This Employment Agreement involves
Title: AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Governing Law: Pennsylvania Date: 8/29/2016
Industry: Misc. Financial Services Law Firm: Dechert Sector: Financial
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “ Agreement ”), dated as of August 23, 2016 (the “ Effective Date ”), is made by and between JetPay Corporation (the “ Employer ”) and Michael Collester (“ Executive ”).
WHEREAS, ACI Merchant Systems, LLC, a wholly owned subsidiary of the Employer (“ ACI ”), and Executive are parties to that certain Employment Agreement dated as of November 7, 2014 (the “ Prior Employment Agreement ”);
WHEREAS, the parties desire to enter into this Agreement to, among other things, amend and restate the Prior Employment Agreement in its entirety;
WHEREAS, Executive is currently employed by ACI as the CEO of ACI; and
WHEREAS, the Employer desires to employ Executive as the Chief Operating Officer of the Employer, and Executive agrees to accept such employment, in accordance with the terms and conditions set forth in this Agreement.
NOW, THEREFORE, 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 to this Agreement, intending to be legally bound, hereby agree as follows:
1. Employment . The Employer agrees to employ Executive, and Executive accepts such employment hereunder, for a period beginning on the Effective Date through December 31, 2017 (the “Initial Termination Date”) unless terminated sooner in accordance with Section 1(c) (the “Employment Period”). Notwithstanding the foregoing, the Employment Period shall be automatically extended for an additional one-year period beginning on the Initial Termination Date and on each subsequent anniversary of the Initial Termination Date thereafter unless either party notifies the other party in writing of its decision not to extend the Employment Period at least 90 days prior to the automatic extension thereof or the Employment Period is otherwise terminated in accordance with Section 1(c) .
(a) Position and Duties .
(i) During the Employment Period, Executive shall serve as the Chief Operating Officer of the Employer and in such other positions with the Employer’s Affiliates (for no additional compensation) as are determined by the Board and shall have the normal duties, responsibilities and authority implied by such position(s) and such other duties and responsibilities as are assigned by the Board or its designee(s); provided that Executive’s principal place of employment shall remain at the Employer’s offices in Bucks County, Pennsylvania, although Executive acknowledges that his position will require travel and the performance of work on behalf of the Employer away from the principal place of employment, including in and around Dallas, Texas.
(ii) During the Employment Period, Executive shall faithfully, conscientiously and to the best of his ability devote Executive’s full business time and attention to the business and affairs of the Employer and its Affiliates. Executive shall not engage, directly or indirectly, in any other business, investment or activity that (a) interferes with the performance of Executive’s duties under this Agreement (which shall include, without limitation, the preceding sentence), (b) is contrary to the interests of the Employer or any of its Affiliates or (c) requires any portion of Executive’s business time; provided , however , that, to the extent that the following does not impair Executive’s ability to perform Executive’s duties pursuant to this Agreement (which shall include, without limitation, the preceding sentence), Executive may (1) serve on the board or committee of any charitable, religious, or educational institution and (2) serve as a director of such other organizations.
(b) Salary, Bonus, Benefits and Expenses .
(i) Salary . During the Employment Period, the Employer will pay Executive an initial base salary of $300,000 per annum for the period from the Effective Date through December 31, 2016 and $325,000 per annum thereafter (the “ Base Salary ”). The Board may from time to time, in its sole discretion, review the Base Salary of Executive and increase (but not decrease) the Base Salary by such amount as the Board, in its sole discretion, shall deem appropriate, based upon the performance of Executive. The term “ Base Salary ” as used in this Agreement shall refer to the Base Salary as it may be so increased.
(ii) Annual Bonus . During the Employment Period, Executive shall be eligible to receive an annual bonus as determined by the Board in its sole discretion.
(iii) Benefits . During the Employment Period, Executive shall be eligible to participate in and be covered on the same basis as other similarly situated senior management employees of the Employer, under all employee benefit plans and programs of the Employer, including, without limitation, vacation, paid-time off, retirement, health insurance and life insurance.
(iv) Expenses . Employer shall pay or reimburse Executive for reasonable and necessary expenses directly incurred by Executive in the course of Executive’s employment by Employer in accordance with Employer’s standard policies and practices as in effect from time to time. All reimbursements under this Section 1(b)(iv) shall be made as soon as practicable following submission of a reimbursement request, but no later than the end of the calendar quarter following the month during which the underlying expense was incurred. No right of Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit.
(v) Rental Home . During the Employment Period, the Employer shall (i) rent for Executive an apartment in or around Dallas, Texas for use in connection with his service to the Employer, at a rental cost not to exceed $2,500 per month, and (ii) reimburse Executive for the reasonable costs for Executive to fly to and from Dallas, Texas.
(c) Separation . The Employment Period will terminate immediately upon Executive’s death. In addition, the Employer may, at any time, terminate the Executive’s employment and the Employment Period with or without Cause, or due to Executive’s Disability, in each case, upon written notice to Executive of such termination, and Executive may terminate the Employment Period with or without Good Reason upon 60 days’ advance written notice to the Employer. Effective immediately upon any Separation, Executive shall resign, and shall be deemed to have resigned, from all officer, employee and director positions held by Executive with the Employer or any of its Affiliates.
(d) Severance .
(i) Termination Without Cause or for Good Reason . If Executive’s employment with the Employer and its Affiliates is terminated during the Employment Period by the Employer without Cause (other than by notice of nonrenewal of the Employment Period) or by Executive for Good Reason, the Employer shall provide Executive with the following payments and benefits:
(1) contingent upon the effectiveness of a reasonable general release of claims in form and substance satisfactory to the Employer which is executed within forty-five (45) days of the date of such termination, (A) Base Salary continuation during the period commencing on the sixtieth (60 th ) date following such Separation and ending sixty (60) days following the last day of the then-current Employment Period without giving effect to any automatic extension thereof (the “ Severance Period ”); (B) provided that such Separation occurs on or after July 1 of the applicable calendar year, the annual bonus, if any, Executive would have received for such calendar year had Executive remained employed through the date on which such bonuses are paid to eligible employees generally, which annual bonus shall be paid at the time the Employer pays such bonuses to eligible employees generally but in no event later than March 15 of the calendar year following the calendar year in which such Separation occurs and (C) payment of Executive’s premiums for continuation coverage pursuant to the Consolidated Omnibus Budget Act of 1985, as amended (“COBRA”), less the amount that an active employee would be required to pay for such coverage, for the Employer’s medical insurance plan during the Severance Period (if eligible for COBRA and COBRA is timely elected), or until Executive obtains replacement medical coverage, whichever occurs first;
(2) immediate vesting of all unvested equity incentives granted to Executive under the Employer’s equity incentive plan;
(3) any accrued but unpaid Base Salary and unreimbursed expense due Executive under Section 1(b)(iv) together with any earned but unpaid annual bonus with respect to the year prior to the year of Separation and accrued but unused vacation time; and
(4) any accrued and vested benefits under any employee benefit plan of the Employer or its Affiliates in which Executive was participating immediately prior to such termination, such benefits to be provided in accordance with the terms of the applicable employee benefit plan.
In addition, if Executive’s employment is terminated by the Employer without Cause and in bad faith with the intention of thwarting Executive’s ability to earn the Contingency Consideration as a “Seller” under the Purchase Agreement (each as defined in the Purchase Agreement), Employer shall pay to Executive an amount equal to Executive’s share of the Contingency Consideration in his capacity as a Seller equal to the product of (i) Executive’s percentage ownership of Employer immediately prior to the Closing (as defined in the Purchase Agreement) multiplied by (ii) the difference of (x) $500,000.00, minus (y) the amount of Contingency Consideration earned and paid to the Sellers, if any, under the Purchase Agreement as of the date of such termination (provided that in no event shall there be any duplication of Contingency Consideration payments).
Notwithstanding the foregoing, if Executive breaches any of the provisions of Section 3, Section 4 or Section 5 hereof, any and all remaining payments and benefits payable under this Agreement shall be immediately forfeited.
(ii) Other Terminations . If Executive’s employment with the Employer and its Affiliates is terminated during the Employment Period by the Employer for Cause or due to nonrenewal of the Employment Period or by Executive without Good Reason, the Employer’s and its Affiliates’ sole obligation to Executive shall be to pay to Executive (x) any accrued but unpaid Base Salary and accrued but unused vacation time for the period prior to the date of termination and (y) any accrued and vested benefits under any employee benefit plan of the Employer or its Affiliates in which Executive was participating immediately prior to such termination, such benefits to be provided in accordance with the terms of the applicable employee benefit plan. If Executive’s employment with the Employer and its Affiliates is terminated during the Employment Period due to Executive’s death or Disability, in addition to (x) and (y) above, the Employer or its Affiliates, as the case may be, shall also pay to Executive (or his estate or beneficiaries, as the case may be) (z) accrued but unused vacation time and any unreimbursed expense due Executive under Section 1(b)(iv); (aa) any earned but unpaid annual bonus with respect to the year prior to the year of termination; and (ab) a pro-rata bonus with respect to the year of termination equal to a fraction where the numerator is the number of completed calendar months of employment in such year and the denominator is twelve (12), payable when such bonuses are paid to other employees of the Employer or its Affiliates.
2. Equity Participation . During the Employment Period, Executive shall be eligible to participate in any equity-based compensation plan approved by the Board in its sole discretion for similarly situated employees of the Employer and its Affiliates on the terms and conditions set forth in such plan and the applicable award agreement.
3. Confidential Information .
(a) Obligation to Maintain Confidentiality . Executive shall not, during or after the Employment Period, without the prior express written consent of the Employer, directly or indirectly use or divulge, disclose or make available or accessible any Confidential Information (as defined below) to any Person (other than when required to do so in good faith to perform Executive’s duties and responsibilities under this Agreement or when required to do so by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena power). In the event that Executive becomes legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, criminal or civil investigative demand or similar process) to disclose any of the Confidential Information, then, prior to such disclosure, Executive will, if permissible under applicable law, provide the Employer with prompt written notice so that the Employer may seek (with Executive’s cooperation but at Employer’s sole expense) a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, then Executive will furnish only that portion of the Confidential Information which he is advised by counsel is legally required, and will cooperate with the Employer in the Employer’s efforts to obtain reliable assurance that confidential treatment will be accorded to the Confidential Information. Executive shall also proffer to the Employer, no later than the effective date of any termination of Executive’s employment with the Employer for any reason (or upon earlier request by the Employer), and without retaining any copies, notes or excerpts thereof, all memoranda, computer disks or other media, computer programs, diaries, notes, records, data, customer or client lists, marketing plans and strategies, and any other documents consisting of or containing Confidential Information that are in Executive’s actual or constructive possession or which are subject to Executive’s control at such time. For purposes of this Agreement, “ Confidential Information ” shall mean all information respecting the business and activities of the Employer or any Affiliate of the Employer, including, without limitation, the clients, customers, suppliers, employees, consultants, computer or other files, projects, products, computer disks or other media, computer hardware or computer software programs, marketing plans, financial information, methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, trade secrets, data gathering methods and/or strategies of the Employer or any Affiliate of the Employer. Notwithstanding the immediately preceding sentence, Confidential Information shall not include (i) any information that is, or becomes, generally available to the public (unless such availability occurs as a result of Executive’s breach of any portion of this Agreement); (ii) any information that became available to the public from a third party source which was not bound by a confidentiality agreement; and (iii) any information not otherwise considered by the Board to be confidential and proprietary.
(b) Ownership of Property . Executive acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports, patent applications, copyrightable work and mask work (whether or not including any Confidential Information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) that relate to the Employer’s or any Affiliate of the Employer’s actual or anticipated business, research and development, or existing or future products or services and that are conceived, developed, contributed to, made, or reduced to practice by Executive (either solely or jointly with others) while employed by Employer (including any of the foregoing that constitutes any proprietary information or records) (“ Work Product ”) belong to the Employer or any Affiliate of the Employer designated by the Employer, and Executive hereby assigns, and agrees to assign, all of the above Work Product to the Employer or such Affiliate of the Employer. Any copyrightable work prepared in whole or in part by Executive in the course of Executive’s work for any of the foregoing entities shall be deemed a “work made for hire” under the copyright laws, and the Employer or such Affiliate of the Employer shall own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Executive hereby assigns and agrees to assign to the Employer or such Affiliate of the Employer all right, title, and interest, including without limitation, copyright in and to such copyrightable work. Executive shall promptly disclose such Work Product and copyrightable work to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm the ownership of the Employer or such Affiliate of the Employer (including, without limitation, assignments, consents, powers of attorney and other instruments).
(c) Third Party Information . Executive understands that the Employer and its Affiliates will receive from third parties confidential or proprietary information (“ Third Party Information ”) subject to a duty on the Employer’s and its Affiliates’ part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the Employment Period and thereafter, and without in any way limiting the provisions of Section 3(a) above, Executive will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than (i) personnel and consultants of the Employer or its Affiliates who need to know such information in connection with their work for the Employer or any of its Affiliates; and (ii) as required by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena power) or use, except in connection with his work for the Employer or any of its Affiliates, Third Party Information unless expressly authorized by a member of the Board (other than Executive if Executive is on the Board) in writing.
(d) Use of Information of Prior Employers . During the Employment Period and thereafter, Executive will not improperly use or disclose any confidential information or trade secrets, if any, of any former employers or any other Person to whom Executive has an obligation of confidentiality, and will not bring onto the premises of the Employer or any of its Affiliates any unpublished documents or any property belonging to any former empl