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EXHIBIT 10.6
SETTLEMENT AGREEMENT AND GENERAL RELEASE
THIS SETTLEMENT AGREEMENT and GENERAL RELEASE (hereinafter "Agreement")
is made and entered into by and between XXXXXX X. XXXXX, III (hereinafter
"Xxxxx") and METAL MANAGEMENT, INC., a Delaware corporation (hereinafter
"MTLM").
WHEREAS, the parties have engaged in discussions resulting in an
amicable and mutually satisfactory agreement concerning Isaac's resignation from
his executive committee, officer, director and employment positions with MTLM
and any and all of its affiliates (other than his directorship with MTLM).
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth below, the parties hereby agree as follows:
1. The Employment Agreement. Xxxxx and MTLM are parties to an
"Employment Agreement" dated June 23, 1997. Except for Isaac's obligations
pursuant to Paragraphs 18 (as if the "Employment Period" ended on January 31,
2000 thereunder), 19 and 25(a) thereof, MTLM's obligations pursuant to
Paragraphs 23 and 24 thereof, and the provisions of Paragraphs 20 and 22
thereof, all of which shall continue in full force and effect as if set forth
fully herein, or except as otherwise expressly provided in this Agreement, this
Agreement shall supersede the terms and provisions of the Employment Agreement,
which is terminated effective immediately and is hereby null and void and
without further effect or obligation. Notwithstanding the foregoing, in the
event (and only in the event) that (i) MTLM fails to make any payment to Xxxxx
as required in Section 3(a) below, or (ii) MTLM fails to make a salary payment
to Xxxxx as
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provided in Section 3(b) below during the Six-Month Period (as defined below),
or (iii) MTLM fails to provide Xxxxx with medical insurance or dental insurance
as set forth in Section 3(c) below, and in any such case such failure continues
for a period of three (3) business days after written notice of such failure
from Xxxxx to MTLM, then, if Xxxxx elects to reinstate the Employment Agreement
by serving written notice to MTLM, the Employment Agreement shall be
automatically and fully reinstated and both Xxxxx and MTLM shall be entitled to
any and all rights and remedies thereunder as if Xxxxx had duly delivered a
notice to MTLM that he was terminating the "Employment Period" for "Good Reason"
pursuant to Paragraph 14(a) of the Employment Agreement effective as of the
Effective Date of this Agreement and as if this Agreement were never executed
and delivered. In the event that the Employment Agreement is reinstated as set
forth in the previous sentence, Xxxxx agrees that cash payments made to Xxxxx
under Section 3(a) of this Agreement shall be credited to MTLM against any
adjudication or settlement with respect to the Employment Agreement, and further
agrees that in the event that such adjudication or settlement results in MTLM
owing to Xxxxx x xxxx amount less than cash amounts already paid to Xxxxx
hereunder, Xxxxx will refund the difference to MTLM in cash.
2. Isaac's Resignation. Effective August 1, 1999, Xxxxx hereby resigns
as Executive Vice President of MTLM, as an officer of MTLM and as an officer and
director of any and all of MTLM's affiliates (including those companies
comprising the Xxxxx Group (as defined in the Employment Agreement)) and as a
member of the Executive Committee of MTLM (August 1, 1999 being sometimes
referred to herein as the "Resignation Date").
3. The Obligations of MTLM. On and after Isaac's execution of this
Agreement, and in consideration of Isaac's promises as set forth herein, MTLM
shall be obligated to him as
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set forth herein. Except as expressly set forth in this Agreement (including in
Section 1 above), MTLM and its affiliates (including those in the Xxxxx Group)
shall have no continuing obligation to Xxxxx of any kind or nature whatsoever.
a. Cash Payments. On or before the Effective Date of this Agreement (as
defined in Section 6 below), or if such Effective Date is not a business day,
then on the first (1st) business day following the Effective Date, MTLM shall
pay to Xxxxx the sum of $767,917 by wire transfer to an account specified by
Xxxxx. In addition, MTLM shall pay Xxxxx six equal installments of $69,166.67 on
each of September 1, 1999, October 1, 1999, November 1, 1999, December 1, 1999,
January 3, 2000 and February 1, 2000 by wire transfer to an account specified by
Xxxxx.
b. Continued Employment and Salary. MTLM agrees to continue to employ
Xxxxx as a non-officer part-time employee located in the Toledo, Ohio area, with
the title "Assistant to the Chairman" or another title agreeable to the parties,
from August 1, 1999 through January 31, 2000, at the salary of $120,000 per year
(meaning that Isaac's aggregate salary for the six-month continued employment
period (the "Six-Month Period") will be $60,000). Such salary shall be payable
monthly beginning on September 1, 1999 and shall be paid to Xxxxx or in the
event of his death, to Isaac's beneficiaries, whether or not Xxxxx performs any
services for MTLM under this Agreement, unless Xxxxx voluntarily resigns (other
than on account of his disability) from such part-time employment. Xxxxx shall
not be eligible for any bonus or other incentive compensation payments relating
to such period.
c. Benefits. It is understood and agreed that Isaac's continuous
service under MTLM's 401(k) plan and, except as specifically provided herein,
its other benefit plans shall cease as of January 31, 2000. During the Six-Month
Period, MTLM shall afford to Xxxxx the
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employee benefits set forth in Paragraphs 9, 10 and 11 of the Employment
Agreement as if such employee benefit provisions were set forth fully herein, in
addition to continued participation in, and under the same terms as, Isaac's
present medical insurance and dental insurance plans. During the Six-Month
Period, Xxxxx shall also be entitled to continue to receive his car allowance
under its present terms and conditions, and shall be entitled to reimbursement
for all reasonable business expenses incurred by him in connection with the
performance of his services during such period, subject to the submission of
reasonable documentation. In addition, until June 23, 2002, MTLM shall continue
to provide to Xxxxx medical insurance and dental insurance benefits in
accordance with MTLM's policies from time to time in effect for its executive
officers as if Xxxxx were an active, full-time executive employee of MTLM, and
life insurance in accordance with MTLM's current monthly life insurance
reimbursement practices in the amount of $1,169.76. The provision by MTLM of
such medical and dental benefits shall not be considered continuation coverage
pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended, and
such continuation coverage shall commence on the date that the benefits provided
hereunder cease to the extent required by applicable law.
d. Legal Fees. MTLM agrees to reimburse Xxxxx in an amount not to
exceed $5,000 for the reasonable fees and disbursements of Isaac's counsel
incurred in connection with the negotiation of this agreement, at such counsel's
customary rates.
e. Use of Office. MTLM agrees to provide to Xxxxx, at no cost to Xxxxx,
the use of his present physical office space and file room, and his present
administrative assistant's physical office space and file room, through June 23,
2002, in each case for so long as MTLM or one of its affiliates has the right to
utilize the space where such office is located. MTLM agrees
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not to voluntarily relinquish its right to utilize such office space other than
as part of a bona fide business initiative, rather than for the primary purpose
of avoiding its obligations hereunder. MTLM also agrees to provide Xxxxx with
continuous services of an administrative assistant, who shall initially be
Xxxxxx Xxxx Xxxxxx for as long as she is employed by MTLM or one of its
subsidiaries (and thereafter another suitable administrative assistant), through
June 23, 2002, it being understood that although such administrative assistant
will primarily work with and for Xxxxx, as an employee of MTLM or one of its
affiliates such administrative assistant will also be asked to perform customary
services for his or her employer. Such administrative assistant's work for Xxxxx
will have priority over his or her work for his or her employer in the event of
a conflict. MTLM shall provide Xxxxx and his administrative assistant with
access to their office space and file rooms seven days a week, twenty-four hours
per day, similar to their present practice. In the event that MTLM or its
affiliates move the MTLM office currently used by Xxxxx to another location in
the Toledo, Ohio area, MTLM's obligations as set forth in this subsection (e)
(including without limitation the provision of office and file space for Xxxxx
and his administrative assistant which is comparable in all material respects)
and subsection (f) below shall continue to apply at such relocated office, and
MTLM shall pay to relocate Xxxxx and his administrative assistant's offices and
file room to such new location.
x. Xxxxx Property Company. MTLM agrees to continue to extend its
current lease arrangement with Xxxxx Property Company, allowing Mr. L.A. "Zac"
Xxxxx and his administrative assistant to occupy their current physical office
space and file rooms, under the same terms and conditions that are currently in
effect, through June 23, 2002, for so long as MTLM or one of its affiliates has
the right to utilize the space where such office is located.
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g. Authorization. MTLM hereby represents and warrants that it, and its
representative signing this Agreement on its behalf, have full power and
authority to enter into this Agreement.
4. The Obligations of Xxxxx. In consideration of the promises of MTLM
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Xxxxx agrees as
follows:
a. Mutual General Releases. Except for actions which constitute
or are alleged to constitute fraud or embezzlement and any
obligations arising under this Agreement, (i) Xxxxx, for himself and
for his estate, heirs, personal representatives, executors,
administrators and assigns, hereby releases and forever discharges
MTLM, its subsidiaries and related and affiliated entities, and each
of its and their directors, officers, employees, attorneys, agents
and representatives (hereinafter collectively and individually the
"MTLM Releasees"), and (ii) the MTLM Releasees hereby release and
forever discharge Xxxxx, his estate, heirs, personal
representatives, executors, attorneys, successors, administrators
and assigns (the "Xxxxx Releasees"), from any and all rights,
claims, demands, debts, dues, sums of money, accounts, attorneys'
fees, complaints, judgments, executions, actions and causes of
action of any nature whatsoever, cognizable at law or equity, which
either party now has or claims, or might hereafter have or claim,
against the other party, whether known or unknown, suspected or
unsuspected, accrued or unaccrued, based upon or arising out of any
matter or thing whatsoever through the date of this release,
including, without limitation,
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any claim, action or cause of action which was or is related to or
arises out of any acts, omissions, representations, facts, events,
matters, transactions or occurrences during Isaac's employment,
executive committee membership or directorship with MTLM or any of its
subsidiaries and affiliates, or his separation and/or resignation
therefrom, or which is based upon or arises under the Employment
Agreement (except as provided in this Agreement) or any local, state,
or federal law dealing with employment discrimination, including
without limitation Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act and the Age Discrimination in
Employment Act.
The following provisions are applicable to and made a part of
this Agreement and the foregoing general release and waiver:
(i) Except with respect to the matters defined in this
Agreement, neither Xxxxx nor MTLM releases or waives any right or
claim which he or it may have, including without limitation under the
Age Discrimination in Employment Act, which arises after the date of
execution of this Agreement.
(ii) On or immediately prior to the last day of the Six-Month
Period, so long as neither Xxxxx nor MTLM is in material breach of
this Agreement, Xxxxx and MTLM will re-execute and deliver to one
another a Mutual and General Release dated such date, that is
identical to the release set forth above, it being understood that
such release shall not apply to the parties' continuing obligations
hereunder.
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(iii) MTLM hereby expressly advises Xxxxx to consult with an
attorney of his choosing prior to executing this Agreement which
contains the foregoing general release and waiver.
(iv) Xxxxx has twenty-one (21) days from the date of presentment
to consider whether or not to execute this Agreement. In the event of
such execution, Xxxxx has a further period of seven (7) days from such
date in which to revoke said execution, notice of which must be
received by MTLM within such seven (7) day period.
b. Performance of Duties. During the Six-Month Period, Xxxxx
agrees to (i) use his best efforts to transition his responsibilities
with the Xxxxx Group to designees of MTLM, (ii) complete certain
projects that he is currently undertaking on behalf of MTLM, including
establishing RONA targets and an acquisition due diligence checklist,
and (iii) make himself available for consultations and meetings at the
request of any member of the office of the chief executive regarding
pending acquisition discussions; provided, that the number of hours
that Xxxxx is required to perform these services shall not exceed
twenty hours per week for the four weeks beginning August 16, 1999 (it
being understood that Xxxxx will be on vacation during the week of
August 9, 1999), and forty hours per month thereafter for the
remainder of the Six-Month Period. If MTLM requests, and Xxxxx agrees
to perform (each in their sole discretion), services in excess of the
foregoing hourly limit (which request and agreement shall be in
writing in order to entitle Xxxxx to the following additional
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compensation), MTLM shall compensate Xxxxx at the rate of $220.00 per
hour therefor. After the Six-Month Period, Xxxxx shall continue to
make himself available as may be mutually agreed between Xxxxx and
MTLM as a consultant with respect to pending transactions at an hourly
rate of $220.00 per hour or such other amount as the parties may
agree.
c. Availability. Xxxxx agrees to cooperate reasonably with MTLM
in connection with the transition of his responsibilities. Xxxxx
further agrees to make himself reasonably available to MTLM and its
attorneys and agents for interview, deposition and testimony and
agrees to appear as a witness at trial and, at the election of MTLM,
provide a sworn statement or deposition of any matters in which MTLM
is a party and/or for which Xxxxx may have knowledge of any relevant
facts, provided that MTLM compensates Xxxxx in accordance with Section
4(b) above with respect thereto. Nothing in this Agreement is intended
to influence any such testimony that Xxxxx may offer.
d. MTLM Property. Xxxxx represents that he has turned over or
will turn over to MTLM all property of MTLM in his control or
possession by January 31, 2000, except the property described on
Schedule A hereto which Xxxxx shall be entitled to retain as his
personal possessions, and as to which MTLM surrenders all rights and
title to Xxxxx. This includes all notes, memoranda, records, documents
and all other information, no matter how produced or reproduced, all
computer equipment and programs, all office keys and access cards
(except as required pursuant to Section 3(e) above), and all credit
and
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charge cards kept by Xxxxx or in his possession or control used in or
pertaining to the business of MTLM, it being hereby acknowledged that
all of said items, and all copies of said items, are the sole and
exclusive property of MTLM.
e. Confidentiality of Agreement. Except pursuant to valid
subpoena issued by a court or government agency of competent
jurisdiction, Xxxxx shall not, directly or indirectly, discuss or
communicate the terms of this Agreement with any third party, except
members of his immediate family, his accountant and his attorney and
other professional advisers who shall be advised of this
confidentiality restriction. Except pursuant to a valid subpoena,
Xxxxx will not communicate or cooperate with any employee or director
or former employee or director of MTLM, or with any third party,
concerning any claim against MTLM.
5. Non-Disparagement. From and after the date of presentment of this
Agreement, both parties represent that they have not and will not, nor will they
cause or assist another person to, disparage or make critical, negative,
derogatory or defamatory statements about the other to any third party, other
than any statement made in connection with a proceeding seeking to enforce this
Agreement. It is understood that Isaac's commitment hereunder extends to the
Company's current officers and directors.
6. Effective Date. The effective date of this Agreement (the "Effective
Date") shall be the eighth (8th) day after Xxxxx and MTLM shall have executed
this Agreement, unless prior to the close of business on the seventh (7th) day
after Xxxxx and MTLM shall have executed this Agreement, MTLM has received a
signed statement from Xxxxx revoking such execution.
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7. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the heirs, assigns, administrators, executors, and legal
representatives of Xxxxx and shall be binding upon and inure to the benefit of
the MTLM Releasees and their successors.
8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties. It may not be amended or modified except by a subsequent
written instrument signed by all parties hereto.
9. Severability. If any provision, section, subsection or other portion
of this Agreement shall be determined by any court of competent jurisdiction to
be invalid, illegal or unenforceable in whole or in part, and such determination
shall become final, such provision or portion shall be deemed to be severed or
limited, but only to the extent required to render the remaining provisions and
portions of this Agreement enforceable. This Agreement as thus amended shall be
enforced so as to give effect to the intention of the parties insofar as that is
possible. In addition, the parties hereby expressly empower a court of competent
jurisdiction to modify any term or provision of this Agreement to the extent
necessary to comply with existing law and to enforce this Agreement as modified.
10. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Illinois.
11. Costs of Enforcement. MTLM shall advance Xxxxx all reasonable
attorneys' fees and costs as they are incurred by Xxxxx in connection with any
good faith claims brought by him seeking to enforce the provisions of this
Agreement.
12. Counterparts. This Agreement may be signed in multiple counterparts by
facsimile, each of which shall be deemed to be an original for all purposes.
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13. Acknowledgment. Xxxxx acknowledges that he has carefully read and
fully understands the terms and provisions of this Settlement Agreement and
General Release, has had the opportunity to be represented in this matter by
counsel of his own choosing, and that his execution of this Settlement Agreement
and General Release is voluntary. The parties agree that the language used in
this Agreement is the language chosen by the parties to express their mutual
intent, and that no rule of strict construction is to be applied to or against
any party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date(s) set forth below.
METAL MANAGEMENT, INC., a Delaware
corporation
By: /s/ Xxxxxx X. Xxxxx
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Title: Chairman
Date: August 6, 1999
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/s/ Xxxxxx X. Xxxxx, III
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Xxxxxx X. Xxxxx, III
Date: August 6, 1999
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