EMPLOYMENT, SEVERANCE AND NON-SOLICITATION AGREEMENT
This Employment, Severance and Non-Solicitation Agreement (this
"Agreement") is entered into between Private Business, Inc., a Tennessee
corporation ("Company"), and Xxxx XxXxxxxxx, an individual resident of Tennessee
("Employee"), effective as of January 31, 2006 (the "Effective Date").
Company has purchased a business for which Employee served as an
executive and has offered employment to Employee in connection with such
acquisition. As part of such acquisition, Company has agreed to provide employee
with a severance agreement, and employee has agreed to enter into a
non-solicitation agreement. Now, therefore, for and in consideration of the
foregoing and other consideration exchanged as part of the acquisition, 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 as follows:
ARTICLE I. TERMS OF EMPLOYMENT
Section 1.01 Employment. Company shall employ Employee, and Employee
shall serve Company, in the capacities of President of the Goldleaf division of
Company and as an Executive Vice President of Company upon the terms and
conditions set forth herein. Employee shall have such authority,
responsibilities and duties as are consistent with his title, subject to the
oversight by Company's CEO (the "CEO") and Company's Board of Directors (the
"Board"). 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's
company policies. Notwithstanding the foregoing, 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 Company, as determined by the
CEO or the Board.
Section 1.02 Term. This Agreement shall be for a term of two years (the
"Term"), and shall be extended one day for each day it is in effect, such that
the Term shall always remain two years.
Section 1.03 Compensation and Benefits.
(a) Company shall pay employee a signing bonus of $500,000 upon the
execution of this Agreement. As an additional incentive, Company shall issue two
unsecured promissory notes to Employee, one in the original principal amount of
$850,000 and substantially in the form attached as Exhibit A hereto, and the
other in the original principal amount of $150,000 and substantially in the form
attached as Exhibit B hereto.
(b) Company shall pay Employee a base salary at a rate of $250,000 per
annum in accordance with the normal salary payment practices of Company. The
Board (or the compensation committee thereof), in consultation with the CEO,
shall review and may increase, but shall not decrease, Employee's base salary at
least annually.
(c) Employee shall participate in Company's executive bonus plan, which
shall provide Employee with an opportunity to earn a bonus dependent on Employee
and Company meeting individual, division and corporate performance goals as
determined by the Board (or the compensation committee thereof).
(d) Employee shall be entitled to participate in all retirement, life
and health insurance, disability and other similar benefit plans or programs of
Company now or hereafter applicable to Employee or applicable generally to
employees of Company, provided that Employee shall not be required to pay the
premiums for such benefits that Company requires other employees to pay
(although Employee acknowledges that the amount of such premiums paid by
Purchaser on Employee's behalf shall be considered compensation to Employee for
tax purposes); provided, however, that during any period during the Term that
Employee is disabled, and during the 180-day period of physical or mental
infirmity leading up to Employee's disability, the amount of Employee's
compensation provided under this Section 1.03 shall be reduced by the sum of the
amounts, if any, paid to Employee for the same period under any disability
benefit or pension plan of Company or any of its subsidiaries. For purposes of
this Section 1.03(d), Employee shall be deemed "disabled" upon the earlier of:
(i) a written determination by a duly licensed physician or psychologist
following a personal examination of Employee that Employee is not capable of
performing the normal duties attendant to his position with or without
reasonable accommodation and that such condition appears to be permanent or of
indefinite duration; (ii) a determination by a court of competent jurisdiction
that Employee is not capable of managing his or her own person or property and
that such condition appears to be permanent or of indefinite duration; (iii) a
determination by any duly licensed insurance company maintaining a policy of
disability insurance covering Employee that Employee is disabled to the point
that benefits are payable pursuant to the terms of such policy; or (iv) Employee
has been unable to perform the normal duties attendant to his position with or
without reasonable accommodation for a continuous period of 180 days.
(e) Employee shall be eligible for the grant of stock options,
restricted stock and other awards under Company's equity incentive plan. On
January 23, 2006, as an inducement to Employee to enter into this Agreement,
Company granted Employee options to purchase 900,000 shares of Company's common
stock at an exercise price of $1.33 per share, the closing price of Company's
common stock on the Nasdaq Small Cap Market on the previous trading day.
ARTICLE II. COVENANTS OF EMPLOYEE
Section 2.01 Covenant Not to Engage in Competing Business. Employee
covenants and agrees that, for and during the period of his employment with
Company and for a period of two years thereafter, Employee shall not
individually or through or with any other person or affiliate of Employee,
engage directly or indirectly in the Subject Business anywhere in the Restricted
Territory (as hereinafter defined), whether such engagement be as an employer,
officer, director, owner, investor, shareholder, employee, partner, consultant
or other participant, except for an investment in a public company that does not
constitute more than one percent of the outstanding shares of any class of such
public company. "Restricted Territory" shall mean the United States. "Subject
Business" shall mean the business conducted by Goldleaf Technologies, Inc. prior
to its sale to Company, and any other business engaged in by Company for which
Employee becomes the primary responsible executive. Employee acknowledges and
agrees that this non-compete is given in connection with the purchase of a
business, in consideration of the signing bonus, and other good and valuable
consideration, and given the nature of Company's business, the restrictions set
forth in
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this Agreement are necessary and reasonable in terms of the activities
restrained, as well as the geographic and temporal scope of such restrictions.
Employee further acknowledges and agrees that if any of the provisions in this
Agreement shall ever be deemed to exceed the time, activity, geographic or other
limitations permitted by applicable law, then such provisions shall be and
hereby are reformed to the maximum time, activity, geographic or other
limitations permitted by applicable law.
Section 2.02 Covenant Not to Solicit Employees or Customers. Employee
covenants and agrees that, for and during the period of his employment with
Company and for a period of two years thereafter:
(a) Employee shall not individually or through or with any other person
or affiliate of Employee, solicit for employment or hire any individual who was
employed by Company on the Effective Date or the date of termination of
employment of Employee, without the prior written consent of Company; or
(b) solicit any individual or entity that was an active customer of
Company on the Effective Date or the date of termination of employment of
Employee, for the purpose of contracting with such Person for the goods and
services which comprise the Subject Business.
Section 2.03 Covenant To Maintain Confidentiality.
(a) Employee shall not divulge or appropriate for his own use any Trade
Secrets (as defined below) of Company, from and after the Effective Date of this
Agreement, for as long as the information remains a Trade Secret, and shall not
make any unauthorized disclosure of Confidential Information (as defined below)
about Company for and during the period of his employment with Company and for a
period of two years thereafter. "Trade Secrets" shall mean any information of
Company (including but not limited to technical or non-technical data, a
formula, a pattern, a compilation, a program, a device, a method, a technique, a
drawing, a process, financial data, financial plans, product plans, or a list of
actual or potential customers or suppliers provided that such list is not
available to the general public) which derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy, or such other definition as may
be provided under applicable law. "Confidential Information" means any valuable,
nonpublic, competitively sensitive information (other than Trade Secrets)
concerning Company, its business, or its financial position, results of
operations, annual and long range business plans, product or service plans,
marketing plans and methods, training, educational and administrative manuals,
client lists or employee lists obtained by Employee from Company during the
period of his employment; provided, however, that Confidential Information shall
not include information to the extent that it is or becomes publicly known or
generally utilized (other than because of the unauthorized disclosure of such
information by Employee) by others engaged in the same business or activities in
which Company utilized, developed or otherwise acquired such information.
(b) Disclosure of Trade Secrets or Confidential Information shall not
be precluded, if such disclosure is:
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(i) in response to a valid order of a court or other
governmental body or otherwise required by law; provided, however, that
Employee shall first have given notice to Company and made a reasonable
effort to obtain a protective order requiring that the information
and/or documents so disclosed be used only for the purposes for which
the order was issued; or
(ii) necessary to establish rights under this Agreement (but
only to the extent necessary to do so).
(c) Promptly following the termination of Employee's employment with
Company, Employee shall promptly transfer to Company or destroy (as directed by
Company) all tangible information containing Trade Secrets or Confidential
Information in his possession or within his control which is not already in the
possession or control of Company, and shall promptly certify in writing to
Company such transfer or destruction.
(d) The obligations set forth in this Section 2.03 are in addition to
and not in lieu of any confidentiality obligations in the Stock Purchase
Agreement dated the date of this Agreement by and among Company and the
stockholders of Goldleaf Technologies, Inc., including Employee (the "Stock
Purchase Agreement").
Section 2.04 Survival. The covenants of Employee contained in this
Article II shall survive the termination of this Agreement and the termination
of Employee's employment with Company, and shall remain enforceable in
accordance with their terms as set forth herein.
ARTICLE III. TERMINATION
Section 3.01 Termination by Company. This Agreement, and Employee's
employment with Company, shall automatically terminate upon his death, and may
otherwise be terminated by Company by giving notice during the Term upon the
occurrence of one or more of the following events:
(a) Employee's disability (as defined in Section 1.03(d) hereof),
provided that such disability arises from a condition which appears to be
permanent or of indefinite duration;
(b) without Cause (as defined in the following paragraph), effectively
immediately upon delivery of written notice to Employee following a
determination by the Board to terminate Employee's employment, provided that (i)
the Board may elect to specify in such written notice that the effective date of
termination shall be a date up to and including the 90th day following the
delivery of such written notice to Employee; and (ii) Employee shall be entitled
to payment as provided in Section 3.03 below as severance pay following any such
termination without Cause, unless and until Employee breaches any of the
covenants set forth in Article II hereof; or
(c) for "Cause," which for purposes of this Agreement shall mean that
Employee shall have:
(i) committed an act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with
Company;
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(ii) inflicted intentional damage to any material asset of
Company;
(iii) intentionally committed any act resulting in liability
in tort, under employment laws, or for breach of contract by Company
pursuant to which Company has actually paid damages to any Person in an
amount in excess of $20,000;
(iv) materially failed or refused to perform his duties as are
consistent with his title as set forth in Section 1.01 of this
Agreement, or breached any other material provision of this Agreement,
which failure is not fully corrected within 90 days following written
notification by Company to Employee specifically detailing such
failure; or
(v) been convicted of any felony or a misdemeanor involving
moral turpitude.
Section 3.02 Termination by Employee. This Agreement, and Employee's
employment with Company, may be terminated by Employee for Good Reason (as
hereinafter defined) within 12 months following a Change of Control (as
hereinafter defined).
(a) For purposes of the foregoing, "Change of Control" means any
transaction or series of transactions or the approval by the shareholders of
Company of a transaction that would result in
(i) 40% or more of the combined voting power of Company's then
outstanding voting securities being held by a third party other than a
current shareholder (or an affiliate of such current shareholder),
current board member, or any employee benefit plan maintained by
Company or any subsidiary;
(ii) a merger, consolidation or reorganization involving
Company, unless the shareholders of Company immediately before such
merger, consolidation or reorganization continue to own a majority of
the combined voting power of the outstanding voting securities of the
entity resulting from such merger, consolidation or reorganization;
(iii) a plan of liquidation or dissolution of Company under
the provisions of Title 11 of the United States Code, a state
receivership proceeding or other applicable state law; or
(iv) the sale or other disposition of all or substantially all
of the business or assets of Company to a third party.
(b) For purposes of this Agreement, "Good Reason" shall mean any of the
following:
(i) the assignment to Employee by Company of duties
inconsistent with Employee's position, duties, responsibilities or
status with Company immediately prior to a Change in Control, or a
change in Employee's titles or offices as in effect immediately prior
to a Change in Control;
(ii) reduction in Employee's base salary or target bonus as in
effect prior to the Change in Control; or
(iii) relocation of Employee's principal office to a location
more than 50 miles from Employee's principal office prior to a Change
in Control.
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Section 3.03 Severance Compensation. If Company terminates Employee
pursuant to Section 3.01(b), or if Employee terminates his employment for Good
Reason pursuant to Section 3.02, Company shall: (i) pay (at Company's regular
pay intervals) to Employee the amount of his then current base salary for the
remainder of the Term, and (ii) continue to permit Employee to participate in
all retirement, life and health insurance, disability and other similar benefit
plans or programs of Company applicable to Employee or applicable generally to
employees of Company, without charge for premiums as described in Section
1.03(d); provided, however, that in no event shall Company be obligated to make
severance payments and provide benefits to Employee for longer than two years
following the date of the termination of Employee's employment with Company. The
covenants of Company contained in this Section 3.03 shall survive the
termination of this Agreement and the termination of Employee's employment with
Company, and shall remain enforceable in accordance with their terms as set
forth herein.
Section 3.04 Effect of Severance on Pay and Benefits. The severance pay
and benefits provided for in this Section 3 shall be in lieu of any other
severance or termination pay to which Employee may be entitled under any Company
severance or termination plan, program, practice or arrangement. Employee's
entitlement to any other compensation or benefits (other than severance or
termination pay) shall be determined in accordance with Company's executive
benefit plans and other applicable programs, policies and practices then in
effect.
ARTICLE IV. GENERAL PROVISIONS
Section 4.01 Withholding of Taxes. Company may withhold from any
amounts of compensation 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 4.02 Notices. 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 three business days after having
been mailed by United States registered mail or certified mail, return receipt
requested, postage prepaid, addressed to Company (to the attention of the
Secretary of Company) at its principal office, or to Employee at his principal
residence as reflected in the records of Company, or to such other address as
any party may have furnished to the other in writing and in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
Section 4.03 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.
Section 4.04 Entire Agreement. This Agreement supersedes any other
agreements, oral or written, between the parties with respect to the subject
matter hereof, and contain all of the agreements and understandings between the
parties with respect to the employment of Employee by 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 all parties hereto.
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Section 4.05 Successors and Binding Agreement. This Agreement shall be
binding upon and inure to the benefit of Company and any successor or permitted
assignee of or to Company, including any successor or permitted assignee of
Company pursuant to the Stock Purchase Agreement. This Agreement requires the
personal services of Employee and shall not be assignable in whole or in part by
Employee.
Section 4.06 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 4.07 Definitions. Capitalized terms used in this Agreement and
not otherwise defined or limited herein shall have the meaning ascribed to them
in the Stock Purchase Agreement.
Section 4.08 Counterparts. This Agreement may be executed in two 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 4.09 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 parties hereto. No waiver by
any party hereto at any time of any breach by another 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.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Tennessee without giving effect to the
conflict of laws principles thereof.
(b) Any controversy, claim or dispute arising from, out of or relating
to this Agreement, or any breach thereof, including but not limited to any
dispute concerning the scope of this arbitration clause, claims based in tort or
contract, claims for discrimination under federal, state or local law, and/or
claims for violation of any federal, state or local law ("Claims") shall be
resolved in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association then in effect. Such
arbitration shall take place in the greater Nashville, Tennessee metropolitan
area. The arbitrator's award shall be final and binding upon both parties.
(c) A demand for arbitration shall be made within a reasonable time
after the Claim has arisen. In no event shall the demand for arbitration be made
after the date when an institution of legal and/or equitable proceedings based
on such Claim would be barred by the applicable statute of limitations. Each
party to the arbitration will be entitled to be represented by counsel and shall
have the right to subpoena witnesses and documents for the arbitration hearing.
The arbitrator shall be experienced in employment arbitration and licensed to
practice law in the state of Tennessee. The arbitrator shall have the authority
to hear and grant a motion to dismiss and/or motion for summary judgment,
applying the standards governing such motions under the Federal Rules of Civil
Procedure. The arbitrator shall have the power to compel discovery consistent
with the Federal Rules of Civil Procedure.
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(d) Except as otherwise awarded by the arbitrator, each party shall pay
the fees of its respective attorneys, the expenses of its witnesses and any
other expenses connected with presenting its Claim or defense. Except as
otherwise awarded by the arbitrator, other costs of arbitration, including
arbitrator's fees and expenses, any transcript costs or other administrative
fees shall be paid equally by the parties.
(e) Employee acknowledges that his breach or threatened or attempted
breach of any provision of Article II of this Agreement would cause irreparable
harm to Company not compensable in monetary damages and that Company shall be
entitled, in addition to all other applicable remedies, to obtain a temporary
and permanent injunction and a decree for specific performance of the terms of
Article II from a court of competent jurisdiction without being required to
prove damages or furnish any bond or other security. The parties agree that
Company's seeking such equitable relief from a court of competent jurisdiction
will not affect the agreement of the parties to arbitrate all other matters
concerning or arising from this Agreement. The parties agree that temporary
injunctive relief may be entered by a court of competent jurisdiction pending a
hearing in arbitration of any matter relating to or arising from this Agreement.
The parties indicate their acceptance of the foregoing arbitration requirement
by initialing below:
--------------------------- -----------------------------
For Company For 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.
Section 4.12 Termination of Existing Goldleaf Employment Agreement. As
part of the consideration for Company's entering into this Agreement, Employee
agrees that any employment agreement heretofore in existence between Employee
and Goldleaf shall be and hereby is terminated without the payment of any other
consideration. Without limiting the generality of the foregoing, Employee shall
not be entitled to any severance or termination pay to which Employee might
otherwise be entitled under any such agreement or any Goldleaf severance or
termination plan, program, practice or arrangement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective as of the Effective Date set forth herein.
Private Business, Inc.: Employee:
------------------------------------ ----------------------------------
G. Xxxx Xxxxx, CEO Xxxx XxXxxxxxx
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