SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made and entered into as of
January 1, 2000, by and between X. X. Xxxxxx ("Employee") and Huntco Inc. (the
"Company"). In consideration of the mutual covenants and conditions contained
herein, the parties, intending to be legally bound, agree as follows:
ARTICLE I
EMPLOYMENT
1.1 Employment.
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In consideration of the mutual covenants and agreements contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Employee and the Company, the
Company agrees to continue to employ Employee, and Employee accepts continued
employment, subject to the terms and conditions of this Agreement.
ARTICLE II
SEVERANCE
2.1 Payments in the Event of a Change of Control.
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(a) If at any time while Employee is employed by the Company (the "Term")
there is a Change of Control of the Company, as defined below, Employee shall
have the option of resigning his employment with the Company, or its
successor, for any reason, or for no reason, at any time up to one year
following the date of the Change of Control. If Employee resigns his
employment pursuant to this section within one year following a Change of
Control, or Employee's employment is involuntarily terminated by the Company
within one year following a Change of Control, the Company will pay to
Employee an amount equal to three times his then current Base Salary, in a
lump sum, within fifteen days of such resignation or termination. Employee
shall also be entitled to remain on the Company's medical and dental insurance
program at Company's expense for three years following termination of
Employee's employment pursuant to this section. Upon payment of the lump sum
payment provided for herein and the medical and dental benefits herein
described, all obligations of the Company to the Employee hereunder shall be
fully satisfied. The parties further expressly agree that, during the period
after Employee's termination during which period Employee will receive
payments or benefits hereunder, Employee will not have authority to act on
behalf of the Company.
(b) The Company will pay Employee a "Tax Gross-Up" payment if a tax is imposed
on Employee pursuant to Section 4999 of the Internal Revenue Code of 1986 as
amended, or any successor provision, with respect to any excess parachute
payment in connection with a Change of Control of the Company. The amount of
the Tax Gross-Up payment will be equal to (i) the amount of such tax, divided
by (ii) 1 minus the blended marginal federal and applicable state income tax
rates in effect for the applicable period for Employee. The Company shall pay
any Tax Gross-Up amount promptly to enable Employee to timely pay income taxes
for the applicable tax period, estimated or otherwise.
(c) For purposes of this Agreement, a "Change of Control" means the occurrence
of any of the following events: (i) a merger, consolidation or reorganization
of the Company in which the Company does not survive as an independent entity;
(ii) a merger, consolidation or reorganization of the Company in which the
Company does not survive as a publicly held company; (iii) a sale of all or
substantially all of the assets of the Company; (iv) the first purchase of
shares of Class A Common Stock of the Company pursuant to a tender or exchange
offer for more than 20% of the Company's outstanding shares of Class A Common
Stock; or (v) any change in control of a nature that, in the opinion of the
Board of Directors, would be required to be reported under the federal
securities laws; provided that such a change in control shall be deemed to
have occurred if: (A) any person other than the `Hunter Affiliates' as that
term is defined in Article III, SectionB.6(b)(iv) of the Company's Restarted
Articles of Incorporation, or the `Hunter Group' as that term is defined in
Article III, Section B.6(b)(ii) of the Company's Restated Articles of
Incorporation (x) is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 35% or more of the combined voting
power of the Company's then outstanding securities, or (y) through a
shareholders' agreement, voting trust, other contractual arrangement, or
otherwise, acquires or obtains the right to vote securities or to direct
another to vote securities of the Company representing 35% or more of the
combined voting power of the Company's then outstanding securities; or (B)
during any period of two consecutive years from January 1, 2000 through the
expiration date hereof, individuals who at the beginning of such period
constitute the Board of Directors of the Company cease for any reason to
constitute a majority thereof unless the election of any director, who was not
a director at the beginning of the period, was approved by a vote of at least
70% of the directors then still in office who were directors at the beginning
of the period.
For purposes of this Section 2.1(c)(v)(B), a director shall be considered to
be a director at the beginning of such two year period if the director's
election was approved either (i) during the lifetime of X.X. Xxxxxx by the
`Hunter Affiliates' as that term is defined in Article III, Section B.6(b)(iv)
of the Company's Restated Articles of Incorporation, or, if after the death of
X.X. Xxxxxx, the `Xxxxxx Group' as that term is defined in Article III,
Section B.6(b)(ii) of the Company's Restated Articles of Incorporation, or
(ii) by a vote of at least 70 percent of the directors then still in office
who were directors at the beginning of the two-year period, or who would be
considered pursuant to this sentence to be a director at the beginning of the
two-year period.
2.2 Continuing Obligations to Remain in Effect.
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The termination of this Agreement for any reason, including termination due to
a Change of Control, shall not relieve Employee of any continuing obligations
expressly provided in this Agreement, including without limitation each of
those set forth in Article III herein below.
ARTICLE III
COVENANTS REGARDING CONFIDENTIAL INFORMATION, COMPANY PROPERTY AND INVENTIONS,
NONSOLICITATION, AND NONCOMPETITION
3.1 Confidentiality.
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Employee recognizes and acknowledges that he will have access to certain
confidential information and trade secrets of the Company. Such confidential
information includes, but is not limited to: customer names and customer
lists, contracts, trade secrets, financial information, product plans,
marketing plans, systems, manuals, training materials, forecasts, inventions,
improvements, ideas, business strategies, formulas, product ideas, computer
programs and software, software designs and documentation, source codes, data
and data bases, techniques, schematics, information relating to confidential
or secret designs, processes, formulae, plans, devices or materials of the
Company, and its business and marketing plans, product and service
development, market development, manuals written by the Company, marketing and
financial analysis, plans, research, programs, and related information and
data, corporate books and records, and other similar intellectual property and
confidential information. Employee acknowledges and agrees that this
confidential information constitutes valuable, special and/or unique property
of the Company. Employee shall, at all times, both during Employee's
employment by the Company and thereafter, keep all such confidential
information in confidence and trust and will not use or disclose any
confidential information or anything relating to it to any person, firm,
corporation, association, or other entity for any reason or purpose without
the written consent of the Company.
3.2 Return of the Company's Property and Documents.
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Employee recognizes that all confidential information, however stored or
memorialized, and all identification cards, keys, access codes, marketing
materials, samples, tape recordings, notes, tools, documents, records,
apparatus and other equipment or property which the Company provides to or
makes available to Employee are the sole property of the Company. Employee
shall use such property solely for the benefit of the Company and for no other
purpose. Upon the termination of Employee's employment with the Company,
Employee shall (i) refrain from taking any such property from the Company's
premises, (ii) immediately return to the Company any such property which may
be in Employee's possession or control (including any and all copies thereof),
(iii) immediately return to the Company any copies, notes, or excepts thereof,
all records, data, memoranda, and all documents or materials made or compiled
by Employee which are in the possession or control of Employee and which
relate to Employee's employment or to the business, activities or facilities
of the Company and any of its employees, agents, owners, officers, executives
and directors, and (iv) certify in writing that Employee has complied with
this Section 3.2.
3.3 Assignment of Inventions to the Company.
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Employee will promptly disclose to the Company all improvements, inventions,
formulas, ideas, works of authorship, processes, techniques and trade secrets,
whether or not patentable, made or conceived or developed by Employee, either
alone or jointly with others, during Employee's employment (collectively
"Inventions"). All Inventions, and all patents, copyrights, trade secret
rights and other intellectual property rights related thereto shall be the
sole property of the Company to the maximum extent permitted by law and, to
the extent permitted by law, shall be "works for hire." Employee hereby
assigns to the Company any rights Employee may have or acquire in all
Inventions and agrees to perform, during and after employment with the
Company, all acts necessary or desirable by the Company to permit and assist
the Company, at the Company's expense, in obtaining and enforcing patents,
copyrights, trade secrets or other intellectual property rights with respect
to such Inventions. Employee hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as Employee's agents and
attorneys-in-fact to act for and in Employee's name and stead, to execute and
file any applications or related filings and do all other lawfully permitted
acts to further the prosecution and issuance of patents, copyrights, trade
secret rights or other intellectual property rights with respect to any
Inventions with the same legal force and effect as if executed by Employee.
3.4 Non-Solicitation of Customers and Clients.
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During the Term of this Agreement and for three years thereafter, Employee
will not, on behalf of any person or entity other than the Company, directly
or indirectly solicit, divert or attempt to solicit or divert any customer or
client of the Company, or any prospective customer or client of the Company,
at the time of Employee's termination or for one year prior thereto, on behalf
of any other person or entity competitive with the Company.
3.5 Non-Solicitation of Other Employees.
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During the Term and for three years thereafter, Employee will not encourage,
solicit, induce, or attempt to encourage, solicit or induce any other
employee, agent or representative of the Company to leave his or her
employment with the Company for a position competitive with the Company and
Employee will not hire or attempt to hire, for any position with any entity
that is competitive with the Company, any person who is an employee, agent or
representative of the Company at such time, or who has been an employee, agent
or representative of the Company at any time within 90 days preceding such
time.
3.6 Non-Interference.
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During the Term of this Agreement and for three years thereafter, Employee
will not directly or indirectly hire, engage, send any work to, place orders
with, or in any manner be associated with any supplier, contractor,
subcontractor or other business relation of the Company if such action by him
would have a material adverse effect on the business, assets, or financial
condition of the Company, or materially interfere with the relationship
between any such person or entity and the Company.
3.7 Non-Competition.
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During the Term of this Agreement and for three years thereafter, Employee
shall not, without the prior written consent of the Company, directly or
indirectly own, manage, finance, operate, join, control or participate in the
ownership, management or operation of, or be employed, provide services to or
otherwise be connected in any manner with, any person or entity competitive
with the Company. This prohibition encompasses any and all services, duties,
and employment of the same nature as the services, duties, and
responsibilities which Employee performs under this Agreement.
For the purposes of this Agreement, a person or entity is "competitive with
the Company" if such person or entity conducts, operates, carries out or
otherwise engages in the development, production, marketing or servicing, in
any state or market in which the Company transacts business, or was
contemplating the transaction of business at the time of Employee's
termination, of any product of the Company (i) with which Employee was
involved in the course of his employment with the Company, or (ii) which the
Company is developing, producing, marketing, or servicing, or plans to
develop, produce, market or service and of which Employee gained any knowledge
in the course of his employment with the Company.
3.8 Representations by Employee.
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In connection with the above covenants, Employee represents that his
experience, capabilities and circumstances are such that the covenants
contained herein will not prevent him from earning a livelihood. Employee
further agrees that the limitations set forth in such covenants do not impose
a greater restraint than is necessary to protect the confidential information,
customer goodwill, and other business interests of the Company. Employee also
agrees that the limitations and covenants are reasonable and properly required
for the adequate protection of the current and future business of the Company.
Employee also agrees that, if any provision of the covenants set forth above
are found to be invalid in part or whole, the Company may elect, but shall not
be required, to have such provision reformed, whether as to time, scope of
activity, or otherwise, as and to the extent required for its validity under
applicable law, and, as so reformed, such provisions shall be enforceable.
3.9 Injunctive and Other Relief.
--------------------------------
It is understood and agreed that the covenants made by Employee in this
Article III shall survive the expiration or termination of this Agreement.
Employee acknowledges and agrees that a remedy at law for any breach or
threatened breach of the provisions of this Article III would be inadequate,
and therefore agrees that the Company shall be entitled as a matter of right
to injunctive relief in addition to any other available rights and remedies in
cases of such breach or threatened breach; provided, however, that nothing
contained herein shall be construed as prohibiting the Company from pursuing
any other rights and remedies available for any such breach or threatened
breach, including the recovery of damages and attorneys' fees from Employee.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 Successors and Assigns.
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Except as otherwise provided herein, the rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of the Company. Except as otherwise provided
herein, this Agreement shall be binding upon Employee and his agents, heirs,
executors, administrators and legal representatives. The rights and
obligations of Employee shall not be assignable by Employee.
4.2 Governing Law.
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Subject to Section 4.9, this Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri. The parties hereto consent
to the jurisdiction and venue of the Circuit Court in and for St. Louis
County, Missouri and of the Federal District Court of the Eastern District,
Eastern Division of Missouri with respect to any action brought in equity for
the breach of the provisions of Article III.
4.3 Counterparts.
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This Agreement may be executed in multiple counterparts, each of which shall
be deemed an original, and all of which shall constitute one instrument.
4.4 Entire Agreement.
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This Agreement contains the entire agreement of the parties pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, and there are no other
warranties, representations, covenants or agreements among the Company and
Employee in connection with the subject matter hereof.
4.5 Amendment.
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Employee's obligations under this Agreement may be amended, supplemented,
modified and/or rescinded only through an express written amendment executed
by both Employee and the Company.
4.6 No Waiver of Employee Breach.
---------------------------------
The waiver by the Company of a breach of any provision of this Agreement by
Employee shall not operate or be construed as a waiver by the Company of any
subsequent breach by Employee.
4.7 Severability.
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If a court of competent jurisdiction shall adjudge to be invalid any clause,
sentence, subparagraph, paragraph, or section of this Agreement, such judgment
or decree shall not affect, impair, invalidate, or nullify the remainder of
this Agreement, but the effect thereof shall be confined to the clause,
sentence, subparagraph, paragraph, or section so adjudged to be invalid.
4.8 Survival.
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Employee and the Company expressly acknowledge and agree that the ongoing
obligations and covenants set forth in this Agreement shall survive the
termination of Employee's employment under this Agreement for the time period
set forth in this Agreement.
4.9 Arbitration.
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Any controversy or claim arising out of or relating to the Agreement other
than an action brought in equity for the breach of the provisions of Article
III shall be settled by final and binding arbitration in St. Louis County,
Missouri. A single arbitrator may be selected by the unanimous agreement of
the parties to the dispute, but if the parties to the dispute fail to agree on
and appoint an arbitrator within thirty (30) calendar days of the receipt by
any party of notice of the existence of a dispute, then the dispute shall be
settled in St. Louis County, Missouri in accordance with the commercial
arbitration rules of the American Arbitration Association then in effect. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16 and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof and the parties hereto
consent to the jurisdiction and venue of the Circuit Court in and for St.
Louis County, Missouri and of the Federal District Court of the Eastern
District, Eastern Division of Missouri for the entry of judgment relating to
any award of the arbitrator.
4.10 Opportunity to Review.
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Employee hereby represents and warrants that he (a) has been given a
meaningful opportunity to review this Agreement, and (b) has been encouraged
by the Company to receive the advice of counsel with respect to the meaning
and effect of each Section of this Agreement. Employee acknowledges that he
has voluntarily entered into this Agreement of his own free will based only
upon the terms and conditions included in this Agreement.
4.11 Agreement Not to be Construed Against Either Party.
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Employee and Company expressly acknowledge and agree that this Agreement was
the product of arms length negotiation between the parties, and that this
Agreement shall be construed fairly and without prejudice to either party as
the drafter of this Agreement, regardless of whether one party physically
prepared this Agreement.
4.12 Notices.
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All notices and other communications which are required or permitted hereunder
shall be in writing and shall be deemed to have been duly given and received
when delivered personally, when sent when mailed by registered or certified
mail, return receipt requested and postage prepaid, or when sent by a
nationally known overnight delivery service, or when sent by telephone
facsimile confirmed by overnight delivery service, to the parties at the
addresses or facsimile numbers indicated below (or at such other address as
shall be specified by notice).
EMPLOYEE: COMPANY:
X.X. XXXXXX BOARD OF DIRECTORS
615 SPYGLASS SUMMIT HUNTCO INC.
XXXXXXXXXXXX, XX 00000 00000 XXXXX XXXXX XXXXX
XXXXX 000X
XXXX & XXXXXX, XX 00000
(000) 000-0000
With a copy to:
Xxxxx X. Adoor, Esq.
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xx. Xxxxx, XX 00000
Fax: (314) 345 - 6060
Each party is responsible for informing the other party of any change in
address.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES
EMPLOYEE The COMPANY
Huntco Inc.
/s/ X. X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
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X. X. Xxxxxx Its: Vice Chairman & President
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