This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of November 18, 2004, between Mill Services Corporation, a Delaware corporation (“Company”) and I. Michael Coslov (“Executive”). Any capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in Section 4A hereof.
WHEREAS, Executive is currently employed as the Chairman and Chief Executive Officer of Tube City, LLC (“Tube City”), pursuant to the terms of an employment agreement dated as of September 11, 2003 (the “Current Agreement”);
WHEREAS, upon the closing of the transactions (the “Closing”) described in a Unit Purchase Agreement dated as of November , 2004 (the “Unit Purchase Agreement”), all of the outstanding membership units of Tube City Holdings, LLC (“Tube City Holdings”), the parent of Tube City, will be acquired by the Company, currently a wholly-owned subsidiary of Wellspring Capital Partners III, L.P., a New York limited partnership (“Wellspring”); and
WHEREAS, upon the Closing, the Company desires that Executive serve as the Chairman and Chief Executive Officer of the Company, on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged the Company and Executive hereby agree as follows:
Section 1. Grant of Stock Option. Upon the Closing, Executive will be granted an option to purchase shares of common stock of the Company representing no less than 1.5% of the total of the Company’s outstanding shares immediately following the Closing, on a fully diluted basis, including after taking into account shares reserved under the Company’s option plan (the “Option”). The terms and conditions of the Option, and certain other matters referred to therein, will be set forth in agreements based on the term sheet attached.
Section 2. Terms and Conditions of Employment Between the Company and Executive.
2A. Employment; Duties.
(a) The Company shall employ Executive, and Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the Closing and ending as provided in Section 2C hereof (the “Employment Period”).
(b) During the Employment Period Executive shall serve as the Chief Executive Officer of the Company (which, as of the Closing will own all of the business and assets of International Mill Service, Inc. and Tube City Holdings) and shall have the normal duties, responsibilities, functions and authority of the Chief Executive Officer, subject to the
power and authority of the Board. Executive shall be appointed to serve on the Board as its Chairman and member of the Executive Committee thereof (if established). Executive also may be appointed to serve, and agrees to serve, as an officer and/or director of one of more subsidiaries of the Company.
(c) During the Employment Period, Executive shall devote his full business time and attention to the business and affairs of the Company and its subsidiaries. Executive may continue his historic involvement in nonprofit activities and manage the direction of his personal and family investments in a manner consistent with past practice, and the Executive represents that such past practice did not prevent him from devoting his substantially full business time and attention to the affairs of the Company nor materially interfere with his ability to perform the duties of his employment. So long as Executive is employed by the Company, Executive shall not, without the prior written consent of the Board, accept other employment, or perform other services for compensation.
(d) The Company shall establish an annual bonus plan (the “Bonus Plan”) no later than 60 days after the Closing. The performance goals under the Bonus Plan with respect to each fiscal year shall be set in advance by the Board. The Board shall consult with the Executive with respect to the design of the Bonus Plan, the selection of eligible participants, the establishment of the performance goals, and the setting of the level of target bonuses for eligible participants.
2B. Base Salary and Benefits.
(a) During the Employment Period, the Company shall pay Executive an annual base salary of $950,000 (the “Base Salary”). The Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices (as in effect from time to time).