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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into this 1st day of
December, 1997, by and between XXXXX X. XXXXX (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 a Vice-President of
the Company to perform such duties and responsibilities as are consistent with
such positions.
(b) Directorship. Effective upon the closing of the merger of a
subsidiary of the Company and Xxxxx Iron & Metal, Inc. (the "Closing"), the
Executive shall become a member of the Company's Board of Directors (the "Board
of Directors"), and thereafter 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 T. Xxxxxxxx Xxxxxxxx, Xxxxxx X. Xxxxxx, the Executive, Xxxxxx 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. If for any
reason (including death or disability) Xxxxxx X. Xxxxx, as the President and
Chief Operating Officer of the Company, is unable to serve on the Executive
Committee, then the Executive shall be a member of 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
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without the unanimous consent of (i) Xxxxxx X. Xxxxx or his successor on the
Executive 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. In addition, the
Company and the Executive acknowledge that Executive is a shareholder, officer
and director of F&A Enterprises, Inc., which is involved in the printing
business, and that such shall not violate the terms of this Section, provided
that it does not in any way interfere with the performance of his duties and
responsibilities hereunder.
3. Term. The term of employment under this Agreement shall commence on
the date of the Closing (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 Xxxxxx X. Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx with respect
to such Contract Year, so long as they are then employed by the Company.
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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:
(a) Stock Warrants. On the Commencement Date, the Company shall grant
the Executive warrants to purchase two hundred ninety-one thousand three
hundred eighty (291,380) 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 two
hundred ninety-one thousand three hundred eighty (291,380) shares of common
stock of the Company at an exercise price equal to 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, 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.
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, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, T. Xxxxxxxx
Xxxxxxxx and Xxxxxx X. Xxxxxx, and nothing contained in this Section
5(c)(iv) shall be deemed to impose any obligation upon the Company to
take any action whatsoever
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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 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 Xxxxxx X. Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx 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 Xxxxxx X. Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx X.
Xxxxxx, 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.
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8. Sick Leave. In accordance with the policies and rules governing the
sick leave of Xxxxxx X. Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx, 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.
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 Xxxxxx
X. Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx, so long as they are then
employed by the Company. In the event there is then no established policy
regarding disability benefits afforded to Xxxxxx X. Xxxxx, T. Xxxxxxxx Xxxxxxxx
and Xxxxxx X. Xxxxxx or such benefits afforded to Xxxxxx X. Xxxxx, T. Xxxxxxxx
Xxxxxxxx and Xxxxxx X. Xxxxxx 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 Xxxxxx X.
Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx. In the event there is then
no established policy regarding death benefits afforded to Xxxxxx X. Xxxxx, T.
Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx or such benefits afforded Xxxxxx X.
Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx 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
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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 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 Xxxxxx X. Xxxxx, T. Xxxxxxxx
Xxxxxxxx and Xxxxxx X. Xxxxxx, 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 Xxxxxx X. Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx
X. Xxxxxx, 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 Xxxxxx X.
Xxxxx, T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx. Without limiting the
generality of the foregoing, it is expressly agreed: that the 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, educational and
other programs, presentations, workshops, seminars and conventions, other than
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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 and the Executive: 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 and for the Executive.
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 City limits 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 of
non-renewal
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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
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Company with any other corporation, other than a merger
with 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
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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 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
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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;
(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,
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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 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
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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 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,
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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.
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: Chief Executive Officer
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With a copy to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
As addressed to the Executive:
Xx. Xxxxx X. Xxxxx
0000 Xxxxx Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
With a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: M. Xxxxxx Xxxxxx
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.
(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
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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 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
METAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X. Xxxxxx, President and Chief
Executive Officer
By: /s/ T. Xxxxxxxx Xxxxxxxx
------------------------------------------
T. Xxxxxxxx Xxxxxxxx, Chairman and Chief
Development Officer
EXECUTIVE:
/s/ Xxxxx X. Xxxxx
---------------------------------------------
XXXXX X. XXXXX
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