EXHIBIT 10.5
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between THE
INTERCEPT GROUP, INC., a Georgia corporation (the "Company"), and XXXXX X.
XXXXXXX, an individual resident of Georgia (the "Executive"), as of this 30th
day of January 1998.
The Company presently employs the Executive as its President and Chief
Operating Officer. The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success of the
Company is substantial. The Board desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements which the Board has determined will reinforce and
encourage the continued dedication of the Executive to the Company and will
promote the best interests of the Company and its stockholders. The Executive
is willing to continue to serve the Company on the terms and conditions herein
provided.
This Agreement will supersede in its entirety any prior understanding of
the parties, whether written or oral. Certain terms used in this Agreement are
defined in Section 20.
In consideration of the foregoing, 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 of the Effective Date) that:
1. Employment. The Company shall continue to employ the Executive,
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and the Executive shall continue to serve the Company, as President and Chief
Operating Officer upon the terms and conditions set forth herein. The Executive
shall have such authority and responsibilities as are consistent with his
position and which may be set forth in the Bylaws or assigned by the Board or
the Chief Executive Officer from time to time. The Executive 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 policy. The Executive 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
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materially interfere with the performance of his duties hereunder and are not in
conflict or competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein, the
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Executive's employment under this Agreement shall be for a continuing term (the
"Term") of three years, which shall be extended automatically (without further
action of the Company or the Executive) each day for an additional day so that
the remaining term shall continue to be three years; provided, however, that
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either party may at any time, by written notice to the other, fix the Term to a
finite term of three years, without further automatic extension, commencing with
the date of such notice.
3. Compensation and Benefits.
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a. The Company shall pay the Executive a salary at a rate of not less
than $190,000 per annum in accordance with the salary payment practices of the
Company. The Board (or the Compensation Committee) shall review the Executive's
salary at least annually (on January 30, 1999, for the first review) and may
increase the Executive's base salary if it determines in its sole discretion
that an increase is appropriate.
b. The Executive shall be eligible to participate in any management
incentive programs established by the Company and to receive incentive
compensation based upon achievement of targeted levels of performance and such
other criteria as the Board or the Compensation Committee may establish from
time to time. In addition, the Board or the Compensation Committee shall
annually consider the Executive's performance and determine if a bonus is
appropriate.
c. The Executive may participate in the Plan and shall be eligible
for the grant of stock options, restricted stock and other awards thereunder.
d. The Executive shall continue to participate in all retirement,
welfare, deferred compensation, life and health insurance (including health
insurance for Executive's spouse and his dependents), and other benefit plans or
programs of the Company now or hereafter applicable to the Executive or
applicable generally to employees of the Company or to a class of employees that
includes senior executives of the Company; provided, however, that during any
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period during the Term that the Executive is subject to a Disability, and during
the 180-day period of physical or mental infirmity leading up to the Executive's
Disability, the amount of the Executive's compensation provided under this
Section 3 shall be reduced by the sum of the amounts, if any, paid to the
Executive for the same period under any disability benefit or pension plan of
the Company or any of its subsidiaries.
e. The Company shall provide to the Executive an automobile owned or
leased by the Company of a make and model appropriate to the Executive's status
(in the reasonable opinion of the Executive) or, in lieu thereof, shall provide
the Executive with an annual allowance of not less than $12,000 to partially
cover the cost of the business use of an automobile owned or leased by the
Executive.
f. The Company shall continue to reimburse the Executive for travel,
seminar and other expenses related to the Executive's duties which are incurred
and accounted for in accordance with the historic practices of the Company.
4. Termination.
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a. The Executive's employment under this Agreement may be terminated
prior to the end of the Term only as follows:
(i) upon the death of the Executive;
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(ii) by the Company due to the Disability of the Executive
upon delivery of a Notice of Termination to the Executive;
(iii) by the Company for Cause upon delivery of a Notice of
Termination to the Executive;
(iv) prior to a Change in Control, by the Company without
Cause upon no less than ninety (90) days written notice to
the Executive, provided the Company satisfies the provisions
of Section 4(d); and
(v) by the Executive for any reason upon delivery of a
Notice of Termination to the Company within a 90-day period
beginning on the 30th day after any occurrence of a Change
in Control or within a 90-day period beginning on the one
year anniversary of the occurrence of a Change in Control.
b. If the Executive's employment with the Company shall be terminated
during the Term (i) by reason of the Executive's death, or (ii) by the Company
for Disability or Cause, the Company shall pay to the Executive (or in the case
of his death, the Executive's estate) within 15 days after the Termination Date,
a lump sum cash payment equal to the Accrued Compensation and, if such
termination is other than by the Company for Cause, the Pro Rata Bonus.
c. If the Executive's employment with the Company shall be terminated
after a Change in Control either (i) by the Company without Cause or otherwise
in violation of this Agreement or (ii) by the Executive for any reason, in
addition to other rights and remedies available in law or equity, the Executive
shall be entitled to the following:
(i) the Company shall pay the Executive in cash within 15
days of the Termination Date an amount equal to all Accrued
Compensation and the Pro Rata Bonus;
(ii) the Company shall pay to the Executive in cash at the
end of each of the 36 consecutive 30-day periods following
the Termination Date an amount equal to one-twelfth of the
sum of the Base Amount and the Bonus Amount.
(iii) for the period from the Termination Date through the
date that Executive attains the age of 65 (the "Continuation
Period"), the Company shall at its expense continue on
behalf of the Executive and his dependents and beneficiaries
the life insurance, disability, medical, dental and
hospitalization benefits provided (x) to the Executive at
any time during the 90-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly
situated executives who continue in the employ of the
Company during the Continuation Period, if permitted, in
either case, by the applicable
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benefit plan. The coverage and benefits (including
deductibles and costs) provided in this Section 4(c)(iii)
during the Continuation Period shall be no less favorable to
the Executive and his dependents and beneficiaries than the
most favorable of such coverages and benefits during any of
the periods referred to in clauses (x) and (y) above. The
Company's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive
obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may
reduce the coverage of any benefits it is required to
provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans is no
less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This subsection
(iii) shall not be interpreted so as to limit any benefits
to which the Executive or his dependents or beneficiaries
may be entitled under any of the Company's employee benefit
plans, programs or practices following the Executive's
termination of employment, including without limitation,
retiree medical and life insurance benefits; and
(iv) the restrictions on any outstanding incentive awards
(including stock options) granted to the Executive under the
Plan or under any other incentive plan or arrangement shall
lapse and such incentive award shall become 100% vested and
all stock options and stock appreciation rights granted to
the Executive shall become immediately exercisable and shall
become 100% vested.
d. If, prior to a Change in Control, the Company terminates the
Executive without Cause, the Company shall pay the Executive in cash:
(i) within fifteen (15) days of the Termination Date, an
amount equal to all Accrued Compensation on the Pro Rata
Bonus; and
(ii) at the end of each of the twelve (12) consecutive
thirty (30) day periods following the Termination Date, an
amount equal to (1/12) of the sum of the Base Amount and the
Bonus Amounts.
e. The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to the Executive in any subsequent employment except as
provided in Section 4(c)(iii).
f. In the event that any payment or benefit (within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code")) to the Executive or for his benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, his employment with the Company
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or a change in ownership or effective control of the Company or of a substantial
portion of its assets (a "Payment" or "Payments"), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive will be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties,
other than interest and penalties imposed by reason of the Executive's failure
to file timely a tax return or pay taxes shown due on his return, imposed with
respect to such taxes and the Excise Tax), including any Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
g. The severance pay and benefits provided for in this Section 4
shall be in lieu of any other severance or termination pay to which the
Executive may be entitled under any Company severance or termination plan,
program, practice or arrangement. The Executive's entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans and other applicable programs, policies and practices
then in effect.
h. In the event that the Executive's employment hereunder is
terminated for any reason, the Executive shall, and does hereby, tender his
resignation as a director of the Company and its affiliates effective as of the
date of termination.
5. Protection of Trade Secrets and Confidential Information .
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a. Through exercise of his rights and performance of his obligations
under this Agreement, Executive will be exposed to "Trade Secrets" and
"Confidential Information" (as those terms are defined below). "Trade Secrets"
shall mean information or data of or about the Company or any affiliated entity,
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 lists of actual
or potential customers, clients, distributors, or licensees, that: (i) derive
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 their disclosure or use; and (ii) are the subject of efforts
that are reasonable under the circumstances to maintain their secrecy. To the
extent that the foregoing definition is inconsistent with a definition of "trade
secret" mandated under applicable law, the latter definition shall govern for
purposes of interpreting Executive's obligations under this Agreement. Except
as required to perform his obligations under this Agreement or except with
Company's prior written permission, Executive shall not use, redistribute,
market, publish, disclose or divulge to any other person or entity any Trade
Secrets of the Company. The Executive's obligations under this provision shall
remain in force (during or after the Term) for so long as such information or
data shall continue to constitute a "trade secret" under applicable law.
Executive agrees to cooperate with any and all confidentiality requirements of
the Company and Executive shall immediately notify the Company of any
unauthorized disclosure or use of any Trade Secrets of which Executive becomes
aware.
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b. The Executive agrees to maintain in strict confidence and, except
as necessary to perform his duties for the Company, not to use or disclose any
Confidential Business Information at any time, either during the term of his
employment or for a period of one year after the Executive's last date of
employment, so long as the pertinent data or information remains Confidential
Business Information. "Confidential Business Information" shall mean any non-
public information of a competitively sensitive or personal nature, other than
Trade Secrets, acquired by the Executive, directly or indirectly, in connection
with the Executive's employment (including his employment with the Company prior
to the date of this Agreement), including (without limitation) oral and written
information concerning the Company or its affiliates relating to financial
position and results of operations (revenues, margins, assets, net income,
etc.), annual and long-range business plans, marketing plans and methods,
account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of disclosure,
directly or indirectly, by the Executive, or was available to the Executive on a
non-confidential basis prior to its disclosure to the Executive.
c. Upon termination of employment, the Executive shall leave with the
Company all business records relating to the Company and its affiliates
including, without limitation, all contracts, calendars, and other materials or
business records concerning its business or customers, including all physical,
electronic, and computer copies thereof, whether or not the Executive prepared
such materials or records himself. Upon such termination, the Executive shall
retain no copies of any such materials.
d. As set forth above, the Executive shall not disclose Trade Secrets
or Confidential Business Information. However, nothing in this provision shall
prevent the Executive from disclosing Trade Secrets or Confidential Business
Information pursuant to a court order or court-issued subpoena, so long as the
Executive first notifies the Company of said order or subpoena in sufficient
time to allow the Company to seek an appropriate protective order. The
Executive agrees that if he receives any formal or informal discovery request,
court order, or subpoena requesting that he disclose Trade Secrets or
Confidential Business Information, he will immediately notify the Company and
provide the Company with a copy of said request, court order, or subpoena.
6. Non-Solicitation and Related Matters
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a. If the Executive is terminated for Cause or if the Executive
resigns without Adequate Justification, then for a period of two years following
the date of termination, the Executive shall not (except on behalf of or with
the prior written consent of the Company) either directly or indirectly, on the
Executive's own behalf or in the service or on behalf of others, (i) solicit,
divert, or appropriate to or for a Competing Business, or (ii) attempt to
solicit, divert, or appropriate to or for a Competing Business, any person or
entity that was a customer or
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prospective customer of the Company on the date of termination and with whom the
Executive had direct material contact within six months of the Executive's last
date of employment.
b. If the Executive is terminated for Cause or if the Executive
resigns without Adequate Justification, then for a period of two years following
the date of termination, the Executive will not, either directly or indirectly,
on the Executive's own behalf or in the service or on behalf of others, (i)
solicit, divert, or hire away, or (ii) attempt to solicit, divert, or hire away
any employee of or consultant to the Company or any of its affiliates engaged or
experienced in the Business, regardless of whether the employee or consultant is
full-time or temporary, the employment or engagement is pursuant to written
agreement, or the employment is for a determined period or is at will.
c. The Executive acknowledges and agrees that great loss and
irreparable damage would be suffered by the Company if the Executive should
breach or violate any of the terms or provisions of the covenants and agreements
set forth in this Section 6. The Executive further acknowledges and agrees that
each of these covenants and agreements is reasonably necessary to protect and
preserve the interests of the Company. The parties agree that money damages for
any breach of clauses (a) and (b) of this Section 6 will be insufficient to
compensate for any breaches thereof, and that the Executive or any of the
Executive's affiliates, as the case may be, will, to the extent permitted by
law, waive in any proceeding initiated to enforce such provisions any claim or
defense that an adequate remedy at law exists. The existence of any claim,
demand, action, or cause of action against the Company, whether predicated upon
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of any of the covenants or agreements in this Agreement;
provided, however, that nothing in this Agreement shall be deemed to deny the
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Executive the right to defend against this enforcement on the basis that the
Company has no right to its enforcement under the terms of this Agreement.
d. The Executive acknowledges and agrees that: (i) the covenants and
agreements contained in clauses (a) through (e) of this Section 6 are the
essence of this Agreement; (ii) that the Executive has received good, adequate
and valuable consideration for each of these covenants; and (iii) each of these
covenants is reasonable and necessary to protect and preserve the interests and
properties of the Company. The Executive also acknowledges and agrees that:
(i) irreparable loss and damage will be suffered by the Company should the
Executive breach any of these covenants and agreements; (ii) each of these
covenants and agreements in clauses (a) and (b) of this Section 6 is separate,
distinct and severable not only from the other covenants and agreements but also
from the remaining provisions of this Agreement; and (iii) the unenforceability
of any covenants or agreements shall not affect the validity or enforceability
of any of the other covenants or agreements or any other provision or provisions
of this Agreement. The Executive acknowledges and agrees that if any of the
provisions of clauses (a) and (b) of this Section 6 shall ever be deemed to
exceed the time, activity, or geographic limitations permitted by applicable
law, then such provisions shall be and hereby are reformed to the maximum time,
activity, or geographical limitations permitted by applicable law.
e. The Executive and the Company hereby acknowledge that it may be
appropriate from time to time to modify the terms of this Section 6 and the
definition of the term "Business" to reflect changes in the Company's business
and affairs so that the scope of the
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limitations placed on the Executive's activities by this Section 6 accomplishes
the parties' intent in relation to the then current facts and circumstances. Any
such amendment shall be effective only when completed in writing and signed by
the Executive and the Company.
7. Successors; Binding Agreement.
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a. This Agreement shall be binding upon and shall inure to the
benefit of the Company, its Successors and Assigns and the Company shall require
any Successors and Assigns to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal personal representative.
8. Fees and Expenses. The Company shall pay all legal fees and
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related expenses (including but not limited to the costs of experts, accountants
and counsel) incurred by the Executive as they become due as a result of (a) the
termination of the Executive's employment (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination of employment)
and (b) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement; provided, however, that the circumstances set forth in
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clauses (a) and (b) above occurred on or after a Change in Control.
9. Notice. For the purposes of this Agreement, notices and all
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other communications provided for in this Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other; provided, however, that all notices to the Company shall be
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directed to the attention of the Board with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received
on the date of delivery thereof.
10. Settlement of Claims. The Company's obligation to make the
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payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others. The Company may, however,
withhold from any benefits payable under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
11. Modification and Waiver. No provisions of this Agreement may be
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modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and the Company. No waiver by
any party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of
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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.
12. Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the laws of the State of Georgia without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in State of Georgia.
13. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
14. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
15. Headings. The headings of Sections herein are included solely for
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convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17. Demand Registration Rights.
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a. Rights. Subject to the provisions of this Section 17(a), upon
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the termination of the Executive's employment, for any reason, the Executive may
request registration for sale under the Act of all or part of the Common Stock
then held by him (excluding, for purposes of this Section 17(a), shares subject
to the stock options held by the Executive as to which the vesting provisions
shall not have lapsed pursuant to this Agreement or otherwise). Any such
request shall specify the number of shares proposed to be registered and sold
and the name of the managing underwriter of the proposed offering (who must be
acceptable to the Company in its reasonable discretion).
b. Exceptions. The Company shall not be required to effect a demand
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registration under the Act pursuant to Section 17(a) above if: (i) the
aggregate market value of the shares of Common Stock proposed to be registered
does not equal or exceed $12,000,000 prior to the Initial Public Offering or
$2,000,000 after the Initial Public Offering; (ii) within 12 months prior to any
such request for registration, a registration of securities of the Company has
been effected in which the Executive had the right to participate pursuant to
this Section 17 or Section 18 hereof; (iii) the Company receives such request
for registration within 180 days preceding the anticipated effective date of a
proposed underwritten public offering of securities of the Company approved by
the Board prior to the Company's receipt of such request; or (iv) the Board
reasonably determines in good faith that effecting such a demand registration at
such time would have a material adverse effect upon a proposed sale of all (or
substantially all) of the assets
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of the Company, or a merger, reorganization, recapitalization, or similar
transaction materially affecting the capital structure or equity ownership of
the Company which is actively being negotiated with another party whose identity
is disclosed to the Executive; provided, however, that the Company may only
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delay a demand registration pursuant to this Section 17(b)(iv) for a period not
exceeding six months (or until such earlier time as such transaction is
consummated or no longer proposed). The Company shall promptly notify in writing
the Executive of any decision not to effect any such request for registration
pursuant to this Section 17(b), which notice shall set forth in reasonable
detail the reason for such decision and shall include an undertaking by the
Company promptly to notify the Executive as soon as a demand registration may be
effected.
c. Reduction. If the managing underwriters, the Company and the
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Executive determine, after reasonable negotiations, that the number of shares of
Common Stock held by the Executive which the Executive requested to be included
in such registration exceeds the number which can be sold in such offering, then
the amount of such shares that may be included in such registration shall be
reduced to the number of shares that the managing underwriters, the Company and
the Executive determine is marketable, after reasonable negotiations.
d. Withdrawal. The Executive may withdraw at any time before a
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registration statement filed pursuant to this Section 17 is declared effective,
in which event the Company may withdraw such registration statement. If the
Company withdraws a registration statement under this Section 17(d) in respect
of a registration for which the Company would otherwise be required to pay some
expenses under Sections 19(c), (d) and (e) hereof, then the Executive shall be
liable to the Company for all expenses of such registration specified in
Sections 19(c), (d) and (e) hereof.
18. Piggyback Registration Rights.
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a. Rights. Subject to the provision of this Section 18, if the
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Company proposes to make a registered public offering, including an initial
public offering, of any of its securities under the Act (whether to be sold by
it or by one or more third parties), other than an offering pursuant to a demand
registration under Section 17 hereof or an offering registered on Form X-0, Xxxx
X-0, or comparable forms, the Company shall, not less than 45 days prior to the
proposed filing date of the registration form, give written notice of the
proposed registration to the Executive, and at the written request of the
Executive delivered to the Company within 15 days after the receipt of such
notice, shall include in such registration and offering, and in any underwriting
of such offering, all shares of Common Stock as may have been designated in the
Executive's request.
b. Primary Offering Reduction. If a registration in which the
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Executive has the right to participate pursuant to this Section 18 is an
underwritten primary registration on behalf of the Company, and the managing
underwriters, the Company and the Executive determine, after reasonable
negotiations, that the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, then the
Company shall include in such registration the number of shares of the Common
Stock requested to be sold by the Company, any other person who has registration
rights pursuant to a written agreement with
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the Company and the shares requested by Executive in proportion to the number of
shares of Common Stock so requested by each of them to be so included.
c. Secondary Offering Reduction. If a registration in which the
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Executive has the right to participate pursuant to this Section 18 is an
underwritten secondary registration, and the managing underwriters, the Company
and the Executive determine, after reasonable negotiations, that the number of
shares requested to be included in such registration exceeds the number of
shares which can be sold in such offering, then the Company shall include in
such offering the number of shares of Common Stock owned and proposed to be sold
by the Company and by any other participants (including the Executive) proposing
(and entitled) to sell shares pursuant to such registration which the managing
underwriters, the Company and the Executive determine, after reasonable
negotiations, can be sold in the offering, in proportion to the number of shares
of Common Stock so requested by each of them to be included.
19. Other Registration Issues.
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a. The Company shall have no obligation to file a registration
statement pursuant to Section 17 hereof, or to include shares of Common Stock
owned by the Executive in a registration statement pursuant to Section 18
hereof, unless and until the Executive has furnished the Company with all
information and statements about or pertaining to the Executive in such
reasonable detail as is reasonably deemed by the Company to be necessary or
appropriate with respect to the preparation of the registration statement.
Whenever the Executive has requested that any shares of Common Stock be
registered pursuant to Section 17 or 18 hereof, subject to the provisions of
those Sections, the Company shall, as expeditiously as reasonably possible:
(i) prepare and file with the SEC a registration statement with
respect to such shares and use its best efforts to cause such registration
statement to become effective as soon as reasonably practicable thereafter
(provided that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company shall furnish counsel for the
Executive with copies of all such documents proposed to be filed);
(ii) prepare and file with the SEC such amendments and supplements to
such registration statement and prospectus used in connection therewith as may
be necessary to keep such registration statement effective for a period of not
less than nine months or until the underwriters have completed the distribution
described in such registration statement, whichever occurs first;
(iii) furnish to the Executive such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as the Executive may reasonably request;
(iv) use its best efforts to register or qualify such shares under
such other securities or Blue Sky Laws of such jurisdictions as the Executive
reasonably requests (and to maintain such registrations and qualifications
effective for a period
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of nine months or until the underwriters have completed the distribution of such
shares, whichever occurs first), and to do any and all other acts and things
which may be necessary or advisable to enable the Executive or underwriters to
consummate the disposition in such jurisdictions of such shares; provided,
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however, that the Company will not be required to (a) qualify generally to do
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business in any jurisdiction where it would not be required but for this Section
19(a)(iv), or (b) subject itself to taxation in any such jurisdiction; provided,
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further, however, that, notwithstanding anything to the contrary in this
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Agreement with respect to the bearing of expenses, if any such jurisdiction
shall require that expenses incurred in connection with the qualification of
such shares in that jurisdiction be borne in part or full by the Executive, then
the Executive shall pay such expenses to the extent required by such
jurisdiction;
(v) cause all such shares to be listed on securities exchanges, if
any, on which similar securities issued by the Company are then listed;
(vi) provide a transfer agent and registrar for all such shares not
later than the effective date of such registration statements;
(vii) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as the Executive
and underwriters reasonably request (and subject to approval by the Company's
counsel) in order to expedite or facilitate the disposition of such shares; and
(viii) make available for inspection by the Executive, by any
underwriter participating in any distribution pursuant to such registration
statement, and by any attorney, accountant or other agent retained by the
Executive or underwriter, or by any such underwriter, all financial and other
records, pertinent corporate documents, and properties (other than confidential
intellectual property) of the Company; provided, however, that the Company can
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condition delivery of any information, records or corporate documents upon the
receipt from the Executive and the underwriter and their counsel, accountants,
advisors and agents, of a confidentiality agreement in form and substance
acceptable to the Company and its counsel in the exercise of their exclusive
discretion.
b. Holdback Agreement. In the event that the Company effects an
------------------
underwritten public offering of any of the Company's equity securities, the
Executive agrees, if requested by the managing underwriters, not to effect any
sale or distribution, including any sale pursuant to Rule 144 under the Act, of
any equity securities (except as part of such underwritten offering) during the
180-day period commencing with the effective date of the registration statement
for such offering.
c. Stockholder Expenses. If, pursuant to Section 17 or 18 hereof,
--------------------
shares of Common Stock owned by the Executive are included in a registration
statement, then the Executive shall pay all transfer taxes, if any, relating to
the sale of its shares, the fees and
12
expenses of his own counsel, and its pro rata portion of any underwriting
discounts, fees or commissions or the equivalent thereof.
d. The Company's Expenses. Except for the fees and expenses
----------------------
specified in Section 19(c) hereof and except as provided below in this Section
19(d), the Company shall pay all expenses incident to the registration and to
the Company's performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, fees and expenses of
compliance with securities or Blue Sky Laws, underwriting discounts, fees and
commissions (other than the Executive's pro rata portion of any underwriting
discounts or commissions or the equivalent thereof), printing expenses,
messenger and delivery expenses, and fees and expenses of counsel for the
Company and all independent certified public accountants and other persons
retained by the Company. If the Company shall previously have paid, pursuant to
this Section 19(d), the expenses of a registration, then the Executive shall pay
all expenses described in this Section 19(d) (but not expenses described in
Section 19(e) hereof).
e. Other. With respect to any registration pursuant to Section 17
-----
or 18 hereof, the Company shall pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties) and the expenses and fees for listing the securities
to be registered on exchanges on which similar securities issued by the Company
are then listed.
f. Indemnity. In the event that any shares of Common Stock owned by
---------
the Executive are offered or sold by means of a registration statement pursuant
to Section 17 or 18 hereof, the Company agrees to indemnify and hold harmless
the Executive and each person, if any, who controls or may control the Executive
within the meaning of the Act (the Executive and any such other persons being
hereinafter referred to individually as an "Indemnified Person" and collectively
as "Indemnified Persons") from and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs, and
expenses, including, without limitation, interest, penalties, and reasonable
attorneys fees and disbursements, asserted against, resulting to, imposed upon
or incurred by such Indemnified Person, jointly or severally, directly or
indirectly (hereinafter referred to in this Section 19(f) in the singular as a
"claim" and in the plural as "claims"), based upon, arising out of, or resulting
from any untrue statement or alleged untrue statement of a material fact
contained in the registration statement, any preliminary or final prospectus
contained therein, or any amendment or supplement thereto, or any document
incident to registration or qualification of any such shares, or any omission or
alleged omission to state therein a material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, or any violation by the Company of the Act of any state
securities or Blue Sky Laws, except insofar as such claim is based upon, arises
out of or results from information developed or certified by the Executive for
use in connection with the registration statement or arises out of or results
from the omission of information known to the Executive prior to the violation
or alleged violation. The Executive agrees to indemnify and hold harmless the
Company, its officers and directors, and each person, if any, who controls or
may control the Company within the meaning of the Act (the Company, its officers
and directors, and any such persons also being hereinafter referred to
individually in this context as an "Indemnified Person" and collectively as
"Indemnified Persons") from and against all claims based upon, arising out of,
or resulting from any untrue statement of a material
13
fact contained in the registration statement, or any omission to state therein a
material fact necessary in order to make the statement made therein, in the
light of the circumstances under which they were made, not misleading, to the
extent that such claim is based upon, arises out of, or results from information
developed or certified by the Executive for use in connection with the
registration statement or arises out of, or results from an omission of
information known to the Executive prior to the violation or alleged violation;
provided, however, that the maximum amount of liability in respect of such
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indemnification shall be limited, to an amount equal to the net proceeds
actually received by the Company or the Executive from the sale of such shares
effected pursuant to such registration. The indemnifications set forth herein
shall be in addition to any liability the Company or the Executive may otherwise
have to the Indemnified Persons. Promptly after actually receiving definitive
notice of any claim in respect of which an Indemnified Person may seek
indemnification under this Section 19(f), such Indemnified Person shall submit
written notice thereof to either the Company or the Executive, as the case may
be (sometimes being hereinafter referred to as an "Indemnifying Person"). The
omission of the Indemnified Person so to notify the Indemnifying Person of any
such claim shall not relieve the Indemnifying Person from any liability it may
have hereunder except to the extent that (a) such liability was caused or
increased by such omission, or (b) the ability of the Indemnifying Person to
reduce such liability was materially adversely affected by such omission. In
addition, the omission of the Indemnified Person to notify the Indemnifying
Person of any such claim shall not relieve the Indemnifying Person from any
liability it may have otherwise than hereunder. The Indemnifying Person shall
have the right to undertake, by counsel or representatives of its own choosing,
the defense, compromise or settlement (without admitting liability of the
Indemnified Person) of any such claim asserted, such defense, compromise or
settlement to be undertaken at the expense and risk of the Indemnifying Person,
and the Indemnified Person shall have the right to engage separate counsel, at
its own expense, whom counsel for the Indemnifying Person shall keep informed
and consult with in a reasonable manner. In the event the Indemnifying Person
shall elect not to undertake such defense by its own representatives, the
Indemnifying Person shall give prompt written notice of such election to the
Indemnified Person, and the Indemnified Person shall undertake the defense,
compromise or settlement (without admitting liability of the Indemnified Person)
thereof on behalf of and for the account and risk of the Indemnifying Person by
counsel or other representatives designed by the Indemnified Person. In the
event that any claim shall arise out of a transaction or cover any period or
periods wherein the Company and the Executive shall each be liable hereunder for
part of the liability or obligation arising therefrom, then the parties shall,
each choosing its own counsel and bearing its own expenses, defend such claim,
and no settlement or compromise of such claim may be made without the joint
consent or approval of the Company and the Executive. Notwithstanding the
foregoing, no Indemnifying Person shall be obligated hereunder with respect to
amounts paid in settlement or any claim if such settlement is effected without
the consent of such Indemnifying Person (which consent shall not be unreasonably
withheld).
20. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which shall include
all amounts earned or accrued through the Termination Date but not paid as of
the Termination Date including (i) base salary, (ii) reimbursement for
reasonable and necessary expenses incurred by
14
the Executive on behalf of the Company during the period ending on the
Termination Date, and (iii) bonuses and incentive compensation (other than the
Pro Rata Bonus).
b. "Act" shall mean the Securities Act of 1933, as amended.
c. "Adequate Justification" shall mean the occurrence after a Change
in Control of any of the following events or conditions: (i) a material failure
of the Company to comply with the terms of this Agreement; (ii) any relocation
of the Executive outside the metropolitan area where the Company's principal
executive office is located that is not approved by members of the Incumbent
Board (as such term is defined under Section 20(j)); or (iii) other than as
provided for herein, the removal of the Executive from the position of President
and Chief Operating Officer or any other substantial diminution in the
Executive's authority or the Executive's responsibilities that is not approved
by members of the Incumbent Board.
d. "Base Amount" shall mean the greater of the Executive's annual
base salary (i) at the rate in effect on the Termination Date or (ii) at the
highest rate in effect at any time during the 90-day period prior to the Change
in Control, and shall include all amounts of his base salary that are deferred
under the qualified and non-qualified employee benefit plans of the Company or
any other agreement or arrangement.
e. "Board" shall have the meaning set forth in the recitals.
f. "Bonus Amount" shall mean the greater of (i) the most recent
annual bonus paid or payable to the Executive, or, if greater, the annual bonus
paid or payable for the full fiscal year ended prior to the fiscal year during
which a Change in Control occurred or (ii) the average of the annual bonuses
paid or payable during the three full fiscal years ended prior to the
Termination Date or, if greater, the three full fiscal years ended prior to the
Change in Control (or, in each case, such lesser period for which annual bonuses
were paid or payable to the Executive).
g. "Business" shall mean the design, development, marketing and
implementation of electronic commerce products and services for community
financial institutions.
h. "Bylaws" shall mean the Amended and Restated Bylaws of the
Company, as amended, supplemented or otherwise modified from time to time.
i. The termination of the Executive's employment shall be for
"Cause" if it is the result of:
(i) any act that (A) constitutes, on the part of the Executive,
fraud, dishonesty, or gross malfeasance of duty, or conduct
grossly inappropriate to the Executive's office, and (B) is
demonstrably likely to lead to material injury to the
Company or resulted or was intended to result in direct or
indirect gain to or personal
15
enrichment of the Executive; provided, however, that such
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conduct shall not constitute Cause:
(A) unless (1) there shall have been delivered to the
Executive a written notice setting forth with
specificity the reasons that the Board believes the
Executive's conduct constitutes the criteria set forth
in clause (i), (2) the Executive shall have been
provided the opportunity, if such behavior is
susceptible to cure, to cure the specific inappropriate
behavior within 30 days following written notice, and
(3) after such 30-day period, the Board of Directors
determines that the behavior has not been cured, and
(4) the termination is evidenced by a resolution
adopted in good faith by two-thirds of the members of
the Board (other than the Executive); or
(B) if such conduct (1) was believed by the Executive in
good faith to have been in or not opposed to the
interests of the Company, and (2) was not intended to
and did not result in the direct or indirect gain to or
personal enrichment of the Executive; or
(ii) the conviction (from which no appeal may be or is timely
taken) of the Executive of a felony; or
(iii) the failure of the Executive to perform his duties
hereunder in a manner satisfactory to the Board of
Directors, as recommended by the Chief Executive Officer and
as determined by the Board of Directors in its sole
discretion; provided, however, that the Executive shall have
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60 days to cure such failure after receiving notice from the
Company. The Company shall be obligated to provide only one
notice to the Executive pursuant to this Section 20(i)(iii).
Thereafter, the Company may terminate the Executive, without
the Executive having a right to cure, if the Executive fails
to perform his duties in a manner satisfactory to the Board
of Directors, as recommended by the Chief Executive Officer
and as determined by the Board of Directors in its sole
discretion.
j. A "Change in Control" shall mean the occurrence during the Term
of any of the following events after the Initial Public Offering:
(i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities")
by any "Person" (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of
1934 (the "1934 Act")) immediately after which such Person
has "Beneficial Ownership"
16
(within the meaning of Rule 13d-3 promulgated under the
0000 Xxx) of 20% or more of the combined voting power of
the Company's then outstanding Voting Securities;
provided, however, that in determining whether a Change in
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Control has occurred, Voting Securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined)
shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean
an acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) the Company or
(y) any corporation or other Person of which a majority of
its voting power or its equity securities or equity
interest is owned directly or indirectly by the Company (a
"Subsidiary"), (2) the Company or any Subsidiary, or (3)
any Person in connection with a "Non-Control Transaction"
(as hereinafter defined);
(ii) The individuals who, as of the date of the Initial Public
Offering, are members of the Board (the "Incumbent Board")
cease for any reason to constitute at least two-thirds of
the Board; provided, however, that if the election, or
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nomination for election by the Company's stockholders, of
any new director was approved by a vote of at least two-
thirds of the Incumbent Board, such new director shall,
for purposes of this Agreement, be considered as a member
of the Incumbent Board; provided, further, however, that
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no individual shall be considered a member of the
Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11
promulgated under the 0000 Xxx) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization involving
the Company, unless
(1) the stockholders of the Company, immediately
before such merger, consolidation or
reorganization, own, directly or indirectly,
immediately following such merger, consolidation
or reorganization, at least two-thirds of the
combined voting power of the outstanding voting
securities of the corporation resulting from
such merger or consolidation or reorganization
(the "Surviving Corporation") in
17
substantially the same proportion as their
ownership of the Voting Securities immediately
before such merger, consolidation or
reorganization, and
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds
of the members of the board of directors of the
Surviving Corporation.
(A transaction described in clauses (1) and (2) shall
herein be referred to as a "Non-Control Transaction").
(B) A complete liquidation or dissolution of the Company;
or
(C) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
(iv) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated prior
to a Change in Control and the Executive reasonably
demonstrates that such termination (A) was at the request of
a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who
effectuates a Change in Control (a "Third Party") or (B)
otherwise occurred in connection with, or in anticipation
of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control
with respect to the Executive shall mean the date
immediately prior to the date of such termination of the
Executive's employment.
k. "Compensation Committee" shall mean the compensation committee of
the Board.
l. "Competing Business" shall mean any business that, in whole or in
part, is the same or substantially the same as the Business.
m. "Confidential Business Information" shall have the meaning
ascribed to it in Section 5(b).
n. "Continuation Period" shall have the meaning ascribed to it in
Section 4(c)(iii).
18
o. "Disability" shall mean the inability of the Executive to perform
substantially all of his current duties as required hereunder for a continuous
period of 90 days because of mental or physical condition, illness or injury.
p. "Effective Date" shall mean January 30, 1998.
q. "Fair Market Value" shall have the meaning ascribed to it in
Section 4(e).
r. "Initial Public Offering" shall mean the closing of the first
public offering of the Company's common stock registered under the Securities
Act of 1933 in which aggregate proceeds to the Company, net of all underwriting
discounts and commissions and other expenses of issuance and distribution as
stated in the prospectus relating to such offering, are equal to at least twelve
million dollars ($12,000,000).
s. "Notice of Termination" shall mean a written notice of
termination from the Company or the Executive which specifies an effective date
of termination, indicates the specific termination provision in this Agreement
relied upon, and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
t. "Plan" shall mean The InterCept Group, Inc. Amended and Restated
1996 Stock Option Plan, effective as of November 12, 1996.
u. "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days in the
fiscal year through the Termination Date and the denominator of which is 365.
v. "Successors and Assigns" shall mean a corporation or other
entity acquiring all or substantially all the assets and business of the Company
(including this Agreement), whether by operation of law or otherwise.
w. "Termination Date" shall mean, in the case of the Executive's
death, his date of death, and in all other cases, the date specified in the
Notice of Termination.
x. "Trade Secrets" shall have the meaning ascribed to it in Section
5(a).
[End of page]
19
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Executive has signed and sealed this Agreement, effective as of the date
first above written.
THE INTERCEPT GROUP, INC.
ATTEST:
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxxx Xxxxxx Name: Xxxx X. Xxxxxxx
------------------- -----------------------
Title: Assistant Secretary Title: Chief Executive Officer
------------------- -----------------------
(CORPORATE SEAL)
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
