Execution Copy

 

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT made effective as of the first day of January 2008 between
NOVAMERICAN STEEL INC., a Delaware corporation (the “Corporation”), with its
principal offices at 28 West 44th Street, 16th Floor, New York, NY 10036 and
CORRADO DE GASPERIS (the “Executive”). Each of the Executive and the Corporation
are called, individually, a “Party” and, collectively, the “Parties”.

WITNESSETH:

WHEREAS, the Corporation desires to employ the Executive and the Executive
desires to be employed by the Corporation, as a senior executive of the
Corporation;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein and other good, valuable and sufficient
consideration, the receipt of which is hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:

1.        Employment. The Corporation hereby agrees to employ the Executive, and
the Executive hereby agrees to be employed by the Corporation, on the terms and
conditions set forth herein.

 

2.

Position and Duties.

(a)       The Executive shall serve as the chief executive of the Corporation.
The Executive shall report to the Board of Directors of the Corporation (the
“Board”). The Executive shall have such responsibilities and duties as are
customary for such position and as may be assigned by the Board to the Executive
from time to time. Without limiting such duties and responsibilities, the
Executive shall be responsible for developing and presenting to the Board
strategic plans for the Corporation (including plans for improvement and
transformation of operations and other business activities, improvement in
financial condition and performance and growth), directing implementation of
such plans (and adjustments thereto) as approved by the Board, monitoring such
implementation and reporting to the Board on such implementation, and developing
and presenting to the Board adjustments to such plans in light of results and
developments.

 

(b)

The Executive agrees to serve on the Board if elected to so serve.

(c)       The Executive shall devote all of the Executive’s working time and
efforts to the business and affairs of the Corporation; provided, however, that
the Executive may from time to time serve on boards of trustees or directors of
a limited number of (i) not-for-profit organizations so long as he shall have
advised the Board of his intention to so serve prior to the commencement of such
service and (ii) for-profit organizations so long as the Board shall have
approved such service prior to commencement of such service and Executive may
manage his personal investments so long as such management does not interfere
with performance of his

 

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responsibilities or duties hereunder. The proviso to the preceding sentence
shall not limit the obligations of the Executive under Section 7.

 

3.

Compensation and Benefits.

(a)       The Executive shall receive an initial payment equal to $950,000 no
later than March 15, 2008.

(b)       The Executive’s salary shall be $800,000 per year during which this
Agreement is in effect. Such salary shall be paid in accordance with the
Corporation’s payroll practices. Such salary shall be subject to review each
year by the Board and may be increased (but not decreased) in the discretion of
the Board. The Executive’s salary, as then in effect, is called the “Salary”.

(c)       The independent directors of the Board shall determine performance
targets and metrics for the Executive for each year during which this Agreement
is in effect. The Executive will be eligible to receive a performance bonus each
year. The bonus is expected to be no less than 50% and no greater than 150% of
the Salary. The independent directors of the Board shall determine, in their
discretion, the amount of the bonus, if any, for each year. The bonus will be
paid in accordance with the Corporation’s payroll practices no later than March
15 following the year in respect of which the bonus is earned.

(d)       The Executive shall be entitled to receive reimbursement, in
accordance with the Corporation’s expense reimbursement practices, for all
reasonable and customary expenses incurred by the Executive in connection with
performance of his duties and responsibilities; provided, that such expenses are
incurred and reported in accordance with the Corporation’s expense reimbursement
policies and procedures. Without limiting such expenses, such expenses include
expenses for reasonable and customary temporary accommodations near the
Corporation’s facilities located more than 35 miles outside of New York, New
York for the Executive and, if the Executive is required to work from such
facilities for an extended period, the Executive’s spouse and dependents and
related travel arrangements.

(e)       The Executive shall be entitled to participate in or receive benefits
under any medical, pension, profit sharing or other employee benefit plan or
arrangement generally made available by the Corporation now or in the future to
its executives and management employees (or to their family members) subject to
the terms and conditions of such plans and arrangements; provided, however, that
nothing herein shall obligate the Corporation to grant any stock option,
restricted stock or other equity incentive awards to the Executive.

(f)        The Executive shall be entitled to four (4) weeks vacation each year,
with carryover of unused vacation days in accordance with the Corporation’s
vacation policy.

 

4.

Termination.

(a)       Termination by Corporation. The Executive’s employment may be
terminated by the Corporation at any time with or without Cause (as defined in
Section 5(e)(ii)) or if the Executive becomes Disabled (as defined in Section
5(e)(i)), by notifying the Executive,

 

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in which case the termination shall be effective immediately upon receipt of
such notice by the Executive.

(b)       Termination by the Executive. The Executive’s employment may be
terminated by the Executive with or without Good Reason (as defined in Section
5(e)(iii)) by notifying the Board within ninety (90) days following the first
occurrence of the event or circumstance constituting Good Reason, in which case
the termination shall be effective thirty (30) days following the receipt of
such notice by the Board; provided, that the event or circumstance is not cured
within thirty (30) days following such notice to the Board. Any failure to so
notify the Board within the applicable ninety (90) day period constitutes a
waiver by the Executive of his right to terminate his employment for Good Reason
as to such applicable event(s) or circumstance(s).

(c)       Notice of Termination. Any notification under this Section to either
Party shall indicate the specific termination provision in this Agreement relied
upon and set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated.

5.         Compensation Upon Termination. Upon termination of the Executive’s
employment for any reason, the Executive is deemed to have resigned, as of the
date of such termination of employment, from the Board and any committees of the
Corporation or its affiliates on which he serves.

(a)       If the Corporation shall terminate the Executive’s employment for any
reason other than for Cause, including due to the Executive’s Disability, or if
the Executive resigns for Good Reason, subject to Sections 5(f) and 5(h), the
Executive shall be entitled to the following:

(i)        A lump sum payment, within thirty (30) days following the termination
of the Executive’s employment, which includes all amounts due to the Executive
through the date of his termination, including any accrued but unpaid Salary
and/or bonus and any accrued and unused vacation days;

(ii)       A lump sum payment, within sixty (60) days following the termination
of the Executive’s employment, equal to the product of (A) the Salary plus the
minimum bonus of 50% of the Salary multiplied by (B) a fraction, the numerator
of which is the number of months (full and partial) remaining between the date
of termination and December 31, 2010 and the denominator of which is twelve
(12), but in no event shall the fraction equal less than one (1) (the “Severance
Period”);

(iii)      Continued participation in the Corporation’s health plans (medical
and dental), at the same cost to the Executive as immediately prior to such
termination of employment, for the longer of (A) the Severance Period and (B)
eighteen (18) months; provided, that if the Executive is entitled to participate
in a health plan provided by a new employer, any payment by the Corporation for
continued participation in the Corporation’s health plans shall cease (although
participation may continue solely at the Executive’s cost, to the extent
participation must be offered under federal law); provided, further, that if the
new

 

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employer plan does not have preexisting condition coverage, the Executive may
continue medical coverage with the Company for the balance of the period
described above, without affecting the cost to the Executive. The Corporation
anticipates that health benefits made available pursuant to this clause (iii)
will be provided in accordance with applicable continuation coverage
requirements under federal and state law.

(iv)      Continuation of life insurance coverage at the same level and at the
same cost to the Executive as immediately prior to such termination of
employment, for the longer of (A) the Severance Period and (B) eighteen (18)
months;

(v)       Reimbursement for reasonable outplacement services for 12 months
following the termination of the Executive’s employment. The Parties shall use
their good faith efforts to locate a provider, and determine the scope of,
outplacement services which are reasonably acceptable to both parties.

(vi)      Except as provided in this Section 5(a), the Corporation will have no
further obligations to the Executive under this Agreement following the
Executive’s termination of employment under the circumstances described in this
Section 5(a).

(b)       If the Executive’s employment with the Corporation shall terminate due
to either (i) the Executive’s termination other than for Good Reason or (ii) by
the Corporation’s termination of the Executive’s employment for Cause, then the
Executive shall be entitled to receive his Salary through the date of
termination (which Salary shall not include any accrued and unused vacation
days). Except as provided in this Section 5(b), the Corporation shall have no
further obligations to the Executive under this Agreement following the
Executive’s termination of employment under the circumstances described in this
Section 5(b).

(c)       If the Executive’s employment with the Corporation shall terminate due
to the Executive’s death, then the Executive’s estate shall be entitled to the
amounts described in Section 5(a)(i) and (ii) and the Executive’s surviving
spouse and dependents, if any, shall be entitled to continued participation in
the Corporation’s health plans (medical and dental) as described in Section
5(a)(iii) above. Except as provided in this Section 5(c), the Corporation shall
have no further obligations to the Executive under this Agreement following the
Executive’s termination of employment under the circumstances described in this
Section 5(c).

(d)       In the event a Change of Control (as defined in Section 5(e)(iv)) of
the Corporation occurs prior to the termination of the Executive’s employment,
then, for purposes of Section 5(a), the “Severance Period” shall mean the number
of months (full and partial) remaining between the date of termination and the
three year anniversary of the effective date of the Change of Control.

 

(e)

Definitions:

(i)        “Disability” means the Executive becomes “disabled” as defined in the
Corporation’s long term disability plan or, if there is no such plan, the
Executive becomes physically or mentally incapacitated and absent and/or unable
to perform his duties on a full-time basis for 90 days in any 180 consecutive
day period.

 

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(ii)       “Cause” means the Executive’s (A) willful, intentional or grossly
negligent failure to substantially perform his duties (other than due to
Disability) after the Board has given lawful directive to so perform; (B)
conviction of or plea of no contest to a crime constituting (I) a felony or (II)
a misdemeanor involving deceit, dishonesty or fraud that relates to the
Corporation; or (C) willful, intentional or grossly negligent conduct which is
materially injurious to the Corporation, monetarily or otherwise. The
Executive’s employment shall not be deemed to have been terminated for Cause
without (x) reasonable written notice to the Executive setting forth the reasons
for the Corporation’s intention to terminate for Cause and (y) the opportunity
to cure (if curable) within 15 days of such written notice of the event(s)
giving rise to such notice.

(iii)      “Good Reason” means: (A) any failure to pay or reduction in the
Executive’s Salary; (B) the assignment of duties or responsibilities to the
Executive that are materially and adversely inconsistent with the Executive’s
position, including a material diminution in duties or responsibilities or
title; (C) a material breach by the Corporation of this Agreement or any other
material agreement between the Executive and the Corporation; (D) the failure of
the Corporation to obtain the assumption of this Agreement in writing by each
successor to the Corporation; or (E) any circumstance in which the Corporation
is directing the Executive to participate in illegal activity; provided, that
the events and circumstances described in clauses (A) through (E) above shall
not constitute Good Reason (I) if the Executive consents to such event or
circumstance or (II) if such event or circumstance has been cured within thirty
(30) days after notice of such event or circumstance has been given by the
Executive to the Board.

(iv)      A “Change of Control” shall be deemed to occur upon the occurrence of
any of the following events or circumstances:

(A)      any “person” or “group” within the meaning of Section 13(d) or 14(d)(2)
of the Securities Exchange Act of 1934 (the “Act”) becomes the beneficial owner
of 40% or more of the then outstanding common stock of the Corporation or 40% or
more of the then outstanding voting securities of the Corporation;

(B)      any “person” or “group” within the meaning of Section 13(d) or 14(d)(2)
of the Act acquires, by proxy or otherwise, the right to vote on any matter or
question with respect to 40% or more of the then outstanding common stock of the
Corporation or 40% or more of the combined voting power of the then outstanding
voting securities of the Corporation;

(C)      Present Directors and New Directors cease for any reason to constitute
a majority of the Board (and, for purposes of this clause (C), “Present
Directors” shall mean individuals who, at the beginning of any consecutive
twenty-four month period, were members of the Board and “New Directors” shall
mean individuals whose election by the Board or whose nomination for election as
directors by the Corporation’s stockholders was approved by at least two-thirds
of the Present Directors and New Directors then in office);

 

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(D)      the stockholders of the Corporation approve a plan of dissolution or
complete or substantially complete liquidation of the Corporation; or

 

(E)

upon the consummation of:

I.         any reorganization, restructuring, recapitalization, reincorporation,
merger, consolidation or similar form of corporate transaction involving the
Corporation (a “Business Combination”) unless, following such Business
Combination, (a) all or substantially all of the individuals and entities who
were the beneficial owners of the common stock of the Corporation and the voting
securities of the Corporation outstanding immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 40% of the
common equity securities and the combined voting power of the voting securities
of the entity resulting from such Business Combination (including the
Corporation, if it is such resulting entity) outstanding after such Business
Combination (including, without limitation, an entity that, as a result of such
Business Combination, owns the Corporation or all or substantially all of the
assets of the Corporation and its subsidiaries on a consolidated basis, either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership of common stock of the Corporation and combined
voting power of the voting securities of the Corporation, respectively,
outstanding immediately prior to such Business Combination, (b) no “person” or
“group” within the meaning of Section 13(d) or 14(d)(2) of the Act (excluding
(x) any entity resulting from such Business Combination and (y) any employee
benefit plan (or related trust) of any entity resulting from such Business
Combination) beneficially owns 40% or more of the common equity securities or of
the combined voting power of the voting securities of the entity resulting from
such Business Combination (including the Corporation, if it is such resulting
entity) outstanding after such Business Combination (including, without
limitation, an entity that, as a result of such Business Combination, owns the
Corporation or all or substantially all of the assets of the Corporation and its
subsidiaries on a consolidated basis,, either directly or through one or more
subsidiaries), except to the extent that such beneficial ownership existed prior
to such Business Combination with respect to the common stock of the Corporation
and the voting securities of the Corporation, and (c) at least a majority of the
members of the board of directors (or similar governing body) of the entity
resulting from such Business Combination were members of the Board at the
earliest of the time of the execution of the initial agreement providing for
such Business Combination, the time of the action of the Board approving such
Business Combination or, if such approval is required or sought, at the time of
action of the stockholders approving such Business Combination; or

II.        any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or a majority of the

 

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assets of the Corporation, whether held directly or indirectly through one or
more subsidiaries (excluding any pledge, mortgage, grant of security interest,
sale-leaseback or similar transaction, but including any foreclosure sale).

Notwithstanding anything contained herein to the contrary, a Change in Control
shall not be deemed to occur pursuant to clause (A) or (B) above solely because
40% or more of the then outstanding common stock of the Corporation or the then
outstanding voting securities of the Corporation is or becomes beneficially
owned or is directly or indirectly held or acquired by (1) one or more employee
benefit plans (or related trusts) maintained by the Corporation or (2) any one
or more of the founding stockholders of the Corporation.

For purposes of this definition, references to “beneficial owner” and
correlative phrases shall have the same meaning as set forth in Rule 13d-3 under
the Act (except that ownership by underwriters (including when acting as initial
purchasers in a private offering) solely for purposes of a distribution or
offering shall not be deemed to be “beneficial ownership”), references to
“affiliate” and “associates” shall have the same meaning as set forth under the
Act and references to the Act shall mean the Exchange Act and the rules and
regulations thereunder as in effect on January 1, 2008.

(f)        Release. As a condition precedent to receipt of the payments provided
for in Sections 5(a) and 5(g), no later than sixty (60) days following the
termination of his employment the Executive shall be required to execute a
general release in favor of the Corporation, which release shall exclude only
the payments remaining to be made pursuant to such Sections.

 

(g)

Excise Tax Gross Up.

(i)        Notwithstanding anything in this Agreement to the contrary and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Corporation or its affiliates to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 5(g)) (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”) or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are collectively called the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing, if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed $50,000 more than the greatest amount that could be paid
to the Executive such that the receipt of Payments would not give rise to any
Excise Tax (the “Reduced

 

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Amount”), then no Gross-Up Payment shall be made to the Executive and the
Payments, in the aggregate, shall be reduced to the Reduced Amount.

(ii)       Subject to the provisions of Section 5(g)(iii) below, all
determinations required to be made under this Section 5(g), including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by the then-current accountants of the Corporation or such other nationally
recognized certified public accounting firm as may be designated by the
Executive (the “Accounting Firm”) no later than the later of (i) the last day of
the year in which a termination of the Executive’s employment occurs or (ii)
forty-five (45) days following the termination of the Executive’s employment.
The Accounting Firm shall provide detailed supporting calculations to both
Parties simultaneously with any event giving rise to a Gross-Up Payment. All
fees and expenses of the Accounting Firm shall be borne solely by the
Corporation. Any Gross-Up Payment, as determined pursuant to this Section 5(g),
shall be paid by the Corporation to the Executive simultaneously with any event
giving rise to a Gross-Up Payment. Absent manifest error, any determination by
the Accounting Firm shall be binding upon the Corporation and the Executive. As
a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Corporation
should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. In the event that the Corporation exhausts its
remedies pursuant to Section 5(g)(iii) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment
(including any interest and penalties thereon) shall be promptly paid by the
Corporation to or for the benefit of the Executive. In the event that the
Executive pays the Excise Tax prior to the determination by the Accounting Firm
or payment of the taxes by the Corporation, the Corporation shall reimburse the
Executive for such amount no later than the last day of the taxable year
following the year in which the Executive remits the Excise Tax.

(iii)      The Executive shall notify the Corporation in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Corporation of the Gross-Up Payment or the Underpayment. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the
Corporation of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which he gives such notice
to the Corporation (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Corporation notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:

(A)      provide the Corporation any information reasonably requested by the
Corporation relating to such claim,

(B)      take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Corporation,

 

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(C)      cooperate with the Corporation in good faith in order effectively to
contest such claim, and

(D)      permit the Corporation to participate in any proceedings relating to
such claim;

provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 5(g)(iii), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation shall pay the amount of such payment to the Executive, along with an
additional Gross-Up Payment, and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such payment
or with respect to any imputed income with respect to such payment; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Corporation's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority. All
of the payments by the Corporation to the Executive under this Section 5(g)
shall be made no later than the last day of the calendar year following the
calendar year in which all of the issues concerning such payments have been
finally resolved. It is the parties’ intent that the timing of the payment of
such amounts shall be in compliance with Section 409A of the Code and the
treasury regulations thereunder.

(iv)      If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to Section 5(g)(iii), the Executive receives any refund
with respect to such claim, the Executive shall (subject to the Corporation's
complying with the requirements of Section 5(g)(iii)), pay to the Corporation
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto) no later than the last day of the calendar year
in which the refund is received by the Executive.

(h)       Six Month Limitation. Notwithstanding any provision of this Agreement
to the contrary, distribution of any amounts that constitute “deferred
compensation” payable to the Executive due to his “separation from service”
within the meaning of Section

 

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409A of the Code, shall not be made before six months after such separation from
service or the Executive’s death, if earlier (the “Six Month Limitation”). At
the end of such six-month period, payments that would have been made but for the
Six Month Limitation shall be paid in a lump sum, without interest, on the first
day of the seventh month following the Executive’s separation from service and
remaining payments or reimbursements, if any, shall commence, or continue, in
accordance with the relevant provision of this Section 5. Notwithstanding the
Six Month Limitation, in the event that any amounts of “deferred compensation”
payable to the Executive due to his “separation from service” constitute
“separation pay only upon an involuntary separation from service” within the
meaning of Section 409A of the Code (“Separation Pay”), then all or a portion of
such Separation Pay, up to two times the maximum amount that may be taken into
account under a qualified plan pursuant to Section 401(a)(17) of the Code for
the year in which the separation from service occurs (i.e., $460,000 in the
event of a separation from service during 2008), whether paid under this
Agreement or otherwise, may be paid to the Executive during the six-month period
following such separation from service with the Corporation.

6.         Mitigation. The Executive shall have no duty to mitigate the payments
provided for in Section 5 by seeking other employment or otherwise and such
payment shall not be subject to reduction for any compensation received by the
Executive from employment in any capacity following the termination of the
Executive’s employment with the Corporation.

 

7.

Restrictive Covenants.

(a)       The Executive agrees that for the duration of his employment and for a
period of one (1) year following the date of termination thereof, he will not,
on his own behalf or on behalf of any other person or entity, solicit, or
encourage to leave the employ of the Corporation any person who is an employee
of the Corporation or any of its subsidiaries or affiliates.

(b)       The Executive agrees that for the duration of his employment and for a
period of one (1) year following the date of termination thereof, he will not,
on his own behalf or on behalf of any other person or entity, divert, or attempt
to divert, any person from doing business with the Corporation, or attempt to
induce any such person to cease being a customer or supplier of the Corporation.

(c)       The Executive agrees that for the duration of his employment and for a
period of one (1) year following the date of termination thereof, he will take
no action which is intended, or would reasonably be expected, to harm (e.g.,
making public derogatory statements or misusing confidential Corporation
information, it being acknowledged that the Executive’s employment with a
competitor in and of itself shall not be deemed to be harmful to the Corporation
for purposes of this Section 7(c)) the Corporation or its reputation.

(d)       The Executive agrees that, during the duration of his employment and
for a period of one (1) year following the date of termination thereof, he shall
not, directly or indirectly, (i) operate, manage, control or engage in any
“Competitive Business” (as defined below) for his own account, (ii) enter into
the employ of, consult with, advise or render any services to, any person
engaged in a Competitive Business, or (iii) operate, manage, control,

 

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participate in, carry on, lend money to, guarantee the debts or obligations of,
permit his name to be used in connection with or become interested in any entity
engaged in a Competitive Business, directly or indirectly as an individual,
partner, shareholder, officer, director, principal, agent, employee, trustee,
consultant, or in any other relationship or capacity, in any case in the United
States (east of the Mississippi River) or in the Canadian provinces of Ontario
or Quebec; provided that the Executive may own, solely as an investment,
securities of any entity that is a Competitive Business that are traded on a
national securities exchange if the Executive is not a controlling person of, or
a member of a group that controls such entity and does not, directly or
indirectly, own 2% or more of any class of securities of such entity.
“Competitive Business” means a business which competes in any material respect
with the Corporation and shall include (A) the processing and distribution of
carbon steel, stainless steel and aluminum products, the manufacture of tubing
products, the production of roll formed steel sections, the manufacture of
hardwood flooring nails and nailers, front loading brackets and racking, and
operating as an intermediary between primary metal producers and manufacturers
and (B) those businesses and companies that the Corporation and the Executive
jointly designate in writing as of the date hereof as being in competition with
the Corporation.

(e)       The Executive will not at any time (whether during or after his
employment with the Corporation) disclose or use for his own benefit or purposes
or the benefit or purposes of any other person, entity or enterprise, other than
the Corporation or any of its subsidiaries or affiliates, any “Confidential
Information.” The term “Confidential Information” means all information
(including proprietary information of the Corporation, technical, business and
financial data, trade secrets or know-how, including, but not limited to,
research, product plans, products, services, vendor lists, supplier lists and
suppliers, customer lists and customers, contacts at or knowledge of clients or
prospective clients of the Corporation, pricing information and costs, markets,
software, ideas, concepts, developments, inventions, discoveries, protocols,
scripts, features and modes of operation, interfaces, works of authorship,
databases or database criteria, algorithms, methodologies, processes, formulas,
computer codes, technology, designs, drawings, internal documentation,
engineering materials, hardware configuration information, marketing data,
licenses, finances, budgets, projections, forecasts, strategies, salaries, terms
of compensation of employees or other business information disclosed to the
Executive by the Corporation, either directly or indirectly whether in written,
electronic, oral or other form and including trade secrets and non-public,
confidential or proprietary information) relating to the Corporation (including
the past, present or prospective transactions, business, technology, operating
methods or processes, financial condition, financial or business performance,
assets, liabilities, rights, obligations, strategies and plans of the
Corporation) furnished by or on behalf of or obtained from, before or after the
date hereof, the Corporation or controlling persons, directors, officers,
employees, affiliates, representatives (including financial advisors, attorneys
and accountants), agents or financing sources (collectively, “Representatives”)
of the Corporation and all files, books, records, notes, compilations, analyses,
forecasts, studies, reports and other documents (whether in written or
electronic form) prepared by, on behalf of or for any third party, including the
Executive, which contain or reflect any of such information (collectively,
“Analyses”). The term “Confidential Information” does not, however, include
information which (i) is part of the public domain, including information which
is not unique to the Corporation or which is generally known to the industry or
the public, through no fault of the Executive or (ii) becomes known by or
available to the Executive after the termination of his employment with the
Corporation on a non-confidential basis from a source (other than the

 

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Corporation or any of its Representatives) which, to the knowledge of the
Executive, after due inquiry, is not prohibited from disclosing such information
to the Executive by a statutory, regulatory, contractual or fiduciary
obligation. The Executive agrees that upon termination of his employment with
the Corporation for any reason, he will return to the Corporation immediately
all memoranda, books, papers, plans, information, letters and other data, and
all copies thereof or therefrom, in any way relating to the business of the
Corporation or its subsidiaries or affiliates or licensees

(f)        The Executive acknowledges that money damages for a breach of this
Agreement by him is unlikely to be calculable, that such a breach is likely to
cause irreparable harm to the Corporation and that remedies at law are likely to
be inadequate to protect the Corporation against any actual or threatened breach
of this Agreement by the Executive. Accordingly, the Executive agrees to the
granting of injunctive relief in favor of the Corporation in the event of any
such breach or threatened breach of any of the provisions of this Section 7 (the
“Restrictive Covenants”), without proof of actual damages and without the
requirement of posting bond or other security. Such relief shall not be the
exclusive remedy for a breach by the Executive of this Agreement, but shall be
in addition to all other rights and remedies available at law, in equity or
otherwise to the Corporation, including:

(i)        The right and remedy to have the Restrictive Covenants specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed that any such breach or threatened breach of such Restrictive Covenants
will cause irreparable injury to the Corporation and that money damages will not
provide an adequate remedy to the Corporation; and

(ii)       The right to discontinue the payment of any amounts owing to the
Executive under this Agreement or otherwise; provided that the Corporation shall
have secured a reasoned opinion of counsel that the Executive’s activities
constitute a material breach of the Restrictive Covenants and which shall have
been provided to the Executive, the delivery of which shall not be deemed to be
a waiver of any applicable privilege. To the extent the Executive, by notice
hereunder, disputes the discontinuance of any payments hereunder, such payments
shall be segregated and deposited in an interest bearing account at a major
financial center bank in New York City pending resolution of the dispute.

In the event of litigation relating to this Agreement wherein a court of
competent jurisdiction determines in a final, non-appealable order that this
Agreement has been breached by the Executive, then the Executive will reimburse
the Corporation for all costs and expenses (including reasonable legal fees and
expenses) incurred in connection with such litigation and all other litigation
related to such breach.

(g)       If any court determines that any of the Restrictive Covenants, or any
part thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portion. In addition, if any court construes any of the
Restrictive Covenants, or any part thereof, to be unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of such provision and, in its reduced
form, such provision shall then be enforceable and shall be enforced.

 

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8.         Compensation Committee. Any action which is required to be or may be
taken by the Board may be taken by the Compensation Committee of the Board.

9.         Policies. References to the Corporation’s policies, plans, practices
and arrangements means those in effect at the relevant time and nothing herein
obligates the Corporation to maintain any policy or restricts the Corporation
from changing any policy.

10.       Representation by the Executive. The Executive hereby represents to
the Corporation that the execution and delivery of this agreement by the
Executive and the Corporation and the performance by the Executive of his
responsibilities and duties hereunder shall not constitute a breach of, or
otherwise contravene, the terms of any employment agreement or other agreement
or policy to which the Executive is a party or otherwise bound.

11.       Notice. All notices required or permitted to be given pursuant to this
Agreement shall be given by written notice, shall be transmitted by personal
delivery, registered or certified mail (return receipt requested, postage
prepaid), nationally recognized courier service, facsimile or email, and shall
be addressed to the intended recipient at its address set forth herein. A Party
may designate a new address to which such notices shall thereafter be
transmitted by giving written notice to that effect to the other Party. Each
notice transmitted in the manner described herein shall be deemed to have been
(a) delivered to the addressee as indicated by the return receipt (if
transmitted by mail), the mailing label (if transmitted by courier service), the
affidavit of the messenger (if transmitted by personal delivery) or the
answerback, call back or email receipt (if transmitted by facsimile or email) or
(b) presented for delivery to the addressee as so indicated during normal
business hours, if such delivery shall have been refused for any reason.

12.       Governing Law and Jurisdiction. THE VALIDITY, INTERPRETATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW
RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
THE INTERNAL LAWS OF THE STATE OF DELAWARE TO THE RIGHTS AND DUTIES OF THE
PARTIES). Each Party agrees that any proceeding arising out of or relating to
this letter agreement or the breach or threatened breach hereof shall be
commenced and prosecuted in a court in the State of Delaware. Each Party
consents and submits to the non-exclusive personal jurisdiction of any court in
the State of Delaware in respect of any such proceeding. Each Party consents to
service of process upon it with respect to any such proceeding by any means by
which notices may be transmitted hereunder or by any other means permitted by
applicable laws and rules. Each Party waives any objection that it may now or
hereafter have to the laying of venue of any such proceeding in any court in the
State of Delaware and any claim that it may now or hereafter have that any such
proceeding in any court in the State of Delaware has been brought in an
inconvenient forum. EACH PARTY WAIVES TRIAL BY JURY IN ANY SUCH PROCEEDING.

13.       Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and assigns.
Neither Party shall assign any of its rights or delegate any of its duties under
this Agreement (except to the extent the assignment is by merger, consolidation
or operation of law, in which case such successor must

 

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affirmatively agree to assume this Agreement) without the prior written consent
of the other Party. Except as provided in the preceding sentence, any assignment
of rights or delegation of duties under this Agreement by a Party without the
prior written consent of the other Party shall be void.

14.       Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and cancels and
supersedes all of the previous or contemporaneous contracts, representations,
warranties and understandings (whether oral or written) by or between the
Parties with respect to the subject matter hereof. As used herein, the word
“including” shall in all cases be deemed to be followed by the phrase “without
limitation” and the word “person” shall include individuals and corporations,
societies, companies, partnerships, trusts, unincorporated associations,
governments and governmental instrumentalities, and other entities of any kind.

15.       Amendments and Modifications. No addition to, and no cancellation,
extension, modification or amendment of, this Agreement shall be binding upon a
Party unless such addition, cancellation, extension, modification or amendment
is set forth in a written instrument which expressly states that it adds to,
amends, cancels, extend or modifies this Agreement and which is executed and
delivered by such Party. No waiver of, or agreement or confirmation under, any
provision hereof shall be binding upon a Party unless such waiver is expressly
set forth in a written instrument which is executed and delivered by a Party.
Neither the exercise (from time to time and at any time) by a Party of, nor the
delay or failure (at any time or for any period of time) to exercise, any right,
power or remedy shall constitute a waiver of the right to exercise, or impair,
limit or restrict the exercise of, such right, power or remedy or any other
right, power or remedy at any time and from time to time thereafter. No waiver
of any right, power or remedy of a Party shall be deemed to be a waiver of any
other right, power or remedy of such Party or shall, except to the extent so
waived, impair, limit or restrict the exercise of such right, power or remedy.

16.       Counterparts. This Agreement may be signed in any number of
counterparts, each of which (when executed and delivered) shall constitute an
original instrument, but all of which together shall constitute one and the same
instrument. This Agreement shall become effective at such time as counterparts
shall have been executed and delivered by all of the Parties, regardless of
whether all of the Parties have executed the same counterpart. A facsimile of an
original shall be as effective as delivery of such original.

17.       Validity; Severability. If any provision of this Agreement is held to
be illegal, invalid or incapable of being enforced, in whole or in part, in any
jurisdiction under any circumstances for any reason under present or future laws
effective during the term hereof, (i) such provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and
legal while preserving the intent of the parties as expressed in, and the
benefits to such parties provided by, such provision or (ii) if such provision
cannot be so reformed, such provision shall be severed from this Agreement and
an equitable adjustment shall be made to this Agreement (including addition of
necessary further provisions to this Agreement) so as to give effect to the
intent as so expressed and the benefits so provided. Such holding shall not
affect or impair the validity, enforceability or legality of such provision in
any other jurisdiction or under any other circumstances. Neither such holding
nor such reformation or

 

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severance shall affect or impair the legality, validity or enforceability of any
other provision of this letter agreement.

18.       Taxes and Withholding. The Corporation may withhold from any amounts
payable under this Agreement such federal, state and local taxes as may be
required to be withheld pursuant to applicable law or regulation. The Parties
recognize that certain provisions of this Agreement may be affected by Section
409A of the Code and they, therefore, agree to negotiate in good faith to amend
the Agreement with respect to any changes necessary or advisable to comply with
Section 409A. To the extent there are any ambiguities in this Agreement, such
ambiguities shall be construed in a manner that complies with Section 409A.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
and effective as of the date set forth above.

 

 

NOVAMERICAN STEEL INC.

 

 

 

By:

/s/ Scott C. Mason

 

 

Name: Scott C. Mason

 

 

Title: Chairman, Compensation Committee

 

 

 

Date:

February 8, 2008

 

 

 

 

 

/s/ Corrado De Gasperis

 

The Executive: CORRADO DE GASPERIS

 

 

 

Date:

January 31, 2008

 

 

 

 

 

Address of the Executive for delivery of notice:

 

 

 

/s/ Corrado De Gasperis

 

432 Scarborough Road

 

Briarcliff Manor, NY 10510

 

 

 

 

 

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