EMPLOYMENT AND NONCOMPETE AGREEMENT
THIS AGREEMENT, dated this first day of July, 1994, is made by
and among ROBERT E. LISS, a resident of the State of Arizona
("Executive"); and JUPITER TRANSPORTATION, INC., a Kansas corporation
("Employer"), a wholly owned subsidiary of MARK VII TRANSPORTATION
COMPANY, INC., a Delaware corporation ("Mark VII").
RECITALS
A. Employer, Mark VII, and it's 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 Mark VII and its subsidiary
corporations.
B. Executive desires to continue to be employed by Employer as
President 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 until terminated as provided in Section 5.
2. Duties and Authority.
2.01 Duties and Position of Executive. 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 date of this Agreement shall be
and are those typically performed by a President of a subsidiary.
Executive has been elected President of Jupiter Transportation, Inc.
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 Business Units/Profit Centers Assigned to Executive.
(a) Executive shall have specific profit/loss management
responsibility for profit centers or business units which are, from
time to time, assigned to him by the Chairman or the Board of
Directors of Mark VII subject to Executive's consent. Once so
assigned and accepted, a profit center may not be reassigned or
withdrawn from the scope of Executive's management responsibility
without his consent.
(b) All business opportunities arising out of or related to
logistics and/or transportation services which are encountered or
developed by Executive belong to Mark VII. In each instance, the
Board or senior management or Mark VII shall determine whether or not
the business opportunity or venture shall be pursued, and if so, under
what terms and conditions and whether or not it is to be assigned to
the management supervision of Executive pursuant to this agreement.
(c) Each business opportunity, profit center or business unit
will be conducted pursuant to an annual business plan approved by the
Board or senior management of Mark VII. Following any month when plan
results are not being attained, Mark VII has the unilateral right to
discontinue the business unit, profit center or venture with no
further claim of interest on the part of Executive.
2.03 Other Employees or Agents of Mark VII. Executive has no
authority to engage or employ other agents or employees of Employer,
Mark VII or any of its subsidiaries without the advance express
consent of the Board of Employer. Executive may not elect, without
advance approval of senior management of Mark VII, to share his bonus
with any other employee or agent of Mark VII. No other agent or
employee of Mark VII shall be permitted to utilize the business units
or profit centers assigned to the management of Executive to provide
transportation services or logistics support to customers assigned,
for commission purposes, to that employee or agent, without advance
approval of senior management of Mark VII.
2.04 Time Devoted to Employment. Executive shall devote full time
and attention to performance of assigned employment duties. 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 Executive is not hereby precluded from
engaging in limited appropriate civic, charitable or religious
activities or from devoting limited time to private investments that
do not compete with the business of Employer.
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 Twenty Five Thousand Dollars and No/100
($125,000) per year ("Base Salary"), in equal weekly installments.
The Employer's Board of Directors may increase the salary of Executive
at any time; provided, however, that the Board may not reduce the Base
Salary specified herein.
3.02 Bonus. In addition to the Base Salary, in each fiscal year
(commencing with the fiscal year ending December 31, 1994), Employer
will provide a bonus to Executive payable within 90 days following the
close of Employer's fiscal year. The annual bonus shall be an amount
equal to 25% of the pre-tax profit (computed on the basis of generally
accepted accounting principles consistently applied) earned by the
business units and profit centers assigned to the management
responsibility of Executive.
The calculation of pre-tax profit shall incorporate the following
factors:
(a) In the case of each new business unit or profit center
assigned to the management responsibility of Executive, senior
management of Mark VII shall determine, on a case by case basis,
whether or not the start up losses, or what portion thereof, shall be
charged against pre-tax profits earned in other business units
assigned to the management supervision of Executive.
(b) In no event shall pre-tax profit include rail volume
incentive credits or credit for unbilled freight.
(c) Each unit will be charged a $7.50 administrative fee for
each invoice.
(d) Each unit will be charged interest expense on receivables at
a rate equal to the current cost of funds borrowed by Mark VII.
(e) All customer credit extended must have the prior written
approval of the Mark VII accounting office in Indianapolis. Any bad
debt resulting from unapproved credit shall be charged in full against
the bonus accrual of Executive.
(f) As to any transportation service requiring utilization of
Mark VII operated equipment (including power units or refrigerated
trailers but excluding dry vans), for each quarter in which weekly net
operating profit from the utilization of Mark VII equipment is less
than $300 per unit a week the 25% bonus will be reduced to 15%.
(g) All accounting issues or questions shall be barred on the
anniversary date of any transaction in question, subject to no further
examination or question thereafter. Any dispute as to any matter
related to this contract or the business to which it is related,
between Executive and Mark VII, shall be resolved by arbitration
rather than judicial proceedings.
(h) In any year in which the 25% pre-tax bonus of Executive
attains the sum of $800,000, the pre-tax profit of "Big Dog
Enterprises", a trade name assigned to Dave Hursey and that of Bill
Reed of Park City, Utah, may be excluded from the calculation of the
pre-tax profit bonus of Executive to the extent which would reduce the
bonus to $800,000 but not further.
In each year pre-tax profit shall be reduced by the amount of the
following items:
(i) All charges of Employer to any affiliated company for
services rendered, said services to be charged at cost;
(j) Any gain on the sale, casualty or other disposition of any
capital asset of the Employer;
(k) Any other income which was not the result of ordinary
operations of the profit center or business unit.
The Board of Directors of Employer shall make the sole and final
determination of what constitutes "pre-tax profit" as defined above.
3.03 Car Allowance. 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
Mark 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 therefor, all according to
Employer's generally applicable procedures.
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, Executive shall not,
directly or indirectly, divulge or disclose to any person, for any
purpose, for a period of three (3) years after the termination of this
Agreement, 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.
4.02 Covenant Against Competition. During the term of this
Agreement and subject to the provisions of section 6.05 below, for a
period of three years after the termination of this Agreement,
Executive shall not have any interest, or be engaged by, directly or
indirectly, 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 injunctive 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) Subject to the provisions of Paragraphs 5.02(c) and 6.02,
the term of employment hereunder shall lapse at such time as either
the Employer or Executive provides the other with 30 days notice of
termination;
b) On the date of Executive's death;
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 Employer's Board of Directors or any act or
omission that Employer's Board of Directors believes, in good faith,
materially 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;
g) At Executive's option, on the date Employer commits any act
that is a material breach of this Agreement; or
h) At Employer's option, upon fulfilling the "executive buyout"
provisions of Section 5.02(c) below.
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 ninety (90)
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 Executive.
In the event the doctors should disagree as to whether 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) "Executive Buyout" includes:
1. The right of Employer to terminate this agreement with
no further payment of compensation to Executive in the event the
profit centers assigned to the management responsibility of
Executive fail, collectively, to earn pre-tax profit (as defined
in Paragraph 3.02 above) of $250,000 in 1995 or any calendar year
thereafter.
2. Following any calendar year in which the profit centers
assigned to Executive collectively earn pre-tax profit of
$250,000 or more, Employer may terminate this Agreement by paying
Executive an amount equal to three times his previous year's W-2
reported income from Employer, but in no event less than One
Million Four Hundred Thousand Dollars ($1,400,000). Such payment
shall constitute liquidated damages which Executive hereby agrees
to accept as his exclusive remedy for any breach of the
obligations of the Employer hereunder hereby waiving any right to
punitive or exemplary damages.
3. In the event of termination by Employer subsequent to
any year in which profit centers assigned to Executive were,
collectively profitable but in which pre-tax profit of at least
$250,000 was not attained, Employer may elect to extend
provisions of Section 4 hereof pursuant to Paragraph 6.05(b)
below only by making advance annual payments to Executive in the
amount of Three Hundred Thousand Dollars ($300,000) for the first
year, Three Hundred Thousand Dollars ($300,000) for the second
year and at Fifty Thousand Dollars ($50,000) for the third year.
4. Employer retains the unilateral right to sell or
terminate any business unit assigned to the management of
Executive with no further approval or subsequent right of
Executive to pre-tax profit bonus beyond the date of sale or
termination. Provided, however, that the sale or termination of
the a unit devoted to providing service to United Parcel Service
or its subsidiaries will require Employer to provide Executive
with the benefit of the buyout provisions of this subparagraph
(c).
5. Pre-tax profits earned by Dave Hursey, "Big Dog" and Bill
Reed of Park City, Utah shall be excluded from the calculation of
the $250,000 pre-tax profit standard hereof.
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 (c) (disability), Employer shall pay, or cause to be
paid, to Executive, his designated beneficiary or his legal
representative,
a) the Base Salary and fringe benefits 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.
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 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 Termination for Breach by Employer. Upon
termination of this Agreement pursuant to Section 5.01 (g) (Employer's
breach), Employer shall pay to Executive all of the compensation set
forth in Section 3, including bonus pursuant to Section 3.02, for
twelve months subsequent to the breach. All post-employment
compensation paid by Employer under the terms of this Section 6 shall
be calculated in the manner set forth in Section 3 hereof and shall
constitute liquidated damages which Executive hereby agrees to accept
as his exclusive remedy for any breach of the obligations of the
Employer hereunder hereby waiving any right to punitive or exemplary
damages.
6.04 Payment of Amounts Due Upon Termination and Mitigation. If
Executive is entitled to payment of Base Salary, bonus, 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 such payments shall be
reduced by the amount of compensation earned by Executive from any
other employment.
6.05 Effect of Termination on Nondisclosure, Noncompete and
Nonsolicitation Provisions.
a) All of the provisions of Section 4 (confidentiality,
noncompete 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) Subject to Section 5.02(c), upon termination of this Agreement
pursuant to Section 5.01 (a) (termination), 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 the current base salary
set forth in Section 3.01 and termination payments of Section 5.02
(c), 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.
6.06 Provisions Void Upon Termination. Except as specifically
provided herein to the contrary, all terms and provisions of this
Agreement shall be void upon any termination hereof.
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.
Executive herewith agrees to answer and execute an annual
disclosure form "Questionnaire for Directors and Executive Officers of
Mark VII, Inc." providing the same information that is required of all
other Directors and executive officers of Mark VII directed to the
purpose of enabling Employer to assess and provide disclosure of
matters required of publicly held companies.
8. Indemnification of Executive
The Employer will indemnify 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 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 Scottsdale, Arizona, 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.
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: Jupiter Transportation, Inc.
c/o Mark VII Transportation Co., Inc.
201 South Emerson Avenue
Suite 130
Greenwood, Indiana 46143
cc: James T. Graves, Vice Chairman and General Counsel
Mark VII, Inc.
5310 St. Joseph Avenue
St. Joseph, Missouri 64502
Executive: Robert E. Liss
11442 E. Bella Vista
Scottsdale, Arizona 85350
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.
9.06 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 Arizona, without
considering its laws or rules related to choice of law.
9.07 Jurisdiction and Venue. Subject to the arbitration provision
in section 9.11 below, the parties hereby consent, and waive any
objection, to the jurisdiction of either the State or Federal Courts
of Arizona over the person of either party for purposes of any action
brought under or as the result of a breach of this Agreement. The
parties agree that their execution of this Agreement constitutes doing
or conducting business within the State of Arizona. The parties
further consent that venue of any action brought under or as the
result of a breach of this Agreement shall be proper in either of the
above named courts and they each waive any objection thereto.
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 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
Executive's possession.
9.09 Attorney's Fees. Subject to the arbitration provision in
Section 9.11 below, if either party brings an action to enforce the
terms hereof, the prevailing party in such action, on trial or appeal,
shall be entitled to recover its reasonable attorney's fees, costs and
expenses to be paid by the losing party as fixed by the court.
9.10 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 judgment upon the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction
thereof.
WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
JUPITER TRANSPORTATION, INC.
By: /s/ R.C. Matney
-----------------------
R.C. Matney, Chairman
/s/ Robert E. Liss
-----------------------
Robert E. Liss, in his individual capacity
(Executive)