SEPARATION AGREEMENT AND RELEASE
THIS SEPARATION AGREEMENT AND RELEASE is made and entered into as of the date
the last party to execute this Agreement so executes it, by and between Huntco
Inc., a Missouri corporation ("Huntco"), and Xxxxx X. Xxxxx ("Xxxxx").
WITNESSETH THAT:
WHEREAS, Heinz was employed by Huntco under the terms of that certain
Executive Employment Agreement entered into by and between Huntco and Heinz
effective May 18, 1993 (the "Employment Agreement"), a copy of which is
attached hereto as Attachment A; and
WHEREAS, Heinz's employment with Huntco terminated on January 4, 1999 under
Section 8.4 of the Employment Agreement although Huntco paid Heinz's base
salary and the other benefits due Heinz under the Employment Agreement through
February 28, 1999 as if Heinz were still an employee of Huntco; and
WHEREAS, the parties desire to resolve all matters arising out of Heinz's
employment by Huntco and the subsequent termination of such employment.
NOW THEREFORE, in consideration of the mutual agreements, promises and the
release contained herein, the parties hereto agree as follows:
1. Termination of Employment. Effective upon the "Effective Date" of this
Agreement, as that term is defined in Section 7(b) hereof, and except as
specifically provided herein, the rights and obligations of the parties hereto
under the Employment Agreement shall cease and terminate and shall be of no
further force or effect.
2. Severance Payments and Benefits.
(a) In consideration for the termination of the Employment
Agreement, the covenants of Heinz contained herein and the release contained
in Section 6 hereof, Huntco shall: (i) for the Five (5) year period commencing
February 1, 1999 and ending January 31, 2004 (the "Payment Period"), pay Heinz
(or in the event of Heinz's death, to his spouse, Xxxxxxxx Xxxxx), $100,000
(the "Annual Payment") per year in equal installments and in accordance with
Huntco's normal payroll policies and procedures, less any applicable federal,
state, and local income tax withholding; (ii) at Huntco's sole cost and
expense, provide Heinz during the Payment Period with the group health,
medical, hospitalization and dental benefits generally available to the full-
time employees of Huntco as if Heinz were still employed by Huntco; ("Group
Health Benefits") and (iii) pay Heinz $6,845.70 (the "Aggregate Car Lease
Payment") which amount represents the total of the Ten (10) remaining lease
payments on the automobile which was in Heinz's possession on the date of
termination of Heinz's employment and which Heinz was to use primarily for
Huntco business (the "Leased Automobile").
(b) Heinz and Huntco acknowledge that during February 1999,
Huntco has paid Heinz $22,750 (the "February Payment"), equaling One-Twelfth
of Heinz's annual base salary during 1998 of $273,000. Anything in Section
2(a) hereof to the contrary notwithstanding, Huntco's payment to Heinz under
Section 2(a) hereof for March, 1999 shall be in the amount of $762.36,
calculated by determining the difference between the February Payment of
$22,750 and the sum of (i) $8,333.33 (which represents One-Twelfth of the
Annual Payment attributable to February 1999) and (ii) $6,845.70 (the
Aggregate Car Lease Payment made on the date hereof), which is $7,570.97 (the
"February Overpayment"), which February Overpayment is to be subtracted from
$8,333.33 (One-Twelfth of the Annual Payment attributable to March, 1999),
resulting in a difference of $762.36. Based on Huntco's normal payroll
policies, this amount shall not be due or payable until March 31, 1999.
(c) All of the options to purchase shares of Class A Common
Stock, par value $.01 per share of Huntco (the "Class A Shares"), awarded to
Heinz under the Huntco Inc. 1993 Incentive Stock Plan (as Amended and Restated
in 1996), are hereby cancelled and otherwise forever terminated and of no
further force or effect. Concurrently herewith and pursuant to the
immediately preceding sentence the following agreements are cancelled and
forever terminated and of no further force or effect: (i) the Stock Option
Agreement - 1993 Award entered into by and between Huntco and Heinz dated June
29, 1993 relating to options to purchase up to 150,000 Class A Shares (the
"IPO Stock Options") previously awarded to Heinz; (ii) the Stock Option
Agreement entered into by and between Huntco and Heinz dated April 3, 1997
relating to options to purchase up to 10,000 Class A Shares previously awarded
to Heinz; (iii) the Stock Option Agreement entered into by and between Huntco
and Heinz dated December 4, 1997 relating to options to purchase up to 60,000
Class A Shares previously awarded to Heinz; and (iv) the agreement between
Huntco and Heinz by which Huntco agreed to reimburse Heinz with respect to
federal and state income taxes payable by Heinz on the first $400,000 of
taxable income recognized by Heinz upon the exercise of the IPO Stock Options.
(d) All compensation, payments or benefits which Huntco would
have provided to Heinz contractually or otherwise for the period commencing
January 5, 1999 and thereafter had Heinz's employment with Huntco not been
terminated (the "Terminated Benefits"), are by the agreement of the parties
hereto, cancelled and otherwise forever terminated as of January 4, 1999, the
date Heinz ceased to be employed by Huntco, which Terminated Benefits include
but are not limited to: (i) the cellular telephone provided by Huntco to
Heinz; (ii) reimbursement for gasoline, insurance, maintenance or any other
expenses (other than the fixed amount provided for in Section 2(a)(iii))
incurred by Heinz with respect to the Leased Automobile; (iii) participation
in any group life insurance programs generally available to the full-time
employees of Huntco, (iv) the supplemental reimbursement for health, medical,
hospitalization and dental expenses incurred by Heinz after January 4, 1999
above and beyond those covered by the Group Health Benefits; (v) Huntco's
contribution to Heinz's account in the Huntco Inc. 401(k) Retirement Savings
Plan; (vi) reimbursement of the dues paid in connection with Heinz's country
club membership; and (vii) payments made by Huntco on Heinz's behalf with
respect to the life insurance and disability insurance policies maintained by
Huntco on Heinz, it being acknowledged and agreed that if Heinz desires to
continue such insurance in effect, Heinz shall make all premium payments
thereon for all coverage periods from and after January 4, 1999.
(e) This Section 2 shall have no force or effect if Heinz
revokes his acceptance of this Agreement pursuant to Section 7(b) hereof.
3. Consulting Agreement.
(a) Huntco hereby contracts and engages Heinz, and Heinz hereby
contracts and agrees to serve as an independent consultant during the Payment
Period, to advise Huntco or any of the other "Huntco Entities" (as hereinafter
defined) on those matters on which Heinz has special competence by reason of
his prior experience in and knowledge of the intermediate steel processing
business generally and of Huntco and the other Huntco Entities specifically,
and to engage in such services as Huntco in good faith seeks (the "Consulting
Duties"), on the terms and conditions set forth below.
(b) As an independent contractor, neither Huntco nor any of the
other Huntco Entities shall have the right to exercise supervision over Heinz
in the performance of the Consulting Duties or to require Heinz to comply with
detailed orders or instructions. Anything in the preceding sentence to the
contrary notwithstanding, however, Heinz and Huntco agree that Heinz shall
receive general direction and assignment with respect to his Consulting Duties
from Xx. Xxxxxx X. Xxxxxxxxx, Huntco's Vice Chairman ("Xxxxxxxxx"), or from
any other officers or employees of Huntco designated by Xxxxxxxxx or his
replacement.
(c) Heinz need not devote his principal working time, attention
and energies to the performance of his Consulting Duties, but he shall devote
his best efforts and such time, attention and energies as shall be necessary
to fulfill his obligations hereunder. Heinz may own, be employed by or
perform consulting or other services for other companies, entities or
businesses so long as such services do not interfere with Heinz's Consulting
Duties and are otherwise permitted by, or do not conflict with the terms of,
this Agreement (including but not limited to Heinz's obligations under Section
4 hereof).
(d) In consideration for his Consulting Duties, Huntco shall pay
Heinz a consulting fee of $1,000 per day (the "Consulting Fee") plus
reimbursement of "Travel Expenses" as hereinafter defined. Huntco shall
reimburse Heinz for only those Travel Expenses Heinz incurs in performing a
specific project for Huntco or one of the Huntco Entities, which project must
have been assigned to Heinz by Xxxxxxxxx or by any other officers or employees
of Huntco designated by Xxxxxxxxx or his replacement. Reimbursement of
Heinz's Travel Expenses shall be made only upon submission of an expense
report including receipts, vouchers and other evidence of expenses incurred,
all in a manner which is consistent with reimbursement of Travel Expenses
incurred by employees of Huntco when conducting business for Huntco. "Travel
Expenses" shall mean all reasonable expenses incurred by Heinz for air fare
(coach class) car rental, taxi fares, reimbursement for mileage at rates
allowed as deductions under applicable Internal Revenue Code Regulations (if
Heinz's personal automobile is used; reimbursement for gasoline only if the
Leased Automobile is used), lodging and travel related meals.
(e) In his capacity as a consultant, Heinz is for all purposes
to be considered an independent contractor and not an employee or agent of
Huntco. Accordingly, no amounts shall be withheld by Huntco from any payments
for Consulting Duties performed hereunder for federal, state, local, FICA,
FUTA or other taxes unless required under applicable law. Heinz agrees to pay
all taxes due with respect to the payments received hereunder as and when due.
(f) Heinz covenants and agrees that he shall not represent
himself to any person or entity to be an employee of Huntco and further
convenants and agrees that he does not have, and shall not represent to any
person or entity that he has, the authority to contractually bind Huntco.
(g) Neither Huntco nor any of the Huntco Entities shall be
obligated to utilize Heinz's services as a consultant under this Section 3 and
Huntco shall only be obligated to pay such Consulting Fees and Travel Expenses
with respect to Consulting Duties actually performed by Heinz pursuant to the
terms of Section 3 hereof.
4. Heinz's Surviving Obligations Under the Employment Agreement.
(a) Heinz understands and agrees that all obligations of Huntco
under the Employment Agreement have been released and forever terminated
pursuant to this Agreement. Notwithstanding the preceding, Heinz agrees that
Heinz is not relieved of any of Heinz's continuing obligations expressly
provided for in the Employment Agreement, including, but not limited to, those
obligations set forth in Sections 4, 5.2, 5.3, 6, 11.1(a)-(c) (except as
Heinz's obligation under Section 11.1(a)-(c) are modified by this Section 4
hereof, but without regard to any actions which Huntco was required to take
under the Employment Agreement to obtain the benefits of Section 11.1
thereunder, which actions are no longer required pursuant to the provisions
hereof) and Section 12, which sections of the Employment Agreement (except as
modified herein) are incorporated into this agreement as fully and as
completely as if set forth herein. The duration of the obligations set forth
in Sections 4, 5.2, 5.3, 6, and 12 shall survive for the period set forth in
the Employment Agreement, and if the Employment Agreement does not provide for
expiration, such obligations survive indefinitely. The obligations of Section
11.1(a)-(c) shall continue through January 31, 2000 (the "Non-Compete
Period").
(b) Huntco prospectively waives its rights under Section 4(a)
herein to prevent Heinz or any entity affiliated with Heinz from purchasing
all of the issued and outstanding capital stock or the assets of [a certain
steel-related concern ("Steel Target Company")], or any interest therein and
to thereafter operate or be employed by [Steel Target Company], based solely
upon Heinz's representation to Huntco that [Steel Target Company] is a
"general line service center" which does not own, lease or operate a cut-to-
length line and has no plan or present intention to purchase, lease or
otherwise acquire, install or operate a cut-to-length line during the Non-
Compete Period. Heinz acknowledges that Huntco's prospective waiver of the
noncompete provision of Section 4(a) hereof with respect to [Steel Target
Company] is based on (i) Heinz's representation in the immediately preceding
sentence and (ii) Heinz's covenant and agreement that [Steel Target Company]
shall not purchase, lease or otherwise acquire, install or operate a cut to
length line during the Non-Compete Period.
5. Termination of Employment; Resignation from Officer Positions and
Directorships.
(a) Heinz acknowledges and agrees that his employment with
Huntco was terminated as of January 4, 1999 and that he is not entitled to
future employment with or to provide consulting services to any of the Huntco
Entities or to any of their respective successors, assigns, subsidiaries or
affiliates, provided, however, that pursuant to Section 3 hereof, Huntco may
compel Heinz to perform Consulting Duties.
(b) Effective upon execution of this Agreement, Heinz resigns as
a director, officer, and employee of each of the Huntco Entities of which he
is a director, officer or employee (except Huntco) and effective as of the
Effective Date, Heinz shall be deemed to have resigned as a director of
Huntco.
6. Heinz Release. Heinz, for himself and for each of his heirs,
administrators, representatives, executors, successors and assigns
(collectively the "Heinz Group") hereby releases, remises, and forever
discharges Huntco and each of its subsidiaries (collectively the "Huntco
Entities"), together with the respective directors, officers, agents, and
employees of the Huntco Entities (who, together with the Huntco Entities
constitute the "Released Parties"), from any and all claims and demands of any
kind, known or unknown, which the Heinz Group may have against the Released
Parties as of the date Heinz executes this Agreement or which the Heinz Group
may have had at any time before the date of signing this Agreement. Heinz
understands that he is releasing the Released Parties to the maximum extent
permissible by law, from any liability which Heinz believes the Released
Parties may have had to the Heinz Group at any time up to and including the
date Heinz executes this Agreement. This release includes a waiver (a giving
up) of any legal rights or claims the Heinz Group may have or may have ever
had, including claims of race, color, national origin, sex or gender, age or
disability discrimination, arising under Title VII of the Civil Rights Act of
1964, the Rehabilitation Act of 1973, the Civil Rights Act of 1866 (Section
1981), the Americans with Disabilities Act, the Employee Retirement Income
Security Act of 1974, the Age Discrimination in Employment Act, the Family and
Medical Leave Act of 1993, the Missouri Service Letter Statute, the Missouri
Human Rights Act, the Employment Agreement and under any other federal, state,
or local statute, regulation, or the common law of any state, including but
not limited to any and all claims in tort or contract, to the maximum extent
permitted by applicable law, except as otherwise specifically provided in this
Agreement.
7. Consideration and Revocation; Effective Date.
(a) Heinz acknowledges and agrees that (i) he received this
Agreement on February 26, 1999, (ii) the Agreement has been reviewed in detail
with him, (iii) the language contained herein and therein has been explained
to him, (iv) he has been encouraged by Huntco to review this Agreement with an
attorney of his choice, (v) that he has had a reasonable period of time and
has had adequate opportunity to consider the terms of the Agreement and
whether to enter into the Agreement, and (vi) he has voluntarily entered into
this Agreement of his own free will based only upon the terms and conditions
set out herein.
(b) Heinz has 21 calendar days after the date Heinz receives the
Agreement within which to consider the Agreement, although he may sign and
return it sooner if he desires. Heinz may revoke the Agreement, by delivering
a written notice of revocation to Xx. Xxxxxx X. Xxxxxxxxx, Vice Chairman,
Huntco Inc., 00000 Xxxxx Xxxxx Xxxxx, Xxxxx 000 X., Xxxx & Xxxxxxx, Xxxxxxxx
00000, within 7 calendar days after Heinz signs the Agreement. The Agreement
will become effective and enforceable immediately after the 7 day revocation
period expires (the "Effective Date"), if Heinz has not revoked this Agreement
pursuant to the terms hereof prior to that time.
8. Return of Property. Heinz agrees that as of the Effective Date, he
shall return to Huntco all property belonging to any Huntco Entity which has
not previously been returned to such Huntco Entity.
9. Section 16 Filings. Heinz represents and warrants to Huntco that as of
February 17, 1999, Heinz filed or caused to be timely filed with the
Securities and Exchange Commission (the "Commission") and the New York Stock
Exchange (the "NYSE"), all reports required to be filed by him under Section
16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules promulgated under Section 16 thereof (the "Section 16 Rules"),
with respect to (i) transactions in the Class A Shares or in options in which
the underlying security are Class A Shares (collectively the "Huntco
Securities") effected by him or (ii) transactions in Huntco Securities
effected by others but pursuant to which he is deemed to have a pecuniary
interest, during the preceding two years. Heinz further represents and
warrants to Huntco that he has not engaged in any transactions in Huntco
Securities which required the filing of a Form 5 by February 17, 1999. Heinz
covenants and agrees that he will notify Huntco if he effects any transactions
involving Huntco Securities or if transactions in Huntco Securities in which
he is deemed to have a pecuniary interest are effected by others, if and to
the extent Heinz has an obligation to report such transactions to the
Commission and the NYSE pursuant to the Section 16 Rules. Heinz further
covenants and agrees that he will provide Huntco with a copy of all reports
which he files or causes to be filed with the SEC and the NYSE pursuant to the
Section 16 Rules with respect to the foregoing.
10. No Admission of Liability. Heinz acknowledges that this Agreement
shall not in any way be construed as an admission of any liability on the part
of any of the Released Parties and that all such liability is expressly denied
by each and every one of the Released Parties.
11. Public Comment; Cooperation. Heinz shall not take any action
inconsistent with Heinz's relationship and responsibilities as a former
director, executive officer and employee of Huntco or of any of the other
Huntco Entities of which he was a former director, executive officer or
employee, or take any action which is intended, or may be reasonably expected,
to harm the reputation, business, prospects or operations of Huntco or any of
the other Huntco Entities, including, but not limited to, making any
disparaging remarks about any of the Huntco Entities or any of their
respective officers, directors, employees or shareholders. To that end, Heinz
shall continue to (i) cooperate and assist in the orderly transition of
management when reasonably requested by any of the Huntco Entities, including
execution of any minutes or other appropriate documents, and (ii) cooperate
and assist any and all of the Huntco Entities in any pending, threatened or
new litigation filed against or in any manner involving the Huntco Entities,
or in any investigation or audit by any governmental entity, including but not
limited to, providing truthful information to each of the Huntco Entities and
the directors, officers, agents, employees of, and attorneys for, the Huntco
Entities, and to governmental investigators (if required by applicable law).
12. No Litigation. Heinz, for himself and the Heinz Group, agrees not to
enter into any suit, action, or other proceeding at law or in equity, or to
prosecute further any existing suit or action that might presently exist, or
to make any claim or demand of any kind or nature against any of the Released
Parties, other than an action to enforce his rights contained herein. If
Heinz or any member of the Heinz Group enters into any action in violation of
this Section 12, Heinz shall pay all legal costs, including reasonable
attorneys' fees, incurred by Huntco or any of the other Released Parties in
defending against Heinz's action(s) or those of the Heinz Group.
13. Right of Set-off. If Heinz breaches any material provision of this
Agreement, or if any provisions of Sections 1, 4, 5, 6, 8, 11 or 12 hereof are
found by a court of competent jurisdiction to be unenforceable, Heinz agrees
to return to Huntco the amounts paid to Heinz under this Agreement and to
reimburse Huntco any costs or attorneys' fees Huntco or any of the other
Huntco Entities incurs in connection with obtaining the return of these
amounts, to the maximum extent permitted by applicable law. This provision
shall not restrict Huntco or any of the other Huntco Entities from seeking any
remedy available to Huntco or any of the Huntco Entities to enforce the terms
of this Agreement, including but not limited to, ceasing any further payments
under this Agreement or seeking equitable relief for the violation of any
provision for which damages are not appropriate.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri without giving effect to the
conflicts of laws provisions thereof. The parties hereto consent to the
jurisdiction of the Circuit Court of the County of St. Louis, State of
Missouri and the United States District Court for the Eastern District of
Missouri for all purposes in connection with any litigation between or among
the parties hereto. Heinz hereby irrevocably waives any objection which he
now or hereafter may have to the laying of venue of any action or proceeding
arising out of or relating to this Agreement brought in the United States
District Court for the Eastern District of Missouri or the Circuit Court of
the County of St. Louis, Missouri and any objection on the ground that any
such action or proceeding in either of such courts has been brought in an
inconvenient forum.
(b) This Agreement (which includes the surviving provisions of
the Employment Agreement) contain the entire agreement between Heinz and
Huntco and supercedes all prior agreements or understandings between them on
the subject matters of this Agreement. Such other agreements shall have no
force or effect, and are hereinafter void. No change or waiver of any part of
the Agreement will be valid unless in writing and signed by both Heinz and
Huntco. Except where the context requires a different interpretation to
effectuate the purposes of this Agreement, the term "Agreement" means this
Agreement and the surviving provisions of the Employment Agreement as modified
hereby.
(c) If a court of competent jurisdiction determines that any
provision contained in this Agreement, or any part thereof, is unenforceable
for any reason, Heinz agrees that such court shall have the power to reduce
the duration or scope of such provision, or otherwise modify such provision,
as the case may be, and, in its reduced form, such provision shall then be
enforceable, provided, however, that if the duration of the non-compete
provision set forth in Section 4 hereof and in section 11.1(a)-(c) of the
Employment Agreement (the applicable portions of which are incorporated into
this Agreement), are reduced by such court, such court shall have the power to
also reduce proportionately the payment due Heinz under Section 2(a) hereof,
provided, further, however, that if such court fails to reduce the amount of
such payment proportionately, Huntco and Heinz agree to a proportionate
reduction which reduction shall thereafter be evidenced by an amendment to
this Agreement which Heinz agrees to execute and deliver to Huntco. If any
court of competent jurisdiction determines that any provision contained in
this Agreement or any part thereof is unenforceable and cannot for any reason
be reduced and enforced as described in the immediately preceding sentence,
Heinz agrees that such determination shall not affect, impair or invalidate
the remainder of this Agreement.
(d) This Agreement shall be freely assignable by Huntco and
shall inure to the benefit of and be binding upon the Heinz Group and shall
inure to the benefit of and be binding upon the Released Parties. This
Agreement shall not be assignable by Heinz without the prior written consent
of Huntco.
(e) Heinz and Huntco agree to reasonably cooperate with the
other party or their agents in taking all steps necessary to effectuate the
purposes of this Agreement, including but not limited to executing documents
and providing information when reasonably requested by the other party.
(f) This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
(g) The description headings of the several sections of this
Agreement are inserted for convenience only and do not qualify or affect the
terms and conditions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Witness: XXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx
__________________________________ ___________________________________
Witness: HUNTCO INC.
/s/ Xxxxxx X. Xxxxxxxxx 3/8/99
__________________________________ ___________________________________
