EXHIBIT 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is dated as of this ____ day
of August, 1996, by and between Preferred Payment Systems, Inc., a Delaware
corporation ("PPS"), and Xxxxx X. Xxxxx (the "Employee").
WHEREAS, PPS and Employee are parties to an employment agreement dated
January 1, 1994, which agreement is hereby amended and superseded in its
entirety;
WHEREAS, certain investors have agreed to provide financing (the
"Financing") to PPS subject to the terms of that certain Convertible Note
Purchase Agreement (the "Purchase Agreement"), dated as of the date hereof by
and among PPS, the shareholders identified therein (the "Shareholders"), and the
investors identified therein (the "Investors"), the proceeds of which will be
used to fund a dividend to Employee and other shareholders; and
WHEREAS, it is a condition to the Financing that the Company and the
Employee agree to the terms of employment of Employee as provided hereunder.
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and for other good and valuable considerations, the parties agree as
follows:
1. Employment and Position. Employee shall be employed as Executive Vice
President and Chief Operating Officer of PPS and shall serve subject to the
direction of the Board of Directors of PPS upon the terms, covenants and
conditions hereinafter set forth.
2. Initial Term. The effective date of this Agreement is September 1,
1996 and this Agreement shall control the employment relationship through August
31, 1998, unless sooner terminated as provided for herein.
3. Extension of Term. At the end of the initial term, this Agreement will
automatically renew for successive one-year periods, unless and until terminated
by either party giving the other party notice of the intent not to renew the
Agreement within thirty (30) days of the expiration of the initial term or a
renewal term, as appropriate, or as otherwise provided for herein. The terms of
this Agreement, if extended, shall remain the same as set forth herein.
4. Compensation.
------------
A. Base Salary. For the period commencing on September 1, 1997 and
ending August 31, 1997, PPS shall pay Employee a base salary of One Hundred
Forty Thousand Dollars ($140,000), payable biweekly. For all periods after
September 1, 1997, PPS shall pay Employee an annual base salary of One Hundred
Eighty Thousand Dollars ($180,000), payable biweekly.
B. Bonus. Upon the achievement of all of the covenants for a quarter
that are set forth in the $25 Million Credit Agreement among PPS, certain
lenders party thereto, Fleet National Bank, as co-administrator, and NationsBank
of Texas, N.A., as Administrative Lender, for each of the first four quarters
following the date hereof, PPS shall pay Employee a bonus of $9,000 payable
within 30 days after the end of such quarter. In addition to the foregoing
bonus, the Employee shall be entitled to participate in a bonus plan and receive
a bonus under such plan as may be established in the sole discretion of the
Compensation Committee.
5. Reimbursement for Expenses. Employee shall be reimbursed for all
reasonable, ordinary and necessary expenses upon receipt of appropriate receipts
and expense reports according to standard procedures established in the PPS
policy manual.
6. Duties. Employee shall serve as Executive Vice President and Chief
Operating Officer of the Company. In such positions, Employee shall have such
duties and authority as shall be determined from time to time by the Board of
Directors of the Company. It is agreed that Employee's duties shall be
performed with diligence, loyalty, good faith and due care under the
circumstances of the specific duty performed. During the term of his employment
hereunder, Employee will devote substantially all of his business time and
efforts to the performance of his duties hereunder.
7. Benefits. Employee will be entitled to employee benefits of the
Company, including, without limitation, vacation days, major medical, extended
medical and extended disability insurance on the same basis as those benefits
are generally made available to executives of the Company.
8. Disability and Sickness. If Employee is unable to perform his services
by reason of illness or incapacity, for a period of less than ninety days, the
compensation otherwise payable to Employee during that ninety day period shall
be paid in full during the period of such illness. In the event the illness
shall extend for longer than ninety days, compensation
-2-
from PPS shall cease. Employee's full compensation shall be reinstated upon his
return to employment and discharge of his full duties hereunder. Notwithstanding
anything herein to the contrary, PPS may terminate this Agreement at any time
after Employee has been absent from his employment for whatever unauthorized
cause (including illness), for a continuous period of more than ninety days,
and, except as provided for in Paragraph 10 below, all obligations of PPS
hereunder shall cease upon such termination.
9. Termination for Cause. In addition to the other provisions hereof, PPS
may terminate this Agreement upon written notice to Employee, effective upon
receipt, for any of the following causes:
A. fraud, embezzlement or other material dishonesty of the Employee
with respect to the Employer or any subsidiary or affiliate thereof;
B. the Employee's conviction or plea of nolo contendere to (A) a
felony or (B) a misdemeanor involving moral turpitude, deceit, dishonesty or
fraud;
X. xxxxx negligence or willful misconduct of the Employee with
respect to the Employer or any subsidiary or affiliate thereof; provided,
however, if susceptible to cure, following notice and a 10 business day
opportunity to cure;
D. substantial and continued breach by the Employee of the Employee's
obligations hereunder; provided, however, if susceptible to cure, following
notice and a 10 business day opportunity to cure; or
E. Competing with PPS during the terms of this Agreement, or
disclosures of an Confidential Information.
If this Agreement is terminated by PPS for any of these reasons, Employee
shall not be entitled to any further compensation or benefits from, and shall
have no claims against PPS.
10. Other Terminations. If Employee should terminate his employment with
PPS for any reason, PPS shall have no further obligations to him under this
Agreement or otherwise; provided that if PPS should terminate Employee's
employment under this Agreement or any extension thereof (as provided in
Paragraph 3, above) for any reason other than those set forth in Paragraph 9
above or Employee terminates his employment for Good Reason (as defined below),
then Employee shall be entitled to receive as severance pay an amount equal to
one week's worth of his Base
-3-
Salary multiplied by the number of years or portions thereof (rounded to the
highest whole number) that Employee has been employed by PPS. For the purposes
hereof, "Good Reason" shall mean (i) any reduction in Employee's Base Salary as
in effect on the date hereof as the same may be increased from time to time or
any material decrease in Employee's benefits (except as such benefits may be
decreased for all employees of the Company) or (ii) the office where Employee
works is relocated more than 50 miles away from where Employee currently works.
11. Confidential Information. In this Agreement:
------------------------
A. "Confidential Information" means information, not generally known,
and proprietary to PPS, including trade secret information, about their
processes and products, including information relating to fee negotiation
methodology, research, development, manufacture, purchasing, accounting,
engineering, marketing, merchandising, selling, leasing, servicing, finance and
business systems and techniques. All information disclosed to Employee, or
which Employee obtains access, whether originated by him or others, during the
period of his employment, which he has a reasonable basis to believe to be
Confidential Information, or which is treated by PPS as being Confidential
Information, shall be presumed to be Confidential Information.
B. "Inventions" means discoveries, improvements and ideas (whether or
not shown or described in writing or reduced to practice) works of authorship,
whether or not patentable or copyrightable, (1) which related directly to the
business of PPS, or (2) which related to their actual or demonstrable
anticipated research or development, or (3) which result from any work performed
by Employee for PPS, or (4) for which equipment, supplies, facility or trade
secret information of PPS is used, or (5) which is developed on any PPS time.
C. "Conflicting Product" means any product, process, system or
service of any person or organization other than PPS, in existence or under
development, which is the same as or similar to or competes with, or has a usage
allied to, a product, process, system or service which Employee was involved
with or had knowledge of (in either a sales or a non-sales capacity) during his
employment by PPS or about which he acquired Confidential Information.
D. "Conflicting Organization" means any person or organization which
is engaged in or about to become engaged in, research on or development,
production, marketing, leasing, selling or servicing of a Conflicting Product.
-4-
With respect to Inventions made, authored or conceived by Employee,
either solely or jointly with others (1) during his employment, whether or not
during normal working hours or whether or not at PPS' premises, or (2) within
two (2) years after termination of his employment, he will:
E. Keep accurate, complete and timely records of such Inventions,
which records shall be PPS' property and be retained on PPS' premises.
F. Promptly and fully disclose and described such Inventions in
writing to PPS.
G. Assign (and he does hereby assign) to PPS all of his rights to
such Inventions, and to applications for letters patent and/or copyright in all
countries and to letters patent and/or copyrights granted upon such inventions
in all countries.
H. Acknowledge and deliver promptly to PPS (without charge to them
but at their expenses) such written instruments and to do such other acts as may
be necessary in the opinion of PPS to preserve property rights against
forfeiture, abandonment or loss and to obtain and maintain letters patent and/or
copyrights and to vest the entire right and title thereto to PPS.
NOTICE: This is to notify Employee that this paragraph of the "Employee
Agreement" he is being asked to sign as a condition of his employment
does not apply to an Invention for which no equipment, supplies,
facility or trade secret information of PPS was used and which was
developed entirely on his own time, and which (1) does not relate (a)
directly to the business of PPS, or (b) to their actual or
demonstrably anticipated research or development, or (2) does not
result from any work performed by him for PPS.
I. Except as required in his duties to PPS, Employee will never,
either during this employment or anytime thereafter, use or disclose any
Confidential Information as defined hereinabove. Upon termination of Employee's
employment with PPS, all records, any composition, articles, devices, and other
items which disclose or embody Confidential Information including all copies or
specimens thereof in his possession, whether prepared or made by him or others,
will be left with or immediately returned to PPS. Except as listed at the end
of this Agreement, Employee will not assert any rights under any Inventions as
having been made, conceived, authored or acquired by him prior to his being
employed by PPS.
-5-
J. The Employee hereby confirms that the Employee is not bound by the
terms of any agreement with any previous employer or other party which restricts
in any way the Employee's use or disclosure of information or the Employee's
engagement in any business. The Employee represents to PPS that the Employee's
execution of this Agreement, the Employee's employment with PPS and the
performance of the Employee's proposed duties for PPS will not violate any
obligations the Employee may have to any such previous employer or other party.
12. Noncompetition. Employee hereby agrees that during the term of this
Agreement and for a period of two (2) years from the termination of his
employment for any reason, he will neither directly nor indirectly engage or be
interested in any business competing with PPS or their successors, or directly
or indirectly engage or be interested in any business competing with PPS or
their successors, nor directly or indirectly have any interest to own, manage,
operate, control, or be connected with as a stockholder, joint venturer,
officer, employee, partner, or consultant, or otherwise engage or invest or
participate in any business which shall compete with PPS or successor of PPS in
the continental United States. Neither shall Employee solicit business from any
client or customer of PPS or any source of referrals for PPS, wherever located,
nor shall the Employee hire or attempt to employ, recruit or otherwise solicit,
induce or influence any person to leave employment with PPS during such two (2)
year period following termination of his employment. In addition, for a period
of two (2) years after the termination of this employment with PPS, Employee:
A. Will inform any new employer, prior to accepting employment, of
the existence of this Employee Agreement and provide such employer with a copy
thereof.
B. If he has been or is employed by PPS in a sales capacity, he will
not render services in the United States, directly or indirectly, to any
Conflicting Organization in connection with the development, manufacture,
marketing, sale, merchandising, leasing, servicing or promotion of any
Conflicting Product to any person or organization upon whom he called, or whose
account he supervised on behalf of PPS, at any time during his employment.
C. If he has been or is employed by PPS in a non-sales capacity, he
will not render to any Conflicting Organization, services, directly or
indirectly, in the United States or in any country in which PPS has a plant for
manufacturing a product upon which he worked during his employment or in which
PPS provided a service in which he participated during his employment, except
that he may accept employment with a large Conflicting
-6-
Organization whose business is diversified (and which has separate and distinct
divisions), and which as to part of its business is not a Conflicting
Organization, provided PPS, prior to his accepting such employment, shall
receive separate written assurances satisfactory to them from such Conflicting
Organization and from Employee, that he will not render services directly or
indirectly in connection with any Conflicting Product.
The parties hereto agree that damages would be an inadequate remedy for PPS
in the event of a breach or threatened breach of this Agreement, and thus, in
any such event, PPS may, either with or without pursuing and potential damage
remedies, immediately obtain and enforce an injunction prohibiting Employee from
violating this Agreement and Employee waives any requirements that PPS post a
bond in the event of such injunction proceeding.
13. Employment Policies. Employee shall be given a copy of the employment
policies which shall be deemed to be an integral part of the Agreement and by
reference are incorporated herein; provided, however, that if and to the extent
PPS' employment policies are contrary to or inconsistent with this Agreement,
this Agreement shall be controlling. Copies of said employment policies shall
be available for copying and inspection from PPS during any regular business
day.
14. Death During Employment. If Employee dies during the term of this
Agreement, PPS shall pay to the estate of Employee the compensation which would
otherwise be payable to Employee up to the end of the month in which the death
occurs. In addition, Employee shall receive death benefits to the extent, if
any, provided under any group insurance policy maintained for qualifying
employees of PPS.
15. Breach or Enforcement of the Agreement. In the event of a legal
action by either party based upon this Agreement, the prevailing party is
entitled to an award of costs of court, attorneys' fees, experts' fees, and any
other cost or expense reasonably incurred in prosecuting the action. PPS shall
be entitled to temporary and permanent injunctive relief, in addition to any
other remedies provided at law or in equity, in the event Employee breaches his
obligations under Sections 11 and 12 of this Agreement.
16. Jurisdiction, Construction and Venue. This Agreement has been
negotiated and executed and is to be performed in the State of Illinois, and all
of its terms, covenants and conditions shall be construed according to the laws
thereof. In the event of a legal action by either party based on this Agreement,
each party submits to jurisdiction of the State of Illinois, and
-7-
agrees that said jurisdiction is the sole jurisdiction in which a legal action
relating to the Agreement may be initiated.
17. Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered mail to
Employee and/or PPS as follows:
Preferred Payment Systems, Inc. 0000 Xxxxx Xxxx Xxxx
0000 Xxxx Xxxxx Xxxx, Xxxxx 000 Xxxx Xxxx Xxxx, XX 00000
Xxxxxxxxxx, XX 00000
In the event of a change of address, the party making the change shall
notify the other in writing. If no notice of change is stated, notice shall be
effective if delivered to the address stated herein.
18. Waiver. No term or provision hereof shall be deemed to have been
waived and no breach excused unless the waiver or excuse is in writing executed
by the party claimed to have waived or excused performance. Any waiver or
excuse, whether express or implied, shall not operate as an excuse or waiver for
any subsequent or different breach or failure to perform.
19. Severability. in the event any paragraph, section or portion of this
Agreement shall be found void, unconstitutional or unenforceable, the remaining
terms, covenants and conditions of this Agreement shall remain in full force and
effect, and the portion found to be void, unenforceable or unconstitutional
shall be stricken and the remaining terms hereof shall be construed as though
said portion did not exist.
20. Benefit of Agreement. This Agreement contemplates the personal
services of Employee and may not be assigned by him. The rights and obligations
of PPS under this Agreement shall inure to the benefit of and shall be binding
upon the transferee, successors and assigns of PPS, unless terminated as
provided herein.
21. Entire Agreement. This instrument contains the entire Agreement
between the parties, and supersedes all prior written or oral agreements between
the parties, including the Employment Agreements between the parties dated
January 1, 1994. It may not be modified or amended except by an agreement in
writing signed by both parties.
* * * *
-8-
