Exhibit 10.5
EMPLOYMENT
CONTRACT
THIS EMPLOYMENT CONTRACT
(“Employment Contract”) made as of the Effective Date
(as defined below) between KEVIN AUSTIN, a Georgia resident
(hereinafter referred to as “Employee”) and TRX, Inc.,
a Georgia corporation (hereinafter referred to as the
“Company”).
WITNESSETH:
WHEREAS, the Company has agreed to
acquire the assets of Hi-Mark, LLC, a Delaware limited liability
company (“Hi-Mark”) pursuant to that certain Asset
Purchase Agreement (the “Asset Purchase Agreement”)
dated December 7, 2006, by and among the Company; Hi-Mark;
Hi-Mark Travel Systems, Inc., a Georgia corporation; Integrated
Profitmark Corporation, LLC, a Delaware limited liability company;
Employee; Diane Austin, a Georgia resident; and Charles Bradsher, a
Georgia resident (the “Transaction”); and
WHEREAS, the parties intend that the
Transaction will formally close on a date (the “Effective
Date”) that is later than December 7, 2006;
and
WHEREAS, the Employee indirectly
owns a majority interest in Hi-Mark and will thus benefit from the
Transaction; and
WHEREAS, if (and only if) the
Transaction formally closes, the Company desires to employ
Employee, and Employee desires to be employed by the Company,
beginning on the Effective Date; and
WHEREAS, Employee’s employment
by the Company following the closing of the Transaction is an
integral and essential aspect of the Transaction, without which the
Company would not have agreed to the Transaction; and
WHEREAS, the parties intend to
supersede all prior correspondence, letters, and negotiations
between them regarding the terms of Employee’s employment
with the Company with the terms set forth herein;
NOW, THEREFORE, it is hereby agreed
as follows:
|
|
1.
|
Employment
of Employee . The Company
hereby employs Employee for a period of three (3) years
commencing on the Effective Date of this Employment Contract (the
“Initial Term”), unless earlier terminated pursuant to
Section 6 herein. Employee agrees to such employment on the
terms and conditions herein set forth and agrees to devote his full
time and efforts to his duties under this Employment Contract and
to perform such duties diligently and efficiently and in accordance
with the directions of the Company. The Initial Term and any
Renewal Terms (as defined in Section 6(f)) shall be
collectively referred to as the “Term” of this
Employment Contract.
|
|
|
2.
|
Duties and
Responsibilities .
Employee shall be employed as Executive Vice President for the
Company. Employee shall initially report to the Chief Executive
Officer of the Company. As Executive Vice President, Employee shall
have primary responsibility and authority for managing data
consolidation and reporting for the Company’s Hi-Mark
offering (the “Unit”) for suppliers, travel management
companies, health care management companies and
corporations.
|
Page 1 of 11
During the Term of this Employment
Contract, Employee shall be responsible for preparing and
submitting to the Company at least ninety (90) days prior to
the end of the Company’s calendar year an annual budget and
business plan for the operation of the Unit for the upcoming
calendar year. Said annual budget and business plan either shall be
approved as submitted, or reasonably modified, revised, or amended
by the Company and delivered to Employee as the annual budget and
business plan for the Company during the applicable calendar year.
Employee agrees that he will manage the business of the Unit in
material conformity with the annual budget or business plan of the
Company or the Unit, as approved by the Company.
|
|
3.
|
Compensation
and Benefits .
|
|
|
(a)
|
Base Salary.
Employee’s annual salary during the Term of this Employment
Contract shall be $250,000 (the “Base Salary”). The
Base Salary shall be paid by the Company monthly in arrears or in
accordance with the Company’s regular payroll practice, and
shall be subject to all withholdings and deductions required by law
or authorized by Employee. The Base Salary may be increased (but
not decreased) from time to time during the Term in accordance with
the Company’s policies and procedures for reviewing,
establishing and increasing the base compensation of the
Company’s senior executives.
|
|
|
(b)
|
Annual
Discretionary Bonus. Upon completion of each calendar year during
the Term, Employee shall be eligible for an annual discretionary
bonus in the range of 0% to 50% of Employee’s Base Salary.
The Company shall determine the amount of Employee’s annual
discretionary bonus, if any, based on both the performance of the
Company and the performance of Employee. Notwithstanding the
foregoing, during the Initial Term of this Employment Contract, the
discretionary bonus shall not be less than $50,000 per year (the
“Guaranteed Amount”).
|
|
|
(c)
|
Employee
Benefits. During the Term, (i) the Employee shall be entitled
to participate in all incentive, savings, stock option and
retirement plans, practices, policies and programs applicable
generally to other senior executives of the Company and
(ii) the Employee and/or the Employee’s family as the
case may be, shall be eligible for participation in the welfare
benefit plans, practices, policies and programs provided by the
Company, including medical, prescription, dental, disability,
salary continuance, employee life, group life, accident death and
travel accident insurance plans and programs, to the extent
applicable generally to other senior executives of the Company. The
terms, conditions and eligibility requirements of the employee
benefits provided to Employee shall be governed by the employee
benefit plans maintained by the Company, and such plans may be
amended or modified from time to time.
|
Page 2 of 11
|
|
(d)
|
Vacation.
Employee shall be entitled to four (4) weeks of paid vacation
per calendar year; provided, however, that if this Employment
Contract is not in effect for any full calendar year, Employee
shall have only a pro rata portion of such paid vacation during
that calendar year.
|
|
|
(e)
|
Car allowance.
Employee shall receive a monthly automobile allowance in the amount
of $1,000 per month.
|
|
|
(f)
|
Cell phone
allowance. Employee shall receive a monthly cellular telephone
allowance in the amount of $150 per month.
|
|
|
(g)
|
Stock Options.
In connection with obtaining the approval of the Transaction by the
Company’s Board of Directors, the Company shall obtain the
approval of its Board of Directors (and the members of the Omnibus
Plan Committee) for the grant to the Employee of non-qualified
options to purchase 100,000 shares of the Company’s common
stock (the “Options”), with such option grant to be
effective as of the Effective Date. The Options shall have an
exercise price per share equal to the Fair Market Value (as defined
in the TRX, Inc. Omnibus Incentive Plan) on the date of grant, and
shall become exercisable as to 33 1/3 percent of the shares subject
to the Option on each of the first three anniversaries of the date
of grant. In the event of a termination of Employee’s
employment by the Company without Good Cause pursuant to
Section 6(c) below, or by the Employee for Good Reason
pursuant to Section 6(d) below, all of the Options shall be
immediately exercisable. Except as otherwise provided herein, the
Options shall in all respects be governed by the TRX, Inc. Omnibus
Incentive Plan or any successor plan thereto.
|
|
|
4.
|
Personnel
Policies . Employee shall
conduct himself at all times in a businesslike and professional
manner as appropriate for a person in his position and shall
represent the Company in all respects as complies with good
business and ethical practices. In addition, Employee shall be
subject to and abide by the policies and procedures of the Company
applicable to personnel of the Company, as adopted from time to
time.
|
|
|
5.
|
Business
Expenses . Employee shall
be reimbursed monthly by the Company for ordinary, necessary and
reasonable expenses incurred by him in the performance of his
duties for the Company, provided that Employee shall first document
said business expenses in the manner generally required by the
Company under its policies and procedures, and in any event, the
manner required to meet applicable regulations of the Internal
Revenue Service relating to the deductibility of such
expenses.
|
|
|
6.
|
Termination
and Renewal .
|
|
|
(a)
|
Termination Due to Death or
Discharge for Good Cause. This Employment Contract shall terminate
immediately upon the death of Employee or upon the discharge of
Employee for “Good Cause”. For the purposes of this
Employment Contract, “Good Cause” means (i) any
act of fraud or material dishonesty (whether or not in connection
with the Company’s Business as hereinafter defined);
(ii) any material
|
Page 3 of 11
|
|
misrepresentation by Employee or
Hi-Mark relating to the Transaction; (iii) competing with the
Business of the Company either directly or indirectly;
(iv) the material breach of any provision of this Employment
Contract by Employee, if such breach is not cured by the Employee
within fifteen (15) business days after the Company’s
written notice to Employee of such breach; (v) failure to
comply with the lawful and reasonable directives of the Company, if
such breach is not cured by the Employee within fifteen
(15) business days after the Company’s written notice to
Employee of such breach; (vi) breach of the Employee’s
fiduciary duty of loyalty to the Company; or (vii) material
breach by Employee or Hi-Mark of its covenants or obligations under
the Asset Purchase Agreement or the Non-Competition Agreement
entered into in connection with the Transaction which is not cured
pursuant to the terms of the applicable instrument. In the event of
termination under this subsection, any earned but unpaid Base
Salary and any other benefits provided herein shall be paid to
Employee up to the effective date of termination of this Employment
Contract and not thereafter, and Employee shall not be entitled to
any further bonus payments.
|
|
|
(b)
|
Termination Due
to Disability. This Employment Contract shall terminate immediately
upon written notice to Employee if Employee shall at any time be
unable to perform the essential functions of his job hereunder, by
reason of a physical or mental illness or condition as documented
by a licensed medical doctor, with or without reasonable
accommodation, for a continuous period of three
(3) consecutive calendar months. In the event of termination
under this subsection, any earned but unpaid Base Salary and any
other benefits provided herein shall be paid to Employee up to the
effective date of termination of this Employment Contract and not
thereafter, and Employee shall not be entitled to any further bonus
payments.
|
|
|
(c)
|
Termination by
Company Without Cause. If the Company terminates Employee’s
employment, other than for death, disability, or Good Cause,
Employee shall continue to receive his Base Salary for the
remainder of the Initial Term (or, if applicable, the then-current
Renewal Term, as defined below). If the Company terminates
Employee’s employment pursuant to this subsection during the
Initial Term, Employee shall further be entitled to bonus payments
equal to the Guaranteed Amount for each year remaining in the
Initial Term.
|
|
|
(d)
|
Termination by Employee for Good
Reason. If Employee terminates his employment with the Company for
Good Reason, Employee shall continue to receive his Base Salary for
the remainder of the Initial Term (or, if applicable, the
then-current Renewal Term, as defined below). If the Employee
terminates his employment for Good Reason during the Initial Term,
Employee shall further be entitled to bonus payments equal to the
Guaranteed Amount for each year remaining in the Initial Term.
Employee agrees not to terminate his employment for Good Reason
unless (i) Employee has given the Company at least 30
days’ prior written notice of his intent to terminate this
employment for Good Reason, which notice shall specify the facts
and circumstances constituting Good Reason, and (ii) the
Company has not remedied such facts and circumstances constituting
Good Reason within such 30 day period. For purposes of this
Employment Contract, “Good Reason” means (1) any
failure by the Company to comply with its obligations under section
3 hereof; (2)
|
Page 4 of 11
|
|
any material breach by the
Company of this Agreement, the Asset Purchase Agreement or any
other agreement between Employee and the Company;
(3) relocation of Employee’s place of employment more
than 75 miles from the Company’s present headquarters; or
(4) a significant and material reduction, made without the
Employee’s consent, in Employee’s position, authority,
duties or responsibilities as contemplated in section 2 hereof;
provided, however, that such reduction as described in subsection
(d)(4) shall constitute Good Reason only if Employee has, prior to
such reduction, consistently performed his duties and
responsibilities at a performance and quality level (including, but
not limited to, in terms of productivity, business results,
teamwork with other senior management, and cooperation with the
Company’s business strategies) reasonably expected of an
Executive Vice President of the Company.
|
|
|
(e)
|
Termination by
the Employee Without Good Reason. If Employee terminates his
employment, other than for Good Reason and in compliance with the
requirements of section 6(d) above, Employee shall be entitled only
to receive his Base Salary through the date of termination, and
shall not be entitled to receive any other bonus or other
compensation. In addition, unless Employee has provided the Company
with at least six (6) months prior notice of his intent to
terminate his employment, Employee
|
|
