EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated as of September 1, 2001,
by and between Metal Management, Inc., a Delaware corporation ("MTLM"), and
Xxxxxxx X. Xxxxxx ("Employee").
IT IS HEREBY AGREED:
1. EMPLOYMENT. On the terms and subject to the conditions set forth in this
Agreement, MTLM agrees to employ the Employee as the President of its Proler
Southwest, Inc. ("Proler Southwest") subsidiary to perform such duties and
responsibilities as are consistent with such position and such other positions
as may be assigned to Employee, from time to time, by MTLM and are at least
equivalent to those duties and responsibilities performed by Employee as an
employee of Proler Southwest. Employee's duties hereunder shall be performable
for the Proler Southwest operations of MTLM only in the Houston, Texas area,
except that periodic trips to Proler Southwest's and MTLM's other Gulf Coast
operations or customers outside the Houston area or attending MTLM corporate
meetings may be required, and shall include, but not be limited to,
participating in decisions regarding finance, information systems, due diligence
on financial and operational aspects of acquisitions and the integration of
acquisitions, working with senior management of MTLM on budgets, contracts,
scrap purchases and personnel decisions for Proler Southwest's and MTLM's other
Gulf Coast operations. For as long as Employee is so employed, he will devote
his full business time, energy and ability to his duties, except for incidental
attention to the management of his personal affairs.
2. TERM. The term of employment under this Agreement shall commence on the
date hereof (the "Commencement Date") and shall continue through, and ending as
of the close of business on August 31, 2003 (the "Employment Period"); provided,
however, that the Employment Period shall be automatically extended for
successive one (1) year periods unless at least ninety (90) days before the end
of the then applicable Employment Period, either the Employee or MTLM, as the
case may be, notifies the other of its desire not to further extend the
Employment Period; and provided, further, that the Employment Period may
terminate sooner upon the occurrence of certain events as described in Sections
5, 6, 7 and 8 hereof. For purposes of this Agreement, "Balance of the Term"
shall mean the period beginning on the date of termination of the Employment
Period (the "Termination Date") and ending on the date that the Employment
Period would have ended pursuant to this Section 2 due to lapse of time
(assuming no further extensions of the Employment Period beyond those already in
effect as of the Termination Date), without regard to Sections 5, 6, 7 or 8
hereof.
3. COMPENSATION.
(a) Base Compensation. The base compensation to be paid to Employee
for his services under this Agreement shall be $300,000 per year,
payable in equal periodic installments in accordance with the
usual payroll practices of MTLM, but no less frequently than
monthly, commencing on the date hereof. MTLM and the Employee
agree that Employee's base
compensation shall be subject to annual review for cost of living
and merit factors, with any adjustments being mutually agreed
upon. The foregoing is hereafter referred to as Employee's "Base
Compensation."
(b) Bonuses. During the Employment Period, Employee shall earn a
so-called "guaranteed bonus" in regard to each year of employment
by MTLM equal to twenty-five percent (25%) of Employee's Base
Compensation under Section 3(a) hereof during such year. During
the Employment Period, Employee shall also be eligible to receive
a so-called "discretionary bonus" in regard to each year of
employment by MTLM, in an amount to be determined by the Board of
Directors of MTLM (or the Compensation Committee thereof, if any)
in consultation with Xxxxxxx X. Xxxxxx based primarily upon the
financial results of the Proler Southwest and Gulf Coast operating
region operating region during such year, provided that the
discretionary bonus for Employee shall be determined in accordance
with the bonus standards and criteria then being used by MTLM to
determine the discretionary bonuses for senior management officers
of MTLM.
4. FRINGE BENEFITS. MTLM shall furnish Employee with accident and health
insurance and reimbursement of all documented reasonable and necessary
out-of-pocket expenses incurred by Employee on behalf of MTLM by reason of
Employee's duties hereunder. Further, MTLM shall furnish Employee with all of
the additional fringe benefits made generally available by MTLM to its executive
officers recognizing that such fringe benefits may be changed from time to time
provided Employee will be deemed immediately eligible for any such fringe
benefits. Employee shall be entitled to take five (5) weeks of paid vacation per
year, and shall be paid on all national and state holidays, during the
Employment Period. Vacation allowances shall not be cumulative from year to
year. MTLM shall include Employee as a covered person under MTLM's directors and
officers insurance policy. MTLM shall furnish Employee with appropriate office
space, equipment, supplies, and such other facilities and personnel as necessary
or appropriate (de minimis use thereof by Employee for personal reasons shall
not be deemed a breach of this Agreement). MTLM will pay the Employee's dues in
such societies and organizations as MTLM deems appropriate, and will pay on
behalf of Employee (or reimburse Employee for) documented reasonable
out-of-pocket expenses incurred by Employee in attending conventions, seminars,
trade shows and other business meetings and business entertainment and
promotional expenses. MTLM shall permit Employee to continue to use the
automobile currently used by Employee as an employee of Proler Southwest as of
the Commencement Date and pay Employee an automobile allowance of $500.00 per
month.
5. DEATH OR PERMANENT DISABILITY. If, during the Employment Period,
Employee dies (as confirmed by a certificate of death) or Employee is
permanently disabled such that, in the opinion of a physician selected by MTLM,
Employee is rendered incapable of performing the services contemplated under
this Agreement for a period of twelve (12) consecutive months by reason of
illness, accident, or other physical or mental disability ("Permanent
Disability"), this Agreement shall be deemed to be terminated as of the date of
such death or of the determination of Permanent Disability. Notwithstanding the
foregoing, the Employee shall be entitled to the benefits as provided in Section
8 hereof.
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6. INVOLUNTARY TERMINATION. Except in the case of termination for Cause
pursuant to Section 7 hereof, if MTLM terminates Employee's employment hereunder
without Employee's consent, all of Employee's benefits under this Agreement
shall cease immediately upon the date of such termination, provided that
Employee shall continue to be entitled to receive the benefits as provided in
Section 8 hereof.
7. TERMINATION VOLUNTARY OR FOR CAUSE.
(a) In the event: (i) Employee voluntarily terminates his employment
hereunder without "Good Reason" (as defined below); or (ii)
Employee's employment hereunder is terminated for Cause, all of
his benefits under this Agreement shall cease immediately upon the
date of such termination, provided that Employee shall be entitled
to receive the compensation provided in Section 3 hereof paid on a
pro rata basis to the date of such termination.
(b) TERMINATION FOR CAUSE. Any of the following events shall be
considered as "Cause" for the immediate termination of the
Employment Period by MTLM:
(i) final and non-appealable conviction of Employee for a
felony; or
(ii) final and non-appealable conviction of Employee for
misappropriation by Employee of funds or property of MTLM or
the commission of other acts of dishonesty relating to his
employment; or
(iii) willful breach or material neglect by Employee of any of
his material duties hereunder; or
(iv) conduct on the part of Employee which is materially adverse
to any known interest of MTLM that continues unabated, or
uncured to the reasonable satisfaction of Employer, after
the expiration of 10 days following receipt of written
notice by Employee from MTLM.
Notwithstanding the foregoing, the Employee shall not be deemed
to have been terminated for Cause unless and until there shall
have been delivered to him a written termination notice signed by
the Chairman of the Board of Directors, or Chief Executive
Officer, of MTLM.
8. ACCELERATION OF PAYMENTS.
(a) For this Agreement, the following terms shall have the following
meanings:
(i) "Good Reason" shall mean the occurrence of any of the
following events without Employee's express written consent:
(a) a reduction
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by MTLM of Employee's compensation provided in Section 3
hereof; (b) any material breach by MTLM of any provisions
of this Agreement which is not cured by MTLM within 10 days
following receipt by MTLM of written notice of such breach
from Employee; (c) a requirement by MTLM that Employee
perform his duties outside the Houston, Texas area, except
that periodic trips to Proler Southwest's or MTLM's other
Gulf Coast operations or customers outside Houston, Texas
and periodic MTLM corporate meetings outside Houston, Texas
shall not be deemed to be a breach; or (d) the assignment
of the Executive by MTLM without his consent to a position,
responsibility or duties of a material lesser status or
degree of responsibility than his position,
responsibilities or duties as of the Commencement Date.
(ii) A "Change of Control" shall be deemed to have occurred if
any "person" as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as then in
effect, other than: (a) MTLM; (b) any "person" who on the
date hereof is a director or officer of MTLM; or (c) Xxxxxx
X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxx and their
respective affiliates and heirs, is or becomes the
"beneficial owner" as defined in Rule 13d-3 under such Act,
directly or indirectly, of securities of MTLM representing
51% or more of the combined voting power of MTLM's then
outstanding securities on a fully diluted basis.
(iii) "Trigger Date" means the date on which a Triggering Event
occurs.
(iv) "Triggering Event" means any of: (a) a Change of Control;
(b) a resignation of Employee as an employee of MTLM due to
Good Reason; (c) termination of the Employment Period under
Section 5 hereof; or (d) involuntary termination of the
Employment Period by MTLM, except in the case of
termination for Cause.
(b) OCCURRENCE OF TRIGGERING EVENT. Upon the occurrence of a
Triggering Event, Employee shall receive from MTLM a lump sum
payment equal to the Base Compensation provided under Section
3(a) hereof that otherwise would have been payable to Employee
for the Balance of the Term but for the occurrence of a
Triggering Event, plus any earned bonuses as set forth in Section
3(b) hereof (determined on a pro rated basis in comparison to
Employee's bonus, if any, from the prior year) for the year in
which the Triggering Event occurred. Furthermore, any unvested
stock options or unvested long term incentive plan compensation
shall immediately become vested and be exercisable for the 270
days following the date of the Triggering Event. Additionally, in
the event that this Agreement terminates because (i) either party
has provided a notice of non-renewal under Section 2 to preclude
the automatic annual extension of this
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Agreement and this Agreement so expires at the end of the
Employment Period; or (ii) MTLM terminates the Employee's
employment for reasons other than Cause, (iii) Employee
terminates this Agreement for Good Reason, or (iv) this Agreement
is terminated as a result of Employee's permanent disability (as
provided in Section 5), then in any such case, Employee shall, at
no cost to Employee, be entitled to continue to participate in
the MTLM provided health and medical insurance programs for a
period of five (5) years from the date of termination, unless,
(y) such continued participation is prohibited by any applicable
laws or would otherwise jeopardize the tax qualified status of
any such programs; or (z) Employee, either directly or
indirectly, engages in an activity that would violate Section 9
hereof, if conducted during a Non-Competition Period. If,
however, MTLM is prohibited by applicable law or would otherwise
jeopardize the tax qualified status of any health or medical
insurance plan and as a result terminates coverage, it shall
reimburse Employee for the cost of obtaining comparable third
party coverage, subject to the restrictions in clause (z) above.
(c) TIME OF PAYMENT FOLLOWING TRIGGERING EVENT. All accelerated
payments of Base Compensation, bonuses, and long term incentive
plan compensation due to Employee pursuant to this Section shall
be paid promptly but in any event within thirty (30) days after
the Trigger Date. If the full amount of such accelerated payments
is not paid within five (5) business days after the Trigger Date,
such amounts shall be evidenced by a promissory note from MTLM to
Employee bearing interest at the rate of 12% per annum from the
Trigger Date until paid.
9. NON-COMPETITION.
(a) GENERAL. In addition to any other obligations of Employee under
any other agreement with MTLM, in order to assure that MTLM will
realize the benefits of this Agreement and in consideration of
the employment set forth in this Agreement, Employee agrees that
he shall not
(i) during the period comprising the Balance of the Term (the
"Non-Competition Period"), directly or indirectly, whether
through an affiliate or otherwise, alone or as a partner,
joint venturer, member, officer, director, employee,
consultant, agent, independent contractor, stockholder, or
in any other capacity of any company or business, engage
in any business activity in the States of Texas or
Mississippi, which is directly or indirectly in
competition with the business conducted by MTLM or any
subsidiary or affiliate of MTLM on the Termination Date;
provided, however; that, the beneficial ownership of less
than 5% of the shares of stock of any corporation having a
class of equity securities actively traded on a national
securities exchange or over-the-counter market shall not
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be deemed, in and of itself, to violate the prohibitions
of this section;
(ii) during the Non-Competition Period, directly or indirectly
(a) induce any person which is a customer of MTLM or any
subsidiary or affiliate of MTLM on the Termination Date to
patronize any business directly or indirectly in
competition with the business conducted by MTLM or any
subsidiary or affiliate of MTLM on the Termination Date;
(b) canvass, solicit or accept from any person which is a
customer of MTLM or any subsidiary or affiliate of MTLM on
the Termination Date, any such competitive business, or
(c) request or advise any person which is a customer of
MTLM or any subsidiary or affiliate of MTLM on the
Termination Date to withdraw, curtail or cancel any such
customer's business with MTLM or any subsidiary or
affiliate of MTLM on the Termination Date;
(iii) during the Non-Competition Period, directly or indirectly
employ, or knowingly permit any company or business
directly or indirectly controlled by him, to employ, any
person who was employed by any of MTLM or any then
subsidiary or affiliate of MTLM at or within six months
prior to the Termination Date, or in any manner seek to
induce any such person to leave his or her employment;
(iv) directly or indirectly, at any time following the
Termination Date, in any way utilize, disclose, copy,
reproduce or retain in his possession any of MTLM's or any
subsidiary's or affiliate's proprietary rights or records,
including, but not limited to, any of their customer or
price lists.
(b) EMPLOYEE ELECTION TO END NON-COMPETITION PERIOD. In the event
that (i) a Change in Control occurs in which a French company by
the name of CFF, or any of its affiliates, becomes the beneficial
owner of more than 50% of MTLM or acquires the capital stock of
Proler Southwest or substantially all of its assets, or otherwise
becomes entitled to appoint a majority of its board of directors
or otherwise control its management then Employee shall have the
right to elect, within thirty (30) days of either such event, to
terminate this Agreement in which case the Non-Competition Period
shall terminate effective with the date of termination. In the
event of a termination under this clause (b), Employee shall not
be entitled to any separation or severance benefits provided for
under this Agreement for periods following the date of
termination notwithstanding anything in this Agreement to the
contrary.
(c) SCOPE OF RESTRICTION. The Employee agrees and acknowledges that
the restrictions contained in this Section 9 are reasonable in
scope and
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duration and are necessary to protect MTLM after the Commencement
Date. If any provision of this Section 9 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 9 will cause
irreparable damage to MTLM and upon breach of any provision of
this Section 9, MTLM shall be entitled to injunctive relief,
specific performance or other equitable relief; provided,
however, that this shall in no way limit any other remedies which
MTLM may have (including, without limitation, the right to seek
monetary damages).
10. CONFIDENTIALITY OF INFORMATION; DUTY OF NON-DISCLOSURE. The Employee
acknowledges and agrees that his employment by MTLM under this Agreement
necessarily involves his understanding of and access to certain trade secrets
and confidential information pertaining to the business of MTLM or any
subsidiary or affiliate of MTLM. Accordingly, the Employee agrees that during
the Agreement Term, and until the expiration of the Non-Competition Period, he
will not, directly or indirectly, without the prior written consent of MTLM,
disclose to or use for the benefit of any person, corporation or other entity,
or for himself any and all files, trade secrets or other confidential
information concerning the internal affairs of MTLM or any subsidiary or
affiliate of MTLM, including, but not limited to, confidential information
pertaining to clients, services, products, earnings, finances, operations,
methods or other activities; provided, however, that the foregoing shall not
apply to information which is of public record or is generally known, disclosed
or available to the general public or the industry generally. Further, the
Employee agrees that he shall not, directly or indirectly, remove or retain,
without the express prior written consent of MTLM, and upon termination of this
Agreement for any reason shall return to MTLM, any confidential figures,
calculations, letters, papers, records, computer disks, computer print-outs,
lists, documents, instruments, drawings, designs, programs, brochures, sales
literature, or any copies thereof, or any information or instruments derived
therefrom, or any other similar information of any type or description, however
such information might be obtained or recorded, arising out of or in any way
relating to the business of MTLM or any subsidiary or affiliate of MTLM or
obtained as a result of his employment by MTLM or any subsidiary or affiliate of
MTLM. The Employee acknowledges that all of the foregoing are proprietary
information, and are the exclusive property of MTLM. The covenants contained in
this Section 10 shall survive the termination of this Agreement.
11. GOODWILL. MTLM has invested substantial time and money in the
development of its products, services, territories, advertising and marketing
thereof, soliciting clients and creating goodwill. By accepting employment with
MTLM, the Employee acknowledges that the customers are the customers of MTLM and
its subsidiaries and affiliates, and that any goodwill created by the Employee
belongs to and shall inure to the benefit of MTLM.
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12. SUCCESSOR COMPANIES. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of MTLM, whether by merger, sale of
assets or otherwise.
13. NOTICES. Any notice or request to be given hereunder to either party
hereto shall be deemed effective only if in writing and either (a) delivered
personally to Employee (in the case of a notice to Employee) or to the President
of MTLM, or (b) sent by certified or registered mail, postage prepaid, to the
addresses set forth on the signature page hereof or to such other address as
either party may hereafter specify to the other by notice similarly served.
14. ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of each of the parties
hereto, and shall also bind and inure to the benefit of Employee's heirs and
legal representatives and any successor or successors of MTLM by merger or
consolidation and any assignee of all or substantially all of MTLM's business
and properties; except as to any such successor or assignee of MTLM, neither
this Agreement nor any duties, rights or benefits hereunder may be assigned by
MTLM or by Employee without the express written consent of Employee or MTLM, as
the case may be.
15. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas without reference to its
choice-of-law principles.
16. MODIFICATION. No modification or waiver of any provision hereof shall
be made unless it be in writing and signed by both of the parties hereto.
17. SCOPE OF AGREEMENT. This Agreement constitutes the whole of the
agreement between the parties on the subject matter, superseding all prior oral
and written conversations, negotiations, understandings, and agreements in
effect as of the date of this Agreement specifically including, but not limited
to, the employment agreement by and between the Employee and MTLM, dated August
27, 1997.
18. SEVERABILITY. To the extent that any provision of this Agreement may be
deemed or determined to be unenforceable for any reason, such unenforceability
shall not impair or affect any other provision, and this Agreement shall be
interpreted so as to most fully give effect to its terms and still be
enforceable.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the day and year first above written.
METAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
Employee
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