<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended March 31, 1997
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-27872
MAY & SPEH, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2992650
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1501 Opus Place, Downers Grove, Illinois 60515
(Address of principal executive offices) (Zip Code)
(630) 964-1501
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of May 15, 1997
Common Stock, par value $0.01 per share 25,024,354
<PAGE>
MAY & SPEH, INC.
INDEX
Part I -- Financial Information Page
Item 1. Financial Statements
Balance Sheets -- March 31, 1997 1
and September 30, 1996
Statements of Operations -- Three and six months 2
ended March 31, 1997 and March 31, 1996
Statements of Stockholders' Equity -- Six months 3
ended March 31, 1997
Statements of Cash Flows -- Six months ended 4
March 31, 1997 and March 31, 1996
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
Part II -- Other Information
Item 6. Exhibits and Reports on Form 8-K 10
<PAGE>
PART 1 -- FINANCIAL INFORMATION
Item 1. Financial Statements
May & Speh, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, 1997 September 30, 1996
Assets (unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,973,912 $ 10,397,858
Marketable securities 25,036,974 20,334,278
Accounts receivable, net 19,562,064 21,003,095
Prepaid software royalties and other current assets 6,803,311 7,468,809
Deferred income taxes 726,000 726,000
------------ ------------
Total current assets 59,102,261 59,930,040
Property, plant and equipment, net 33,680,113 32,289,746
Intangible assets 19,356,206 16,863,811
Other assets 9,557,713 6,134,473
------------ ------------
Total assets $121,696,293 $115,218,070
============ ============
Liabilities and stockholders' equity
Current liabilities:
Current maturities of long-term debt $ 5,505,672 $ 5,329,670
Accounts payable 3,629,164 3,713,421
Accrued payroll and other expenses 6,943,206 4,737,929
------------ ------------
Total current liabilities 16,078,042 13,781,020
Long-term debt 20,337,240 22,250,802
Deferred income taxes 3,455,000 3,455,000
------------ ------------
Total liabilities 39,870,282 39,486,822
------------ ------------
Stockholders' equity:
Common stock 250,244 249,342
Additional paid-in capital 47,087,685 46,967,691
Retained earnings 38,645,945 33,860,039
------------ ------------
85,983,874 81,077,072
Unearned ESOP compensation (4,157,863) (5,345,824)
------------ ------------
Total stockholders' equity 81,826,011 75,731,248
------------ ------------
Total liabilities and stockholders' equity $121,696,293 $115,218,070
============ ============
</TABLE>
See Accompanying Notes
-1-
<PAGE>
May & Speh, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------------------------------
1997 1996 1997 1996
--------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $21,692,905 $19,132,514 $42,921,635 $35,176,130
Operating expenses:
Wages and benefits 7,402,494 6,091,189 14,545,768 11,641,879
Services and supplies 1,738,829 1,676,490 3,777,845 2,984,358
Rents, leases and maintenance 4,530,047 4,432,695 9,167,141 8,042,602
Depreciation and amortization 981,244 377,475 1,882,640 727,924
Other operating expenses 2,099,258 1,806,904 3,922,848 3,367,617
ESOP principal payments 593,981 593,979 1,187,960 1,187,961
----------- ----------- ----------- -----------
Total operating expense 17,345,853 14,978,732 34,484,202 27,952,341
----------- ----------- ----------- -----------
Operating income 4,347,052 4,153,782 8,437,433 7,223,789
Interest and other expense:
ESOP interest 106,842 172,558 226,875 318,183
Other expense, net 338,205 22,302 490,950 225,881
----------- ----------- ----------- -----------
Income before income taxes 3,902,005 3,958,922 7,719,608 6,679,725
Income taxes 1,482,800 1,590,200 2,933,700 2,649,600
----------- ----------- ----------- -----------
Net income $ 2,419,205 $ 2,368,722 $ 4,785,908 $ 4,030,125
=========== =========== =========== ===========
Earnings per common share and common
equivalent shares outstanding $0.09 $0.11 $0.18 $0.18
Weighted average shares and common
equivalent shares outstanding 25,986,364 22,514,624 26,101,656 22,421,590
</TABLE>
See Accompanying Notes
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<PAGE>
May & Speh, Inc.
Consolidated Statements of Stockholders' Equity
For Six Months Ended March 31, 1997
<TABLE>
<CAPTION>
Common Stock Additional Unearned Retained
Shares Amount paid-in-capital compensation earnings Total
<S> <C> <C> <C> <C> <C> <C>
Balance - September 30, 1996 24,934,154 $249,342 $46,967,691 ($5,345,823) $33,860,037 $75,731,247
Net income for the six months 4,785,908 4,785,908
ended March 31, 1997(unaudited)
ESOP compensation earned 1,187,960 1,187,960
during the six months ended
March 31,1997 (unaudited)
Exercise of stock options 90,200 902 119,994 120,896
(unaudited) ---------- -------- ----------- ----------- ----------- -----------
Balance - March 31,1997 25,024,354 $250,244 $47,087,685 ($4,157,863) $38,645,945 $81,826,011
(unaudited) ========== ======== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes
-3-
<PAGE>
May & Speh, Inc.
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
1997 1996
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,785,908 $ 4,030,125
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,882,640 727,924
ESOP principal payments 1,187,960 1,187,962
Changes in assets and liabilities:
Accounts receivable, net 1,329,157 (3,229,595)
Prepaid expenses and other current assets (427,654) (182,479)
Income taxes payable/refundable 2,287,559 1,582,161
Accounts payable and accrued expenses 49,800 1,438,819
Other 4,281 111,853
------------ -----------
Net cash provided by operating activities 11,099,651 5,666,770
------------ -----------
Cash flows from investing activities:
Purchases of property and equipment (2,669,970) (1,478,075)
Purchases of marketable securities (7,665,581) (1,843,963)
Sales of marketable securities 2,962,884 980,023
Cash paid for SDS (1,395,038)
Software development costs capitalized (3,390,222) (1,465,581)
Increase in cash surrender value of insurance (37,000) (37,000)
Other (108,606)
------------ -----------
Net cash used in investing activities (12,194,927) (3,735,990)
------------ -----------
Cash flows from financing activities:
Capital lease principal payments (820,317)
Repayments of long-term obligations (1,629,249) (1,751,136)
Proceeds from issuance of common stock 120,896 33,213,043
------------ -----------
Net cash provided by financing activities (2,328,670) 31,461,907
------------ -----------
Net change in cash and cash equivalents (3,423,946) 33,392,687
Cash and cash equivalents:
Beginning of period 10,397,858 6,713,581
------------ -----------
End of period $ 6,973,912 $40,106,268
============ ===========
</TABLE>
See Accompanying Notes
-4-
<PAGE>
May & Speh, Inc.
Notes to Financial Statements
(1) Basis of Presentation.
The financial statements as of March 31, 1997 and for the six months then
ended are unaudited and reflect all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary
for the fair presentation of the financial position and operating results
for the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. Therefore, the financial statements should be read in
conjunction with the Financial Statements and Notes thereto contained in
the Company's annual report filed on Form 10-K for the fiscal year ended
September 30, 1996. The results of operations for the six months ended
March 31,1997 are not necessarily indicative of the results for the entire
fiscal year.
-5-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
In addition to historical information, the following discussion contains
forward looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those anticipated,
including, but not limited to, renewal of customer and supplier contracts
by GIS (as defined below) as they expire on terms and conditions favorable
to the Company and GIS, integration of operations of the Company and GIS,
changes in technology, and the risks and uncertainties described in reports
and other documents filed by the Company with the Securities and Exchange
Commission, including the Prospectus dated March 26, 1996 included in the
Company's Registration Statement on Form S-1 (File No. 33-98302).
Results of Operations
Three Months Ended March 31, 1997 Compared to the Three Months Ended March
--------------------------------------------------------------------------
31, 1996
--------
Net revenues increased to $21.7 million for the three months ended March
31, 1997 from $19.1 million for the three months ended March 31, 1996, an
increase of $2.6 million or 13%. The Company's direct marketing services
revenues decreased to $13.2 million for the three months ended March 31,
1997 versus $14.8 million for the three months ended March 31, 1996, a
decrease of 11%. The decrease was attributed to the credit card segment of
the finance and banking industry that experienced a decrease in sales to
$3.5 million for the three months ended March 31, 1997 versus $5.4 million
for the three months ended March 31,1996, a decrease of 38%. The Company's
data processing outsourcing services revenues increased to $8.5 million for
the three months ended March 31, 1997 versus $4.4 million for the three
months ended March 31, 1996, an increase of $4.1 million or 94%. Of this
increase, $3.2 million is attributable to revenues from GIS.
Wages and benefits expenses increased to $7.4 million for the three months
ended March 31, 1997 from $6.1 million for the three months ended March 31,
1996, an increase of 22%. The increased expenses reflect the net addition
of 123 employees as a result of the Company's continued expansion of
business volume, strengthening of its infrastructure and 1996 acquisition
of GIS.
Services and supplies expenses approximated $1.7 million for the three
months ended March 31, 1997, compared to $1.7 million for the three months
ended March 31, 1996. Services and supplies generally consist of outsourced
data entry services, general supplies, contract labor and costs related to
the use of outside consultants.
Rents, leases and maintenance expenses increased to $4.5 million for the
three months ended March 31, 1997 from $4.4 million for the three months
ended March 31, 1996, an increase of 2%. The increase was primarily
attributable to leasing computers, computer peripheral hardware, additional
software, and facility rent to house our print operation and new employees.
A portion of this increase was due to the acquisition of GIS and its
existing computer, computer peripheral hardware, software and facility
rent.
Depreciation and amortization expenses increased to $1.0 million for the
three months ended March 31, 1997 from $0.4 million for the three months
ended March 31, 1996, an increase of 160%. The increase was primarily
attributable to continued investment in technology including the upgrade of
the Company's mainframe computer and the conversion of the lease for
computer equipment from an operating lease to a capital lease. In addition,
the acquisition of GIS in the fourth quarter of fiscal year 1996 has
created goodwill in excess of $18 million that will be amortized over 40
years.
-6-
<PAGE>
Other operating expense increased to $2.1 million for the three months
ended March 31, 1997 from $1.8 million for the three months ended March 31,
1996, an increase of 16%. The increase was primarily attributable to
variable costs relating to several customer contracts.
Research and development costs representing primarily wages and benefits
for information technology staff increased to $0.8 million for the three
months ended March 31, 1997 from $0.7 million for the three months ended
March 31, 1996, an increase of 20%. The Company's research and development
expenses relate primarily to new product development activities.
Income taxes decreased to $1.5 million for the three months ended March 31,
1997 from $1.6 million for the three months ended March 31, 1996. The
Company's effective tax rate was 38% for the three months ended March 31,
1997 and 40% for the three months ended March 31, 1996.
Six Months Ended March 31, 1997 Compared to the Six Months Ended March 31,
--------------------------------------------------------------------------
1996
----
Net revenues increased to $42.9 million for the six months ended March 31,
1997 from $35.2 million for the six months ended March 31, 1996, an
increase of $7.7 million or 22%. The Company's direct marketing services
revenues decreased to $26.5 million for the six months ended March 31, 1997
versus $27.0 million for the six months ended March 31, 1996, a decrease of
2%.The decrease was attributed to the credit card segment of the finance
and banking industry that saw sales decrease to $6.8 million for the six
months ended March 31, 1997 versus $8.6 million for the six months ended
March 31, 1996, a decrease of 20%. The Company's data processing
outsourcing services revenues increased to $16.4 million for the six months
ended March 31, 1997, versus $8.2 million for the six months ended March
31, 1996, an increase of $8.3 million or 102%. Of this increase, $6.4
million is attributable to revenues from GIS.
Wages and benefits expenses increased to $14.5 million for the six months
ended March 31, 1997 from $11.6 million for the six months ended March 31,
1996, an increase of 25%. The increased expenses reflect the net addition
of 123 employees as a result of the Company's continued expansion of
business volume, strengthening of its infrastructure and 1996 acquisition
of GIS.
Services and supplies expenses increased to $3.8 million for the six months
ended March 31, 1997 from $3.0 million for the six months ended March 31,
1996, an increase of 27%. Services and supplies generally consist of
outsourced data entry services, general supplies, contract labor and costs
related to the use of outside consultants. This increase resulted
principally from outsourcing of technical support and the use of outside
consultants to improve productivity and to re-engineer certain work flow.
Rents, leases and maintenance expenses increased to $9.2 million for the
six months ended March 31, 1997 from $8.0 million for the six months ended
March 31, 1996, an increase of 14%. The increase was primarily attributable
to leasing computers, computer peripheral hardware, additional software,
and facility rent to house our print operation and new employees. A portion
of this increase was due to the acquisition of GIS and its existing
computer, computer peripheral hardware, software and facility rent.
-7-
<PAGE>
Depreciation and amortization expenses increased to $1.9 million for the
six months ended March 31, 1997 from $0.7 million for the six months ended
March 31, 1996, an increase of 159%. The increase was primarily
attributable to continued investment in technology, including the upgrade
of the Company's mainframe computer and the conversion of the lease for
certain computer equipment from an operating lease to a capital lease. In
addition, the acquisition of GIS in the fourth quarter of fiscal year 1996
has created goodwill in excess of $18 million that will be amortized over
40 years.
Other operating expenses increased to $3.9 million for the six months ended
March 31, 1997 from $3.4 million for the six months ended March 31, 1996,
an increase of 16%. The increase was primarily attributable to variable
costs relating to several customer contracts.
Research and development costs representing primarily wages and benefits
for information technology staff increased to $1.6 million for the six
months ended March 31, 1997 from $1.3 million for the six months ended
March 31, 1996, an increase of 26%. The Company's research and development
expenses relate primarily to new product development activities.
Income taxes increased to $2.9 million for the six months ended March 31,
1997 from $2.6 million for the six months ended March 31, 1996. The
Company's effective tax rate was 38% for the six months ended March 31,
1997 and 40% for the six months ended March 31, 1996.
Liquidity and Capital Resources
-------------------------------
The Company's working capital decreased to $43.0 million as of March 31,
1997 from $46.1 million as of September 30, 1996. The decrease was
primarily due to capital expenditures, including capitalized software cost,
and payment for Strategic Decision Services of $1.3 million. The Company's
investment policy is to invest in marketable, investment-grade debt
instruments of the U.S. Government or tax-free municipal bonds. The
Company's investments typically have maturities of three years or less. The
Company historically limits its concentration of investments in individual
municipalities to $500,000 or less. These tax-free municipal bonds are
backed by U.S. Treasuries or insured by a major municipal insurer
(principal and interest). As of March 31, 1997, the Company's net accounts
receivable were $19.6 million, a decrease of 7% over the previous fiscal
year end.
The Company has available a $2.0 million revolving credit facility. There
are no outstanding borrowings under this credit facility. Borrowings under
a $12.0 million real estate loan are being repaid over a ten year period
with interest at 8.5%. Maximum borrowings during the three months ended
March 31, 1997 under these credit facilities were $10.8 million. The
Company entered into a loan at the time of the formation of the Company's
Employee Stock Ownership Plan, which currently has an outstanding balance
of $4.2 million. Borrowings under this ESOP loan are being repaid through
December 31, 1998 with interest at 9.3% on the fixed rate portion of the
loan ($3.3 million at March 31, 1997) and at 80% of the lender's prime rate
for the floating rate portion of the loan ($0.9 million at March 31, 1997),
currently 6.8%.
Effective July 1, 1996, the Company purchased all of the outstanding
capital stock of GIS for $16.1 million in cash, guaranteed deferred
payments totaling $1,000,000, common stock warrants to purchase 180,000
shares of the Company's Common stock at $16.51 per share and certain
contingent payments. The company has recorded $18.3 million of goodwill
that will be amortized over a 40 years period using the straight-line
method for financial reporting purposes.
-8-
<PAGE>
Effective February 3, 1997, the Company purchased all of the assets of
Credit Strategy Management, Inc., now known as Strategic Decision Services
(SDS), for approximately $1.4 million. Approximately $1.3 million of the
purchase price has been recorded as goodwill with the remainder
representing the fair value of assets acquired. Goodwill is being amortized
using a 40 year life for financial reporting purposes.
-9-
<PAGE>
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.1 Employment Agreement, dated January 15, 1997, between the
Company and Eric M. Loughmiller.
10.2 Employment Agreement, dated April 25, 1997, between the
Company and Peter I. Mason.
10.3 Amendment No. 4 to the May & Speh, Inc. Employee Stock
Ownership Plan.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed by the Company during the period
covered by this report.
-10-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
May & Speh, Inc.
Date: May 14, 1997 By: /s/ Eric M. Loughmiller
Eric M. Loughmiller
Executive Vice President, Chief Financial
Officer
-11-
<PAGE>
Exhibit 10.1
May & Speh, Inc.
Employment Agreement
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on January 15,
1997, by and between May & Speh, Inc., a Delaware corporation (the "Company"),
and Eric Loughmiller ("Executive").
RECITALS
A. The Company is in the business of providing computer-based information
management and data base services, direct marketing services, and data
processing outsourcing services to customers.
B. Each of the Company and Executive believe that Executive has the
knowledge, skills and experience to provide significant value to the Company in
the position of Chief Financial Officer.
C. The Company desires to obtain the benefit of Executive's knowledge,
skills and experience and assure itself of the ongoing right to Executive's
services according to the terms and conditions set forth in this Agreement.
D. Executive is willing and able to render services to the Company
according to the terms and conditions set forth in this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the recitals and the mutual covenants
contained in this Agreement, the Company and Executive agree as follows:
1. Employment.
(a) Employment. The Company hereby employs Executive and Executive
hereby accepts employment by the Company, subject to the terms and conditions
set forth in this Agreement.
(b) Employment Term. The term of Executive's employment under this
Agreement will begin effective as of January 15, 1997 (the "Effective Date"),
and end on January 15, 2002 or such earlier date as Executive's employment
terminates under Section 3 of this Agreement (the "Employment Term").
(c) Title and Duties. Executive's title will be Executive Vice
President and Chief Financial Officer. Executive will report to the Company's
Chief Executive Officer, or such other officer as the Board of Directors may
direct. Executive will have such powers and perform such duties as are normally
incident to the position of Chief Financial Officer as provided in the
<PAGE>
Company's by-laws and in accordance with applicable law. Executive will
discharge his duties subject to and in observance of such reasonable rules,
regulations, policies, directions and restrictions as may be established from
time to time by the Company.
(d) Performance. Throughout the Employment Term, Executive shall
devote substantially his full business time, attention, knowledge and skills,
faithfully, diligently and to the best of his ability, to the active performance
of his duties and responsibilities hereunder, and do such travelling as may
reasonably be required in connection with the performance of such duties and
responsibilities.
2. Compensation and Related Matters.
(a) Base Salary. For services rendered by Executive to the Company
during the Employment Term the Company will pay Executive an annual base salary
equal to $200,000 (the "Base Salary"), payable in periodic installments every
other week, less income tax withholdings and other normal employee deductions.
The Base Salary shall not be decreased during the Employment Term but may, at
the sole discretion of the Company, from time to time be increased by an amount
which the Company deems appropriate.
(b) Bonus. For each fiscal year during the Employment Term, the
Company will set a target bonus for Executive of at least $100,000. The amount
of the bonus actually paid, if any, will be determined by the Company based upon
Executive's performance and the achievement of the Company's financial
objectives; provided, however, that in any event the Company will pay to
Executive a bonus of not less than $50,000 for fiscal year 1997.
(c) Stock Options. On the Effective Date, the Executive will be
granted an option pursuant to the Company's 1994 Executive Stock Option Plan
(the "Stock Option Plan") to purchase 200,000 shares of the Company's common
stock (the "Stock Option"). The per share exercise price of the Stock Option
will be the Fair Market Value (as defined in the Stock Option Plan), determined
as of the day before the Effective Date, of a share of the Company's common
stock. Subject to the terms of the Stock Option Plan and the form of Non-
Qualified Stock Option Agreement attached to this Agreement as Exhibit A, the
Stock Option will vest and become exercisable annually over a period of five
years in annual installments according to the following schedule:
First installment: 25,000 shares on January 15, 1998
Second installment: 25,000 shares on January 15, 1999
Third installment: 25,000 shares on January 15, 2000
Fourth installment: 50,000 shares on January 15, 2001
Fifth installment: 75,000 shares on January 15, 2002
(d) Vacation. Throughout the Employment Term, Executive will be
entitled to take, at such times as are mutually convenient to Executive and the
Company, paid vacation days
2
<PAGE>
in accordance with the Company's policy; provided, however, that during the
first year of the Employment Term Executive will be entitled to take no fewer
than three weeks of paid vacation.
(e) One-time Club Allowance. As compensation for the loss by
Executive of a perquisite granted by his prior employer, the Company shall
reimburse Executive to the extent of $37,000 for dues and related charges
previously paid by Executive to Glen Oak Country Club. Executive acknowledges
that the Company has satisfied its reimbursement obligation.
(f) Fringe Benefits. The Company shall make available to Executive,
throughout the Employment Term, such benefits and perquisites as are generally
provided by the Company to its executive employees. Executive shall be eligible
to participate in and receive coverage and benefits under all group insurance,
stock ownership and other employee benefit plans, programs and arrangements of
the Company which are now or hereafter adopted by the Company for the benefit of
its senior executive employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans, programs and
arrangements.
(g) Business Expenses. The Company shall reimburse Executive for the
reasonable and necessary business expenses incurred by Executive in connection
with the performance of his employment duties during the Employment Term. Such
expenses shall include, but are not limited to, all expenses of travel and
living expenses while away from home on business or at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by the Company.
3. Termination.
(a) For Cause. The Employment Term may be terminated at any time at
the option of the Company for "Cause," as defined in this subsection (a),
effective upon Notice of Termination, as defined in subsection (f), to
Executive. As used in this Agreement, the term "Cause" means: (i) Executive's
conviction of, or plea of nolo contendere to, a felony; (ii) Executive's breach
of any legal duty of loyalty to the Company, misappropriation of the Company's
funds, or dishonest, fraudulent, illegal or unethical business conduct; (iii)
Executive's failure to satisfactorily perform his duties under section 1 of this
Agreement or failure to comply with reasonable rules, regulations, policies,
directions and restrictions as may be established from time to time by the
Board, which failure continues after notice from the Company and a reasonable
cure period; (iv) Executive's breach of the obligations provided in sections 5,
6, and 7 of this Agreement; (v) Executive's illegal use of controlled
substances, (vi) any material breach of this Agreement by the Executive (other
than one identified above) which shall continue after notice from the Company
and a reasonable cure period. Termination for Cause shall be effective
immediately for those events described in subparagraphs (i), (ii), (iv), and
(v). Termination for Cause shall be effective immediately upon the giving of
notice by the Company to Executive of the continuance of Executive's failure to
perform or comply with respect to the items described in subparagraph (iii)
above or the continuance of a breach described in subparagraph (vi) above. In
the event that the Executive is purportedly terminated for cause and a court,
arbitrator, or other tribunal having jurisdiction determines that
3
<PAGE>
Cause was not present, then such purported termination for Cause shall be deemed
a termination without Cause pursuant to section 3(d) and Executive's rights and
remedies will be governed by section 4(b) hereof, in full satisfaction and in
lieu of any and all other or further remedies the Executive may have.
(b) Without Cause. The Company may terminate the Executive without
Cause and for any reason effective upon Notice of Termination to the Executive
or such later date as may be specified in such notice.
(c) Death. The Employment Term shall terminate automatically
effective upon the death of Executive.
(d) Disability. The Employment Term shall terminate automatically
effective upon Notice of Termination to Executive (or such later date as may be
specified in such notice) following a determination by the Board of Directors
that the Executive is unable to perform the essential functions of his
employment position due to a disability of Executive that cannot be reasonably
accommodated by the Company.
(e) Termination by Executive. Executive may terminate the Employment
Term upon Notice of Termination to the Company delivered at least 60 days before
the effective date of termination.
(f) Notice of Termination. Any termination of the Employment Term by
the Company or by Executive (other than termination upon Executive's death)
shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employment Term under the
section so indicated.
(g) Termination Disputes. If, within 30 days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding and final arbitration
award or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected).
4. Compensation upon Termination or During Disability.
(a) Compensation Upon Termination For Cause or Voluntary Termination
by Executive. If the Employment Term is terminated by the Company for Cause
under section 3(a) of this Agreement, or if the Employment Term is terminated by
the Executive under section 3(e) of this Agreement, the Company shall have no
further liability under this Agreement except to pay Executive (i) the value of
any accrued salary or other compensation due to Executive as of the
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effective date of such termination, and (ii) any benefit payable under the
employee benefit plans, programs and arrangements of the Company in which
Executive is a participant on the date of delivery of the Notice of Termination.
(b) Compensation Upon Termination Without Cause.
(i) No Change of Control. If the Employment Term is terminated
by the Company without Cause (other than because of death or disability) under
section 3(b) and there has not been a Change in Control (as defined in the Stock
Option Plan), the Company shall pay Executive (A) the value of any accrued
salary or other compensation due to Executive as of the effective date of such
termination, (B) any benefit payable under the employee benefit plans, programs
and arrangements of the Company in which Executive is a participant on the date
of delivery of Notice of Termination, and (C) severance pay in an amount equal
to the unpaid portion of the Base Salary then in effect for the remainder of the
fiscal year in which the Employment Term is terminated, payable in installments
every other week less required deductions in accordance with the terms of
section 2(a) above; provided, however, that in no event will Executive receive
severance pay in an amount less than one-quarter of the annual Base Salary then
in effect (i.e. three months severance pay).
(ii) Upon Change in Control. If, in contemplation of or
following a Change in Control (as defined in the Stock Option Plan), the
Employment Term is terminated by the Company without Cause (other than because
of death or disability) under section 3(b), the Company shall pay Executive (A)
the compensation and benefits provided in section 4(b)(i)(A) and (B) above, and
(B) severance pay in an amount equal to the difference between the aggregate
Base Salary (as then in effect) that Executive would have been paid had he
continued to be employed by the Company through July 15, 1999, payable as
provided in section 4(b)(i), minus the aggregate Fair Market Value (as defined
in the Stock Option Plan) of the vested but unexercised shares subject to the
Stock Option, as determined on the date of the Notice of Termination; provided,
however, that in no event will Executive receive severance pay in an amount less
than one-quarter of the annual Base Salary then in effect for the fiscal year in
which the Employment Term is terminated (i.e. three months severance pay).
(c) Compensation Upon Death. If the Employment Term is terminated by
the death of the Executive, the Company shall have no further liability under
this Agreement except to pay Executive (i) the value of any accrued salary, or
other compensation due to Executive as of the date of the Executive's death, and
(ii) any benefit payable under all employee benefit plans, programs and
arrangements of the Company in which Executive is a participant on the date of
his death.
(d) Compensation Upon Disability. If the Employment Term is
terminated by the Company under section 3(d) of this Agreement due to
Executive's disability, the Company shall have no further liability under this
Agreement except to pay Executive (i) the value of any accrued salary or other
compensation due to Executive as of the effective date of such termination, and
(ii) any benefit payable under the employee benefit plans, programs and
arrangements of the Company
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in which Executive is a participant on the date of delivery of the Notice of
Termination, provided, however, that in the event Executive is paid disability
benefits under any disability benefit plan of the Company in which he
participates, any salary payments made to Executive during such period shall be
reduced by the sum of such amounts.
5. Confidential Information.
(a) Disclosure and Use. Executive shall not disclose or use at any
time, either during or after Executive's employment with the Company or any
other direct or indirect subsidiary of the Company (collectively referred to
herein as the "Company"), any trade secrets or other confidential information,
whether patentable or not, of the Company, including but not limited to,
technical or non-technical data, a formula, pattern, compilation, program,
device, method, technique, drawing, process, financial data, or list of actual
or potential customers or suppliers, of which Executive is or becomes informed
or aware during his employment, whether or not developed by Executive, except
(i) as may be required for Executive to perform his employment duties with the
Company; (ii) to the extent such information has been disclosed to Executive by
a third party who is not subject to restriction on the dissemination of such
information or becomes generally available to the public other than as a result
of a disclosure by a party who is not subject to restriction on the
dissemination of such information; (iii) information which must be disclosed as
a result of a subpoena or other legal process, after the Company has had the
opportunity to request a suitable protective order for such information, or (iv)
unless Executive shall first secure the Company's prior written authorization.
This covenant shall survive the termination of Executive's employment with the
Company, and shall remain in effect and be enforceable against Executive for so
long as any such Company secret or confidential information retains economic
value, whether actual or potential, from not being generally known to other
persons who can obtain economic value from its disclosure or use. Executive
shall execute such reasonable further agreements of Executive's obligations to
the Company concerning non-disclosure of Company trade secrets and confidential
information as the Company may require from time to time.
(b) Return of Materials. Upon termination of the Employment Term,
Executive (or in the event of termination due to Executive's death, his estate
or devisee, legatee or other designee, as applicable) shall promptly deliver to
the Company all assets of the Company, including materials of a secret or
confidential nature relating to the Company's business, which are in the
possession or under the control of Executive.
6. Inventions and Discoveries. Executive hereby assigns to the Company
all of his rights, title and interest in and to all inventions, discoveries,
processes, designs and other intellectual property (hereinafter referred to
collectively as the "Inventions"), and all improvements on existing Inventions
made or discovered by Executive during the Employment Term. Promptly upon the
development or making of any such Invention or improvement thereon, Executive
shall disclose the same to the Company and shall execute and deliver to the
Company such reasonable documents as the Company may request to confirm the
assignment of Executive's
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rights therein and, if requested by the Company, shall assist the Company in
applying for and prosecuting any patents which may be available in respect
thereof. The Company acknowledges and hereby notifies Executive that this
section 6 does not apply to an Invention for which no equipment, supplies,
facility or trade secret information of the Company was used and which was
developed entirely on Executive's own time, unless (a) the Invention relates to
(i) the business of the Company, or (ii) the Company's actual or demonstrably
anticipated research or development, or (b) the Invention results from any work
performed by Executive for the Company.
7. Restrictive Covenants.
(a) Restriction on Competition During Employment Term. During the
Employment Term, Executive shall not, without the prior written authorization of
the Board of Directors of the Company, directly or indirectly render services of
a business, professional or commercial nature (whether for compensation or
otherwise) to any person or entity competitive or adverse to the Company's
business welfare or engage in any activity whether alone, as a partner, or as an
officer, director, employee, consultant, independent contractor, or stockholder
in any other corporation, person, or entity which is competitive with or adverse
to the Company's business welfare. This section 7(a) shall not, however,
prohibit Executive from investing in the publicly traded securities issued by
any such competitive or adverse corporation, provided the holdings thereof by
Executive do not constitute more that two percent of any one class of such
securities.
(b) Restriction on Employee Solicitation Following Termination.
During the two-year period following the Employment Term, Executive shall not
employ or attempt to employ or assist anyone else to employ any person who is at
such time, or at any time during the preceding year was, an employee of or
consultant to the Company, provided that this clause shall not restrict
Executive from employing a third party vendor who supplies generic services to
the industry. As used in this section 7, the verb "employ" shall include its
variations, for example, retain, engage or conduct business with; the term the
"Company" shall include subsidiaries or affiliates, if any, of the Company.
(c) Acknowledgment. The parties acknowledge that the time, scope, and
other provisions of this Agreement have been specifically negotiated by the
parties and agree that all such provisions are reasonable under the
circumstances and are given as an integral and essential part of Executive's
employment hereunder. In the event that any covenant contained in this
Agreement is determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too great a period of time or by
reason of its being too extensive in any other respect, it shall be interpreted
to extend only over the maximum period of time for which it may be enforceable
and to the maximum intent in all other respects as to which it may be
enforceable, all as determined by such court in such action.
8. Severability. If any provision of this Agreement is held invalid or
unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall thereupon be deemed (i) modified
only to the extent necessary to render it valid, or (ii) not
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applicable to given circumstances, or (iii) excised from this Agreement, as the
situation may require, and this Agreement shall be construed and enforced as if
such provision had been included herein as so modified in scope or application,
or had not been included herein, as the case may be.
9. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement, or the breach of this Agreement, shall be settled by
arbitration in Chicago, Illinois, by JAMS/Endispute pursuant to JAMS/Endispute's
Arbitration Rules. The decision of the arbitrator shall be final and binding
upon both parties hereto. Judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof.
10. Enforcement. Executive hereby acknowledges that the Company would
suffer irreparable injury if the provisions of sections 5, 6, and 7 herein,
which shall survive the termination of this Agreement, were breached and that
the Company's remedies at law would be inadequate in the event of such breach or
threatened breach. Accordingly, Executive hereby agrees that any such breach or
threatened breach may, in addition to any and all other available remedies
(including those remedies provided in section 9), be preliminarily and
permanently enjoined in a court of law or equity by the Company without bond.
11. Legal Fees and Expenses. In the event of litigation under this
Agreement, both the Company and Executive shall pay their own attorneys' fees
and other legal expenses; provided, however, that (i) Executive shall pay the
reasonable attorneys' fees and legal expenses of the Company in connection with
an evidentiary hearing where Executive is enjoined either preliminarily or
permanently due to his breach or threatened breach of any provision of this
Agreement, and (ii) the Company shall pay Executive's reasonable attorneys' fees
and legal expenses in connection with an evidentiary hearing which results in a
court refusing to issue a preliminary or permanent injunction against Executive
due to his breach or threatened breach of any provision of this Agreement.
12. General Provisions.
(a) Notices. Any notice, request, demand or other communication
required or permitted to be given hereunder shall be in writing and personally
delivered or sent by registered or certified mail, return receipt requested, or
by a facsimile, telegram or telex followed by a confirmation letter sent by
registered or certified mail, return receipt requested, addressed as follows:
To the Company: May & Speh, Inc.
1501 Opus Place
Downers Grove, Illinois 60515
Attention: President
Fax: (630) 964-1747
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with a copy to: Peter I. Mason
Freeborn & Peters
311 South Wacker Drive
Suite 3000
Chicago, Illinois 60606
Fax: (312) 360-6573
To Executive: Mr. Eric Loughmiller
902 Canyon Run Road
Naperville, Illinois 60565
Either the Company or Executive may, at any time, by notice to the other,
designate another address for service of notice on such party. When the letter,
facsimile, telegram or telex is dispatched as provided for above, the notice
shall be deemed to be made when the addressee receives the letter, facsimile,
telegram or telex, or within three days after it is sent, whichever is earlier.
(b) Amendments. Neither this Agreement nor any of the terms or
conditions hereof may be waived, amended or modified except by means of a
written instrument duly executed by the party to be charged therewith.
(c) Captions and Headings. The captions and section headings used in
this Agreement are for convenience of reference only, and shall not affect the
construction or interpretation of this Agreement or any of the provisions
hereof.
(d) Governing Law. This Agreement, and all matters or disputes
relating to the validity, construction, performance or enforcement hereof, shall
be governed, construed and controlled by and under the laws of the State of
Illinois without regard to principles of conflicts of law.
(e) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original hereof, but all of
which together shall constitute one and the same instrument.
(g) Entire Agreement. Except as otherwise set forth or referred to in
this Agreement, this Agreement constitutes the sole and entire agreement and
understanding between the
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parties hereto as to the subject matter hereof, and supersedes all prior
discussions, agreements and understandings of every kind and nature between them
as to such subject matter.
(h) Reliance by Third Parties. This Agreement is intended for the
sole and exclusive benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns, and no other person or entity shall have any right to rely on this
Agreement or to claim or derive any benefit therefrom absent the express written
consent of the party to be charged with such reliance or benefit.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
May & Speh, Inc.
By: /s/ Lawrence J. Speh
---------------------------------------
Lawrence J. Speh, President
/s/ Eric Loughmiller
------------------------------------------
Eric Loughmiller
#71472v.2
[Signature Page to Employment Agreement]
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Exhibit 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), entered into this 25th day of
April, 1997, between May & Speh, Inc., a Delaware corporation (the "Company")
and Peter I. Mason ("Executive").
WITNESSETH:
A. The Company desires to obtain the benefits of Executive's knowledge,
skill, and experience by employing Executive upon the terms and subject to the
conditions of this Agreement.
B. Executive desires to be employed by the Company upon the terms and
subject to the conditions of this Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and Executive hereby
covenant and agree as follows:
1. Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings, and all other capitalized
terms used in this Agreement but not defined in this paragraph 1 shall have the
meanings assigned elsewhere in this Agreement:
"Base Amount" means $400,000.
"Cause" has the meaning assigned in paragraph 5(a).
"Change in Control" has the meaning assigned in paragraph 6(f).
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"Compensation Committee" means the applicable compensation committee of the
Board of Directors of the Company.
"Disabled" or "Disability" has the meaning assigned in paragraph 5(c).
"Employment Period" has the meaning assigned in paragraph 2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any successor thereto.
<PAGE>
"Executive Plan" means the Amended and Restated 1994 Executive Stock Option
Plan of May & Speh, Inc.
"Good Reason" has the meaning assigned in paragraph 6(e).
"Initial Consulting Period" has the meaning assigned in paragraph 3(a).
"Notice of Termination" means a written notice of either the Company or
Executive, as applicable, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination.
"Option Agreements" has the meaning assigned to it in paragraph 16.
"Termination Date" has the meaning assigned in the initial paragraph of
paragraph 5.
2. Employment Period. The Company shall employ Executive, and Executive
shall be employed by the Company and shall provide services to the Company for
the period beginning on the date hereof, and continuing for a period of five
years from the date that he becomes President and Chief Operating Officer
pursuant to paragraph 3(b) (whereby each year is comprised of 12 complete,
consecutive months) (the "Employment Period") or such earlier date on which
Executive's employment is terminated in accordance with paragraph 5 below;
provided, however, that after expiration of the initial Employment Period, the
Employment Period shall automatically be extended or re-extended for successive
one year periods unless the Company or Executive delivers a notice specifying
such party's intent not to extend or re-extend the Employment Period at least
ninety (90) days prior to an extension or re-extension date.
3. Performance of Duties.
(a) From the date hereof until the later of (i) May 19, 1997 and (ii)
that date that Executive's employment shall not conflict with his existing
obligations (the "Initial Consulting Period"), Executive shall serve as a
consultant to the Company, providing such services that he can provide as
are consistent with his existing obligations.
(b) Commencing on the day after termination of the Initial Consulting
Period through and including September 30, 1997, Executive's title shall be
President and Chief Operating Officer of the Company, and he shall possess
such powers and perform such duties as are normally incident to such
positions, as provided in the By-laws of the Company and in accordance with
the General Corporation Law of the State of Delaware. During this period,
(i) Executive shall report only to the Chief Executive Officer of the
Company and the Board of Directors of the Company, (ii) the Chief Financial
Officer of the Company shall report jointly to the Chief Executive Officer
and the President and Chief Operating Officer, and (iii) all other
employees of the Company shall report to the President and Chief Operating
Officer.
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(c) Commencing October 1, 1997 without further action by the Company,
Executive shall become President and Chief Executive Officer of the
Company, and he shall possess such powers and perform such duties as are
normally incident to such positions, as provided in the By-laws of the
Company and in accordance with the General Corporation Law of the State of
Delaware. During this period, Executive agrees that he shall perform his
duties faithfully and efficiently subject to the direction of the Board of
Directors of the Company, and the Company agrees that Executive shall be
required to report only to the Board of Directors.
(d) Executive agrees that during the Employment Period he shall devote
substantially his full business time to the business affairs of the
Company, provided, however, that notwithstanding any other provision
hereof, the parties acknowledge that Executive may engage in other business
activities, including but not limited to attending to his personal
investment activities and serving as a member of the board of directors of
public, private, and not-for-profit companies, to the extent that such
activities do not interfere with the performance of his duties hereunder,
and that Executive shall be entitled to retain all compensation (whether in
the form of cash, equity securities or perquisites) paid or delivered to
Executive in connection with such activities. Executive agrees that
Executive shall not, without the prior consent of the Board of Directors of
the Company (which consent shall not be unreasonably withheld), agree to
serve on any boards of directors other than the boards of directors upon
which Executive presently serves.
4. Compensation. For services rendered by Executive after the Initial
Consulting Period, and upon the condition that Executive fully and faithfully
perform all of his duties and obligations set forth herein, Executive shall be
compensated for his services as follows:
(a) Subject to the following sentence, Executive shall receive an annual
salary, payable in monthly or more frequent installments, in an amount
equal to the Base Amount, less income tax withholdings and other
normal employee deductions. Executive agrees that for the period
commencing on the day after termination of the Initial Consulting
Period and ending on September 30, 1997, his compensation shall be
paid at the rate of $350,000 per annum. The Base Amount shall be
reviewed annually as of the end of each fiscal year commencing
September 30, 1997 by the Compensation Committee, and may, at the sole
discretion of the Compensation Committee, be increased by an amount
that it deems appropriate. If the Base Amount is increased by the
Compensation Committee, it shall not be decreased thereafter during
the Employment Period.
(b) Executive shall receive bonus payments in accordance with any
arrangements or bonus plans established by the Company for its senior
executive officers, in such amounts and upon such terms as are
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determined by the Compensation Committee pursuant to such plans.
Notwithstanding the foregoing, the Company agrees that Executive will
be eligible for a potential bonus for the fiscal year ending September
30, 1997 of $125,000, such bonus to be determined by the Compensation
Committee in its discretion.
(c) Executive shall be a participant, to the extent he meets all
eligibility requirements of general application, in any and all plans,
programs and arrangements maintained by the Company to provide
benefits for its employees, including, but not limited to, medical and
hospitalization, group term life insurance, disability, profit
sharing, employee stock ownership and retirement plans. The Company
shall not make any changes in such plans, programs and arrangements
which would adversely affect Executive's rights or benefits
thereunder, unless such change occurs pursuant to a plan, program or
arrangement applicable to all senior executive employees of the
Company and does not result in a proportionately greater reduction in
the rights of or benefits to Executive as compared with any other
senior executive employee of the Company.
(d) Without limiting the generality of paragraph 4(c), upon presentation
of appropriate premium notices, the Company shall pay, or reimburse
Executive for, the premiums of one or more term life insurance
policies on Executive's life in an aggregate amount not to exceed
$2,000,000, provided that the maximum premium(s) payable by the
Company under this paragraph 4(d) shall not exceed $5,000. Executive
shall be the owner of such policy or policies and shall have the sole
right to designate the beneficiaries of such policy or policies.
Executive agrees to comply with reasonable requests of the Company in
connection with the Company's attempts to obtain, maintain, replace or
renew one or more insurance policies on the life of Executive, of
which the Company would be the owner and have the right to designate
the beneficiaries of such policies; provided that the Company's
attempts to obtain, maintain replace or renew such policies do not
interfere with Executive's attempts to obtain, maintain, replace or
renew the policies referred to above.
(e) Without limiting the generality of paragraph 4(c), the Company will
reimburse Executive for the annual premiums for Executive's existing
long-term disability insurance policies (which policies provide an
aggregate benefit of $14,501 per month) or any comparable replacement
policy obtained by Executive.
(f) Executive shall be entitled to reasonable vacations.
(g) Executive shall be entitled to be reimbursed for the dues, assessments
and expenses attendant to (i) his membership in the Young Presidents
Organization, and (ii) his membership in the Chicago Club.
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(h) Executive shall be entitled to a dedicated secretary selected by
Executive and retained as an employee of the Company (at Company
expense).
(i) Executive shall be entitled to such perquisites as may be customarily
granted by the Company to its senior executives.
(j) The Company shall reimburse Executive for the reasonable and necessary
business expenses incurred by him in connection with the performance
of his duties and obligations as set forth herein. Reimbursement
shall be made upon the presentation by Executive to the Company of
reasonably detailed statements of such expenses.
Payment of the Base Amount shall not in any way limit or reduce any other
obligation of the Company pursuant to this Agreement, and no other compensation,
benefit, or payment hereunder shall in any way limit or reduce the obligation of
the Company to pay Executive's Base Amount, except that, for the period
commencing on the date Executive becomes Disabled and ending on the Termination
Date, the Base Amount shall be reduced by any amounts that are payable to
Executive prior to or during such period under any disability benefit plan of
the Company in which Executive participates.
5. Termination. Executive's employment hereunder shall terminate at the
end of the Employment Period. In addition, the Employment Period may be
terminated at any time as provided in this paragraph 5, and, subject to the last
paragraph of this paragraph 5, the applicable effective date of termination as
expressed herein shall be referred to as the "Termination Date."
(a) Cause. The Employment Period may be terminated at the option of
the Company for "Cause" (as such term is hereinafter defined), effective
upon the date stated in the Notice of Termination to Executive. As used
herein, the term "Cause" shall mean and be limited to:
(i) Executive's conviction of (or plea of no contest or similar
plea to) a felony; or
(ii) Executive's intentional continuing refusal to substantially
perform his obligations under this Agreement (except by reason of
incapacity due to illness or accident) if he (a) shall have failed to
remedy the alleged breach caused by such conduct within 30 days from
the date written notice is given by the Secretary of the Company
demanding that he remedy the alleged breach caused by such conduct, or
(b) shall have failed to take reasonable steps in good faith to that
end during such 30-day period, provided that, with respect to this
paragraph 5(a)(ii), after the end of such 30-day period there shall
have been delivered to Executive a certified copy of a resolution of
the Board of Directors of the Company, adopted by the affirmative vote
of not less than two-thirds of the members of the Board of Directors,
taken at a meeting of the Board of Directors at
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which Executive, together with his counsel, is given the opportunity
to be heard (hereafter, a "Supermajority Vote"), finding that
Executive was guilty of conduct set forth in this paragraph 5(a)(ii)
and specifying the details thereof, and that Executive has failed to
take reasonable steps in good faith to remedy the alleged breach
caused by such conduct, or
(iii) upon a finding by a Supermajority Vote that Executive
engaged in willful fraud or defalcation, either of which involved
funds or other assets of the Company.
(b) Death. The Employment Period shall terminate automatically
effective upon the death of Executive.
(c) Disability. In the event Executive becomes Disabled (as such term
is hereinafter defined) during the Employment Period, and the Company is
unable to make a reasonable accommodation which would enable Executive to
continue to perform the essential functions of his employment position with
the Company, the Employment Period may be terminated at the option of
Executive or the Company effective 30 days after a Notice of Termination is
given (provided that Executive shall not have returned to the performance
of his duties on a full-time basis during such 30-day period). "Disabled"
or "Disability" means a determination, made at the request of Executive or
upon the reasonable request of the Company set forth in a notice to
Executive, by an independent competent medical authority that Executive is
unable to perform his duties as specified in this Agreement and in all
reasonable medical likelihood such inability will continue for a period in
excess of 180 days. Unless otherwise agreed by Executive and the Board of
Directors, the independent medical authority shall be selected by Executive
and the Company each selecting a board certified licensed physician and the
two physicians selected shall designate an independent medical authority,
whose determination that Executive is Disabled shall be binding upon the
Company and Executive.
(d) Voluntary Resignation. Executive may resign his employment at any
time, effective upon Notice of Termination (which shall state whether such
resignation is with Good Reason) given by Executive to the Company.
(e) Termination without Cause by the Company. The Company may
terminate Executive's employment at any time, effective upon Notice of
Termination (which shall state that such termination is without Cause)
given by the Company to Executive.
If, within 30 days after any Notice of Termination for Cause is given by the
Company, Executive notifies the Company that a dispute exists concerning the
termination, then the Termination Date shall be the date (the "Final
Determination") as determined either by mutual written agreement of the parties,
by a binding and final arbitration award or by a final judgment, order or decree
of a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
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Notwithstanding the foregoing, the Company shall not be prohibited from removing
Executive from his position with the Company pending the Final Determination
provided that such removal is without prejudice to Executive's rights to receive
all benefits from the Company to which he may be entitled upon the Final
Determination.
6. Separation Benefits. Executive shall be entitled to receive
separation benefits upon such events and in such amounts as are set forth in
this paragraph 6.
(a) Termination Without Cause or for Good Reason. In the event that
Executive's employment with the Company is terminated at any time during
the Employment Period by the Company without Cause, or by Executive for
"Good Reason" (as such term is hereafter defined in paragraph 6(e) below),
then Executive (or if he shall have died after termination but prior to
payment, his surviving spouse, or if he leaves no spouse, his personal
representative, as successor in interest) shall be paid by the Company an
amount equal to the product of Executive's Base Amount in effect as of the
Date of Termination, multiplied by three, payable in cash in a lump sum on
or before the fifteenth day following the Date of Termination.
(b) Termination Upon Death. If the Employment Period is terminated by
Executive's death, the Company shall pay Executive's surviving spouse, or
if he leaves no spouse, his personal representative, as successor in
interest, (i) an amount equal to the then current Base Amount (paid in one
lump sum payment on or before the fifteenth day following the date of
Executive's death, and (ii) any death benefit payable under any employee
benefit plans, programs and arrangements of the Company in which Executive
is a participant on the date of his death.
(c) Termination Upon Disability. If the Employment Period is
terminated in accordance with the terms of paragraph 5(c) because of
Executive's Disability, the Company shall pay to Executive (or in the event
of Executive's death after a finding of Disability, his surviving spouse,
or if he leaves no spouse, his personal representative, as successor in
interest) all compensation and benefits specified under paragraph 4 herein,
for a period of one year from the Date of Termination, payable in the same
manner as if the Employment Period had not been terminated.
(d) Additional Separation Benefit. For a period of three years
following (i) the full completion of the Employment Period or (ii)
following the Date of Termination of the Employment Period for any reason
other than termination by the Company for Cause or termination by Executive
for other than Good Reason, the Company shall permit, at the Company's
expense, Executive, his spouse and dependents, as applicable (the "Benefit
Participants"), to participate in all group medical and health insurance
plans and employee benefit plans, programs and arrangements now or
hereafter made available to the senior executive employees of the Company
(the "Plans") (including but not limited to such Plans in which Executive
was entitled to participate immediately prior to the Date of
-7-
<PAGE>
Termination), in the same manner provided to its other senior executive
employees; provided, however, that this paragraph 6(d) shall not apply in
the event that (i) the Company shall hereafter terminate the applicable
Plan, or (ii) the participation of the Benefit Participants in such Plan is
prohibited by law or, if applicable, would disqualify such Plan as a tax
qualified plan pursuant to the Code, or (iii) the participation of the
Benefit Participants violates the general terms and provisions of such
applicable Plan. In the event that any of the Benefit Participants'
participation in such Plans is prohibited by law or, if applicable, would
disqualify the Plan as a tax qualified plan, or the participation of the
Benefit Participants violates the general terms and provisions of such
applicable Plan, the Company shall permit the Benefit Participants to
acquire substantially comparable coverage or benefits, at the Company's
expense, from a source of Executive's or his spouse's choosing, provided,
however, that if provision of such coverage or benefit would result in a
cost in excess of 130% of the cost to the Company if provided under a
Company Plan, the Company may satisfy its obligations under this paragraph
6(d) by contributing to the Benefit Participants 130% of the cost to the
Company under the Company Plans. Notwithstanding the foregoing, in no
event will the Benefit Participants receive from the Company the coverage
and benefits contemplated by this paragraph 6(d) if the Benefit
Participants receive such coverage and benefits from any other source.
(e) Good Reason Defined. For purposes of this Agreement, "Good
Reason" means:
(i) a Change in Control of the Company (as defined in paragraph
6(f) below);
(ii) a decrease in the total amount of Executive's Base Amount
below the amount in effect on the date hereof;
(iii) a reduction in Executive's title, a material reduction in
his duties or job responsibilities, or a material adverse change in his
working conditions (including the relocation of Executive's office more
than 40 miles from the Company's present executive offices), without
Executive's consent, as determined by Executive in his reasonable judgment;
(iv) a failure by the Company to comply with any material
provision of this Agreement or the Option Agreements if the Company shall
have failed to remedy the alleged breach within 30 days from the date
written notice is given by Executive demanding that the Company remedy the
alleged breach;
(v) any purported termination of Executive's employment which is
not effected pursuant to a proper Notice of Termination (and for purposes
of this Agreement no such purported termination shall be effective);
-8-
<PAGE>
(vi) Executive ceases to be a director of the Company for any
reason other than Executive's resignation from the Board of Directors or
Executive's refusal to stand for election as a director; or
(vii) modification without Executive's consent of the vesting
schedule, exercise period or number of shares subject to the options issued
to Executive pursuant to the Option Agreements.
(f) Change in Control Defined. For purposes of this Agreement, a
"Change in Control" shall be deemed to occur in the following situations:
(i) in the event any "person" (as such term is used in paragraphs
13(d) and 14(d) of the Exchange Act) or more than one such person acting as
a group, other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of the securities of the Company, in a transaction or a series
of transactions, representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities ordinarily having
the right to vote for the election of directors of the Company;
(ii) during any period of two consecutive years during the
Employment Period, individuals who at the beginning of the Employment
Period constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof, unless the election, or
the nomination for election by the Company's stockholders, of each director
who was not a director at the beginning of the Employment Period has been
approved in advance by directors representing at least two-thirds of the
directors then in office who were (A) directors at the beginning of the
Employment Period, or (B) previously approved in accordance with this
subparagraph (ii);
(iii) the Company sells or otherwise disposes of all or
substantially all of its assets; and
(iv) the Company participates in a merger or consolidation and,
immediately following the consummation of such merger or consolidation, the
Company's stockholders prior to such merger or consolidation do not own 50%
or more of the voting shares of stock of the surviving or successor
corporation.
(g) Excise Tax Gross-Up. If Executive becomes entitled to one or more
payments (with a "payment" including, but not limited to, the vesting of an
option or other non-cash benefit or property), whether pursuant to the
terms of this Agreement or any other plan, arrangement, or agreement with
the Company or any affiliated company (the "Total Payments"), which are or
become subject to the tax imposed by Section 4999 of the Code (or any
similar tax that may hereafter be imposed) (the "Excise Tax"), the Company
shall pay to Executive at the time specified below an additional amount
(the "Gross-Up Payment") (which
-9-
<PAGE>
shall include, but not be limited to, reimbursement for any penalties and
interest that may accrue in respect of such Excise Tax) such that the net
amount retained by Executive, after reduction for any Excise Tax (including
any penalties or interest thereon) on the Total Payments and any federal,
state and local income or employment tax and Excise Tax on the Gross-Up
Payment provided for by this subparagraph (g), but before reduction for any
federal, state, or local income or employment tax on the Total Payments,
shall be equal to the sum of (a) the Total Payments, and (b) an amount
equal to the product of any deductions disallowed to Executive for federal,
state, or local income tax purposes because of the inclusion of the Gross-
Up Payment in Executive's adjusted gross income multiplied by the highest
applicable marginal rate of federal, state, or local income taxation,
respectively, for the calendar year in which the Gross-Up Payment is to be
made.
For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax:
(i) The Total Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless, and except to the
extent that, in the written opinion of independent compensation consultants
or auditors of nationally recognized standing ("Independent Advisors")
selected by the Company and reasonably acceptable to Executive, the Total
Payments (in whole or in part) do not constitute parachute payments, or
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code or are otherwise not subject to the Excise
Tax;
(ii) The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Total Payments or (B) the total amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i) above); and
(iii) The value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Independent Advisors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed (A) to pay federal income taxes at the highest
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made; (B) to pay any applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such
state and
-10-
<PAGE>
local taxes if paid in such year (determined without regard to limitations
on deductions based upon the amount of Executive's adjusted gross income);
and (C) to have otherwise allowable deductions for federal, state, and
local income tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Payment in Executive's adjusted gross income. In
the event that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time the Gross-Up Payment is
made, Executive shall repay to the Company at the time that the amount of
such reduction in Excise Tax is finally determined (but, if previously paid
to the taxing authorities, not prior to the time the amount of such
reduction is refunded to Executive or otherwise realized as a benefit of
Executive) the portion of the Gross-Up Payment that would not have been
paid if such Excise Tax had been applied in initially calculating the
Gross-Up Payment, plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder
at the time the Gross-Up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any interest and penalties payable
with respect to such excess) at the time that the amount of such excess is
finally determined.
The Gross-Up Payment provided for above shall be paid on the 30th
day (or such earlier date as the Excise Tax becomes due and payable to the
taxing authorities) after it has been determined that the Total Payments
(or any portion thereof) are subject to the Excise Tax; provided, however,
that if the amount of such Gross-Up Payment or portion thereof cannot be
finally determined on or before such day, the Company shall pay to
Executive on such day an estimate, as determined by the Independent
Advisors, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code), as soon as the amount thereof can be
determined. In the event that the amount of the estimated payments exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to Executive, payable on the fifth day
after demand by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code). If more than one Gross-Up Payment is
made, the amount of each Gross-Up Payment shall be computed so as not to
duplicate any prior Gross-Up Payment. The Company shall have the right to
control all proceedings with the Internal Revenue Service that may arise in
connection with the determination and assessment of any Excise Tax and, at
its sole option, the Company may pursue or forego any and all
administrative appeals, proceedings, hearings, and conferences with any
taxing authority in respect of such Excise Tax (including any interest or
penalties thereon); provided, however, that the Company's control over any
such proceedings shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder, and Executive shall be entitled to
settle or contest any other issue raised by the Internal Revenue Service or
any other taxing authority. Executive
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<PAGE>
shall cooperate with the Company in any proceedings relating to the
determination and assessment of any Excise Tax and shall not take any
position or action that would materially increase the amount of any Gross-
Up Payment hereunder.
7. Noncompetition. During the Employment Period and continuing until the
later of (or if the Employment Period is terminated by the Company for Cause or
by Executive for other than Good Reason, the first anniversary of the later of),
(i) the expiration of the Employment Period, (ii) the Termination Date, and
(iii) the date upon which the last of Executive's separation benefits hereunder
(if any), ceases in accordance with its terms, Executive shall not, without the
prior written authorization of the Board of Directors of the Company, (i)
directly or indirectly render services of a business, professional or commercial
nature (whether for compensation or otherwise) to any person or entity
competitive or adverse to the Company's business welfare, (ii) engage in any
activity, whether alone, as a partner, or as an officer, director, employee,
consultant, independent contractor, or stockholder in any other corporation,
person, or entity which is competitive with or adverse to the Company's business
welfare, or (iii) hire or solicit for hire any of the Company's employees. This
Section 7 shall not, however, prevent Executive from investing in securities
issued by any such competitive or adverse corporation provided the holdings
thereof by Executive do not constitute more than three percent of any one class
of such securities.
8. Confidentiality.
(a) Disclosure and Use. Executive shall not disclose or use at any
time, either during or subsequent to the Employment Period, any trade
secrets or other confidential information of the Company of which Executive
is or become informed or aware of prior to or during the Employment Period,
except (i) as may be required for Executive to perform his duties and
obligations under this Agreement, (ii) to the extent such information has
been disclosed to Executive by a third party who is not affiliated with the
Company or which otherwise becomes generally available to the public, (iii)
information which must be disclosed as a result of a subpoena or other
legal process, or (iv) unless Executive shall first secure the Company's
prior written authorization. This paragraph shall survive the termination
of this Employment Period, whether by lapse of time or otherwise, and shall
remain in effect and be enforceable against Executive for as long as any
such Company trade secrets or confidential information retains commercial
value. Executive shall execute additional agreements and confirmations of
his obligations to the Company concerning such non-disclosure of Company
trade secrets and other confidential information as the Company may require
from time to time, provided that the execution of such additional
agreements and confirmations are (i) reasonable and (ii) are required of
all other senior executive employees of the Company under similar
circumstances.
(b) Return of Materials. Upon termination of his employment for any
reason, Executive (or in the event of termination due to Executive's death,
his
-12-
<PAGE>
surviving spouse or personal representative, as applicable) shall promptly
deliver to the Company all materials of a secret or confidential nature
relating to the Company's business, which are in the possession or under
the control of Executive.
9. Ideas and Improvements. Executive hereby assigns to the Company all
of his rights, title, and interest in and to all inventions, discoveries,
processes, designs, and other intellectual property (hereinafter referred to
collectively as the "Inventions"), and all improvements on existing Inventions
made or discovered by Executive during the term of his employment by the
Company. Promptly upon the development or making of any such Invention or
improvement thereon, Executive shall disclose the same to the Company and shall
execute and deliver to it such reasonable documents as it may request to confirm
the assignment of Executive's rights therein and, if requested, shall assist the
Company in applying for and prosecuting any patents which may be available in
respect thereof. The Company acknowledges and hereby notifies Executive that
this paragraph 9 does not apply to an Invention for which no equipment,
supplies, facility or trade secret information of the Company was used and which
was developed entirely on Executive's own time, unless (a) the Invention relates
to (i) the business of the Company, or (ii) the Company's actual or demonstrably
anticipated research or development, or (b) the Invention results from any work
performed by Executive for the Company.
10. Remedies. If, at any time, Executive violates to any material extend
any of the covenants or agreements set forth in paragraphs 7, 8 and 9, the
Company shall have the right to terminate all of its obligations to make further
payments under this Agreement. Executive acknowledges that the Company would be
irreparably injured by a violation of paragraph 7, 8 or 9 and agrees that the
Company shall be entitled to an injunction restraining Executive from any actual
or threatened breach of paragraph 7, 8 or 9 or to any other appropriate
equitable remedy without any bond or other security being required.
11. Resolution of Disputes. (a) In the event of any controversy among
the parties hereto arising out of, or relating to, this Agreement which cannot
be settled amicably by the parties (other than a controversy contemplated by
paragraphs 6 (separation benefits) and 12 (legal fees and expenses) herein),
within 60 days of the date the dispute arose, such controversy shall be finally
settled by arbitration conducted expeditiously in accordance with the American
Arbitration Association Commercial Arbitration Rules by a board of three
independent arbitrators. Either the Company or Executive may institute such
arbitration proceeding by giving written notice to the other party and by
designating one independent arbitrator. Within 10 days thereafter, the other
party shall designate a second independent arbitrator, and such two arbitrators
shall thereafter select the third independent arbitrator. A hearing shall be
held by the three arbitrators in the City of Chicago, Illinois, and a decision
of the matter submitted to them shall be rendered promptly in accordance with
the rules of the American Arbitration Association. The decision of a majority
of the arbitrators shall be final and binding upon all parties hereto. Judgment
upon the award rendered may be entered in any court having jurisdiction thereof.
If the responding party shall fail to
-13-
<PAGE>
appoint an independent arbitrator within the 10-day period provided above, the
American Arbitration Association may be called upon by the other party to
appoint such independent arbitrator and such two arbitrators shall thereupon
select a third independent arbitrator and the three arbitrators thus chosen
shall constitute the board of arbitration. The cost of arbitration (other than
as provided in paragraph 12) shall be borne by the Company. The arbitrators are
not empowered to award damages in excess of compensatory damages and each party
hereby irrevocably waives any damages in excess of compensatory damages.
(b) Notwithstanding the foregoing, Executive acknowledges and agrees that
the Company may seek in a court of competent jurisdiction an injunction
prohibiting Executive's breach or alleged breach of paragraphs 7, 8 and 9.
12. Legal Fees and Expenses. (a) Subject to subparagraph (b) below and
any arbitration award of fees and expenses, each party shall bear its own costs
and expenses, including attorneys fees, incurred in connection with the
enforcement of this Agreement.
(b) The Company shall pay, or reimburse Executive for, up to $_____________
in legal fees and expenses incurred by Executive in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
transactions contemplated herein.
13. Amendment and Termination. This Agreement may be amended or canceled
by mutual agreement of the parties without the consent of any other person and,
so long as Executive lives, no person, other than the parties hereto, shall have
any rights under or interest in this Agreement or the subject matter hereof.
14. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if given in writing and personally delivered or
sent by registered or certified mail, return receipt requested, or by facsimile,
telegram or telex followed by a confirmation letter sent by registered or
certified mail, return receipt requested, addressed as follows:
If to the Company: May & Speh, Inc.
1501 Opus Place
Downers Grove, Illinois 60515
Attention: Chief Financial Officer
Facsimile: (630) 964-1501
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<PAGE>
If to Executive: Peter I. Mason
121 East Fifth Street
Hinsdale, Illinois 60521
Phone: (630) 850-9512
Fax: (630) 850-9803
15. Non-assignment. The interests of Executive under this Agreement are
not subject to the claims of his creditors and may not be voluntarily or
involuntarily assigned, alienated or encumbered.
16. Stock Options. (a) On the date hereof, the Company shall execute and
deliver to Executive an Option Agreement in the form attached hereto as Exhibit
A-1 (the "Fiscal 1997 Option Agreement"), pursuant to which the Company shall
grant to Executive options to purchase 600,000 shares of the Company's Common
Stock pursuant to the Executive Plan.
(b) On October 1, 1997, the Company shall execute and deliver to Executive
an Option Agreement in the form attached hereto as Exhibit A-2 (the "Fiscal 1998
Option Agreement;" collectively with the Fiscal 1997 Option Agreement, the
"Option Agreements"), pursuant to which the Company shall grant to Executive
options to purchase 295,000 shares of the Company's Common Stock pursuant to the
Executive Plan.
(c) The Company represents and warrants to Executive that it has reserved,
and covenants that it will continue to reserve, for issuance to Executive,
895,000 of the authorized but unissued shares of Common Stock of the Company
reserved for issuance under the Executive Plan.
17. Board of Directors. (a) In the event that at any time, or from time
to time, during the Employment Period the Board of Directors of the Company
establishes an executive or similar committee of the Board of Directors of the
Company, the Company covenants Executive will be a member of such committee.
(b) In the event that at any time, or from time to time, during the
Employment Period the Board of Directors of the Company establishes a nominating
or similar committee of the Board of Directors of the Company, the Company
covenants that Executive will be a member of such committee.
(c) The Company covenants and agrees that Mr. Casey Cowell will,
effective upon his agreement to serve as a director of the Company, be elected a
Class I Director of the Company with a term that will expire on March 1, 2000.
(d) The Company covenants and agrees that as soon as reasonably
practicable after the date hereof the Company will elect a director proposed by
Executive and reasonably acceptable to a majority of the members of the Board of
Directors of the Company, such director to be elected a Class III Director of
the Company with a term that will expire on March 1, 1999.
-15-
<PAGE>
18. Severability. If any provision of this Agreement is held invalid or
unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall thereupon be deemed modified only
to the extent necessary to render such provision valid, or not applicable to
given circumstances, or excised from this Agreement, as the situation may
require, and this Agreement shall be construed and enforced as if such provision
had been included herein as so modified in scope or application, or had not been
included herein, as the case may be. Should this Agreement, or any one or more
of the provisions hereof, be held to be invalid, illegal or unenforceable within
any governmental jurisdiction or subdivision thereof, the Agreement or any such
provision or provisions shall not as a consequence thereof be deemed to be
invalid, illegal or unenforceable in any other governmental jurisdiction or
subdivision thereof.
19. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and Executive, and, in the case of the Company, its
successors and assigns and any Person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or substantially all of the
Company's assets and business, and in the case of Executive, his heirs,
executors, administrators, legal representatives, successors and assigns.
20. Disclosure of Agreement. The Company and Executive agree that the
Company will issue a press release (and cause to be made all appropriate
filings) disclosing the Agreement and the general terms of the Agreement. The
timing and terms of the press release and the timing of any filings and the
nature of the disclosures included therein shall be in form and substance
acceptable to Executive.
21. Prior Agreements. This Agreement cancels any employment agreement,
whether written or oral, entered into between the Company and Executive prior to
the day and year first above written.
22. Counterparts. The Agreement may be executed in two or more
counterparts, any one of which shall be deemed an original and all of which
taken together shall constitute a single instrument.
23. Governing Law. This Agreement, and all matters or disputes relating
to the validity, construction, performance or enforcement hereof, shall be
governed, construed and controlled by and under the laws of the State of
Illinois without regard to principles of conflicts of law.
[Signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
/s/ Peter I. Mason
----------------------------------------
Peter I. Mason
MAY & SPEH, INC.
By: /s/ Lawrence J. Speh
-------------------------------------
Lawrence J. Speh,
President and Chief Executive Officer
By: /s/ Eric Loughmiller
-------------------------------------
Eric Loughmiller
Executive Vice President, Chief
Financial Officer
-17-
<PAGE>
AMENDMENT NO. 4 TO THE
MAY & SPEH, INC. EMPLOYEE STOCK OWNERSHIP PLAN
The May & Speh, Inc. Employee Stock Ownership Plan (the "Plan"), as
established and originally effective October 1, 1988, is hereby amended as
follows:
I.
The third sentence of the third paragraph of Plan Section 7.4(a) is hereby
deleted effective October 1, 1996.
II.
The second sentence of Plan Section 7.6(c) is hereby amended to read as
follows:
Except as provided in Section 7.6(b) regarding the purchase of Company
Stock using a Participant's Other Investments Account, a Participant's
Account shall be valued for distribution as of the Anniversary Date
coincident with or next preceding the distribution date.
III.
Except as provided herein, the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned duly authorized officer of May & Speh,
Inc. has caused the foregoing Amendment No. 4 to the Plan to be executed this
5th day of March, 1997.
May & Speh, Inc.
By: /s/ Willard E. Engel, Jr.
Willard E. Engel, Jr.
Treasurer/Chief Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the financial statements included in the Company's quarterly report on Form 10-Q
for the quarter ended March 31, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 6,973,912
<SECURITIES> 25,036,974
<RECEIVABLES> 19,562,064
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 59,102,261
<PP&E> 44,780,088
<DEPRECIATION> 11,099,975
<TOTAL-ASSETS> 121,696,293
<CURRENT-LIABILITIES> 16,078,042
<BONDS> 20,337,240
0
0
<COMMON> 250,244
<OTHER-SE> 81,575,767
<TOTAL-LIABILITY-AND-EQUITY> 121,696,293
<SALES> 42,921,635
<TOTAL-REVENUES> 42,921,635
<CGS> 0
<TOTAL-COSTS> 34,484,202
<OTHER-EXPENSES> 717,825
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,719,608
<INCOME-TAX> 2,933,700
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,785,908
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
