Document:

Exhibit 10.3

 

ECHO GLOBAL LOGISTICS, INC. ANNUAL INCENTIVE PLAN

 

ARTICLE 1

 

Statement of Purpose

 

The
compensation policies of Echo Global Logistics, Inc. (the “Company”) are
intended to support the Company’s overall objective of enhancing stockholder
value.  In furtherance of this
philosophy, the Company has designed this Echo Global Logistics, Inc. Annual
Incentive Plan (the “Plan”) to provide incentives for business performance,
reward contributions towards goals consistent with the Company’s business strategy,
and enable the Company to attract and retain highly qualified Employees.

 

ARTICLE 2

 

Definitions

 

The
terms used in this Plan include the feminine as well as the masculine gender
and the plural as well as the singular, as the context in which they are used
requires. The following terms, unless the context requires otherwise, are
defined as follows:

 

2.1                                 “Affiliate” means any parent, subsidiary or other entity that is
(directly or indirectly) controlled by, or controls, the Company.

 

2.2                                 “Board”
means the Echo Global Logistics, Inc. Board of Directors.

 

2.3                                 “Bonus”
means the incentive compensation determined under Section 4.4 of
the Plan payable in cash.

 

2.4                                 “Bonus
Pool” means an amount that may be allocated to a
Business Unit for allocation among the eligible Employees of such Business
Unit.

 

2.5                                 “Business Unit” means an organizational unit of business
within the Company, as identified by the Company.

 

2.6                                 “Code” means the
Internal Revenue Code of 1986, as amended.

 

2.7                                 “Committee” means the
Compensation Committee of the Board or any successor committee with
responsibility for compensation, or any subcommittee, as long as the number of
Committee members and their qualifications shall at all times be sufficient to
meet the applicable requirements for “outside directors” under Section 162(m) and
the regulations thereunder and the independence requirements of the NASDAQ
marketplace rules or any other applicable exchange on which Echo Global
Logistics’ common equity is at the time listed, in each case as in effect from
time to time.

 

2.8                                 “Company” means Echo
Global Logistics, Inc. and any of its subsidiaries that adopt this Plan or
that have Employees who are participants under this Plan.

 

2.9                                 “Disability” means
permanent and total disability as defined in the Company’s long term disability
plan, or if no such plan is then in effect, as defined in Code Section 22(e)(3).

 

 

2.10                           “Effective Date” means January 1, 2008.

 

2.11                           “Employee” means any person employed on a full-time or
part-time basis by the Company or an Affiliate in a common law
employee-employer relationship, but shall not include any commissioned sales
employees, temporary employees, interns, leased employees, or independent
contractors.  A Participant shall not
cease to be an Employee for purposes of this Plan in the case of (i) any
leave of absence approved by the Company, or (ii) transfers between
locations of the Company or among the Company, its subsidiaries or any
successor.

 

2.12                           “Executive
Officer” means any Employee who is an “executive officer” as
defined in Rule 3b-7 promulgated under the Exchange Act.

 

2.13                           “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

2.14                           “Echo Global Logistics” means Echo Global Logistics, Inc.,
a Delaware corporation, and any successor to its obligations under this Plan.

 

2.15                           “Participant” means an Executive Officer or Employee as
described in Article 3 of this Plan.

 

2.16                           “Performance
Period” means the period for which a Bonus may be paid. Unless otherwise
specified by the Committee, the Performance Period shall be a calendar year,
beginning on January 1 and ending on December 31 of any year.

 

2.17                           “Plan” means the Echo
Global Logistics, Inc. Annual Incentive Plan, as it may be amended from
time to time.

 

2.18                           “Retirement” means a
Termination of Employment, after appropriate notice to the Company, (a) on
or after the earliest permissible retirement date under a qualified pension or
retirement plan of the Company, or (b) upon such terms and conditions
approved by the Committee, or officers of the Company designated by the Board
or the Committee.

 

2.19                           “SEC” means the U.S.
Securities and Exchange Commission.

 

2.20                           “Section 162(m)” means Code Section 162(m) and
regulations promulgated thereunder by the Secretary of the Treasury.

 

2.21                           “Termination
of Employment” means (a) the termination of the Participant’s
active employment relationship with the Company, unless otherwise expressly
provided by the Committee, or (b) the occurrence of a transaction by which
the Participant’s employing Company ceases to be an Affiliate.

 

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ARTICLE 3

 

Participation

 

An
Executive Officer or other Employee of the Company designated by the Committee
individually or by classification shall be a Participant in this Plan and shall
continue to be a Participant until any Bonus he may receive has been paid or
forfeited under the terms of this Plan. 
The amount of a Participant’s Bonus, if any, will be governed by Article 4.

 

ARTICLE 4

 

Incentive Bonuses

 

4.1                                 Objective
Performance Goals. The Committee shall establish written,
objective performance goals for a Performance Period not later than 90 days
after the beginning of the Performance Period (but not after more than 25% of
the Performance Period has elapsed).  The
objective performance goals shall be stated as specific amounts of, or specific
changes in, one or more of the financial measures described in Section 4.2.  Objective
performance goals may also include operational goals such as: productivity,
safety, other strategic objectives and individual performance goals.  The objective performance goals need not be
the same for different Performance Periods and for any Performance Period may
be stated: (a) as goals for Echo Global Logistics, for one or more of its subsidiaries,
Business Units, divisions, organizational units, or for any combination of the
foregoing; (b) on an absolute basis or relative to the performance of
other companies or of a specified index or indices, or be based on any
combination of the foregoing; and (c) separately for one or more
Participants or Business Units, or in any combination of the two.

 

4.2                                 Financial
Measures.  The Committee
shall use any one or more of the following financial measures to establish
objective performance goals under Section 4.1:  earnings before interest and taxes (EBIT);
earnings before interest, taxes, depreciation and amortization (EBITDA); net
earnings; operating earnings or income; earnings growth; net income (absolute
or competitive growth rates comparative); net income per share; cash flow,
including operating cash flow, free cash flow, discounted cash flow return on
investment, and cash flow in excess of cost of capital; earnings per share;
return on stockholders’ equity (absolute or peer-group comparative); stock
price (absolute or peer-group comparative); absolute and/or relative return on
common stockholders’ equity; absolute and/or relative return on capital;
absolute and/or relative return on assets; economic value added (income in
excess of cost of capital); customer satisfaction; expense reduction; ratio of
operating expenses to operating revenues; gross revenue or revenue by
pre-defined business segment (absolute or competitive growth rates
comparative); revenue backlog; margins realized on delivered services; total stockholder
return; debt-to-capital ratio; or market share. 
The Committee may specify any reasonable definition of the financial
measures it uses. Such definitions may provide for reasonable adjustments and
may include or exclude items, including but not limited to:  realized investment gains and losses;
extraordinary, unusual or non-recurring items; gains or losses on the sale of
assets; changes in accounting principles or the application thereof; 

 

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currency fluctuations, acquisitions, divestitures, or necessary
financing activities; recapitalizations, including stock splits and dividends;
expenses for restructuring or productivity initiatives; and other non-operating
items.

 

4.3                                 Performance
Evaluation.  Within a
reasonable time after the close of a Performance Period, the Committee shall
determine whether the objective performance goals established for that
Performance Period have been met by the respective Company, Business Unit,
Executive Officers, or Employees subject to such performance goals, and the
extent to which such performance goals may have been exceeded.

 

4.4                                 Bonus.  If the Committee has determined that the objective
performance goals established for that Performance Period have been satisfied,
the Committee will determine in its discretion or based on formulae the
Committee may establish for such Performance Period, the amount of Bonuses
payable by the Company.  Bonus amounts
determined by the Committee may be expressed as individual Bonuses payable to
an Employee or as one or more Bonus Pools to be allocated to one or more
Business Units.  Any Bonus Pool will
thereafter be allocated as individual Bonuses among Employees employed by such
Business Unit in the discretion of the senior executive of such Business Unit
(or his designee).

 

4.5                                 Eligibility
for Payments.

 

(a)           Except as
otherwise provided in this Section 4.5, a Participant will be
eligible to receive his Bonus only if the Participant is employed by the
Company continuously from the first day of the Performance Period up to and
including the last day of the Performance Period.

 

(b)           Under Section 4.5(a),
a leave of absence that lasts less than three months and that is approved in
accordance with applicable Company policies is not a break in continuous
employment. In the case of a leave of absence of three months or longer: (1) the
Committee shall determine whether the leave of absence constitutes a break in
continuous employment, and (2) if a Participant is on a leave of absence
on the last day of the Performance Period, the Committee may require that the
Participant return to active employment with the Company at the end of the
leave of absence as a condition of receiving the Bonus or payment.  Any determination as to a Participant’s
eligibility for a Bonus or payment under this Section 4.5(b) may be
deferred for a reasonable period after such Participant’s return to active
employment.

 

(c)           The Committee may determine, in its sole discretion, that (i) a
Bonus will be payable pro-rata for a Participant who either becomes an Employee
during the Performance Period or terminates his employment with the Company
during the Performance Period due to death, Retirement or Disability.

 

4.6                                 Payment
or Deferral of the Bonus.

 

(a)           As soon as
practicable after the amount of a Participant’s Bonus is determined under Section 4.4,
the Company shall pay the portion of the Bonus to the Participant that is not
otherwise deferred under Section 4.6(b). 
The target payment date 

 

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for
any Bonus not deferred shall be within the 2-1⁄2 month period following the end
of the calendar year (or if later, the end of the Company’s tax year) that
includes the end of the Performance Period. 
The Company shall deduct from any Bonus any applicable Federal, state
and local income and employment taxes and any other amounts that the Company is
otherwise required to deduct.  Any
payment attributable to a deceased Participant shall be made to the beneficiary
designated in the Company’s qualified 401(k) plan or, if no beneficiary is
so designated, to his spouse or, if none, to his estate.

 

(b)           Subject to the
Committee’s approval and applicable law, Participants may request that payments
of a Bonus be deferred under a deferred compensation arrangement maintained by
the Company by making a deferral election prior to or, as permitted, during the
Performance Period pursuant to such rules and procedures as the Committee
may establish from time to time with respect to such arrangement.

 

ARTICLE 5

 

Administration

 

5.1                                 General
Administration and Delegation of Authority.  This Plan shall be administered by the
Committee, subject to such requirements for review and approval by the Board as
the Board may establish.  As permitted by
applicable law and the Company, the Committee may delegate any of its duties
and authority under the Plan.

 

5.2                                 Administrative
Rules.  The
Committee shall have full power and authority to adopt, amend and rescind
administrative guidelines, rules and regulations pertaining to this Plan
and to interpret this Plan and rule on any questions respecting any of its
provisions, terms and conditions.

 

5.3                                 Committee
Members Not Eligible.  No
member of the Committee shall be eligible to participate in this Plan.

 

5.4                                 Committee
Members Not Liable.  The
Committee and each of its members shall be entitled to rely upon certificates
of appropriate officers of the Company with respect to financial and
statistical data in order to determine if the objective performance goals for a
Performance Period have been met. Neither the Committee nor any member shall be
liable for any action or determination made in good faith with respect to this
Plan or any Bonus paid hereunder.

 

5.5                                 Decisions
Binding.  All
decisions, actions and interpretations of the Committee concerning this Plan
shall be final and binding on Echo Global Logistics and its subsidiaries and
their respective boards of directors, and on all Participants and other persons
claiming rights under this Plan.

 

5.6                                 Application
of Section 162(m).

 

(a)           This Plan is
intended to be administered, interpreted and construed so that Bonus payments
remain tax deductible to the Company and unlimited by Section 162(m),
which restricts under certain circumstances the Federal income tax deduction
for 

 

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compensation
paid by a publicly held company to named executives in excess of $1,000,000 per
year.  As of this Plan’s Effective Date, Section 162(m) shall
not apply because the Company is not a “publicly held corporation” under Section 162(m).  If the Company should become publicly held,
the Plan is intended to be exempted from Section 162(m) based on
Treasury Regulation Section 1.162-27(f), which generally exempts from the
application of Section 162(m) compensation paid pursuant to a plan
that existed before a company becomes publicly held.  Under such Treasury Regulation, this
exemption is available to this Plan for the duration of the period that lasts
until the earlier of the expiration or material modification of this Plan or
the first meeting of stockholders at which directors are to be elected that
occurs after the close of the third calendar year following the calendar year
in which the Company first becomes subject to the reporting obligations of Section 12
of the Exchange Act.  The Committee, or
the Board, may, without stockholder approval, amend this Plan retroactively or
prospectively to the extent it determines necessary to comply with any
subsequent amendment or clarification of Section 162(m) required to preserve
the Company’s Federal income tax deduction for compensation paid pursuant to
this Plan.

 

(b)           To the extent
that the Committee determines that Section 162(m) applies to a Bonus
payable to an Executive Officer under the Plan and the exemption described in Section 5.6(a) above
is no longer available, such Bonus:  (i) shall
be intended to satisfy the applicable requirements for the performance-based
compensation exception under Section 162(m); (ii) shall be contingent
upon stockholder approval of this Plan in accordance with Section 162(m),
the regulations thereunder and other applicable U.S. Treasury regulations; (iii) shall
not originate from a Bonus Pool awarded to a Business Unit, but rather be set
forth as a specified formula that may be based on a percentage of compensation
applicable to the Executive Officer; (iv) shall not exceed $5,000,000 for
any Performance Period; (v) shall be payable only after the Committee
certifies in writing that the applicable performance goals for such Performance
Period have been achieved; and (vi) shall comply with such other
requirements as necessary to qualify as performance-based compensation under Section 162(m).

 

ARTICLE 6

 

Amendments; Termination

 

This
Plan may be amended or terminated by the Board or the Committee. All amendments
to this Plan, including an amendment to terminate this Plan, shall be in
writing. An amendment to this Plan shall not be effective without the prior
approval of the stockholders of Echo Global Logistics if such approval is
necessary to qualify Bonuses as performance-based compensation under Section 162(m),
or otherwise under Treasury or SEC regulations, the rules of NASDAQ or any
other applicable exchange or any other applicable law or regulations. Unless
otherwise expressly provided by the Board or the Committee, no amendment to
this Plan shall apply to potential Bonuses with respect to a Performance Period
that began before the effective date of such amendment.

 

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ARTICLE 7

 

Other Provisions

 

7.1                                 Bonuses
Not Assignable. No Bonus or any right thereto shall be assignable
or transferable by a Participant except by will or by the laws of descent and
distribution. Any other attempted assignment or alienation shall be void and of
no force or effect.

 

7.2                                 Participant’s
Rights.  The right of
any Participant to receive any Bonus granted or allocated to such Participant
pursuant to the provisions of this Plan shall be an unsecured claim against the
general assets of the Company.  This Plan
shall not create, nor be construed in any manner as having created, any right
by a Participant to any Bonus or portion of a Bonus Pool for a Performance
Period because of a Participant’s participation in this Plan for any prior
Performance Period or employment during such Performance Period.  The application of the Plan to one
Participant shall not create, nor be construed in any manner as having created,
any right by another Participant to similar or uniform treatment under the
Plan.

 

7.3                                 Termination
of Employment. The Company retains the right to terminate the
employment of any Participant or other Employee at any time for any reason or
no reason, and a Bonus is not, and shall not be construed in any manner to be,
a waiver of such right.

 

7.4                                 Exclusion
from Benefits.  Bonuses
under this Plan shall not constitute compensation for the purpose of
determining participation or benefits under any other plan of the Company
unless specifically included as compensation in such plan.

 

7.5                                 Successors. Any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of Echo Global Logistics’ business or assets shall
assume Echo Global Logistics’ liabilities under this Plan and perform any
duties and responsibilities in the same manner and to the same extent that Echo
Global Logistics would be required to perform if no such succession had taken
place.

 

7.6                                 Law
Governing Construction. The construction and
administration of this Plan and all questions pertaining thereto shall be governed
by the laws of the State of Illinois, except to the extent that such law is
preempted by Federal law.

 

7.7                                 Headings
Not a Part Hereto. Any headings preceding the
text of the several Articles, Sections, subsections, or paragraphs hereof are
inserted solely for convenience of reference and shall not constitute a part of
this Plan, nor shall they affect its meaning, construction or effect.

 

7.8                                 Severability
of Provisions. If any provision of this Plan is determined to be
void by any court of competent jurisdiction, this Plan shall continue to
operate and, for the purposes of the jurisdiction of the court only, shall be
deemed not to include the provision determined to be void.

 

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7.9                                 Offsets.  The Company
shall have the right to offset from any Bonus payable hereunder any amount that
the Participant owes to the Company or any Affiliate without the
consent of the Participant (or his beneficiary, in the event of the Participant’s
death).

 

7.10                           Dispute Resolution.  Notwithstanding any term of any employment
agreement in effect between a Participant and the Company or any Affiliate to
the contrary, if a Participant or his beneficiary brings a claim
that relates to benefits under this Plan, regardless of the basis of the claim
(including, but not limited to, actions under Title VII, wrongful discharge,
breach of employment agreement, etc.), such claim shall be settled by final
binding arbitration in accordance with the rules of the American
Arbitration Association (“AAA”) and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.  Arbitration must be initiated by serving or
mailing a written notice of the complaint to the other party describing the
facts and claims for each claim.  Written
notice shall be provided within one year (365 days) after the day the
complaining party first knew or should have known of the events giving rise to
the complaint, unless the applicable statute of limitation provides for a longer
period of time.  If the complaint is not
properly submitted within the appropriate time frame, all rights and claims
that the complaining
party has or may have against the other party shall be waived and void. Notice
will be deemed given according to the date of any postmark or the date of time
of any personal delivery.  Each
party may be represented in the arbitration by an attorney or other
representative selected by the party. The Company or Affiliate shall be
responsible for its own costs, the AAA filing fee and all other fees, costs and
expenses of the arbitrator and AAA for administering the arbitration. The
claimant shall be responsible for his attorney’s or representative’s fees, if
any. However, if any party prevails on a statutory claim which allows the
prevailing party costs and/or attorneys’ fees, the arbitrator may award costs
and reasonable attorneys’ fees as provided by such statute.

 

8Exhibit 10.10

 

CONFIDENTIAL SEPARATION AGREEMENT

 

This CONFIDENTIAL
SEPARATION AGREEMENT (this “Agreement”) is entered into as of this 31st day of March,
2008, by and between Echo Global Logistics, Inc., a Delaware corporation
(the “Company”), and Scott P. Pettit (“Pettit”).

 

WHEREAS, Pettit has been employed as Chief
Financial Officer of the Company;

 

WHEREAS, the Company is terminating Pettit’s
employment with the Company effective as of April 4, 2008 (the “Effective
Date”) in accordance with the terms of this Agreement;

 

WHEREAS, the Company and Pettit entered into that
certain Employment Agreement dated as of January 1, 2008 (the “Employment
Agreement”), which, among other things, contains restrictions on
competition and solicitation on the part of Pettit;

 

WHEREAS, the Company and Pettit entered into that
certain Confidentiality Agreement dated as of December 19, 2007 (the “Confidentiality
Agreement”), which, among other things, contains restrictions on the use
and/or disclosure of confidential information on the part of Pettit; and

 

WHEREAS, the Company desires to provide certain
compensation to, and enter into the other commitments contained herein for the
benefit of, Pettit in exchange for a general release by Pettit and Pettit’s
agreement and adherence to other terms enumerated herein.

 

NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth herein, the Company and Pettit agree as follows:

 

1.             TERMINATION.  Pettit is
hereby terminated from any and all officer position(s) he may hold with
the Company or any of its respective subsidiaries, affiliates or other related
entities (such subsidiaries, affiliates and other related entities shall be
referred to collectively herein as the “Related Entities”) on the
Effective Date.  Pettit’s employment with
the Related Entities will terminate on the Effective Date.

 

2.             PAYMENTS AND BENEFITS.  In
consideration of the releases, covenants and other consideration set forth
herein, the Company agrees to provide the following to Pettit:

 

(a)           Base Salary Continuation.  The Company
will continue to pay Pettit at an annual base salary rate of Two Hundred
Thousand Dollars ($200,000) through and including April 4, 2008, payable
at the Company’s regular employee payroll intervals and subject to required
withholdings.

 

(b)           Employee Benefits
Continuation.  To the extent permitted under the applicable
plans and policies and in a manner consistent with past practices, the Company
will continue to cover through and including April 15, 2008 any costs or
expenses associated with the continued coverage of Pettit and his dependents
under the applicable health and disability insurance plans and policies
presently maintained by the Company.  To
the extent such coverage is not permitted under such plans and policies, the
Company will pay all COBRA continuation 

 

 

coverage premiums for Pettit and his
dependents under such plans and policies until April 4, 2008.  All such payments made during such period will
be considered to be in satisfaction of any obligation of the Company to provide
continuation coverage under Section 4980B of the Internal Revenue Code of
1986, as amended.

 

(c)           Bonuses. 
Pettit
understands and agrees that in connection with his employment with the Related
Entities he is not, and will not be, entitled to any bonus for 2007.  The Company and Pettit understand and agree
that in connection with his employment with the Related Entities Pettit may be
entitled to receive a bonus for the period from January 1, 2008 to March 31,
2008 in accordance with the terms and conditions of Section 4(c)(i) of
the Employment Agreement.

 

(d)           No Other Obligation. 
 Except as specifically set forth herein,
neither the Company nor any other Related Entity shall have any obligation or
liability to Pettit related to his past or current employment, other than the
obligation to reimburse Pettit, in a manner consistent with past practices and
the Company’s existing policies and procedures, for his expenses incurred (1) through
and including the Effective Date in the conduct of his employment with the
Company or (2) after the Effective Date in connection with (A) any consulting
and advisory services provided by Pettit to the Company pursuant to Section 3
hereof or (B) any cooperation provided by Pettit to the Company pursuant
to Section 10 hereof.

 

3.             CONSULTING AND ADVISORY
SERVICES.  Pettit will, through and including April 15,
2008 and as requested by the Company, provide part-time consulting and advisory
services to the Company (the “Services”).  Pettit agrees to devote his commercially
reasonable efforts, working time and skill to the Services; provided, however,
that in no event shall Pettit be required to provide more than twenty (20)
hours of Services in any calendar month. 
The Services shall be performed by Pettit, and Pettit shall not be
required to employ others to perform the Services.  Pettit shall be eligible to receive reimbursement for
reasonable out-of-pocket expenses incurred in connection with the performance
of the Services, provided that such reimbursement is directly related to the
Services.  Pettit shall provide the
Company with documentation evidencing all requests for reimbursement of such
expenses. Pettit is not authorized to enter into contracts or agreements on
behalf of the Company or to otherwise create obligations of the Company or to
third parties in performing the Services under this Agreement.

 

4.             PROTECTIVE AGREEMENTS.  Pettit and the
Company understand and agree that the Employment Agreement and the Confidentiality
Agreement shall remain in full force and effect in accordance with their
respective terms through and including the Effective Date.  After the Effective Date (A) this
Agreement shall fully supersede the Employment Agreement, other than Sections
8 and 9 of the Employment Agreement, which shall survive in
accordance with their terms, and (B) the Confidentiality Agreement shall remain
in full force and effect in accordance with its terms; provided, however,
that Sections 1 and 2 of the Confidentiality Agreement will be of
no further force and effect and will be null and void.

 

5.             EQUITY OWNERSHIP.  Pettit
acknowledges that he (i) is the record and beneficial owner of 50,000
shares (the “Shares”) of common stock, par value $0.0001 per share, of
the Company (the “Common Stock”), (ii) is the record and beneficial
owner of vested options to purchase 50,000 shares of Common Stock at an
exercise price of $4.40 (the “Vested Options,” 

 

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and together with the Shares, the “Owned Securities”), (iii) is
the record and beneficial owner of unvested options to purchase 150,000 shares
of Common Stock (the “Unvested Options”), including unvested options to
purchase 30,000 shares of Common Stock vesting on December 27, 2008 (the “Subject
Options,” and together with the Owned Securities, the “Subject
Securities”), (iv) owns no other equity interests of the Company,
whether directly or indirectly, or of record or beneficially, and has no right
to acquire any other equity interests of the Company.  Notwithstanding anything to the contrary in
the Employment Agreement, the Confidentiality Agreement, any stock option plan
or award agreement (including exhibits and schedules related thereto), or
otherwise (A) Pettit shall be entitled to the Subject Options in
consideration for his agreement to comply with the terms and conditions of this
Agreement, including the provision of the Services in accordance with Section 3
hereof, through and including July 3, 2008 (it being understood that the
Subject Options shall be immediately cancelled and forfeited in the event
Pettit fails to comply with the terms and provisions of this Agreement,
including the provision of the Services in accordance with Section 3
hereof, through and including July 3, 2008), (B) Pettit shall have
until July 3, 2008 to exercise the Vested Options and the Subject Options
and (C) the Unvested Options, other than the Subject Options, shall be
immediately cancelled and forfeited as of the Effective Date.

 

6.             TRANSFER RESTRICTIONS.  Pettit further
acknowledges that the Company is contemplating an initial public offering (the “Offering”)
of its Common Stock (the “Offering Shares”), which Offering Shares will
be sold to a group of underwriters for resale to the public.  Pettit agrees that, without the prior written
consent of the Company (which consent may be given or withheld in the Company’s
sole and absolute discretion), he will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Offering: (1) sell, offer to sell, pledge, mortgage, hypothecate, encumber,
assign, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, the
Subject Securities, or (2) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Subject Securities, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of the Subject Securities
or such other securities, in cash or otherwise. 
The foregoing sentence shall not apply to (a) transfers of the
Subject Securities to any trust, partnership or limited liability company for
the direct or indirect benefit of Pettit or his immediate family or (b) transfers
of the Subject Securities to any beneficiary of Pettit pursuant to a will or
other testamentary document or applicable laws of descent; provided
that in the case of any transfer or distribution pursuant to clause (a) or
(b) above, each transferee shall agree to be bound by the transfer and
other restrictions contained herein.  For
purposes of this Agreement, “immediate family” shall mean any relationship by
blood, marriage, domestic partnership or adoption, not more remote than first
cousin.  Pettit also agrees and consents
to the entry of stop transfer instructions with the Company’s transfer agent
and registrar against the transfer of the Subject Securities except in
compliance with the foregoing restrictions

 

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7.             COMPANY RIGHT OF FIRST
REFUSAL.

 

(a)           Grant.  Subject to
the terms of Section 6 above, Pettit unconditionally and
irrevocably grants to the Company the right to purchase all or a portion of the
Subject Securities (the “Right of First Refusal”) with respect any
proposed assignment, sale, offer to sell, pledge, mortgage, hypothecation,
encumbrance, assignment, disposition of or any other transfer, disposition or
encumbering of the Subject Securities (or any interest therein) proposed by Pettit
(a “Proposed Transfer”) at the same price and on the same terms and conditions
as those offered to the prospective transferee (the “Prospective Transferee”).

 

(b)           Notice.  Pettit must
deliver a notice of any Proposed Transfer (the “Transfer Notice”) to the
Company not later than forty-five (45) days prior to the consummation of such
Proposed Transfer.  The Transfer Notice
shall contain the material terms and conditions of the Proposed Transfer, including,
without limitation, the number of Subject Securities to be transferred, the
nature of the Proposed Transfer, the date of the Proposed Transfer, the
consideration to be paid and the name and address of the Prospective Transferee.  To exercise its Right of First Refusal under
this Section 7, the Company must deliver a written notice to Pettit
within fifteen (15) days after delivery of the Transfer Notice notifying Pettit
that the Company intends to exercise its Right of First Refusal as to some or
all of the Subject Securities with respect to any Proposed Transfer.

 

(c)           Closing.  The closing
of the purchase of the Subject Securities by the Company in accordance with
this Section 7 shall take place, and all payments from the Company
shall have been delivered to Pettit, by the later of (i) the date
specified in the Transfer Notice as the intended date of the Proposed Transfer
and (ii) forty-five (45) days after delivery of the Transfer Notice.

 

(d)           Termination of Right of First Refusal. 
The Right of First Refusal shall terminate and be of no further force
and effect 180 days after the date of the final prospectus relating to the
Offering.

 

8.             GENERAL RELEASES.

 

(a)           General Release by Pettit.  Upon the
execution of this Agreement, and in consideration of the covenants and other
consideration set forth herein, the sufficiency of which Pettit hereby
acknowledges, Pettit (including, but not limited to, in his capacity as a
holder of the Subject Securities and the Unvested Options) releases the
Company, the Related Entities, any and all entities that have been or may become
associated with the Company and/or the Related Entities in the future in any
manner whatsoever, and each of the foregoing entities’ past, present and future
shareholders, directors, officers, employees, agents, attorneys, consultants,
predecessors, successors and assigns (all of the foregoing, collectively, the “Releasees”),
from any and all claims, demands, suits, debts, loans, judgments, liens, obligations,
damages, liabilities (including, but not limited to, claims for indemnification
or contribution), rights and causes of action of any nature whatsoever, known
or unknown, at law or equity or otherwise, including, but not limited to,
claims, demands, suits, causes or rights of action relating to breach of
contract or public policy, any claims arising under Title VII of the
Civil Rights Act of 1964 and as amended by the Civil Rights Act of 1991, 42
U.S.C. § 2000(e), et seq.; the Federal Age 

 

4

 

Discrimination in Employment Act as amended
by the Older Workers Benefit Protection Act of 1990, 29 U.S.C. § 623, et seq.;
the Americans with Disability Act, 42 U.S.C. § 12101, et seq.; the Civil Rights
Act of 1866 (42 U.S.C. § 1981); the Fair Labor Standards Act of 1938, 29 U.S.C.
§ 201, et seq.; the Consolidated Omnibus Budget Reconciliation Act of 1985, 42
U.S.C. § 1395(c); Executive Order 11246; § 503 of the Rehabilitation Act of
1973, 29 U.S.C. §§ 701, et seq.; the Family and Medical Leave Act, 29 U.S.C. §§
2601, et seq.; the Employee Retirement Income Security Act of 1974, as amended,
29 U.S.C. §§ 1132(a)(1)(B), et seq.; Sarbanes-Oxley Act of 2002, Public Law
107-204, including whistleblowing claims under 18 U.S.C. §§ 1514A and 1513(e);
); the Illinois Human Rights Act, 775 ILCS 5/1-103, et  seq.; the
Cook County Human Rights Ordinance, Ord. No. 93-0-13; the Illinois Wage
Payment and Collection Act, 820 ILCS 115/1, et  seq.; the United
States Constitution, including any rights of privacy thereunder; claims for
breach of express or implied contract, including breach of the covenant of good
faith and fair dealing; claims for discrimination or harassment of any kind;
claims for defamation or other personal or business injury of any kind; claims
for unpaid wages, medical expenses, or other benefits or compensation; any
claims arising out of any and all employee handbooks, policy and procedure
manuals, and other policies and practices of the Releasees, and any and all rights to or claims for
continued employment, attorneys’ fees or damages (including, but not limited
to, contract, compensatory, punitive or liquidated damages) or equitable
relief, arising from the beginning of time up to and including the date of this
Agreement, which Pettit may ever have had or has now or which his heirs,
executors or assigns can or shall have, against any or all of the Releasees,
whether known or unknown, including, but not limited to, those on account of or
arising out of or in any way or manner relating to, or based upon, his
employment with the Company or his separation from such employment, or any
facts, transactions, occurrences, acts or omissions, products or services relating
to such employment or separation.  Pettit
specifically waives the benefit of any statute or rule of law, which, if
applied to this Agreement, would otherwise exclude from its binding effect any
claims not now known by Pettit to exist. 
It is expressly understood and agreed that this release shall constitute
a general release and shall be interpreted liberally to effectuate the maximum
protection to the Releasees allowed by law. 
This release includes an express, informed, knowing and voluntary waiver
and relinquishment to the fullest extent permitted by law.  Pettit acknowledges that he may have
sustained damages, losses, costs or expenses which are presently unknown and
unsuspected, and that such damages, losses, costs or expenses as may have been
sustained may give rise to additional damages, losses, costs or expenses in the
future.  Pettit further acknowledges that
he has negotiated this Agreement taking into account presently unsuspected and
unknown claims, counterclaims, causes of action, damages, losses, costs and
expenses, and Pettit voluntarily and with full knowledge of its significance
expressly waives and relinquishes any and all rights he may have under any
state or federal statute, rule or common law principle, in law or equity,
relating to limitations on general releases.

 

(b)           General Release by the
Company.  Upon the execution of this Agreement, and
in consideration of the covenants and other consideration set forth herein, the
sufficiency of which the Company hereby acknowledges, each of the Releasees
releases Pettit from any and all claims, demands, suits, debts, loans,
judgments, liens, obligations, damages, liabilities (including, but not limited
to, claims for indemnification or contribution), rights and causes of action of
any nature whatsoever, known or unknown, at law or equity or otherwise,
including, but not limited to, claims, demands, suits, causes or rights of
action relating to breach of contract or public policy, and any and all rights
to or claims for attorneys’ fees or damages 

 

5

 

(including, but not limited to, contract, compensatory, punitive or
liquidated damages) or equitable relief, arising from the beginning of time up
to and including the date of this Agreement, which any of the Releasees may
ever have had or has now or which its successors or assigns can or shall have,
against him, whether known or unknown, including, but not limited to, those on
account of or arising out of or in any way or manner relating to, or based
upon, his employment with the Company or his separation from such employment,
or any facts, transactions, occurrences, acts or omissions, products or
services relating to such employment or separation.  The Company specifically waives the benefit
of any statute or rule of law, which, if applied to this Agreement, would
otherwise exclude from its binding effect any claims not now known by the
Company to exist.  It is expressly
understood and agreed that this release shall constitute a general release and
shall be interpreted liberally to effectuate the maximum protection to Pettit
allowed by law.  This release includes an
express, informed, knowing and voluntary waiver and relinquishment to the
fullest extent permitted by law.  The
Company acknowledges that it may have sustained damages, losses, costs or
expenses which are presently unknown and unsuspected, and that such damages,
losses, costs or expenses as may have been sustained may give rise to
additional damages, losses, costs or expenses in the future.  The Company further acknowledges that it has
negotiated this Agreement taking into account presently unsuspected and unknown
claims, counterclaims, causes of action, damages, losses, costs and expenses,
and the Company voluntarily and with full knowledge of its significance
expressly waives and relinquishes any and all rights it may have under any
state or federal statute, rule or common law principle, in law or equity,
relating to limitations on general releases.

 

9.             CONFIDENTIALITY OF
AGREEMENT.  Each of Pettit and the Company shall, and the
Company shall cause each of the Related Entities to, keep strictly confidential
the existence of and all of the terms and conditions, including amounts, in
this Agreement; provided, however, that the Company may disclose
the existence of and all of the terms and conditions, including amounts, in
this Agreement in, and file this Agreement as an exhibit to, any filings made
with the Securities and Exchange Commission and/or the NASDAQ Stock Market.  Each of Pettit and the Company shall not, and
the Company shall cause each of its Related Entities not to, disclose any such
terms and conditions to any person other than its legal and/or financial
advisor(s) to the extent necessary to perform services or as may be
compelled by law.

 

10.           PERFORMANCE AND COOPERATION.  Pettit will
cooperate fully with the Company in connection with any and all existing or
future depositions, hearings, trials and/or litigations, adversary proceedings
or investigations brought by or against the Company or any of the Related
Entities or any of their respective agents, officers, directors or employees,
whether administrative, civil or criminal in nature, in which and to the extent
Pettit’s cooperation is reasonably deemed necessary by the Company.  In the event that Pettit is subpoenaed or
otherwise contacted in any way related to the Company or any of the Related
Entities, Pettit will immediately notify the Company and shall give the Company
an opportunity to respond to such notice before taking any action or making any
decision in connection with such subpoena or other contact (it being understood
and agreed to by the Company that any such response shall be prompt).  Notwithstanding the foregoing, Pettit shall
have no obligation to notify the Company under the immediately preceding
sentence in any case in which Pettit is advised in writing by legal counsel
that taking such action would violate applicable law.  The Company will reimburse Pettit for
reasonable out-of-pocket expenses, including reasonable attorneys’ fees,
incurred as a 

 

6

 

result of such cooperation.  On the
Effective Date, Pettit will surrender to the Company all physical property of
the Company presently in his possession, including keys, keycards and credit
cards.

 

11.           NO DISPARAGEMENT.  Pettit agrees
that he shall not at any time engage in any form of conduct, nor make any
statements or representations, that disparage or otherwise impair the
reputation, goodwill or interests of any of the Releasees.  The Company agrees that it shall not at any
time engage in any form of conduct, nor make any statements or representations,
that disparage or otherwise impair the reputation, goodwill or interests of
Pettit.

 

12.           MISCELLANEOUS.

 

(a)           Successors.  This Agreement
shall be binding upon, enforceable by and inure to the benefit of Pettit’s
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees, and the Company and any successor to
all or substantially all of the business and/or assets of the Company.

 

(b)           Severability.  If any
provision of this Agreement shall be found invalid or unenforceable, in whole
or in part, then such provision shall be deemed to be modified or restricted to
the extent and in the manner necessary to render the same valid and enforceable,
or shall be deemed excised from this Agreement, as the case may require, and
this Agreement shall be construed and enforced to be maximum extent permitted
by law, as if such provision had been originally incorporated herein as so
modified or restricted, or as if such provision had not been originally
incorporated herein, as the case may be.

 

(c)           Controlling Law.  This Agreement
shall in all respects be governed by, and construed in accordance with, the
laws of the State of Illinois.

 

(d)           Binding Arbitration.  Any controversy or
claim arising under, or relating to, this Agreement shall be settled by
confidential arbitration administered by the American Arbitration Association
under its Commercial Arbitration Rules, and judgment on the award rendered by
the arbitrator(s) may be entered and enforced by a state or federal court
in the State of Illinois.  The Company
and Pettit submit and
consent to the exclusive jurisdiction of such court for the purpose of
obtaining the entry of and enforcing such judgment and waive, to the fullest
extent permitted by law, any objection that they may now or hereafter have to
the laying of venue of any such action or proceeding in such court as well as
any claim that any such action or proceeding has been brought in an
inconvenient forum.

 

(e)           Amendment.  Any amendment
to this Agreement shall be made in writing and signed by the parties hereto.

 

(f)            Waiver.  No claim or
right arising out of a breach or default under this Agreement can be discharged
by a waiver of that claim or right unless the waiver is in writing signed by
the party hereto to be bound by such waiver. 
A waiver by either party hereto of a breach or default by the other
party of any provision of this Agreement shall not be deemed a waiver of future
compliance therewith and such provision shall remain in full force and effect.

 

7

 

13.           ENTIRE AGREEMENT.  Except as specifically
set forth herein, any existing written or oral agreement of any kind between
the Company and Pettit is fully superseded by this Agreement and is null and
void.  The Company and Pettit warrant
that no promise or inducement has been offered or made except as herein set
forth and that the consideration stated herein is the sole consideration for
this Agreement.

 

14.           ADVICE.  Pettit represents
and warrants that he has read this entire Agreement; has had, in accordance
with the Older Workers Benefit Protection Act, up to twenty-one (21) days to
consider this Agreement; has been given the opportunity and has been encouraged
to have this Agreement reviewed by an attorney; understands its meaning and
application; and is signing of his own free will with the intent of being bound
by each and every provision of this Agreement.  Pettit further understands that he has seven (7) days
to revoke this Agreement after signing it.

 

15.           NOTICES. 
All
notices, requests, demands and other communications required or permitted
hereunder shall be given in writing and shall be deemed to have been duly given
if delivered or mailed, postage prepaid, by same day or overnight mail or
overnight courier service as follows:

 

to the Company:

 

Echo Global
Logistics, Inc.

600 West Chicago
Avenue

Suite 725

Chicago,
Illinois  60610

Attention:  Douglas R. Waggoner, Chief Executive Officer

 

with a copy to:

 

Steven J. Gavin
and Matthew F. Bergmann

Winston &
Strawn LLP

35 West Wacker
Drive

Chicago,
Illinois  60601

 

to Pettit:

 

Scott P. Pettit

 

or to such other address as either party shall have previously
specified in writing to the other.

 

[signature page follows]

 

8

 

IN
WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the date first above
written.

 

 

	
  SCOTT P. PETTIT

  	
   

  	
  ECHO GLOBAL LOGISTICS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Scott P. Pettit

  	
   

  	
  By:

  	
  /s/ Douglas R. Waggoner

  
	
   

  	
   

  	
   

  	
  Douglas R. Waggoner

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  

 

[Signature Page to Confidential Separation Agreement]

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