EXHIBIT 99.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into on November
17, 2005 (the "Effective Date") between, Internet Commerce Corporation (the
"Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇").
In consideration of the mutual covenants and conditions set forth herein,
the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs ▇▇▇▇▇▇▇▇▇ in the capacity
of Chief Executive Officer. ▇▇▇▇▇▇▇▇▇ accepts such employment and agrees to
perform such services as are customary to such office and as shall from time to
time be assigned to him by the Board of Directors of the Company (the "Board").
▇▇▇▇▇▇▇▇▇ will perform his duties so as to cause the Business of the Company to
be operated in accordance with an annual operating plan and budget developed
jointly by the Board and ▇▇▇▇▇▇▇▇▇ and approved by the Board. For purposes of
this Agreement, the "Business" of the Company is to provide electronic data
interchange business-to-business e-commerce solutions and operating an
electronic data interchange service center.
2. TERM. The employment hereunder shall be for a period of one year,
commencing on the Effective Date and ending on the first anniversary of such
date (the "Employment Period"). Unless either party elects not to extend the
term of this Agreement by so notifying the other in writing at least 30 days
prior to the first anniversary of the Effective Date and each anniversary
thereafter, the Employment Period shall automatically extend for an additional
one year upon each such anniversary. ▇▇▇▇▇▇▇▇▇' employment will be on a
full-time basis requiring the devotion of such amount of his productive time as
is necessary for the efficient operation of the Business of the Company.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. For the performance of ▇▇▇▇▇▇▇▇▇' duties hereunder, the
Company shall pay ▇▇▇▇▇▇▇▇▇ (i) an annual base salary in the amount as provided
on Exhibit A, a copy of which is attached hereto and incorporated herein by
reference, payable in accordance with the Company's standard payroll policies,
which may be changed from time to time.
3.2 ANNUAL CASH INCENTIVE. ▇▇▇▇▇▇▇▇▇ will receive the opportunity to
earn an annual cash incentive pursuant to the terms of Exhibit A attached hereto
(the "Annual Cash Incentive"). The Company agrees to negotiate in good faith a
new Annual Cash Incentive Plan for each year of ▇▇▇▇▇▇▇▇▇' employment subsequent
to 2006. If the Company fails to negotiate a new Cash Incentive Plan for any
year after 2006, then the Annual Cash Incentive in effect for the preceding year
will govern.
3.3 BENEFITS. The Company shall provide to ▇▇▇▇▇▇▇▇▇ the benefits as
described on Exhibit B attached hereto.
3.4 REIMBURSEMENT OF EXPENSES. ▇▇▇▇▇▇▇▇▇ shall be entitled to be
reimbursed for all actual and reasonable expenses, including but not limited to,
expenses for travel, meals and entertainment, incurred by ▇▇▇▇▇▇▇▇▇ in
connection with and reasonably related to the furtherance of the Company's
Business, per Company travel guidelines in effect from time to time.
3.5 STOCK OPTIONS. The parties incorporate the terms of Exhibit A
attached hereto regarding the grant of stock options, provided however, that
upon any Change in Control of the Company as defined in Section 4(b) of this
Agreement or if ▇▇▇▇▇▇▇▇▇' employment is terminated under Sections 5. 1(b), (d)
or (e) of this Agreement, any of ▇▇▇▇▇▇▇▇▇' stock options that have not yet
vested will vest immediately.
4. CHANGE OF CONTROL. For the purposes of this Agreement, the term
"Change of Control" shall mean a change in the beneficial ownership of the
Company's voting stock pursuant to which:
(a) any "person," including a "syndicate" or "group" as those
terms are used in Section 13(d)(3) of the Securities Exchange Act of
1934, is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 60% or more of the combined voting
power of the Company's then outstanding "Voting Securities," which is any
security that ordinarily possesses the power to vote in the election of
the board of directors of a corporation without the happening of any
precondition or contingency; or
(b) the Company is merged or consolidated with another
corporation and immediately after giving effect to the merger or
consolidation less than 40% of the outstanding Voting Securities of the
surviving or resulting entity are then beneficially owned in the
aggregate by either the shareholders of the Company immediately prior to
such merger or consolidation, or, if a record date has been set to
determine the shareholders of the Company entitled to vote on such merger
or consolidation, the shareholders of the Company as of such record date;
or
(c) the Company transfers substantially all of its assets to
another corporation, other than a corporation of which the Company owns,
directly or indirectly, at least 40% of the combined voting power of such
corporation's outstanding voting securities.
5. TERMINATION.
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5.1 TERMINATION EVENTS. ▇▇▇▇▇▇▇▇▇' employment hereunder will terminate
upon the occurrence of any of the following events:
(a) Death;
(b) Disability: If ▇▇▇▇▇▇▇▇▇ is unable perform the duties
assigned to him hereunder for a continuous period exceeding 90 days by
reason of injury, physical or mental illness or other disability, which
condition has been certified by a physician; then, upon written notice to
▇▇▇▇▇▇▇▇▇ or his personal representative setting forth specifically the
nature of the disability and the resulting performance failures and
▇▇▇▇▇▇▇▇▇' failure to cure the cited performance failures within ten days
of receipt of such notice, the Company may discharge ▇▇▇▇▇▇▇▇▇;
(c) Cause: As used in this Agreement, "Cause" shall mean:
(i) ▇▇▇▇▇▇▇▇▇' conviction of (or pleading guilty or nolo contendere
to) a felony or any misdemeanor involving dishonesty or moral
turpitude; provided, however, that prior to discharging ▇▇▇▇▇▇▇▇▇
for Cause, the Board shall give a written statement of findings to
▇▇▇▇▇▇▇▇▇ setting forth specifically the grounds on which Cause is
based, and ▇▇▇▇▇▇▇▇▇ shall have a period of ten days thereafter to
respond in writing to the Board's findings;
(ii) ▇▇▇▇▇▇▇▇▇' willful and continued failure to substantially perform
his duties with the Company (other than any failure resulting from
illness or disability) that has, or can reasonably be expected to
have, a direct and material adverse monetary effect on the
Company, provided that the Board has tendered written notice to
▇▇▇▇▇▇▇▇▇ specifying the nature of the misconduct or performance
deficiency and giving ▇▇▇▇▇▇▇▇▇ 20 days to cure such deficiency.
For purposes of this subsection (ii), no act or failure to act on
▇▇▇▇▇▇▇▇▇' part shall be considered "willful" if done, or omitted
to be done, by ▇▇▇▇▇▇▇▇▇ in good faith and with reasonable belief
that ▇▇▇▇▇▇▇▇▇' action or omission was in the best interest of the
Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Employee in
good faith and in the best interests of the Company.
(d) Without Cause: The Board may terminate ▇▇▇▇▇▇▇▇▇ by issuing
at least 30 days' advance written notice, subject to the severance
provisions set forth below.
(e) By ▇▇▇▇▇▇▇▇▇ With Cause: ▇▇▇▇▇▇▇▇▇ may terminate his
employment due to either (i) a default by the Company in the
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performance of any of its obligations hereunder, or (ii) an Adverse
Change in Duties (as defined below), which default or Adverse Change in
Duties remains unremedied by the Company for a period of 20 days
following its receipt of written notice thereof from ▇▇▇▇▇▇▇▇▇; or
(f) By ▇▇▇▇▇▇▇▇▇ Without Cause: ▇▇▇▇▇▇▇▇▇ may terminate his
employment for any reason upon the furnishing of at least 30 days'
advance written notice to the Board.
As used herein, "Adverse Change in Duties" means an action or series of
actions taken by the Company, without ▇▇▇▇▇▇▇▇▇' prior written consent, that
results in:
(1) A change in ▇▇▇▇▇▇▇▇▇' reporting responsibilities, titles, job
responsibilities or offices that results in a material diminution of his
status, control or authority; or
(2) The assignment to ▇▇▇▇▇▇▇▇▇ of any positions, duties or
responsibilities that are materially inconsistent with ▇▇▇▇▇▇▇▇▇'
positions, duties and responsibilities or status with the Company
immediately prior to the change; or
(3) A requirement by the Company that ▇▇▇▇▇▇▇▇▇ be based or
perform his duties anywhere other than the principal executive offices of
the Company, as located (i) at ▇▇▇▇▇▇▇▇▇' office location on the date of
this Agreement or (ii) within 25 miles of such current location; or
(4) A failure by the Company to provide for ▇▇▇▇▇▇▇▇▇'
participation in any newly-adopted benefits or plans at a level or to an
extent commensurate with that of other top executives of the Company.
5.2 EFFECTS OF TERMINATION.
(a) Upon termination of ▇▇▇▇▇▇▇▇▇' employment hereunder for any
reason, the Company will promptly pay ▇▇▇▇▇▇▇▇▇ all compensation owed to
▇▇▇▇▇▇▇▇▇ and unpaid through the date of termination (including, without
limitation, salary and employee expense reimbursements).
(b) In addition, if ▇▇▇▇▇▇▇▇▇' employment is terminated under
Sections 5.1 (b), (d) or (e), the Company shall also pay ▇▇▇▇▇▇▇▇▇ a
severance amount equal to 12 months of the then-applicable base monthly
salary plus any target Annual Cash Incentive that would have accrued for
the fiscal year in which the termination occurred, which amount shall be
paid in accordance with the Company's then-existing standard payroll
policies (including payroll deductions) over the 12-month period
following such termination.
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(c) The Company shall have the right to offset against any
damages resulting from a breach by ▇▇▇▇▇▇▇▇▇ of Section 5.3 or Section 6
of this Agreement.
5.3 RESTRICTIVE COVENANTS. Upon termination of ▇▇▇▇▇▇▇▇▇' employment
hereunder for any reason, ▇▇▇▇▇▇▇▇▇ agrees that for the one-year period
following the termination of employment, ▇▇▇▇▇▇▇▇▇ will not:
(a) directly or indirectly, within a ten-mile radius of
▇▇▇▇▇▇▇▇▇' office at the Company, whether for his own account or as an
individual, employee, director, consultant or advisor, or in any other
capacity whatsoever, provide services that are substantially similar to
the services he provided to the Company to any person, firm, corporation
or other business enterprise that competes with the Business of the
Company, unless he obtains the prior written consent of the Board;
(b) directly or indirectly encourage or solicit, or attempt to
encourage or solicit, on behalf of any person, firm, corporation or other
business enterprise that competes with the Business of the Company, any
individual to leave the Company's employ for any reason or interfere in
any other manner with the employment relationships at the time existing
between the Company and its current or prospective employees.
(c) induce or attempt to induce, on behalf of any person, firm,
corporation or other business enterprise that competes with the Business
of the Company, any provider, payor, customer, supplier, distributor,
licensee or other business relation of the Company with whom ▇▇▇▇▇▇▇▇▇
dealt at any time during the two-year period preceding his termination of
employment to cease doing business with the Company or in any way
interfere with the existing business relationship between any such
customer, supplier, distributor, licensee or other business relation
described above and the Company.
▇▇▇▇▇▇▇▇▇ acknowledges that monetary damages will not be sufficient to
compensate the Company for any economic loss that may be incurred by reason of
breach of the foregoing restrictive covenants. Accordingly, in the event of any
such breach, the Company shall, in addition to any remedies available to the
Company at law, be entitled to obtain equitable relief in the form of an
injunction precluding ▇▇▇▇▇▇▇▇▇ from continuing to engage in such breach.
In the event that any of the foregoing restrictive covenants are too
broad to be enforceable, the parties request and agree that they may be reduced
to such lesser breadth as may be necessary to make them enforceable. The
covenants in this section 5.3 shall be construed as an agreement independent of
any other agreement between the parties. ▇▇▇▇▇▇▇▇▇ agrees that the existence of
any claim or cause of action of ▇▇▇▇▇▇▇▇▇ against the Company,
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whether predicated upon this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of these covenants.
6. CONFIDENTIALITY. During the term of this Agreement and for 36
months after ▇▇▇▇▇▇▇▇▇' termination of employment with the Company, ▇▇▇▇▇▇▇▇▇
will continue to be bound by the terms of that certain Confidentiality Agreement
entered into between ▇▇▇▇▇▇▇▇▇ and the Company on or about April 26, 2005.
7. GENERAL PROVISIONS.
7.1 ASSIGNMENT. ▇▇▇▇▇▇▇▇▇ may not assign or delegate any of his rights
or obligations under this Agreement. The Company may assign its rights and
obligations under this Agreement to any successor to the Company through merger,
consolidation, sale or the like.
7.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
and all prior agreements between the parties relating to such subject matter.
7.3 MODIFICATIONS. This Agreement may be changed or modified only by
an agreement in writing signed by the party against whom enforcement is sought.
7.4 SUCCESSORS AND ASSIGNS. The rights and duties under this Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
successors and assigns, legal representatives, heirs, legatees, distributees,
assigns and transferees by operation of law, whether or not any such person or
entity shall have become a party to this Agreement and have agreed in writing to
join and be bound by the terms and conditions hereof.
7.5 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Georgia.
7.6 SEVERABILITY; PARTIAL INVALIDITY. If any provision of this
Agreement or any instrument or document delivered in connection herewith is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement (the "Offending Provision"), the Offending
Provision shall be fully severable; this Agreement shall be construed and
enforced as if the Offending Provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the Offending Provision or by its
severance from this Agreement. Furthermore, in lieu of the Offending Provision,
there shall be added automatically as a part of this Agreement a provision as
similar in terms to the Offending Provision as may be possible and be legal,
valid and enforceable.
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7.7 FURTHER ASSURANCES. The parties will execute such further
instruments and take such further actions as may be reasonably necessary to
carry out the intent of this Agreement.
7.8 NOTICES. Any notices or other communications required or permitted
hereunder shall be in writing and shall be deemed received by the recipient when
delivered personally or, if mailed, five (5) days after the date of deposit in
the United States mail, certified or registered, postage prepaid and addressed,
in the case of the Company, to:
Internet Commerce Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and, in the case of ▇▇▇▇▇▇▇▇▇, to:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as either party may later specify by at least ten (10)
days' advance written notice delivered to the other party in accordance
herewith.
7.9 NO WAIVER. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of that provision, nor prevent
that party thereafter from subsequently enforcing that provision of any other
provision of this Agreement.
7.10 LEGAL FEES AND EXPENSES. In the event of any disputes under this
Agreement, each party shall be responsible for his or its own legal fees and
expenses that may be incurred in resolving such dispute.
7.11 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Internet Commerce Corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
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EXHIBIT A
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2006 COMPENSATION PLAN
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, CEO
INTERNET COMMERCE CORPORATION (THE "COMPANY")
PERSONAL OBJECTIVES
1. Develop, lead and manage the executive team so that the Company
exceeds the financial plan for $22.5M in revenue and $3.5M in net operating
profit for the year ended July 31, 2006 ("Fiscal 2006").
2. Develop, implement and manage merger and integration plans to ensure
successful final integration of the MEC service bureau and the successful
acquisition and appropriate integration of Kodiak into the Company during Fiscal
2006.
3. Develop and guide discussions with the Board of Directors during
Fiscal 2006 on a strategic plan for the Company, inclusive of product, market,
capital and sales strategies, that can be approved by the Board of Directors and
adopted as part of the 2007 planning process.
4. Develop, implement, and manage a series of programs during Fiscal 2006
to track, measure, and provide effective management information on operations
quality and customer satisfaction so as to ensure significant superiority over
competitors, and market awareness of said superiority, in service delivery to
customers.
5. Develop, implement, and manage a series of programs during Fiscal 2006
to track, measure, and provide effective management information on employee
retention, satisfaction, and productivity.
6. Develop and ensure effective implementation of an investor relations
plan during Fiscal 2006, providing personal leadership with current and
potential investors, so as to significantly expand the investment community
awareness of and favorable impressions of the Company.
SALARY
The Company shall pay you a salary of $250,000 annually. The Company,
through the Compensation Committee of the Board of Directors, will review your
salary annually and, in its sole discretion, may modify your salary as
appropriate, subject to the approval of the Compensation Committee of the Board
of Directors.
ANNUAL CASH INCENTIVE
You shall have the opportunity to earn a cash incentive based on the
Company's and your personal performance during the Fiscal 2006. The Company,
through the Compensation Committee of the Board of Directors, retains the right
to adjust your cash incentive plan at any time as business circumstances or
other factors reasonably dictate.
Your targeted annual incentive compensation for Fiscal 2006 is $200,000.
Payment of 2006 incentive compensation will be at fiscal year end and will be
determined based on the following factors, weighted as indicated:
A. Achieve $22.5 million in planned Company revenue for Fiscal 2006.
(37.5% weight - $75,000.00 at 100% of plan). Paid at a rate of .333% of revenue.
Payment eligibility begins when Company revenue reaches 90% of plan. The payout
rate doubles to .666% on the incremental portion of revenue performance that
exceeds 100% of plan. There is a maximum payout of $150,000 on this component.
B. Achieve $3.5 million in planned Company net operating profit for
Fiscal 2006. (37.5% weight - $75,000.00 at 100% of plan). Paid at a rate of
2.14% of net earnings. Payment eligibility begins when Company revenue reaches
90% of plan. The payout rate doubles to 4.28% on the incremental portion of
revenue performance that exceeds 100% of plan. There is a maximum payout of
$150,000 on this component.
C. Achievement of your Personal Objectives (25% weight - $50,000.00).
Based on the Compensation Committee's qualitative assessment of your
effectiveness in achieving your personal objectives as set forth above. There is
a maximum payout of $50,000 on this component.
LONG TERM STOCK INCENTIVE
Promptly following the next meeting of the Company's Board of Directors,
the Company shall grant you an option to purchase 100,000 shares of Class A
Common Stock of the Company at an exercise price per share equal to the fair
market value of such common stock as determined by the Board of Directors in
good faith at the time of the grant. This grant shall have normal vesting terms
as provided in the Internet Commerce Corporation Amended and Restated Stock
Option Plan.
Promptly following the next meeting of the Company's Board of Directors,
the Company shall grant you an option to purchase an additional 100,000 shares
of Class A Common Stock of the Company at an exercise price per share equal to
the fair market value of such common stock as determined by the Board of
Directors in good faith at the time of the grant. This grant shall have special
vesting terms. Upon the completion of the first fiscal quarter where
Company revenue exceeds $6,000,000, and Company net operating profit exceeds
$1,000,000, as reported in the Company's regulatory filings, these shares will
vest in full. If these revenue and earnings objectives are not achieved, these
options shall vest under the normal vesting terms as provided in the Internet
Commerce Corporation Amended and Restated Stock Option Plan.
At the first meeting of the Board of Directors following a fiscal quarter
where Company revenue exceeds $6,000,000, and Company net operating profit
exceeds $1,000,000, as reported in the Company's regulatory filings, the Company
shall grant you an option to purchase an additional 100,000 shares of Class A
Common Stock of the Company at an exercise price per share equal to the fair
market value of such common stock as determined by the Board in good faith at
the time of the grant. This grant shall have special vesting terms. Upon the
completion of the first fiscal quarter where Company revenue exceeds $7,000,000,
and Company net operating profit exceeds $1,200,000, as reported in the
Company's regulatory filings, these shares will vest in full. If these revenue
and earnings objectives are not achieved, these options shall vest under the
normal vesting terms as provided in the Internet Commerce Corporation Amended
and Restated Stock Option Plan or the Internet Commerce Corporation 2005 Stock
Plan, as applicable at the time that the options are granted.
Such options shall be granted pursuant to the terms of, and evidenced by,
a written stock option agreement to be entered into between you and the Company.
EXHIBIT B
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BENEFITS
You will be eligible to participate in benefit plans and/or programs
which the Company may offer to its employees from time to time. Your eligibility
for such plans and/or programs will be determined by the terms of such plans
and/or programs. Among the benefits currently offered by the Company to its
employees are medical and dental insurance, a stock option plan and a 401k plan,
which are described below. Please be advised, however, that the Company reserves
the right to amend, modify, or terminate any of its benefits plans and/or
programs at any time in its sole discretion. You will be eligible for four weeks
vacation in accordance with the Company's accrual policy.
MEDICAL INSURANCE. Currently, the Company offers its employees medical insurance
through Oxford Health Plans. The Company will contribute a portion of your
premium for employee coverage, and you will be responsible for contributing for
additional family coverage through pre-tax payroll deduction.
DENTAL INSURANCE. The Company presently offers its employees dental insurance
through Unicare Dental Plan. ICC will contribute a portion of your premium for
employee coverage, and you will be responsible for contributing for additional
family coverage through pre-tax payroll deduction.
401k PLAN. The Company presently offers its employees a 401k plan. You may elect
to contribute pre-tax deferrals through payroll deduction.
