EXHIBIT 10.8
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into by
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and between NETZEE, INC., a Georgia corporation (the "Company"), and XXXXX X.
XXXXXXXXX, an individual resident of the State of Georgia (the "Executive"), to
be effective as of the 1/st/ day of September, 1999 (the "Effective Date").
The Company desires to employ the Executive as its Senior Executive Vice
President of Sales and Marketing and the Executive is willing to serve the
Company on the terms and conditions provided herein.
Defined Terms: Capitalized terms used in this Agreement that are not otherwise
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defined herein are defined at Section 19 hereof.
1. Employment. The Company hereby employs the Executive, and the Executive
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hereby agrees to serve the Company, as the Senior Executive Vice
President of Sales and Marketing of the Company, upon the terms and
conditions set forth herein. The Executive shall be the only Senior
Executive Vice President of Sales and Marketing of the Company. The
Executive shall have such authority and responsibilities as are
consistent with his position as provided herein and as may be set forth
in the Bylaws or assigned by the Chief Executive Officer of the Company
(the "CEO") from time to time. The Executive shall report to the CEO.
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. This employment relationship between the
Executive and the Company shall be exclusive; provided, however, the
Executive may devote reasonable periods of time (and be exclusively
entitled to all compensation and other income related thereto) to
continue to provide consulting services to other persons and
organizations, to serve as a director or advisor to other organizations,
to perform charitable and other community activities, and to manage his
personal investments; provided, further, however, that such activities
do not interfere with the performance of his duties hereunder and are
not adverse to the interests of the Company.
Unless otherwise agreed to by the Executive, the Executive shall be
headquartered at the Company's offices in and around the metropolitan
area of Atlanta, Georgia, but shall do such traveling as is reasonably
required of him in the performance of his duties.
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2. Term. Unless earlier terminated as provided herein, the Executive's
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employment under this Agreement shall commence as of the Effective Date
and shall continue for a period of two (2) years (the "Initial Term");
provided, however, the Company may extend the Initial Term for another
two (2) years (the "Extended Term") upon (i) written notice to the
Executive on or before January 15, 2001, and (ii) a minimum of a seven
percent (7%) increase to the Executive's then existing base salary (as
described at Section 3.a. below). (The Initial Term and the Extended
Term shall be individually and collectively referred to herein as the
"Term.")
3. Compensation and Benefits.
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1. The Company shall pay to the Executive a base salary at a rate of
not less than $185,000 per annum, in accordance with the salary
payment practices of the Company in effect from time to time.
On or before each September 1/st/ of the Term (beginning September
1, 2000) the CEO (or Compensation Committee) shall review the base
salary of the Executive and increase (but not decrease) such base
salary by an amount determined in the discretion of the CEO (or
Compensation Committee).
2. For each year of the Term, 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 CEO
(or Compensation Committee) may establish from time to time. In
addition, the CEO (or the Compensation Committee) shall annually
consider (on or before each September 1st) the Executive's
performance and determine if additional bonus is appropriate.
3. The Executive may participate in any executive stock incentive plans
established by the Company from time to time and shall be eligible
for the grant of stock options, stock, and/or other awards provided
thereunder. Additionally, the Board (or the Compensation Committee),
upon recommendation by the CEO, shall annually consider (on or
before each September 1/st/) the Executive's performance and
determine if additional grants of stock options, stock, and/or other
awards are appropriate.
4. 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 dependants), and
other benefit plans or programs of the Company now or hereafter
applicable to the Executive or applicable generally to executives of
the Company or to a class of executives that includes senior
executives of the Company; provided, however, that during
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any 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 Section 3.a. 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.
5. 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 business judgment of the
Executive) or, in lieu thereof at the Executive's option, shall
provide the Executive with an monthly allowance of not less than
$1,000 to partially cover the cost of an automobile owned or leased
by the Executive.
6. The Executive shall be entitled to three (3) weeks paid vacation (in
addition to Company-wide holiday periods) each year during the Term,
to be taken in accordance with the Company's vacation policies for
executives, as in effect from time to time.
7. The Company shall reimburse the Executive's expenses for dues and
capital assessments (but not initiation fees) of one (1) country and
(1) dining club membership currently held (or to be held) by the
Executive; provided, however, that if the Executive during the term
of his employment with the Company ceases his membership in any such
clubs and any bonds or other capital payments made by the Company
are repaid to the Executive, the Executive shall pay over such
payments to the Company.
8. The Company shall reimburse the Executive for first-class travel and
accommodations, seminar, and other expenses related to the
Executive's duties that are incurred and accounted for in accordance
with the practices of the Company, as in effect from time to time.
Upon the prior approval of the CEO, the Executive shall be entitled
to personal use of assets of the Company, free of charge or
assessment, whether or not such personal use is separate or in
conjunction with a business purpose.
9. The Company agrees that the Executive shall be entitled to invest in
venture capital and similar investments whether or not the Company
also participates in such investments.
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4. Termination.
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1. The Executive's employment under this Agreement may be terminated
prior to the end of the Initial Term, or if extended, the
Extended Term, only as follows:
(1) upon the death of the Executive;
(2) by the Company due to the Disability of the Executive upon
delivery of a Notice of Termination to the Executive;
(3) by the Company for Cause upon delivery of a Notice of
Termination to the Executive;
(4) by the Company without Cause upon delivery of a Notice of
Termination;
(5) following a Change in Control, 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 any
Change in Control; and
(6) by the Executive upon a material breach of this Agreement by
the Company, upon delivery of a Notice of Termination to the
Company at least thirty (30) days prior to the Termination
Date and chance to cure therein.
2. 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.
3. If the Executive's employment with the Company shall be terminated
during the Term pursuant to Sections 4.a. (iv), (v), or (vi), the
Executive shall be entitled to all of the following:
(1) the Company shall pay to the Executive in cash, as a lump-
sum, within 15 days of the Termination Date, an amount equal
to all
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Accrued Compensation and the Pro Rata Bonus;
(2) the Company shall pay to the Executive in cash, as a lump-sum,
within 15 days of the Termination Date, an amount equal to the
base salary (as described in Section 3.a.), then in effect,
that would otherwise have been payable to the Executive during
the Term if such Term was not earlier terminated; provided,
however, if the otherwise remaining Term is less than 365
days, such remaining Term shall automatically be deemed to be
365 days;
(3) the Company shall pay to the Executive in cash, as a lump-sum,
within 15 days of the Termination Date an amount equal to the
product of the Bonus Amount, multiplied by the number of
months that were otherwise remaining in the Term, divided by
12;
(4) the Company shall pay to the Executive in cash, as a lump-
sum, within 15 days of the Termination Date, an amount equal
to those amounts described in Sections 3.e. and 3.g. that
would have otherwise been payable during the Term if such
Term was not earlier terminated;
(5) the restrictions on any outstanding incentive awards
(including stock options) granted to the Executive under any
Company 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 by the
Company shall become immediately exercisable and shall become
100% vested; and
(6) upon a Termination Date occurring prior to the earlier of (A)
an Initial Public Offering, or (B) the date in which the
Company becomes subject to the reporting requirements set
forth in the Securities Exchange Act of 1934, the Company
shall, within 15 days after the Termination Date, offer to
repurchase all of the Company's capital stock and other debt
and securities of the Company (collectively, the "Company
Equity") then owned by the Executive, at a purchase price
equal to the Fair Market Value of such Company Equity, as
determined in accordance with the provisions below. The
question of the Fair Market Value of the Company Equity shall
be submitted to three impartial and reputable appraisers. The
Executive and the Company shall each select one appraiser, and
such appraisers shall select a third, independent appraiser.
The three appraisers shall thereafter proceed as expeditiously
as possible to determine (by concurrence of a majority of such
appraisers) the Fair Market Value
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of the Company Equity, and the appraisers shall deliver an
appraisal report to the Executive and the Company as soon as
practicable after it is completed. The determination of the
question of the Fair Market Value of the Company Equity by
such appraisers shall be final and binding on the Executive
and the Company for purposes of this Agreement. The Company
shall pay the reasonable fees and expenses of such appraisers.
For the purposes hereof, "Fair Market Value" shall mean the
relevant percentage of the fair value of the business of the
Company represented by the Company Equity as to which such
determination is being made, which shall be determined on a
going concern basis and as between a willing seller and a
willing buyer, taking into account the Company's financial
condition, performance, market share and other relevant
criteria, but not taking into account the absence of a public
market for the shares or that the shares constitute a minority
interest in the Company.
4. 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 nor
reduced by the amount of any compensation or benefits provided to
the Executive in any subsequent employment.
5. 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 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 and/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 shall promptly 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 would retain an
amount equal to such original payment or benefit.
6. 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
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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 executive benefit plans and other applicable programs,
policies and practices then in effect.
5. Protection of Trade Secrets and Confidential Information.
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1. 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 or of 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 and
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.
2. 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 during
the term of his employment and for a period of one year after the
later of (i) the Executive's last date of employment and (ii) the
last day of the period with respect to which the Executive received
compensation by reason of his termination of employment.
"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
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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 that 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.
3. 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.
4. 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
(unless such notice is impracticable or impossible) 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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1. 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
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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
prospective customer of the Company on the date of termination and
with whom the Executive had direct material contact within twelve
months of the Executive's last date of employment.
2. 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, 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.
3. 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 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.
4. 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
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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.
5. 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 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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1. 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.
2. Neither this Agreement not 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 reasonable legal fees
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and 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 any of the following: (a) the preparation, negotiation,
counsel, and execution of this Agreement; (b) the termination of the
Executive's employment (including all such fees and expenses, if
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any, incurred in contesting or disputing any such termination of
employment); or (c) the Executive seeking to obtain or enforce any right
or benefit provided by this Agreement.
9. Notice. For the purposes of this Agreement, notices and all other
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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,
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that all notices to the Company shall be directed to the attention of
the Chairman of 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 Claim. The Company's obligation to make the payments
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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 that 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
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 and
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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 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 agreement, if any,
understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.
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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. Piggyback Registration Rights.
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1. Rights. Subject to the provision of this Section 17, if the Company
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proposes to make a registered public offering of shares of its
Common Stock, excluding 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 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, given
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, subject to the
provisions of subsection (b) below, 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.
2. Offering Reduction. If a registration in which the Executive has
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the right to participate pursuant to this Section 17 is an
underwritten offering, and if the managing underwriters, determine
in their reasonable discretion, that the number of securities
requested to be included in such registration only exceeds the
number that can be sold in such offering, then the Company shall
include in such registration the number of shares of Common Stock
requested to be sold by the Company as the managing underwriters
shall determine; and the Executive and all other persons who have
exercised registration rights with respect to the proposed offering
shall participate in the offering in proportion to the number of
shares of Common Stock so requested by each of them to be so
included.
18. Other Registration Issues.
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1. The Company shall have no obligation to include shares of Common
Stock owned by the Executive in a registration statement pursuant to
Section 17 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
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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 hereof, subject to
the provisions of those Sections, the Company shall, as
expeditiously as reasonably possible:
(1) 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);
(2) 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 (9) months or until the underwriters have completed the
distribution described in such registration statement,
whichever occurs first;
(3) 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;
(4) 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 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, further, however, that, notwithstanding
anything to the contrary in this 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;
(5) cause all such shares to be listed on securities exchanges, if
any, on
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which similar securities issued by the Company are then
listed;
(6) provide a transfer agent and registrar for all such shares
not later than the effective date of such registration
statements;
(7) 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
(8) 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 may 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.
2. Holdback Agreement. In the event that the Company effects an
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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 party of such underwritten offering) during the 180-day
period commencing with the effective date of the registration
statement for such offering.
3. Stockholder Expenses. If, pursuant to Section 17 hereof, shares
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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
expenses of his own counsel, and its pro rata portion of any
underwriting discounts, fees or commissions or the equivalent
thereof.
4. The Company's Expenses. Except for the fees and expenses specified
----------------------
in Section 18(c) hereof and except as provided below in this Section
18(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
14
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 18(d), the expenses of a registration, then the Executive
shall pay all expenses described in this Section 18(d) (but not
expenses described in Section 18(e) hereof).
5. Other. With respect to any registration pursuant to Section 17
-----
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.
6. 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 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 18(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
15
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 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 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 18(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 to
notify the Indemnifying Person of any such claim shall not relieve
the Indemnifying Person from any liability it may have otherwise
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,
16
and the Indemnified Person shall give prompt written notice os 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 claims, 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 of any claim if such
settlement is effected without the consent of such Indemnifying
Person (which consent shall not be unreasonably withheld).
19. Definitions. For purposes of this Agreement, the following terms shall
-----------
have the following meanings:
1. "Accrued Compensation" shall mean the aggregate amount of all
amounts earned or accrued through the Termination Date but not paid
as of the Termination Date including (i) base salary and other
amounts set forth in Sections 3.e., f., g., and h., (ii)
reimbursement for expenses incurred by the Executive on behalf of
the Company during the period ending on the Termination Date and not
otherwise reimbursed hereunder, and (iii) bonuses and incentive
compensation (other than the Pro Rata Bonus).
2. "Act" shall mean the Securities Act of 1933, as amended.
3. "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 Atlanta, Georgia
metropolitan area; or (iii) other than as provided for herein, the
removal of the Executive from the position and/or duties described
above or any other substantial diminution in the Executive's
authority or the Executive's responsibilities that is not approved
by a majority of the members of the Board with the Executive
abstaining.
4. "Bonus Amount" shall mean the greater of (i) the most recent
annual bonuses paid or payable to the Executive, or (ii) the
average of the annual bonuses paid or payable to the Executive
during all previous fiscal years ended prior to the Termination
Date.
17
5. "Business" shall mean the design, development, marketing and
implementation of electronic banking software and services for
financial institutions.
6. "Bylaws" shall mean the Bylaws of the Company, as amended,
supplemented or otherwise modified form time to time.
7. "Cause" shall mean the occurrence of any of the following:
1. any act that constitutes, on the part of the Executive,
fraud or gross malfeasance of duty; provided, however, that
such conduct shall not constitute Cause:
(1.) 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, (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
(2.) 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) or plea of other than "not guilty" of the Executive of
a felony or misdemeanor if such misdemeanor involves moral
turpitude; or
(iii) the material breach of this Agreement by the Executive, upon
forty-five (45) days written notice thereof and chance to cure
therein.
10. A "Change in Control" shall mean the occurrence during the Term of
any of the following events:
(1) An acquisition (other than directly from the Company) of any
voting
18
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" (within the meaning of Rule 13d-3
promulgated under the 0000 Xxx) of 35% or more of the combined
voting power of the Company's then outstanding Voting
Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities that are
acquired in a "Non-Control Acquisition" (as defined below)
shall not constitute an acquisition that 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 defined
below);
(2) 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 following the date of the Initial Public Offering;
provided, however, that if the election, or 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 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
(3) Approval by stockholders of the Company of:
(1.) 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
19
merger, consolidation or reorganization, own at
least two-thirds of the combined voting power of the
outstanding voting securities of the corporation
resulting form such merger or consolidation or
reorganization (the "Surviving Corporation") in
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")
(2) A complete liquidation or dissolution of the Company; or
(3) 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).
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 that 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.
11. "Compensation Committee" shall mean the compensation committee of
the Board.
12. "Competing Business" shall mean any business that, in whole or in
part, is the same or substantially the same as the Business, unless
such Business is operated and/or conducted by an affiliate of the
Company.
20
13. "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.
14. "Initial Public Offering" shall mean the closing of the first public
offering of the Company's common stock registered under the Act 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).
15. "Notice of Termination" shall mean a written notice of termination
from the Company or the Executive, as the case may be, that
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.
16. "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.
17. "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.
18. "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.
[Continued on the next page.]
21
IN WITNESS WHEREOF, the Company and Executive have caused this Agreement to
be executed, effective as of the Effective Date.
COMPANY:
Netzee, Inc.
By: /s/ Xxxxx X. Xxxxx
--------------------------
Name: Xxxxx X. Xxxxx
------------------------
Title: Chief Executive Officer
-----------------------
EXECUTIVE:
/s/ Xxxxx X. Xxxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxxx
00
