Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of the 2nd day of July, 1998
("Effective Date"), by and between Xxxxxxx X. X'Xxxx ("Employee") and
TransFinancial Holdings, Inc., a Delaware corporation ("TFH").
RECITALS
1. Employee for a number of years has been an executive officer of TFH,
has expertise in its business, and desires to continue such employment on the
terms and conditions hereinafter set forth.
2. To induce Employee to continue his employment notwithstanding actions
by others to take control of TFH, and to give to him the independence necessary
to negotiate with such others for the benefit of TFH and all its stockholders,
TFH has agreed to pay and provide to Employee the compensation and other
benefits hereinafter set forth.
3. The parties desire to here set forth all of the terms and provisions
of their agreements relating to the employment of Employee.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, the parties agree as follows:
AGREEMENTS
1. Employment. TFH hereby employs Employee as its President and Chief
Executive, and Employee accepts such employment and position. Employee is an
employee at will, and his employment may be terminated at any time, and for any
reason, or no reason; provided, however, that until such termination and, in
some instances, thereafter, as provided in paragraph 8.c. hereof, Employee shall
be entitled to the compensation and other benefits herein provided unless and
until the parties hereto shall otherwise agree in writing.
2. Employee's Duties and Responsibilities. Employee shall be the
President and Chief Executive of TFH, and shall report directly to its board of
directors. Employee's duties on behalf of TFH shall be the usual and customary
duties and responsibilities of a chief executive officer, and he shall to the
best of his ability perform the same and such other lawful duties as shall be
from time to time assigned to him by the board of directors so long as the same
are not inconsistent with his position. During the term of this Employment
Agreement, Employee agrees to devote his entire skill, attention, loyalty and
diligence to serving and promoting the business of TFH, and agrees that he shall
not, directly or indirectly, during the term of this Agreement, engage or
participate in any other activities for profit or in conflict with the interest
of TFH; provided, however, that Employee shall be entitled to devote reasonable
time to his personal investments and affairs.
3. Base Compensation. During the term of this Employment Agreement,
Employee shall be paid base compensation at the rate of $160,680 per year, in
semi-monthly installments, or in installments otherwise applicable to
compensation paid to the executive officers of TFH, subject to withholding for
applicable federal, state, local, social security and unemployment taxes, and
any other withholding required by law. Base Compensation and Incentive
Compensation shall be reviewed annually and may be increased by agreement of the
parties.
4. Incentive Compensation. For each year or portion thereof during the
term hereof, from and after the Effective Date, Employee shall be entitled to
receive incentive compensation equal to such percentage (which may exceed 100%)
of $69,000 as shall be determined in accordance with Exhibit A hereto. Such
incentive compensation shall be computed within 30 days after receipt of the
report of TFH's independent auditors on the consolidated net income of TFH. The
amount so computed shall be paid to Employee within 30 days of such
determination.
5. Benefits. In addition to base compensation and incentive
compensation, Employee shall be entitled to the following:
a. The exclusive use of an automobile owned by TFH which is to be
replaced every four years or earlier at such time as such automobile has
been driven 80,000 miles. Employee shall have the option, but not the
obligation, to purchase any of such automobiles, at the time of replacement
thereof, at the depreciated net book value thereof on the books of TFH.
b. Medical insurance to the extent provided by TFH to its other
executive officers.
c. Long-term disability to the extent provided by TFH to its other
executive officers.
d. Life insurance to the extent provided by TFH to its other
executive officers.
e. Four weeks paid vacation per year.
f. Participation in all welfare and benefit plans maintained by TFH
and its affiliates for the officers or TFH, as amended from time to time,
and as restricted by their terms and rules prohibiting discrimination in
favor of highly compensated employees.
g. Such stock options as TFH shall from time to time grant
to Employee pursuant to Stock Option Plans from time to time in effect.
h. Nothing contained herein is intended to, or shall,
replace or in any way alter Employee's rights or the obligations of TFH
under existing Deferred Compensation and Supplemental Benefit and
Collateral Assignment Split-Dollar Agreement.
6. Confidentiality. Employee agrees that he shall not, at any time
during or following the term of his employment hereunder, directly or indirectly
use, disseminate, divulge or disclose, for any purpose whatsoever, any
Confidential Information (as hereinafter defined) which has been given to or
obtained by him as a result of his employment. For purposes of this paragraph,
Confidential Information shall include the identity and location of customers,
financing, accounts, systems, procedures, policies, manuals, trade secrets and
other information peculiar to the operations of TFH and its affiliates and not
known to the public in general. In the event of a breach or threatened breach
of any of the provisions of this paragraph, or the following paragraph, TFH, in
addition to and not in limitation of any other rights, remedies or damages
available at law or in equity, shall be entitled to a restraining order and
injunction in order to prevent or restrain any such breach.
7. Non-Competition. Employee agrees that, during the term of this
Agreement and for a period of two years from and after the termination of his
employment, for whatever reason (except in the event such termination is
pursuant to paragraph 9 hereof), he shall not, directly or indirectly:
a. Solicit of divert business from any customer of TFH or any other
business owned directly or indirectly by TFH; or
b. Solicit for employment or employ any person who in the prior six
months has been an employee of TFH or any other such business; or
c. Individually or through any corporation, partnership, joint
venture, trust, limited liability company or person, engage in any business
competitive with the business then being conducted by TFH, or any other
business owned directly or indirectly by TFH, at any place and in any state
in which TFH or such other business is then conducting its business.
8. Termination of Employment.
a. The employment of Employee under this Employment Agreement will
be terminated:
(i) Upon the death of Employee;
(ii) In the event Employee becomes permanently disabled. For
the purpose of this Employment Agreement, Employee will be considered
to be permanently disabled if, by a mental or physical incapacity, it
is impossible for Employee to render, for 180 consecutive days or more
to TFH the Employee's Duties and Responsibilities provided in
paragraph 2 hereof. Such determination shall be made by a licensed
medical doctor designated by TFH and reasonably acceptable to Employee
or on evidence that the Employee is eligible for Social Security
disability payments. Total and permanent Disability shall exclude
disability arising from:
(a) Chronic or excessive use of intoxicants, drugs or
narcotics; or
(b) Intentionally self-inflicted injury or intentionally
self-induced sickness.
(iii) By the mutual written agreement of Employee and TFH; or
(iv) Within a reasonable period of time following a
determination by TFH that "good cause" exists for such termination and
the delivery by TFH to Employee of a written notice specifying with
factual specificity the actions of Employee which justify TFH's
determination that cause exists to terminate Employee's employment
pursuant to Paragraph 8(b) herein. Delivery of such notice shall not
be determinative of whether cause does or does not in fact exist for
purposes of termination of Employee's employment.
b. For purposes hereof, the term "good cause" shall have the meaning
set forth in Section 9(b) hereof.
c. If employment is terminated by TFH without good cause, TFH shall
pay within fourteen (14) days following the date of such termination an
amount equal to then existing Base Compensation and all related benefits
for two (2) years.
9. Change of Control.
a. In the event that (1) a Change of Control of TFH shall occur and
(2) within two years after such Change of Control, Employee's employment
with TFH is terminated other than by Employee, for any reason other than
Employee's permanent disability, death, normal retirement or Good Cause (as
hereinafter defined), or is terminated by Employee for Stated Cause (as
hereinafter defined), TFH shall promptly pay to Employee as termination
compensation the amount provided in subparagraph e. hereof.
b. For purposes of this Agreement, "Good Cause" is defined as (1) a
material breach by Employee of his obligations under this Employment
Agreement which is demonstrably willful and deliberate on Employee's part,
committed in bad faith, or without reasonable belief that such breach is in
the best interest of TFH and is not remedied within a reasonable period of
time after receipt of written notice specifying the breach; (2) conviction
of Employee of a felony; (3) fraud committed by Employee against TFH or
misappropriation by Employee of the assets of either thereof; or (4) breach
of Employee's duty of loyalty or other fiduciary duty or obligation to TFH
which is not remedied within a reasonable period of time after receipt of
written notice specifying the same.
c. For purposes of this Agreement, "Stated Cause" is defined as (1)
any substantive changes in Employee's duties and responsibilities for TFH
which are not approved by him; (2) involuntary relocation or proposed
relocation of Employee from Greater Kansas City; (3) any material reduction
in the salary or benefits to which Employee is entitled pursuant hereto; or
(4) any change in the position to which Employee shall report as provided
in paragraph 2 hereof.
d. For purposes of this Agreement, a Change of Control of TFH shall
have occurred if, as the result of the acquisition of the assets or
securities of TFH by a single person or group, as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, or a merger,
consolidation, contested election of directors or any combination of the
foregoing transactions, (a "Transaction"), either of the following shall
occur:
(i) The persons who were directors of TFH immediately before
the Transaction shall cease to constitute a majority of the board of
directors of TFH or of any parent of or successor to TFH, or
(ii) Such person or group becomes the beneficial owner, directly
or indirectly of substantially all of the assets of TFH or securities
of TFH representing 35% or more of the combined voting power of TFH's
then outstanding securities.
e. The compensation to which Employee shall be entitled pursuant to
Paragraph 9.a. hereof shall be equal to 2.99 times the average annual
compensation from TFH and its affiliates includable in Employee's gross
income, for federal income tax purposes, for the three most recent years
ending before the Transaction, or such lesser period as Employee shall have
been an employee. In no event shall any amount be required to be paid
hereunder that would constitute an "excess parachute payment" within the
meaning of S 280G(b) of the Internal Revenue Code.
f. In the event that Employee's employment terminates after a change
in control so as to entitle him to the compensation provided in
subparagraph e. hereof, Employee shall be additionally entitled to:
(i) Immediate 100% vesting of all Incentive Compensation and
Stock Options provided or to be provided pursuant hereto or pursuant
to Stock Option Agreements with TFH, and
(ii) All benefits to which he would have been entitled had he
retired at normal retirement age from TFH, and
(iii) Three years of continued participation in medical and life
insurance plans, Supplemental Benefit and Collateral Assignment Split-
Dollar Agreement and benefit plans of TFH then in effect and in which
Employee was participating immediately prior to the Transaction,
provided, however, that if there are any limitations on such
participation provided in such plans, TFH shall provide Employee
during such three-year period equivalent benefits not less favorable
to Employee than those to which he would have been entitled as a
participant in such plans at the time of the Transaction, except that
Employee's entitlement to such participation shall not extend beyond
his normal retirement date.
(iv) The right to purchase the automobile then being provided to
Employee under paragraph 5(a) hereof at the price therein specified.
10. Burden and Benefit. This Agreement shall be binding upon, and
shall inure to the benefit of, TFH and Employee, and their respective heirs,
personal and legal representatives, successors and assigns, provided that no
party hereto may assign its rights or obligations hereunder.
11. Governing Law. It is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all respects be
governed by the laws of the State of Kansas.
12. Severability. The provisions of this Agreement (including
particularly, but not limited to, the provisions of Paragraphs 6 and 7 hereof)
shall be deemed severable, and the invalidity or unenforceability of any one or
more of the provisions hereof shall not affect the validity and enforceability
of the other provisions hereof, and if any court shall determine any provision
of Paragraphs 6 or 7 hereof to be unreasonably broad, the parties hereto agree
that such provision(s) shall be deemed amended to the greatest breadth which
such court shall find to be reasonable and enforceable.
13. Notices. Any notice permitted or required to be given hereunder shall
be sufficient and deemed given when in writing, and delivered or sent by
certified or registered mail, return receipt requested, first-class postage
prepaid, to his last known residence in the case of Employee, and to its
principal office in the case of TFH.
14. Attorney Fees. If any party to this Agreement files suit or takes
legal action to enforce or avoid its provisions, the losing party shall pay the
prevailing parties' reasonable attorney fees.
15. Entire Agreement. This Agreement and the Exhibit hereto contain the
entire agreement and understanding between TFH and Employee with respect to the
employment herein referred to, and no representations, promises, agreements or
understandings, written or oral, not herein contained, shall be of any force or
effect. No change or modification hereof shall be valid or binding unless the
same is in writing and signed by the party intended to be bound. No waiver of
any provision of this Agreement shall be valid unless the same is in writing and
signed by the party against whom such waiver is sought to be enforced; moreover,
no valid waiver of any provision of this Agreement at any time shall be deemed a
waiver of any other provision of this Agreement at such time or be deemed a
valid waiver of such provision at any other time.
IN WITNESS WHEREOF, TFH and Employee have duly executed this Agreement as
of the day and year first above written.
Witness:
By: /s/Xxxxx Xxxxxxxxx /s/Xxxxxxx X. X'Xxxx
Xxxxxxx X. X'Xxxx
TRANSFINANCIAL HOLDINGS, INC.
Attest:
By: /s/Xxxxx Xxxxxxxxx By: /s/Xxxxxxx X. Xxx
EXHIBIT A
(a) Except as set forth in subparagraph (b) hereof, no Incentive
Compensation shall be earned unless the net income of TFH
(consolidated) or Universal Premium Acceptance Corporation (UPAC), for
each full or partial year during the term of the Employment Agreement,
shall equal at least 80% of budget (the "Threshold"). If the
Threshold with respect to UPAC is met, 16.67% of Incentive
Compensation shall be deemed earned, and such amount shall be
increased by 1.25% for each whole percentage point by which the net
income of UPAC exceeds 80% of budget. If the Threshold with respect
to TFH is met, 16.67% of Incentive Compensation shall be deemed
earned, and such amount shall be increased by 1.25% for each whole
percentage point by which the consolidated net income of TFH exceeds
80% of budget.
(b) An amount not to exceed 16.67% of Incentive Compensation may be
awarded, if, in the sole judgment of the Board of Directors of TFH,
such adjustment is necessary to properly reflect Employee's
contribution.
