Exhibit 10(t)
2/23/95
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT made this 23rd day of February, 1995 by
and between ADESA CORPORATION ("ADESA") and Xxxxx X. Xxxxxxx ("Executive").
WHEREAS, Minnesota Power & Light Company ("MPL"), ADESA, Executive and
others have entered into a letter agreement dated January 5, 1995 ("Letter of
Intent") which contemplates, among other things, that a subsidiary of MPL will
be merged with and into ADESA (the "Merger") pursuant to the terms of an
Agreement and Plan of Merger of even date among ADESA, Executive and others (the
"Merger Agreement"), that ADESA will survive the Merger, and that (i) in
connection with the Merger, Executive will sell a portion, but not all, of his
shares of common stock of ADESA and his unexercised stock options will be
canceled; and
WHEREAS, the Letter of Intent contemplates that immediately after the
Merger, MPL will own 80% of the issued and outstanding capital stock of ADESA
and certain executives of ADESA ("Management Shareholders"), including
Executive, will own the remaining 20% of the capital stock of ADESA, in order to
provide the Management Shareholders, including Executive, with an incentive to
continue their employment with ADESA; and
WHEREAS, MPL will not undertake the Merger unless it is assured that
after the Merger, ADESA will continue to have available to it the services of
Executive; and
WHEREAS, to induce MPL to enter into the Merger Agreement contemplated
by the Letter of Intent, and thereafter to consummate the Merger, Executive and
ADESA desire to enter into this Executive Employment Agreement, upon the terms
and conditions hereof including those providing for noncompetition and
nondisclosure covenants on the part of Executive.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter set forth the parties agree as follows:
1. Employment. ADESA hereby agrees to continue to employ the Executive,
and the Executive hereby accepts such engagement and agrees to continue to serve
ADESA, on the terms and conditions set forth herein.
2. Term. The employment of the Executive by ADESA as provided in
Section 1 will commence at the Effective Time, as that term is defined in the
Merger Agreement, and end on April 30, 1999, unless further extended or sooner
terminated as hereinafter provided.
3. Position and Duties. The Executive shall serve as an officer of
ADESA and shall have such responsibilities, duties and authority as he may have
as of the date hereof (or any position to which he may be promoted after the
date hereof) and any other office as may from time to time be assigned to the
Executive by ADESA's board of directors (the "Board") that are consistent with
such responsibilities, duties and authority. The Executive shall devote
substantially all his working time and efforts to the business and affairs of
ADESA. Attached hereto as Schedule A is a list of all businesses, other than
ADESA and its subsidiaries, to which the Executive currently devotes any
material amount of working time.
4. Compensation and Related Matters.
4.1 Salary. During the period of the Executive's employment
hereunder ADESA will pay to the Executive an annual base salary of
$180,000.00. This salary may be increased, but not decreased, annually
by the board of directors in its sole discretion, commencing on January
1, 1996. Salary shall be paid in monthly or other installments in
accordance with the general practice of ADESA from time to time.
4.2 Performance Bonus. ADESA may pay the Executive a performance
bonus ("Performance Bonus") if the board of directors in its sole
discretion so determines.
4.3 Fringe Benefits. The Executive shall be entitled to participate
in and to receive benefits, without duplication, under such 401(k)
profit sharing, pension, life
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insurance, accident insurance, health insurance, hospitalization and
all other "Employee Benefit Plans", as said term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended, as ADESA may establish and maintain from time to time during
the term hereof and for which Executive continues to qualify subject,
however, to ADESA's right to amend or terminate any such plan.
Notwithstanding the foregoing, Executive shall be entitled to
participate in the incentive compensation plan contemplated by Section
7.6 of and Exhibit B to the Merger Agreement ("Incentive Compensation
Plan") only to the extent determined from time to time by the board of
directors in its sole discretion.
4.4 Vacation. The Executive shall be entitled to vacation in each
fiscal year, determined in accordance with ADESA's vacation policy in
effect on the date hereof and from time to time during the term hereof.
The Executive shall also be entitled to all paid holidays and personal
days given by ADESA to its executives.
4.5 Expenses. ADESA will reimburse the Executive for all reasonable
business expenses incurred in performing services hereunder upon the
Executive's presentation to ADESA from time to time of itemized
accounts describing such expenditures, all in accordance with ADESA's
policy in effect from time to time with respect to the reimbursement of
business expenses.
4.6 Withholding. All compensation paid to the Executive under this
Section 4 shall be subject to required withholding for federal and
state income taxes, FICA contributions and other required deductions.
5. Termination.
5.1 Death. The Executive's employment hereunder shall terminate upon
his death.
5.2 By ADESA for Disability. ADESA shall have the right to terminate
the Executive's employment hereunder if the Executive becomes Disabled,
upon delivery of a Notice of
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Termination to the Executive. For the purposes hereof the Executive
shall be deemed "Disabled" if: (i) as a result of the Executive's
incapacity due to physical or mental illness, including chemical
dependency, the Executive shall have been absent from his full time
duties with ADESA for six months during any 12 month period; or (ii)
the Executive is found to be permanently disabled by (A) any insurer of
ADESA pursuant to the terms of any disability insurance contract
covering Executive which is then in effect, (B) the Social Security
Administration for purposes of Social Security disability payments, or
(C) by any tribunal or court.
5.3 By ADESA for Cause. ADESA may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, ADESA
shall have "Cause" to terminate the Executive's employment hereunder
upon (a) the failure by the Executive to perform his material duties
hereunder after written demand for performance is delivered by ADESA
that specifically identifies the manner in which ADESA believes the
Executive has not performed his duties, or (b) the willful engaging by
the Executive in conduct which is contrary to the interests of ADESA,
monetarily or otherwise. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause without (1)
reasonable notice to the Executive setting forth the reasons for
ADESA's intention to terminate for Cause, (2) an opportunity for the
Executive, together with his counsel, to be heard before the Board, and
(3) delivery to the Executive of a Notice of Termination from the Board
finding that in the good faith opinion of the Board the Executive was
guilty of conduct set forth above in clause (a) or (b) hereof, and
specifying the particulars thereof in detail.
5.4 By ADESA Without Cause. ADESA may terminate the Executive's
employment hereunder without Cause upon delivery to the Executive of a
Notice of Termination.
5.5 By Executive. Prior to the expiration of the Term the Executive
may terminate the Executive's employment with ADESA for any of the
reasons set forth below.
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(a) At any time for Good Reason. For purposes of this Agreement
the term "Good Reason" means (i) a failure by ADESA to comply with
any material provision of this Agreement which has not been cured
within 10 days after written notice of such noncompliance has been
given by the Executive to ADESA, (ii) a substantial adverse
alteration in the nature or status of the Executive's
responsibilities, (iii) that ADESA has required in writing that the
Executive move his principal office location to a new location that
is not the same as ADESA's then principal place of business or (iv)
any purported termination of the Executive's employment which is not
consistent with Sections 5.2, 5.3 or 5.4 hereof; or
(b) If ADESA imposes material restrictions or limitations on
ADESA's existing personnel or ethics policies (except for such
changes as are, at any time, required by law) which are not removed
within 30 days after written notice of such imposition by Executive.
5.6 Notice of Termination. Any termination of the Executive's
employment by ADESA or by the Executive (other than termination
pursuant to subsection 5.1 hereof) shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied
upon and shall, in the case of a termination under Section 5.3 or 5.5,
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
5.7 Date of Termination. "Date of Termination" shall mean: (a) if
the Executive's employment is terminated by his death, the date of his
death; and (b) if the Executive's employment is terminated for any
other reason, the date specified in the Notice of Termination.
6. Compensation Upon Termination or During Disability.
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6.1. During Disability and Upon Termination Due to Disability.
During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), the Executive shall continue to receive his full
base salary at the rate then in effect for such period (offset by any
payments to the Executive received pursuant to disability benefit plans
maintained by ADESA or disability benefits from governmental entities)
until his employment is terminated pursuant to Section 5.2 hereof, and
upon such termination, the Executive shall be entitled to all amounts
to which the Executive is entitled pursuant to applicable law and
Employee Benefit Plans, all in accordance with the terms thereof as
amended from time to time. In addition, if Executive is terminated
under Section 5.2, ADESA will pay to Executive, on the date the same
would have been payable under Section 4.2 and the Incentive
Compensation Plan if Executive had not been terminated, any Performance
Bonus and any Incentive Compensation Plan payments that would have been
payable to the Executive for the year in which the Disability occurred,
pro-rated to the Date of Termination.
6.2. Death. If the Executive's employment is terminated by his
death, ADESA shall within 10 days following the date of the Executive's
death pay to the Executive's estate his full unpaid base salary at the
rate then in effect, through the Date of Termination, together with any
other amounts to which the Executive is entitled pursuant to applicable
law and ADESA Employee Benefit Plans, all in accordance with the terms
thereof as amended from time to time. In addition, if Executive's
employment is terminated under Section 5.1, ADESA will pay to the
Executive's estate, on the date the same would have been payable under
Section 4.2 and the Incentive Compensation Plan if Executive had not
died, any Performance Bonus and any Incentive Compensation Plan
payments that would have been payable to the Executive for the year in
which his death occurred, pro-rated to the Date of Termination.
6.3. By ADESA For Cause or By Executive In Breach Hereof. If the
Executive's employment is terminated by ADESA for Cause, ADESA shall
pay the Executive at the regular time
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salary payments are due hereunder his full base salary through the Date
of Termination. If the Executive terminates his employment in breach
hereof, ADESA shall pay Executive, at the rate in effect at the time of
such termination, through the date on which the Executive terminates
his employment. In either of such events, except as aforesaid, ADESA
shall have no further obligations to the Executive under this Agreement
and, except for any claims which ADESA may have against Executive (i)
for breach of contract, (ii) based upon, related to or arising out of
the event or events which resulted in the termination of Executive for
Cause and (iii) under Sections 7, 8, 9 and 10 hereof, Executive shall
have no further obligations to ADESA under this Agreement.
6.4 Without Cause or by Executive For Good Reason. If (a) ADESA
terminates the Executive's employment without Cause under Section 5.4,
or (b) the Executive terminates his employment for Good Reason as
defined in Section 5.5(a), then ADESA shall pay the Executive at the
regular time salary payments are due hereunder his full base salary
through April 30, 1999 at the rate in effect at the time Notice of
Termination is given. In addition, ADESA will pay to Executive, on the
date the same would have been payable under Section 4.2 and the
Incentive Compensation Plan, any Performance Bonus and any Incentive
Compensation Plan payments that would have been payable to the
Executive under Section 4.2 and the Incentive Compensation Plan for the
year in which such termination occurred.
6.5 Termination by Executive Under Section 5.5(b). If Executive
terminates his employment with ADESA under Section 5.5(b), then ADESA
shall pay Executive at the regular time salary payments are due
hereunder his full base salary for one full year or, if earlier, until
April 30, 1999. In addition, ADESA will pay to Executive, on the date
the same would have been payable under Section 4.2 and the Incentive
Compensation Plan, any Performance Bonus and any Incentive Compensation
Plan payments that would have been payable to the Executive under
Section 4.2 and the Incentive Compensation Plan for the year in which
such termination occurred pro-rated to the date on which the Executive
terminated his employment.
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6.6. Certain Benefit Plans. Except as otherwise provided by law or
any applicable Employee Benefit Plan, unless the Executive is
terminated for Cause or the Executive terminates his employment with
ADESA in breach of this Agreement, the Executive shall be entitled to
continue to participate, after termination, in all Employee Benefit
Plans, to the extent permitted under the terms thereof as amended from
time to time, but ADESA shall have no obligation to make any further
payments with respect thereto on behalf of Executive.
7. Non-Disclosure. Executive acknowledges that he has received and will
continue to receive and contribute to the production of Confidential
Information. Except as required by his duties hereunder, Executive will not,
either during his employment by ADESA (or until April 30, 1999, if longer, and
if Executive is receiving payments under Section 6.4 hereof) or for three years
thereafter, use any Confidential Information for his own benefit or disclose any
Confidential Information to any third person. The Executive agrees to refrain
from any acts or omissions that would reduce the value of the Confidential
Information. Upon termination of Executive's employment with ADESA, Executive
shall leave with or return to ADESA all records, correspondence, compositions,
articles, writing, programs, codes, devices, equipment, prototypes and other
papers which incorporate, embody or disclose any Confidential Information
(whether written, prepared or made by Executive or others), including all copies
and memorializations thereof. The obligations set forth in this Section 7 shall
not apply to any information or knowledge the entirety of which is now publicly
known or subsequently becomes publicly known, other than as a direct or indirect
result of the breach of this Agreement by the Executive or the breach of a
confidentiality obligation owed to ADESA by any third party. For the purposes
hereof:
(a) The term "Confidential Information" means all information or
material proprietary to ADESA or any of its subsidiaries or
designated as Confidential Information by ADESA or any of its
subsidiaries and not generally known other than by personnel of
ADESA or its subsidiaries, of or to which Executive obtains
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knowledge or access through or as a result of Executive's
relationship (whether prior or subsequent to the date hereof) with
ADESA (including information conceived, originated, discovered or
developed in whole or in part by Executive). Confidential
Information includes, but is not limited to, the following types of
information and other information of a similar nature (whether or
not reduced to writing), discoveries, inventions (whether or not
patentable), ideas, concepts, software in various stages of
development, designs, drawings, specifications, techniques, models,
data, devices, source codes, object codes, documentation, formulae,
patterns, computations, diagrams, flow charts, research and
development data, programs, processes, procedures, know-how, Trade
Secrets, marketing techniques and materials, marketing and
development plans, customer names and other information related to
customers, price lists, pricing policies and financial information.
Confidential Information also includes any information described
above which ADESA or any of its subsidiaries obtains from another
party and which ADESA or any of its subsidiaries treats as
proprietary or designates as Confidential Information, whether or
not owned by or developed by ADESA or any of its subsidiaries.
(b) The term "Trade Secrets" means information, including a
formula pattern, compilation, program device, method, technique or
process, that derives independent economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy.
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8. Covenant Not to Compete.
8.1 Agreement Not To Compete. The Executive agrees that, for a
period of three (3) years commencing on the later of (i) his
termination of employment or (ii) the date the last payment is made to
Executive under Section 6.4 or Section 6.5 hereof, he will not within a
territory consisting of the continental United States and Canada,
engage or be interested in (x) the vehicle redistribution business
(except that Executive may engage in the retail or wholesale sale of
vehicles, other than as an owner of, employee of or consultant to a
vehicle auction), (y) the vehicle auction business or (z) the dealer
floorplan financing business. The Executive shall be deemed to be
interested in a business if the Executive is engaged or interested in
that business as a shareholder, director, officer, employee,
independent contractor, agent, partner, individual proprietor,
consultant or otherwise, but not if such interest is limited solely to
passive investments existing on the date hereof or the ownership of 5%
or fewer of the equity or debt securities of any entity whose shares
are listed for trading on a national securities exchange or traded in
the over the counter market.
8.2 Indirect Competition. The Executive agrees that during the term
of his employment (or until April 30, 1999, if longer, and if Executive
is receiving payments under Section 6.4 hereof) by ADESA and for a
period of three years thereafter, the Executive will not, directly or
indirectly, assist or encourage any other person in carrying out,
directly or indirectly, any activity that would be prohibited by the
provisions of Section 8.1 if such activity were carried out by the
Executive either directly or indirectly. In particular, but not as a
limitation, the Executive agrees that he will not, directly or
indirectly, induce any employee of ADESA or any of its subsidiaries to
carry out, directly or indirectly, any such activity.
8.3 Necessary and Reasonable; Ancillary to Purchase. The Executive
agrees that the covenants provided for in Sections 8.1 and 8.2 hereof
are ancillary to the purchase of stock of ADESA by MPL and are
necessary and reasonable in
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order to protect ADESA, its subsidiaries and MPL in the conduct of
their respective businesses and to protect ADESA, its subsidiaries
and MPL in the utilization of the assets, tangible and intangible,
including the goodwill of ADESA, purchased by MPL pursuant to the
Merger Agreement.
9. No Solicitation. The Executive agrees that during the term of his
employment by ADESA (or until April 30, 1999, if longer, and if Executive is
receiving payments under Section 6.4 hereof) and for a period of three years
thereafter he will not, directly or indirectly, on behalf of himself or another,
solicit the hiring on any basis of any person employed by ADESA or any of its
subsidiaries.
10. Injunctive Relief. The Executive agrees that it would be difficult
to compensate ADESA, its subsidiaries or MPL fully for damages for any violation
of the provisions of Sections 7, 8, or 9 of this Agreement. Accordingly, the
Executive specifically agrees that any of ADESA, its subsidiaries or MPL shall
be entitled to temporary and permanent injunctive relief to enforce the
provisions of this Agreement, that such relief may be granted without the
necessity of proving actual damages, and that, in connection with any such
proceeding the Executive shall waive the defense that ADESA, its subsidiaries or
MPL, as the case may be, has an adequate remedy at law. This provision with
respect to injunctive relief shall not, however, diminish the right of ADESA,
its subsidiaries or MPL to claim and recover damages in addition to injunctive
relief.
11. Arbitration of all Disputes. Except for matters arising under
Sections 7, 8, 9 or 10 hereof, any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in the City of Indianapolis, Indiana, in accordance with the rules
of the American Arbitration Association then in effect, or, if the parties shall
agree in writing, by mediation, and judgment upon the award rendered by the
arbitrators or mediator, as the case may be, may be entered in any court having
jurisdiction thereof.
12. Early Termination of Sections 7, 8, 9 and 10. Sections 7, 8, 9 and
10 hereof shall apply only so long as (i) ADESA and its subsidiaries continue to
be engaged in the vehicle auction
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business as a principal line of business and (ii) MPL and the Management
Shareholders own more than 50% of the outstanding shares of common stock of
ADESA.
13. Miscellaneous.
13.1 Recitals. The recitals to this Agreement are true and correct
and constitute substantive provisions of this Agreement.
13.2 No Assignment. Neither this Agreement nor any rights or
obligations hereunder may be assigned or delegated by any party hereto
without the written consent of the other parties.
13.3 Notices. Any notices, requests, demands and other
communications provided for by this Agreement shall be in writing and
shall be considered to have been duly given or served if personally
delivered, telecopied, sent by national overnight delivery service, or
sent by certified or registered mail, return receipt requested, postage
prepaid, to Executive at the address last shown for the Executive in
the records of ADESA or the last address he has filed in writing with
ADESA or, in the case of ADESA, to its principal executive office,
attention President. All notices shall be copied to MPL at 00 Xxxx
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx 00000, Attention: Chairman of the
Board. Such notice shall be deemed to be received when delivered if
delivered personally, the next business day after receipt of electronic
sent confirmation (or other confirmation of receipt) if telecopied, the
next business day if sent by a national overnight delivery service, or
three business days after the date mailed if sent by certified or
registered mail. Whenever the giving of notice is required, the giving
of such notice may be waived in writing by the party entitled to
receive such notice.
13.4 Governing Law. The provisions of this Agreement shall be
construed and the rights and obligations of the parties determined in
accordance with the laws of the State of Indiana, notwithstanding the
choice of law rules of Indiana or any other jurisdiction.
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13.5 Entire Agreement; Amendment. 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 shall, with respect to
the Executive, be of no further force or effect. This Agreement may not
be modified or amended without the prior written consent of MPL, and
then may only be modified or amended by an instrument in writing duly
executed by Executive and ADESA.
13.6 Meanings of Pronouns; Singular and Plural Words. All pronouns
used in this Agreement shall be deemed to refer to the masculine,
feminine, neuter, singular and plural, as the identity of the person to
which or to whom reference is made may require. Unless the context in
which it is used shall clearly indicate to the contrary, words used in
the singular shall include the plural, and words used in the plural
shall include the singular.
13.7 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits such reference shall be to a Section or Exhibit to
this Agreement unless otherwise indicated. Whenever the words
"include," "includes," or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
13.8 Benefit. This Agreement shall inure to the benefit of and be
enforceable by Executive or by Executive's personal and legal
representatives, executors, administrators, heirs, devisees and
legatees. In addition, it is the intention of the parties that MPL be a
third party beneficiary of this Agreement, entitled to enforce this
Agreement for and on behalf of ADESA.
13.9 Severability. To the extent that any provision of this
Agreement shall be determined to be invalid or unenforceable, the
invalid or unenforceable portion of such
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provision shall be deleted from this Agreement, and the validity and
enforceability of the remainder of such provision and of this Agreement
shall be unaffected. The Executive acknowledges the uncertainty of the
law in this respect and expressly stipulates that this Agreement shall
be construed in a manner which renders its provisions valid and
enforceable to the maximum extent (not exceeding its express terms)
possible under applicable law.
13.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together will constitute one and the same instrument.
13.11 Survival. Except as provided in Section 12, the provisions of
Sections 7, 8, 9 and 10 shall survive any termination of this Agreement
and the termination of the Executive's employment hereunder.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the day and year first written above, effective as aforesaid.
ADESA CORPORATION
By D. Xxxxxxx Xxxxxxx
---------------------------------------
Its President
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X.X. Xxxxxxx
------------------------------------
Executive
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Schedule A
(Section 3)
Other Activities
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