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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
TOWNE SERVICES, INC., a Georgia corporation (the "Company"), and XXXXX X.
XXXXXX, an individual resident of Georgia (the "Employee"), this 19th day of
May, 1998, and is to become effective as of May 19, 1998 (the "Effective
Date").
The Company desires to employ the Employee as its Executive Vice
President. The Board of Directors of the Company (the "Board") desires to
provide for the employment of the Employee which the Board has determined will
reinforce and encourage the dedication of the Employee to the Company and will
promote the best interests of the Company and its shareholders. The Employee is
willing to serve the Company on the terms and conditions herein provided.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree that on the Effective Date:
ARTICLE I - EMPLOYMENT TERMS
1.1 Employment. The Company shall employ the Employee, and the
Employee shall serve the Company, as Executive Vice President upon the terms and
conditions set forth herein. The Employee shall have such authority and
responsibilities consistent with his position and which may be set forth in the
Company's bylaws or assigned by the Board from time to time. The Employee shall
devote his full business time, attention, skill and efforts to the performance
of his duties hereunder, except during periods of illness or periods of vacation
and leaves of absence consistent with Company policy. The Employee may devote
reasonable periods of time to serve as a director or advisor to other
organizations, to perform charitable and other community activities and to
manage his personal investments; provided, however, that such activities do not
materially interfere with the performance of his duties hereunder and are not in
conflict or competitive with, or adverse to, the interests of the Company.
1.2 Term. Unless earlier terminated as provided herein, the
Employee's employment under this Agreement shall be for a continuing term (the
"Term") of one year, which shall be extended automatically (without further
action of the Company or the Employee) each day for an additional day so that
the remaining term shall continue to be one year; provided, however, that either
party may at any time, by written notice to the other, fix the Term to a finite
term of one year, without further automatic extension, commencing with the date
of such notice. Notwithstanding the foregoing, the term of employment hereunder
will end on the date the Employee attains the age of 65.
1.3 Compensation and Benefits.
a. The Company shall pay the Employee a salary at a rate of
not less than $90,000 per annum in accordance with the salary payment practices
of the Company. The
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President and the Chief Executive Officer shall review the Employee's salary at
least annually and may increase the Employee's base salary they determine in
their sole discretion that an increase is appropriate.
b. The Employee shall be eligible to participate in a
management incentive program and shall be eligible to receive bonus payments
(not more than once each quarter) based upon achievement of targeted levels of
performance and such other criteria as the President and the Chief Executive
Officer shall establish from time to time pursuant to that program. The
determination of any bonus amount shall be within the discretion of the
President and the Chief Executive Officer. In addition, the Board shall annually
consider the Employee's performance and determine if any additional bonus is
appropriate.
c. The Employee shall be entitled to participate in all
retirement, life and health insurance, disability and other similar benefit
plans or programs of the Company now or hereafter applicable to the Employee or
applicable generally to employees of the Company; provided, however, that during
any period during the Term that the Employee is disabled, and during the 120-day
period of physical or mental infirmity leading up to the Employee's Disability,
the amount of the Employee's compensation provided under this Section 1.3 shall
be reduced by the sum of the amounts, if any, paid to the Employee for the same
period under any disability benefit or pension plan of the Company or any of its
subsidiaries.
d. The Company shall reimburse the Employee for all reasonable
ordinary and necessary travel, seminar, and other expenses related to the
Employee's duties which are incurred and accounted for in accordance with the
historic practices of the Company.
e. Employee shall be entitled to two weeks paid vacation
annually during the Term of employment by the Company hereunder. Any vacation
not used during any calendar year shall be forfeited, except that one week's
unused vacation may be carried forward to the year following the year in which
such vacation entitlement accrued.
f. The Company shall provide to the Employee an automobile
owned or leased by the Company of a make and model appropriate to the
Executive's status or an automobile allowance of up to $450.00 per month, at the
Company's election. The Company shall also reimburse all reasonable expenses
incurred by the Executive in connection with the operation and maintenance of
the automobile, including for gasoline, insurance, tires and similar items.
ARTICLE II - COVENANTS OF EMPLOYEE
Section 2.1 Confidentiality. Employee recognizes the interest of the
Company in maintaining the confidential nature of its proprietary and other
business and commercial information. In connection therewith, Employee covenants
that during the term of his employment with Company under this Agreement, and
for a period of one (1) year thereafter, Employee shall not, directly or
indirectly, except as authorized by the Board of Directors, publish, disclose or
use for his own benefit or for the benefit of a business or entity other than
the
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Company or otherwise, any secret or confidential matter, or proprietary or
other information not in the public domain that was acquired by Employee during
his employment, relating to the Company's, or any of its subsidiaries'
businesses, operations, customers, suppliers, products, employees, financial
affairs or industry practices, technology, know-how or intellectual property or
other similar information (the "Proprietary Information").
Employee will abide by the Company's policies and regulations, as
established from time to time, for the protection of its Proprietary
Information. Employee acknowledges that all records, files, data, documents and
the like relating to suppliers, customers, costs, prices, systems, methods,
personnel, technology and other materials relating to the Company or its
affiliated entities shall be and remain the sole property of the Company and/or
such affiliated entity and shall, upon the request of the Company, turn over all
copies of such Proprietary Information to the Company (together with a written
statement certifying as to his compliance with the foregoing).
Section 2.2 Non-Solicitation of Customers. During the Term of his
employment with the Company, and for a period of one (1) year thereafter,
Employee shall not directly or indirectly, through one or more intermediaries or
otherwise, solicit, direct or appropriate, or attempt to solicit, direct or
appropriate any individual or entity which was, at the time of termination of
Employee's employment, a customer or client of the Company for the purpose of
providing a service or product to such customer or client which is the same type
of service or product offered or provided by the Company at the time of
termination of Employee's employment, with the Company; provided, that if
Employee is terminated by the Company without Cause (as defined below) or if the
Employee resigns with Good Reason (as defined below), the restrictive period of
this Section 2.2 shall be six (6) months.
Section 2.3 Non-Solicitation of Employees. During the Term of his
employment with the Company, and for a period of one (1) year thereafter,
Employee shall not, directly or indirectly, through one or more intermediaries
or otherwise, employ, induce, solicit for employment, or assist others in
employing, inducing or soliciting for employment any individual who is at any
time during such period an employee of the Company for the purpose of providing
services that are the same or similar to the types of services offered or
engaged in by the Company at the time of termination of Employee's employment
with the Company; provided, that if Employee is terminated by the Company
without Cause (as defined below) or if the Employee resigns with Good Reason (as
defined below), the restrictive period of this Section 2.3 shall be six (6)
months.
Section 2.4 Trade Secrets. The Employee shall not, at any time, either
during the Term of his employment or after any termination of employment, use or
disclose any Trade Secrets (as defined under applicable law) of the Company or
its subsidiaries, except in fulfillment of his duties as the Employee during his
employment, for so long as the pertinent information or data remain Trade
Secrets, whether or not the Trade Secrets are in written or tangible form.
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ARTICLE III - TERMINATION OF EMPLOYMENT
Section 3.1 Termination by Company. Employee's employment may be
terminated by the Company by giving notice during the term of this Agreement
upon the occurrence of one or more of the following events:
(a) Employee's death or disability which renders Employee
incapable of performing his duties for more than one hundred twenty (120)
calendar days (termination under this Section 3.1(a) shall be deemed termination
without Cause);
(b) for any reason following a determination by the Board of
Directors to terminate Employee's employment (termination under this Section
3.1(b) shall be deemed termination without Cause); or
(c) "for Cause", which for purposes of this Agreement shall
mean that the Employee shall have:
(i) committed an intentional act of fraud, embezzlement
or theft in connection with his duties or in the course of his employment with
the Company which has a material adverse effect upon the Company;
(ii) inflicted intentional wrongful material damage to
any material asset of the Company or the Company;
(iii) intentionally and wrongfully violated this
Agreement, which violation has a material adverse effect upon the Company;
(iv) been convicted of a felony or any similar crime
carrying a prison term of at least one year (regardless of whether imprisonment
is actually imposed);
(v) a habitual and debilitating use of alcohol or drugs;
or
(vi) failed to meet performance expectations, as
determined and articulated by the Company's President and Chief Executive
Officer; provided, however, that in the event of this subsection (vi) being the
sole reason for a termination for Cause, Employee shall have the cure provisions
and rights provided for in Section 3.1(d) hereof.
(d) In the event of a determination by the Company's President and
Chief Executive Officer that the Employee has failed to meet performance
expectations, the Company shall furnish to Employee in writing a notice of
proposed termination setting forth a specific statement of the deficiencies in
his performance. Employee shall then have a period of thirty (30) days after the
giving of such written notice of proposed termination by the Company in which to
attempt to effect a cure of the specified deficiencies. If at the end of such
thirty (30) day period no such cure has been effected to the reasonable
satisfaction of the Board of Directors of the Company, then Employee's
employment shall be terminated as of the end of such thirty (30) day period. The
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Company shall be obligated to provide to Employee only one such notice of
proposed termination, and if subsequent to effecting a cure of specified
deficiencies the Employee is determined by the Board of Directors to have again
failed to meet performance expectations, then his employment may be terminated
immediately upon the Company's giving of a final notice of termination to
Employee.
Section 3.2 Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without the express written consent of Employee, the occurrence of a
material breach by the Company of any material provision of this Agreement,
including, but not limited to, material adverse alteration in the nature or
status of Employee's responsibilities, unless such breach is fully corrected
within thirty (30) days following written notification by Employee to the
Company that he intends to terminate his employment hereunder due to such
breach.
Section 3.3 Severance. For purposes of this Agreement, Employee's
entitlement to any severance payments upon termination of his employment shall
be as set forth below:
(a) Termination Without Cause. If Employee is terminated
without Cause or resigns for Good Reason at any time, Employee shall be entitled
to severance pay, at the Company's discretion, of either (i) a lump sum equal to
one-half (1/2) of his then current annual salary; or (ii) six consecutive
monthly payments of one-twelfth (1/12) of his then current annual salary. If
Employee is terminated without cause, resigns for Good Reason or a Change in
Control (as defined in the Company's 1996 Stock Option Plan) occurs, the
conditions to vesting of the options granted to the Employee pursuant to Section
1.3(c) above shall lapse and all such options shall immediately vest.
(b) For Cause. Employee shall not be entitled to any severance
pay whatsoever if his employment is terminated "for Cause" pursuant to Section
3.1(c) of this Agreement, unless severance pay is approved by the Board of
Directors of the Company in its sole discretion, provided, however, that the
Employee shall receive such annual salary that is accrued but unpaid up to the
date of such termination for Cause.
(c) Payments for Covenants. The severance payments provided
for in this Article III shall be made, in part, as consideration for the
Employee's covenants set forth in Article II.
(d) Termination. If the Employee's employment with the Company
is terminated prior to a Change in Control or prior to an initial public
offering of the Company's common stock with net proceeds to the Company of at
least ten million dollars ($10,000,000.00) for any reason other than the
Company's material breach of this Agreement, the Company shall be entitled to
repurchase from the Employee 100% of the stock, options and other securities of
the Company held or beneficially owned by the Employee at the greater of the
price the Employee paid for such securities or the then current fair market
value of such securities.
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ARTICLE IV - GENERAL PROVISIONS
Section 4.1 Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes and
withholdings as shall be required pursuant to any applicable law, rule or
regulation.
Section 4.2 Notice. For purposes of this Agreement, all communications
including, without limitation, notices, consents, requests or approvals,
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or five (5) business days after having been
mailed by United States registered mail or certified mail, return receipt
requested, postage prepaid, addressed to the Company (to the attention of the
Secretary of the Company) at its principal Employee office or to Employee at his
principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except the notices of change of
address shall be effective only upon receipt.
Section 4.3 Validity. It is not the intent of any party hereto to
violate any public policy of any jurisdiction in which this Agreement may be
enforced. If any provision of this Agreement or the application of any provision
hereof to any person or circumstances is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such
provision to any other person or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it valid,
enforceable and legal; provided, however, if the provision so held to be
invalid, unenforceable or otherwise illegal constituted a material inducement to
a party's execution and delivery of this Agreement, then such provision shall
not be reformed unless prior to any reformation that party agrees to be bound by
the reformation.
Section 4.4 Entire Agreement. This Agreement supersedes any other
agreements, oral or written, between the parties with respect to the subject
matter hereof, and contains all of the agreements and understandings between the
parties with respect to the employment of Employee by the Company. Any waiver or
modification of any term of this Agreement shall be effective only if it is set
forth in a writing signed by both parties hereto.
Section 4.5 Successors and Binding Agreement.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any Successor of or to the Company, but shall not
otherwise be assignable or delegable by the Company. "Successor" shall mean any
successor in interest, including, without limitation, any entity, individual or
group of persons acquiring directly or indirectly all or substantially all of
the business or assets of the Company, as the case may be, whether by sale,
merger, consolidation, reorganization or otherwise.
(b) The Company shall require any Successor to agree at the
time of becoming a Successor to perform this Agreement to the same extent as the
original parties would be required if no succession had occurred.
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(c) This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, heirs, distributee and legatees.
(d) This Agreement is personal in nature and neither of the
parties shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in this Section 4.5.
Section 4.6 Captions. The captions in this Agreement are solely for
convenience of reference and shall not be given any effect in the construction
or interpretation of this Agreement.
Section 4.7 Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing signed by Employee and the Company. No waiver by a party
hereto at any time of any breach by another party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provision or conditions at the
same or at any prior or subsequent time.
Section 4.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same Agreement.
Section 4.9 Modification and Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Employee and the Company. No
waiver by any party hereto at any time of any breach by the other party hereto
of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
Section 4.10 Governing Law; Arbitration. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Georgia without giving effect to the conflict of laws principles thereof. Any
controversy, claim or dispute arising out of or relating to this Agreement, or
any breach thereof, including without limitation any dispute concerning the
scope of this arbitration clause, shall be settled by arbitration. The parties
indicate their acceptance of the foregoing arbitration requirement by initialing
below:
/s/ Xxxxx Xxxxxx /s/ Xxxxx Xxxxxx
-------------------------- ---------------------
For the Company Employee
Section 4.11 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Employee has signed and sealed this Agreement, effective as
of the date first above written.
ATTEST: TOWNE SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxxx, Xx. By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx X. Xxxxxxxx, Xx. Name: Xxxxx Xxxxxx
Title: Chief Financial Officer Title: President and Chief
Operating Officer
(CORPORATE SEAL)
EMPLOYEE
/s/ Xxxxx X. Xxxxxx
---------------------------------
XXXXX X. XXXXXX
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