THIS AGREEMENT is made and entered into as of November 24, 2004 between Mill Services Corporation (formerly known as Envirosource, Inc.), a Delaware corporation (the “Company”), and Raymond S. Kalouche (the “Employee”).
WHEREAS, upon the Effective Date, pursuant to an Agreement and Plan of Merger dated as of September 23, 2004, all of the outstanding shares of capital stock of the Company were acquired on October 26, 2004 by Envirosource Holdings LLC, a Delaware limited liability company, the majority of whose membership interests are held by Wellspring Capital Partners III, L.P., a New York limited partnership (“Wellspring”);
WHEREAS, the Employee is currently employed by the Company as its President and Chief Executive Officer pursuant to the terms of an employment agreement dated as of May 24, 2004 (the “Current Employment Agreement”);
WHEREAS, the Company has entered into a Unit Purchase Agreement dated November 19, 2004 (the “Unit Purchase Agreement”) to acquire all of the outstanding membership units of Tube City Holdings, LLC (“Tube City”);
WHEREAS, the parties desire to enter into this Agreement to supersede, upon the closing date of the acquisition of Tube City pursuant to the Unit Purchase Agreement (the “Effective Date”), the Current Employment Agreement and reflect the Employee’s terms and conditions of employment on and after the Effective Date; and
NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Employee hereby agree as follows:
1. Employment and Term.
1.1 The Company shall employ the Employee, and the Employee shall accept such employment by the Company and to serve as the President and Chief Operating Officer of International Mill Service, Inc. (“IMS”), the Company’s wholly-owned operating subsidiary, and as the President and Chief Operating Officer of Olympic Mill Services (“OMS”), a division of Tube City, and in such additional senior executive positions with the Company or its subsidiaries as shall be determined by the Company’s board of directors (the “Board of Directors”). In addition, the Company shall appoint the Employee, and the Employee shall serve, as a member of the Board of Directors. The Employee shall report directly to the Company’s Chief Executive Officer and indirectly to the Board, and/or any of their designees. The authority, duties and responsibilities of the Employee shall include those described in this Agreement, and such other or additional duties of an executive nature as may from time to time be assigned to the Employee by the Board of Directors, the Company’s Chief Executive Officer or their designees consistent with his positions as set forth above. While employed hereunder, the Employee shall devote
substantially all of his business time and attention to the affairs of IMS, the Company and its Affiliates and use all commercially reasonable efforts to perform faithfully and efficiently his duties and responsibilities; provided that the Employee may (i) serve on civic or charitable boards or committees, (ii) manage personal investments, or (iii) with the prior approval of the Board of Directors or the Company’s Chief Executive Officer, serve on corporate boards and committees (other than boards and committees of competitors of the Company or its Affiliates), so long as such activities do not significantly interfere with the performance of the Employee’s obligations under this Agreement.
1.2 Unless sooner terminated pursuant to other provisions hereof, the Employee’s period of employment under this Agreement shall commence as of the Effective Date and terminate on December 31, 2008 (the period from the Effective Date to December 31, 2008 is referred to as the “Term”, and the portion of the Term during which the Employee is employed by the Company or its Affiliates is referred to as the “Employment Period”). The Company may extend the Term in minimum one year increments on terms no less favorable to the Employee than those then in effect pursuant to this Agreement, with the consent of the Employee, by giving written notice to the Employee at least 60 days prior to the end of the then effective Term. If the Employee gives written notice of his consent to the Company within 20 days following receipt of the Company’s notice of its intention to extend the Term, the Term shall be extended on the terms in effect as of the renewal date, provided that the Base Salary shall be increased by the C.P.I.-Urban Consumers for the Northeast Region during the 12 months immediately preceding the renewal date.
1.3 This Agreement shall supersede and replace the Current Employment Agreement, which shall be of no further force or effect as of the Effective Date. In the event the closing of the transactions contemplated by the Unit Purchase Agreement have not then occurred, this Agreement shall terminate upon the termination of the Unit Purchase Agreement and the Current Employment Agreement shall remain in full force and effect in accordance with its terms.
2. Compensation and Benefits.
2.1 Base Salary. As initial compensation for his services provided hereunder, the Company shall pay to the Employee an initial annual base salary equal to $420,000 (the “Base Salary”). The Board of Directors or, if formed, a designated Compensation Committee of the Board of Directors (the “Compensation Committee”) shall annually during the term of this Agreement review the Employee’s Base Salary and, in its discretion if deemed appropriate, increase the same. If the Employee’s Base Salary is increased, it shall not thereafter be reduced below the new Base Salary level. The Base Salary shall be payable in equal semi-monthly installments or in accordance with the Company’s established policy, subject to such payroll and withholding deductions as may be required by law and other deductions, as directed by the Employee, applied generally to employees of the Company for insurance and other employee benefit plans.