EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Executive Employment Agreement (this “Agreement”), dated as of September 17,
2007, is by and between Target Logistic Services, Inc., a Delaware corporation
(the “Company”), and Xxxxxxxxxxx X. Xxxxxxxxxxx (“Executive”).
In
consideration of Executive’s agreement to supply services under this Agreement
and the mutual agreements set forth below, the sufficiency of which is hereby
acknowledged, the Company and Executive agree as follows:
1.Employment.
The
Company shall employ Executive, and Executive shall serve in the employ of
the
Company, upon the terms and subject to the conditions set forth in this
Agreement.
2.Term.
This
Agreement shall be effective and Executive’s employment with the Company
hereunder shall commence upon the closing, if any, of the transactions
contemplated by the August 9, 2007 Letter of Understanding between Mainfreight
Limited (“Parent”) and Target Logistics, Inc. (the “Effective Date,” and such
transactions, the “Merger Transactions”) and, except as otherwise provided in
Section 0
of this
Agreement, continue until the date that is three
years from the Effective Date (such term the “Employment Period”). The
Employment Period shall be renewed for additional two-year periods (subject
to
earlier termination pursuant to Section 0
of this
Agreement) unless either party, not less than 60 days prior to the expiration
of
the then-current Employment Period, gives the other party notice that it does
not wish the Employment Period to be so renewed. For the avoidance of doubt,
this Agreement shall not be effective unless the Merger Transactions have been
consummated.
3.Position
and Duties.
(a)During
the Employment Period, Executive’s position shall be President and Chief
Executive Officer of the Company. Executive shall have responsibility for the
general management, direction and control of the business and affairs of the
Company, under the ultimate direction and supervision of and consistent with
annual budgets and strategic plans submitted by him to, and approved by, the
Board of Directors of the Company (the “Board”). Executive shall have all of the
rights, duties and powers that are commonly incident to the office of President
and Chief Executive Officer of a subsidiary of a publicly-traded corporation
and
shall report to the Managing Director of Parent.
(b)Executive
agrees to devote all of Executive’s working time, attention and efforts to the
Company and to perform the duties of Executive’s position in accordance with the
Company’s policies as in effect from time to time. Executive’s principal place
of employment shall be the Company’s offices located in Carson, California;
provided, however, Executive may be required to travel for business
purposes.
4.Compensation
and Related Matters.
(a)Salary.
During
the Employment Period, the Company shall pay to Executive a minimum annual
base
salary of $243,512 (such salary, as it may be increased from time to time,
the
“Annual Base Salary”), payable in accordance with the Company’s regular payroll
practices as in effect from time to time. During the Employment Period, the
Annual Base Salary shall be reviewed by Parent not less frequently than annually
in accordance with the policies of Parent as then in effect, the first such
review to take place during the month of September 2008.
(b)EBT
Bonus.
(i) For
the
first three fiscal years of TLSI ending during the Employment Period, the
Company shall pay to Executive an amount (the “EBT Bonus”) equal to the sum of:
(A) 3 percent of the first $1,000,000 of the EBT (as defined herein);
(B) 4 percent of the EBT of TLSI from $1,000,0001 to $2,000,000; and
(C) 5% of the EBT of TLSI above $2,000,000, which sum shall be reduced by
the percentage shortfall, if any, from TLSI’s goal EBT for such fiscal year, or
portion thereof for the first fiscal year during the Employment
Period.
The EBT
Bonus will be paid within 60 days after the end of the applicable fiscal
year.
(ii) For
purposes of this Section 0,
EBT for
the first fiscal year ending during the Employment Period shall be limited
to
EBT attributable to the period beginning on July 1, 2007 and ending on the
last
day of the first fiscal year ending during the Employment Period.
(iii) After
the
period described in Section 0,
Executive’s entitlement to any bonus or incentive compensation shall be
determined in accordance with the policies of Parent as then in
effect.
(iv) “EBT”
shall be the Audited Net Profit Before Income Tax of TLSI, and shall exclude
any
transaction costs incurred in connection with the Merger Transactions that
are
otherwise allocated to TLSI.
(c)Option
Award.
If EBT
for the third fiscal year ending during the Employment Period equals or exceeds
200% of the EBT for the last fiscal year ending prior to the commencement of
the
Employment Period, then Parent shall award Executive an option to purchase
100,000 of the ordinary shares of stock of Parent, such option to vest on the
third anniversary of the grant date in accordance with the terms of Parent’s
stock option plan then in effect.
(d)Employee
Benefits.
Executive shall, to the extent eligible, be entitled to participate at a level
commensurate with his position in all employee benefit welfare and retirement
plans, as well as equity plans, generally provided by the Company to its senior
executives in accordance with the terms thereof as in effect from time to time.
(e)Expenses
and Auto Allowance.
The
Company shall reimburse Executive for all reasonable, necessary and historically
reimbursed expenses incurred by Executive during the Employment Period in
performing services in accordance with policies and procedures established
by
the Company. During the Employment Period, the Company shall reimburse Executive
up to a maximum of $18,000 per year for the cost of an automobile. To the extent
that any reimbursement would be includable in Executive’s gross income for
federal income tax purposes, Executive shall submit the necessary documentation
and shall receive the reimbursement as historically paid.
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(f)Vacations.
In
addition to holidays observed by the Company during which the Company’s U.S.
offices are closed, Executive shall be entitled to four weeks of paid vacation
per fiscal year during the Employment Period (or portion thereof for the first
fiscal year ended during the Employment Period).
5.Termination.
(a) Non-Renewal.
If
either party, not less than 60 days prior to the expiration of the then-current
Employment Period, gives the other party notice that it does not wish the
Employment Period to be renewed, the Employment Period shall terminate upon
expiration of the then-current Employment Period,
provided that the Company may instead elect to terminate Executive’s employment
prior to the end of such 60-day period and continue to pay Executive his Annual
Base Salary in accordance with the Company’s normal payroll practices through
the expiration of the 60-day period.
(b) Death.
If
Executive dies during the Employment Period, the Employment Period shall
terminate as of the date of Executive’s death.
(c) Disability.
If
Executive becomes Disabled during the Employment Period, the Employment Period
shall terminate as of the date Executive becomes Disabled. For purposes of
this
Agreement, Executive shall be Disabled if he (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or
mental impairment that can be expected to result in death or can be expected
to
last for a continuous period of not less than 12 months or (ii), by reason
of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of
not
less than six months under an accident and health plan covering the Company’s
employees.
(d) Cause.
The
Company shall be permitted to terminate the Employment Period and all of the
obligations of the Company under this Agreement for Cause. For purposes of
this
Agreement, the Company shall have “Cause” to terminate Executive’s employment
and the Employment Period upon:
(i) The
substantial and continued willful or negligent failure by Executive to perform
his duties hereunder, or a material breach or imminent breach of this Agreement
by Executive, which failure or breach, if curable, is not cured by Executive
within such time as reasonable, not to exceed 30 days after written notice
of
such failure or breach is delivered to Executive by the Company, unless a longer
period of time can reasonably be shown by Executive to be
necessary;
(ii) Executive’s
conviction of, plea of guilty or nolo
contendere to,
or
admission as to the commission of, a felony or other criminal act involving
moral turpitude; or
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(iii) Executive’s
knowingly dishonest act or knowing bad faith or willful misconduct in the
performance of his services for the Company.
(e) Voluntary
Termination. The
Executive shall be permitted to terminate the Employment Period for any reason
at any time. If the Executive terminates the Employment Period under this
Section 5(e), the Executive shall provide the Company with written notice
thereof 60 days before the date such termination shall be effective, provided
that, upon receipt of such written notice from the Executive, the Company may
instead elect to terminate Executive’s employment prior to the end of such
60-day period and continue to pay Executive his Annual Base Salary in accordance
with the Company’s normal payroll practices through the expiration of such
60-day period.
(f) Good
Reason.
Executive shall be permitted to terminate the Employment Period for Good Reason,
provided that Executive must first provide written notice to the Company of
the
existence of a condition constituting Good Reason within 90 days of the initial
existence of the condition, and the Company shall have 30 days following receipt
of such notice during which it may remedy the condition. “Good Reason” shall
mean (i) a material diminution in Executive’s salary provided under Section
0,
(ii) a material diminution in Executive’s authority, duties, or
responsibilities; (iii) the Company requiring Executive to be based at any
office or location more than 50 miles from the office or location to which
Executive is currently assigned, provided, however, that Good Reason shall
not
be deemed to exist due to the travel requirements consistent with the
performance of Executive’s services under this Agreement.
6.Compensation
Upon Termination.
Except
as provided in Section 0
and
subject to the requirements of Section 0:
(a)Basic
Termination Payment.
If the
Employment Period is terminated for any reason, all future compensation and
benefits to which Executive is otherwise entitled under this Agreement shall
cease and terminate as of the date of such termination. Executive, or his
estate, as applicable, shall be entitled to receive the portion of Executive’s
Annual Base Salary that accrued through the date of such termination and any
bonuses or other amounts accrued or payable to Executive but unpaid as of the
date of such termination; however, to the extent that Executive had made a
valid
election to defer these amounts, or the amounts were subject to an automatic
deferral provision, under any nonqualified deferred compensation plan of the
Company, such amounts shall be payable in accordance with the terms of the
nonqualified deferred compensation plan.
(b)EBT
Bonus.
If
Executive’s Employment Period is terminated other than for Cause during the
Company’s fiscal year, the EBT Bonus payable to Executive for such year, if any,
will be calculated pursuant to Section 0,
treating the date Executive’s Employment Period terminated as the last day of
the fiscal year, unless such termination occurs within the last quarter of
the
fiscal year, in which instance the EBT Bonus calculation shall be payable and
calculated through the end of such fiscal year. If Executive’s Employment Period
is terminated for Cause during the Company’s fiscal year, Executive’s EBT Bonus
for such year shall be forfeited.
(c)Death
and Disability Payment.
Upon
termination of the Employment Period at any time by reason of Executive’s death
pursuant to Section 0
or
Disability pursuant to Section 0,
the
Company shall pay to Executive or his estate, as applicable, within 60 days
of
his death or Disability an amount equal to his Annual Base Salary then in
effect, in addition to the Basic Termination Payment described in Section
0.
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(d)Payments
Upon Termination.
(i) Upon
the
termination of the Employment Period as a result of non-renewal pursuant to
Section 0
or by
Executive for Good Reason pursuant to Section 0,
which
termination constitutes a “separation from service” within the meaning of
Treasury Regulation § 1.409A-1(h),
the
Company shall pay to Executive, in addition to the payment described in Section
0,
an
amount equal to his Annual Base Salary then in effect (such amount, exclusive
of
the payment described in Section 0,
the
“Severance Amount”).
(ii) The
Severance Amount will be paid in 12 equal monthly installments beginning in
the
month following the date that is the earlier of (A) 60 days after the
termination of Executive’s Employment Period and (B) the date that the release
provided for in Section 7 of this Agreement becomes binding and irrevocable,
except that if the Severance Amount is “nonqualified deferred compensation”
within the meaning of Section 409A of the Internal Revenue Code and Executive
is
a “specified employee” within the meaning of Treasury Regulation §1.409A-1(i),
payment shall be delayed until the first business that occurs more than six
(6)
months after the date the Employment Period is terminated and all installments
which would otherwise have been paid before such date shall be paid on such
date
(without interest).
(iii) Executive
may elect continuation coverage (as defined in the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (COBRA)) under the Company’s medical and
dental plans as in effect at the time of the termination of Executive’s
employment (the “Health Plans”). If such continuation coverage election is made
by Executive, the Company shall pay the full premiums for Executive and any
dependents eligible for continuation coverage under COBRA for 12 months
following the date of any termination of the Employment Period as a result
of
non-renewal pursuant to Section 5(a) or by Executive for Good Reason pursuant
to
Section 5(f), which termination constitutes a “separation from service” within
the meaning of Treasury Regulation § 1.409A-1(h). For the period beginning 12
months after the date Executive terminates employment and continuing until
the
date that is 24 months after the date Executive terminates employment, the
Company shall pay Executive at the end of each month an amount equal to the
amount of the premiums which the Company would have paid for such month (or
eligible portion thereof) had Executive and his dependents continued their
participation in the Health Plans, which amount shall be determined using the
premium cost in effect on the date Executive’s employment is terminated. On the
date Executive secures subsequent employment with comparable medical and dental
coverage (which Executive has no obligation to pursue), all right to benefits
under this Section 6(d)(ii) not already paid shall be forfeited. In
consideration of the payment of cost of COBRA coverage, Executive shall execute
all necessary documentation acknowledging proper COBRA notice and coverage,
and
shall promptly notify the Company in the event that he secures subsequent
employment with a comparable medical and dental coverage benefit.
(iv) Executive
shall be entitled to no payment under this Section 0
if he is
entitled to receive a payment under Section 0.
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(v) In
the
event that Executive, following termination of his employment with the Company,
either individually or as an employee, officer, director, stockholder, member,
partner, agent, consultant or principal of another business firm, engages in
any
business operating anywhere in the world (other than as a passive shareholder
of
a public company of which he owns less than 1%) that is in direct competition
with any freight forwarding or logistics services business of Parent or its
subsidiaries (including the Company) (“Competitive Business”) or becomes
employed by any entity or person that controls a Competitive Business, any
amounts payable pursuant to this Section 0
that
have not already been paid shall be forfeited.
Parent
or the Company shall bear the burden of proving a breach of this Section
6(d)(v).
7.Release.
As a
condition to his receipt of any benefits provided under Sections 0,
0
or
0,
Executive (or his estate, as applicable) shall execute within 45 days of the
date his Employment Period is terminated and not revoke a release substantially
in the form attached to this Agreement.
8.Parachute
Payment Taxes.
In the
event it shall be determined that any payment or distribution by the Company
to
Executive or for Executive’s benefit (a “Payment”) would be subject to the
excise tax (the “Excise Tax”) imposed by Section 4999 of the Internal Revenue
Code of 1986 (the “Code”), then, prior to the making of any Payment to
Executive, a calculation shall be made comparing (i) the net after-tax
benefit to Executive of the Payment after payment of the Excise Tax, to
(ii) the net after-tax benefit to Executive if the Payment had been limited
to the extent necessary to avoid being subject to the Excise Tax. If the amount
calculated under (i) above is less than the amount calculated under
(ii) above, then the Payment shall be limited to the extent necessary to
avoid being subject to the Excise Tax. The
determination of whether an Excise Tax would be imposed, the amount of such
Excise Tax, and the calculation of amounts referred to above shall be made
by
the Company’s regular independent accounting firm at the expense of the Company
(the “Accounting Firm”). Any determination by the Accounting Firm shall be
binding upon Executive and the Company.
9.Covenants.
As a
condition precedent to and in consideration of receipt of the payments and
benefits set forth in this Agreement:
(a) Executive
agrees to return all written or electronic documents of the Company and its
affiliates immediately upon termination of the Employment Period.
(b) Executive
agrees that during the Employment Period, and for a period ending with the
expiration of 12 months following the end of the Employment Period, Executive
shall not, without the written consent of the Company:
(i) Recruit
or solicit any employee of the Company or its affiliates for employment or
for
retention as a consultant or service provider;
(ii) Hire
or
participate (with another company or third party) in the process of hiring
(other than for the Company) any person who is then an employee of the Company
or its affiliates, or provide names or other information about the employees
of
the Company or its affiliates to any person or business (other than the Company)
under circumstances that could lead to the use of that information for purposes
of recruiting or hiring;
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(iii) Interfere
with the relationship of the Company or its affiliates with any of their
employees, agents, consultants, or representatives;
(iv) Solicit
or induce, or in any manner attempt to solicit or induce, any client or customer
of the Company or its affiliates (1) to cease being a client or customer of
the Company or its affiliates or (2) to divert any business of such client
or customer from the Company or its affiliates; or
(v) Otherwise
interfere with, disrupt, or attempt to interfere with or disrupt, the
relationship, contractual or otherwise, between the Company and its affiliates
and any of their customers, clients, suppliers, consultants, or
employees.
(c) Executive
agrees that, with regard to all confidential technical, business, tax, financial
or proprietary knowledge and information obtained while employed by the Company
or any affiliate (“Proprietary Information”), Executive will not at any time
disclose any such Proprietary Information to any person, firm, corporation,
association, governmental agency, employee, or entity or use any such
Proprietary Information for Executive’s benefit or for the benefit of any other
person, firm, corporation or other entity, except the Company and except as
may
be required by court order or subpoena. Executive agrees to notify the Company
as soon as practicable after Executive’s receipt of such a court order or
subpoena. For purposes of this Agreement, the term “Proprietary Information”
does not include information that (i) is in the public domain or
(ii) was lawfully disclosed to Executive following the end of the
Employment Period by a third party under no obligation of confidentiality.
(d) Executive
agrees that all Executive Developments shall be made for hire by Executive
for
the Company. “Executive Developments” means any idea, discovery, invention,
design, method, technique, improvement, enhancement, development, computer
program, machine, algorithm or other work or authorship that (i) relates to
the business or operations of the Company or its affiliates, or
(ii) results from or is suggested by any undertaking assigned to Executive
or work performed by Executive for or on behalf of the Company or its
affiliates, whether created alone or with others, during or after working hours.
All Executive Developments shall remain the sole property of the Company. To
the
extent Executive may, by operation of law or otherwise, acquire any right,
title
or interest in or to any Executive Development, Executive hereby assigns to
the
Company all such proprietary rights. Executive shall, both during and after
the
Employment Period, upon the Company’s request and at the Company’s expense,
promptly execute and deliver to the Company all such assignments, certificates
and instruments, and shall promptly perform such other acts, as the Company
may
from time to time in its discretion deem necessary or desirable to evidence,
establish, maintain, perfect, enforce or defend the Company’s rights in
Executive Developments.
(e) Executive
acknowledges that a breach by Executive of Section 0
would
cause immediate and irreparable harm to the Company for which an adequate
monetary remedy does not exist; hence, Executive agrees that, in the event
of a
breach or threatened breach by Executive of the provisions of Section
0
during
or after the Employment Period, the Company shall be entitled to injunctive
relief restraining Executive from violation of that section without the
necessity of proof of actual damage or the posting of any bond. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedy
at
law or in equity to which the Company may be entitled under applicable law
in
the event of a breach or threatened breach of this Agreement by Executive
provided, however, that Executive’s resignation without Good Reason shall not,
in and of itself, constitute a breach by Executive of this Agreement, provided
Executive does not thereafter act in breach of his obligations under Section
0.
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The
obligations contained in Section 0
shall,
to the extent provided in Section 0,
survive
the termination or expiration of the Employment Period and, as applicable,
shall
be fully enforceable thereafter in accordance with the terms of this
Agreement.
10.Waiver
of Other Benefits.
This
Agreement supersedes, and Executive expressly waives his right to any benefit
or
payment under, any other severance, employment, change in control, or other
agreement between the Executive and the Company or Parent.
11.Indemnification.
The
Company shall indemnify Executive, to the fullest extent permitted under the
General Corporation Law of the State of Delaware, against any judgments, fines,
amounts paid in settlement, and reasonable expenses, including attorneys’ fees,
incurred by Executive in connection with the defense of any claim or other
matter made against Executive, or threatened to be made, by reason of his being
or having been an officer or director of the Company.
12.Withholding.
The
Company shall withhold such amounts from any compensation or other benefits
payable to Executive under this Agreement on account of payroll and other taxes
as may be required by applicable law or regulation of any governmental
authority.
13.Validity.
The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
14.Acknowledgment.
Executive acknowledges that he has been advised by the Company to seek the
advice of independent counsel prior to reaching agreement with the Company
on
any of the terms of this Agreement. The parties agree that no rule of
construction shall apply to this Agreement which construes ambiguous language
in
favor of or against any party by reason of that party’s role in drafting the
Agreement.
15.Waivers;
Modification.
Failure
to insist upon strict compliance with any of the terms, covenants, or conditions
hereof shall not be deemed a waiver of such term, covenant, or condition, nor
shall any waiver or relinquishment of, or failure to insist upon strict
compliance with, any right or power hereunder at any one or more times be deemed
a waiver or relinquishment of such right or power at any other time or times.
This Agreement shall not be modified in any respect except by a writing executed
by each party hereto.
16.Successors.
(a) This
Agreement and all rights of Executive hereunder shall inure to the benefit
of
and be enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
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(b) The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required
to
perform this Agreement if no such succession had taken place. For purposes
of
this Agreement, the term “Company” shall mean the Company and any successor to
all or substantially all of the Company’s business or assets that assumes and
agrees to perform the Company’s obligations under this Agreement by operation of
law or otherwise.
17.Notices.
For
purposes of this Agreement, all notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified) mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If
to
Executive:
Xxxxxxxxxxx
Xxxxxxxxxxx
0000
Xxxxx Xxxxxxx Xx.
Xxxxxx,
Xxxxxxxxxx 00000
Fax:
000-000-0000
With
a
copy to:
Xx.
Xxxxx
Xxxxxxxxxx, Esq.
0000
X.
Xxxxxxx Xxxx. 11th Fl.
Xxx
Xxxxxxx, XX. 00000
Fax:
000-000-0000
If
to the
Company:
Target
Logistics, Inc.
x/x
Xxxxxxxxxxx Xxxxxxx
X.X.
Xxx
00-000 Xxxxxxx
Xxxxxxxx,
Xxx Xxxxxxx
Attention:
Xxx Xxxxx, Managing Director
Fax:
x00
(0) 000-0000
Email:
xxx@xxxxxxxxxxx.xxx
or
to
such other address as any party may have furnished to the others in writing
in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
18.Governing
Law and Venue.
This
Agreement shall be governed by the law of the State of California, without
regard to any conflict of laws provisions thereof that would apply the law
of a
different jurisdiction. Proper venue for any dispute will be the courts located
within the County of Los Angeles, State of California.
-9-
19.Descriptive
Headings; Certain Interpretations.
Descriptive headings are for convenience only and shall not control or affect
the meaning or construction of any provision of this Agreement. Except as
otherwise expressly provided in this Agreement: (i) any reference in this
Agreement to any agreement, document or instrument includes all permitted
supplements and amendments; (ii) a reference to a law includes any
amendment or modification to such law and any rules or regulations issued
thereunder; (iii) the words “include,” “included” and “including” are not
limiting; and (iv) a reference to a person or entity includes its permitted
successors and assigns.
20.Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and
the
same instrument.
21.Entire
Agreement.
This
Agreement sets forth the entire agreement of the parties hereto in respect
of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto; and any prior agreement of the parties hereto in respect
of
the subject matter contained herein is hereby terminated and shall be of no
further force or effect.
[signatures
appear on the following page]
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the date and year
first above written.
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| By: | /s/ | |
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Name:
Xxxxxx Xxxxxxxxx
Title:
Executive Vice President
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| /s/ | ||
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Xxxxxxxxxxx
Xxxxxxxxxxx
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