SETTLEMENT AND RELEASE AGREEMENT
Agreement dated as of April 3, 1998 between Handy & Xxxxxx, a
New York corporation (the "Company"), WHX Corporation, a Delaware corporation
("WHX"), HN Acquisition Corp., a New York corporation (the "Purchaser"), and
Xxxxx X. Xxxxxxxxx (the "Executive").
WHEREAS, the Purchaser has commenced a tender offer to
purchase all the issued and outstanding shares of the Company (the "Tender
Offer"), pursuant to an offer to purchase dated March 6, 1998 and a related
letter of transmittal of the same date;
WHEREAS, the Company and the Purchaser have entered into an
Agreement and Plan of Merger dated as of March 1, 1998 (as it may be amended and
modified from time to time, the "Merger Agreement"), providing for the merger of
the Purchaser with and into the Company following completion of the Tender
Offer;
WHEREAS, the Executive is entitled to certain payments from
the Company, contingent upon a change of control of the Company, the occurrence
of certain events after a change of control of the Company, or upon retirement
of the Executive from the Company, pursuant to agreements and arrangements
listed on Schedule A to this Agreement (the "Compensation Arrangements");
WHEREAS, the successful completion of the Tender Offer will
constitute a change of control of the Company for the purposes of the
Compensation Arrangements and, as a result, the amounts described in Schedule B
to this Agreement will be paid to the Executive and the payments and benefits
described in Schedule C to this Agreement will or, in certain instances may,
become payable by the Company;
WHEREAS, in order to achieve certainty in the relations among
the parties after the Purchaser accepts shares for payment pursuant to the
Tender Offer (the "Tender Closing") (the date of which is anticipated to be
April 7, 1998), and to give effect to certain agreements they have made
concerning the Compensation Arrangements, the parties wish to enter this
Settlement and Release Agreement confirming and restating the amounts which the
Executive is entitled to receive from the Company under the Compensation
Arrangements, and providing for the release, subject to the terms of this
Agreement, of the Company, the Purchaser and WHX from any obligation other than
those described in this Agreement, and of the Executive from certain obligations
to which he might otherwise be subject.
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree as follows:
1. AMOUNTS TO BE PAID ON TENDER CLOSING
The amounts specified in Schedule B to this Agreement shall be paid by
the Company to the Executive immediately prior to the Tender Closing.
2. AMOUNTS TO BE PAID AFTER TENDER CLOSING
The payments and benefits specified in Schedule C to this Agreement
shall be made and provided by the Company to the Executive, in the amounts and
at the times provided in the relevant Compensation Arrangements, following the
Tender Closing.
3. RELEASE
3.1 GENERAL RELEASES:
(a) The Executive:
(i) agrees not to xxx or file any charges of
discrimination, or any other action or proceeding with any
local, state and/or federal agency or court; and
(ii) waives, discharges and releases the Company, WHX,
their affiliates, subsidiaries, directors, officers,
employees, representatives, agents and their successors and
assigns from any and all actions, causes of action, suits,
debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, liabilities,
damages, judgments, extents, executions, claims and demands,
whether known or unknown, whatsoever, in law, admiralty or
equity
arising out of or relating in any way to the Executive's employment
with the Company prior to the Tender Closing, or to the Executive's
separation from employment with the Company prior to or
contemporaneously with the Tender Closing.
The claims covered by this paragraph (a) include, without
limitation, claims under all laws, rules or regulations as currently in
effect, or as may exist from time to time, relating to employment and
related matters, including without limitation Title VII of the Civil
Rights Act of 1964; the Age Discrimination in Employment Act of 1967;
the Civil Rights Act of 1866; the Civil Rights Act of 1991; the
Rehabilitation Act of 1973; the Americans with Disabilities Act of
1990; the Worker Adjustment and Retraining Notification Act of 1988;
the Older Workers Benefit Protection Act of 1990; the Pregnancy
Discrimination Act of 1978; the Employee Retirement Income Security Act
of 1974; the Family and Medical Leave Act of 1993; Fair Labor Standards
Act; and any and all contract, tort, wrongful termination or other
retaliation claims in connection with workers' compensation claims.
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(b) The Company and WHX:
(i) agree not to xxx or file any charges or any other
action or proceeding with any local, state or federal agency
or court; and
(ii) waive, discharge and release the Executive from any
and all actions, causes of action, suits, debts, dues, sums of
money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises,
variances, trespasses, liabilities, damages, judgments,
extents, executions, claims and demands, whether known or
unknown, whatsoever, in law, admiralty or equity, other than
for any acts of Executive constituting embezzlement, fraud, or
deliberate dishonesty;
arising out of the Executive's employment with the Company prior to the
Tender Closing, relating to the payments made under this Agreement, or
arising out of the Executive's separation from employment with the
Company prior to or contemporaneously with the Tender Closing.
3.2 Nothing in the foregoing release or in this Agreement shall in any way
limit or affect the Executive's rights to indemnification (including
advancement of expenses) pursuant to (i) the Company's Certificate of
Incorporation and By-laws, (ii) Section 5.12 of the Merger Agreement,
and (iii) the provisions of the New York Business Corporation Law.
3.3 The Company and WHX waive, discharge and release the Executive from any
obligation to mitigate damages arising from breach of this Agreement,
or any payment obligation arising under this Agreement, by seeking
alternative employment or otherwise. Moreover, the Company and WHX
agree that no payment or damages arising under this Agreement shall be
reduced by any compensation received by the Executive from any employer
of the Executive other than the Company, or from any other source.
3.4 The waivers, discharges and releases made by the Executive under this
Section 3 shall be contingent upon the full and timely payment and
provision by the Company of amounts payable to and benefits receivable
by the Executive described in the Schedules to this Agreement.
3.5 EMPLOYEE-AT-WILL; RELEASE OF SEVERANCE ENTITLEMENTS: The Executive
acknowledges that following the Tender Closing and the payment of the amounts
specified in Schedule B that his status will be that of an employee-at-will and
that should his employment be terminated following the Tender Closing he will
not be entitled to any cash severance or any other payments or benefits other
than those provided in Schedule C to this Agreement or required by law unless he
enters into an agreement with the Company after the Tender Closing providing for
such a severance payment.
3.6 CONTINUING EFFECT OF COMPENSATION ARRANGEMENTS: The Compensation
Arrangements shall have no further force or effect after the Tender Closing
except insofar as they provide for the payments and benefits listed in Schedule
B (solely with respect to any adjustment to the gross-up for
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golden parachute excise taxes) and Schedule C of this Agreement, in which
respect they shall continue to govern the nature, amount and timing of all such
payments and benefits.
4. RESTRICTION TO EMPLOYMENT RELATIONSHIP
The parties acknowledge that this Agreement is intended to apply only
to rights, obligations and claims arising out of the Compensation Arrangements
and the employment relationship (or its termination) between the Executive and
the Company. In particular, and without limiting the effect of the previous
sentence, this Agreement does not apply to, limit or affect any rights which the
Executive may have in relation to the Tender Offer or the Merger in his capacity
as a shareholder of the Company (including rights arising out of the ownership
of shares that were originally received by the Executive as compensation for his
services as an employee).
5. DISCLOSURE OF INFORMATION.
5.1 In the course of the Executive's employment with the Company, whether
past or in the future, the Executive has received, and will continue to receive,
information that gives the Company an advantage over its competitors, and which
is confidential and proprietary, relating to names and preferences of customers,
the costs and profits of particular lines, products and markets, technological
data, computer programs, know-how, potential acquisitions, sources of financing,
corporate operating and financing strategies, expansion plans and similar
related information (together, the "Confidential Material"). Confidential
Material shall not include any information that (i) is generally available to
the public (other than as a result of disclosure by the Executive), or (ii)
becomes available to the Executive on a non-confidential basis from a source
other than the Company, provided that such source is not known by the Executive
to be bound by a confidentiality agreement with, or other obligation of secrecy
to, the Company. At no time during the period commencing on the date first
written above and continuing through the third anniversary of the Tender
Closing, shall the Executive individually or jointly with others, for the
benefit of himself or any third party, (i) in whole or in part, disclose such
Confidential Material to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever or (ii) make use of any such
Confidential Material for his own purposes or for the benefit of any person,
firm, association, corporation or other entity (except the Company) under any
circumstances; provided, however, that the Executive may disclose any
Confidential Material as required by court order or which is relevant to any
dispute or proceeding between the Executive and the Company. The Executive
acknowledges that any disclosure of the Confidential Material would cause
material and irreparable harm to the Company and its business.
5.2 All papers, books and records of every kind and description relating to
the business and affairs of the Company or its affiliates, whether or not
prepared by the Executive, shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company at any time upon
request by the Chairman of the Board or any authorized officer.
5.3 The provisions of this Section 5 will survive the expiration or earlier
termination of the term of this Agreement.
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6. COVENANTS NOT TO COMPETE OR INTERFERE.
6.1 From and after the date of the Tender Closing, for a period of
thirty-six (36) months, the Executive will not (i) directly or indirectly, own
an interest in (except for ownership of less than 5% of the outstanding equity
interest of any entity), operate, join, control, or participate in, or be
connected as an officer employee, agent, director (other than as a director of a
publicly held corporation of which the Executive is a director as of the date
hereof), independent contractor, partner, shareholder or principal of any
corporation, partnership, proprietorship, firm, association, person, or other
entity engaged in a business competitive with that of the Company or its
subsidiaries as conducted on the date of this Agreement, in any states within
the continental United States where the Company or its subsidiaries are engaged
in business, the United Kingdom, Denmark, Canada, Panama and Bermuda (a
"Competing Business") or (ii) knowingly solicit or accept business for a
Competing Business (x) from any customer of the Company or its subsidiaries, or
(y) from any prospect of the Company with whom the Executive met to solicit or
with whom the Executive discussed a business transaction during the twelve
months preceding the termination of the Executive's employment with the Company.
6.2 For a period ending thirty-six (36) months from and after the Tender
Closing, the Executive will not directly or indirectly, as a sole proprietor,
member of a partnership or stockholder, investor, officer or director of a
corporation, or as an employee, agent, associate or consultant of any person,
firm or corporation, after reasonable investigation, knowingly solicit any
employee of the Company or its affiliates to terminate his employment with the
Company.
6.3 It is the desire and intent of the parties that the provision of this
Section 6 shall be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this Section 6 shall be adjudicated to
be invalid or unenforceable, this Section 6 shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
deletion to apply only with respect to the operation of this Section 6 in the
particular jurisdiction in which such adjudication is made. The provisions of
this Section 6 will survive the expiration or earlier termination of the term of
this Agreement.
7. ARBITRATION
Any dispute or controversy between the Company and the Executive,
whether arising out of or relating to any of the Compensation Arrangements (to
the extent they remain in force) or this Agreement, or the breach of any of the
Compensation Arrangements or this Agreement, shall be settled by arbitration
before a single arbitrator administered by the American Arbitration Association
in accordance with its Commercial Rules then in effect and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Such arbitration shall take place in the New York City metropolitan
area. The arbitrator shall have the authority to award any remedy or relief that
a court of competent jurisdiction could order or grant, including, without
limitation, the issuance of an injunction. However, either party may, without
inconsistency with this arbitration provision, apply to any court having
jurisdiction over such dispute or controversy and seek interim, provisional,
injunctive or other equitable relief until the arbitration award is rendered or
the
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controversy is otherwise resolved. Either party may also apply to a court for
enforcement of the remedy or relief the arbitrator orders or grants. The Company
shall reimburse the Executive, upon demand, for all costs and expenses
(including without limitation attorneys' fees) reasonably incurred by the
Executive in good faith in connection with this arbitration provision, including
without limitation in connection with any such application undertaken by the
Executive in good faith, as well as for all such costs and expenses reasonably
incurred by the Executive in connection with entering or enforcing the award
rendered by the arbitrator. Except as necessary in court proceedings to enforce
this arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written consent of the
Company.
8. MISCELLANEOUS
8.1 INTERPRETATION: References to a party shall include that party's
successors and assigns, and in the case of references to the Company shall
include any entity related to WHX to which all or a substantial portion of the
business or assets of the Company are transferred at any time following the
completion of the Merger Agreement (and WHX shall cause the Company to include
an appropriate term to that effect in any agreement providing for such a
transfer), provided that any such inclusion shall not detract from the Company's
own obligations under this Agreement.
8.2 INJUNCTIVE RELIEF: If there is a breach or threatened breach of the
provisions of Section 5 or 6 of this Agreement, the Company shall be entitled to
an injunction restraining the Executive from such breach. Nothing herein shall
be construed as prohibiting the Company from pursuing any other remedies for
such breach or threatened breach.
8.3 ACKNOWLEDGMENT: Executive acknowledges (i) that the provisions of
Sections 5 and 6 are reasonable and necessary for the protection of the Company
and (ii) that each provision, and the period or periods of time, geographic
areas and types and scope of restrictions on the activities specified herein
are, and are intended to be, divisible. Without affecting the generality of
section 8.6 herein, if any provision of such Sections 5 or 6, including any
sentence, clause or part thereof, shall be deemed contrary to law or invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions shall not be affected, but shall, subject to the discretion of such
court, remain in full force and effect and any invalid and unenforceable
provisions shall be deemed, without further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.
8.4 GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of New York (without regard to the choice-of-law rules
thereof).
8.5 ENTIRE AGREEMENT: This Agreement (including the Schedules hereto), the
Merger Agreement and the Compensation Arrangements to the extent they remain in
force under Section 3.6 of this Agreement, constitute the entire agreement
between the parties with respect to compensation of the Executives contingent
upon, relating to, or due as a result of termination of employment
contemporaneous with, the change of control of the Company, and supersedes any
prior
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understandings, agreements, or representations by or among the parties, written
or oral, to the extent they related in any way to such subject matter.
8.6 SEVERABILITY: To the extent possible, this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or the remaining provisions of this
Agreement.
8.7 COUNTERPARTS: This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same Agreement.
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SIGNED
HANDY & XXXXXX
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
As Its: Vice President and Treasurer
WHX CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
As Its: Assistant Treasurer
HN ACQUISITION CORP.
By: Xxxxxxx X. Xxxxx
------------------------------
As Its: Vice President
/s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Executive
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XXXXX XXXXXXXXX
SCHEDULE A
AGREEMENTS AND ARRANGEMENTS WITH RESPECT TO WHICH THE EXECUTIVE IS A PARTY OR A
PARTICIPANT
1. Executive Agreement dated as of July 1, 1989 between the Executive and
the Company (the "1989 Agreement");
2. Amendment to the 1989 Agreement effective as of July 1, 1989 (the "1989
Amendment");
3. Amended and Restated Agreement dated as of November 3, 1995 between the
Executive and the Company (the "1995 Agreement");
4. Restated Confirmation Agreement dated as of February 26, 1998 between
the Executive and the Company (the "1998 Agreement");
5. Supplemental Executive Retirement Plan (as amended and restated as of
January 1, 1998) (the "SERP");
6. Handy & Xxxxxx Supplemental Executive Plan (together with the
amendments listed in this paragraph, the "SEP"), established pursuant to a
resolution of the Company's Board dated May 12, 1992, and incorporated in the
1995 Agreement. The SEP was amended by agreement between the Executive and the
Company, which amendment did not affect the actuarial value of the SEP. The
terms of that agreement are set out in the minutes of a meeting of the Company's
Compensation Committee on December 23, 1997; a letter from the Company to the
trustees of the trust established under the Supplemental Executive Plan dated
February 11, 1998; and a letter from the trustees of that trust to Metropolitan
Life Insurance Company dated February 20, 1998;
7. Handy & Xxxxxx Executive Post-Retirement Life Insurance Program (the
"Life Insurance Program");
8. Handy & Xxxxxx Management Incentive Plan - Corporate Group Participants
(as amended) (the "MIP");
9. Handy & Xxxxxx Long-Term Incentive Plan (as amended) (the "LTIP");
10. Handy & Xxxxxx Long-Term Incentive Stock Option Plan (as amended) and
its successor, the Handy & Xxxxxx 1995 Omnibus Stock Incentive Plan (as amended)
(the "Stock Option Plans");
11. Handy & Xxxxxx Long-Term Care Plan;
12. Handy & Xxxxxx Pension Plan (the "Qualified Pension Plan");
13. 401(k) plan maintained for the Executive by the Company.
SCHEDULE B
COMPENSATION PAYABLE TO THE EXECUTIVE ON THE TENDER CLOSING
1. SEVERANCE PAYMENTS: $2,175,000.00
Three year's salary plus three times 1997 MIP
bonus.
Paid pursuant to Sections 5 and 6(a) of the 1989
Agreement(1).
2. LUMP SUM PAYABLE UNDER THE SERP: $1,170,960.00
Per calculations by Xxxxxx Xxxxx, attached as
Exhibit 1 hereto.
3. TENDER OF 5TH CYCLE RESTRICTED STOCK UNDER THE LTIP: $906,771.00
25,724 shares, to be tendered at the tender offer
price of $35.25 per share. See attached Exhibit 2
for details of awards of Restricted Stock in the
fifth cycle.
Note that this Agreement does not relate to stock
that was granted in earlier cycles and that has
already vested, in respect of which the Executive
will receive the tender offer price as an
ordinary stockholder.
4. CASH OUT OF 6TH CYCLE RESTRICTED STOCK UNDER THE LTIP: $345,414.75
9,799 shares x $35.25 tender offer price per
share See attached Exhibit 2 for details of
awards of Restricted Stock in the sixth cycle.
The sixth cycle grants of Restricted Stock are to
be awarded pro- rata with the proportion of the
sixth cycle which will have elapsed up to 3 April
1998, the date of the Tender Closing. The sixth
cycle began on 1 January 1997 and would normally
terminate on 31 December 1999.
5. BALANCE OF DEFERRED AWARDS UNDER THE MIP: $156,714.97
6. INTERIM 1998 MIP AWARD: $70,164.00
This interim award is based on the 1997 award,
pro-rated for the period elapsed in 1998 up to
the date of the Tender Closing.
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(1) The references to provisions of the Compensation Arrangements in this
Schedule are explanatory and for reference only. They do not incorporate such
provisions into this Agreement, save such provisons from the effect of Section
3.6 of this Agreement, or otherwise imply that such provisions have any
continued effect.
7. TRANSFER OF LIFE INSURANCE POLICY: $110,011.07
Pursuant to Section 5(b) of the Life Insurance
Program. Cash surrender value of the policy is
$61,892.23. Amount payable to the Executive
includes a gross-up for income tax.
8. REQUIRED GROSS-UP FOR EXCISE TAX ON GOLDEN PARACHUTE $1,957,568.92
PAYMENTS (AND EXCISE AND INCOME TAXES ON GROSS-UP AMOUNT):
Paid pursuant to Section 7 of the 1989 Amendment.
See attached Exhibit 2 for excise tax
computations.(2)
9. TOTAL OF ITEMS 1 THROUGH 8: $6,892,604.71
CASH OUT OF STOCK OPTIONS
CASH OUT OF STOCK OPTIONS AWARDED UNDER THE STOCK OPTION PLANS: $5,869,037.00
See attached Exhibit 2 for the numbers of options granted
and their exercise prices.
The value of each option is the difference between the
exercise price of the option as shown on the attached
Exhibit 2, and the $35.25 tender offer price per share.
------------
(2) The payment shown in line 8 assumes that the Executive will pay the excise
tax shown in Exhibit 2. If any additional excise tax is assessed against the
Executive he shall be entitled to an additional payment from the Company to
reimburse the Executive for such additional excise tax (plus any interest
charged) plus a gross-up payment as provided in Section 7 of the 1989 Amendment.
If a determination (as defined in section 1313 of the Internal Revenue Code of
1986, as amended) is made that the Executive owes less excise tax than is shown
in Exhibit 2, the Executive shall pay the amount of any refunded excise tax (and
any statutory interest paid on the refund) to the Company promptly upon receipt.
The Executive shall also pay to the Company any tax savings which the Executive
realizes as a result of the repayment of the excise tax to the Company.
SCHEDULE C
COMPENSATION AND BENEFITS PAYABLE TO THE EXECUTIVE AFTER THE TENDER CLOSING
1. Payment of health insurance premiums for the Executive and his spouse
over the lives of both the Executive and his spouse, under Section 1(iii) of the
1995 Agreement;
2. Payment of group life insurance premiums for three years under Section
6(c) of the 1989 Agreement;
3. Payment of long-term care health insurance premiums of the Executive,
for his life, and of his spouse, Xxx. Xxxx X. Xxxxxxxxx, for her life, under the
Long-Term Health Care Plan;
4. Payment of life insurance policy premiums, under Section 5(b) of the
Life Insurance Program.
5. Pension under the SEP of $5,480.12 per month for the longer of the
Executive's life or the life of his spouse.
6. Pension under the Qualified Pension Plan, the accrued value of which as
of the date of the Tender Closing is $2,690.63 per month, and payment under any
other qualified plans operated by Handy & Xxxxxx in which the Executive is a
participant;
7. Payment of the balance in the Executive's 401(k) plan maintained by the
Company. The balance in that plan at March 17, 1998 was $161,271.29; the final
balance will be determined on the date of payment.
