CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is entered into as of the
13th day of March, 1999 ("Effective Date"), by and between Knight Acquisition
Corporation, an Arizona corporation ("KAC"), Knight Transportation, Inc., an
Arizona corporation ("Knight"), and Bobby R. Ellis (the "Consultant"). Knight
and KAC are hereinafter referred to as the "Corporation."
RECITALS:
A. Consultant, together with his spouse, owned 100% of the shares of Action
Delivery Service, Inc. ("ADS"), a Texas corporation, and Action Warehouse
Services, Inc. ("AWS"), a Texas corporation (collectively, "Action"). All of the
assets of ADS and AWS were purchased, and certain identified liabilities were
assumed, by the Corporation as evidenced by that certain Asset Purchase
Agreement dated March 13, 1999.
B. Corporation desires to retain Consultant as an independent contractor to
provide consulting services to Corporation as provided in this Agreement.
Consultant is willing to provide such services under the terms and conditions as
set forth in this Agreement.
AGREEMENT:
1. TERM OF AGREEMENT. Unless earlier terminated in accordance with the
provisions of Section 8, the term of this Agreement shall commence on the
Effective Date and shall expire twenty-four (24) months from the Effective Date.
2. SCOPE OF SERVICES. Corporation and Consultant acknowledge that the
duties of Consultant will be that of a marketing consultant to the Corporation.
3. CORPORATION'S RULES. Consultant shall comply with all reasonable rules,
regulations and policies adopted by Corporation from time to time relating to
the business operations of Corporation.
4. CONSULTANT'S GENERAL DUTIES. Consultant shall perform the following
services for Corporation: (i) assist the Corporation with respect to customer
transition matters, including, without limitation, the retention of all existing
customers of ADS and AWS and the Corporation's retention of key employees; (ii)
work closely with Knight's Division Manager to effect a smooth transition for
Action's former employees and customers from Action to the Corporation; (iii)
assist the Corporation in establishing business relations with all of Action's
vendors, including any fuel vendors; and (iv) assist the Corporation in
attracting and retaining new customers to be serviced by the Corporation's
Corsicana, Texas facility. Corporation agrees that it
shall timely and properly perform all of its obligations in connection with and
necessary for Consultant's duties hereunder, as reasonably requested by
Consultant, including attendance at and participation in meetings with Action's
former customers, vendors, and employees. Consultant will use his best good
faith efforts to introduce the Corporation and its representatives to all key
Action customer account representatives including, without limitation, those
persons representing the companies listed on EXHIBIT A attached hereto.
5. REMUNERATION. Corporation and Consultant agree that Consultant will not
be paid any fees or other compensation, except as provided in Section 6 below,
for services provided under this Agreement.
6. FRINGE BENEFITS AND EXPENSES.
a. In consideration for his consulting services the Corporation shall
pay Consultant for twenty-four (24) months following the Effective Date of this
Agreement (the "Consulting Period") all his reasonable business expenses
incurred on the Corporation's behalf. These expenses include reasonable country
club dues [not to exceed $500 per month], and reasonable automobile expenses
incurred in connection with the operation of Action's 1997 Lincoln Towncar
presently furnished to Consultant. Consultant shall continue to have exclusive
use of the Towncar during the Consulting Period.
b. The Corporation shall provide Consultant and his spouse with
medical insurance comparable to that provided by Corporation to its employees,
to the extent such coverages are reasonably available, but such insurance shall
not include any long-term care benefits. The Corporation may provide such
insurance coverage through COBRA benefits, to the extent Consultant and his
spouse are eligible for COBRA through Action and, in such event, Corporation
will pay all COBRA premiums during the Consulting Period. Consultant agrees to
elect COBRA coverage when his employment with Action is terminated. To provide
Consultant with the insurance coverage contemplated hereby, the Corporation may
reimburse Consultant for any COBRA premiums paid by him. If Consultant or his
spouse are eligible for Medicare benefits, Consultant and his spouse (if they
have not done so) will apply for Medicare benefits and Corporation shall, at its
expense, during the Consulting Period, purchase for Consultant and his spouse,
to the extent coverage is reasonably available, a supplemental health insurance
policy to provide medical insurance for those medical expenses not covered by
Medicare.
c. Corporation agrees that it shall reimburse Consultant for any other
business or miscellaneous business-related expenses reasonably incurred by
Consultant and related to the performance of Consultant's services under this
Agreement or other activities engaged in on behalf of Corporation (provided
prior written consent is obtained for expenses in excess of $500); reimbursement
for such expenses shall be paid within thirty (30) days after receipt by
Corporation of Consultant's reimbursement documentation, accompanied by copies
of receipts and other evidence demonstrating Consultant's right to
reimbursement.
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7. TIME COMMITMENT. Consultant shall not be require to consult full-time
for the Corporation during the Consulting Period. Consultant is required to
devote such time as is reasonably necessary for the proper performance of
Consultant's duties under this Agreement. However, as an independent contractor,
Consultant shall have control of and discretion as to establishing the method by
which he will perform services required of him under this Agreement, subject to
the terms of this Agreement. The parties anticipate that Consultant will spend
an average of (but not more than) fifteen (15) hours of service per week in the
performance of Consultant's duties to the Corporation.
8. RIGHT OF TERMINATION. This Agreement shall not be terminable during the
term hereof, except for cause by either Corporation or Consultant, or in the
event of Consultant's death during the Consulting Term. For the purposes of this
Section, "for cause" means (i) failure of Corporation to pay fringe benefits and
expenses in accordance with Section 6 above; (ii) failure of either party to
otherwise materially perform under this Agreement, if such failure continues for
ten (10) business days following notice to the non-performing party as provided
under this Agreement; and (iii) any breach by Consultant under the Asset
Purchase Agreement (or the Exhibits thereto) between Consultant, Action and the
Corporation.
9. ASSIGNMENT. This Agreement and the duties, obligations and benefits
under it are not assignable or delegable by Consultant without Corporation's
prior written consent. This Agreement shall be binding upon and inure to the
benefit of Corporation and its respective successors and assigns.
10. NOTICE. Any notice required to be given by this Agreement shall be in
writing and shall be considered as given and received upon personal delivery,
one day after being sent when sent by a professional overnight courier service,
two days after posting when sent by United States registered or certified mail,
or the date of transmission if sent by telecopier, addressed as follows:
If to Consultant: Mr. Bobby R. Ellis
1812 Hill Valley Drive
Arlington, Texas 76013
If to Corporation: Knight Transportation, Inc.
Attn: Kevin P. Knight, Chief Executive Officer
5601 W. Buckeye Road
Phoenix, Arizona 85043
11. INDEPENDENT CONTRACTOR STATUS. Consultant's relationship to Corporation
shall be that of an independent contractor and not an employee. Any federal,
state and local taxes required to be paid by Consultant with respect to any
fringe benefits and expenses described in Section 6 shall be Consultant's sole
responsibility as an independent contractor. Nothing contained
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in this Agreement shall be construed so as to make Consultant an officer or
employee of Corporation. Neither Consultant nor Corporation shall have the
authority to bind the other party in any respect.
12. CONFIDENTIALITY. During the term of the Agreement and thereafter,
Consultant shall hold in confidence and shall not disclose, directly or
indirectly, to any third person any Confidential Information unless such
disclosure is authorized in writing by the Corporation or is required by law.
For purposes of this Agreement, "Confidential Information" means any and all
confidential or proprietary information regarding the Corporation's personnel,
products, customers, customer lists, prospects, business plans, lists of actual
or prospective customers, pricing, trade secrets, pay practices, suppliers,
financing arrangements, or other information relating to the operations or
business of the Corporation or any parent, subsidiary and affiliated companies,
regardless of whether such confidential information is known or available to, or
developed by, Consultant before or during the term of the Agreement.
Confidential Information shall not include any information clearly in the public
domain, provided that such information did not come into public domain by reason
of the Consultant's violation of this Agreement. Consultant acknowledges that
the information described above is proprietary and confidential and will be kept
confidential. Consultant agrees that all right, title and interest in any such
Confidential Information shall be and shall remain the exclusive property of the
Corporation. Consultant agrees to execute any agreements or documents and to do
all other things reasonably requested by the Corporation in order to vest in the
Corporation all ownership rights in the Confidential Information. Upon
termination of the Agreement, Consultant agrees to turn over to the Corporation
all notes, data, tapes, reference items, sketches, drawings, memoranda,
calendars, records and other materials in Consultant's possession or control.
13. NON-COMPETE AGREEMENT. Consultant acknowledges and agrees that this
Agreement shall not modify the terms and conditions of the Asset Purchase
Agreement and Consultant shall continue to be subject to and bound by all terms
and conditions of the Asset Purchase Agreement, including, without limitation,
the non-compete agreement set forth therein.
14. MISCELLANEOUS.
a. This Agreement shall be governed by and construed in accordance
with the substantive laws of the State of Arizona.
b. Amendments, modifications and changes to this Agreement shall be
valid only if in writing and signed by both parties to this Agreement.
c. This Agreement, together with the Asset Purchase Agreement,
contains the entire understanding of the parties with regard to the matters
contained herein and supersedes any prior or contemporaneous written or oral
agreements of the parties.
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d. The waiver of either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by either party. If either party retains an attorney to enforce the terms of
this Agreement, the prevailing party to any action or enforcement proceeding
shall be reimbursed by the other party for all costs and expenses thereof,
whether or not assessable.
The undersigned have executed this Agreement as of the Effective Date.
"CONSULTANT" /s/ Bobby R. Ellis
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Bobby R. Ellis
"CORPORATION" KNIGHT ACQUISITION CORPORATION,
an Arizona corporation
By: /s/ Kevin P. Knight
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Its: Chief Executive Officer
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Knight Transportation, Inc., an
Arizona corporation
By: /s/ Kevin P. Knight
--------------------------------
Its: Chief Executive Officer
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