This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of December 21, 2004, between Mill Services Corporation, a Delaware corporation (“Company”) and Thomas E. Lippard (“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 Executive Vice President Finance and Administration, General Counsel and Secretary of Tube City, LLC (“Tube City”), pursuant to the terms of an executive securities 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 18, 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 Executive Vice President Finance and Administration, General Counsel and Secretary of Tube City, 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. Effective as of the Closing, Executive will be granted an option to purchase shares of common stock of the Company (the “Option”). The Option will be granted pursuant to the Company’s Stock Option Plan and on terms and conditions to be set forth in a grant letter, which shall be in substantially the form 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 2D hereof (the “Employment Period”).
(b) During the Employment Period Executive shall report to 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 initially serve as the Executive Vice President Finance and Administration, General Counsel and Secretary of Tube City or in such other senior managerial capacities of Tube City, the Company or its subsidiaries as requested by the Chief Executive Officer.
(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. 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 and the Executive agree that Executive’s primary office shall be at the Company’s place of business in Glassport, Pennsylvania, subject to reasonable travel requirements.
2B. Base Salary and Benefits.
(a) During the Employment Period, the Company shall pay Executive an annual base salary of $450,000 (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).
(b) In addition to the Base Salary, during the Employment Period, Executive will be eligible to earn an annual bonus under a bonus plan to be established by the Company, payable in accordance with the Company’s customary practices, as determined by the Board in its sole discretion based upon the Company’s achievement of budgetary and other objectives set by the Board; provided that, in determining the amount of the annual bonus, if any, to be paid to Executive, the Board shall, in determining whether the Company has achieved the budgetary and other goals set by the Board, disregard any payments by the Company and its subsidiaries to Wellspring and affiliates.
(c) During the Employment Period, Executive shall be entitled to participate in all of the Company’s employee benefit programs for which senior executives of the Company and its subsidiaries are generally eligible.
(d) During the Employment Period, the Company shall (without duplication of any employee benefits provided to Executive pursuant to other provisions of this Agreement) reimburse Executive for all reasonable business expenses incurred by him in the course of performing his duties and responsibilities under this Agreement which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documentation of such expenses.