EXHIBIT 10.6
PRIVILEGED SETTLEMENT; NOT
ADMISSIBLE IN ANY LEGAL OR
ADMINISTRATIVE PROCEEDING
UNLESS AGREED TO AND EFFECTIVE
AGREEMENT AND RELEASE
THIS AGREEMENT AND RELEASE (the "Agreement") is entered into by Xxxxx
XxXxxxx (hereinafter referred to as "XxXxxxx") and by XXXXX XXXXXXXXX
INCORPORATED (hereinafter referred to as "RMI").
RECITALS
X. XxXxxxx has been employed by RMI and has resigned his employment,
effective March 31, 1998.
X. XxXxxxx and RMI wish to enter into this Agreement to completely settle
any issues that may exist between them with respect to the employment
relationship between XxXxxxx and RMI and its termination, and any continuing
obligations of the parties to one another following the end of the employment
relationship.
C. RMI has advised XxXxxxx of his right to consult an attorney prior to
signing this Agreement and has provided him with at least 21 days to consider
its severance offer and to seek legal assistance.
D. This Agreement is not and should not be construed as an admission or
statement by either party that it or any other party has acted wrongfully or
unlawfully. Both parties expressly deny any wrongful or unlawful action.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals and mutual
promises contained below, it is agreed as follows:
1. EMPLOYMENT: ENDING DATE AND RESPONSIBILITIES
XxXxxxx' employment with RMI shall terminate effective March 31, 1998 (the
"Termination Date"). XxXxxxx will thereafter have no remaining employment
responsibilities to RMI.
2. SEVERANCE AND BENEFITS
2.1 RMI will pay XxXxxxx his regular compensation through March 31, 1998,
and any accrued and unpaid vacation in the ordinary course and consistent with
RMI's policies. In addition, within thirty (30) days of Xxxxx 00, 0000, XXX
will pay XxXxxxx Four Thousand Seven Hundred Dollars ($4,700), less required and
customary withholding, representing estimated compensation for his management of
the MRM Fund through March 31, 1998. All benefits shall cease on the date of
termination of employment, except for XxXxxxx' right under COBRA to self-pay
medical benefits under the RMI Medical Plan if he elects to do so.
2.2 Further, provided this Agreement has become effective as provided in
Section 8, on September 30, 1998, RMI shall pay XxXxxxx a severance payment in
the amount of Sixty Thousand Dollars ($60,000), less required and customary
withholding.
3. REDEMPTION OF SHARES AND APPRECIATION RIGHTS
3.1 Redemption of Shares. On the Termination Date, XxXxxxx shall tender
for redemption, and RMI shall redeem, all shares of stock of RMI owned by
XxXxxxx and XxXxxxx shall duly transfer such shares to RMI by delivery of the
applicable stock certificate or certificates representing such shares, duly
endorsed by XxXxxxx or accompanied with duly executed assignment(s) separate
from certificate(s), with signatures guaranteed. RMI shall pay to XxXxxxx the
book value of the shares so redeemed by April 30, 1998. Notwithstanding any
provision of this Agreement to the contrary, RMI shall not be required to effect
any redemption of the shares of stock of RMI owned by XxXxxxx, or make any
payment for such shares, if such redemption or payment, if made, would result in
a violation of applicable law or a regulatory requirement applicable to RMI.
For purposes of this Section 3.1, the book value of shares shall be calculated
as of March 27, 1998, in accordance with Section 3.2(f).
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3.2 Benefits - Appreciation Rights as Additional Severance Payment. Upon
redemption of the shares of stock of RMI owned by XxXxxxx in accordance with
Section 3.1, XxXxxxx shall have the right to a "Stock Appreciation Amount" in
the form of an additional severance payment, calculated as follows on a share by
share basis:
(a) The book value for each such share shall be calculated as of March
27, 1998 and again as of the end of the eighth fiscal quarter of RMI after
the end of the fiscal quarter of RMI ended Xxxxx 00, 0000 (xxx "Xxxxxx
Xxxxxxx").
(x) Except as otherwise provided in Section 3.2(d) and subject to the
adjustments as provided in Section 3.2(f), the Stock Appreciation Amount
shall be the amount, if any, by which such per share book value as of the
end of said Eighth Quarter exceeds said book value on March 27, 1998.
(c) Such Stock Appreciation Amount, if any, shall be paid on a per
share basis within thirty days after the calculation of the Eighth Quarter
book value.
(d) Notwithstanding anything to the contrary in Section 3.2(b) and
Section 3.2(c), if prior to the end of such Eighth Quarter there occurs a
"Corporate Disposition" (as defined in Section 3.5(a)), then the Stock
Appreciation Amount shall be the amount, if any, by which the amount (net
of expenses) received per share of common stock of RMI in such Corporate
Disposition exceeds the per share book value on March 27, 1998; provided,
however, that if the Corporate Disposition is the closing of an initial
public offering of stock of an Affiliated corporation that occurs after a
reorganization of RMI into a holding company structure pursuant to which
shareholders of RMI received shares of the Affiliated corporation in
exchange for or upon conversion of their shares of RMI, then the Stock
Appreciation Amount shall be the difference between (a) the product of the
amount (net of expenses) received per share of common stock of the
Affiliated corporation in such public offering multiplied by the number of
shares or fraction of share, as the case may be, of the Affiliated
corporation received per share of RMI by an RMI shareholder in connection
with the holding company reorganization minus (b) the per share book value
on March 27, 1998. The Stock Appreciation Amount pursuant to this Section
3.2 (d) shall be determined within 30 days after the Corporate Disposition
and shall be the final Stock Appreciation Amount. The Corporation shall
pay two-thirds of such Stock Appreciation Amount within 30
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days of the occurrence of such Corporate Disposition and shall pay
one-sixth of such Stock Appreciation Amount, plus interest accruing on such
one-sixth amount at the prime rate of Seafirst Bank from the date of the
relevant Corporate Disposition through the date of such payment, within 30
days after the first anniversary and within 30 days after the second
anniversary of the Termination Date. Payment by RMI to XxXxxxx of such
Stock Appreciation Amount in accordance with the foregoing sentence shall
fully discharge the obligations of RMI for any payment to be made with
respect to the shares of stock of RMI redeemed pursuant to Section 3.1.
(e) Notwithstanding the provisions of the foregoing clause (d), if the
consideration to be received by shareholders of RMI in connection with a
Corporate Disposition consists in whole or in part of shares or other
securities of another corporation, then the payment of the Stock
Appreciation Amount pursuant to Section 3.2(d) may be, if the Board of
Directors of RMI so elects, in the form of such shares or securities,
rather than cash, with the quantity of such shares or securities to be paid
in lieu of cash to be based on fair market values as determined by the
Board of Directors of RMI, and such determination shall be final and
binding on the parties hereto.
(f) The book value per share shall be established by the accountant or
accountants regularly employed by RMI at the time of such determination;
such value shall be net book value of each such share involved, calculated
in accordance with generally accepted accounting principles, and assuming
that all shares which have been redeemed by RMI but are still entitled to a
Stock Appreciation Amount under this Agreement or a similar payment under
any other plan or agreement of RMI are still outstanding, and that all
shares which can be purchased or acquired under outstanding options or
rights for a price equal to or less than the resulting per share book value
are also outstanding. The calculation of book value per share shall be
adjusted by such accountant or accountants as appropriate for any increase
or decrease in the number of issued shares of common stock of RMI resulting
from a reclassification, stock split, reverse stock split, stock dividend
or similar transaction and shall be adjusted by such accountant or
accountants as appropriate in the event of any reclassification of stock of
RMI or exchange of the stock of RMI for stock of an Affiliated corporation
so that the intent of this Section 3 may be effected as nearly as
reasonably practicable. All calculation and adjustments so made in good
faith by such accountant or accountants shall be conclusive and binding on
all parties. RMI shall pay all costs of calculating such Stock
Appreciation
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Amounts, shall fully cooperate to enable such calculation to be made as
soon as practicable, and if requested, shall review the computation of the
book values with XxXxxxx or his representative.
3.3 No Obligation to Effect Corporate Disposition. Neither RMI nor any
Affiliated corporation (defined below) has any obligation whatsoever to effect a
Corporate Disposition, or to take any other action which would or might increase
the amount of any Stock Appreciation Amount, and XxXxxxx shall not promote in
any way any such transaction or action without the prior approval of RMI.
3.4 No Rights under Suspended 1997 Share Repurchase Plan. XxXxxxx and RMI
acknowledge that RMI's 1997 Share Repurchase Plan, dated August 21, 1997, as
amended and supplemented (the "Share Repurchase Plan"), is currently suspended.
In consideration of the mutual promises set forth in this Agreement, XxXxxxx
agrees that all shares redeemed pursuant to Section 3.1 (the "Redeemed Shares")
shall not be subject in any manner to the Share Repurchase Plan and XxXxxxx
hereby irrevocably waives any and all of his rights of any nature whatsoever
pursuant to the Share Repurchase Plan that relate in any manner to the Redeemed
Shares or any associated stock appreciation amount in respect of the Redeemed
Shares, and agrees that effective as of the date hereof all of his rights at any
time under the Share Repurchase Plan in respect of the Redeemed Shares and any
related stock appreciation amount are revoked and of no further force and
effect.
3.5 Definitions. The following terms shall have the following meanings
when used in Section 3 of this Agreement:
(a) A "Corporate Disposition" shall mean any of the following events: (i)
any merger or consolidation of RMI in which RMI is not the continuing or
surviving corporation, or pursuant to which shares of RMI are converted into
cash, securities or other property, except that "Corporate Disposition" shall
not include any such merger or consolidation in which the holders of RMI's
outstanding voting securities immediately prior to such merger or consolidation
own at least 66-2/3% of the of the outstanding voting securities of either the
surviving corporation of such transaction or any direct or indirect parent
entity of such surviving corporation; (ii) consummation of any sale, lease,
exchange or other transfer in one transaction or a series of related
transactions of all or substantially all of RMI's assets other than a transfer
of RMI's assets to an Affiliated corporation; (iii) approval in accordance with
applicable law by the holders of RMI's stock of any plan or proposal for the
liquidation or dissolution of RMI; or (iv) the closing of an initial public
offering of shares by RMI or an Affiliated corporation that are listed on a
national securities
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exchange or The Nasdaq Stock Market. For purposes of clause (i) above, ownership
of voting securities shall take into account and shall include ownership as
determined by applying Rule 13d-3(d)(1)(i) (as in effect on the date of this
Agreement) pursuant to the Securities Exchange Act of 1934, as amended.
(b) An Affiliated corporation shall mean a corporation which, together with
RMI, is part of an affiliated group as defined in Section 1504(a) of the
Internal Revenue Code of 1986, as amended, without giving effect to Section
1504(b) of said Code.
4. VALID CONSIDERATION
XxXxxxx and RMI agreed that the payments XxXxxxx is to receive pursuant to
Sections 2.2 and 3 above are not required by RMI policies or procedures or by
any contractual obligation of RMI, and are offered by RMI solely as
consideration for this Agreement.
5. CONFIDENTIALITY OF SETTLEMENT AGREEMENT
XxXxxxx agrees that he will keep the terms of this Agreement confidential,
and that he will not disclose any information concerning this Agreement or its
terms to anyone other than his immediate family and/or his advisors, whom
XxXxxxx will inform of and ask to honor this confidentiality clause. XxXxxxx
may also disclose the terms of the noncompetition provision contained in Section
7 of this Agreement to any prospective employer to the extent necessary to avoid
any breach of the noncompetition provision. Nothing in this Section shall limit
disclosure that may be compelled by law.
6. GENERAL RELEASE OF CLAIMS BY XXXXXXX
XxXxxxx represents that he has not filed, and agrees and warrants he will
not file, any complaints, charges or lawsuits against RMI with any governmental
agency or any court. XxXxxxx expressly waives any claims against RMI and
releases RMI (including its officers, directors, owners, managers, agents and
representatives) from any claims that he may have in any way connected with his
employment with RMI and the termination thereof. It is understood that this
release includes, but is not limited to, any claims for wages, bonuses,
employment benefits, or damages of any kind whatsoever, arising out of any
contracts, express or implied, any theory of wrongful discharge or other legal
restriction on RMI's right to terminate employment, or any federal, state or
other governmental statute or ordinance, including, without limitation, Title
VII of the Civil Rights Act of 1964, the federal Age Discrimination in
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Employment Act, the Americans with Disabilities Act, the Family Medical Leave
Act, the Washington Law Against Discrimination, or any other legal limitation on
the employment relationship.
For purposes of this Section 6, the term "RMI" shall include all of the
officers, directors, owners, managers, agents, and representatives of RMI.
This waiver and release shall not preclude XxXxxxx from filing a lawsuit
for the exclusive purpose of enforcing his rights under this Agreement.
7. CONFIDENTIALITY, NONCOMPETITION, NONSOLICITATION AND NONDISPARAGEMENT
XxXxxxx acknowledges that in the course of his employment with RMI he has
had access to Confidential Information that is important, competitively
sensitive and not generally known to the public, including, but not limited to,
RMI's business plan, bidding and pricing procedures, market strategies,
financial data, confidential personnel information and similar information.
XxXxxxx recognizes his obligation to safeguard such Confidential Information and
not to disclose such information to other parties or to use it to the
competitive disadvantage of RMI. In addition, XxXxxxx agrees that, for a period
of six (6) months following the Termination Date, he will not, except as
expressly permitted hereunder, directly or indirectly (a) operate, develop or
own any interest other that the ownership of less than 5% of the equity
securities of a publicly traded company, in any business which has significant
activities, or has announced intentions to focus significant resources, relating
to the ownership, management or operation of any organization which, by reason
of its activities as a broker, dealer, investment advisor, investment company or
related business, is subject to regulation by the Securities and Exchange
Commission and which conducts business in any state in which RMI conducts
business (a "Business"); (b) compete with RMI or its subsidiaries and affiliates
in the operation or development of any Business within the United States of
America; or (c) be employed by any entity which owns, manages or operates a
Business, provided that this will not prevent XxXxxxx from employment with a
Business with a division that competes with RMI so long as his duties and
activities do not in any way support any activities that are competitive to RMI.
XxXxxxx shall not be entitled to circumvent the provisions of the Section by
entering into a relationship with a Business as a consultant, director, advisor,
or otherwise, which has the effect of competing with RMI, its affiliates or
subsidiaries. XxXxxxx shall be entitled to request RMI to consider specific
employment opportunities and to grant a waiver of the provisions of the section,
which waiver shall not be unreasonably withheld. XxXxxxx further agrees that
for a
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period of two years after the Termination Date, he will not (d) interfere with,
solicit, disrupt, or attempt to disrupt any past, present or prospective
relationship, contractual or otherwise, between RMI or its subsidiaries or
affiliates and any customer, client, supplier or employee of RMI or its
subsidiaries or affiliates; or (e) solicit any employee of RMI or its
subsidiaries or affiliates to leave their employment with RMI or its
subsidiaries or affiliates, as the case may be, or hire any such employee to
work for a Business. XxXxxxx further agrees that he will not at any time
following the Termination Date make any statements that disparage RMI, its
directors, officers, employees and representatives and/or that damage the
reputation and/or good will of RMI. BREACH BY XXXXXXX OF ANY OBLIGATION UNDER
THIS SECTION 7 WILL EXCUSE AND RELEASE RMI FROM MAKING ANY FURTHER PAYMENT DUE
TO XXXXXXX UNDER SECTIONS 2.2 AND 3 OF THIS AGREEMENT.
8. REVIEW AND REVOCATION PERIOD; EFFECTIVE DATE
XxXxxxx and RMI agree that he shall have 21 days to review this Agreement
and consult legal counsel if he so chooses, during which time the proposed term
of the Agreement shall not be amended, modified or revoked by RMI. XxXxxxx may
revoke this Agreement if he so chooses by providing notice of his decision to
revoke the Agreement to RMI within seven days following the date he signs this
Agreement. This Agreement shall become effective and enforceable upon
expiration of this seven-day revocation period.
9. SEVERABILITY
The provisions of this Agreement are severable, and if any part of it is
found to be unlawful or unenforceable, the other provisions of this Agreement
shall remain fully valid and enforceable to the maximum extent consistent with
applicable law.
10. KNOWING AND VOLUNTARY AGREEMENT
XxXxxxx represents and agrees that he has read this Agreement, understands
its terms and the fact that it releases any claim he might have against RMI and
its agents, understands that he has had the right to consult counsel of choice
and has done so, and enters into this Agreement without duress or coercion from
any source.
11. ENTIRE AGREEMENT
This Agreement sets forth the entire understanding between XxXxxxx and RMI
and supersedes any prior agreements or understandings, express or implied,
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pertaining to the terms of his employment with RMI and the termination of the
employment relationship. XxXxxxx acknowledges that in executing this Agreement,
he does not rely upon any representation or statement by any representative of
RMI concerning the subject matter of this Agreement, except as expressly set
forth in the text of the Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates indicated below.
XXXXX XXXXXXXXX INCORPORATED
By: /s/ Xxxx X. Xxxxxx /s/ Xxxxx XxXxxxx
----------------------------- -------------------------------
Xxxxx XxXxxxx
Title: Chief Executive Officer
-------------------------- Dated: 3/19/98
-------------------------
Dated: 3/22/98
--------------------------
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