AMENDED AND RESTATED SEPARATION AGREEMENT
Exhibit
10.60
AMENDED
AND RESTATED
This
Amended and Restated Separation Agreement (this
“Agreement”) is made and entered into as of the [__]
day of [__________], 200_, by and between Electronic Clearing House, Inc.,
a
Nevada corporation (the “Company”) and [____________]
(“Executive”) and supersedes and replaces that certain
Separation Agreement, dated as of May 11, 2006, by and between the parties
relating to the same subject matter and upon execution, such former Separation
Agreement shall be null and void and of no further force and
effect.
RECITALS
WHEREAS,
Executive is employed by the Company as the [___________] of the Company;
and
WHEREAS,
the Company considers it essential to its best interests and to the best
interests of its stockholders to xxxxxx the continuous employment of its key
personnel.
NOW,
THEREFORE, in consideration of the mutual covenants and promises herein
contained and other good and valuable consideration, receipt and sufficiency
of
which are hereby acknowledged, the parties hereby agree as follows:
1. Definitions.
a. “Anticipated
Annual Bonus” shall mean the highest possible annual bonus award
to be received by Executive in a given fiscal year based upon and assuming
the
successful completion by each of the Company and Executive, as applicable,
of
performance criteria previously determined by the Board of Directors of the
Company for such fiscal year.
b. “Change-in-Control”
shall mean the consummation of (i) a merger, consolidation, plan of share
exchange, or other reorganization involving the Company (a “Merger”) ,
if more than 50% of the combined voting power (which voting power shall be
calculated by assuming the conversion of all equity securities convertible
(immediately or at some future time) into shares entitled to vote, but not
assuming the exercise of any warrant or right to subscribe to or purchase those
shares) of the continuing or surviving entity’s securities outstanding
immediately after such merger, consolidation, plan of share exchange or other
reorganization is owned, directly or indirectly, by persons who were not
stockholders of the Company immediately prior to such merger, consolidation,
plan of share exchange or other reorganization; provided, however,
that in making the determination of ownership by the stockholders of the
Company, immediately after the reorganization, equity securities which persons
own immediately before the reorganization as stockholders of another party
to
the transaction shall be disregarded; (ii) the sale, lease, exchange, transfer
or other disposition (in one transaction or a series of related transactions)
of
all or substantially all of the Company’s assets; or (iii) any Person (as
defined below) shall have become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) directly or indirectly, of securities of
the
Company ordinarily having the right to vote for the election of directors
representing 50% or more of the combined voting power of the then outstanding
securities of the Company ordinarily having the right to vote for the election
of directors; and provided, further, that an event shall
constitute a Change-in-Control only if such event is a change in the ownership
or effective control, or in the ownership of a substantial porion of the assets,
within the meaning of Section 409A(a)(2)(A)(v) of the Code .
c. “Code”
means the Internal Revenue Code of 1986, as amended.
d. “Common
Stock” means the common stock, $.01 par value of the
Company.
e. “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
References to a particular section of the Exchange Act include references to
successor provisions.
f. “Involuntary
Termination” shall mean Executive's cessation of the provision of
services following (i) a material reduction in Executive's function, authority,
duties, or responsibilities, without Executive's express written consent; (ii)
a
material reduction in salary or (iii) the Company’s material breach of this
Agreement; provided, that, the Executive has provided notice to the
Company of the existence of the conditions described above within 90 days of
the
initial discovery of the condition by Executive and, provided, further,
that upon such notice, the Company has been provided a 30 day period during
which it may remedy the condition. If the condition is so remedied,
any related cessation of the provision of services shall not be deemed an
“Involuntary Termination” hereunder.
g. “Options”
shall mean options issued by the Company to the Executive to purchase Common
Stock pursuant to the Company's Amended and Restated 2003 Incentive Stock Option
Plan.
h. “Person”
shall mean and include any individual, corporation, partnership, group,
association or other “person”, as such term is used in Section 14(d) of the
Exchange Act, other than the Company, any Subsidiary of the Company or any
employee benefit plan(s) sponsored by the Company.
i. “Restricted
Stock” shall mean shares of Common Stock acquired by Executive
pursuant to, or outside of, the Company's Amended and Restated 2003 Incentive
Stock Option Plan.
j. “Sales
Commission Plan” shall mean a plan setting forth, for a given
fiscal year, sales commission compensation payable to Executive based on
performance criteria previously determined by the Board of Directors of the
Company for such fiscal year.
k. “Subsidiary”
means (a) any corporation of which more than 50% of the Voting Securities are
at
the time, directly or indirectly, owned by the Company, (b) any partnership
or
limited liability company in which the Company has a direct or indirect interest
(whether in the form of voting power or participation in profits or capital
contribution) of more than 50%, and (c) any other entity designated by the
Board
of Directors of the Company (“Board”) in which the
Company has a direct or indirect interest.
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l. “Termination
Date” shall mean the date in which Executive (i) is terminated by
the Company without Cause, or (ii) ceases to provide services to the Company
as
a result of an Involuntary Termination with respect to Executive.
m. Termination
for “Cause” shall mean termination by reason of: (i)
any act or omission knowingly undertaken or omitted by Executive with the intent
of causing damage to the Company or its affiliates, its properties, assets
or
business, or its stockholders, officers, directors or employees; (ii) any act
of
Executive involving a material personal profit to Executive, including, without
limitation, any fraud, misappropriation or embezzlement, involving properties,
assets or funds of the Company or any of its subsidiaries; (iii) Executive's
consistent failure to perform his normal duties or any obligation under any
provision of this Agreement, in either case, as directed by the Board; (iv)
conviction of, or pleading nolo contendere to, (A) any crime or offense
involving monies or other property of the Company; (B) any felony offense;
or
(C) any crime of moral turpitude; or (v) the chronic or habitual use or
consumption of drugs or alcoholic beverages.
n. “Total
Cash Compensation” shall mean an amount equal to the sum
of Executive's annual base salary for the prior fiscal year including any bonus
awards.
o.
“Voting Securities” shall mean the issued and
outstanding shares of Common Stock of the Company that are entitled to vote
on a
particular matter.
2. Vesting.
Subject to the limitations of Section 5, in the event of a Change in Control,
and provided that Executive is employed by the Company at the time of such
Change in Control: (i) all of the outstanding Options shall become immediately
vested and exercisable, and (ii) the entire unvested portion of any shares
of
Restricted Stock shall accelerate and immediately vest.
3. Payment
of Bonus. Subject to the limitations of Section 5, in the event
of a Change in Control, and provided that Executive is employed by the Company
at the time of such Change in Control, Executive shall be entitled to receive
the following: (A) (i) in the event such Change in Control occurs in the first
six (6) months of the Company’s then existing fiscal year, Executive shall
receive a one time lump-sum cash payment equal to the product of Executive’s
Anticipated Annual Bonus, multiplied by 0.50, or (ii) in the event
such Change in Control occurs during any period following the first six (6)
months of the Company’s then existing fiscal year, Executive shall receive a one
time lump-sum cash payment equal to a pro-rated portion of Executive’s
Anticipated Annual Bonus, pro-rated based upon the number of months of service
the Executive had provided in the then existing fiscal year (each a
“Bonus Payment”); and (B) in the event that Executive
is entitled to receive commissions based on sales under any then existing Sales
Commission Plan, Executive shall be entitled to receive any and all then earned
sales commissions (“Sales Commission Payments”) for
the remainder of the then existing fiscal year (notwithstanding when the Change
in Control occurs). Any Bonus Payment shall be payable by Company (or
its corporate successor) to Executive within five (5) business days following
the consummation of such Change in Control, and any Sales Commission Payments
will be payable in accordance with the terms of the Sales Commission
Plan. The Company shall cause any successor/acquiring entity in such
Change in Control to adopt the Sales Commission Plan.
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4. Termination.
Subject to the limitations of Section 5, in the event that (i) a Change in
Control occurs with respect to the Company (and provided that Executive is
employed by the Company at the time of such Change in Control), and (ii) within
a period of two (2) years following the closing of such Change in Control,
Executive either (a) is terminated by the Company (or its corporate successor)
without Cause, or (b) ceases to provide services to the Company (or its
corporate successor) as a result of an Involuntary Termination with respect
to
Executive, then Executive shall be entitled to receive the following
compensation:
(i)
[__________ percent (__%)] of the total amount of Executive's Total
Cash Compensation; such payment to be made in a lump sum, payable by Company
(or
its corporate successor) to Executive within five (5) business days following
the Termination Date; and
(ii) for
a
period of [**less than or equal to 2** (___) years] after the Termination Date,
the Company (or its corporate successor) shall continue to make available to
Executive medical benefits on a basis that is substantially similar (in benefits
to Executive and costs to Company), in the aggregate, to the benefits that
were
available to the Executive immediately prior to the Change in
Control.
The
parties intend that the compensation payable pursuant to subsection (i) above
shall be treated as a short-term deferral as that term is used in section 409A
of the Code and the regulations promulgated thereunder (collectively,
“section 409A”).
5. Statutory
Limitations.
a. Notwithstanding
any other provision of this Agreement, in the event the Company determines,
based upon the advice of the tax advisors for the Company, that part or all
of
the consideration, compensation or benefits to be paid to Executive under this
Agreement constitute "parachute payments" under Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended, then, if the aggregate present value
of such parachute payments, singularly or together with the aggregate present
value of any consideration, compensation or benefits to be paid to Executive
under any other plan, arrangement or agreement which constitute "parachute
payments" (collectively, the "Parachute Amount")
exceeds 2.99 times the Executive's "base amount," as defined in Section
280G(b)(3) of the Code (the "Executive Base Amount"),
the amounts constituting "parachute payments" which would otherwise be payable
to or for the benefit of Executive shall be reduced to the extent necessary
so
that the Parachute Amount is equal to 2.99 times the Executive Base Amount
(the
"Reduced Amount"); provided, however, that
Company shall pay to Executive the Parachute Amount without reduction if the
Company determines that payment of the Parachute Amount would generate more
after-tax income to Executive than the Reduced Amount.. In the event
of a reduction of the payments that would otherwise be paid to Executive, then
the Company may elect which and how much of any particular entitlement shall
be
eliminated or reduced and shall notify Executive promptly of such election;
provided, however that the aggregate reduction shall be no more than as set
forth in the preceding sentence of this Section 5(a). Within ten (10)
days following such election, the Company shall pay to Executive such amounts
as
are then due under this Agreement and shall pay to Executive in the future
such
amounts as become due under this Agreement. As a result of the
uncertainty in the application of Section 280G of the Code at the time of a
determination hereunder, it is possible that payments will be made by the
Company which should not have been made
("Overpayment") or that additional payments which are
not made by the Company pursuant to this Section 5(a) should have been made
("Underpayment"). In the event of a final
determination by the Internal Revenue Service, a final determination by a court
of competent jurisdiction or a change in the provisions of the Code or
regulations or tax law, that an Overpayment has been made, any such Overpayment
shall be treated for all purposes as a loan to Executive which Executive shall
repay to the Company together with interest at the applicable federal rate
provided for in Section 7872(f)(2) of the Code. In the event of a
final determination by the Internal Revenue Service, a final determination
by a
court of competent jurisdiction or a change in the provisions of the Code or
regulations or tax law pursuant to which an Underpayment arises under this
Agreement, any such Underpayment shall be promptly paid by the Company to or
for
the benefit of Executive, together with interest at the applicable federal
rate
provided for in Section 7872(f)(2) of the Code.
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b. If
Officer is a “specified employee” within the meaning of Code
§ 409A(a)(2)(B)(i) and any payment required to be made pursuant to Section
3 or 4 is subject to Code § 409A and not exempt from those requirements under
any applicable regulations or other guidance of general applicability, then
any
such payment otherwise payable on account of Officer’s termination of employment
during the period ending on the date that is six months after the Date of
Termination shall be paid in a lump sum on the date that is six months after
Officer’s Date of Termination instead of the date on which it would
otherwise be paid.
6. Termination
of
Agreement. In
the event that Executive ceases to provide services to the Company (or its
successor) for any reason, prior to a Change of Control, this Agreement shall
terminate without further action by the Company or Executive, and shall
thereafter be deemed null and void.
7. General
Release and Waiver. As a condition to any payment under this
Agreement, in addition to the other requirements set forth herein, Executive
shall enter into and deliver to the Company a general release and waiver in
such
form and containing such terms and conditions as the Board may
require.
8. Executive
Covenants.
a. For
a period of one (1) year after the Termination Date (“Restricted
Period”), Executive covenants not to, either directly or
indirectly, for Executive or on behalf of or in conjunction with any other
person, company, partnership, corporation, business, group, or other entity
(each, a “Person”), solicit or attempt to solicit,
recruit or attempt to recruit any employee, agent, or contract worker of the
Company with whom Executive had contact during the course of [his or her]
employment with the Company.
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b. Executive
further covenants and agrees that during the Restricted Period, Executive shall
not, either directly or indirectly, for [himself or herself] or on behalf of
or
in conjunction with any other person or entity, (i) induce or attempt to induce
any employee, officer or consultant of the Company to supply Confidential
Information or Trade Secrets, as defined in Section 9 herein, of the
Company to any third person, firm or corporation, or (ii) induce or attempt
to
induce any Person who, as of the date of the inducement or attempted inducement
or within twelve (12) months prior to that date, is or was a customer, supplier,
vendor, licensee, licensor or other business relation of the Company, to cease
doing business with the Company or in any way interfere with the relationship
between any such customer, supplier, vendor, licensee, licensor or other
business relation and the Company.
c. The
covenants in this Section 8 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of
any
other covenant. If any provision of this Section
8 relating to the time period, scope, or geographic
areas of the restrictive covenants shall be declared by a court of competent
jurisdiction to exceed the maximum time period, scope, or geographic area,
as
applicable, that such court deems reasonable and enforceable, then this
Agreement shall automatically be considered to have been amended and revised
to
reflect such determination.
d. All
of the covenants in this Section 8 shall be construed as an agreement
independent of any other provisions in this Agreement, and the existence of
any
claim or cause of action Executive may have against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the
enforcement by the Company of such covenants.
e. Executive
has carefully read and considered the provisions of this Section 8 and,
having done so, agrees that the restrictive covenants in this Section 8
impose a fair and reasonable restraint on Executive and are reasonably required
to protect the interests of the Company and its officers, directors, employees,
and stockholders.
9. Trade
Secrets and Confidential Information.
a. For
purposes of this Section, “Confidential Information”
means any data or information (other than Trade
Secrets) that is valuable to the
Company (or, if owned by someone else, is valuable to that third party) and
not
generally known to the public or to competitors in the industry, including,
but
not limited to, any non-public information (regardless of whether in writing
or
retained as personal knowledge) pertaining to research and development; product
costs and processes; stockholder information; pricing, cost, or profit factors;
quality programs; annual budget and long-range business plans; marketing plans
and methods; contracts and bids; and personnel. “Trade
Secret” means information including, but not limited to, any
technical or nontechnical data, formula, pattern, compilation, program, device,
method, technique, drawing, process, financial data, financial plan, product
plan, list of actual or potential customers or suppliers or other information
similar to any of the foregoing, which (i) 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 derive economic value
from its disclosure or use and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
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b. Executive
acknowledges that [he or she] has been employed by the Company in a confidential
relationship wherein [he or she], in the course of his employment with the
Company, has received and has had access to Confidential Information and Trade
Secrets of the Company and accordingly, [he or she] is willing to enter into
the
covenants contained in Sections 9, 10, and 11 of this
Agreement in order to provide the Company with what [he or she] considers to
be
reasonable protection for its interests.
c. Executive
hereby agrees that, during the Restricted Period, [he or she] will hold in
confidence all Confidential Information of the Company that came into [his
or
her] knowledge during [his or her] employment by the Company and will not
disclose, publish or make use of such Confidential Information without the
prior
written consent of the Company.
d. Executive
hereby agrees to hold in confidence all Trade Secrets of the Company that came
into [his or her] knowledge during [his or her] employment by the Company and
shall not disclose, publish, or make use of at any time after the Termination
Date such Trade Secrets without the prior written consent of the Company for
as
long as the information remains a Trade Secret.
e. Notwithstanding
the foregoing, the provisions of this Section will not apply to
(i) Confidential Information or Trade Secrets that otherwise become
generally known in the industry or to the public through no act of Executive
or
any person or entity acting by or on Executive's behalf, (ii) information
independently developed by Executive without reference to the Company's
Confidential Information or Trade Secrets, or (iii) disclosure of Confidential
Information or Trade Secrets to the extent required to be disclosed by a court
or governmental agency pursuant to a statute, regulation or valid order
(provided that Executive first notifies the Company and gives it the opportunity
to seek a protective order or to contest such required disclosure).
f. The
parties agree that the restrictions stated in this Section 9 are in
addition to and not in lieu of protections afforded to trade secrets and
confidential information under applicable state law. Nothing in this
Agreement is intended to or shall be interpreted as diminishing or otherwise
limiting the Company's rights under applicable state law to protect its trade
secrets and confidential information.
10. Return
of Company Property. Upon the Termination Date or as promptly
thereafter as is practicable, Executive shall deliver to the Company all
correspondence, reports, records, designs, patents, business plans, financial
statements, manuals, memoranda, customer lists, customer databases, charts,
advertising materials, other similar data and other property delivered to or
compiled by Executive by or on behalf of the Company or its representatives,
vendors or customers which pertain to the business of the Company or future
plans of the Company.
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11. No
Prior Agreements. Executive hereby represents and warrants that
the execution of this Agreement by Executive and the performance of his duties
hereunder will not violate or be a breach of any agreement with the Company,
a
former employer, client, or any other person or entity.
12. Assignment;
Binding Effect. No assignment or transfer by any party of such
party's rights and obligations under this Agreement will be made except with
the
prior written consent of the other parties to this Agreement; provided that
the
Company may assign this Agreement only to the Successor (as hereinafter
defined), provided that any such assignee shall assume this Agreement in a
writing delivered to Executive. Further, upon Executive’s written
request, the Company will seek to have any Successor (as hereinafter defined),
by agreement in form and substance satisfactory to Executive, assent to the
fulfillment by the Company of its obligations under this
Agreement. Failure of the Company to obtain such assent prior to or
at the time a Person becomes a Successor shall constitute a material breach
of
this Agreement if a Change in Control of the Company has
occurred. For purposes of this Agreement,
“Successor” shall mean any Person that succeeds to, or
has the practical ability to control (either immediately or with the passage
of
time), the Company’s business directly, by merger, consolidation or purchase of
assets, or indirectly, by purchase of the Company’s Voting Securities or
otherwise. Subject to the preceding sentences, this Agreement shall
be binding upon, inure to the benefit of, and be enforceable by the parties
and
their respective heirs, legal representatives, successors, and permitted
assigns.
13. Complete
Agreement; Waiver; Amendment. Executive has no oral
representations, understandings, or agreements with the Company or any of their
respective officers, directors, or representatives covering the same subject
matter as this Agreement. This Agreement is the final, complete, and
exclusive statement of expression of the agreement between the Company and
Executive with respect to the subject matter hereof, and cannot be varied,
contradicted, or supplemented by evidence of any prior or contemporaneous oral
or written agreements. This written Agreement may not be later
modified except by a further writing signed by duly authorized officers of
the
Company and by Executive, and no term of this agreement may be waived except
by
a writing signed by the party waiving the benefit of such term.
14. Notice. Whenever
any notice is required hereunder, it shall be given in writing addressed as
follows:
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To
the Company:
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Electronic
Clearing House, Inc.
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000
Xxxxx Xxxxxxxxx
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Xxxxxxxxx,
Xxxxxxxxxx 00000
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Attn:
Board of Directors
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Facsimile
No.: (000) 000-0000
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To
the Executive:
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_________________ | ||
| _________________ | |||
| _________________ | |||
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Facsimile
No.: (___) ________
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15. Severability;
Headings. If any provision of the Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by the decision of any arbitrator or by decree of a
court
of last resort, the parties shall promptly meet and negotiate substitute
provisions for those rendered or declared illegal or unenforceable to preserve
the original intent of this Agreement to the extent legally possible, but all
other provisions of this Agreement shall remain in full force and
effect.
16. Equitable
Remedy. Because of the difficulty of measuring economic losses to
the Company as a result of a breach of the covenants set forth in Sections 8
through 12, and because of the immediate and irreparable damage that would
be caused to the Company for which monetary damages would not be a sufficient
remedy, it is hereby agreed that in addition to all other remedies that may
be
available to the Company at law or in equity, the Company shall be entitled
to
specific performance and any injunctive or other equitable relief as a remedy
for any breach or threatened breach of Executive's covenants.
17. Jointly
Drafted. The parties and their respective counsel have
participated jointly in the negotiation and drafting of this
Agreement. In the event that an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring
or
disfavoring any party by virtue of the authorship of any of the provisions
of
this Agreement.
18. Governing
Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of California, not
including the choice-of-law rules thereof. All disputes arising from
or relating to this Agreement shall be subject to the exclusive jurisdiction
of
and be litigated in the state or federal courts located in the State of
California. All parties hereby consent to the exclusive jurisdiction
and venue of such courts for the litigation of all disputes and waive any claims
of improper venue, lack of personal jurisdiction, or lack of subject matter
jurisdiction as to any such disputes.
19. Attorney's
Fees. The losing party shall be liable to the prevailing party
for its reasonable costs and attorney's fees incurred in any action to enforce
this Agreement.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
| Electronic Clearing House, Inc. | |||
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By:
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Name:
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Title:
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EXECUTIVE:
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[______________]
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