EXHIBIT 10.16
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EMPLOYMENT AGREEMENT
This Employment Agreement ("AGREEMENT") is entered into between Schnitzer
Steel Industries, Inc. ("COMPANY") and Xxxxx X. Xxxxx ("XXXXX").
BACKGROUND
X. Xxxxx has served as the Chief Financial Officer of the Company since
1982.
X. Xxxxx advised the Company that he intended to retire as of the close
of the Company's current fiscal year. The Company has determined that it is in
the Company's best interest to delay Xxxxx'x retirement in order to effectuate
an orderly transition of his duties to a new chief financial officer of the
Company.
X. Xxxxx has agreed to remain as the Chief Financial Officer of the
Company, subject to entering into this Agreement.
D. The parties agree that the obligations and benefits of the parties in
this Agreement are reasonable under the circumstances, and each party has
entered freely into this Agreement.
Therefore, the parties agree as follows:
1. SERVICES.
1.1 TERM. Subject to earlier termination in accordance with Section
3, the Company will continue to employ Xxxxx, and Xxxxx will work for the
Company in the terms set forth in this Agreement from September 1, 2004 (the
"EFFECTIVE DATE") until June 2, 2005 (the "EXPIRATION DATE"). Company, at its
sole option may extend the Term of this Agreement for up to an additional three
(3) months, by notice given to Xxxxx not later than May 1, 2005, which notice
shall specify the new Expiration Date.
1.2 SERVICES. Xxxxx will continue to perform his responsibilities
as Chief Financial Officer of the Company under the direction of the Company's
Chief Executive Officer in the manner as Xxxxx has performed for the Company
prior to the date hereof. Xxxxx will also be responsible for training his
successor as designated by the Chief Executive Officer. Without limiting the
generality of the foregoing, subject to the direction of the Chief Executive
Officer, Xxxxx shall have responsibility for, and exercise authority over, the
financial operations of the Company. Xxxxx shall continue to be appointed
Vice-President and Chief Financial Officer of the Company during the term of
this Agreement.
1.3 OBLIGATIONS OF XXXXX. Xxxxx will devote his full time to
employment with the Company during the term of this Agreement.
2. COMPENSATION.
2.1 BASE SALARY. From the Effective Date and during the term of
this Agreement, Xxxxx will continue to receive his annual base salary, with such
increases, if any, as may be approved by the Compensation Committee of the
Company's Board of Directors.
2.2 EVA BONUS. Xxxxx will receive his EVA Bonus on the date the
Company distributes EVA Bonuses to its employees for fiscal year 2004. Xxxxx
shall receive his EVA Bonus Bank on November 30, 2004. All EVA payments shall be
subject to standard payroll deductions. Xxxxx waives any right to receive an EVA
Bonus attributable to his employment from the Effective Date until the
Expiration Date.
2.3 RETENTION BONUS. In consideration of Xxxxx entering into this
Agreement, Xxxxx will be paid a bonus in the amount of $280,000.00 on November
30, 2004. The bonus payment shall be subject to standard payroll deductions.
2.4 STOCK OPTIONS. The parties acknowledge that Xxxxx was granted
stock options during calendar years 2001 through 2003 pursuant to Stock Option
Agreements between the Company and Xxxxx ("STOCK OPTION AGREEMENTS"), which will
not be vested as of the Expiration Date. In further consideration of Xxxxx'x
undertakings hereunder, the Company agrees that subject to termination of
Xxxxx'x employment pursuant to Sections 3.1 or 3.2 below, the Stock Option
Agreements are hereby amended to provide that all stock options granted
thereunder, if not sooner vested, will be vested on June 2, 2005.
2.5 OTHER BENEFITS. Except as otherwise provided in this Agreement,
the employee benefits and retirement program in effect for the Company to which
Xxxxx will be entitled and in which he will be entitled to participate during
the term of this Agreement will be identical to those in which he currently
participates, as such benefits and programs may be modified from time to time
for all Company participants. Notwithstanding the foregoing, Xxxxx will not earn
any additional years of Credited Service under the Company's Supplemental
Executive Retirement Bonus Plan from and after the Effective Date.
3. TERMINATION BENEFITS AND OBLIGATIONS ON TERMINATION. Xxxxx'x
employment pursuant to this Agreement may be terminated by Xxxxx or by the
Company as set forth in this Section 3.
3.1 AUTOMATIC TERMINATION. Xxxxx'x employment will terminate
automatically upon his death or permanent disability, as determined pursuant to
the Company's policies as set forth in its Employee Policy Manual. In the event
of termination of this Agreement pursuant to this Section 3.1, Xxxxx will have
the right to receive the bonuses provided for in Sections 2.2 and 2.3 above, but
the amendment to the Stock Option Agreements described in Section 2.4 above will
be null and void.
3.2 TERMINATION BY COMPANY FOR CAUSE OR BY XXXXX. Xxxxx'x
employment under this Agreement may be terminated at the option of the Company's
Board of Directors for cause only for fraud, dishonesty or willful misconduct
compromising Xxxxx'x reputation or ability to represent the Company in
performing his duties under this Agreement. In the event of termination of this
Agreement by the Company pursuant to this Section 3.2, or if Xxxxx terminates
this Agreement for any reason other than as provided in Section 3.1 above,
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Xxxxx will have the right to receive the salary provided for in Section 2.1 that
has been earned by him through the date of his termination. All other amounts
and benefits due to Xxxxx hereunder that have not been delivered to Xxxxx prior
to the Termination Date shall be deemed forfeited and the amendment to the Stock
Option Agreements described in Section 2.4 above will be null and void.
3.3 TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event of
termination of Xxxxx'x employment without cause, Xxxxx will have the right to
receive all bonuses and benefits as provided for in Section 2 above, which shall
be payable as provided therein.
4. MISCELLANEOUS PROVISIONS.
4.1 NOTICES. Any notice or other communication required or
permitted under this Agreement shall be in writing (which may take the form of a
telecopy or email communication) and shall be sent by certified mail, return
receipt requested, telecopier, email or hand delivery:
(a) If to the Company, to the following address:
Schnitzer Steel Industries, Inc.
0000 XX Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President and CEO
Telecopy: (000) 000-0000
Email: xxxxxxx@xxxx.xxx
with copy to:
Schnitzer Steel Industries, Inc.
0000 XX Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx Davidson, Secretary
Telecopy: (000) 000-0000
Email: xxxxxxxxx@xxxx.xxx
(b) If to Xxxxx, to the following address:
Xxxxx X. Xxxxx
0000 XX 00xx Xxx., #000
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Email: xxxxxx@xxxx.xxx
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All notices and communications shall be deemed to have been duly given or made
(i) when delivered by hand, (ii) three (3) business days after being deposited
in the U. S. mail, postage prepaid, (iii) when emailed, receipt acknowledged by
email response, or (iv) when telecopied, receipt acknowledged. The address,
telecopy number or email address to which notices or other communication shall
be directed, may be changed from time to time by either party by giving written
notice to the other party of the substituted address, telecopy number or email
address.
4.2 SUCCESSORS AND ASSIGNS. The agreement for services of Xxxxx is
personal in nature, and Xxxxx may not assign or delegate his rights or
obligations under this Agreement. This Agreement may not be assigned by the
Company without the consent of Xxxxx. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of each party.
4.3 AMENDMENT AND WAIVER. No supplement, modification or amendment
of, or waiver with respect to, this Agreement shall be binding unless executed
in writing by both parties.
4.4 HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall not limit or otherwise affect the meaning of
this Agreement.
4.5 SEPARABILITY AND CONFLICTS. If one or more of the provisions of
this Agreement or any application thereof is declared invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions and any application thereof will in no way be affected or
impaired.
4.6 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements between the
parties with respect to the subject matter hereof.
4.7 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Oregon.
The parties have executed this Agreement on August 20, 2004.
SCHNITZER STEEL INDUSTRIES, INC.
an Oregon corporation
By: /s/ Xxxxxx X. Xxxxxx
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President and CEO
/s/ Xxxxx X. Xxxxx
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