EMPLOYMENT AGREEMENT
Exhibit 10.2
This Employment Agreement (this “Agreement”) is made and entered into
effective (the “Effective Date”) as of February 9, 2011, by and between Global Traffic
Network, Inc., a Nevada corporation located at 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX
00000 (the “Company”), and Xxxxx Xxxx, with a mailing address of X.X. Xxx 000, 000 Xxxxxx
Xxxxxx, Xxxxxx, XX 00000 (the “Employee”).
BACKGROUND
A. Global Traffic Network, Inc., a Delaware corporation and predecessor to the Company
(“Global Delaware”), and Employee have previously entered into that certain Employment
Agreement effective as of March 29, 2006 (the closing date of the Global Delaware’s initial public
offering), as amended by that certain Amendment No. 1 to Employment Agreement dated April 4, 2007
(but effective as of March 29, 2007), and that certain Amendment No. 2 to Employment Agreement
dated July 1, 2008 by and between the Employee and the Company (as the successor in interest to
Global Delaware) (as so amended, the “Previous Agreement”).
B. The Company desires to employ Employee as the Company’s Chief Financial Officer and Chief
Operating Officer in accordance with the terms and conditions of this Agreement, and wishes to
obtain reasonable protection against unfair competition from Employee following termination of
employment and to protect itself against unfair competition and the use of its confidential
business and technical information.
C. Employee wishes to provide services to the Company in exchange for compensation and is
willing to grant the Company the benefits of the various covenants contained herein.
D. The Company and the Employee wish to enter into this Agreement to supersede and replace the
Previous Agreement in its entirety.
AGREEMENT
Now, Therefore, in consideration of the foregoing facts, the mutual covenants set
forth herein and for other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment. The Company hereby employs Employee as the Company’s Chief Financial Officer
and Chief Operating Officer, and Employee hereby accepts such employment and agrees to serve the
Company to the best of his ability, promoting the Company’s interests and business and devoting
substantially all of his business time, energy and skill to such employment.
2. Duties and Powers. While Employee is employed hereunder, and excluding any periods of
vacation, sick, disability or other leave to which Employee may be entitled, Employee agrees to
devote substantially all of Employee’s attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge the responsibilities
assigned to Employee pursuant hereto and under the Company’s bylaws as amended from time to time,
to use Employee’s reasonable best efforts to perform faithfully and efficiently such
responsibilities. Employee shall perform such duties under the direction of, and shall report to,
the Company’s Chief Executive Officer, President
or Board of Directors (the “Board”) or a committee thereof. Employee shall comply with the
Company’s policies and procedures; provided, however, that to the extent such policies and
procedures are inconsistent with this Agreement, the provisions of this Agreement shall control.
3. Term. The Employee’s appointment and position hereunder shall be effective as of the
Effective Date and shall continue until terminated as provided pursuant to Section 9.
4. Salary. The Company shall pay Employee an initial annual salary of $347,287.50.
Commencing July 1, 2011, Employee’s annual salary shall be $395,000.00 per year. Payment of
Employee’s annual salary shall be made in accordance with the Company’s normal payroll business
practices.
5. Annual Bonus. During the term of this Agreement, Employee shall be entitled to receive an
annual performance-based bonus (the “Bonus”) of up to $100,000 for fiscal 2011 and up to
40% of Employee’s base salary commencing with fiscal 2012. The amount of the Bonus, if any, will be
determined and paid based upon satisfaction of certain operating profit goals to be determined by
the Board or the Compensation Committee thereof for the applicable fiscal year. Subject to Employee
remaining an active employee of the Company through the end of the applicable fiscal year, the
Bonus, if any, for such fiscal year will be paid not later than the 15th day of the
third month after the end of the fiscal year in which the Bonus has been earned.
6. Equity Awards; Accelerated Vesting.
(a) Employee will receive, as of the Effective Date, a grant of 22,725 shares of the Company’s
common stock, pursuant to the Company’s Amended and Restated 2005 Stock Incentive Plan, which are
restricted with respect to sale and transfer (the “Restricted Stock”). The restrictions on the
Restricted Stock will lapse in three installments of 7,575 shares on the first, second and third
anniversary of the date of grant.
(b) In the event of an acquisition of the Company through the sale of substantially all of the
Company’s assets or through a merger, exchange, reorganization or liquidation of the Company or a
similar event as determined by the Board or the Compensation Committee thereof (such transaction,
as defined in the Company’s Amended and Restated 2005 Stock Incentive Plan, a “Transaction”), all
unvested options to purchase Company stock or other equity-based incentives awarded to Employee
will immediately vest upon the closing of such Transaction.
7. Other Benefits. Employee shall be entitled to participate in or receive benefits under any
employee-benefit plan made available by the Company in the future to its employees based in the
United States (including without limitation medical, dental and life insurance benefits), subject
to and on a basis consistent with the terms, conditions and overall administration of such plans.
Nonetheless, in its sole discretion the Company may amend or terminate any such employee-benefit
plan providing benefits generally to its employees. Employee shall be entitled to an aggregate of
four weeks of paid vacation in each calendar year. Notwithstanding the foregoing, unless and until
the Company elects to provide its United States based employees (including Employee) with medical
insurance, the Company shall pay Employee $1,000 per month in lieu providing Employee with such
benefit.
8. Reimbursement of Business Expenses. Upon presentation of appropriate receipts and/or
vouchers, the Company shall reimburse Employee for the reasonable and necessary expenses he incurs
in connection with the performance of his duties, in accordance with any and all Company’s policies
and procedures governing such expenses.
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9. Termination.
(a) Notwithstanding the term set forth in Section 3 hereof, this Agreement may be
earlier terminated as set forth below:
(i) by the Company without Cause (as defined below);
(ii) by the Company, immediately upon written notice to Employee for the
following events, each of which would constitute “Cause”: (a) Employee is
convicted of a felony; (b) Employee has materially breached this Agreement; (c)
Employee’s material violation of a Company policy that has a materially adverse
effect on the Company; (d) Employee’s failure to perform his duties as the Company’s
Chief Financial Officer and Chief Operating Officer as required by this Agreement,
which failure has not been cured by Employee after ten days written notice thereof
to Employee by the Company; or (e) Employee’s habitual intoxication, drug use or
chemical substance abuse by any intoxicating or chemical substance;
(iii) by Employee in the event (a) of a material breach of this Agreement by
the Company, or (b) that Employee is required to report directly to anyone other
than the Company’s Chief Executive Officer, President or the Board of Directors (or
a committee thereof); provided, however, that in either case: (x) Employee has
provided written notice to the Board of the existence of such breach within a period
not to exceed ninety (90) days following its initial occurrence; (y) the Company has
failed to cure such breach within a period of (30) days following the Board’s
receipt of such notice from Employee; and (z) Employee terminates his employment
with the Company within a period of time not to exceed thirty (30) days following
the expiration of the Company’s cure period under subsection (y) above;
(iv) by Employee voluntarily upon at least 30 days written notice to the
Company, specifying an effective date for such termination; and
(v) upon the death or disability of Employee. For the purposes of this
Agreement, Employee’s “disability” shall occur if Employee shall become
incapacitated by accident or illness and, in the sole reasonable determination of
the Board, shall be unable to perform the duties of the positions he then occupies
with reasonable accommodation for a period of time of not less than 90 consecutive
days, and the Company provides 30 days written notice to the Employee at any time
after such period of disability.
(b) In the event of any termination occurring by virtue of paragraphs (i) through (v)
above, Employee shall be entitled to compensation and benefits, if any, accrued through the
effective date of termination. Furthermore, if Employee’s employment is terminated pursuant
to paragraphs (i) or (iii) above, he shall continue to receive the salary payments specified
in Section 4 for the 12-month period immediately following the effectiveness of any such
termination (the “Severance Payments”);
(c) Except as provided in the following paragraph, the Company shall make all Severance
Payments due pursuant to this Section 9, and all payments made pursuant to the preceding
paragraph, at the times and in the manner that Employee’s salary would have been paid but
for the termination of Employee’s employment and shall otherwise comply with the
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requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder (“Section 409A”).
If, as of the date Employee’s employment is terminated: (i) the Company’s common stock
is publicly traded (as determined under Section 409A), (ii) Employee is a “specified
employee” (as determined under Section 409A), and (iii) any portion of the Severance
Payments due pursuant to this Section 9, or any amounts payable under the second preceding
paragraph of this Section 9, would exceed the sum of the applicable limited separation pay
exclusions as determined pursuant to Section 409A, then payment of the excess amount shall
be delayed until the first regular payroll date of the Company following the six month
anniversary of the date of Employee’s employment termination (or, if earlier, the date of
his or her death), and shall include a lump sum equal to the aggregate amounts that Employee
would have received had payment of this excess amount commenced following the date of
Employee’s employment termination as provided in this Section 9. If Employee continues to
perform any services for the Company (as an employee or otherwise) after the date of
Employee’s employment termination, such six month period shall be measured from the date of
Employee’s “separation from service” as defined pursuant to Section 409A.
(d) Notwithstanding any contrary provisions of this Agreement, the Company shall,
before the due date for payment of any amounts that become payable pursuant to Section 9(b)
or 6(b) hereof, cause an independent national accounting firm designated by the Company (the
“Accounting Firm”) to compute whether there would be any “excess parachute payments” payable
to Employee, within the meaning of Code Section 280G, taking into account the total
“parachute payments,” within the meaning of Code Section 280G, payable to Employee by the
Company or any successor thereto under this Agreement and any other plan, agreement or
otherwise. If there would be any excess parachute payments, the Accounting Firm will
compute the net after-tax proceeds of such total “parachute payments” that would be paid to
Employee, after taking into account all applicable federal, state and local income and
employment taxes, and the excise tax imposed by Code Section 4999, if either (a) the
payments hereunder were reduced, but not below zero, such that the total parachute payments
payable to Employee would not exceed three (3) times the “base amount” as defined in Code
Section 280G, less One Dollar ($1.00); or (b) the payments hereunder were not reduced. If
reducing the payments hereunder would result in a greater after-tax amount of such proceeds
being paid to Employee, then such lesser amount shall be paid to Employee. Any good faith
determination by the Accounting Firm shall be final, binding and conclusive upon the Company
and Employee, subject to the following paragraph.
As a result of uncertainty in the application of Code Section 280G, it is possible that
excess parachute payments will be paid when such payment would result in a lesser amount of
such after-tax proceeds being paid to Employee. In any such case, the payment of any excess
parachute payment under this Agreement will be void ab initio to the extent of any such
excess. Any excess will be treated as an overpayment by the Company to the Employee.
Employee will return the overpayment to the Company, within fifteen (15) business days after
any determination by the Accounting Firm that excess parachute payments have been paid when
not so intended, with interest at an annual rate equal to the rate provided in Code Section
1274(d) (or 120% of such rate if the Accounting Firm determines that such rate is necessary
to avoid an excise tax under Code Section 4999) from the date Employee received the excess
until it is repaid to the Company.
All fees, costs and expenses (including, but not limited to, the cost of retaining
experts) of the Accounting Firm shall be borne by the Company; and the Company shall pay
such fees, costs, and expenses as they become due. In performing the computations required
hereunder, the
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Accounting Firm shall assume that taxes will be paid for federal, state and local
purposes at the highest possible marginal tax rates that could be applicable to Employee in
the year of receipt of the payments, unless Employee agrees otherwise.
10. Confidential Information.
(a) Employee will hold all Confidential Information (as defined below) in the strictest
confidence and never use, disclose or publish any Confidential Information without the prior
express written permission of the Company and its Board. Employee agrees to maintain
control over any Confidential Information obtained, and restrict access thereto to the
Company’s employees, agents or other associated parties who have a need to use such
Confidential Information for its intended purpose. Employee agrees to advise and inform any
party to whom he has provided access to the Confidential Information of its confidential
nature, and further agrees to ensure that such parties be bound by the terms and obligations
of this Agreement that relate to confidentiality.
(b) Upon the Company’s request, all records and any compositions, articles, devices and
other items which disclose or embody Confidential Information, including all copies or
specimens thereof in Employee’s possession, whether prepared or made by Employee or others,
will be delivered to the Company.
(c) All documents and tangible items provided to Employee by the Company or created by
Employee for use in connection with his employment by the Company are the sole and exclusive
property of the Company and shall be promptly returned to the Company upon termination of
employment with the Company, together with all copies, recordings, notes or reproductions of
any kind made from or about the documents and tangible items or the information they
contain.
(d) For purposes of this Agreement and subject to the following paragraph, the term
“Confidential Information” shall mean all information developed by Employee as a
result of his work with, for, on behalf of or in conjunction with the Company and any
information relating to the Company’s processes and products, including information relating
to research, development, manufacturing, know-how, formulae, product ideas, inventions,
trade secrets, patents, patent applications, systems, products, programs and techniques and
any secret, proprietary or confidential information, knowledge or data of the Company. All
information disclosed to Employee or to which Employee obtains access, whether originated by
Employee or by others, which is treated by the Company as “Confidential Information,” or
which Employee has a reasonable basis to believe is “Confidential Information,” will be
presumed to be “Confidential Information.”
Notwithstanding the foregoing definition, the term “Confidential Information” will not
apply to information which (i) Employee can establish by documentation was known to Employee
prior to its receipt by Employee from the Company, (ii) is lawfully disclosed to Employee by
a third party not deriving such information from the Company, or (iii) is presently in the
public domain or becomes a part of the public domain through no fault of Employee.
(e) The Company shall in turn keep all personal nonpublic information about Employee
that the Company may now have or hereafter acquire in strict confidence and shall not
disclose
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any such personal nonpublic information except as required by law or ordered by a court
of competent jurisdiction, or with the consent, express or implied, of Employee himself.
11. Restrictive Covenants. Employee agrees that during the period Employee is employed by the
Company (commencing on the Effective Date) and continuing for a period one year following the
termination of this Agreement for any reason or no reason, Employee will not, without the prior
express written consent of the Company, directly or indirectly, engage in any of the following
actions:
(a) render services, advice or assistance to any corporation, person, organization or
other entity which engages in the provision of traffic and/or news information to radio or
television stations anywhere outside of the United States, or engage in any such activities
in any capacity whatsoever, including without limitation as an employee, independent
contractor, officer, director, manager, beneficial owner, partner, member or shareholder of
any provider of traffic and/or news information; provided, however, that Employee may be a
shareholder of a corporation other than the Company, required to file periodic reports with
the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange
Act of 1934 where his total holdings are less than one percent of the issuing corporation’s
issued and outstanding publicly traded securities; or
(b) induce, solicit, endeavor to entice or attempt to induce any customer, supplier,
licensee, licensor or other business relation of the Company or a related entity to cease
doing business with the Company or a related entity, or in any way interfere with the
relationship between any such customer, vendor, licensee, licensor or other business
relation and the Company or a related entity; or
(c) induce, solicit or endeavor to entice or attempt to induce any employee of the
Company or a related entity to leave the employ of the Company or a related entity, or to
work for, render services or provide advice to or supply confidential business information
or trade secrets of the Company or a related entity to any third person or entity, or to in
any way interfere adversely with the relationship between any such employee and the Company
or a related entity.
12. Conflicts of Interest. Employee agrees that he will not, directly or indirectly, transact
business with the Company or a related entity for his own benefit, or as agent, owner, partner or
shareholder of any other entity; provided, however, that any such transaction may be entered into
if approved by a majority of the disinterested directors serving on the Board after full
disclosure.
13. Further Assurances. Each party shall, without further consideration, execute such
additional documents as may be reasonably required in order to carry out the purpose and intent of
this Agreement.
14. Arbitration.
(a) The parties will, to the greatest extent possible, endeavor to resolve any disputes
relating to the Agreement through amicable negotiations. Failing an amicable settlement,
any controversy, claim or dispute arising under or relating to this Agreement, including the
existence, validity, interpretation, performance, termination or breach of this Agreement,
will finally be settled by binding arbitration before a single arbitrator (the
“Arbitration Tribunal”) which will be jointly appointed by the parties. The
Arbitration Tribunal shall self-administer the arbitration proceedings utilizing the
Commercial Rules of the American Arbitration Association (“AAA”); provided, however,
the AAA shall not be involved in administration of the arbitration. The arbitrator must be
a retired judge of a state or federal court of the United States or a licensed lawyer with
at least five years of corporate or commercial law experience and have at least an AV
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rating by Martindale Xxxxxxx. If the parties cannot agree on an arbitrator, either
party may request the AAA to appoint an arbitrator which appointment will be final.
(b) The arbitration will be held in that particular State and municipal location in
which the Company’s headquarters, at the time of any such arbitration’s institution, is
located. Each party will have discovery rights as provided by the Federal Rules of Civil
Procedure within the limits imposed by the arbitrator; provided, however, that all such
discovery will be commenced and concluded within 60 days of the selection of the arbitrator.
It is the intent of the parties that any arbitration will be concluded as quickly as
reasonably practicable. Once commenced, the hearing on the disputed matters will be held
four days a week until concluded, with each hearing date to begin at 9:00 a.m. and to
conclude at 5:00 p.m. The arbitrator will use all reasonable efforts to issue the final
written report containing award or awards within a period of five business days after
closure of the proceedings. Failure of the arbitrator to meet the time limits of this
Section 14 will not be a basis for challenging the award. The Arbitration Tribunal will not
have the authority to award punitive damages to either party. Each party will bear its own
expenses, but the parties will share equally the expenses of the Arbitration Tribunal. The
Arbitration Tribunal shall award attorneys’ fees and other related costs payable by the
losing party to the successful party as it deems equitable. This Agreement will be
enforceable, and any arbitration award will be final and non-appealable, and judgment
thereon may be entered in any court of competent jurisdiction. Notwithstanding the
foregoing, claims for injunctive relief, may be brought in a state or federal court in the
state court in Las Vegas, Nevada.
15. General Provisions. This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Nevada without regard to its conflicts-of-law provisions. The venue for
any action hereunder shall be in Las Vegas, Nevada. If any provision of this Agreement shall be
held by any court of competent jurisdiction to be illegal, invalid or unenforceable, such provision
shall be construed and enforced as if it had been more narrowly drawn so as not to be illegal,
invalid or unenforceable, and such illegality, invalidity or unenforceability shall have no effect
upon and shall not impair the enforceability of any other provision of this Agreement. This
Agreement contains the entire understanding of the parties with regard to all matters contained
herein. Employee acknowledges and agrees that this Agreement supersedes and replaces all prior
agreements relating to the matter contained herein, including, but not limited to, the Previous
Agreement, and that the Previous Agreement is null and void and has no further effect. There are
no other agreements, conditions or representations, oral or written, expressed or implied, with
regard to the matters contained in this Agreement other than those referenced in this paragraph.
This Agreement is and shall be binding upon the heirs, personal representatives, legal
representatives, successors and assigns of the parties hereto; provided, however, that Employee may
not assign this Agreement because the services to be rendered hereunder are unique and personal in
nature. This Agreement may be amended only in writing, signed by both parties. Any waiver by
either party of compliance with any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement. Any notice to be given under this Agreement
by either Employee or the Company shall be in writing and shall be effective upon personal delivery
or delivery by mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the party at the address set forth at the beginning of this
Agreement, but each party may change its or his address by written notice in accordance with this
paragraph. Notice delivered personally shall be deemed given as of actual receipt and mailed
notices shall be deemed given as of three business days after mailing. The parties hereby mutually
represent and warrant that they are authorized to execute and deliver this Agreement, that this
Agreement will be valid and enforceable against each party upon their execution and delivery of the
same, and that there are no restrictive agreements binding them which may affect their ability to
perform their respective obligations hereunder. If any party is made or shall become a party to
any litigation (including arbitration) commenced by or against the other party involving the
enforcement
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of any of the rights or remedies of such party, or arising on account of a default of the other
party in its performance of any of the other party’s obligations hereunder, then the parties shall
bear their own expenses and attorneys’ fees. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall constitute one and
the same agreement. Signatures delivered by facsimile and other means of electronic communication
shall be valid and binding to the same extent as original signatures.
16. Compliance with Section 409A. To the extent any provision of this Agreement may be
deemed to provide a benefit to Employee that is treated as non-qualified deferred compensation
pursuant to Section 409A, such provision shall be interpreted in a manner that qualifies for any
applicable exemption from compliance with Section 409 or, if such interpretation would cause any
reduction of benefit(s), such provision shall be interpreted (if reasonably possible) in a manner
that complies with Section 409A and does not cause any such reduction.
17. Survival. The rights and obligations set forth in Section 9 of this Agreement,
the restrictions set forth in Sections 10 and 11 of this Agreement, and the provisions of Sections
14, 15 and 16 of this Agreement, shall survive the termination of this Agreement and/or Employee’s
employment with the Company.
Signature Page Follows
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In Witness Whereof, the parties have executed this Employment Agreement on this 9th
day of February, 2011.
| COMPANY: GLOBAL TRAFFIC NETWORK, INC. a Nevada corporation |
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| By: | /s/ Xxxxxxx X. Xxx | |||
| Xxxxxxx X. Xxx III, Chief Executive Officer | ||||
| EMPLOYEE: |
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| /s/ Xxxxx X. Xxxx | ||||
| Xxxxx X. Xxxx | ||||
Signature Page — Employment Agreement
