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Exhibit 10.63
SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL RELEASE (this
“ Agreement ”) is made and
entered into as of this 10 th day of
August, 2007 (the “ Execution Date
”), to be effective as of the 2 nd day of
July, 2007 (the “ Effective Date
”), by and between Joel M. Barry (the “
Executive ”) and Electronic
Clearing House, Inc., a Nevada corporation (together with any and
all of its subsidiaries as appropriate, the “
Company ”).
RECITALS
A. The
Executive has served as the Chairman and Chief Executive
Officer of Company, and desires to confirm his retirement, and
corresponding resignation, from all executive and employment
positions at the Company and as a director of the Company,
effective as of the Effective Date.
B. As
a material inducement to the Company’s execution of this
Agreement, the Executive further desires to provide the
Company with a general release and to enter into a
non-competition agreement with the Company and certain other
agreements and covenants in exchange for certain payments
payable to the Executive under this Agreement, and the Company
desires to make such payments and enter into such agreements
and covenants with the Executive on the terms set forth
herein.
AGREEMENT
NOW, THEREFORE , in consideration of the premises, the
Executive and the Company agree as follows:
1.
Retirement/Resignation .
1.1 The
Executive hereby confirms his retirement and resignation as
the Chairman and Chief Executive Officer of the Company and
otherwise from all director, executive and employment
positions at the Company, effective as of the Effective
Date. The Executive further acknowledges and agrees
that his position as Chairman and Chief Executive Officer of
the Company is ended and terminated effective as of the
Effective Date, and that his employment as such will not be
continued or resumed again at any time. The
Executive also hereby confirms his resignation as a Director
of the Company, effective as of the Effective
Date. The parties hereby acknowledge and agree that
the Executive also is relieved of his position as a signatory
and responsible person on the Company’s bank accounts
effective as of the Effective Date. The Executive
hereby acknowledges and agrees that (i) the Company has fully
paid and satisfied all amounts properly due and owing to the
Executive as a result of his employment with Company through
the Effective Date, and (ii) in the absence of this Agreement,
Executive would not be entitled to any of the payments
provided for hereunder as a result of his retirement and
resignation. The parties will characterize the
Executive’s departure from the Company as a retirement,
and corresponding resignation, from the Company.
1.2 From
and after the Execution Date, the Executive agrees to make
himself available from time to time to consult with the
Company, and provide general cooperation and assistance in
order to facilitate an orderly transition, as reasonably
requested by the Company (the “ Transition
Assistance ”); provided, such Transition
Assistance is to be provided at no out-of-pocket cost to the
Executive, and shall generally be provided at
Executive’s convenience. The Executive shall
receive no additional compensation other than the Cash
Compensation provided for herein for providing Transition
Assistance.
2.
Compensation .
2.1
Cash Compensation . The
Company will pay the Executive all salary earned through the
Effective Date and all accrued but unused vacation time or PTO
earned through the Effective Date (“ Accrued
Compensation ”). The Company
will pay the Executive, in separate payments, two years of
Executive’s current base compensation (representing an
aggregate amount equal to $592,800.00), plus an amount equal
to $150,000.00 (representing the aggregate of
Executive’s bonus payments in the two years prior to the
Effective Date, but subject to a maximum cap of $150,000.00)
(the “ Cash Compensation
”) in accordance with the following schedule of
payments: (a) an initial lump-sum payment of
$300,000.00 to be paid within three (3) business days of the
Execution Date, (b) $221,400.00 to be paid on January 2, 2008;
and (c) $221,400.00 to be paid on January 2,
2009. The parties intend that the Cash Compensation
payable pursuant to clauses (a) and (b) above shall be treated
as a short-term deferral as that term is used in Section 409A
of the Internal Revenue Code of, as amended (the “
Code ”) and the regulations
promulgated thereunder (collectively, “
Section 409A
”). The parties intend that the Cash
Compensation payable pursuant to clause (c) above shall be
treated as a separate payment for purposes of Section 409A and
excluded from the definition of “deferred
compensation” pursuant to the regulations promulgated
thereunder regarding separation pay payable upon an
involuntary separation from service. The parties
agree that the payment date for the Cash Compensation payable
pursuant to clauses (b) or (c) above may be accelerated at the
written request of the Executive, and, upon such written
request, each such payment will be paid within three (3)
business days of such request. The Accrued
Compensation and the Cash Compensation will be paid in
accordance with the Company’s normal payroll practices
and will be subject to normal federal and state withholding
obligations.
2.2
Stock Options
. Any and all stock options issued to
Executive pursuant to the Company’s Incentive Stock
Option Plan 1992, as amended (the “ 1992
Plan ”), all of which are or shall be
fully vested as of the Effective Date, shall expire in
accordance with their terms based on the termination of the
Executive’s employment with the Company, effective as of
the Effective Date. Any and all unvested stock
options issued to Executive pursuant to the Company’s
Amended and Restated 2003 Incentive Stock Option, as amended
(the “ 2003 Plan ”),
shall immediately vest on the Effective Date. Any
and all stock options issued to Executive pursuant to the 2003
Plan shall expire, notwithstanding the provisions thereof or
the provisions of the 2003 Plan to the contrary, on the 360
th day
following the Effective Date. The stock options
issued to Executive will otherwise continue to be subject to
the terms and conditions applicable to stock options granted
under the 1992 Plan or 2003 Plan, as applicable, and any
applicable stock option agreements between the Executive and
the Company; provided, however , that in the event of
a conflict between the provisions of this Agreement and the
1992 Plan, 2003 Plan or the applicable stock option
agreements, the provisions of this Agreement shall
apply. Each of Executive and Company acknowledge
and agree that this Section 2.2 has been expressly
approved by the Compensation Committee of the Board of
Directors of the Company pursuant to the authority delegated
to such committee under the 1992 Plan and the 2003 Plan, each
as has been previously approved by the Company’s
shareholders, and that no portion of the foregoing shall be
deemed an amendment or other modification of the 1992 Plan,
2003 Plan or any stock option agreement issued
thereunder.\
2.3
Car Payments . The Company
will pay an amount equal to $21,929.85, the payoff amount as
of the Execution Date, directly to Nissan Motor Acceptance
Corp in respect of the promissory note due for the Nissan
Maxima automobile previously provided for use to the
Executive. The Company shall not be responsible for any other
costs related to the vehicle or the Executive’s use
thereof following the Effective Date, including, but not
limited to, insurance (which must have been obtained by
Executive within 30 days of the Effective Date), all of which
shall have been obtained by Executive on or after the
Effective Date at his own cost and expense.
2.4
Medical Benefits . For a
period of two (2) years after the Effective Date, the Company
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 Effective
Date.
3.
Non-Admission of Discrimination or
Wrongdoing .
3.1 This
Agreement shall not in any way be construed as an admission by
the Company or the Executive that it or he acted wrongfully
with respect to the other, or any other person or
entity.
3.2 The
Executive acknowledges and agrees that he has not suffered any
discrimination and/or harassment in terms, conditions or
privileges of his employment based on age, race, gender,
religious creed, color, national origin, ancestry, physical
disability, mental disability, medical condition, marital
status, sexual orientation, or on any other
basis. The Executive acknowledges and agrees that
he has no claim for employment discrimination and/or
harassment under any legal or factual theory.
4.
Company Property
. Executive represents and agrees that, as of the
Execution Date, he has turned over to 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, and
any other physical or personal property that are the property
of Company that he had in his possession, custody or control
(whether directly or indirectly) on the Execution
Date. Notwithstanding the foregoing, as soon as
reasonably practicable following the Execution Date, the
Company will deliver to the Executive or otherwise permit
Executive to retain (i) the desktop and laptop computers used
by the Executive in the provision of his services to the
Company prior to the Effective Date, cleansed of all data and
programs, together with the docking station, mouse and
keyboard used by the Executive with such computers, (ii) his
office chair, and (iii) his mobile phone; provided, however,
that the Company will not continue to pay or be responsible
for any charges or fees incurred in connection with
the use thereof; which such fees shall become the sole
responsibility of the Executive as of the Effective
Date. The Company also will deliver to the
Executive a compact disk containing a copy of the
Executive’s contacts that were on such
computers. The Company will, for a period of one
year from the Effective Date, continue to accept messages and
forward all personal and non-business related calls received
at Executive’s previously assigned (800) 899-1289
telephone number to the contact number provided by Executive.
All other services, utilities, and other benefits not
explicitly provided for herein shall be cancelled as of the
Effective Date, including but not limited to home internet
access, mobile phone plans and usage and Blackberry or other
similar service.
5.
Trade Secrets and Agreements Not to Solicit and Not
to Compete; Company’s Right to Seek Injunctive
Relief .
5.1 The
Executive understands, acknowledges and agrees that in the
course of employment with the Company he has acquired
confidential information and trade secrets concerning the
Company’s past, present or future clients, operations,
plans, methods of doing business (including, without
limitation, customer lists), projected and historical
revenues, marketing, costs, production, growth and
distribution, and confidential business strategies (“
Confidential Information
”). The Executive understands, acknowledges
and agrees that it would be extremely damaging to the Company
if such information were disclosed to a competitor or made
available to any other person or entity. The
Executive understands and agrees that such Confidential
Information has been disclosed to the Executive in confidence,
that he will keep such information secret and confidential and
that he will not in any way use, distribute or disclose such
information.
5.2 The
Executive further agrees that for a period of twelve (12)
months from the Effective Date (the “
Restricted Period ”), the
Executive shall not (i) directly or indirectly, engage,
without the express prior written consent of the Company, in
any Competing Business, whether as an employee, director,
consultant, partner, principal, agent, representative, equity
holder or in any other individual, corporate or representative
capacity (without limitation by specific enumeration of the
foregoing), or render any services or provide any advice to
any Competing Business; and (ii) directly or indirectly, (a)
with respect to the Business, solicit or divert or attempt to
solicit or divert any business or clients or customers made
known to the Executive during his employment with the Company
away from the Company, (b) induce or attempt to induce
customers, clients, suppliers, agents or other Persons under
contract or otherwise associated or doing business with
Company who are made known to the Executive during his
employment with the Company, to reduce or alter any such
association or business with the Company, and/or (c) knowingly
solicit or attempt to solicit any Person in the employment of
the Company to (I) terminate such employment, and/or (II)
accept employment, or enter into any consulting arrangement,
with any Person other than the Company. The
Executive acknowledges and agrees that the Company depends on
the services and contributions of its employees and personnel,
including certain key employees and personnel of the Company
who have pre-existing business and personal relationships with
the Executive and were initially introduced to the Company by
the Executive. The Executive acknowledges and
understands that the loss of the services of any such key
employees or personnel by the Company could materially and
adversely affect the Company’s business, operations and
prospects, and the covenants, agreements and obligations set
forth in this Section 5.2 are a material inducement to
the Company’s execution of this Agreement and its
agreement to enter into the obligations (including payment
obligations) set forth herein. For the purposes
hereof, the following terms have the meanings ascribed
to
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