EXHIBIT 10.3
ADVANTAGE PAYROLL SERVICES, INC.
EMPLOYMENT AND NON-COMPETE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 15th day of March 2001,
between Advantage Payroll Services, Inc., a Delaware corporation (the "Company")
and Xxxxx X. Xxxxxx ("Executive").
The Company and the Executive desire to enter into an agreement (i)
defining the relative rights of the Company and the Executive, (ii) setting
forth the obligation of Executive to refrain from competing with the Company
during her employment with the Company and for a period of time thereafter as
provided herein and (iii) setting forth certain terms of Executive's employment
with the Company.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in Section 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as Vice
President of Tax Services and Government Relations and shall have the normal
duties, responsibilities and authority associated with such position, subject to
the power or authority of the Company's board of directors (the "Board") or its
president to expand or limit such duties, responsibilities and authority and to
override actions of the Executive.
(b) Executive shall report to the president of the Company, and
Executive shall devote her best efforts and her full business time and attention
(except for permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company and its
Subsidiaries. Executive shall perform her duties and responsibilities to the
best of her abilities in a diligent, trustworthy, businesslike and efficient
manner.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one of more Subsidiaries.
3. Base Salary and Benefits.
(a) During the first year of the Employment Period, Executive's base
salary shall be $125,000 (the Executive's per annum salary, the "Base Salary").
On each anniversary of this Agreement, Executive's Base Salary shall increase by
4% per annum or such other rate as the Board may in good faith designate from
time to time. The Base Salary shall be payable in regular installments in
accordance with the Company's general payroll practices and shall be subject to
customary withholding. In addition, during the Employment Period, Executive
shall be entitled to participate in all of the Company's employee benefit
programs for which senior executive employees of the Company and its
Subsidiaries are generally eligible, and Executive shall be entitled up to four
weeks of paid vacation each year, which if not taken may not be carried forward
to any subsequent year.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by the Executive in the course of performing her duties under this
Agreement which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(c) At the end of each fiscal year, Executive shall be eligible to
receive a bonus of up to $25,000.00 (the "Bonus") based upon the attainment by
Executive, as determined in good faith by the Board and President, of certain
performance objectives set in good faith each year by the president of the
Company and approved by the Board.
4. Term.
(a) Unless renewed by the mutual agreement of the Company and
Executive, the Employment Period shall end on the third anniversary hereof (the
"Expiration Date"); provided that (i) the Employment Period shall terminate
prior to the Expiration Date upon Executive's resignation, death or permanent
disability or incapacity (as determined by the Board in its good faith judgment)
and (ii) the Employment Period may be terminated by the Company at any time
prior to such date for Cause (as defined below) or without Cause.
(b) If the Employment Period is terminated by the Company without Cause
prior to the third anniversary of the date of this Agreement, Executive shall be
entitled to receive her Base Salary (the "Severance Payment") until the earlier
of (i) the Expiration Date or (ii) the twelve-month anniversary of the date of
such Executive's termination; provided, however, that such Executive shall be
entitled to the Severance Payment if and only if Executive has not breached the
provisions of Sections 5, 6 and 7 hereof.
(c) If the Employment Period is terminated by the Company for Cause or
is terminated pursuant to clause (a)(i) above, Executive shall be entitled to
receive her Base Salary through the date of termination.
(d) All of Executive's rights to fringe benefits and bonuses hereunder
(if any) which accrue or become payable after the termination of the Employment
Period shall cease upon such termination. The Company may offset any amounts
Executive owes it or its Subsidiaries against any amounts it owes Executive
hereunder.
(e) For purposes of this Agreement, "Cause" means (i) a breach of
Section 5, 6 or 7 of this Agreement, (ii) a breach of Executive's duty of
loyalty to the Company or any of its Subsidiaries or any act of dishonesty or
fraud with respect to the Company or any of its Subsidiaries, (iii) the
commission by the Executive of a felony, a crime involving moral turpitude or
other act or omission causing material harm to the standing and reputation of
the Company or any of its Subsidiaries, (iv) Executive's continued failure to
perform her duties to the Company or any of its Subsidiaries, which failure
remains uncured thirty days following written notice thereof or is incapable of
being cured, or (v) the commission of acts of negligence in the performance of
her duties which are substantially injurious to the Company or any of its
Subsidiaries, which acts remain uncured thirty days following written notice
thereof by the Company or which is incapable of being cured.
5. Confidential Information. Executive acknowledges that the
information, observations and data obtained by her while employed by the Company
and its Subsidiaries (including such information, observations and data obtained
while employed by the Company, concerning the business or affairs of the Company
or any other Subsidiary ("Confidential Information") are the property of the
Company or such Subsidiary. Therefore, Executive agrees that she shall not
disclose to any unauthorized person or use for her own purposes any Confidential
Information without the prior written consent of the Board, unless and to the
extent that the aforementioned matters become generally known to, and available
for use by, the public other than as a result of Executive's acts or omissions.
Executive shall deliver to the Company at the termination of the Employment
Period, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) or the business of the Company or
any Subsidiary which she may then possess or have under her control.
6. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable),
including, without limitation, computer software and data, which relate to the
Company's or any of its Subsidiaries' actual or anticipated business, research
and development or existing or future products or services and which are
conceived, developed or made by Executive while employed by the Company or its
Subsidiaries ("Work Product") belong to the Company or such Subsidiary.
Executive shall promptly disclose such Work Product to the Board and perform all
actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
7. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that in the course of her employment
with the Company she shall become familiar, and during her employment with the
Company, she has become familiar, with the Company's trade secrets and with
other Confidential Information concerning the Company and its predecessors and
its Subsidiaries and that her services have been and shall be of special, unique
and extraordinary value to the Company and its Subsidiaries. Therefore,
Executive agrees that, during the Employment Period and for two years thereafter
(the "Noncompete Period"), she shall not directly or indirectly own any interest
in, manage, control, participate in, consult with, render services for, or in
any manner engage in any business competing with the businesses of the Company
or its Subsidiaries (including, without limitation, payroll services or tax
filing services), as such businesses exist or are in process on the date of the
termination of Executive's employment anywhere in the United States. Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any Subsidiary
to cease doing business with the Company or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary (including, without
limitation, making any negative statements or communications about the Company
or its Subsidiaries).
(c) If, at the time of enforcement of this Section 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this Section 7 are reasonable.
(d) In the event of the breach or a threatened breach by Executive of
any of the provisions of this Section 7, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions hereof (without posting a
bond or other security). In addition, in the event of an alleged breach or
violation by Executive of this Section 7, the Noncompete Period shall be tolled
until such breach or violation has been duly cured.
(e) Executive agrees that termination of the Noncompete Period under the
terms of this Agreement shall not serve to terminate the existence of any other
non-competition or non-solicitation agreement that Executive has with the
Company, including, without limitation, pursuant to the terms of the
Recapitalization Agreement.
8. Executive's Representations. Executive hereby represents and warrants to
the Company that (i) the execution, delivery and performance of this Agreement
by Executive do not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which she is bound, (ii) Executive is not a
party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges that she has been advised to consult
with independent legal counsel regarding her rights and obligations under this
Agreement, and that she fully understands the terms and conditions contained
herein.
9. Survival. Sections 5, 6 and 7 and Sections 10 through 17 shall survive
and continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
10. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed by first class mail, return
receipt requested, to the recipient at the address below indicated:
Notices to Executive:
--------------------
Xxxxx X. Xxxxxx
00 Xxxxxxx Xxxxx
Xxxxx, Xxxxx 00000
Notices to the Company:
----------------------
Advantage Payroll Services, Inc.
000 Xxxxxx Xxxx
X.X. Xxx 0000
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Xx.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
11. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Complete Agreement. This Agreement, the Recapitalization Agreement,
those documents expressly referred to herein and other documents of even date
herewith embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations by
or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
13. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
14. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
15. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign her rights
or delegate her obligations hereunder without the prior written consent of the
Company.
16. Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Delaware, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
17. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company, the Executive and
the Investors, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
18. Termination of Existing Agreement. By the execution of this Agreement,
the parties agree to terminate the existing Employment and Non-Compete Agreement
dated February 10, 1998.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Employment and
Non-Compete Agreement as of the date first written above.
ADVANTAGE PAYROLL SERVICES, INC.
By: /s/ XXXXXXX X. XXXXXXX, XX.
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Its: President and CEO
/s/ XXXXX XXXXXX
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Xxxxx Xxxxxx
