Exhibit 10.5
Mutual Release Agreement (Wise Metals Group, L.L.C.)
April 28, 1999 (5:03 pm)
MUTUAL RELEASE AGREEMENT
THIS MUTUAL RELEASE AGREEMENT ("Agreement"), made this 29th day of
April,1999, effective as of March 30, 1999, by and among Avalon-Xxxxxx
Companies, Inc. a Delaware corporation ("Avalon"), Das Xxxxxx, the chief
executive officer of Avalon ("Xxxxxx) and Xxxx Metals Group LLC, a Delaware
limited liability company (the "Company") provides as follows:
WHEREAS, pursuant to a Letter of Intent dated October 28, 1998 (as
amended November 2, 1998 and November 5, 1998, together the "LOI") between
Avalon and Xxxxxxxx Metals Company ("Xxxxxxxx"), Avalon expressed its intention
to purchase the Xxxxxxxx Alloys rolling mill and its Alabama and Southern
Reclamation facilities and Sheffield coil coating facility as well as the
operations conducted or formerly conducted at such facilities; and
WHEREAS, Wise Metals Co., Inc. ("Wise") and Avalon entered into a
memorandum of understanding on December 2, 1998 (as amended by a December 9,
1998 supplement, together the "MOU"), which in material part, provided that at
Avalon's election, made no later than the Second Closing under the Asset
Purchase Agreement contemplated in the LOI and in fact executed by Wise Alloys
LLC ("Wise Alloys") and Xxxxxxxx as of December 30, 1998 ("Purchase Agreement")
Avalon could either (i) acquire a two percent (2%) interest in Wise Alloys or
(ii) receive One Million U.S. Dollars ($1,000,000) from Wise in two (2) equal
annual tranches, on the first and second anniversary of the Second Closing, plus
in both cases reimbursement by Wise of direct and substantiated expenses
incurred in connection with the LOI, which reimbursement would be paid by Wise
on the date of the Second Closing; and
WHEREAS, pursuant to a Consent, Assignment and Assumption Agreement
dated December 9, 1998 between Wise Alloys, Wise, Avalon, and Xxxxxxxx: (i)
Avalon agreed to assign and transfer all of its right, title and interest in the
LOI to Wise Alloys; (ii) Wise Alloys agreed to assume and discharge when due
Avalon's obligations under the LOI; and (iii) Wise agreed to guarantee the
obligations of Wise Alloys under the LOI; and
WHEREAS, Wise formed Wise Alloys pursuant to the Delaware Limited
Liability Company Act, by causing to be filed a Certificate of Formation with
the Office of the Secretary of State of the State of Delaware on December 9,
1998; and
WHEREAS, pursuant to an Operating Agreement executed on December 29,
1998, effective as of December 9, 1998 (the "Operating Agreement"), Wise, as the
sole Member of Wise Alloys, capitalized Wise Alloys, with an initial Captial
Contribution of One Million Five Hundred Thousand U.S. Dollars ($1,500,000) and
made additional Capital Contributions to enable Wise Alloys to execute the
Purchase Agreement and proceed to the Second Closing, which Second Closing
occurred on March 31, 1999;
WHEREAS, pursuant to the Assignment and Assumption of Limited Liability
Company Interest Agreement dated March 26, 1999, Wise transferred 100% of its
membership interest in Wise Alloys to the Company; and
WHEREAS, Avalon announced its intention to elect to receive a 2%
interest in Wise Alloys in lieu of One Million U.S. Dollars ($1,000,000), to be
effective as of the Second Closing, plus reimbursement by Wise of expenses as
recited above; and
WHEREAS, a good faith dispute has arisen among the parties with respect
to the terms and conditions of such 2% interest in Wise Alloys which the parties
wish to resolve as proved herein.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto, the warranties and covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
1. RELEASE FEE. In exchange for the release of all claims as
provided in Paragraph 3(a) below, the Company hereby agrees that it shall
deliver as a release fee the sum of $1,387,500.00 in accordance with the terms
of this Paragraph 1. The Company shall deliver to Avalon, by 1:00 p.m. C.D.T. on
Friday, April 30, 1999, the sum of $1,387,500.00 by wire transfer to the account
of Avalon, as follows:
First Metro Bank
000 X. Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxx
ABA Routing No. 0622-03955
For Deposit to: Xxxxxx Companies, Inc.
Account No. 00000000
2. REIMBURSEMENT OF EXPENSES. The Company shall reimburse Avalon for
its direct and substantiated expenses in the agreed total amount of $283,132.96
incurred in connection with the contract rights in the LOI assigned to Wise
Alloys. The Company shall deliver to the account of Avalon the sum of
$283,132.96 by wire transfer as provided in Paragraph 1, above, by 1:00 p.m.
C.D.T. on Friday, April 30, 1999.
3. MUTUAL RELEASE.
(a) Xxxxxx individually and Avalon and his/its successors or
assigns (collectively, the "Releasor"), hereby, voluntarily and knowingly
release, acquit, discharge and covenant not to claim against Wise, the Company,
Wise Alloys, or any subsidiaries, affiliates, shareholders, members,
predecessors or successors of the foregoing entities (collectively, the
"Release") from any and all claims, demands, liens, agreements, contracts,
covenants, actions, suits, causes of action, obligations, controversies, debts,
disputes, costs, expenses, damages, judgments, orders and liabilities
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of whatever kind or nature, in law or in equity, by statute or otherwise whether
now known or unknown, vested or contingent, suspected or unsuspected, which have
existed or may have existed, or do exist or may exist, of any kind which the
Releasor now may have against the Releasee (the "Claims"), including but not
limited to claims with respect to the LOI, the MOU and the Purchase Agreement,
except that Releasor does not release the Company from its obligations under
this Agreement.
Releasor represents and warrants that it has not
transferred or assigned any Claims by operation of law or otherwise; that it has
full power and corporate authority to execute, deliver and perform this Release;
that such execution, delivery and performance has been duly authorized by all
necessary corporate action; and that this Release is valid and binding on and is
enforceable against Releasor.
Nothing in this Paragraph 3 (a) is intended to release any
claim that Releasor may have in the future for matters asserted against Releasor
by third parties that arise solely from the acts or omissions of Releasee,
regardless of when such acts or omissions are alleged to have occurred.
(b) The Company (for the Releasee) hereby, voluntarily and
knowingly releases, acquits, discharges and covenants not the claim against
Releasor, or any subsidiaries or affiliates, shareholders, members, predecessors
or successors of the foregoing entities (collectively, "A/B") from any and all
claims, demands, liens, agreements, contracts, covenants, actions, suits, causes
of action, obligations, controversies, debts, disputes, costs, expenses,
damages, judgments, orders and liabilities of whatever kind or nature, in law or
in equity, by statute or otherwise whether now known or unknown, vested or
contingent, suspected or unsuspected, which have existed or may have existed, or
do exist or may exist, of any kind which the Release now may have against A/B,
except that the Company does not release A/B from its obligations under this
Agreement.
The Company represents and warrants that by operation of
law or otherwise it can effectively release the claims of Release against A/B;
that it has full power and authority to execute, deliver and perform this
Release; that such execution, delivery and performance has been duly authorized
by all necessary company action; and that this Release is valid and binding on
and is enforceable against the Company.
Nothing in this Paragraph 3(b) is intended to release any
claim that the Company (for the Releasee) may have in the future for matters
asserted against the Company by third parties that arise solely from the acts or
omissions of Releasor, regardless of when such acts or omissions are alleged to
have occurred.
4. FURTHER ASSURANCES. The parties hereby agree to execute and
deliver such other documents, certificates, agreements, instruments, and other
writings and to take such other actions as may be reasonably necessary in order
to consummate expeditiously the transactions contemplated by this Agreement.
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5. NONDISCLOSURE. Xxxxxx and Avalon hereby agree that, except with
the prior written consent of the Company, they will not disclose to any person
or entity the content or existence of this Agreement of the content or existence
of the negotiations relating thereto.
6. COMMENTS CONCERNING LAW. This Agreement may be executed in
counterpart, each completed set of which when so and delivered by all the
parties, shall be original, but all such counterparts shall but one and the
instrument. This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland without giving effect to its conflict of laws
principles.
7. ENTIRE AGREEMENT. This Agreement represents the sole and entire
agreement between the parties on the subject hereof. IN WITNESS WHEREOF, the
undersigned have entered and delivered this Mutual Release Agreement on the date
set forth above, effective as of March 30, 1999.
WISE METALS GROUP LLC
/s/ XXXX X. XXXXXXX
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By: Xxxx X. Xxxxxxx
Title: President/CEO
AVALON-XXXXXX COMPANIES, INC.
/s/ XXXXX X. XXXXXXXX
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By: Xxxxx X. Xxxxxxxx
Title: Chairman of the Board
INDIVIDUALLY
/s/ DAS XXXXXX
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Das Xxxxxx
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