Exhibit 10.41
CONSULTING AND NON-COMPETITION AGREEMENT
This CONSULTING AND NON-COMPETITION AGREEMENT (this "Agreement"),
is made as of the 3rd day of July, 1996, between Celadon Group, Inc., a Delaware
corporation (the "Company"), on the one hand, and Leonard R. Bennett (the
"Consultant"), on the other hand.
W I T N E S S E T H:
WHEREAS, prior to the date hereof the Consultant has served as a
member of the Board of Directors, the President, the Chief Operating Officer and
an employee of the Company and as such has provided services to the Company that
were both critical and integral to its operations; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Consultant is resigning from his positions as a director, officer
and employee of the Company; and
WHEREAS, the Company desires to formally engage the Consultant as
a consultant and adviser in connection with the Company's business operations,
and the Consultant desires to accept such engagement, upon the terms and subject
to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereto hereby agree
as follows:
SECTION 1. Engagement. The Company hereby engages the Consultant
as a consultant and adviser in connection with the Company's business
operations, and the Consultant hereby accepts such engagement, upon the terms
and subject to the conditions hereinafter set forth.
SECTION 2. Term. The services of the Consultant hereunder shall
commence as of the date hereof and, unless sooner terminated in the manner as
hereinafter provided, shall continue thereafter until the third anniversary of
the date hereof.
SECTION 3. Duties of the Consultant. During the term of his
engagement hereunder, the Consultant shall (a) perform such duties and serve the
Company to the best of his ability at such time and place and shall devote such
working time and attention to his engagement hereunder as the Consultant and the
Company shall mutually and reasonably deem necessary; provided, however, that in
no event shall the Consultant be required to travel to locations other than
Indianapolis, Indiana or New York, New York in connection with his obligations
hereunder, and (b) perform such duties and services as may reasonably be
required of him by the Board of Directors of the Company in connection with the
Company's business operations, it being understood by the parties hereto that
the Consultant shall not be required to devote more than three full business
days per month during the term hereof to the performance of his obligations
hereunder. The Consultant shall travel to the locations referenced in this
Section 3 in connection with the performance of his obligations hereunder, at
the request and expense of the Company, provided the Company notifies the
Consultant of the need therefor at least five business days in advance of any
such scheduled travel date.
SECTION 4. Compensation and Set-Off Rights. (a) As of the date
hereof and during the term of his engagement hereunder, the Company shall pay
to the Consultant as compensation for the Consultant's services hereunder and
for the Consultant's agreements under Section 9 hereof, a fee of $250,000 per
year, payable bi-weekly or at such other intervals as may be agreed to in
writing by the Consultant and the Company.
(b) In addition to the fee referred to in Section 4(a)
hereof, the Company shall pay to the Consultant as an additional fee for his
services hereunder an amount equal to and payable concurrently with the bonus,
if any, paid to Stephen Russell, the Chairman of the Board of Directors and
Chief Executive Officer of the Company, for the Company's 1996 fiscal year.
(c) The Company may set-off and otherwise apply payments
due pursuant to Section 4(a) and (b) hereof against monies which are past due
and owing, following the expiration of all applicable notice and cure periods,
from the Consultant to the Company or its subsidiaries pursuant to the terms of
that certain Agreement, dated as of even date herewith, between Celadon
Logistics Inc., a Delaware corporation, and the Consultant (a "Set-off
Payment"). In the event that a court having proper jurisdiction determines that
a Set-off Payment was not due and owing in whole or in part to the Company or
the applicable subsidiary, the Company shall promptly reimburse such amount to
the Consultant, with interest thereon at a rate of 12% per annum based on the
number of days elapsed from and including the date of such Set-off Payment
through and including the date of the reimbursement payment.
SECTION 5. Benefits; Stock Options and Expenses. (a) Except as
otherwise provided in Section 6 hereof, until the earliest of (x) a termination
of the Consultant's engagement hereunder by the Company for "cause" pursuant to
Section 8(a) hereof, if any, (y) a voluntary termination of the Consultant's
engagement hereunder by the Consultant (excluding a termination as a result of
his death or permanent disability), or (z) the third anniversary of the date
hereof, the Company shall where applicable pay for and shall otherwise provide
or cause to be provided to the Consultant the following benefits:
(i) A non-accountable benefits allowance in the amount of
$1,533 per month, to be paid simultaneously with the delivery of the first
bi-weekly check of each month pursuant to Section 4(a) hereof.
(ii) Continuation of premium payments on the disability
insurance policy listed on Exhibit A hereto which was maintained by the Company
with respect to the Consultant immediately prior to the date hereof.
(iii) Continuation of premium payments, in the manner of
payment set forth on Exhibit A hereto, on the life insurance policies listed on
Exhibit A hereto which were maintained by the Company with respect to the
Consultant immediately prior to the date hereof.
(b) The Company hereby represents and warrants to the Consultant
that attached hereto as Exhibit B is a list of all stock options relating to the
Company's capital stock granted to the Consultant prior to the date hereof
(collectively, the "Stock Options"). Notwithstanding anything to the contrary
contained in any stock option plan or agreement relating to the Stock Options
(collectively, the "Option Documents"), the Company shall cause all such Stock
Options to be exercisable by the Consultant until the earlier of (x) a
termination of the Consultant's engagement hereunder by the Company for "cause"
pursuant to Section 8(a) hereof, if any, or (y) the third anniversary of the
date hereof, in each case in accordance with the terms of the applicable Option
Documents, except that the expiration of this Agreement on the third anniversary
of the date hereof shall be deemed a termination of the Consultant's employment
with the Company for purposes of the Option Documents. The Company shall
indemnify and hold the Consultant, his heirs, executors, administrators,
personal representatives, successors and assigns harmless from
and against any and all losses, liabilities, damages and expenses (including
reasonable attorneys' fees and expenses) resulting from any breach by the
Company of its representations, warranties or obligations pursuant to this
Section 5(b).
(c) The Company shall reimburse the Consultant for all reasonable
out-of-pocket expenses incurred by the Consultant with the prior approval of the
Company in connection with the performance of the Consultant's obligations
hereunder, promptly following the Consultant's submission to the Company of
invoices therefor, except that such prior approval shall not be required for
reimbursement of all reasonable travel expenses incurred by the Consultant where
the Company has required such travel of the Consultant in accordance with the
terms hereof.
(d) Unless this Agreement is terminated upon the death of the
Consultant, until the earliest of (x) a termination of the Consultant's
engagement hereunder by the Company for "cause" pursuant to Section 8(a) hereof,
if any, (y) a voluntary termination of the Consultant's engagement hereunder by
the Consultant (excluding a termination as a result of his death or permanent
disability), or (z) the third anniversary of the date hereof, the Consultant
shall pay to the Company the then cash value of both of the "split whole life"
insurance policies listed on Exhibit A hereto and the Company shall execute and
deliver and take any and all actions necessary to have the Company removed as a
collateral beneficiary under each of the insurance policies listed on Exhibit A
hereto.
SECTION 6. Death or Permanent Disability. In the event of the
death or permanent disability (as defined below) of the Consultant during the
term of his engagement hereunder, this Agreement shall thereupon automatically
terminate and except as otherwise provided in Section 5(b) hereof, the parties
shall have no further obligations hereunder. For purposes of this Section 6,
"permanent disability" shall mean any physical or mental disability or
incapacity, as reasonably determined in good faith by a physician, mutually
acceptable to the Company and the Consultant or his personal representatives,
which permanently renders the Consultant incapable of performing the services
required of him pursuant to the terms hereof. If the parties are unable to
promptly select a mutually acceptable physician, either party may request that a
physician be selected for purposes of this Section 6, by the American
Arbitration Association. The Company shall pay all fees and other costs,
including the fees, if any, of the American Arbitration Association, of any
medical examinations required for purposes of this Section 6.
SECTION 7. Releases. (a) The Consultant, on behalf of himself and
anyone claiming through him including, but not limited to, his past, present and
future spouses, family members, relatives, agents, attorneys, representatives,
heirs, executors and administrators, and the predecessors, successors and
assigns of each of them, hereby releases and agrees not to sue the Company or
any of its divisions, subsidiaries, affiliates, other related entities (whether
or not such entities are wholly owned) or the officers, directors, agents,
attorneys or representatives thereof, or the predecessors, successors or assigns
of each of them (hereinafter jointly referred to as the "Released Parties"),
with respect to any and all known or unknown claims which the Consultant now
has, has ever had, or may in the future have, against any of the Released
Parties for or related in anyway to anything occurring from the beginning of
time up to and including the date hereof, including without limiting the
generality of the foregoing, any and all claims which in any way result from,
arise out of, or relate to, the Consultant's employment by the Company or the
termination of such employment, including, but not limited to, any and all
claims for severance or termination payments under any agreement between the
Consultant and the Company or any program or arrangement of the Company or any
claims that could have been asserted by the Consultant or on
his behalf against any of the Released Parties in any federal, state or local
court, commission, department or agency under any fair employment, contract or
tort law, or any other federal, state or local law, regulation or ordinance,
including, without limitation, Title VII of the Civil Rights Act of 1964, the
Employee Retirement Income Security Act of 1974, as amended, the Americans with
Disabilities Act or the Age Discrimination in Employment Act, or under any
compensation, bonus, severance, retirement or other benefit plan; provided,
however, that nothing contained in this Section 7 (a) shall apply to, or release
the Company from, any obligations (i) contained in this Agreement, (ii)
contained in the Stock Purchase Agreement, dated of even date herewith, between
the Consultant and Celadon Logistics Inc., a Delaware corporation, and the
agreements, documents and instruments contemplated thereby, (iii) contained in
the Amendment to Country Club Membership Agreement, dated of even date herewith
(the "Amendment to Country Club Membership Agreement"), among the Company, the
Consultant and Stephen Russell, or (iv) to indemnify the Consultant with respect
to matters occurring prior to the date hereof pursuant to the Company's
Certificate of Incorporation or Bylaws or insurance policies maintained by the
Company with respect thereto. The Consultant expressly represents and warrants
that he has not transferred or assigned any rights or causes of action of the
nature referred to in this Section 7(a) that he might have against any of the
Released Parties.
(b) The Company, on behalf of itself and anyone claiming through
it including, but not limited to, its officers, directors, agents, attorneys,
representatives, heirs, successors and assigns, and the predecessors, successors
and assigns of each of them, hereby releases and agrees not to sue the
Consultant, his family members, relatives, agents, attorneys, representatives,
heirs, executors and administrators, or the predecessors, successors or assigns
of each of them (hereinafter jointly referred to as the "Consultant Released
Parties"), with respect to any and all known or unknown claims which the Company
now has, has ever had, or may in the future have, against any of the Consultant
Released Parties for or related in anyway to anything occurring from the
beginning of time up to and including the date hereof, including without
limiting the generality of the foregoing, any and all claims which in any way
result from, arise out of, or relate to, the Consultant's employment by or
directorship with or offices held with the Company, including, but not limited
to, any and all claims for payments by the Consultant under any agreement
between the Consultant and the Company or any claims that could have been
asserted by the Company or on its behalf against any of the Consultant Released
Parties in any federal, state or local court, commission, department or agency
under any federal, state or local law, regulation or ordinance; provided,
however, that nothing contained in this Section 7(b) shall apply to, or release
the Consultant from, any obligations (i) contained in this Agreement, (ii)
contained in the Agreement, dated of even date herewith between the Consultant
and Celadon Logistics Inc., a Delaware corporation, and the agreements,
documents and instruments contemplated thereby, (iii) contained in the Amendment
to Country Club Membership Agreement, or (iv) based on acts of fraud or
violations of law committed by the Consultant. The Company expressly represents
and warrants that it has not transferred or assigned any rights or causes of
action of the nature referred to in this Section 7(b) that it might have against
any of the Consultant Released Parties.
SECTION 8. Termination. (a) The Consultant's engagement
hereunder may be terminated by the Company at any time if the Consultant shall
commit any of the following acts (such termination being for "cause"):
(i) The Board of Directors of the Company shall have
reasonably determined in good faith that the Consultant has committed an act of
fraud, theft or dishonesty against the Company; or
(ii) The Consultant shall be convicted of (or plead nolo
contendere to) any felony.
In the event the Company elects to terminate the engagement of the Consultant
for "cause" pursuant to this Section 8(a), the Board of Directors of the Company
shall send written notice to the Consultant terminating such engagement and
describing the basis for such termination; and thereupon the Company shall have
no further obligations under this Agreement to the Consultant, and the
Consultant shall have the obligations set forth in Section 9 hereof.
(b) Except as otherwise expressly provided in Section 6 or
Section 8(a) hereof, in the event the Company terminates the Consultant's
engagement hereunder for any other reason, the Company shall be obligated to
promptly pay in a lump sum payment to the Consultant the full amount of the
remaining payments pursuant to Sections 4(a) and (b) hereof and the Consultant
shall be entitled to receive all of the rights, payments and benefits provided
for in Section 5 hereof until the third anniversary of the date hereof.
SECTION 9. Non-Competition Covenants and Confidentiality. (a)
Provided that the Company is not in default to the Consultant with respect to
the Company's obligations under this Agreement (which default remains uncured
for ten days after notice thereof from the Consultant to the Company), the
Consultant shall not, directly or indirectly, do any of the following:
(i) own, manage, operate, control, or participate in the
ownership, management, operation or control of or be employed or engaged by or
otherwise affiliated or associated in any manner with, any other corporation,
partnership, proprietorship, firm, association, or other business entity which
is principally engaged in the business of providing full truckload trucking
services (w) within any of the United States, Canada or Mexico, (x) between the
United States and Mexico, (y) between the United States and Canada, or (z)
between Canada and Mexico (a "Competing Business"); provided, however, that the
Consultant's ownership of not more than five percent (5%) of the outstanding
stock of a company engaged in a Competing Business, if such stock is listed on a
national securities exchange, reported on The Nasdaq Stock Market or regularly
traded in the over-the-counter market, shall not be deemed violative of this
Section 9(a)(i); or
(ii) except for members of the Consultant's family, Ramiro
Leal and Sandra Hall, hire any person who is an employee of the Company or its
subsidiaries (other than persons who are employees of Celsur Inc. or its
subsidiaries) on the date hereof, unless such person's employment is terminated
by the Company or the applicable subsidiary and a period of six months has
passed following the date of such termination; or
(iii) disclose, divulge, discuss, copy or otherwise use or
suffer to be used, in any manner in competition with or contrary to the
interests of the Company, the customer lists, marketing methods, research or
data or other trade secrets or other proprietary information of the Company, it
being acknowledged by the Consultant that all such information regarding the
business of the Company, compiled or obtained by, or furnished to, the
Consultant while the Consultant shall have been engaged hereunder or associated
with the Company is confidential information and the exclusive property of the
Company; provided, however, that this Section 9(a)(iii) shall not apply to the
disclosure by the Consultant of confidential information (A) in the course of
carrying out his duties under this Agreement, (B) when required to do so by a
court of law or any governmental or administrative agency having jurisdiction
over the business of the Company; provided in such event, the Consultant shall
immediately notify the Company of the existence, terms and circumstances
surrounding such disclosure so that the Company may
seek an appropriate protective order prior to the disclosure of such
information, or (C) information which is in the public domain other than through
disclosure by the Consultant.
(b) Except as otherwise provided in Section 9(a) hereof, the
provisions of Sections 9(a)(i) and 9(a)(ii) hereof shall be operative until the
third anniversary of the date of this Agreement. All other obligations created
by the terms of this Section 9 are of a continuing nature and shall remain in
full force and effect during and beyond the Consultant's period of engagement by
and association with the Company.
(c) The Consultant expressly agrees and understands that the
remedy at law for any breach by him of this Section 9 will be inadequate and
that the damages flowing from such breach are not readily susceptible to being
measured in monetary terms. Accordingly, it is acknowledged that upon adequate
proof of the Consultant's violation of any legally enforceable provision of this
Section 9, the Company shall be entitled to immediate injunctive relief and may
obtain a temporary order restraining any threatened or further breach. Except as
provided in the immediately following sentence, nothing contained in this
Section 9 shall be deemed to limit the Company's remedies at law or in equity
for any breach of the provisions of this Section 9 by the Consultant. Any
covenant on the Consultant's part contained hereinabove which may not be
specifically enforceable shall nevertheless, if breached, give rise to a cause
of action for monetary damages, if such breach remains uncured for 30 days after
notice thereof in reasonable detail from the Company to the Consultant.
(d) Nothing contained herein shall prevent the Consultant from
being employed by, rendering services to or owning, managing or otherwise being
affiliated with other entities; provided such other entities are not engaged in
a Competing Business.
SECTION 10. Relationship of the Parties. In performing his
services hereunder, the Consultant shall be an independent contractor and, as
between the Company and the Consultant, the Company shall not be responsible for
withholding, collection or payment of income taxes or for other taxes of any
nature on behalf of the Consultant. Nothing contained herein shall make the
Consultant the agent or employee of the Company or provide the Consultant with
the power or authorization to bind the Company to any contract, agreement or
arrangement with an individual or entity except with the prior written approval
of the Chairman of the Board of Directors and Chief Executive Officer of the
Company.
SECTION 11. Termination of Employment Contract. The parties
hereto hereby agree that the Employment Contract, dated as of January 21, 1994
between the Company and the Consultant shall be terminated and the terms and
provisions thereof shall be null and void and of no further force and effect
effective as of the date hereof.
SECTION 12. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered personally,
sent by registered or certified mail, return receipt requested, or sent by a
nationally recognized overnight courier service addressed as follows:
If to the Company, to:
Celadon Group, Inc.
888 Seventh Avenue
Suite 402
New York, New York 10106
Attention: Stephen Russell
With a copy to:
Proskauer Rose Goetz & Mendelsohn L.L.P.
1585 Broadway
New York, New York 10036-8299
Attention: Arnold Jacobs, Esq.
If to the Consultant, to:
Leonard R. Bennett
2526 N.W. 59th Street
Boca Raton, Florida 33496
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
399 Park Avenue
New York, New York 10022
Attention: Robert G. Koen, Esq.
or to such other person or address as any party shall
specify by notice in writing to the other parties hereto.
SECTION 13. Assignability, Binding Effect and Survival. This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. The rights and obligations of the Consultant under this
Agreement shall inure to the benefit of and be binding upon the Consultant and
his heirs, personal representatives and estate. The provisions of Section 9
hereof shall survive termination of this Agreement and, to the extent
appropriate to the intention of the parties and the subject matter of this
Agreement, other rights and obligations of the parties may survive the
termination of this Agreement.
SECTION 14. Complete Understanding; Amendment. This Agreement
constitutes the complete understanding between the parties with respect to the
subject matter hereof, and no statement, representation, warranty or covenant
has been made by any party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or terminated
except by written instrument signed by each of the parties hereto. Waiver by any
party hereto of any breach hereunder by another party shall not operate as a
waiver of any other breach, whether similar to or different from the breach
waived.
SECTION 15. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law thereof.
SECTION 16. Section Headings. The section headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 17. Severability. If any provision of this Agreement or
the application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable, shall not be affected thereby,
and each provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
SECTION 18. Legal Fees and Expenses. The parties hereto shall
each pay all costs, fees and expenses incurred by it or him in connection with
the negotiation and preparation of this Agreement, including, without
limitation, the fees and expenses of its or his own advisors and counsel.
SECTION 19. Further Assurances. Each of the parties hereto shall,
whenever and as often as reasonably requested to do so by the other party, do,
execute, acknowledge and deliver any and all such other further acts, transfers
and any instruments of further assurances, approvals and consents as are
necessary or proper in order to accomplish and complete the transactions
contemplated hereby.
SECTION 20. Counterparts. This Agreement may be executed in two
or more separate counterparts, each of which shall be deemed an original and
all of which together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
CELADON GROUP, INC.
By: /s/ Stephen Russell
Name: Stephen Russell
Title: Chairman
/s/ Leonard R. Bennett
Leonard R. Bennett
EXHIBIT A
BENEFITS
Disability Insurance Policy:
Policy Number Insurer Policy Amount
31050-69733 Provident $17,000/month
Life Insurance Policies:
Policy Insurer Policy Policy Manner of
Number Amount Type Payment
7214173 Mass Mutual $1,500,000 Split whole Borrowing
life against cash
value
7394226 Mass Mutual $1,000,000 Split whole Borrowing
life against cash
value
79774583 Prudential $2,000,000 Term Cash premium
payments
EXHIBIT B
STOCK OPTIONS
Number of Shares Exercise Price
25,000 $20.00
25,000 $13.625
20,000 $10.00