EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AS AMENDED AND RESTATED OCTOBER 16, 1998
This Employment Agreement is effective as of the 16th day of October, 1998
("Effective Date"), by, between and among Universal Premium Acceptance
Corporation, a Missouri corporation ("UPAC"), Presis, L.L.C., a Kansas limited
liability company ("Presis"), Kurt W. Huffman ("Employee") and TransFinancial
Holdings, Inc., a Delaware corporation ("TFH").
RECITALS
1. UPAC is primarily engaged in the business of insurance premium finance,
and desires to continue the employment of Employee as an executive officer on
the terms and conditions hereinafter set forth.
2. Presis is engaged in the business of particle reduction, and desires
to continue the employment of Employee as an executive officer on the terms and
conditions hereinafter set forth.
3. Employee is and has been an executive officer of UPAC, Presis and TFH,
has developed expertise in their business and desires to continue said
employment on the terms and conditions hereinafter set forth.
4. TFH is the owner of UPAC and Presis and, to induce employee to enter
into the Agreement, has agreed to pay and provide to Employee the compensation
and other benefits hereinafter set forth.
5. 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. UPAC, Presis and TFH hereby employ Employee as
President and Chief Executive of UPAC and Presis, and Executive Vice-President
of TFH, and Employee accepts such employment and positions. 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 UPAC and Presis and Executive Vice-President of
TFH, and shall report directly to the board of managers of Presis and the Chief
Executive Officer of TFH. Employee's duties on behalf of UPAC and Presis 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
managers and the Chief Executive Officer of TFH 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 UPAC and Presis, 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 business
of UPAC or Presis; 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 $125,000 per year, in
semi-monthly installments, or in installments otherwise applicable to
compensation paid to the executive officers of UPAC and Presis, subject to
withholding for applicable federal, state, local, social security and
unemployment taxes, and any other withholding required by law. Such base
compensation shall be paid by TFH, but UPAC and Presis agrees to reimburse TFH
for such amount, and the amount of Incentive Compensation hereinafter provided.
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 $54,000 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. Automobile allowance of $600.00 per month.
b. Medical insurance to the extent provided by TFH, UPAC or Presis
to its other executive officers.
c. Long-term disability to the extent provided by TFH, UPAC or
Presis to its other executive officers.
d. Life insurance to the extent provided by TFH, UPAC or Presis to
its other executive officers.
e. Three weeks paid vacation per year.
f Participation in pension and profit sharing plans maintained by
TFH or UPAC, as amended from time to time.
g. Participation in whatever 401(k) Plan is from time to time
sponsored by TFH, UPAC or Presis, if any.
h. Such stock options as TFH shall from time to time grant to
Employee pursuant to Stock Option Plans from time to time in effect.
i. In general, Employee shall be entitled to participate in all
welfare and benefit plans from time to time maintained by TFH, UPAC or
Presis generally for its executive officers, subject to amendment or
termination thereof and subject to all legal constraints, including
discrimination in favor of highly compensated employees.
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 UPAC or Presis 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, either Presis,
UPAC or 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 one year from and after the termination of his
employment with UPAC or Presis, for whatever reason, he shall not, directly or
indirectly:
a. Solicit or divert business from any customer of UPAC or Presis or
any other business owned directly or indirectly by Presis, UPAC or TFH and
with respect to which Employee has responsibility; or
b. Solicit for employment or employ any person who in the prior six
months has been an employee of Presis, UPAC or 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 Presis or UPAC, or
any other business owned directly or indirectly by Presis, UPAC or TFH and
with respect to which Employee has responsibility, at any place and in any
state in which Presis, UPAC or such other business is then conducting its
business.
8. Termination of Employment.
a. The employment of Employee under this Employment Agreement with
TFH, UPAC and Presis 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 with reasonable accommodation for Employee to render,
for 180 consecutive days or more to UPAC or Presis the Employee's
Duties and Responsibilities provided in paragraph 2 hereof. Such
determination shall be made by a licensed medical doctor designated by
TFH, UPAC or Presis 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, UPAC
or Presis; 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, UPAC or Presis for other than
good cause, TFH shall pay within fourteen (14) days following the date of
such termination an amount equal to then existing Base Compensation and
related benefits for one (1) year.
9. Change of Control.
a. In the event that (1) a Change of Control of TFH, UPAC or Presis
shall occur and (2) within two years after such Change of Control,
Employee's employment with UPAC Presis or 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, UPAC or Presis 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, UPAC or Presis 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, UPAC or Presis 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
Presis, UPAC or 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 to an Employment Agreement of even date herewith; or (4)
change in the position to which Employee reports, as set forth in paragraph
2 hereof.
d. For purposes of this Agreement, a Change of Control of UPAC or
Presis shall have occurred if TFH and its affiliates cease to own at least
51% interest therein, and 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, UPAC and Presis 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 Presis, UPAC or TFH, and
(iii) Three years of continued participation in medical and life
insurance plans of UPAC, Presis and 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.
10. Burden and Benefit. This Agreement shall be binding upon, and shall
inure to the benefit of, UPAC, Presis, 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 UPAC, Presis and 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 among UPAC, Presis, 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, UPAC, Presis, TFH and Employee have duly executed this
Agreement as of the day and year first above written.
Universal Premium Acceptance
Corporation
Attest:
By: By:
PRESIS, L.L.C.
Attest:
By: /s/Timothy P. O'Neil By: /s/Timothy P. O'Neil
Witness:
By: /s/Mark A. Foltz By: /s/Kurt W. Huffman
Kurt W. Huffman
TRANSFINANCIAL HOLDINGS, INC.
Attest:
By: /s/Mark A. Foltz By: /s/Timothy P. O'Neil
President
EXHIBIT A
(a) Except as set forth in subparagraph (b) hereof, no Incentive
Compensation shall be earned unless the net income of TFH
(consolidated), UPAC or Presis, 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 Presis is
met, 13.33% of Incentive Compensation shall be deemed earned, and such
amount shall be increased by 1.0% for each whole percentage point by
which the net income of Presis exceeds 80% of budget. If the
Threshold with respect to UPAC is met, 13.33% of Incentive
Compensation shall be deemed earned, and such amount shall be
increased by 1.0% 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, 6.67% of Incentive Compensation shall be deemed earned,
and such amount shall be increased by 0.5% for each whole percentage
point by which the net consolidated 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 Chief Executive Officer of
TFH, such adjustment is necessary to properly reflect Employee's
contribution.