CONFIDENTIAL SEVERANCE AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of
January 15, 1999 by and between XXXXX X. XXXXXXXX, XX. ("Xxxxxxxx") and
ENVIROSOURCE, INC., a Delaware corporation (the "Corporation").
RECITALS:
X. Xxxxxxxx has tendered his resignation as an employee,
officer, and a director of the Corporation and each of its subsidiary and
affiliated companies, effective January 15, 1999;
B. The Corporation desires to enter into an agreement to
facilitate a smooth transition from Xxxxxxxx to his successor. In addition, the
Corporation desires to obtain certain benefits as more fully set forth herein.
AGREEMENT
NOW, THEREFORE in consideration of the foregoing recitals and
the covenants contained herein, the parties agree as follows:
1. Consulting Relationship. The Corporation agrees to continue
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to utilize the services of Xxxxxxxx, and Xxxxxxxx agrees to continue to serve
the Corporation as a consultant for thirty (30) months from the date hereof (the
"Consulting Term") on an as-needed, non-exclusive basis on the terms set forth
in this Agreement. In particular, to fulfill his obligations as a consultant,
Xxxxxxxx shall be available, when requested, at reasonable times and places,
upon reasonable notice, but in any event no more than five (5) days per month
during the first six months of the Consulting Term and no more than five (5)
days per calendar quarter for the remainder of the Consulting Term. The
Corporation and Xxxxxxxx agree to cooperate in good faith in the scheduling of
Xxxxxxxx'x duties so that such duties will not interfere with any full time
employment accepted by Xxxxxxxx.
2. Compensation and Benefits
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(a) In return for Xxxxxxxx'x execution of this
Agreement and the Waiver and Release attached hereto as Exhibit "A" (the
"Release"), Xxxxxxxx shall receive compensation at the rate of $34,167 per month
during the Consulting Term for consulting services, which shall be paid in
accordance with the Corporation's current payroll practices. The Corporation
shall deduct from the compensation paid to Xxxxxxxx under this Section 2(a) all
applicable taxes and appropriate deductions.
(b) If Xxxxxxxx accepts full time employment with
a new employer prior to the end of the Consulting Term, all amounts that would
otherwise become payable pursuant to Section 2(a) above for periods after the
date Xxxxxxxx commences such employment to and including the end of the
Consulting Term, net of withholding obligations, (the "Accelerated Payment"),
shall become due and shall be applied, to the extent needed, by the Corporation
against payment of the "1986 Loan" (as defined in Section 3(d) hereof). Any
amounts due and owing that are in excess of the amount required to pay the 1986
Loan shall be paid to Xxxxxxxx. Notwithstanding the foregoing, in the event that
the Corporation asserts that by accepting such new employment, Xxxxxxxx would
violate Section 6(a) below, the remaining payments due hereunder shall not be
accelerated and applied in the manner otherwise provided in this Section 2(b),
but shall be suspended pending determination of the Corporation's assertion. In
the event Xxxxxxxx advises the Corporation in writing that he disputes the
Corporation's assertion, the Corporation and Xxxxxxxx shall as promptly as
practicable submit the dispute to expedited arbitration in the manner provided
in Section 8.1. If the Corporation's position is sustained in the arbitration,
the provisions of Section 8.2 shall apply. If the arbitration is determined in
Xxxxxxxx'x favor, the remaining payments due to Xxxxxxxx under this Agreement
shall be accelerated and applied by the Corporation as soon as practicable in
the manner provided in this Section 2(b).
(c) In the event Xxxxxxxx dies or becomes disabled
disabled during the Consulting Term, the Accelerated Payment described in
Section 2(b) above shall become due and shall be applied by the Corporation
against payment of the 1986 Loan as described in Section 3(d) hereof. Any
remaining amounts owing under the 1986 Loan after the application of the
Accelerated Payment pursuant to Section 3(d) shall be forgiven. For purposes of
this Section 2(c), Xxxxxxxx shall be deemed disabled if, according to the
determination of a physician approved by the Corporation in its reasonable
discretion, he is unable to engage in any substantial gainful employment
substantially comparable to that in which he was engaged as an employee of the
Corporation, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than six (6) months.
(d) Xxxxxxxx shall not incur any reimbursable
expenses in rendering his services hereunder unless such expenses have received
the prior approval of the Chairman or CEO of the Corporation. The Corporation
shall from time to time promptly reimburse Xxxxxxxx, upon receipt of proper
documentation, for all reasonable out-of-pocket pre-approved expenses that are
incurred by Xxxxxxxx during the Consulting Term.
(e) Xxxxxxxx shall not be entitled to receive any
compensation or benefits from the Corporation for his employment during the
Consulting Term except as expressly set forth herein.
3. Other Agreements. The Corporation and Xxxxxxxx further
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agree as follows:
(a) Effective as of the date hereof, during the
Consulting Term and only until the commencement by Xxxxxxxx of full time
employment, Xxxxxxxx shall be entitled to participate in the Corporation's group
medical and dental insurance plans on the same terms and conditions as
applicable to employees of the Corporation. Thereafter, Xxxxxxxx shall be
advised of, and be entitled to, his COBRA rights and benefits.
(b) The Corporation will pay Xxxxxxxx for all
accrued salary and three (3) weeks of accrued unused vacation pay within fifteen
(15) of the execution of this agreement.
(c) Xxxxxxxx agrees to return to the Corporation,
within thirty (30) days of the execution of this Agreement, his Company provided
automobile.
(d) The parties agree that as of the date hereof,
a certain promissory note dated October 15, 1987 made by Xxxxxxxx in favor of
the Corporation (the "1986 Loan") is reconstituted such that the outstanding
principal thereof, plus accrued interest, shall bear interest at the rate of 6%
per annum, payable in cash on each March 31, June 30, September 30 and December
31. The outstanding principal of the 1986 Loan and all accrued interest thereof,
as reconstituted pursuant to this Section 3(d), shall be payable in full on the
earlier of (i) July 15, 2001 or (ii) the date on which the Accelerated Payment
described in Section 2(b) above is due, which Accelerated Payment shall be
applied by the Corporation toward repayment of the 1986 Loan. The parties agree
that as of the date hereof, the outstanding principal amount (including financed
interest payments) of the 1986 Loan is $525,432.00.
(e) Xxxxxxxx agrees that within sixty (60) days
following the date hereof, he will pay the Corporation the amount of
$150,000.00, to be applied by the Corporation toward the repayment of the 1986
Loan, as reconstituted pursuant to Section 3(d) above.
4. Return of Property. Xxxxxxxx represents that he has
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delivered to the Corporation all documents and materials (and copies thereof) of
a confidential or proprietary nature, which are the property of the Corporation,
or any subsidiary or affiliate thereof, and which relate to the Corporation or
any subsidiary or affiliate thereof, or any of their products and/or services,
including (without limitation) information contained in or on computer files,
disks or other data storage media. In
addition to the above, Xxxxxxxx will return all tangible property of the
Corporation of more than nominal value.
5. Relationship of the Parties. Xxxxxxxx shall have no power
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hereunder to act in the name of, or on behalf of, the Corporation or in any way
bind the Corporation in any regard, except as authorized in writing by the
Chairman or CEO of the Corporation.
6. Covenants.
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(a) Xxxxxxxx agrees that during the Consulting
Term (the "Applicable Period"), he will not knowingly, directly or indirectly:
(i) own or control any debt, equity or other interest in (except as a passive
investor of less than 1% of the capital stock or publicly traded notes or
debentures of a publicly held company), or (ii) (1) act as a director, officer,
manager, employee, participant or consultant to or accept or solicit any office
to act as any of the foregoing or (2) be obligated to or connected in any
advisory, business or ownership capacity in each case with respect to the KO-61
processing, slag processing, scrap yard management, slag hauling or other
related steel mill services, currently engaged in by the Corporation or any of
its subsidiaries (collectively "Envirosource").
(b) During the Applicable Period, Xxxxxxxx will
not knowingly solicit, directly or indirectly, and shall not knowingly cause or
assist any other person or entity to solicit, any person that is employed at
that time by Envirosource to hire or employ such person, whether on Xxxxxxxx'x
own behalf or on behalf of a supplier, competitor or customer of Envirosource.
As used herein the word "indirectly" includes but is not limited to, attempting
to induce any employee of Envirosource to leave Envirosource for any purpose.
(c) Xxxxxxxx further agrees not to knowingly
divulge to anyone any negative, untrue or defamatory information, whether or not
proprietary or confidential, concerning Envirosource. The Corporation shall not
make any statement which disparages the personal or business reputation of
Xxxxxxxx.
(d) Xxxxxxxx shall cooperate in good faith with
the Corporation and the Corporation's counsel in connection with any pending
administrative proceeding, arbitration, mediation or litigation or subsequent
administrative proceeding, arbitration, mediation or litigation relating to the
time of his employment with the Corporation, including but not limited to
providing information and/or documents, participating in informal interview(s)
and appearing for deposition(s) and/or testimony if deemed necessary by the
Corporation. Notwithstanding the foregoing, nothing in this paragraph shall
obligate Xxxxxxxx to expend any sum or incur any liability in connection with
such cooperation. In the event such cooperation requires a commitment of time
beyond the limits set forth in Section 1 above, the parties shall mutually agree
on compensation to be provided Xxxxxxxx for such services.
7. Confidential Information. Xxxxxxxx shall not knowingly in
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any manner use (other than in the performance of services under this Agreement)
or disclose any material trade secret information with respect to customers,
suppliers or products, prices, call lists or other confidential plans,
processes, procedures, business concepts, forecasts, drawings, ideas,
discoveries, materials or information concerning the operations, business or
financial affairs of the Corporation, or any subsidiary or affiliate thereof,
gained during or as a result of his employment by the Corporation. Xxxxxxxx
agrees that he shall not knowingly in any manner use (other than in the
performance of services under this Agreement) or disclose any material
confidential third party information gained during or as a result of his
employment by with the Corporation. The parties agree that the terms and
conditions of this Agreement, except with respect to Section 8.1, shall remain
confidential and shall not be disclosed to any other person (other than
Xxxxxxxx'x family members, attorneys, and accountants, who shall be informed of
and bound by the confidentiality provisions of this Agreement) other than as
required by court order, legal process of applicable law or as otherwise agreed
to by Xxxxxxxx and the Corporation. Any disclosures permitted hereunder shall
not be made in a manner derogatory to any other party hereto. The provisions of
this Section 7 shall not apply to any information which becomes generally
available to the public, other than as a result of any disclosure, direct or
indirect, by Xxxxxxxx.
8. Miscellaneous.
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8.1 Arbitration. All controversies, claims,
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disputes, and matters in question arising out of, or relating to, this Agreement
or the breach thereof, shall be decided by arbitration in accordance with the
provisions of this paragraph. The arbitration proceedings shall be conducted
under the applicable rules of the American Arbitration Association or its
successor in effect at the time a demand for arbitration under the rules is
made. The arbitration board will consist of a single arbitrator. The decision of
the arbitrator, including determination of the amount of any damages suffered,
shall be conclusive, final, and binding upon the parties hereto, and their
respective heirs, legal representatives, successors, and assigns. The fees and
costs associated with the arbitration proceeding shall be shared equally by the
parties. Such fees and costs shall not include the fees and costs of the parties
respective attorneys and witnesses, which shall be borne by the party incurring
such fees and costs. Notwithstanding the foregoing, and in addition to the
remedy of arbitration, the parties agree that the violation of the provisions of
Section 6 and/or 7 cannot be reasonably or adequately compensated in damages
and, in addition to any other relief to which the Corporation may be entitled
by reason of such violation, the Corporation shall also be entitled to seek
permanent and temporary injunctive and equitable relief in a court of competent
jurisdiction.
8.2 Certain Breaches of Agreement. In the event
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of Xxxxxxxx'x breach of Sections 6 and/or 7 hereof, the Corporation shall have
no further obligations under Sections 2 and 3(a) of this Agreement. This
Agreement shall be null and void if Xxxxxxxx cancels the Release.
8.3 Notices. Except as otherwise provided
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herein, any notice or demand which, by the provisions hereof, is required or
which may be given to or served upon the parties hereto shall be in writing and,
if by telegram, facsimile or telex, shall be deemed to have been validly served,
given or delivered when sent, if by personal delivery, shall be deemed to have
been validly served, given or delivered upon actual delivery and, if mailed,
shall be deemed to have been validly served, given or delivered three business
days after deposit in the United States mails, as registered or certified mail,
with proper postage prepaid and addressed to the party or parties to be
notified, at the following addresses (or such other address(es) as a party may
designate for itself by like notice):
If to the Corporation: Envirosource, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
If to Xxxxxxxx: Xxxxx X. Xxxxxxxx, Xx.
00 Xxxxxx Xxxx
Xxx Xxxxxx, XX 00000
8.4 Successors and Assigns. The parties hereto
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acknowledge that the Corporation shall have the right to assign, with absolute
discretion, any or all of its rights and obligations under this Agreement to any
of its affiliates, successors or assigns, and this Agreement shall inure to the
benefit of, and be binding upon, such respective affiliates, successors and
assigns of the Corporation in the same manner and to the same extent as if such
affiliate, successors or assigns were original parties thereto. In the event of
a failure to perform by an assignee, the Corporation shall remain liable
hereunder. The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it whether or not such
succession had taken place. In the event of an assignment, the nonsolicitation
provision of Section 6(b) shall be deemed to apply only with respect to
employees of Envirosource and its subsidiaries and the non-disparagement and
confidentiality provisions of Sections 6(c) and 7, respectively, shall be deemed
to apply only with respect to Envirosource and its subsidiaries. This Agreement
shall be deemed to be personal to Xxxxxxxx and shall not be assignable by
Xxxxxxxx.
8.5 Governing Law. This Agreement shall be
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governed by, and construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania (without regard to choice of law principles). The
arbitrator or parties agree that all actions and proceedings arising directly or
indirectly hereunder shall be litigated or otherwise resolved in the State of
Pennsylvania and hereby waive any objection based on forum non conveniens and
any objection to venue of any action instituted hereunder.
8.6 Amendment; Waiver. This Agreement may be
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amended only by an instrument in writing executed by the parties hereto. No
waiver, express or implied, of any breach of any covenant, agreement or duty
shall be held or construed as a waiver of any other breach of the same or any
other covenant, agreement or duty.
8.7 Entire Agreement. This Agreement and the
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Release constitute the entire agreements of the parties hereto and fully
supersede and replace any and all prior agreements and understandings, whether
oral or written, express or implied, between the parties pertaining to the
subject matter of this Agreement and the Release.
8.8 Severability. Should any provision of this
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Agreement be declared or be determined by any arbitrator or court to be illegal
or invalid, the validity of the remaining parts, terms or provisions shall not
be affected thereby and the illegal or invalid part, term or provisions shall be
deemed not to be part of this Agreement. The parties intend this Agreement to be
enforced as written. However, if any provision, or any part thereof, is held to
be unenforceable because of the scope or duration of such provision Xxxxxxxx and
the Corporation agree that the arbitrator or court making such determination
shall have the power to reduce the scope, duration and/or area of such
provisions in order to make such provision enforceable to the fullest extent
permitted by law, and/or to delete specific words and phrases
("blue-penciling"), and in its reduced or blue-penciled form such provision
shall then be enforceable and shall be enforced.
8.9 Captions. The captions of the several
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sections and paragraphs of this Agreement are used for convenience only
and shall not be considered or referred to in resolving questions of
interpretation with respect to this Agreement.
8.10 Counterparts. This Agreement may be executed
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in counterparts, each of which will be deemed an original, and both of which
together shall constitute one and the same Agreement.
8.11 Negotiation. Xxxxxxxx acknowledges that he
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has had an opportunity to negotiate with regard to the terms of this Agreement
and to receive advice of counsel with regard to it and has carefully read and
considered this Agreement and fully understands the extent and impact of its
provisions, and has executed this Agreement voluntarily and without coercion,
undue influence, threats, or intimidation of any kind or type whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
The Corporation
ENVIROSOURCE, INC.
By: /s/XXXX X. XXXXXX
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Its: Vice President, General Counsel and Secretary
XXXXXXXX
/s/XXXXX X. XXXXXXXX, XX.
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Xxxxx X. Xxxxxxxx, Xx.
EXHIBIT "A"
WAIVER AND RELEASE AGREEMENT
This Release is given
By the Releasor(s): Xxxxx X. Xxxxxxxx, Xx.
Address: 00 Xxxxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
hereinafter referred to as "I",
To the Releasee(s): ENVIROSOURCE, INC. and its parent, division, subsidiary and
affiliated corporations (including predecessors and
successors) and their Officers, Directors, Employees and
Representatives
sometimes hereinafter referred to as "You."
1. Release. I hereby release and give up any and all actions, causes of actions,
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claims and rights (hereinafter "Claims") which I may have against You. This
releases all claims, including those of which I am not aware and those not
mentioned herein. This Waiver and Release Agreement ("Release") applies to
Claims resulting from anything that has happened up to now. I specifically
release any and all Claims relating in any way to my employment relationship, or
resignation from employment effective January 15, 1999, with You, including but
not limited to any Claims arising under the Age Discrimination in Employment
Act, the Older Workers Benefit Protection Act of 1990, Title VII of the Civil
Rights Act of 1964, the Equal Pay Act, the Employee Retirement Income Security
Act, the Fair Labor Standards Act, the Consolidated Omnibus Budget
Reconciliation Act of 1986, or any other federal, state or local laws or
ordinances and any common law claims under tort, contract, or any other theories
now or hereafter recognized. This Release specifically includes, but without
limitation, all Claims arising out of my employment relationship with You.
2. Waiver. I hereby acknowledge and assume all risks or chances that the
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injuries claimed to have resulted from the above stated matter may become
greater or more extensive than now known, anticipated or expected. I understand
that this instrument shall be effective as a full and final release of all
Claims. In connection with the above waiver, I am aware that I may hereafter
discover Claims or facts in addition to or different from those I now know or
believe to exist with respect to the subject matter of this instrument or You.
However, I and my successors and assigns hereby settle and release all of the
Claims which I may have against You.
1.
3. No Admissions. I agree and acknowledge that this Release is not to be
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construed as an admission of any violation of any federal, state or local
statutes, ordinance or regulation or any duty allegedly owed by You to me. You
specifically disclaim any liability to me on any basis.
4. Time Periods. I have been given the opportunity to take a period of at least
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twenty-one (21) days within which to consider this Release. If I choose to sign
this Release before that time period expires, I do so knowingly and voluntarily.
I also understand that I have the right to change my mind and cancel this
Release within seven (7) days following the date that I have signed it. This
Release will not be effective until the end of this seven (7) day period.
5. Consideration. In exchange for, consideration of and reliance on my execution
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of this Release, You and I have (a) executed and agreed to perform that certain
Confidential Severance Agreement dated as of January 15, 1999 ("Agreement") and
(b) You agree to commence payment to me upon the expiration of the seven (7) day
time period referred to in Paragraph 4 above, the payments pursuant to Section 2
of the Agreement. I agree that I will not seek anything further, including any
other payment from You. I further agree, in return for receipt of the foregoing
payments, to abide by all of your rules, policies and procedures applicable to
current and former employees.
6. Confidentiality. I agree that the terms and conditions of this Release shall
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remain confidential and shall not be disclosed to any other person (other than
my family members, attorneys, and accountants who shall be informed of and bound
by the confidentiality provisions of this Release) other than as required by
court order, legal process or applicable law or as otherwise agreed to by You
and me. I understand that this provision regarding confidentiality constitutes a
substantial inducement for You to enter into this Release.
7. Who is Bound. I am bound by this Release. Anyone who succeeds to my rights
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and responsibilities, such as my heirs or the executor of my estate, is also
bound by this Release. This Release is made for your benefit and that of anyone
who succeeds to your rights and responsibilities.
8. No Inducements. I further warrant that no promise or inducement for this
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Release has been made except as set forth herein, that this Release is executed
without reliance upon any statement or representation by any person or parties
released, their officers, directors, employees, agents or representatives,
concerning any fact material to my act in releasing them, and that I am legally
competent to execute this Release and accept full responsibility therefor.
9. Representations. I understand and agree that I understand the contents,
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implications, and consequences of this Release, and that I agree to the terms of
this Release and have executed it voluntarily. I have had an opportunity to
discuss the terms of this Release with individuals of my own choosing who are
not associated with You. I have been advised by You to consult with an attorney
of my own choosing.
2.
10. Entire Agreement. This Release and the Agreement constitute the entire
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agreements between You and I concerning the subject matter hereof and supersede
all prior agreements between You and I. This Release may not be modified orally.
I understand and agree to the terms of this Release.
11. Governing Law. This Release is made and entered into in the State of
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Pennsylvania and shall in all respects be interpreted, enforced and governed
under the laws of said State. The language of all parts of this Release shall
cause to be construed as a whole, according to its fair meaning, and not
strictly for or against You or I.
12. Invalidity. Should any provisions of this Release be determined by any court
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to be illegal or invalid, the validity of the remaining parts, terms or
provisions shall not be affected thereby and said illegal or invalid part, term
or provision shall be deemed not to be a part of this Release.
13. Arbitration. All controversies, claims, disputes, and matters in question
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arising out of, or relating to, this Release or the breach thereof, shall be
decided by arbitration in accordance with the provisions of Section 8.1 of the
Agreement.
I ACKNOWLEDGE AND AGREE THAT I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY
PRIOR TO EXECUTING THIS RELEASE; THAT TO THE EXTENT I HAVE DESIRED I HAVE
AVAILED MYSELF OF THAT RIGHT; THAT I HAVE CAREFULLY READ AND UNDERSTAND ALL OF
THE PROVISIONS OF THIS RELEASE; THAT I MAY REVOKE THIS RELEASE WITHIN SEVEN (7)
DAYS AFTER YOU HAVE EXECUTED IT; AND THAT I AM VOLUNTARILY ENTERING INTO THIS
RELEASE.
IN WITNESS WHEREOF, the undersigned has executed this Release
as of the date written freely and voluntarily.
DATED AS OF: January 15, 1999 ENVIROSOURCE, INC.
By:______________________
DATED AS OF: January 15, 1999 ACKNOWLEDGED AND AGREED:
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XXXXX X. XXXXXXXX, XX.
3.
