Exhibit (c)(18)
EMPLOYMENT AND NONCOMPETE AGREEMENT
XXXX XXXXX, CHIEF FINANCIAL OFFICER
THIS AGREEMENT, dated this 19th day of May, 1999, is made by and among
XXXX XXXXX, a resident of the State of _______________ ("Executive"); and XXXX
VII, INC., a Delaware corporation ("Employer").
RECITALS
A. Employer 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
its subsidiary corporations.
B. Executive desires to be employed by Employer as its Chief
Financial 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 with Employer for the term commencing on June 21, 1999 and
continuing until June 20, 2002 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 start date of this Agreement shall be and
are those typically performed by a Chief Financial Officer of
a company.
(b) By appropriate action of Employer's Board of Directors,
Executive has been elected as Chief Financial Officer of
Employer. Executive shall be permitted to continue to serve
as Chief Financial 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 Chief Financial 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 One Hundred Seventy-Five Thousand Dollars and No/100 Dollars ($175,000) per
year ("Base Salary") payable in equal weekly installments. 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, 1999), in which
consolidated pre-tax profit (calculated on the basis of generally accepted
accounting principles consistently applied) earned by Xxxx VII is equal to the
consolidated Business Plan (as defined at 5.02 (c)) or exceeds 120% of the
consolidated pre-tax profit earned in the previous fiscal year, Employer will
pay Executive within 90 days following the close of the fiscal year a bonus
equal to 50% of his 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;
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(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.
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. By separate agreement, Employer shall provide
Executive with a non-qualified option to purchase 25,000 shares of the common
stock of Xxxx VII, Inc. exercisable at the closing price per share on the first
business date of employment. The option shall vest in five equal annual
installments of 5,000 shares each commencing on June 21, 2000. Each portion of
the option shall be exercisable subsequent to vesting and the entire option
shall lapse on June 20, 2010.
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.
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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 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) Lapse of the term hereof on June 20, 2002.
(b) On the date of Executive's death;
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(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) 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 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,
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 eighty (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 1999, 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 2003, 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.
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6. PAYMENTS UPON TERMINATION.
6.01 PAYMENTS UPON EXECUTIVE'S DEATH OR DISABILITY. Upon the
termination of this Agreement pursuant to Section 5.01 (b) (death) or Section
5.01 (e) (disability), 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 June 20, 2002 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.
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(a) The provisions of Sections 4.01, 4.02 and 4.03
(confidentiality, non-compete and nonemployment of other
employees) of this Agreement shall 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), 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
125% of base 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.
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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.
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: Xxxx Xxxxx
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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
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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 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 19th day of
May, 1999 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:
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X. X. XXXXXX, CHAIRMAN
-----------------------------------
XXXX XXXXX, IN HIS
INDIVIDUAL CAPACITY (EXECUTIVE)
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