employment Period, he
will not, directly or indirectly, without the prior written consent of the
Company, 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 the Company or its subsidiaries
or affiliates, including, but not limited to, information pertaining to its
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
Executive agrees that he shall not, directly or indirectly, remove or retain,
without the express prior written
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consent of the Company, and upon termination of this Agreement for any reason
shall return to the Company, any figures, calculations, letters, papers,
records, computer disks, computer print-outs, customer lists, price lists,
other lists, contracts, business plans, forms, manuals, other documents,
instruments, drawings, designs, programs, brochures, sales literature, or any
copies or reproductions 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 the Company or obtained as a result of his
employment by the Company. The Executive acknowledges that all of the
foregoing are proprietary information, and are the exclusive property of the
Company.
20. Enforcement.
(a) Upon presentation of a claim or claims (collectively, "Claims")
arising out of or relating to this Agreement, or the breach hereof, by an
aggrieved party, the other party shall have thirty (30) days in which to make
such inquiries of the aggrieved party and conduct such investigations as it
believes reasonably necessary to determine the validity of the Claims. At the
end of such period of investigation, the complained of party shall either pay
the amount of the Claims or the arbitration proceeding described immediately
below shall be invoked.
(b) In the event that the Claims are not settled by the procedure
set forth immediately above, the Claims shall be submitted to arbitration
conducted in accordance with the Commercial Arbitration Rules ("Rules") of the
American Arbitration Association ("AAA") except as amplified or otherwise
varied hereby.
(c) The parties shall submit the dispute to the Chicago regional
office of the AAA and the situs of the arbitration shall be Xxxx County,
Illinois.
(d) The arbitration shall be conducted by a single arbitrator. The
parties shall appoint the single arbitrator to arbitrate the dispute within ten
(10) business days of the submission of the dispute. In the absence of
agreement as to the identity of the single arbitrator to arbitrate the dispute
within such time, the AAA is authorized to appoint an arbitrator in accordance
with the Rules, except that the arbitrator shall have as his principal place of
business the Chicago metropolitan area.
(e) The single arbitrator selected by the AAA shall be an attorney,
accountant or other professional licensed to practice by the State of Illinois.
(f) Notwithstanding anything in the Rules to the contrary, the
arbitration award shall be made in accordance with the following procedure.
Each party shall, at the commencement of the arbitration hearing, submit an
initial statement of the amount each party proposes be selected by the
arbitrator as the arbitration award ("Settlement Amount"). During the course
of the arbitration, each party may vary its proposed Settlement Amount. At the
end of the arbitration hearing, each party shall submit to the arbitrator its
final Settlement Amount ("Final Settlement Amount"), and the arbitrator shall
be required to select either one or the other Final Settlement Amounts as the
arbitration award without discretion to select any other amount
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as the award. The arbitration award shall be paid within ten (10) business
days after the award has been made, together with interest from the date of
award at the rate of six percent (6%). Judgment upon the award may be entered
in any federal or state court having jurisdiction over the parties and shall be
final and binding.
21. Costs of Enforcement. The Company shall reimburse the Executive
for reasonable attorneys' fees and costs incurred by the Executive in connection
with any claim by the Executive brought hereunder (including but not limited to
all reasonable attorneys' fees and costs incurred by the Executive in
contesting or disputing any termination of the Employment Period, or in seeking
to obtain or enforce any right or benefit provided by this Agreement, or in
connection with any tax audit or proceeding to the extent attributable to any
payment or benefit provided hereunder), so long as such claim is brought in
good faith.
22. Competing Interest. During the Employment Period, the Executive
shall not, without the prior written consent of the Company, (i) engage in
any other business activity for gain, profit, or other pecuniary advantage or
(ii) engage in or in any manner be connected or concerned, directly or
indirectly, whether as an officer, director, stockholder, partner, owner,
executive, creditor, or otherwise, with the operation, management, or conduct
of any business, in either case which directly or indirectly competes with the
Company Business. Provided, however, that this Section 22 shall not prohibit
the Executive from owning up to five (5) percent of the publicly traded shares
of any entity.
23. No Duty to Mitigate or Offset. The Executive shall not be
required to mitigate or offset the amount of any payments that the
Executive may receive from the Company as a result of the termination of the
Employment Period. The amounts payable hereunder by the Company as a result of
the termination of the Employment Period shall be considered liquidated damages
and shall not be reduced by any amounts that the Executive earns through other
employment or otherwise, except that the Company's obligation to continue
medical, dental and life insurance benefits pursuant to Section 17 herein,
shall be reduced by the amount of any such benefits provided to the Executive
by any other employer.
24. Indemnification. The Company hereby agrees to indemnify the
Executive against all liabilities, costs, charges and expenses whatsoever
incurred or sustained by the Executive in connection with any threatened,
pending or completed action, suit or proceeding to which the Executive may be
made a party or may be threatened to be made a party by reason of the
Executive's being or having been a director, officer, employee, or agent of
the Company or serving or having served at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise to the fullest extent permitted by
applicable law. The Company shall advance all costs, charges and expenses,
including legal fees, incurred by the Executive in connection with the
Executive's defense of any claim for which the foregoing indemnity may apply.
If it is subsequently determined that the Executive was not entitled to such
indemnification, the Executive will reimburse the Company any amounts advanced
pursuant to the foregoing sentence.
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25. Directors and Officers Insurance. The Executive shall be
entitled to the protection of any insurance policies the Company or any of
its affiliates from time to time maintains for the benefit of its senior
executive officers and directors (or substantially similar policies) respecting
liabilities, costs, charges, and expenses of any type whatsoever incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party or may be threatened to be made a party
by reason of the Executive's being or having been a director, officer, employee
or agent of the Company or serving or having served at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
26. General Provisions.
(a) Goodwill. The Company 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 the Company, the Executive acknowledges that the customers are
the customers of the Company, and that any goodwill created by the Executive
belongs to and shall inure to the benefit of the Company.
(b) Notice. Any notice or demand required or permitted hereunder
shall be made in writing (i) either by actual delivery of the notice or
demand into the hands of the party thereunder entitled, or (ii) by the mailing
of the notice or demand in the United States mail, certified or registered
mail, return receipt requested, all postage prepaid and addressed to the party
to whom the notice or demand is to be given at the party's respective address
set forth below, or such other address as the parties may from time to time
designate by written notice as herein provided.
As addressed to the Company:
Metal Management, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Chairman
With a copy to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
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As addressed to the Executive:
Xx. Xxxxxx X. Xxxxxx
Metal Management, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
The notice or demand shall be deemed to be received in case (i) on the date of
its actual receipt by the party entitled thereto and in case (ii) on the date
of its mailing.
(c) Amendment and Waiver. No amendment or modification of this
Agreement shall be valid or binding upon the Company unless made in
writing and signed by an officer of the Company duly authorized by the Board of
Directors or upon the Executive unless made in writing and signed by him. The
waiver by either party hereto of the breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach by such
party.
(d) Entire Agreement. This Agreement constitutes the entire
Agreement between the parties with respect to the Executive's duties and
compensation as an executive of the Company and shall supersede any and all
prior agreements or understandings between the parties hereto; there are no
representations, warranties, agreements or commitments between the parties
hereto with respect to his employment except as set forth herein. The parties
do hereby terminate that certain Employment Agreement by and between the
Company (formerly known as General Parametrics Corporation) and the Executive
dated April 9, 1996.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts)
of the State of Illinois.
(f) Severability. If any provision of this Agreement shall, for
any reason, be held unenforceable by a court of competent jurisdiction, such
provision shall be severed from this Agreement unless, as a result of such
severance, the Agreement fails to reflect the basic intent of the parties. If
the Agreement continues to reflect the basic intent of the parties, then the
invalidity of such specific provision shall not affect the enforceability of
any other provision herein, and the remaining provisions shall remain in full
force and effect.
(g) Assignment. The Executive may not under any circumstances
delegate any of his rights and obligations hereunder without first
obtaining the prior written consent of the Company. The Company shall cause
this Agreement and all of the Company's rights and
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obligations hereunder, including without limitation the obligations of the
Company in the event of a termination of employment by the Company pursuant to
Section 14(a), to be assigned and expressly assumed by any successor to all or
substantially all of the business and/or assets of the Company, whether direct
or indirect, by purchase, merger, consolidation or otherwise, including upon a
Change in Control (as defined in Section 14(e)); provided, however, that any
such assignment shall not relieve the Company of its obligations hereunder to
the extent that an assignee does not fulfill such obligations.
(h) Heirs. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designees or, if there is no such
designee, to the Executive's estate.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
METAL MANAGEMENT, INC.
By: /s/ T. Xxxxxxxx Xxxxxxxx
-----------------------------------
T. Xxxxxxxx Xxxxxxxx, Chairman and
Chief Development Officer
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx, Chief Operating
Officer
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
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EXHIBIT "A"
1. Crown Group, Inc.
2. Miss Mimi Corporation
3. GMJ Holdings, Inc.
4. Environmental Waste Funding Corporation and affiliated entities
5. Trailside Capital Corporation
6. North-South Partners
7. Entrepreneurial Capital Management
8. Lonesome Dove Ventures
9. J&J Investment Partnership and affiliated entities
10. Outright Industries and affiliated entities
