EMPLOYMENT AGREEMENT
Exhibit
10.e
This
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into by
and between Xxxxxx Freight System, Inc., a Michigan corporation, (the
“Company”), with the guaranty of High Point Transport, Inc., a Florida
corporation, and Xxxxxxx Xxxxxxx, Xx. (“Employee”)
effective as of October 25, 2007 or the actual date Employee first
reports for work (“Start Date”).
RECITAL
The
Company desires to continue to employ Employee, and Employee is willing to
continue his employment by the Company, in each case on the terms and subject
to
the conditions set forth in this Agreement. The parties agree that
any and every preexisting agreement, understanding and arrangement with respect
to Employee’s employment and benefits (not including accrued and unpaid
compensation and retirement benefits, if any) between the Company and the
Employee is cancelled and terminated and replaced by this
agreement.
NOW,
THEREFORE, the parties hereto hereby agree as follows:
1.
Position and Duties.
1.1 During
the
term of this Agreement, Employee agrees to be employed by and to serve the
Company on a full-time basis as President and Chief Operating Officer, and
to perform such duties consistent with such position, or as may be assigned
to
him from time to time by the Board of Directors. Employee’s principal place of
business with respect to his services to the Company shall be Xxxxxxxx Township,
Michigan. All travel expenses of Employee shall be reimbursed in accordance
with
Section 3.4(c), below.
1.2 Employee
shall carry out his duties under the general supervision and direction of
the
Board of Directors of the Company in accordance with the Company’s policies,
rules and procedures in force from time to time.
1.3 Employee
shall devote his full time, attention, skill and efforts to his tasks and
duties
hereunder and to the affairs of the Company. Without the prior
written consent of the Company based on approval by the board of directors,
Employee shall not provide services for compensation to any other person
or
business entity during the Term of his employment by the Company, as defined
in
paragraph 2.1, or engage in any other business activity (not including any
passive investment activities), whether or not such other business activity
is
pursued for profit or pecuniary advantage.
2.
Term
of Employment.
2.1 Basic
Term. The term of employment under this Agreement (the
“Term”) shall begin on Start Date and shall continue through three (3)
calendar
years after the Start Date (the “Expiration Date”), unless earlier terminated in
accordance with Article 2 or extended pursuant to the following
sentence. Unless written notice is given by the Company or Employee
to the other at
1.
least
ninety (90) days prior to the Expiration Date (or any later date to which
the
Term shall have been extended in accordance with this Section 2.1) advising
that
the one giving such notice does not desire to extend this Agreement, the
Term shall automatically be extended for additional one-year periods without
further action of either the Company or Employee.
2.2 Termination
for
Cause Only. Employee
may be terminated for cause only. Termination for Cause (as defined
in Section 2.7(a), below) may be effected by the Company at any time during
the
Term of this Agreement and shall be effected by written notification to Employee
from the Chairman of the Board of Directors or his designee, stating the
reason
for termination. Such termination shall be effective immediately upon
the giving of such notice (subject to the terms set forth in Section 2.7(a)
below), unless the Board of Directors shall otherwise determine. Upon
Termination for Cause, Employee shall be paid all accrued salary, any benefits
under any plans of the Company in which Employee is a participant to the
full
extent of Employee’s rights under such plans, accrued vacation pay, and any
appropriate business expenses incurred by Employee in connection with his
duties
hereunder prior to such termination, all to the date of termination, but
Employee shall not be entitled to any other compensation or reimbursement
of any
kind, including without limitation, severance compensation.
2.3 Voluntary
Termination. In the event of a Voluntary Termination (as
defined in Section 2.7(b), below), the Company shall pay to Employee all
accrued
salary, bonus compensation to the extent earned, any benefits under any plans
of
the Company in which Employee is a participant to the full extent of Employee’s
rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by Employee in connection with his duties hereunder, all
to
the date of termination, but no other compensation or reimbursement of any
kind,
including without limitation, severance compensation. Employee may affect
a
Voluntary Termination by giving sixty (60) days’ written notice of such
termination to the Company.
2.4 Termination
by Death. In the event of Employee’s death during the Term
of this Agreement, Employee’s employment shall be deemed to have terminated as
of the last day of the month during which his death occurs and the Company
shall
pay to his estate or such beneficiaries, as Employee may from time to time
designate, all accrued salary, bonus to the extent earned, any benefits under
any plans of the Company in which Employee is a participant to the full extent
of Employee’s rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by Employee in connection with his duties hereunder,
all to the date of termination, but Employee’s estate shall not be paid any
other compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.5 Termination
by Reason of Disability. If, during the Term of this
Agreement, a physician selected by the Company certifies that Employee has
become physically or mentally incapacitated or unable to perform his full-time
duties under this Agreement, and that such incapacity has continued for a
period
of five consecutive months or 180 calendar days within any period of 365
consecutive days, the Company shall have the right to terminate Employee’s
employment hereunder by written notification to Employee, and such termination
shall be effective on the seventh (7th) day
following the
giving of such notice (“Termination by Reason of Disability”). In
such event, the Company will pay to Employee all accrued salary, bonus to
the
extent earned, any benefits under any plans of the Company in which Employee
is
a participant to the full extent of
2.
Employee’s
rights under such plans, accrued vacation pay, any appropriate business expenses
incurred by Employee in connection with his duties hereunder, all to the
date of
termination, and all severance compensation required under Section 4.1, but
Employee shall not be paid any other compensation or reimbursement of any
kind. In the event of a Termination by Reason of Disability, upon the
termination of the disability, the Company will use its best efforts to reemploy
Employee, provided that such reemployment need not be in the same capacity
or at
the same salary or benefits level as in effect prior to the Termination by
Reason of Disability.
2.6 Employee’s
Obligation Upon Termination. Upon the Termination of Employee’s
employment for any reason, Employee shall within ten (10) days of such
termination return to the Company all personal property and proprietary
information in Employee’s possession belonging to the Company. Unless
and until all such property and information is returned to the Company (which
shall be determined by the Company’s standard termination and check-out
procedures), the Company shall have no obligation to make any payment of
any
kind to Employee hereunder.
2.7 Definitions. For
purposes of this Agreement the following terms shall have the following
meanings.
(a) “Termination
for Cause” shall mean termination by the Company
of Employee’s employment by the Company by reason of:
(i) Employee’s
willful dishonesty towards, fraud upon, or deliberate injury or attempted
injury
to, or breach of fiduciary duty to, the Company;
(ii) Employee’s
material breach of this Agreement, or any other agreement to which Employee
and
the Company are parties, provided that in the event of a claimed material
breach, notice shall be given in writing by Company to the Employee of the
circumstances alleged to constitute a material breach and
Employee shall have a period of thirty (30) days
to cure whatever condition or circumstance which would otherwise constitute
a
material breach and, provided further that, no notice shall be required with
respect to the third material breach of the same nature within a period of
six
months;
(iii) Employee’s
use or possession of illegal drugs at any time, use of alcoholic beverages
during working hours or on Company property except when specifically allowed
by
a Company sponsored function, improper use of prescription drugs during working
hours or on Company property or Employee reporting to work under the influence
of illegal drugs or alcohol;
(iv) Conduct
by
Employee, whether or not in connection with the performance of the duties
contemplated hereunder, that would result in serious prejudice to the interests
of the Company if Employee were to continue to be employed, including, without
limitation, the conviction of a felony or a good faith determination by the
Board of Directors that Employee has committed acts involving moral
turpitude;
(v) Any
material
violation of any rule, regulation or policy of the Company by Employee or
Employee’s failure to follow reasonable instructions or directions of the Board
of Directors of the Company (as it relates to the Employee’s written job
description) or any policy, rule or procedure
3.
of
the
Company in force from time to time, provided that in the event of a claimed
material breach, notice shall be given in writing by Company to the Employee
of
the circumstances alleged to constitute a material breach and
Employee shall have a period of thirty (30) days
to cure whatever condition or circumstance which would otherwise constitute
a
material breach and, provided further that, no notice shall be required with
respect to the third material breach of the same nature within a period of
six
months. All Company policies, rules, regulations and procedures
currently in force must be provided to Employee in writing before execution
of
this Agreement. Any changes to Company policies, rules and procedures
must be provided to Employee in writing thirty (30) days prior to the changes
becoming effective.
(b) “Voluntary
Termination” shall mean termination by Employee of Employee’s
employment other than (i) Termination by Reason of Disability and (ii)
Termination by reason of Employee’s Death.
3.
Salary, Benefits and Bonus Compensation.
3.1 Base
Salary. As payment for the services to be rendered by
Employee as provided in Section 1 and subject to the terms and conditions
of
Section 2, the Company agrees to pay to Employee a “Base Salary “at the rate of
$ 225,000 (U S Dollars) per year payable in accordance with the Company’s
regular payroll practices. On the anniversary date of
this Agreement each year, an increase of at least 10% in the “Base Pay”
rate will occur. Such rate and Employee’s performance shall be reviewed by the
Company’s Board of Directors on an annual basis, commencing Starting Date, for a
determination of whether other adjustment(s) in Employee’s Base Salary should be
made, which adjustment shall be in sole discretion of the Company’s Board of
Directors. In no event shall Employee’s Base Pay be
decreased.
3.2 Performance
Bonus. Employee shall be paid a performance bonus upon the
occurrence of certain earned annual gross revenues by the Company (“Gross
Revenue”) according to the following terms:
(a) Employee
shall receive $75,000 if the Company achieves Revenue From Operations (“RFO”) of
$50 million, and an additional $75,000 for every $15 million increment
thereafter (e.g., $65 million, $80 million, etc.).
(b) Any
bonus
paid pursuant to this section shall be paid upon only the first achievement
of initial RFO amount and increments thereto identified in
3.2(a).
(c) The
RFO from
audited financial statements of the most recent fiscal year prior to acquisition
(as of the date of acquisition) of any businesses or entities acquired pursuant
to Section 3.3 below shall not be calculated in the Gross Revenue figure
used
for this section. However, amounts over the RFO shall be included in
the calculation of Employee’s bonus pursuant to Section 3.2(a). If
any acquired business or entity ceases its affiliation with the Company in
any
way, its RFO shall be removed from the calculation of Employee’s bonus pursuant
to this section.
(d) The
RFO of
the Company shall be audited gross revenues beginning for the 2008
fiscal
4.
year
and
shall be done on a consolidated basis for the Company and all of its acquired
companies, subsidiaries and affiliates.
(e) The
performance bonus shall be payable in cash, common stock, or any combination
of
both, at the sole election of Employee. If the Employee elects a
stock distribution, the stock shall be issued not later than forty-five days
following the filing of the Company’s annual report on Form 10-KSB.
(f) Upon
the
occasion that the RFO of the Company exceeds $200 million, the Parties agree
to
attempt to renegotiate this Agreement. During the pendency of the
renegotiation, or if agreement cannot be reached as a result of the
renegotiation, the terms of this Agreement shall remain in force and effect;
provided, however, that the incremental amount specified in 3.2(a) shall
increase to $20 million for RFO exceeding $200 million (e.g. $220
million, $240 million, etc.).
3.3 Acquisition
Bonus. Notwithstanding the terms set forth in Section 3.2
above, Employee shall be paid an acquisition bonus of $75,000 for each $15
million of RFO of any company acquired directly or indirectly by the Company,
its parents, or subsidiaries, the acquisition of which is identified and
substantially negotiated by the Employee, provided that neither the Company
nor
the acquired company are obligated to pay brokerage fees to a third
party. By way of illustration, if Employee identifies a business
which the Company or its affiliate acquires (by way of stock or asset
acquisition) that earned $45 million RFO, Employee shall be entitled to an
acquisition bonus of $225,000. The bonus shall be paid within thirty
days following the closing of such acquisition.
3.4 Additional
Benefits. During the Term of this Agreement, Employee shall
be included in all group insurance plans and other benefit plans and programs
made available to management employees of the Company. In addition to
said benefits, Employee shall be entitled to the following fringe
benefits:
(a) Automobile
Allowance. Company shall provide Employee with an automobile
allowance during the term of this Agreement in the amount of $1,000 per
month. In addition to said allowance, Company shall also reimburse
Employee for gas and automobile insurance.
(b) Disability
Insurance. Company shall continue to provide Employee the MetLife
Disability Income Insurance Policy currently in place, or any other equivalent
policy that the Employee shall elect.
(c Life
Insurance. Company shall continue to provide Employee with an
expense allowance of equal premium obligation under that certain life insurance
policy with Lincoln Financial Group, Policy No. 506039097, or any other
equivalent policy that the Employee shall elect.
(d) Vacation. Employee
is entitled to take five (5) weeks paid vacation annually, as measured from
the
Starting Date. Employee shall be entitled to an additional one (1)
week of vacation upon each anniversary as measured from the Starting Date,
but
shall accrue no more than eight (8) weeks of paid vacation per
year. Vacation time banked and unused may be rolled over to
subsequent years or paid out in cash, at the sole election of
Employee.
5.
(e) Reimbursement
for Expenses. The Company shall reimburse Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by Employee in connection with his duties under this Agreement in
accordance with the Company’s reimbursement policy in effect from time to time.
Company’s reimbursement policy currently in force must be provided to Employee
in writing before execution of this Agreement. Any changes to
Company’s policy must be provided to Employee in writing thirty (30) days prior
to the changes becoming effective.
4.
Severance Compensation.
4.1 Payment. Following
a Termination by Reason of Disability, Employee shall be entitled to severance
compensation equal to the Base Salary remaining under the term of this Agreement
at the time of said termination. The severance compensation will be
paid in accordance with the Company’s customary payroll practices. The
Company may, in the Company’s sole discretion, if Employee so requests within
thirty (30) days following a Termination by Reason of Disability, elect to
pay
to Employee a lump sum severance payment by bank cashier’s check equal to the
present value based on a factor of five percent (5%) of the flow of cash
payments that would otherwise be paid to Employee pursuant to this
Agreement.
4.2 No
Severance
Compensation Under Other
Termination. In the event
of a
Voluntary Termination, Termination for Cause, or Termination by reason of
Employee’s
Death, neither Employee nor his
estate shall be paid any severance compensation.
5.
Restrictive Covenants.
5.1 Agreement
Not
to Compete. Employee shall not enter into or engage for a period
beginning on the date of this agreement and ending one year after the
termination of Employee’s employment with Company, in any business in
competition with Company and any subsidiary of the Company (defined as “the
transportation of general commodity goods and automotive parts in the Midwestern
part of the United States, or that business which may be conducted in the
future
under Employee’s management,” or “the Protected Business”), either as an
individual on his own account, or as a partner, joint venturer, employee,
agent,
or consultant for any person, or as a director, officer, or stockholder (other
than as a passive investor) of a corporation or other enterprise, or otherwise,
in the territory served by such business. The parties acknowledge
that even thought eh Employee has been engaged as the owner and employee
of
Company, Employee acknowledges that he believes he will be able to engage
in a
livelihood apart from the activities which are prohibited by this covenant
during the specified period, and that the value and expected value of the
consideration given for this covenant is sufficient compensation for this
agreement.
5.2 Non-solicitation. From
a period one year after the termination of Employee’s employment with the
Company, Employee shall not, without the Company’s prior written consent,
directly or indirectly, (a) call on any person or entity who, at the time
of
Employee’s employment, is a customer of the Company or any subsidiary of
the Company, with respect to the purchase of any goods or services which
are, at
the time, being offered by the Company or any subsidiary of the Company,
or which are under development by the Company or any subsidiary of the
Company at the time of Employee’s employment, (b) solicit or induce or attempt
to solicit or induce any
6.
customer
of the Company or any subsidiary of the Company to reduce, or take any action
which would reduce, its business with the Company or any subsidiary of the
Company, (c) solicit or attempt to solicit any employees of the Company or
any
subsidiary of the Company to leave the employ of the Company or any subsidiary
of the Company, or (d) hire any employees or former employees of the Company
or
any subsidiary of the Company, or cause any entity with which Employee is
affiliated or in which Employee owns an equity interest to hire any such
employees or former employees except as specifically defined in this
Agreement. As used herein, the term “former employee” means a person
who has been an employee of the Company or any subsidiary of the Company
within
the twelve-month period prior to the date of termination.
5.3 Enforcement. It
is agreed by the parties that the covenants contained in this Article 5 may
be
enforced against Employee by injunction, without requirement imposed by the
court for posting bond which Employee specifically and knowingly waives,
as well
as by all other legal remedies available to the Company. It is agreed
by the parties that if any portion of the covenants contained in this Article
5
are held to be unreasonable, arbitrary, or against public policy, the covenant
shall be considered divisible both as to time and geographical area so that
a
lesser period or geographical area shall remain effective so long as the
court
determines the same is not unreasonable, arbitrary, or against public
policy. In the event the Company permanently cease conducting the
Protected Business, Employee shall be released from this covenant.
5.4 Liquidated
Damages. it is agreed by the parties that in the event of
breach by Employee of the covenants contained in this Article 5, that as
liquidated damages, the Company shall be entitled to recover from Employee,
at
the Company’s election, either (i) $25,000, or (ii) its actual
damages.
5.5 Preservation
of Business. During the period of this Agreement, Employee
will not engage in any conduct, nor encourage others to engage in any conduct
detrimental to the business of the Company, and shall not commit any act,
or in
any way assist others to commit any act which will injury such business,
and
will not divulge any confidential information or make available to any others
any documents, files or other papers concerning the business or financial
performance of the business of the Company.
6.
Miscellaneous.
6.1 Waiver. The
waiver of the breach of any provision of this Agreement shall not operate
or be
construed as a waiver of any subsequent breach of the same or other provision
hereof.
6.2 Entire
Agreement; Modifications. This Agreement represents the
entire understanding among the parties with respect to the subject matter
hereof, and this Agreement supersedes any and all prior understandings,
agreements, plans and negotiations, whether written or oral with respect
to the
subject matter hereof including without limitation, any understandings,
agreements or obligations respecting any past or future compensation, bonuses,
reimbursements or other payments to Employee from the Company. All
modifications to this Agreement must be in writing and signed by both parties
hereto.
6.3 Notices. All
notices and other communications under this Agreement shall be in writing
and
shall be given by first class mail, certified or registered with return receipt
requested, and shall
7.
be
deemed
to have been duly given three (3) days after mailing to the respective persons
named below:
If
to
the
Company:
Xxxxxx Freight System, Inc.
00000
Xxxxx X. Xxx Xxxx.
Xxxxxxxx
Xxxxxxxx, Xxxxxxxx
00000
Copy
of notice to
Company sent
to:
High Point Transport, Inc.
00000
Xxxxxx Xx. 000
Xxxxxx
Xxxx, Xxxxxxx 00000
Attn:
Xxxx Xxxxxx CEO
If
to
Employee:
Xxxxxxx Xxxxxxx, Xx.
00000
Xxxxxxx Xxxxxx
Xxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Any
party
may change such party’s address for notices by notice duly given pursuant to
this Section.
6.4 Headings. The
Section headings herein are intended for reference and shall not by themselves
determine the construction or interpretation of this Agreement.
6.5 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan.
6.6 Severability. Should
a court or other body of competent jurisdiction determines that any provision
of
this Agreement is invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.7 Benefits
of
Agreement. The provisions of this Agreement shall be binding
upon and inure to the benefit of the executors, administrators, heirs,
successors and assigns of the parties; provided, however, that except as
herein
expressly provided, this Agreement shall not be assignable either by the
Company
(except to an affiliate of the Company) or by Employee.
6.8 Counterparts. This
Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one and the same Agreement.
6.9 Withholdings. All
compensation and benefits to Employee hereunder shall be reduced by all federal,
state, local and other withholdings and similar taxes and payments required
by
applicable law.
6.10 Remedies. All
rights and remedies of the Company hereunder shall be cumulative and the
exercise of any right or remedy shall not preclude the exercise of
another. In the event of a breach of this Agreement, the non-breaching
party shall be entitled to all costs and actual attorney fees incurred as
a
result of the breach.
8.
6.11 Interpretation
Review. Counsel in the negotiation and execution of this
Agreement has represented both parties to this Agreement, and no inference
shall
be drawn against the drafting party. Employee acknowledges that he
has in fact reviewed and discussed this Agreement with his counsel and that
he
understands and assents to the terms hereof.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of
the day and year first above written.
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Company:
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Employee:
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Xxxxxx
Freight System, Inc.
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By: /s/
Xxxx X. Xxxxxx
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/s/
Xxxxxxx Xxxxxxx, Xx.
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Xxxx
X.
Xxxxxx
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Xxxxxxx Xxxxxxx, Xx.
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Its: Chief
Executive Officer
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This
Agreement, and the covenants, representations, and provisions contained
herein are GUARANTEED by:
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a
Florida corporation
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By: /s/
Xxxx X. Xxxxxx
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Xxxx
X. Xxxxxx
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Its: President
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9.
