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Exhibit 10.8
EMPLOYMENT AND NONCOMPETE AGREEMENT
THIS AGREEMENT, dated this first day of January, 1997, is made by and
among XXXXX X. XXXXXXX, a resident of the State of Tennessee ("Executive"); XXXX
VII TRANSPORTATION COMPANY, INC., a Delaware corporation ("Employer"), a wholly
owned subsidiary of XXXX VII , INC., a Delaware corporation ("XXXX VII").
RECITALS
A. Employer, XXXX VII, and its subsidiaries, are engaged in the
business of freight transportation services, both providing and arranging
transportation of goods. Subsequent references to Employer herein shall be
deemed to also include XXXX VII and its subsidiary corporations.
B. Executive desires to continue to be employed by Employer as its
President and Chief Operating Officer and Employer desires to employ Executive
in such capacity under the terms set forth herein.
AGREEMENT
In consideration of the mutual promises, covenants and agreements
contained herein and other good and valuable consideration, sufficiency of which
is hereby acknowledged by Executive and Employer, the parties agree as follows:
1. Employment and Term of Employment.
Employer hereby employs Executive and Executive hereby accepts
employment which Employer for the term commencing on the date hereof and
continuing for a period of three (3) years subsequent to January 1, 1997, unless
sooner terminated as provided in Section 5.
2. Duties and Authority.
2.01 Duties and Position of Executive.
(a) Executive shall undertake and assume the
responsibility for those duties that Employer's Board of Directors shall, from
time to time, assign to Executive. Executive's principal duties as of the date
of this Agreement shall be and are those typically performed by an the President
and Chief Operating Officer of a company.
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(b) By appropriate action of Employer's Board of
Directors, Executive has been elected as President and Chief Operating Officer
of Employer. Executive shall be permitted to continue to serve as President and
Chief Operating Officer of Employer for the duration of this Agreement provided
and for so long as the performance standards of Paragraph 5.02 (c) below are
attained.
(c) Executive shall, at all times, faithfully and to the
best of his ability, experience and talents, perform the duties set forth herein
or to which Executive may, in the future, be assigned, always acting solely in
the best interests of the Employer.
2.02 Time Devoted to Employment. Executive shall devote full time and
attention to performance of assigned employment duties; provided, however, he
shall be allowed to also pursue those separate and personal business interests
which do not conflict or compete with the business of the employer directly or
indirectly and which do not require personal services of the Executive. During
the term of this Agreement, the Executive will not be involved in any
transportation ventures other than those of the employer without the advance
written authorization of the Employer's Board of Directors.
It is also understood that the Executive is not hereby precluded from
engaging in limited appropriate civic, charitable or religious activities.
In the event the Employer's Board of Directors shall reassign the
duties of Executive as President and Chief Operating Officer to another person,
the Executive shall thereafter continue to serve the Employer engaged in the
consultation, performance and management of those specific projects or duties to
which he is assigned by the Employer and which are consistent with his
experience and competence.
3. Compensation.
During the term of this Agreement, Employer shall pay to Executive the
following compensation:
3.01 Base Salary. Executive shall be paid an initial base salary of
Two Hundred Forty Thousand Dollars and No/100 Dollars ($240,000) per year ("Base
Salary") payable in equal weekly installments of $4,615.38. The Compensation
Committee of the Employer's Board of Directors ("Committee") may review
Executive's performance and adjust his Base Salary in its sole and absolute
discretion. The Committee may increase the salary of the Executive at any time;
provided, however, that the Committee may not reduce the Base Salary fixed in
this Agreement.
3.02 Bonus. In addition to the Base Salary, in each fiscal year
(commencing with the fiscal year ending December 31, 1997), Employee will
provide a bonus to Executive payable within 90 days following the close of the
employer's fiscal year. The annual bonus shall be based upon pre-tax profit
(computed on the basis of generally accepted accounting principles consistently
applied) earned by Employer (exclusive of operating divisions assigned to the
management supervision of others) as compared to the pre-tax profit earned in
the prior year. For example, and based upon pre-tax profit of $10,750,00 for the
Base Year 1996:
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Base Year 1996 - Estimated Pre-Tax $10,750,000.00
Year 1997
110% of base or $11,825,000 bonus earned equals 30% of salary
115% of base or $12,362,000 bonus earned equals 40% of salary
120% of base or $12,900,000 bonus earned equals 50% of salary
125% of base or $13,437,000 bonus earned equals 70% of salary
Year 1998 if 1997 Base is $12,900,000
110% of base or $14,190,000 bonus earned equals 35%
115% of base or $14,835,000 bonus earned equals 50%
120% of base or $15,480,000 bonus earned equals 60%
125% of base or $16,125,000 bonus earned equals 70%
Year 1999 if 1998 Base is $15,000,000
110% of base or $16,500,000 bonus earned equals 35%
115% of base or $17,250,000 bonus earned equals 50%
120% of base or $18,000,000 bonus earned equals 60%
125% of base or $18,750,000 bonus earned equals 70%
Provided, however, in any year in which results equal to the 1997 business plan
pre-tax profit are attained, Executive shall receive a minimum alternative bonus
equal to 25% of base salary.
In each plan year business plan revenue or business plan pre-tax profit shall be
adjusted by the amount of the following items:
(a) All charges of Employer to any affiliated company for services
rendered shall be at present standards with any new services to be to charged at
cost;
(b) Any gain on the sale, casualty or other disposition of any capital
asset of the Employer shall be deducted;
(c) Any other income which was not the result of ordinary operations of
the Employer shall be excluded;
(d) Services of affiliated companies or business units shall be at cost
or as agreed. If not, Executive may cause Employer to purchase such goods or
services from unaffiliated sources.
"Pre-tax profit", as defined above shall be based upon generally accepted
accounting principles consistently applied and as finally determined by the
Company's independent CPA auditing firm.
3.03 Car Allowance. In addition, the Executive shall receive $500 a
month as a car allowance, plus the costs he incurs in operating his private
automobile with respect to insurance, fuel, oil, filters, hoses, belts, license
tags, one set of tires every four years and sales tax upon acquisition.
3.04 Fringe Benefits/Vacation. Executive shall receive standard Xxxx
VII fringe benefits, including three (3) weeks of vacation with pay each year.
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3.05 Reimbursement of Expenses. Employer shall reimburse Executive for
ordinary, necessary and reasonable business expenses incurred to conduct or
promote Employer's business, including travel and entertainment, provided
Executive submits an itemization of such expenses and supporting documentation
thereof, all according to Employer's generally applicable procedures.
3.06 Stock Options and Stock Appreciation Rights. All Stock Options and
Stock Appreciation Rights related to the Common Stock of Xxxx VII previously
granted to the Executive by agreement between Xxxx VII and the Executive shall
continue in full force and effect in accordance with their respective terms and
conditions. By separate agreement, Employer shall provide Executive with an
additional non-qualified option to purchase 20,000 shares of the common stock of
Xxxx VII, Inc. exercisable at $29.25 per share. The option shall vest in five
equal annual installments of 4,000 shares each commencing on April 10, 1998.
Each portion of the option shall be exercisable one year subsequent to vesting
and the entire option shall lapse on April 9, 2007, ten years subsequent to the
effective date of grant.
4. Nondisclosure and Noncompetition.
Executive hereby covenants and agrees as follows:
4.01 Confidentiality. Executive acknowledges that as a result of his
employment by Employer, he has, in the past, used and acquired and, in the
future, will use and acquire knowledge and information used by Employer in its
business and which is not generally available to the public or to persons in the
transportation industry, including, without limitation, its future products,
services, patents and trademarks; designs; plans; specifications; models;
computer software programs; test results; data; manuals; methods of accounting;
financial information; devices; systems; procedures; manuals; internal reports;
lists of shippers and carriers; methods used for and preferred by its customers;
and the pricing structure of its existing and contemplated products and service,
except such information known by Executive prior to his employment by Employer
("Confidential Information"). As a material inducement to Employer to enter into
this Agreement, and to pay to Executive the compensation set forth herein,
Executive agrees that, during the term of this Agreement and, subject to the
provisions of section 6.05 below, for a period of three (3) years after the
termination of this Agreement, Executive shall not, directly or indirectly,
divulge or disclose to any person, for any purpose, any Confidential
Information, except to those persons authorized by Employer to receive
Confidential Information and then only if use by such person is for Employer's
benefit.
4.02 Covenant Against Competition. During the term of this Agreement
and for a period of three (3) years after the termination of this Agreement and
subject to the provisions of section 6.05 below, Executive shall not have any
interest in or be engaged by any business or enterprise that is in the business
of providing motor freight transportation services or arranging for the
transportation of goods, including any business that acts as a licensed property
broker or shipper's agent, which is directly competitive with any aspect of the
business Employer now conducts or which Employer is conducting or is in the
process of developing at the time of any competitive actions by Executive
("Prohibited Activity") except to the extent provided in section 2. For purposes
of this Section 4.02, Executive shall be deemed to have an "interest in or be
engaged by a business or enterprise" if Executive acts (a) individually, (b) as
a partner, officer, director, shareholder, employee, associate, agent or owner
of any entity or (c) as an advisor, consultant, lender or other person
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related, directly or indirectly, to any business or entity that is engaging in,
or is planning to engage in, any Prohibited Activity. Ownership of less than
five percent (5%) of the outstanding capital stock of a publicly traded entity
that engages in any Prohibited Activity shall not be a violation of this Section
4.02.
4.03 Employment of Other Employees by Executive. During the term of
this Agreement and, subject to the provisions of section 6.05 below, for a
period of three (3) years after the termination of this Agreement, Executive
shall not directly or indirectly solicit for employment, or employ, except on
behalf of Employer, any person who was an employee of Employer at any time
during the six (6) months preceding such solicitation or employment.
4.04 Judicial Amendment. If a court of competent jurisdiction
determines any of the limitations contained in this Agreement are unreasonable
and may not be enforced as herein agreed, the parties hereto expressly agree
this Agreement shall be amended to delete all limitations judicially determined
to be unreasonable and to substitute for those limitations found to be
unreasonable the maximum limitations such court finds to be reasonable under the
circumstances.
4.05 Irreparable Injury. Executive acknowledges that his abilities and
the services he will provide to Employer are unique and that his failure to
perform his obligations under this Section 4 would cause Employer irreparable
harm and injury. Executive further acknowledges that the only adequate remedy is
one that would prevent him from breaching the terms of Section 4. As a result,
Executive and Employer agree that Employer's remedies may include preliminary
injunction, temporary restraining order or other injunction relief against any
threatened or continuing breach of this Section 4 by Executive. Nothing
contained in this Section 4.05 shall prohibit Employer from seeking and
obtaining any other remedy, including monetary damages, to which it may be
entitled.
5. Termination.
5.01 Events Causing Termination. This Agreement shall terminate upon
the first of the following events to occur:
a) At the end of three (3) years subsequent to January 1, 1997;
b) On the date of Executive's death;
c) At Employer's option, upon Executive's disability as defined in
section 5.02 (a) below, effective on the day Executive receives notice from
Employer that it is exercising its option granted by this Section to terminate
this Agreement;
(d) On the day Executive receives written notice from Employer that
Executive's employment is being terminated for cause, as defined in section 5.02
(b) below;
(e) Subject only to an exception specified in Section 5.02 (d) below,
fifteen (15) days after receipt by Executive of notice from Employer specifying
any act of insubordination or failure to comply with any instructions of the
Chief Executive Officer of Xxxx VII or any act or omission that the Chief
Executive Officer believes, in good faith, does, or may, adversely affect
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Employer's business or operations provided Executive fails to remedy or cease
said acts within said fifteen (15) day period;
(f) On the date Executive resigns or, at the Employer's option, the
date Executive commits any act that is a material breach of this Agreement; and
(g) At Executive's option, on the date Employer commits any act that is
a material breach of this Agreement.
(h) At Employer's option, upon the failure of Executive to attain the
performance standards of Section 5.02 (c) below.
5.02 Definitions. For purposes of Section 5.01 the following
definitions shall apply:
a) "Disability" means Executive's inability, because of sickness or
other incapacity, whether physical or mental, to perform his duties under this
Agreement for a period in excess of one hundred eight (180) substantially
consecutive days, as professionally determined by two medical doctors licensed
to practice medicine, one of which is selected by the Employer and one of which
is selected by the Executive. In the event the doctors should disagree as to
whether the Executive is disabled, they shall select a third licensed medical
doctor to make such termination which shall be binding on the parties hereto.
b) "Cause" means (i) a willful failure by Executive to substantially
perform his duties hereunder, other than a failure resulting from Executive's
incapacity to do so because of physical or mental illness (ii) a willful act by
Executive that constitutes gross misconduct and which is materially injurious to
Employer, (iii) Executive's commitment of any act of dishonesty toward Employer,
theft of corporate property or unethical business conduct or (iv) Executive's
conviction of any felony involving dishonest, or immoral conduct.
c) "Business Plan" means that the Executive has participated in the
preparation of a business plan of Xxxx VII for 1997, which has been submitted
to, and approved by, the Board of Directors of XXXX VII and Executive. For each
calendar year thereafter, through and including 1999, annual business plans
shall be submitted to, and approved by, the Board of Directors of XXXX VII and
Executive, which shall constitute the basis of annual performance reviews. If,
at the time of any such annual performance review, Employer has attained less
that 50% of the pre-tax profit projected in plan, then the Employer shall, in
its sole and exclusive discretion, have the right to terminate this Agreement
pursuant to Section 5.01 (h) above. For any year in which the Executive does not
approve of the plan adopted by the Board, the performance standard shall amount
to 110% of the previous year's pre-tax profit as defined in Paragraph 3.02
above.
d) Whenever, as the result of a change of control of Xxxx VII, Inc.
consisting of either a change in ownership of 50% or more of the outstanding
voting shares or a majority of the members of the Board of Directors, X. X.
Xxxxxx no longer serves as Chief Executive Officer of Xxxx VII, Inc., in the
event Executive is thereafter terminated for insubordination by failure to
comply with any direction or order given by the successor Chief Executive
Officer which controvenes prior business policy or established practice or
procedure of Employer, then Executive shall, not withstanding the provisions of
Sections 6.02 (a) and 6.05 (a), be entitled to receive all compensation provided
by Paragraph 3 for the balance of the term hereof and shall no longer be subject
to the requirements to not compete set forth in Sections 4.02 and 6.05 (a).
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6. Payments Upon Termination.
6.01 Payments Upon Executive's Death, Disability or Failure to Make
Plan. Upon the termination of this Agreement pursuant to Section 5.01 (b)
(death), Section 5.01 (c) (disability) or Section 5.01 (h) (failure to make
plan), Employer shall pay, or cause to be paid, to Executive, his designated
beneficiary or his legal representative,
a) the current Base Salary as provided in Section 3.02 and fringe
benefits as set forth in Section 3.04 through the period ending twelve
(12) months after occurrence of the event causing termination; and
b) all necessary, ordinary, and reasonable business expenses incurred
by Executive prior to termination of this Agreement.
c) plus in the event of death or disability, bonus pursuant to
Section 3.02 pro-rated to the date of termination.
Employer shall not be obligated to make any other payments to Executive.
6.02 Payments Upon Termination for Cause, Insubordination, Resignation
or Breach by Executive. Upon termination of this Agreement pursuant to Section
5.01 (d) (cause), Section 5.01 (e) (insubordination), or Section 5.01 (f)
(resignation or breach by Executive), Employer shall pay, or cause to be paid,
to Executive,
a) the Base Salary and fringe benefits (not including bonus) for the
period ending on the date this Agreement is terminated pursuant to the
appropriate subsection of Section 5.01; and
b) all necessary, ordinary, and reasonable business expenses incurred
by Executive prior to termination hereof.
Employer shall not be obligated to make any other payments to Executive.
6.03 Payments Upon Expiration of Term or Termination for Breach by
Employer. Upon termination of this Agreement pursuant to Section 5.01 (g)
(Employer's breach), Employer shall pay to Executive the Base Salary set forth
in Section 3.01, through December 31, 1999 plus bonus pursuant to Section 3.02.
All compensation paid by Employer under the terms of this Section 6.03 shall be
paid in the manner set forth in Section 3.
6.04 Payment of Amounts Due Upon Termination and Mitigation. If
Executive is entitled to payment of Base Salary, fringe benefits or business
expenses upon termination of this Agreement, Employer shall make said payments
within the ordinary course of its business and pursuant to the terms hereof. All
compensation to which the Executive is entitled following termination such
payment shall be reduced by the amount of compensation earned by the Executive
from other employment.
6.05 Effect of Termination on Nondisclosure, Noncompete and
Nonsolicitation Provisions.
a) The provisions of Sections 4.01, 4.02 and 4.03 (confidentiality,
non-compete and nonemployment of other employees) of this Agreement shall
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survive termination hereof pursuant to Section 5.01 (d) (cause), Section 5.01
(e) (insubordination) or Section 5.01 (f) (resignation) even though the
remaining terms and provisions of this Agreement shall be void, including the
terms of Section 3 (compensation).
b) Upon termination of this Agreement pursuant to Section 5.01 (a)
(lapse of term) or Section 5.01 (h) (failure to make plan), Employer may elect
to continue the obligations of Executive set forth in Section 4
(confidentiality, noncompete and nonemployment of other employees) for so long
as the Employer continues to provide all compensation set forth in Section 3,
but not to exceed three years subsequent to termination.
c) Upon termination pursuant to Section 5.01 (c) (disability) the
provisions of Section 4 (confidentiality, noncompete and nonemployment of other
employees) shall survive for one year thereafter.
d) Upon termination of this Agreement pursuant to Section 5.01 (g)
(Employer breach), all of the provisions of Section 4 (confidentiality,
noncompete and nonemployment of other employees) shall be void.
7. Conflict of Interest.
During the term of this Agreement, Executive shall not, directly or
indirectly, have any interest in any business which is a supplier of Employer
without the express written consent of Employer's Board of Directors. Such
interest shall include, without limitation, an interest as a partner, officer,
director, stockholder, advisor or employee of or lender to such a supplier. An
ownership interest of less than five percent (5%) in a supplier whose stock is
publicly held or regularly traded shall not be a violation of this Section 7.
8. Indemnification of Executive.
The Employer will indemnify the Executive and hold him harmless
(including reasonable attorney fees and expenses) to the fullest extent now or
hereafter permitted by law in connection with any actual or threatened civil,
criminal, administrative or investigative action, suit or proceeding in which
the Executive is a party or witness as a result of his employment with the
Employer. This indemnification shall survive the termination of this Agreement.
9. General Provisions.
9.01 Location of Employment. Executive's principal office shall be
located at Memphis, Tennessee, or at such other location where Employer and
Executive shall mutually agree.
9.02 Assignment. Neither party may assign any of the rights or
obligations under this Agreement without the express written consent of the
other party. For purposes of the foregoing sentence, the term "assign" shall not
include an assignment of this Agreement by written agreement or by operation of
law to any of Employer's wholly owned subsidiaries.
9.03 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties' heirs, successors and assigns, to the extent
allowed herein.
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9.04 Severability. The provisions of this Agreement are severable. The
invalidity or unenforceability of any one or more of the provisions hereof shall
not affect the validity or enforceability of any other part of this Agreement.
9.05 Waiver. Waiver of any provision of this Agreement or any breach
thereof by either party shall not be construed to be a waiver of any other
provision or any subsequent breach of this Agreement.
9.06 Notices. Any notice or other communication required or permitted
herein shall be sufficiently given if delivered in person or sent by certified
mail, return receipt requested, postage prepaid addressed to:
Employer: X. X. Xxxxxx, Chairman
Xxxx VII, Inc.
000 X. Xxxxxxx
Xxxxxxxxx, XX 00000
cc: Xxxxx X. Xxxxxx
Vice Chairman and General Counsel
Xxxx VII, Inc.
0000 Xx. Xxxxxx Xxxxxx
Xx. Xxxxxx, Xxxxxxxx 00000
Executive: Xxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
or such other address as shall be furnished in writing by any such party. Any
notice sent by the above-described method shall be deemed to have been received
on the date personally delivered or so mailed. Notices sent by any other method
shall be deemed to have been received when actually received by the addressee or
its or his authorized agent.
9.07 Applicable Law. Except to the extent preempted by federal law,
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Tennessee, without considering its laws or rules
related to choice of law.
9.08 Ownership and Return of Documents and Objects. Every plan,
drawing, blueprint, flowchart, listing of source or object code, notation,
record, diary, memorandum, worksheet, manual or other document, magnetic media
and every physical object created or acquired by Executive as part of his
employment by Employer, or which relates to any aspect of Employer's business,
is and shall be the sole and exclusive property of Employer. Executive shall,
immediately upon Employer's request or upon termination of this Agreement for
any reason, deliver to Employer each and every original, copy, complete or
partial reproduction, abstract or summary, however reproduced, of all documents
and all original and complete or partial reproductions of all magnetic media or
physical objects owned by Employer then in Executives' possession.
9.09 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Commercial Arbitration rules of the American Arbitration
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Association and judgement upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
9.10 Attorney's Fees. If either party initiates arbitration proceedings
to enforce the terms hereof, the prevailing party in such proceeding, on
arbitration hearing, judicial trial or appeal, shall be entitled to its
reasonable attorney's fees, costs and expenses to be paid by the losing party as
fixed by the arbitrator.
WITNESS WHEREOF, the parties have executed this Agreement on the 10th
day of April, 1997 to be effective on the day and year first above written.
THIS AGREEMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
XXXX VII, INC.
By:/s/ X. X. Xxxxxx
-------------------------------
X. X. Xxxxxx, Chairman
XXXX VII TRANSPORTATION CO., INC.
By:/s/ X. X. Xxxxxx
-------------------------------
X. X. Xxxxxx, Chairman
/s/ Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx, in his
individual capacity (Executive)
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ADDENDUM TO EMPLOYMENT AND NONCOMPETE AGREEMENT
XXXXX X. XXXXXXX
THIS AGREEMENT; dated this 15th day of May , 1997 is made by and among
Xxxxx X. Xxxxxxx, a resident of the State of Tennessee ("Executive"); Xxxx VII
Transportation Company, Inc. a Delaware corporation ("Employer"), a wholly owned
subsidiary of Xxxx VII, Inc., a Delaware corporation ("Xxxx VII").
RECITALS
A. Executive, Employer and Xxxx VII previously entered into an
"Employment and Noncompete Agreement" on April 10, 1997 effective January 1,
1997 ("Agreement"). The parties hereby undertake and agree to modify said
Agreement to the extent expressly stated herein. In other respects, said
Agreement shall remain as originally stated and executed.
B. The changes expressed in this Addendum are occasioned by the
assignment of an operating division, Xxxx VII Consumer Delivery Network ("CDN"),
to the management supervision of Executive.
AGREEMENT
In consideration of the mutual promises, covenants and agreements
contained herein and in the underlying Agreement, the parties do hereby further
agree as follows:
I. Management Responsibility for Consumer Delivery Network.
In September of 1996, Xxxx VII Transportation Company, Inc. acquired
the assets of Consumer Delivery Network, Inc. which have been subsequently
operated as a division of Xxxx VII Transportation Company, Inc. under the direct
management supervision of X. X. Xxxxxx, Chairman. Effective May 16, 1997,
principal management supervision responsibility of Consumer Delivery Network, an
operating division of Xxxx VII Transportation Company, Inc. was transferred to
Executive by mutual agreement.
II. Impact on Bonus Calculation.
The results of operation of CDN division shall not be included in the
calculation of pre-tax profit upon which Executive's bonus is based pursuant to
Paragraph 3.02 of his Agreement until July 1, 1998.
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IN WITNESS WHEREOF, the parties hereto have executed this Addendum on
the day and year first above written.
XXXX VII, INC.
BY:/s/ X. X. Xxxxxx
----------------------------------
X. X. Xxxxxx, Chairman
XXXX VII TRANSPORTATION CO, INC.
BY:/s/ X. X. Xxxxxx
----------------------------------
X. X. Xxxxxx, Chairman
/s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx, in his individual capacity
(Executive)
