EMPLOYMENT, SEVERANCE AND NON-SOLICITATION AGREEMENT
Exhibit 10.5
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 Xxxxx Xxxxxxxx,
an
individual resident of Georgia (“Employee”), effective as of January , 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 capacity of Senior Vice President of the Goldleaf division 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 six months (the
“Term”), and
shall be extended one day for each day it is in effect, such that the Term shall always remain six
months.
Section 1.03 Compensation and Benefits.
(a) Company shall pay employee a signing bonus of $171,500 upon the execution of this
Agreement.
(b) Company shall pay Employee a base salary at a rate of $200,000 per annum in
accordance with the normal salary payment practices of Company. The CEO (or the Board or the
compensation committee thereof if the Board or such committee so chooses) 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 CEO (or the Board or
the
compensation committee thereof if the Board or such committee so chooses).
(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 emplpyees 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 bis
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, 2005, as an inducement to
Employee to enter into this Agreement, Company granted Employee options to purchase 250,000
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 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 Person 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 2.02
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:
(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”).
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Section 2.03
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 bis
duties or in the course of Ms employment with Company;
(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
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(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.
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 six months following the date of the termination of Employee’s employment
with Company.
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.
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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.
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
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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.
(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.
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The parties indicate their acceptance of the foregoing arbitration requirement by initialing below:
| /s/ Xxxxx Xxxxxxxx | ||
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, effective as of the
Effective Date set forth herein.
Private Business, Inc.:
|
Employee: | |
/s/ G. Xxxx Xxxxx
|
/s/ Xxxxx Xxxxxxxx | |
G. Xxxx Xxxxx, CEO
|
Xxxxx Xxxxxxxx |
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ADDENDUM TO
EMPLOYMENT, SEVERANCE AND NON-SOLICITATION AGREEMENT
EMPLOYMENT, SEVERANCE AND NON-SOLICITATION AGREEMENT
This
Addendum to Employment, Severance and Non-Solicitation Agreement
(this “Addendum”) is
entered into between Private Business, Inc., a Tennessee corporation
(“Company”), and the
undersigned employee (“Employee”), effective as of January 31, 2006. This Addendum amends and
supplements the Agreement (as defined below). The parties hereto, in consideration of the mutual
benefits adhering to the parties hereto, and to induce Company to close the purchase of a business
for which Employee served as an executive, agree as follows:
1. Ownership. Employee agrees and acknowledges that all Work Product and all works
of
authorship and inventions, including without limitation products, goods, programming code,
know-how,
Trade Secrets and Confidential Information, and any improvements, modifications, enhancements,
derivative
works, and/or revisions to existing Work Products, products, goods, programming code,
know-how, Trade
Secrets and/or Confidential Information, in any form and in whatever stage of creation or
development,
arising from, or in connection with, the services provided by Employee to Company under this
Agreement or
at any time prior to the date of this
Agreement (collectively
“Property”), as they now exist
or are currently
used by Company or otherwise, or as they may exist in the future or have existed in the past,
are works made
for hire and shall be the sole and exclusive property of Company. Employee transfers and
assigns to
Company any and all right, title and interest in the Property and upon the future creation,
Employee
automatically assigns to Company, without further consideration, all Property later created,
in whatever form,
including all worldwide copyrights, patents, trade secrets, moral rights and confidential and
proprietary rights
there in and agrees to execute such documents as Company may reasonably request for the
purpose of
effectuating the rights of Company herein.
2. Definitions. The following definitions shall apply to this Addendum but not to
the
Agreement, as defined below:
“Agreement” means that certain Employment, Severance and Non-Solicitation Agreement between
Employee and Company dated the date of this Addendum.
“Confidential
Information” means all of Company’s confidential business information
or proprietary information, other than Trade Secrets, of value to Company that is treated as
confidential, including, without limitation, to the extent consistent with the foregoing,
technical and financial information and customer or client lists, relating to Company or its
business, salaries or bonus earned by Employee or other employees, programs or procedures,
information received by Company from actual or potential clients or customers of Company or other
third parties under confidential conditions, software, methods of production and distribution,
research, sales, sources of supply, Customers, Customer needs, marketing and promotional
strategies, price characteristics, policies, wage and salary structure, production and business
plans and schedules, and production and Customer specifications.
“Customer” means any bank or financial institution and any business, professional, individual
or entity with which Employee has had contact during the last two (2) years while employed by
Company and with which Company has entered into an agreement by which Company is to provide
products or services to such Customer. Customer also means any business, professional, individual
or entity whose accounts receivable are acquired or financed by a bank or financial institution
that Employee has had contact with during the last two (2) years while employed by Company and
which is a customer of Company. Customer also means any bank or financial institution and any
business, professional, individual or entity with which Employee has had contact during the last
two (2) years while employed by Company and with which Company has communicated regarding, or is
negotiating for, the provision of products or services on the date of separation of Employee from
employment with Company.
“Trade
Secrets” means information of Company, its licensers, suppliers, customers, or
prospective licensers or customers, including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes,
financial data, financial plans, products plans, or a list of actual or potential customers or
suppliers, which (a) 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 (b) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
The
terms “Confidential Information” and “Trade
Secrets” do not include: (a)
information which Employee establishes was already known to Employee without obligation to keep
such information confidential, at the time of its receipt from Company, as evidenced by documents
in the possession of Employee prepared or received prior to the receipt of the Trade Secrets or
Confidential Information; (b) information which Employee establishes was received by Employee in
good faith from a third party lawfully in possession and having no obligation to keep such
information confidential; or (c) information which Company establishes was publicly known at the
time of its receipt by Employee or has become publicly known other than by a breach of this
Agreement or other action by Employee.
For
purposes of this Addendum, “Work Product” shall mean the data, materials, documentation,
computer programs, inventions (whether or not patentable), pictures, audio, video, artistic works,
and all works of authorship, including all worldwide rights therein under patent, copyright, trade
secret, confidential information, or other property right, created or developed in whole or in
part by Employee, whether prior to the date of this Agreement or in the future, either (i) while
retained by Company and that have been or will be paid for by Company, or (ii) while employed by
Company (whether developed during work hours or not.) All Work Product shall be considered works
made for hire by the Employee and owned by Company. Company shall have the right to obtain and
hold in its own name copyrights, registrations, and any other protection available in the
Property.
Private Business, Inc.:
|
Employee: | |
/s/ G. Xxxx Xxxxx
|
/s/ Xxxxx X. Xxxxxxxx | |
G. Xxxx Xxxxx, CEO
|
Signature | |
| Xxxxx X. Xxxxxxxx | ||
| Please print name |
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