EXHIBIT 10.31
SEVERANCE AGREEMENT
This Severance Agreement (this "Agreement") is made as of July 15, 1998 by
and between H. Xxxxxxx Xxxxxx ("Employee"), Triplett Auto Recyclers, Inc., an
Ohio corporation ("Xxxxxxxx"), and LKQ Corporation, a Delaware corporation
("LKQ").
RECITALS
Employee is the Vice President and Secretary of Xxxxxxxx.
Xxxxxxxx and LKQ are parties to an Agreement and Plan of Merger dated as of
July 15, 1998 (the "Merger Agreement") pursuant to which LKQ Acquisition
Corporation, an Ohio corporation and wholly-owned subsidiary of LKQ
("Acquisition") will be merged with and into Xxxxxxxx, with Xxxxxxxx being the
surviving corporation and becoming a wholly-owned subsidiary of LKQ.
It is a condition to the obligations of the parties to the Merger Agreement
that this Agreement be entered into. Terms defined in the Merger Agreement and
not otherwise defined herein shall have the same meaning as in the Merger
Agreement.
COVENANTS
1. DEFINITIONS. As used in this Agreement, "Termination for Cause" shall
mean termination of Employee by Xxxxxxxx for any one or more of the following
reasons: (i) Employee's commission of any grossly negligent, fraudulent or
dishonest act in connection with Employee's employment with Xxxxxxxx; (ii)
Employee's commission of a felony or a crime involving dishonesty or moral
turpitude; (iii) Employee's breach of any covenant relating to non-competition
or confidentiality between Employee and Xxxxxxxx or LKQ; or (iv) Employee's
continued failure (after five business days prior written notice specifying the
failure) to carry out Employee's duties and responsibilities as an employee of
Xxxxxxxx. As used in this Agreement, "Good Reason" shall mean the occurrence of
any of the following (without Employee's express written consent or except in
connection with a Termination for Cause): (i) the reduction of Employee's duties
and responsibilities with Xxxxxxxx as such are in existence on the date of this
Agreement; (ii) the reduction by Xxxxxxxx of Employee's base salary as in effect
on the date of this Agreement or as the same may be increased from time to time,
during the term of this Agreement; (iii) the failure by Xxxxxxxx or LKQ to allow
Employee to participate in any benefit plan or arrangement in which Employee is
presently participating or, alternatively, the benefit plans and arrangements of
LKQ which are available to other similarly-situated employees of LKQ; (iv) the
relocation of Employee to a city other than Akron, Ohio or Chicago, Illinois or
the metropolitan areas thereof; (v) the failure by Xxxxxxxx to provide Employee
with the number of paid vacation days consistent with the policy of LKQ for
similarly-situated employees; (vi) the material breach by Xxxxxxxx of any
provision of this Agreement; and (vii) the failure by Xxxxxxxx to obtain the
assumption of this Agreement by any successor or assign of Xxxxxxxx.
2. SEVERANCE PAYMENT. At any time during the period commencing on the
date of this Agreement and ending on the closing of the initial public offering
of LKQ's common stock, in the event of a termination by Xxxxxxxx of Employee's
employment (other than a Termination for Cause) or in the event Employee
terminates his employment with Xxxxxxxx for Good Reason, Xxxxxxxx shall pay
Employee a lump sum amount (subject to the usual payroll deductions) equal to 12
months of Employee's salary at the time of such termination.
3. RESTRICTIVE COVENANT. Employee agrees that (i) he shall not, directly
or indirectly, either for himself or for any other person, during the time of
his employment and for a period of two years thereafter, engage in, represent,
furnish consulting services to, be employed by or have any interest in (whether
as owner, principal, officer, partner, agent, consultant, shareholder, member or
otherwise) any business which would be competitive with any business conducted
by Xxxxxxxx as of the date of this Agreement or, as long as Employee (together
with the members of his immediate family and their affiliates) beneficially owns
at least five percent of the outstanding shares of LKQ, any other business
conducted by LKQ or its subsidiaries, anywhere in the continental United States;
provided, however, that Employee may acquire and hold an aggregate of up two
percent of the outstanding shares of any corporation engaged in any such
business if such shares are publicly traded in an established securities market,
(ii) he shall not, directly or indirectly, during the term of his employment and
for a period of two years thereafter induce any customer of LKQ or any of its
subsidiaries to patronize any such competitive business or otherwise request or
advise any such customer to withdraw, curtail or cancel any of its business with
LKQ or any of its subsidiaries; and (iii) he shall not, directly or indirectly,
during the term of his employment and for a period of two years thereafter,
solicit for employment or assist any other person in soliciting for employment,
any person employed by LKQ or any of its subsidiaries.
4. CONFIDENTIALITY. Employee acknowledges that in his employment he will
be making use of, acquiring and adding to confidential information relating to
the business of Xxxxxxxx, LKQ and their subsidiaries. Employee agrees to keep
all such information confidential and will not disclose any such information in
any manner whatsoever to a third party or use such information (other than for
the benefit of Xxxxxxxx, LKQ or their subsidiaries); provided, however that this
Section 4 shall not apply to information that (a) was in Employee's possession
before receipt from Xxxxxxxx, LKQ or its subsidiaries; (b) is or becomes a
matter of public knowledge through no fault of Employee; (c) is rightfully
received by Employee from a third party without the duty of confidentiality; or
(d) is independently developed by Employee. In the event Employee is required by
law (through oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process), or is
requested in any judicial or administrative proceeding or by any governmental
authority to disclose any confidential information, Employee shall (i) provide
prompt notice of the existence, terms and circumstances of such request to LKQ
so that LKQ may seek an appropriate protective order or waive compliance with
the terms of this Agreement, (ii) consult with LKQ on the advisability of taking
legally available steps to resist or narrow such request, and (iii) if
disclosure of such information is required, disclose such information and,
subject to reimbursement by LKO of the Employee's expenses, exercise his best
efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such portion of the disclosed information which
LKQ designates.
2
5. GENERAL. (a) No delay on the part of any party in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, and no single or
partial exercise by any party of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy. The
waiver of any breach or condition of this Agreement by either party shall not
constitute a precedent in the future enforcement of any of the terms and
conditions of this Agreement.
(b) If any provision of this Agreement, as applied to any party or to
any circumstances, is adjudged by a court to be invalid or unenforceable, the
same shall in no way affect any other provision or any other part of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement. If any such provision, or any part
thereof, is held to be unenforceable because of the duration of such provision
or the area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form
such provision shall then be enforceable.
(c) Upon the breach of any provision of Section 3 or 4, LKQ and
Xxxxxxxx shall be entitled to injunctive relief, since the remedy at law would
be inadequate and insufficient. In addition, they shall be entitled to such
damages as they can show they have sustained by reason of such breach.
(d) This Agreement contains the entire agreement of the parties
hereto, and supersedes all prior understandings and agreements of the parties
hereto, with respect to the subject matter hereof.
(e) This Agreement is deemed to have been drafted jointly by the
parties, and any uncertainty or ambiguity shall not be construed for or against
either party as a result of the attribution of drafting to either party.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois applicable to contracts made and to be
performed wholly therein, without regard to any conflicts of laws provisions.
3
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have duly executed and delivered this Agreement on the day and
year first written above.
LKQ CORPORATION
/s/ H. Xxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------- -------------------------------------
H. Xxxxxxx Xxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
XXXXXXXX AUTO RECYLERS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
4
