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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the _____ day
of _______________, 2001, to be effective as of the ___ day of __________, 2001
(the "Effective Date"), by and between XXXX X. XXXXXX ("Employee") and ALLIED
HOLDINGS, INC., a Georgia corporation ("Employer").
WITNESSETH:
WHEREAS, Employer, through the Affiliates (as hereinafter defined), is
engaged in the transportation of automobiles and light trucks from the
manufacturer to retailers and related activities and providing logistics and
distribution services to the new and used vehicle distribution market and
automotive industry (the "Business");
WHEREAS, Employee has management skills of which Employer desires to
avail itself; and
WHEREAS, Employer and Employee deem it to their respective best
interest to outline the duties and obligations, each to the other, by executing
this Employment Agreement,
NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employer and Employee
hereby mutually agree as follows:
1. DEFINITIONS.
(a) "Affiliate" means any corporation, partnership or
other entity of which at least eighty percent (80%)
of the outstanding equity and voting rights are
owned, directly or indirectly through any other
corporation, partnership or other entity, by
Employer.
(b) "Base Salary" means the annual salary payable
pursuant to Paragraph 4(a) hereof as adjusted, from
time to time, pursuant to Paragraph 4(b) hereof.
(c) "Cause" means (i) the commission by Employee of an
act of fraud, misappropriation, dishonesty,
embezzlement, gross negligence, or willful misconduct
in connection with his employment hereunder which is
materially injurious to Employer; (ii) criminal
conduct of Employee which results in a felony
conviction of such Employee with respect to which all
opportunities for appeal have expired, or the
Employee's offering a plea of nolo contendre to a
felony; (iii) Employee's continuing and/or willful
failure to perform his duties or obligations for
Employer as outlined in this Agreement, or Employee's
material breach of this Agreement, if such failure or
breach is not cured within thirty (30) days after
written notice from Employer's Board of Directors
thereof; (iv) Employee's prolonged
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absence, without the consent of Employer, other than
as a result of Employee's Disability or permitted
absence or vacation, which is not cured within ten
(10) days after written notice from Employer's Board
of Directors thereof; or (v) engaging in activities
prohibited by Paragraphs 12, 13, 14 or 15 hereof
which is not cured within ten (10) days after written
notice from Employer's Board of Directors.
Notwithstanding the foregoing, Employer may not
terminate the Employee's employment for Cause unless
a determination that Cause exists shall be made by a
majority of the Employer's Board of Directors.
(d) "Disability", with respect to Employee, shall
conclusively be deemed to have occurred (i) if
Employee shall be receiving payments pursuant to a
policy of long-term disability income insurance; or
(ii) if Employee shall have no disability income
coverage then in force, then if any insurance company
insuring Employee's life shall agree to waive the
premiums due on such policy pursuant to a disability
waiver of premium provision in the contract of life
insurance; or (iii) if Employee shall have no
disability waiver of premium provision in any
contract of life insurance, then if Employee shall be
receiving disability benefits from or through the
Social Security Administration; provided, however,
that in the event Employee's disability shall,
otherwise and in good faith, come into question (and,
for purposes of this proviso, "disability" shall mean
the permanent and continuous inability of Employee to
perform substantially all of the duties being
performed immediately prior to his disability coming
into question) for a period of not less than one
hundred twenty (120) consecutive days, and a dispute
shall arise with respect thereto, then Employee (or
his personal representatives) shall appoint a medical
doctor, Employer shall appoint a medical doctor, and
said two (2) doctors shall, in turn, appoint a third
party medical doctor who shall examine Employee to
determine the question of disability and whose
determination shall be binding upon all parties to
this Agreement. All such medical doctors shall be
duly licensed in the State of Georgia.
(e) "Restricted Period" means the period commencing as of
the date hereof and ending on that date three (3)
years after the termination of Employee's employment
with Employer for any reason, whether voluntary or
involuntary.
2. TERM. Subject to the provisions hereinafter set forth, the
term of this Agreement shall commence as of the Effective Date and shall end on
that date five (5) years after the Effective Date (the "Initial Term"). Upon the
expiration of the Initial Term, and upon the expiration of each successive
Renewal Term (as hereinafter defined), Employee's employment shall be
automatically renewed for an additional term of two (2) years (the "Renewal
Term(s)"), unless written notification of termination is given by either party
to the other party not less than one (1) year prior to the expiration of the
Initial Term or, as the case may be, the then-current Renewal Term. As used
herein, "Term" shall mean the then current Initial Term or Renewal Term, as the
case may be.
3. DUTIES.
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(a) Employee shall, during the Term, serve as President
and CEO of Employer having duties, responsibilities,
powers and authority which are consistent with senior
management positions of like designation generally,
but subject to the Chairman's direction. The Employee
shall report directly to the Chairman and the Board
of Directors of Employer and shall perform such
executive, managerial and administrative duties as
the Chairman and the Board of Directors of Employer
may, from time to time, reasonably request.
(b) During the Term, Employee shall devote substantially
all of his business time, energy and skill to
performing the duties of his employment (vacations as
provided hereunder and reasonable absences because of
illness excepted), shall faithfully and industriously
perform such duties, and shall use his best efforts
to follow and implement all management policies and
decisions of Employer. Employee shall not become
personally involved in the management or operations
of any other company, partnership, proprietorship or
other entity, other than any Affiliate, without the
prior written consent of Employer; provided, however,
that so long as it does not interfere with Employee's
employment hereunder, Employee may (i) serve as a
director, officer or partner in a company that does
not compete with the Business of Employer and the
Affiliates so long as the aggregate amount of time
spent by Employee in all such capacities shall not
exceed twenty (20) hours per month, and (ii) serve as
an officer or director of, or otherwise participate
in, educational, welfare, social, religious, civic,
trade and industry-related organizations.
(c) Employee shall not be required to relocate outside of
the metropolitan Atlanta, Georgia, area without his
prior written consent.
(d) The Board of Directors has adopted a resolution
appointing Employee to serve on Employer's Board of
Directors by filling the vacancy created by the
resignation of A. Xxxxxxxx Xxxxx. Such appointment is
subject to Employee's execution of this Agreement and
will take effect on the Effective Date. It is
anticipated that Employee will also be elected to
serve on the Board of Directors of one or more of
Employer's Affiliates. Employee shall serve in such
position(s) without additional compensation.
4. BASE SALARY.
(a) For and in consideration of the services to be
rendered by Employee pursuant to this Agreement,
Employer shall pay to Employee, for each year during
the Term, an annual salary of not less than Five
Hundred Fifty Thousand Dollars ($550,000.00),
adjusted as provided in subparagraph (b) below (the
"Base Salary"), in equal semi-monthly installments in
accordance with Employer's payroll practices.
Employee's salary shall be reviewed by the Board of
Directors of Employer annually (on each anniversary
of the date hereof) and, in the sole discretion of
the Board of Directors, may be increased, but not
decreased.
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(b) Commencing as of the Effective Date, and as of each
subsequent anniversary thereafter during the Term,
the Base Salary shall be increased, but not
decreased, by an amount equal to the greater of (i)
such amount as shall be determined by the
Compensation Committee of the Board of Directors of
Employer; or (ii) the amount equal to the percentage,
if any, by which the Consumer Price Index (All Items
Less Shelter), Urban Wage Earners and Clerical
Workers, for the Southeast Region/Population Size
Class B, published by the United States Government
Bureau of Labor Statistics for the December 1
preceding such January exceeds such Index for the
December 1 of the preceding year. (As an example, as
of January 1, 2002, the difference will be between
said Index as of December 1, 2001 compared to said
Index as of December 1, 2000.)
5. BONUS COMPENSATION.
(a) Subject to subsection (b) below, in addition to
Employee's Base Salary, Employee shall, with respect
to each calendar year of Employer ending during the
Term, be eligible to participate in a management
bonus plan determined by Employer's Board of
Directors from time to time. Such plan shall, at a
minimum, provide for an opportunity for Employee to
earn a cash bonus on an annual basis of up to one
hundred percent (100%) of Employee's Base Salary
received for the year as to which such bonus is
earned (the "Target Bonus"), based on meeting the
performance goals (such as individual or company-wide
goals) and satisfying such other reasonable terms and
conditions as may be set from time to time by
Employer's Board of Directors in the good faith
exercise of its discretion. The foregoing shall not
limit the ability of Employer's Board of Directors to
establish management bonus plans providing for a
greater Target Bonus for the Employee or to provide a
cash bonus for Employee in any given year that is
greater than the Target Bonus. Such annual cash
bonuses will be payable within thirty (30) days of
the completion of the independent certified audit for
the applicable year (each, an "Annual Bonus"); and
(b) Employer shall pay Two Hundred Seventy-Five Thousand
Dollars ($275,000.00) of the eligible targeted Annual
Bonus in 2001; provided, that Employer shall not be
required to pay such bonus if Employee terminates his
employment on or before December 31, 2001 (other than
a termination by Employee pursuant to Paragraph
9(b)). The remaining balance of the target 2001
Annual Bonus (in the amount of $275,000.00) or a
portion thereof will be paid at the discretion of the
Chairman and the Board of Directors (or its
designee). Such Annual Bonus will be payable within
thirty (30) days of the completion of the independent
certified audit for 2001. All amounts received
pursuant to this Paragraph shall constitute Annual
Bonus for 2001.
(c) Employee shall be eligible to participate in
Employer's Long Term Incentive Plan, on a basis no
less favorable than those made available to other
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senior managers of Employer generally and shall enter
into required documents evidencing participation in
such plan, if any, contemporaneously with the
execution of this Agreement and from time to time
thereafter.
6. OTHER BENEFITS. During the Term, Employer shall provide the
following benefits to Employee:
(a) On and as of the Effective Date, Employee and
Employee's immediate family shall be entitled to
participate in all group benefit programs, including,
without limitation, medical and hospitalization
benefit programs, dental care, life insurance or
other group benefit plans for highly compensated
employees of Employer as are now or hereafter
provided by Employer or any Affiliate, in each case
in accordance with the terms and conditions of each
such plan and benefit package on terms no less
favorable, in both scope of coverage and value of
coverage, than the benefits currently provided to
Employer's Chairman. To the extent applicable and
allowable by the terms and conditions of such plans
and programs, Employee shall be credited for the full
period of Employee's prior employment by Employer or
its Affiliates;
(b) Employee shall be paid a monthly car allowance of One
Thousand Three Hundred Dollars ($1,300.00) to be used
for vehicles for the benefit of Employee in his
discretion;
(c) Employee shall be provided with the use of a cellular
telephone, at no cost to Employee;
(d) Employer shall reimburse Employee for dues paid by
Employee for membership in such professional
organizations and eating clubs as shall, from time to
time, be deemed appropriate and necessary by
Employer;
(e) Employee shall, at all times, have available to him
an expense account to defray actual, reasonable,
ordinary and necessary business expenses incurred in
the performance of his duties hereunder. Employee
shall be reimbursed for such expenses upon
presentation and approval of expense statements or
written vouchers or other supporting documents as may
be reasonably requested in advance by Employer,
Employer's Board of Directors, or a committee
thereof, which approval shall not be unreasonably
withheld or delayed;
(f) Employer shall reimburse Employee up to Seventy-Five
Thousand Dollars ($75,000.00) for actual and
reasonable expenses incurred by Employee in
relocating to Atlanta, Georgia, including actual
moving costs, customary real estate commissions or
closing costs incurred in selling Employee's
residence in Southlake, Texas, or penalties paid by
Employee for failing to fulfill certain contractual
obligations related to the purchase of said residence
in Southlake, Texas. Employee shall be reimbursed for
such
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expenses upon presentation and approval of expense
statements or written vouchers or other supporting
documents as may be reasonably requested in advance
by Employer, Employer's Board of Directors, or a
committee thereof, which approval shall not be
unreasonably withheld or delayed; and
(g) Employer shall reimburse Employee up to One Hundred
Twenty-Five Thousand ($125,000.00) for payments
actually paid by Employee related to the early
termination of his Employment Agreement with his
former employer in Irving, Texas upon Employer's
receipt of reasonable evidence of such payment. Such
payment shall not be unreasonably withheld or delayed
by Employer.
(h) Employer shall pay to Employee an additional payment
(the "Gross-Up Payment") in an amount sufficient to
fully reimburse Employee with respect to all federal,
state and local taxes actually paid by Employee with
respect to the payments set forth in clauses (f) and
(g) hereof. The Gross-Up Payment shall not be
unreasonably withheld or delayed by Employer.
The benefits described in subparagraph (a) of this Paragraph shall not
be construed to require Employer to establish any such plans or
programs or to prevent Employer from modifying or terminating any such
plans or programs, and no such action or failure thereof shall affect
this Agreement; provided, however, that in the event of any reduction
in the group medical and hospitalization benefits in place as of the
date hereof, the salary payable to Employee shall be increased, as of
the effective date of such reduction, by that amount necessary to
enable Employee to supplement the benefits provided by Employer to
maintain the level of benefits currently provided to him by it.
7. VACATION. Employee shall receive four (4) weeks of paid
vacation and/or personal days for each year during the Term. Scheduling of
vacation shall be subject to the prior approval of Employer (which approval
shall not be unreasonably withheld). Vacation time shall not accrue, and in the
event any vacation time for any year shall not be used by Employee prior to the
end of such year, it shall be forfeited.
8. TERMINATION. Anything herein to the contrary notwithstanding,
Employee's employment hereunder shall terminate upon the first to occur of any
of the following events:
(a) Employee's Disability; or
(b) Employee's death; or
(c) Employer's sending Employee ten (10) days prior
written notice terminating his employment without
Cause hereunder prior to expiration of the Term; or
(d) Employee's voluntarily terminating his employment
with Employer for any reason or no reason by sending
Employer ten (10) days prior written notice
terminating his employment hereunder prior to
expiration of the Term, and Employee shall not
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be liable to Employer solely as the result of
terminating this Agreement pursuant to this
subsection (d), except as may otherwise be provided
herein; or
(e) Employee being terminated for Cause.
9. TERMINATION PAYMENT. In the event:
(a) Employee's employment shall terminate pursuant to
Paragraph 8(a) (Disability) or Paragraph 8(b) (death)
hereof; or
(b) Employee shall terminate his employment as a result
of:
(i) any failure to elect or reelect or to
appoint or reappoint Employee to the
position of President and CEO of Employer
unless agreed to by Employee;
(ii) any material change by Employer in
Employee's function, duties, title,
responsibility, importance, reporting
relationship or scope from the position and
attributes thereof described in Paragraph 3
hereof, or any change to Employee's
compensation other than as contemplated by
Paragraph 4 hereof, unless agreed to by
Employee, or any change in location of the
principal offices of Employer outside the
metropolitan Atlanta, Georgia, area, or any
requirement that Employee perform
substantially all of his duties outside the
metropolitan Atlanta, Georgia, area (and any
such material change or relocation of
Employer or Employee shall be deemed a
continuing breach of this Agreement);
(iii) any failure by Employer to comply with
Paragraphs 4 or 5 of this Agreement, unless
agreed to by Employee;
(iv) the liquidation, dissolution, consolidation
or merger of Employer (other than a merger
or other combination of Employer and an
Affiliate); however, if a termination of
employment results from events described in
this clause (iv) and subsection (d) below,
then such termination shall be deemed
pursuant to subsection (d) below;
(v) any other material breach of this Agreement
by Employer which shall not be cured within
thirty (30) days after receipt of written
notice of same from Employee; or
(vi) Employer filing a petition for protection or
relief from creditors under the federal
bankruptcy law, or any petition shall be
filed against Employer under the federal
bankruptcy law, or Employer shall admit in
writing its inability to pay its debts or
shall make an assignment for the benefit of
creditors, or a petition or application for
the appointment of a receiver or liquidator
or
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custodian of Employer is filed, or Employer shall
seek a composition with creditors.
(c) Employee's employment shall be terminated by Employer
for any reason other than for Cause or because
Employer elects not to extend this Agreement beyond
the Initial or any Renewal Term; or
(d) If (i) Employer undergoes any change in control or
ownership whereby Employer is reorganized, merged, or
consolidated with one or more corporations as a
result of which the owners of all of the outstanding
shares of common stock immediately prior to such
reorganization, merger or consolidation own in the
aggregate less than seventy percent (70%) of the
outstanding shares of common stock of the Employer or
any other entity into which Employer shall be merged
or consolidated immediately following the
consummation thereof (hereinafter, "Employer's
successor-in-interest"), or (ii) the sale, transfer
or other disposition of all or substantially all of
the assets or more than thirty percent (30%) of the
then outstanding shares of common stock of Employer
is effectuated, other than as a result of a merger or
other combination of Employer and an Affiliate, or
(iii) the acquisition by any "person" as used for
purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934 of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of the
combined voting power of Employer's then outstanding
voting securities is effectuated; or (iv) the
individuals who, as of the date of execution of this
Agreement, are members of the Board of Directors (the
"incumbent Board") cease for any reason to constitute
at least two-thirds (2/3) of the Board; provided,
however, that if the election, or nomination for
election by the shareholders of any new director was
approved by a vote of at least two-thirds (2/3) of
the incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member
of the incumbent Board, and (a) Employee's employment
with Employer or Employer's successor-in-interest is
terminated by Employer or Employer's
successor-in-interest (as the case may be) or
Employee for any reason, or (b) Employee's employment
under this Agreement is not extended by Employer or
Employer's successor-in-interest for any Renewal
Term, and such termination or non-renewal occurs
within two (2) years after the closing of the
transaction which resulted in the change in control;
or
(e) Employee shall terminate his employment as a result
of:
(i) The failure of the Board of Directors to
re-nominate Employee as a candidate for
election to Employer's Board of Directors,
unless agreed to by Employee; or
(ii) any failure to appoint, elect or reelect
Employee as Chairman of the Board promptly
upon Chairman Xxxxxx X. Xxxxxxx no longer
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holding such office, unless agreed to by
Employee,
then Employer shall, depending upon the reason for the termination of Employee's
employment, immediately pay (in accordance with the terms of this Section 9) to
Employee an amount determined as follows:
(x) If the termination shall be pursuant to subparagraph (d)
above, the amount shall be equal to the sum of
(1) three hundred percent (300%) of Employee's
then-effective annual Base Salary; and
(2) three hundred percent (300%) of the Bonus, as
hereinafter defined.
In addition, Employer shall continue to provide to Employee
(except in the case of Employee's death), for a period equal
to the greater of (i) the remainder of the Term had not said
termination occurred, and (ii) three (3) years from said
termination, benefits, in both scope of coverage and value of
coverage which are in effect as of the date of such
termination, as are provided pursuant to Employer's group
health and hospitalization plan, group dental plan and group
base life insurance plan, and the benefits enumerated in
Paragraph 6(b) hereof.
(y) If the termination shall be other than pursuant to
subparagraph (d) or subparagraph (e) above, the amount shall
be equal to the sum of
(1) that percentage of Employee's then-effective annual
Base Salary equal to the product of the number of
whole or partial years remaining in the Term and one
hundred (100); and
(2) that percentage of Employee's then-effective Bonus,
as hereinafter defined, equal to the product of the
number of whole or partial years remaining in the
Term and one hundred (100);
provided, however, in no event shall the percentage in
subparagraphs (1) and (2) hereof be less than three hundred
percent (300%).
In addition, Employer shall continue to provide to Employee
(except in the case of Employee's death), for a period of
years equal to the number of whole or partial years remaining
in the Term, but in no event fewer than three (3) years,
benefits, in both scope of coverage and value of coverage
which are in effect as of the date of such termination, as are
provided pursuant to Employer's group health and
hospitalization plan, group dental plan and group base life
insurance plan, and the benefits enumerated in Paragraph 6(b)
hereof.
(z) If the termination shall be pursuant to subparagraph (e)
above, the amount shall be equal to three hundred percent
(300%) of Employee's then-effective annual Base Salary.
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In addition, Employer shall continue to provide to Employee (except in
the case of Employee's death), for a period equal to the greater of (i) the
remainder of the Term had not said termination occurred, and (ii) three (3)
years from said termination, benefits, in both scope of coverage and value of
coverage which are in effect as of the date of such termination, as are provided
pursuant to Employer's group health and hospitalization plan, group dental plan
and group base life insurance plan, and the benefits enumerated in Paragraph
6(b) hereof.
10. OPERATIVE PROVISIONS
(a) As used in this Agreement, the term "Bonus" shall
mean:
(i) with respect to the most recent grant or
award of restricted stock, pursuant to
Employer's "Long Term Incentive Plan", made
prior to the date of termination of
Employee's employment, the Dollar value, as
of the date of such grant or award, of the
Long Term Incentive Plan restricted stock
plan target for Employee as approved by the
Compensation Committee of Employer's Board
of Directors, which Dollar value is
established by the Compensation Committee
notwithstanding the number of shares
actually received pursuant to such grant or
award and notwithstanding the value of such
shares actually received; plus
(ii) the highest of the (A) the Annual Bonus
actually paid to Employee in the preceding
year; (B) the average of the Annual Bonuses
actually paid to Employee in the two (2)
preceding fiscal years if Employee has been
employed for two (2) years; and (C) if
Employee's employment is terminated (whether
by Employer, Employer's successor in
interest or Employee) following an event
described in Section 9(d) hereof, the target
amount of Employee's Annual Bonus for the
year in which the termination of employment
occurs.
(b) In the event of a termination of employment pursuant
to Paragraph 9 hereof, all restricted stock awards of
Employee shall become wholly unrestricted and all
unvested stock options of Employee shall become
immediately and fully vested in Employee, and all
such agreements pertaining thereto shall be read
accordingly; provided, however, that Employee shall
have not have any such rights with respect to any
stock issued under any employee stock plan of
Employer qualifying under Section 402(a) et seq. of
the Code if, and to the extent, such rights would
jeopardize the qualification of such plan under said
Section. As used in the preceding sentence, "Code"
means the Internal Revenue Code of 1986 as amended
from time to time or any provisions from time to time
enacted and corresponding in substance thereto.
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(c) Paragraph 9 and this Paragraph 10 shall survive the
termination of this Agreement, and this Agreement
shall be read accordingly.
11. INTENTION OF PARTIES. It is the express understanding and
intention of Employer and Employee that the provisions of Paragraph 5 and
Paragraph 9 hereof shall be read together and be non-exclusive so that, in the
event of a termination of Employee's employment pursuant to Paragraph 9 of this
Employment Agreement, Employee shall receive: both all of the compensation
specified in Paragraph 9 hereof (including, but not limited to, the applicable
percentage of Employee's then-effective Base Salary and the applicable
percentage of the cash portion of Employee's Bonus) and one hundred percent
(100%) of the pro rata portion of both the cash and equity parts of Employee's
Bonus based on the number of days in the fiscal year falling within the Term
(which shall include the amount of any Annual Bonus paid to Employee during that
year, if any), but such pro rata portion shall not be less than the highest of
(i) the Annual Bonus actually paid to Employee in the preceding year; (ii) the
average of the Annual Bonuses actually paid to Employee in the two (2) preceding
fiscal years if Employee has been employed for two (2) years; and (iii) if
Employee's employment is terminated (whether by Employer, Employer's successor
in interest or Employee) following an event described in Section 9(d) hereof,
the target amount of Employee's Annual Bonus for the year in which the
termination of employment occurs.
The amounts referred to in this Paragraph are in addition to the
insurance and other benefits enumerated in Paragraphs 9(x), 9(y) and 9(z)
hereof, if applicable. In no event shall Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Employee under any of the provisions of this Agreement. Any severance
benefits payable to Employee shall not be subject to reduction for any
compensation received from other employment.
12. COVENANT NOT-TO-SOLICIT. Employer and Employee acknowledge
that, during Employee's employment, Employer will spend considerable amounts of
time, effort and resources in providing Employee with knowledge relating to the
business affairs of Employer and the Affiliates, including Employer's and the
Affiliates' trade secrets, proprietary information and other information
concerning Employer's and the Affiliates' financing sources, finances, customer
lists, customer records, prospective customers, staff, contemplated acquisitions
(whether of business or assets), ideas, methods, marketing investigations,
surveys, research, customers' records and any other information relating to
Employer's and the Affiliates' Business.
Employer and Employee recognize that, during the course of Employee's
term of employment with Employer pursuant to this Agreement, Employee shall
contact, solicit or approach Employer's and the Affiliates' customers and
prospective customers (the "Customers") on behalf of Employer.
To protect Employer from Employee's solicitation of business from
Customers during the Restricted Period, Employee agrees that, subject to
Paragraph 16 hereof, he shall not, directly or indirectly, for any person
(including Employee himself), corporation, firm, partnership, proprietorship or
other entity, other than Employer or an Affiliate, engaged in the Business,
solicit transportation, logistics or other business of the type provided by
Employer from any Customer with whom the Employee had contact during the twelve
(12) month period
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immediately preceding the termination of Employee's employment. This Paragraph
12 shall, except as otherwise provided in this Agreement, survive the
termination of this Agreement.
13. COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize
that, during the course of Employee's term of employment with Employer pursuant
to this Agreement, Employer will disclose to Employee information concerning
Employer and the Affiliates, their products, their customers, their services,
their trade secrets, their proprietary information and other information
concerning their business all of which constitute valuable assets of Employer
and the Affiliates. Employer and Employee further acknowledge that Employer has,
and will, invest considerable amounts of time, effort and corporate resources in
developing such valuable assets and that disclosure by Employee of such assets
to the public shall cause irreparable harm, damage and loss to Employer and the
Affiliates.
(a) To protect these assets, Employee agrees that he
shall not, during the Restricted Period, advise or
disclose to any person, corporation, firm,
partnership or other entity whatsoever (except
Employer or an Affiliate), or any officer, director,
stockholder, partner or associate of any such
corporation, firm, partnership or entity any
information received from Employer by Employee during
the course of Employee's association with Employer
relating to the business affairs of Employer and the
Affiliates including information concerning
Employer's and the Affiliates' finances, services,
customers, customer lists, prospective customers,
staff, contemplated acquisitions (whether of business
or assets), ideas, proprietary information, methods,
marketing investigations, surveys, research and any
other information relating to the business and
objectives of Employer and the Affiliates, except as
permitted by this Paragraph 13.
(b) Employee further agrees that he shall not, during the
term of his employment or any time thereafter, advise
or disclose to any person or entity any trade secret
which Employer or any Affiliate has disclosed to
Employee during the course of his employment with
Employer.
(c) In the event Employee's employment is terminated,
Employee agrees that, if requested by Employer, he
will acknowledge in writing that he received the
disclosures referred to herein and is under the
obligations referred to in this Agreement.
(d) This Paragraph 13 shall, except as otherwise provided
in this Agreement, survive the termination of this
Agreement.
Any implication in this Paragraph 13 to the contrary notwithstanding,
this Paragraph 13 hereof shall not, and shall not be deemed to, prohibit
Employee from disclosing information regarding Employer that (i) is already
public information other than because of any breach of this Paragraph 13 by
Employee; (ii) shall be required by applicable Federal or state laws; (iii)
shall not be confidential or proprietary and shall be required in the ordinary
course of business; (iv) shall be required pursuant to the order of any court or
administrative agency having jurisdiction; provided, however, that the foregoing
shall not permit the disclosure of any trade secret of Employer; and (v) during
the course of Employee's employment with Employer disclosure of any
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of the foregoing as reasonably required by Employee in the good faith
performance of his duties under this Agreement.
14. COVENANT NOT-TO-INDUCE. Employee covenants and agrees that
during the Restricted Period, he will not, directly or indirectly, on his own
behalf or in the service or on behalf of others, solicit, induce or attempt to
solicit or induce an employee or other personnel of Employer and the Affiliates
to terminate employment with such party. This Paragraph 14 shall, except as
otherwise provided in this Agreement, survive the termination of this Agreement.
15. COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee agrees
that he shall not, at any time during or following the Term, make any remarks
disparaging the conduct or character of Employer or any of its current or former
Affiliates, agents, employees, officers, directors, shareholders, successors or
assigns (in the aggregate, such persons and entities are referred to herein as
the "Protected Persons"); provided, however, that during the Term, Employer
acknowledges and agrees that Employee may be required from time to time to make
such remarks about Protected Persons for legitimate business purposes and if
consistent with the discharge of his duties hereunder. In addition, following
termination of his employment hereunder, Employee agrees to reasonably cooperate
with Employer, at no extra cost, in any litigation or administrative proceedings
(e.g., EEOC charges) involving any matters with which Employee was involved
during Employee's employment with Employer. Employer shall reimburse Employee
for travel and other related expenses approved by Employer incurred in providing
such assistance. This Section 15 shall survive the termination of this
Agreement.
16. COVENANT NOT TO COMPETE. Employer and Employee acknowledge
that, by virtue of Employee's responsibilities and authority as President and
Chief Executive Officer of Employer, he will, during the course of his
employment, be instrumental in developing, and will receive, highly confidential
information concerning Employer and the Affiliates, their services, their trade
secrets, their proprietary information, and other information concerning the
business of Employer and the Affiliates, much of which is unavailable to persons
of lesser responsibility and authority. Employee further acknowledges that the
ability of such information to benefit a competitor or potential competitor of
Employer shall cause irreparable harm, damage and loss to Employer and the
Affiliates. To protect Employer and the Affiliates from Employee's using or
exploiting this information, Employee agrees that he shall not, for a period of
twelve (12) months from the date of termination of this Agreement for any
reason, (i) perform substantially similar job duties or functions as those
performed for Employer under this Agreement for any entity engaged in the
Business in the United States of America (the "Restricted Territory"), or (ii)
directly or indirectly, own, manage, join, control, contract with, be employed
by, act in the capacity of an officer, director, trustee, shareholder or partner
or consultant, or participate in any manner in the ownership, management,
operation, or control of any business or person engaged in the Business in the
Restricted Territory wherein Employee would perform substantially similar duties
or job functions as those performed for Employer under this Agreement; provided,
however, Employee shall be permitted to own not more than five percent (5%) of
the stock of a corporation required to file reports pursuant to the Securities
Exchange Act of 1934. As to the foregoing, Employee acknowledges that he has the
ability to earn a comparable income within or without the Restricted Territory
as a manager or executive for persons or entities not engaged in the Business
and that earning a livelihood by working for persons or entities not engaged in
the Business within or without the Restricted Territory would not constitute a
hardship or an
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unreasonable restriction on the Employee or restrict him from earning comparable
income. This Section 16 shall survive termination of this Agreement.
17. PARAMOUNT PROVISION. Anything in this Agreement to the
contrary notwithstanding, the provisions of Paragraph 00, Xxxxxxxxx 00(x),
Xxxxxxxxx 13(c), Paragraph 14 and Paragraph 16 hereof shall not apply to
Employee, and shall be absolutely null and void, in the event Employee shall
terminate his employment hereunder for any one of the reasons set forth in
Paragraph 9(b) hereof.
18. SPECIFIC ENFORCEMENT. Employer and Employee expressly agree
that a violation of the covenants not-to-solicit, not-to-disclose, not-to-induce
and not-to-compete contained in Paragraphs 12, 13, 14 and 16 hereof, or any
provision thereof, shall cause irreparable injury to Employer and that,
accordingly, Employer shall be entitled, in addition to any other rights and
remedies it may have at law or in equity, to an injunction enjoining and
restraining Employee from doing or continuing to do any such act and any other
violation or threatened violation of said Paragraphs 12, 13, 14 and 16 hereof.
19. SEVERABILITY. In the event any provision of this Agreement
shall be found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void part were
deleted; provided, however, if Paragraphs 12, 13, 14 and 16 shall be declared
invalid, in whole or in part, Employee shall execute, as soon as possible, a
supplemental agreement with Employer, granting Employer, to the extent legally
possible, the protection afforded by said Paragraphs. It is expressly understood
and agreed by the parties hereto that Employer shall not be barred from
enforcing the restrictive covenants contained in each of Paragraphs 12, 13, 14
and 16 as each are separate and distinct, so that the invalidity of any one or
more of said covenants shall not affect the enforceability and validity of the
other covenants.
20. INCOME TAX WITHHOLDING. Employer or any other payor may
withhold from any compensation or benefits payable under this Agreement such
Federal, State, City or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
21. OTHER TAX CONSIDERATIONS. Notwithstanding any other provision
of this Agreement or any other plan, agreement or arrangement applicable to
Employee to the contrary, in the event that (1) any portion of the aggregate
payments and benefits received or to be received by Employee pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with
Employer or any Affiliate of Employer which are contingent on a change of
ownership or effective control of Employer or an Affiliate or a change in the
ownership of a substantial portion of the assets of Employer or an Affiliate (in
each case, within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code")) (hereinafter, all such payments and benefits
being sometimes referred to as "Total Payments") would constitute a "parachute
payment", as defined in Code Section 280G(b)(2), and (2) the amount of such
parachute payment that Employee would receive after deduction of all excise
taxes payable by the Employee under Section 4999 of the Code with respect to any
portion of such Total Payments constituting an "excess parachute payment"
(within the meaning of Section 280(G) of the Code) would be less than 299
percent of Employee's "base amount" (as defined in Code Section
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280G(b)(3), then, but only then, Employee's right to the portion of such Total
Payments otherwise constituting a "parachute payment" shall automatically be
reduced so that the aggregate of the applicable values thereof for purposes of
Code Section 280(G) shall be equal to 299 percent of the Employee's "base
amount" by reducing] to the extent necessary (A) first the cash portion of the
Total Payments otherwise constituting a "parachute payment" (if necessary, to
zero (0)), and (B) then] all other non-cash Total Payments otherwise
constituting a "parachute payment" (if necessary, to zero (0)); provided that,
in making any such determination as to the application and effect of this
Paragraph 21 on any payments or benefits received or to be received by Employee,
(i) no portion of the Total Payments shall be taken into account which does not
constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code, including by reason of Section 280G(b)(4)(A) of the Code; and (ii) the
value of any non-cash benefit or any deferred payment or benefit included in the
Total Payments otherwise constituting a "parachute payment" shall be determined
in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
22. WAIVER. The waiver of a breach of any term of this Agreement
by any of the parties hereto shall not operate or be construed as a waiver by
such party of the breach of any other term of this Agreement or as a waiver of a
subsequent breach of the same term of this Agreement.
23. D & O INSURANCE; INDEMNIFICATION. Employer shall maintain, for
the benefit of Employee, director and office liability insurance in form at east
as comprehensive as, and in an amount that is at least equal to, that maintained
by Employer on the Effective Date; provided, however, that Employer's Board of
Directors shall have the discretion to modify such coverage so long as such
modification applies to all officers and directors. In addition, Employer shall
indemnify Employee against liability as an officer and director of Employer
and/or any Affiliate of Employer to the same extent as other officers and
directors of Employer and/or any Affiliate in accordance with the constituent
and organizational documents of such entities and consistent with applicable
law. Employee's rights under this Section 23 shall continue so long as he may be
subject to such liability, whether or not this Agreement may have been
terminated prior hereto.
24. RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as
notice of termination of this Agreement is given, Employee shall immediately
cease contact with all Customers of Employer and shall forthwith surrender to
Employer all customer lists, documents and other property of Employer then in
his possession, compliance with which shall not be deemed to be a breach of this
Agreement by Employee. Pending the surrender of all such customer lists,
documents and other property to Employer, Employer may hold in abeyance any
payments due Employee pursuant to this Agreement.
25. ASSIGNMENT.
(a) Employee shall not assign, transfer or convey this
Agreement, or in any way encumber the compensation or
other benefits payable to him hereunder, except with
the prior written consent of Employer or upon
Employee's death.
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(b) The covenants, terms and provisions set forth herein
shall be binding upon and shall inure to the benefit
of, and be enforceable by, Employer and its
successors and assigns; provided, Employer shall
require any successor (whether direct or indirect, by
purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation or
otherwise) to all or a substantial portion of its
assets, by agreement in form and substance reasonably
satisfactory to Employee, expressly to assume and
agree to perform this Agreement in the same manner
and to the same extent that Employer would be
required to perform this Agreement if no such
succession had taken place. Regardless of whether
such an agreement is executed, this Agreement shall
be binding upon any successor of Employer in
accordance with the operation of law, and such
successor shall be deemed the "Employer" for purposes
of this Agreement.
26. NOTICES. All notices required herein shall be in writing and
shall be deemed to have been given when delivered personally or five (5) days
after the date on which such notice is deposited in the U.S. Mail, certified or
registered, postage prepaid, return receipt requested, addressed as follows, to
wit:
If to Employer at:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
With a copy to:
Xxxxx Xxxxxxx Xxxxxx Xxxxxxx & Small, P.C.
0000 XxxxxXxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx Xxxxx, Esquire
If to Employee at:
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
With a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, LLP
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esquire
or at such other addresses as may, from time to time, be furnished to Employer
by Employee, or by Employer to Employee on the terms of this Paragraph.
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27. BINDING EFFECT. This Agreement shall be binding on the parties
hereto and on their respective heirs, administrators, executors, successors and
permitted assigns.
28. ENFORCEABILITY. This Agreement contains the entire
understanding of the parties and may be altered, amended or modified only by a
writing executed by both of the parties hereto. This Agreement supersedes all
prior agreements and understandings by and between Employer and Employee
relating to Employee's employment.
29. APPLICABLE LAW. This Agreement and the rights and liabilities
of the parties hereto shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Georgia.
30. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document.
IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and
Employer has caused this Agreement to be executed and delivered by its duly
authorized officers, all as of the day and year first above written.
(SEAL)
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WITNESS XXXX X. XXXXXX
ATTEST: ALLIED HOLDINGS, INC.
By: By:
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Its Secretary Its Chairman
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[CORPORATE SEAL]
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