EXHIBIT 10.4
EMPLOYMENT AGREEMENT (the
"Agreement"), dated as of November 19, 2000,
by and between Xxxx Xxxxx (the "Executive")
and QUALITY DISTRIBUTION, INC., a Florida
corporation (the "Company").
WHEREAS, the Company desires to have the benefit of the
Executive's knowledge and experience for the benefit of the Company and its
subsidiaries; and
WHEREAS, the Executive desires to be employed pursuant to the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Executive hereby agree as
follows:
Section 1. Employment.
The Company hereby employs the Executive, and the Executive
hereby accepts employment by the Company, upon the terms and conditions
hereinafter set forth. The Executive's employment hereunder shall commence, and
shall be effective as of the date hereof, (the "Effective Date").
Section 2. Term.
Subject to the provisions for earlier termination as herein
provided, the employment of the Executive hereunder will be for the period
commencing on the Effective Date and ending on the first anniversary of such
date. On the first anniversary of the Effective Date, and on each anniversary
thereafter, the term of this Agreement shall automatically be extended by an
additional one year unless, no later than 30 days prior to any such renewal
date, either the Company or the Executive gives written notice to the other that
the term will not be extended, in which case the Executive's employment
hereunder shall terminate upon the expiration of the then-current term. The
period of the Executive's employment under this Agreement, as it may be
terminated or extended from time to time as provided herein, is referred to
hereafter as the "Employment Period".
Section 3. Duties and Responsibilities.
During the Employment Period, the Executive shall serve as
Chief Operating Officer and Senior Vice President of Operations of the Company.
The Executive will faithfully perform the duties and responsibilities of such
offices, as they may be assigned from time to time by the Board of Directors of
the Company (the "Board") or the Board's designee. The Executive shall devote
full-time attention and energy during all business hours during the Employment
Period at the Company's Tampa offices or engaged in business related travel
(except for permitted vacation periods taken in accordance with the Company's
policy and reasonable periods of illness or other incapacity) to the business
and affairs of the Company, and at all times the Executive shall use his best
efforts to serve and advance the business of the Company. During the Employment
Period, the Executive shall not engage in any business activity which, in
the reasonable judgment of the Board or its designee, conflicts with the duties
of the Executive hereunder, whether or not such activity is pursued for gain,
profit or other pecuniary advantage; provided, however, to the extent not in
conflict with this Section 3, the Executive shall not be prohibited from
engaging in passive business activities permitted under Section 8(a)(i) hereof.
SECTION 4. COMPENSATION AND BENEFITS.
(a) Base Salary. During the Employment Period, The Company
shall pay to the Executive an annual base salary of $190,000, payable in
accordance with the Company's general payroll practices and subject to
withholding and other payroll taxes. Three months after the effective-date of
this agreement, the Executive's annual base salary shall be reviewed by the
Company's Chief Executive Officer. At that time the Executive's annual base
salary may be increased to $200,000. Said decision shall be at the sole
discretion of the Company's Chief Executive Officer. Thereafter, the Executive's
base salary shall be reviewed annually by the Board (excluding the Executive if
he should be a member of the Board at the time of such determination) and shall
be subject to increase at the option and sole discretion of the Board.
(b) Bonus.
(i) Upon the Effective Date the Company shall pay to
the Executive a bonus of $22,000 subject to ordinary
withholding and other payroll taxes;
(ii) During the Employment Period the Executive shall
be eligible to receive, at the sole discretion of the Board,
an annual cash bonus based on predetermined performance
standards established pursuant to the Company's Incentive
Bonus Program on the date hereof, or such other annual bonus
plan to be agreed upon by the Executive and the Board. The
Executive shall have a target bonus of 40% of his base salary
under such program.
(iii) In the event Executive shall remain employed by
Company through March 1, 2002, the Company shall pay to the
Executive a stay bonus in the amount of $15,000.
(c) Benefits. In addition to the salary and cash bonus
referred to above, the Executive shall be entitled during the Employment Period
to participate in such employee benefit plans or programs of the Company, and
shall be entitled to such other fringe benefits, as are from time to time made
available by the Company generally to employees of the Executive's position,
tenure, salary, and other qualifications, on terms and conditions at least as
favorable as those provided to such similarly situated employees. The Executive
acknowledges and agrees that the Company does not guarantee the adoption of any
particular employee benefit plan or program or other fringe benefit during the
Employment Period, and participation by the Executive in any such plan or
program shall be subject to the rules and regulations applicable thereto.
(d) Options to Purchase Common Stock. Upon the Effective Date,
the Executive shall be granted options to purchase 10,000 shares of the
Company's common stock at a price of $__ per share, which options shall be
subject to the terms and provisions set forth in Attachment A hereto. In
addition, the Executive shall be eligible for such other awards, if any, under
the Company's stock option plan in effect as of the date hereof or any other
stock option or
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other equity-based incentive plan as shall be granted to the Executive from time
to time by the Board or its designee, in its sole discretion. All options
granted pursuant to this Section 4(dl shall be referred to hereinafter as the
"Executive Options".
(e) Expenses. The Company will reimburse the Executive, in
accordance with the practices in effect from time to time for other officers or
staff personnel of the Company, for all reasonable and necessary business
expenses incurred by the Executive for or on behalf of the Company in the
performance of the Executive's duties hereunder, upon presentation by the
Executive to the Company of appropriate vouchers or documentation.
(f) Relocation. The Executive shall relocate to Florida in
connection with this Agreement, the Company agrees to reimburse the Executive
for reasonable moving expenses incurred by him in connection with such
relocation including the following:
(i) Full service household goods move, which will
include the reimbursement to Executive of the insurance costs
required to obtain full replacement valuation of up to
$250,000.
(ii) Six (6) month's transitional living expenses
(iii) One trip to current Atlanta residence every
other week for a period of three (3) months.
(iv) Payment of reasonable documented real estate
brokerage fees paid by the Executive in connection with the
sale of the home in which the Executive resides immediately
prior to such relocation.
(v) Two (2) house hunting trips to the Tampa area for
your immediate family.
(vi) In the event Executive shall voluntarily
terminate his employment with out good reason during the first
year of the agreement, Executive agrees to reimburse the
Company for the above mentioned relocation expenses, on a
pro-rata basis.
(g) Bridge Loan. The Company agrees to provide the Executive
with a Bridge Loan of up to $500,000 for the purchase of his residence in the
Tampa area. Said loan shall accrue interest at a rate of LIBOR plus 2%. The
Executive agrees to repay the entire principal plus accrued interest on or
before the sixth month following the date said loan was made.
SECTION 5. TERMINATION.
The Company reserves the right to terminate the Executive's
employment hereunder at any time with or without "Cause" (as defined herein),
subject to the provisions of Section 6 hereof. In addition, the Executive's
employment hereunder may be terminated by the Company under the following
circumstances:
(a) Death. The Employment Period shall terminate upon the
death of the Executive.
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(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been unable to
satisfactorily perform all of his duties hereunder for 90 days (whether or not
consecutive) during any 365 day period, and within 30 days after written notice
of termination is given (which may occur before or after the end of such absence
period) shall not have returned to the performance of the duties set forth
hereunder on a full-time basis, the Company may terminate the Executive's
employment hereunder on the basis of disability.
(c) For Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder if such
termination shall be the result of:
(i) the failure by the Executive to satisfactorily
perform his duties hereunder which shall be deemed to include,
without limitation, habitual absenteeism or dereliction of
duty;
(ii) disobeying in a material respect any legally
appropriate directives of the Board that are specific in
nature;
(iii) a material breach of the Executive's fiduciary
duty to the Company, willful misconduct or material dishonesty
fraud, or theft;
(iv) the material breach of any of the covenants set
forth in Section 8 hereof; or
(v) a conviction for, or plea of guilty or polo
contendere to any crime involving moral turpitude or any
felony.
Any termination of the Executive's employment for Cause by the Company shall be
communicated by a written notice of termination, indicating the specific
termination provision in the Agreement relied upon and setting forth the facts
that provide the basis for the Executive's termination. Such notice must be
given at least thirty days prior to termination, and the Executive shall have
the opportunity during such notification period to cure or correct any failure
or breach upon which the Executive's termination is based.
(d) Good Reason. The Executive may terminate his employment
hereunder for "Good Reason." For purposes of this Agreement, the Executive shall
have "Good Reason" to terminate his employment if such termination shall be the
result of:
(i) a material diminution caused by the Company in
the Executive's duties and responsibilities as contemplated by
Section 3 hereof;
(ii) a material breach by the Company of its
compensation and benefit obligations under Section 4 hereof;
(iii) a relocation of the Executive required by the
Company of more than 50 miles from the current location of the
Company's Tampa Offices; or
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(d) Without Cause: Good Reason. In the event of termination of
the Executive's employment hereunder by the Company without Cause (other than
upon death or disability or delivery of a notice pursuant to Section 2 hereof or
by the Executive for Good Reason, the Executive shall be entitled to the
following severance pay and benefits:
(i) severance payments in the form of continuation of
the Executive's base salary as in effect immediately prior to
such termination over the then-remaining current term hereof
plus one (1) additional year (the "Severance Period").
(ii) continuation during the Severance Period of
coverage under the group medical benefits plan in which the
Executive is participating at the time of termination;
provided, however, that the Company's obligation to provide
such coverage shall be terminated if the Executive obtains
comparable substitute coverage from another employer at any
time during the Severance Period; and
(iii) a pro rata bonus as calculated in accordance
with Section 6(f) hereof.
(e) Sole Remedy. The parties agree that the foregoing shall
constitute the Executive's sole and exclusive rights and remedies by reason of
termination pursuant to this Section 6, and that with respect to Section 6(d)
above, such amounts shall constitute an agreement between the parties of
liquidated damages for the Executive by reason of any such termination. It is
further understood that neither party hereto shall be entitled to punitive,
consequential or special damages with respect to any claim hereunder, and each
party waives ail such rights and remedies if any, except to the extent such a
waiver is determined in a court of competent jurisdiction to violate public law
or policy.
(f) Pro Rata Bonus. If the Executive's employment is
terminated under Section 5 hereof as a result of death, disability, by the
Company without Cause, by the Executive for Good Reason, the Executive shall
receive, a pro rata portion of the annual bonus for the year in which the
termination occurs (based on the period of service prior to such termination),
with such amount calculated and paid following the completion of the year based
on the Company's performance applicable under the terms set forth in Section
4(b)(ii) hereof Notwithstanding any provisions set forth herein, or any
provisions set forth in the applicable bonus plan, any pro rata bonus paid
pursuant to this Section 6 shall be paid at the end of the fiscal year that such
termination occurs, based on the Company's performance for such fiscal year.
(g) Other Benefits. The benefits payable to the Executive
under this Agreement are not in lieu of any benefits payable under any employee
benefit plan, program or arrangement of the Company, and upon termination the
Executive will receive such benefits or payments, if any, as the Executive may
be entitled to receive pursuant to the terms of such plans, programs and
arrangements.
SECTION 7. COMPANY COMMON STOCK.
Purchase of Common Stock
The Executive shall purchase 10,000 shares of the Company's
common stock (the "Loan Shares"), as soon as practicable following the Effective
Date and the Company
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agrees to sell such shares at a price of $ per share, for a total purchase price
of $_____. The Company further agrees to lend to the Executive up to 100% of the
total purchase price set forth in the immediately preceding sentence, pursuant
to the terms of a Limited Recourse Promissory Note (the "Note") entered into as
of the date hereof, a form of which is attached hereto as Attachment B;
SECTION 8. RESTRICTIVE COVENANTS.
(a) Covenant Not to Compete.
(i) During the Employment Period and (A) for a period
of two years from the termination date, following a
termination by the Company for Cause or by the Executive
without Good Reason or (B) until the Executive ceases to
receive salary or severance payments from the Company
(including, without limitation, any subsidiary thereof), if
the Executive is terminated by the Company without Cause or
the Executive terminates his employment for Good Reason (the
"Restricted Period"), the Executive shall not, (i) engage in
(A) any business that includes the transportation of any goods
or products transported by the Company or its Affiliates as of
the date hereof and the date of termination, (B) the bulls
trucking business, (C) the bulk tank cleaning business, or (D)
. any other business in which the Company or any of its
Affiliates are engaged as of the date hereof or the date of
termination of the employment with the Company (collectively,
the "Company Business") within the United States; (ii) compete
or participate as agent, employee, consultant, advisor,
representative or otherwise in any enterprise which has any
material operations engaged in the Company Business within the
United States; or (iii) compete or participate as a
stockholder, partner, member or joint venture, or has any
direct or indirect financial interest, in any enterprise which
has any material operations engaged in the Company Business
within the United States; (the "Company Business"), except
that the Executive shall be allowed to invest his assets in
the securities of public companies engaged in the Company
Business if such holdings are passive investments which do not
involve the Executive's holding with respect to any such
entity the position of officer, director, employee, consultant
or general partner, or owning directly or indirectly two
percent (2%) or more of the stock, whether voting or not, of
any such entity, and which do not involve the Executive
becoming a secured or unsecured creditor of any such entity;
(ii) At its sole option, the Company may extend by a
period of up to one year the Restricted Period applicable
under Sections 8 (a)(i) and (iii) hereof by providing to the
Executive the severance payments and benefits referred to in
Section 6(d)(i) - (ii) and paying such bonus as would have
been paid to the Executive for such extended period, based on
the Company's performance hereof for the duration of any such
extended period. The Company shall notify the Executive if it
wishes to exercise this option not later than 135 days prior
to the expiration of the then-current Restricted Period;
(iii) During the Restricted Period, the Executive
agrees to refrain from interfering with the employment
relationship between the Company, its subsidiaries and
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its Affiliates and their respective employees, unions, members
of the Company's Affiliate Program or other independent
owner/operators by directly or indirectly soliciting or making
any other contact with any of such individuals to participate
in independent business ventures, and the Executive agrees to
refrain from directly or indirectly soliciting business from
or making any other contact with any client of the Company or
any of its subsidiaries or Affiliates, or prospective client
that has been solicited by the Company or any of its
subsidiaries or Affiliates within three months of the date of
termination; and
(iv) In the event of any breach of the restrictive
covenants set forth in Section 8 a hereof, the Company shall
have the right, in its sole discretion, and in addition to its
right of enforcement under Section 8 hereof and any other
right of enforcement or recovery available to the Company at
law or equity or under this Agreement, to (a) suspend or
cancel the Executive's right to exercise the Executive Options
(whether or not then otherwise exercisable), (b) suspend or
cancel the Executive's pending right to receive an issuance of
shares in settlement of any Executive Option exercise, and/or
(c) either (1) cancel the shares issued upon exercise of the
Executive Options (with repayment to the Executive of the full
purchase price paid for such shares) or (2) require the
Executive to pay to the Company in cash an amount equal to the
gain realized by the Executive upon exercise of any Executive
Option; provided, however, that the foregoing shall not apply
to any Executive Options exercised more than six months prior
to the date of termination of employment. The Company shall
provide at least twenty days advance notice and opportunity to
cure before exercising this right.
(b) Intellectual Property. During the Employment Period, the
Executive will disclose to the Company all ideas, inventions, creations,
business plans and other intellectual property developed by the Executive during
such period which relate directly or indirectly to the Company Business,
including, without limitation, any process, operation, product or improvement
which may be patentable or copyrightable. The Executive agrees that such will be
the property of the Company and that the Executive will, at the Company's
request and cost, do whatever is necessary to secure the rights thereto by
patent, copyright or otherwise to the Company. The Executive shall be prohibited
from making use of or implementing any such ideas, inventions or business plans
in connection with his employment with a business that is considered a
competitor under Section 8(a)(i) hereof.
(c) Confidentiality. During the Employment Period and at all
times thereafter, the Executive agrees that he will not divulge to anyone (other
than the Company or any persons employed or designated by the Company) any
knowledge or information of any type whatsoever of a confidential nature of any
information not readily available to the public relating to the business of the
Company or any of its subsidiaries or Affiliates, including, without limitation,
all types of trade secrets (unless readily ascertainable from public or
published information or trade sources), product design and customer and
supplier information. The Executive further agrees not to disclose, publish or
make use of any such knowledge or information (other than the Company or any
persons employed or designated by the Company) without the prior written consent
of the Company.
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(d) Remedy for Breach. The parties hereto acknowledge that in
addition to any remedies available to the Company at law or under this
Agreement, the Executive hereby consents and agrees that the Company shall be
entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any continuation of any violation of the provisions of
this Section 8 and the Executive hereby consents that such restraining order or
injunction may be granted.
SECTION 9. [INTENTIONALLY LEFT BLANK]
SECTION 10. ENFORCEMENT.
It is the desire and intent of the parties hereto that the
provisions of this Agreement be enforceable by a court of competent jurisdiction
to the fullest extent permissible under the laws of public policies applied in
each jurisdiction where enforcement is sought. If, at the time of enforcement of
Section 8 of this Agreement, a court holds that the restrictions stated herein
are unreasonable under circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
(a) Because the employment relationship between the Company
and the Executive is unique and because the Executive has access to Confidential
Information and Work Product, the parties hereto agree that money damages would
be an inadequate remedy for any breach of this Agreement. Therefore, in the
event of a breach or threatened breach of this Agreement, either party may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
hereof (without posting a bond or other security) or, in the case of a breach by
the Executive of the provisions of Section 8 hereof require the Executive to
account for and pay over to the Company all compensation, profits, moneys,
accruals, increments or other benefits derived or received as a result of any
transactions constituting a breach of the covenants contained therein.
(b) The prevailing party in any legal action (including any
arbitration pursuant to Section 14 arising out of or relating to this Agreement
shall be entitled to its reasonable attorneys' fees and court and other costs.
SECTION 11. JURISDICTION AND VENUE.
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself or himself and its or his property, to the
exclusive jurisdiction of any New York state court or federal court of the
United States of America sitting in New York, and any appellate court presiding
thereover, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment relating thereto,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such New York state court or, to the extent permitted by law,
in any such federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
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(b) Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it or he may legally and
effectively do so, any objection that it or he may now or hereafter have to the
laying of venue of any suit, action, or proceeding arising out of or relating to
this Agreement, in any New York State or federal court sitting in New York
County, New York. Each of the parties hereto irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) The parties hereto further agree that the mailing by
certified or registered mail, return receipt requested, of any process required
by any such court shall constitute valid and lawful service of process against
them, without the necessity for service by any other means provided by law.
SECTION 12. SURVIVAL.
Notwithstanding anything contained in this Agreement to the
contrary, the provisions of Sections 6, 8 and 10 hereof will survive the
expiration or other termination of this Agreement until, by their terms, such
provisions are no longer operative.
SECTION 13. NOTICES.
Notices and other communications hereunder will be in writing
and will be delivered personally or sent by air courier or first class certified
or registered mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Executive: Xxxx Xxxxx
0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
and if to the Company: Quality Distribution, Inc.
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
with a copy to: Apollo Management, L.P.
c/o Xxxxxx Xxxxxx
1301 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement will be deemed to have been given on the
date of delivery, if personally delivered; on the business day after the date
when sent, if sent by air courier; and on the third business day after the date
when sent, if sent by mail, in each case addressed to such party as provided in
this Section 13 or in accordance with the latest unrevoked direction from such
party.
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SECTION 14. ARBITRATION.
Except as specifically provided in Section 10 hereof, any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a single arbitrator in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The attorney's fees and expenses of the prevailing party shall be
paid by the non-prevailing party, based on a determination made by the
arbitrator for this purpose as to which party is the prevailing party hereunder.
Arbitrators will be selected from the American Arbitration Association's panel
of arbitrators in the New York region and the location of the arbitration
proceeding shall be in Hillsborough County, Florida.
SECTION 15. GOVERNING LAW.
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK
OR ANY OTHER JURISDICTION), THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE
INTERNAL LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW
OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
WOULD ORDINARILY APPLY.
SECTION 16. WAIVER OF BREACH.
The waiver by either party of a breach of any provision of
this Agreement by the other party must be in writing and will not operate or be
construed as a waiver of any subsequent breach by such other party. No course of
conduct or failure or delay in enforcing the provisions of this Agreement shall
effect the validity, binding effect or enforceability of this Agreement or any
provisions hereof.
SECTION 17. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements or understandings among the parties with respect thereof. This
Agreement may be amended only with the prior written
SECTION 18. HEADINGS.
The section headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
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SECTION 19. SEVERABILITY.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 20. ASSIGNMENT; SUCCESSORS.
This Agreement is personal in its nature and the parties
hereto shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, provided, that (i) the
provisions hereof will inure to the benefit of, and be binding upon, each
successor of the Company, whether by merger, consolidation, transfer of all or
substantially all of its assets or otherwise (subject to Section 5(d)(iv)
herein) and (ii) all of the Executive's rights to compensation following his
death shall inure to the benefit of his heirs, estate, personal representatives
or designees or other legal representatives as the case may be.
*****
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
QUALITY DISTRIBUTION, INC.
--------------------------------------
Name:
Title:
EXECUTIVE
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Xxxx Xxxxx
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