Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into this
1st day of January, 1997, by and between Transportation Information Services,
Inc., an Oklahoma corporation ("Employer"), and Xxxxxxx X. Xxxxxxx ("Employee").
R E C I T A L S:
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A. T/SF Communications Corporation ("T/SF"), through its wholly-owned
subsidiary, T/SF Investment Co. ("T/SFIC"), is the owner of 100% of the
issued and outstanding capital stock of Employer.
B. On November 18, 1996, T/SF announced that it had engaged
Prudential Securities Incorporated to pursue a possible sale of or other
transaction involving Employer.
C. Employer and Employee now desire to enter into this Agreement in
order to describe the terms of Employee's employment by Employer and
provide for certain rights of Employee upon any change in control of
Employer.
In consideration of the mutual covenants and agreements contained herein,
the parties agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
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accepts employment with Employer upon the terms and conditions hereinafter set
forth.
2. TERM. The term of this Agreement shall commence on the date hereof
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and extend through December 31, 1998, unless sooner terminated as herein
provided.
3. DUTIES. Employee shall devote his full business time and attention
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and best efforts to the business of Employer. Employee shall serve in the
capacity and office of President of Employer with the duties usually incident to
such office, including but not limited to the following:
(a) The authority, responsibility and accountability to supervise,
manage, lead and conduct all aspects of Employer's business;
(b) Provide leadership, strategic direction and long-term planning;
(c) Prepare and execute business plans for Employer's business
covering each of 1997 and 1998;
(d) Hire, fire, supervise and determine the compensation of all
employees;
(e) Ensure compliance with all applicable laws, regulations and
corporate policies and ethical standards; and
(f) Ensure integrity of financial reporting and information systems;
subject at all times to the direction of the Chief Executive Officer of
Employer, the Board of Directors of Employer and the budgets and business plans
approved (as such plans may be amended from time to time) by Employer's Board of
Directors.
4. COMPENSATION. As compensation for the performance by Employee of
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the duties specified herein and for the obligations of Employee under paragraph
7 hereof, Employee shall be paid the following during the term of this
Agreement.
(a) Base Salary. Commencing on the date hereof and extending through
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December 31, 1997, Employee shall receive a base salary of $13,750.00 per
month ($165,000 annual rate). For the period January 1, 1998, through
December 31, 1998, Employee shall receive a base salary of $14,583.33 per
month ($175,000.00 annual rate).
(b) Bonuses. For each of 1997 and 1998, Employee shall be entitled to
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receive a bonus based on a plan which is consistent with the bonus plans
applicable to Employee in previous years. A copy of the Plan for 1997 is
attached as Exhibit "A" to this Agreement. The bonus plan for 1998 shall
be designed on the same general guidelines (e.g. based on achieving
improvements over 1997 with bonus payments to begin at the same approximate
level of achievement of the target growth amounts, etc.) and be designed to
yield a bonus not less than that earned in 1997 assuming that the
improvement in operating income of Employer in 1998 is not less than the
improvement in operating income of Employer in 1997 as compared to 1996.
By execution hereof the parties acknowledge that Employee is subject to
certain separate bonus plans related to "new initiatives" and attached as
Exhibit "B-1" through "B-5" are the bonus plans relating to specific
activities of Employer which are designed to yield income in the future and
for which these separate bonus plans apply. The parties acknowledge that,
by execution hereof, Employee has relinquished any right to a previously
agreed-to bonus plan with respect to any future income of the Company's
previous subsidiary, National Employment Screening Services, Inc.
(c) Deductions. All salary payments to Employee shall be made in
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accordance with Employer's normal payroll practices and shall be made
subject to normal deductions therefrom, including social security and
withholding taxes.
(d) Benefit Plans. Employee shall be entitled to participate in
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Employer's group medical and hospitalization insurance plan, and any other
group insurance or general employee benefit plan provided by Employer, upon
the same terms as all other employees of Employer (which may be changed by
Employer at any time) or upon such other terms (but in no event less
favorable than the terms in effect on the date hereof) as the Board of
Directors of Employer may determine.
5. EXPENSES. In addition to the compensation described above,
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Employee shall be entitled to reimbursement of his actual out-of-pocket expenses
incurred in the conduct of Employer's business (including, but not limited to,
appropriate professional dues and travel and entertainment expenses related to
the business of Employer), all of which expenses shall be
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limited to ordinary and necessary items and which shall be supported by
vouchers, receipts or similar documentation to the extent practicable and as
required by law.
6. VACATIONS. Employee shall be entitled to annual vacation, with
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pay, at such times as will not unduly interfere with or hamper the operation of
Employer's business, as provided in and subject to Employer's normal vacation
policies.
7. NONCOMPETITION.
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(a) Subject to the provisions of paragraph 8(e), at all times
during the period beginning on the date hereof and ending on the date six
months after Employee's termination of employment with Employer, Employee
shall not, directly or indirectly, compete with Employer or own, operate,
manage, have a proprietary interest in, extend financial assistance to,
solicit, or encourage or handle patronage for or serve or be employed by
any other company, firm or enterprise (other than Employer) which is then
engaged in any business engaged in by Employer during Employee's employment
with Employer, in any geographic area or market in which Employer operates
or does business. Provided, however, that Employee may purchase or
otherwise acquire up to two percent of any class of securities of any
enterprise if such securities are listed on any national or regional
securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934.
(b) The benefits of this paragraph 7 shall flow to and be
enforceable by any of Employer, T/SF and/or Buyer, and their respective
successors and permitted assigns. The parties hereto recognize that,
because of the nature of the subject matter of this paragraph 7, it would
be impractical and extremely difficult to determine Employee's and/or
T/SF's or Buyer's actual damages in the event of a breach of any of such
provisions. Accordingly, if Employee commits a breach, or threatens to
commit a breach, of this paragraph, Employer and/or T/SF or any of their
successors or permitted assigns shall give Employee written notice of such
violation and if Employee has not cured such violation or otherwise ceased
to act in violation of this paragraph 7 within twenty (20) days of the
giving of such notice, Employer and/or T/SF or any of their successors or
permitted assigns shall have the following rights and remedies:
(i) to have the provisions of this paragraph 7 specifically
enforced, by injunctive or other equitable relief, by any court having
equity jurisdiction, it being acknowledged and agreed by Employee that
any such breach or threatened breach will cause irreparable injury to
Employer and/or T/SF or their successors and permitted assigns and
that an injunction may be issued against Employee to stop or prevent
any such breach or threatened breach; and
(ii) concurrent with the above remedy, to discontinue any
payments due to Employee under this Agreement.
In the event that an action shall be instituted to specifically enforce
Employee's obligations hereunder (or under paragraph 9 below), Employee
shall, to the fullest extent permitted by
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applicable law, waive the defense that the party or parties seeking
enforcement have an adequate remedy at law and shall interpose no
opposition, legal or otherwise, as to the propriety of pursing specific
performance as a remedy and shall not request any bonding for the issuance
of the relief sought. It is agreed that the curing of such violation shall
not prevent any party from seeking recovery of its actual damages resulting
from such violation.
8. TERMINATION. This Agreement may be terminated only as provided in
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paragraph 11D or upon the occurrence of one or more of the following events, and
in the event of any such termination Employee shall receive under this Agreement
only those amounts specifically set forth in this paragraph 8:
(a) By Employer upon the permanent disability of Employee or his
temporary disability for a period in excess of four (4) consecutive months,
or six (6) months in any one year. "Disability" for this purpose shall be
deemed to be any physical or mental disability rendering Employee unable to
perform substantially all of his usual duties and responsibilities for
Employer. The Disability of Employee will be determined by a medical
doctor selected by written agreement of the Employer and the Employee upon
the request of either party by notice to the other. If the Employer and
Employee cannot agree on the selection of a medical doctor, each of them,
within ten (10) days of written request by either Employer or Employee,
will select a medical doctor and the two medical doctors will select a
third medical doctor who will determine whether Employee has a Disability.
The determination of the medical doctor selected under this paragraph 8(a)
will be binding on both parties. In the event of a termination pursuant to
this subparagraph, Employee shall be entitled to such compensation and
benefits as are provided in any long-term disability insurance policy or
certificate, if any, covering Employee maintained by Employer and Employer
shall continue the payment of Employee's base salary, at the monthly rate
in effect as of the date of disability, for a period of not less than six
(6) months from the date of the determination of the disability.
(b) Upon Employee's death, in which event Employer shall be
obligated to continue the payment of the base salary amount payable under
paragraph 4 herein, at the monthly rate in effect as of the date of death,
for six (6) months after the date of death. All such amounts shall be paid
to Employee's estate or designated beneficiary.
(c) Employee shall have the right to terminate his obligations
under this Agreement in the event of the substantial breach of this
Agreement by Employer (a "Substantial Breach", as defined in paragraph 8(e)
below), in which case Employee shall be entitled to receive his base salary
(as in effect at the time of the breach) for the remaining term of this
Agreement, plus any amounts coming due under paragraph 11, as well as any
other remedies available to Employee under law, equity or otherwise. To
effect termination by reason of a Substantial Breach pursuant to paragraph
8(e) below, Employee must give written notice of such breach to Employer at
the address and in the manner set forth in paragraph 12(g) below,
specifying in reasonable detail the nature of the breach and the
provision(s) of such paragraph 8(e) upon which the termination is based,
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and Employer shall have failed to cure such breach within thirty (30) days
(ten (10) days in the case of a nonpayment breach) of its receipt of such
notice.
(d) By Employer by written notice for "cause." "Cause" for
termination shall be limited to one or more of the following:
(i) Employee's material breach of his duties or obligations
under the terms or provisions of this Agreement;
(ii) Employee's dishonesty (which dishonesty has a material
adverse effect on the business, financial condition or net income of
Employer), fraud, misappropriation or embezzlement in the course of,
related to or connected with, the business of Employer;
(iii) Employee's conviction of a felony; or
(iv) Employee's failure to devote his full business time,
attention and best efforts to the business of Employer or related
professional activities; provided, that Employee may spend personal
time on or be involved (where such time spent or involvement does not
prevent Employee from devoting his full business time, attention and
best efforts to the business of Employer) with personal activities,
investments or community affairs which don't conflict with other
provisions of this Agreement.
Prior to the termination of this Agreement by Employer pursuant to
subparagraphs 8(d)(i) or (iv) above, Employer shall give written notice of
its intent to terminate Employee, specifying in reasonable detail the
nature of the breach and the provision(s) of the Agreement upon which the
termination is based. Employee shall have thirty (30) days from the date
of his receipt of such notice to cure the breach or breaches, and
Employee's failure or inability to cure same shall give Employer the right
to proceed with termination. The foregoing notice and curative provisions
shall not apply to a termination under subparagraph 8(d)(i) by reason of a
breach of any provision of paragraph 7 of this Agreement for which notice
was given and the breach remained uncured after the thirty (30) days'
notice period provided for in subparagraph 7(d) hereof. In the event of
termination of this Agreement for any of the causes enumerated in this
subparagraph (d), Employer's obligation to pay Employee shall be limited
solely to the payment of (x) an amount equal to one (1) month's then
current base salary (as of the date of termination), and (y) other accrued
benefits (such as accrued vacation pay and accrued benefits under any
retirement, savings or other employee benefit plans of Employer) through
the date of such termination.
(e) The termination of this Agreement for any reason shall not
affect the provisions of paragraphs 7, 9 and 10 hereof, which shall remain
in full force and effect, except as follows: in the event of the
termination of this Agreement by Employee pursuant to paragraph 8(c) hereof
Employee due to the Substantial Breach hereof by Employer, the provisions
of paragraph 7 hereof and the portions of paragraph 10 hereof that would
otherwise prohibit Employee from contacting customers and prospective
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customers of Employer shall no longer apply to Employee. For purposes of
this Agreement, Substantial Breach shall be deemed to mean (i) the non-
payment of amounts due to Employee hereunder (and not cured within
applicable notice and cure periods), (ii) termination of Employee without
"cause" hereunder, or (iii) relocation of the primary business offices of
Employer which causes Employee to have to relocate out of the Tulsa,
Oklahoma, metro area.
9. OWNERSHIP OF PRODUCTS, ETC. Employee hereby acknowledges and
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agrees that any intellectual property, invention (whether patentable, subject to
copyright or trademark protection or otherwise), process, application,
device, product, production procedure, publication, marketing or product, or
other idea (all referred to herein as "Intellectual Property") which shall have
been conceived, commenced, or developed by Employee, in whole or in part, at any
time during Employee's full-time employment with Employer prior to the date
hereof or during the term of this Agreement shall be the sole and exclusive
property of Employer, and Employee shall not be entitled to any additional or
special compensation in connection with any such item. It is acknowledged that
Employer would be irreparably harmed if Employee should breach the provisions of
this paragraph. Accordingly, Employer is granted the right of specific
performance to enforce the provisions of this paragraph.
10. CONFIDENTIALITY. Employee covenants and agrees that Employee
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shall not, during or subsequent to Employee's employment with Employer, divulge,
furnish, disclose or make accessible to any person or company, any knowledge or
information, techniques, customer or client information, processes, promotional
idea, trade secrets, prospective customer information, plans, devices, or
material with respect to any secret, confidential or sensitive research or
development work, promotions, business plans, designs, services, products or
production methods of Employer or T/SF (or their successors and assigns) or with
respect to any other secret, confidential or sensitive aspect of the business of
Employer or T/SF (or their successors and assigns), except as may be necessary
in the furtherance and conduct of Employer's or T/SF's (or their successor's and
assign's) business as an employee of Employer for the period Employee is so
employed. Provided, however, that the restrictions on disclosure in this
subparagraph shall not apply with respect to any of the above-described
knowledge, information, documents or ideas to the extent that the same shall
have become known to the trade or public pursuant to disclosure (a) by sources
other than Employee (and for which Employee is not directly or indirectly
responsible), or (b) by Employee, Employer and/or other employees of Employer or
its representatives in the course of the "auction" and sale of Employer which
commenced in 1996, as described in paragraph 11 below.
11. SALE OF EMPLOYER. As noted in the Recitals, on November 18,
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1996, T/SF announced that it had engaged Prudential Securities Incorporated to
explore strategic alternatives, including the possible sale, with respect to
Employer. If and to the extent that a change in control of Employer (meaning a
transaction which results in T/SF, T/SFIC (the direct parent of Employer), or
the stockholders of T/SF immediately prior to such transaction, not controlling
more than 50% of the voting capital stock of Employer, either directly or
indirectly) occurs during 1997, the following additional rights and obligations
shall apply:
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A. Employee is the owner of certain stock options issued under the
1994 Incentive Stock Plan of T/SF with respect to shares of Common Stock of
T/SF, as follows:
Date of Grant Date of Option Number of
of Option Vesting Option Price Shares
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1/25/94 1/97 $ 4.250 22,500
3/18/96 3/99 $13.875 10,000
With respect to all such options, upon a change in control of Employer (or
immediately prior thereto if necessary to meet the obligations of Employer and
T/SF hereunder), the following shall apply:
(i) All options shall be deemed vested in Employee, regardless of any
other terms of such options; and
(ii) Subject to the reasonable consent of Employee, such options shall be
converted to other securities, options or cash of a value equal to
the then "premium" in such options on the date immediately preceding
the closing of the change in control transaction. For purposes
hereof, the option "premium" is equal to the fair value of a share
of T/SF Common Stock less the applicable option price. For purposes
hereof, the "fair value" of T/SF Common Stock shall be based on the
average closing price of the Common Stock on the American Stock
Exchange for the ten trading days preceding the valuation date.
B. The termination provisions of paragraph 8 shall be amended by the
addition of the following subparagraph (f):
"(f) If Employee's employment with Employer is terminated for any
reason other than as provided in paragraphs 8(a), (b) or (d)
hereof, Employee shall be entitled to a severance payment of
base salary at the then current monthly rate for the greater of
twelve months or the remaining term of this Agreement. This
severance provision shall continue for as long as Employee is
employed by Employer, shall survive the end of the term of this
Agreement and shall also be deemed to apply to a termination by
Employee pursuant to paragraph 8(c) hereof."
C. Upon the closing of a change of control transaction affecting
Employer, Employee shall be paid a sum equal to 0.5 x 1% of the "sale price" in
any such transaction plus an amount equal to the following:
X = 10,000 x $(A-23)
X = amount due to Employee
A = average closing price of T/SF Common Stock on the American
Stock Exchange for the ten trading days preceding a closing of
the change in control transaction.
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For purposes hereof, the "sale price" shall be the fair value of all
consideration actually received by T/SF, T/SFIC or the stockholders of T/SF in
such transaction; provided, that if less than 100% of Employer is affected by
the change in control, e.g., the stockholders of T/SF or T/SF retain an
interest, directly or indirectly, in Employer, the amount due Employee under
this provision shall be based on an equivalent value of the consideration
received for the portion of Employer sold or transferred increased to the
equivalent value for 100% of Employer.
The following example will serve to illustrate this provision:
Assumptions:
. T/SFIC sells 75% of Employer in 1997 for $50,000,000 in cash.
. The average closing price of T/SF stock for the ten trading days
preceding closing was $33.00.
Employee would receive the following:
0.5 x 1% X ($50,000,000 / 0.75) = $333,333.33
plus
10,000 x $(33 - 23) = $100,000.00
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Total $433,333.33
If the change of control transaction is part of a transaction in which at least
80% of the operating subsidiaries of T/SF also have a change of control, the
provisions of this subparagraph 11C shall not apply and no bonus hereunder would
be due to Employee by reason of such transaction.
D. If there is no change in control transaction affecting Employer in
1997, Employer reserves the right to terminate this Employment Agreement with no
continuing obligation to Employee (including, without limitation, under this
paragraph 11) by written notice to Employee stating that Employer and/or T/SF
have abandoned the effort to sell or otherwise effect a transaction with respect
to Employer. In the event of any such termination, Employee's employment shall
revert to an "at will" arrangement equivalent to that in effect prior to the
entering to of this Employment Agreement, subject to any other agreement then
entered into between Employer and Employee.
12. MISCELLANEOUS.
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(a) This Agreement shall not be assignable by either Employer or
Employee except upon their mutual written consent, except that this
Agreement may be assigned by Employer to a buyer of substantially all of
the assets of Employer who agrees to assume the obligations of Employer and
to recognize and honor the rights of Employee hereunder.
(b) If any of the covenants or agreements contained herein, or
any part hereof, is held to be unenforceable for any reason, the remainder
of this Agreement shall be construed as if such provision or part thereof
was not included herein. Any provision of
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this Agreement held invalid or unenforceable only in part or degree will
remain in force and effect to the extent not held invalid or unenforceable.
(c) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Oklahoma with respect to
agreements made and to be performed in such state.
(d) This Agreement constitutes the entire understanding of the
parties with respect to the employment of Employee and supersedes all prior
written or oral agreements between and/or among T/SF, Employer and Employee
with respect to the subject matter hereof. This Agreement may not be
amended, except by a written amendment executed by both Employee and
Employer.
(e) This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
(f) This Agreement shall be binding upon Employer and Employee,
and, to the extent herein provided, shall inure to the benefit of Employer,
T/SF and Employee and their or his respective successors and permitted
assigns, heirs and legal representatives.
(g) Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing
and delivered personally, or sent by registered, certified mail or
overnight air courier, as follows:
IF TO EMPLOYER, TO:
Transportation Information Services, Inc.
c/o T/SF Communications Corporation
Attention: Xxxxxx X. Xxxxxxx, Xx.
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
AND IF TO EMPLOYEE, TO:
Xxxxxxx X. Xxxxxxx, President
Transportation Information Services, Inc.
Suite 200, Grant Building
0000 X. 000xx Xxxx Xxxxxx
Xxxxx, XX 00000
Or at such other address for a party as shall be specified by like notice.
Any notice which is delivered personally in the manner provided herein
shall be deemed to have been duly given to the party to whom it is directed
upon actual receipt by such party. Any notice which is addressed and
mailed in the manner herein provided shall be conclusively
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presumed to have been given to the party to whom it is addressed at the
close of business, local time of the recipient, on the third (3rd) day
after the day it is so placed in the mail.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
TRANSPORTATION INFORMATION
SERVICES, INC.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx, Xx.
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Xxxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx, Xx.
Chairman and Chief Executive Officer
"Employee" "Employer"
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T/SF Communications Corporation and T/SF Investment Co. hereby
unconditionally guarantee the full and prompt performance of all obligations of
Transportation Information Services, Inc. under this Employment Agreement, and
otherwise agree to be bound by the terms hereof to the extent applicable to
them. This guarantee shall expire and be null and void upon any change in
control transaction affecting Employer.
T/SF COMMUNICATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
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Xxxxxx X. Xxxxxxx, Xx.
President and Chief Executive Officer
T/SF INVESTMENT CO.
By: /s/ J. Xxxx Xxxxxxx
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J. Xxxx Xxxxxxx
President
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