NONQUALIFIED DEFERRED COMPENSATION AGREEMENT
This Nonqualified Deferred Compensation Agreement (the "Agreement") is made
and entered into effective March 14, 2000 (the "Effective Date"), between Swift
Transportation Co., Inc., an Arizona corporation ("Swift"), and Xxxxxxx X.
Xxxxx, III, a Phoenix, Arizona resident ("Xxxxx").
RECITAL
The purpose of this Agreement is to provide an incentive for Xxxxx to
remain in Swift's employ through at least June 24, 2006 (the "Vesting Date"),
and to motivate Xxxxx to maintain the level of capable, industrious, and
efficient performance of his duties that has marked his service to Swift.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recital and the
agreements herein contained, the parties agree as follows:
1. Deferred Compensation Account.
a. Contingent Deposits. Until the earliest to occur of Xxxxx'x death
or permanent disability, termination with or without cause, or the Vesting Date,
Swift shall deposit each month, from March, 2000, through June, 2006, the sum of
$50,738.67 into an investment account (the "Account") held by a National
Association of Securities Dealers, Inc. member broker dealer designated by
Swift's Board of Directors (the "Board") for the benefit of Swift. Such deposits
shall occur on the 24th day of each month commencing March 24, 2000, or the next
succeeding business day. The final deposit shall be made on the Vesting Date.
b. Designating Investments. Xxxxx, for so long as funds remain in the
Account, shall be entitled to direct the investment of funds in the Account
toward any combination of mutual funds, bonds, publicly-traded stocks, and money
market accounts. If requested to do so by Xxxxx, the Board may engage investment
advisers or brokers that offer these investment choices, and all costs of such
services and administering the Account shall be charged against the Account.
Xxxxx shall be entitled to make investment designations at reasonable intervals
approved by Swift's Chief Executive Officer, or, in the absence of such
approval, quarterly.
c. Earnings or Loss; Taxes. It is acknowledged and understood that the
cumulative total of all deposits to the Account, if made in the amount of
$50,738.67 over 76 payments, will be $3,856,138.92, and any earnings thereon or
appreciation therein will be tax-affected at Swift's highest marginal tax rates
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(state and federal) and retained by Swift. The earnings (gain) or loss from
investments made pursuant to paragraph b. of this Section 1, net of taxes on
earnings or gains and any expenses properly chargeable thereto, shall be
determined annually for the Account at the close of the year by the Board, and
reported to Xxxxx.
d. Withdrawl from Account. It is acknowledged and understood that
Swift shall withdraw funds from the Account equal to the amount of funds paid to
Xxxxx pursuant to paragraphs d. or e. of Section 2 of this Agreement. Funds
remaining in the Account following such withdrawals shall remain subject to this
Section 1.
2. Swift's Obligation to Pay Deferred Compensation.
a. Payment on Vesting Date. Provided payment is not otherwise required
or prohibited under this Agreement, on the Vesting Date the Board shall
authorize and direct the payment of funds to Xxxxx pursuant to paragraph e. of
this Section 2.
b. Death or Disability. If Xxxxx dies or becomes permanently disabled
(as hereinafter defined) before the Vesting Date, the Board shall authorize and
direct payment of funds to Xxxxx'x estate, in the case of his death, or to
Xxxxx, in the case of his permanent disability, pursuant to paragraph e. of this
Section 2. For purposes of this Agreement, permanent disability shall mean the
inability, for physical or mental reasons, of Xxxxx to perform the essential
functions of his position with Swift for more than a six month period, as
determined by a medical doctor selected by Swift.
c. Termination for Cause. In the event Xxxxx'x employment with Swift
is terminated for "Cause" prior to the Vesting Date, Xxxxx shall be entitled to
receive nothing under the terms of this Agreement. Cause shall mean:
i. If Xxxxx is convicted or pleads guilty or no contest under any
applicable criminal code or statute of a felony or of any
misdemeanor involving fraud or dishonesty against Swift or any
affiliated or successor entity;
ii. If Xxxxx breaches any fiduciary duty to Swift or any affiliated
or successor entity;
iii. If Xxxxx, willfully and continually neglects to substantially
perform those duties reasonably expected of a person in his
position and fails to cure such performance within ten (10) days
after a majority of Swift's directors, other than Xxxxx, deliver
a written demand for substantial performance that specifically
identifies the manner in which such directors believe Xxxxx has
not substantially performed his duties; or
iv. If Xxxxx ceases to be continuously employed on a full-time basis
at any time prior to the Vesting Date, except in the event of
death, permanent disability, or termination without cause.
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For purposes of this Agreement, continuously employed shall mean the lack of an
unapproved absence from his duties for a period of 30 consecutive days, unless
within ten (10) days after written notice to return is given, Xxxxx shall have
returned to the performance of his duties on a full-time basis.
d. Termination Without Cause. Except as provided for in paragraph b.
of this Section 2, in the event Xxxxx is terminated other than for Cause prior
to the Vesting Date, the Board shall authorize and direct the payment of funds
to Xxxxx as follows: Xxxxx shall be entitled to receive an amount equal to 50%
of the value of the Account on the immediately preceding December 31st (the
"Termination Without Cause Amount"). In determining the Termination Without
Cause Amount, Swift shall calculate the value of the funds in the Account on
such date, net of taxes on earnings or gains and any expenses properly
chargeable to the Account as referenced in Section 1.c. The Termination Without
Cause Amount shall be paid to Xxxxx net of federal or state payroll tax or other
required withholdings, in the manner and at the time(s) prescribed for payment
of Deferred Compensation in paragraph e. of this Section 2.
e. Payment of Deferred Compensation. To the extent Xxxxx or his estate
is entitled to receive payment under paragraphs a. or b. of this Section 2 (the
"Deferred Compensation") or the Termination Without Cause Amount pursuant to
paragraph d. of this Section 2, such payment shall be paid to Xxxxx or his
estate in annual installments; the first installment to be paid on December 24,
2006, and later installments on the anniversary thereof. In determining the
amount of any annual installment, Swift shall calculate the value of funds in
the Account on the date an installment is paid (the "Installment Date"), net of
taxes on earnings or gains, federal and state payroll tax or other required
withholdings, and any expenses properly chargeable to the Account as referenced
in Section 1.c. On each Installment Date, Swift shall pay to Xxxxx or his
estate the lesser of $1,000,000, or the amount (the "Difference") by which all
applicable employee remuneration (as "applicable employee remuneration" is
defined under Section 162(m)(4)(A) of the Internal Revenue Code, as amended)
received by Xxxxx from Swift in the year the installment is paid, is less than
the deductible salary cap imposed with respect to "covered employees" under
Section 162(m)(1) of the Internal Revenue Code, as amended (currently
$1,000,000). Notwithstanding the foregoing, if any determination of the balance
of the Account, as computed above, results in a value that does not exceed the
lesser of $ 1,000,000 or the Difference, such value shall be the amount of the
final installment payment.
f. Rights to Deferred Compensation or the Termination Without Cause
Amount. Any rights to Deferred Compensation or the Termination Without Cause
Amount that Xxxxx or his estate may acquire under the terms of this Agreement
shall be mere unsecured contractual rights against Swift. Such rights may not be
anticipated, transferred, assigned, alienated, pledged, or encumbered by Xxxxx,
his estate, or any of his beneficiaries, or subjected to attachment,
garnishment, levy, execution, or other legal or equitable process initiated by
the creditors of Xxxxx, his estate, or his beneficiaries.
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3. Miscellaneous.
a. Rights and Title to Certain Assets. Nothing in this Agreement shall
be construed as bestowing upon Xxxxx, his estate, or his beneficiaries a
preferred claim on, or any beneficial ownership interest in, any assets of
Swift, including those assets held in the Account. Swift shall at all times
retain title to and beneficial ownership of any assets, whether cash or
investments, which Swift may set aside or earmark to meet its contingent
deferred obligations hereunder.
b. Entire Agreement; Amendment. This Agreement represents the entire
agreement of the parties with respect to its subject matter and may be altered
or amended only by a writing signed by both parties.
c. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be considered an original and together shall
constitute the entire document.
d. Applicable Law; Severabiltiy. This Agreement shall be governed and
construed in accordance with the laws of the State of Arizona. In the event any
provision of this Agreement is held invalid, illegal, or unenforceable in whole
or in part, neither the validity of the remaining part of such provision, nor
the validity of any other provision of this Agreement, shall in any way be
affected thereby. In lieu of such invalid, illegal, or unenforceable provision
there shall be added automatically a provision as similar in terms to such
invalid, illegal, or unenforceable provision as may be possible and still be
legal, valid, or enforceable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective on the Effective Date.
SWIFT TRANSPORTATION CO., INC.
By: /s/ Xxxxx Xxxxx /s/ Xxxxxxx X. Xxxxx III
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Xxxxx Xxxxx, President Xxxxxxx X. Xxxxx III, Individually
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