Exhibit 10.1
SERVICES AGREEMENT
THIS SERVICES AGREEMENT is effective the 1st day of June, 2007 by and
between DIRECT INSITE CORP., a Delaware corporation (hereinafter the "Company")
and Xxxxx X. Xxxxxxxxx, an individual residing at #1 Lovango Cay, USVI (mailing
address 0000 Xxx Xxxx Xxxxx, Xxxxx 000-XXX, Xxx Xxxx, Xx. Xxxxxx, USVI 00802),
(hereinafter referred to as "Xxxxxxxxx").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Services Agreement with
Xxxxxxxxx; and
WHEREAS, Xxxxxxxxx desires to enter into a Services Agreement with the
Company;
NOW, THEREFORE, it is agreed as follows:
1. Prior Agreements Superseded. This Agreement supersedes any services,
consulting or other agreements, oral or written, entered into between Xxxxxxxxx
and the Company prior to the date of this Agreement except for stock options and
restricted stock awards previously granted to Xxxxxxxxx, which stock options and
restricted stock awards shall continue in full force and effect, under the terms
and conditions effective when they were issued.
2. Services. The Company hereby agrees to employ Xxxxxxxxx and Xxxxxxxxx hereby
agrees to serve as Chief Executive Officer (until such time as the planned
successor is appointed C.E.O. and thereafter as a consultant(as hereinafter
defined) to the Company through the end of the Term of this agreement) and
Chairman of the Board of the Company with commensurate responsibilities and to
perform such services as reasonably directed by the Board of Directors.
Xxxxxxxxx shall serve in similar capacities of such of the subsidiary
corporations of the Company as may be selected by the Board of Directors without
additional compensation. Notwithstanding the foregoing, it is understood that
the duties of Xxxxxxxxx during the performance of services shall not be
inconsistent with his position and titles at such time.
3. Term. Subject to earlier termination on the terms and conditions hereinafter
provided, the term of this Services Agreement shall cover the period June 1st,
2007 through and ending on December 31st, 2010 "Term" of this agreement..
4. Compensation. For all services rendered by Xxxxxxxxx under this Agreement,
compensation shall be paid to Xxxxxxxxx as follows:
(a) During the Term of this Agreement,
1. Xxxxxxxxx shall receive $20,000 per month as compensation base.. This
will increase 10% on each annual anniversary subject to approval of the
Company's Compensation Committee and based on the performance of the Company.
2. A one time grant of 100,000 shares of restricted common stock. This
restriction shall be removed on a change of control or termination of
employment, whichever occurs first.
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3. A grant of 10,000 shares of restricted stock monthly starting with the
signing of this contract and ending with the last grant on December 1st, 2010.
This restriction shall be removed on a change of control or termination of
employment, whichever occurs first.
(b) During the period of this Agreement, Xxxxxxxxx shall be eligible to
participate in the Company's stock option and stock purchase plans to the extent
determined in the discretion of the Board of Directors of the Company or
committee thereof.
(c) During the period of this Agreement, Xxxxxxxxx shall be entitled to
participate in any short-term or long-term incentive plan which the Company has
in existence or which may be adopted.
(d) During the period of this Agreement, Xxxxxxxxx shall be furnished with
office space and secretarial service and facilities commensurate with his
position and adequate for the performance of his duties.
(e) During the period of this Agreement, Xxxxxxxxx shall be entitled to
fully participate in all benefit programs available to executive employees of
the Company throughout the term of this Agreement.
5. Expenses. (a) Xxxxxxxxx shall be reimbursed for all out-of-pocket expenses,
including medical expenses, reasonably incurred by him in the performance of his
duties hereunder. (b) During the Term of this agreement Xxxxxxxxx shall be
provided with a remote office and housing, (Not to exceed $10,000.00 per month
for such office and housing) and (c) a car including maintenance, insurance,
parking and all operation costs, with the monthly lease cost of such car not to
exceed $1,000 per month unless approved by the Company prior to lease execution.
At the end of any lease Xxxxxxxxx will have the right to purchase the vehicle
under the terms of any lease. (d) Additionally Xxxxxxxxx shall be reimbursed for
his reasonable expenses incurred performing his duties re: the following not for
profit organizations, (National & International Center for Missing and Exploited
Children and "BENS" Business Executives for National Security). Upon its
expiration the Company will renew, under substantially the same original terms
and conditions, the Airpass issued to Xxxxxxxxx. All payments due to Xxxxxxxxx
under this Agreement which are not paid when due will have interest added to
them at a rate equivalent to the average rate of that paid on the Company's
preferred stock outstanding.
6. Severance Benefits. Xxxxxxxxx shall be entitled to the severance benefits
provided for in subsection (c) hereof in the event of the termination of this
Agreement, by the Company without cause or in the event of a voluntary
termination of this service Agreement by Xxxxxxxxx for good reason. In such
event, Xxxxxxxxx shall have no duty to mitigate damages hereunder. Xxxxxxxxx and
the Company acknowledge that the foregoing provisions of this paragraph 6 are
reasonable and are based upon the facts and circumstances of the parties at the
time of entering into this Agreement, and with this Agreement, and with due
regard to future expectations.
(a) The term "cause" shall mean:
(i) Xxxxxxxxx'x willful and continued failure to substantially perform his
duties under this Agreement (other than any such failure resulting from his
incapacity due to physical or mental illness) after written demand for
substantial performance is delivered to Xxxxxxxxx by the Board of Directors of
the Company which specifically identifies the manner in which the Board believes
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Xxxxxxxxx has not substantially performed his duties and provides Xxxxxxxxx with
a reasonable period in which to comply.
(ii) Xxxxxxxxx'x failure or refusal to follow directions from the Company's
Board of Directors provided that (a) Xxxxxxxxx is provided written notice of
such directions and a reasonable period in which to comply and (b) Xxxxxxxxx'x
compliance with any such direction would not be illegal or unlawful.
(iii) Any act or fraud, embezzlement or theft committed by Xxxxxxxxx which
has been finally adjudicated, whether or not in connection with his duties or in
the course of his performance as defined in this Service Agreement, which
substantially impairs his ability to perform his duties hereunder.
(iv) Any willful disclosure by Xxxxxxxxx of confidential
information or trade secrets of the Company or its affiliates.
For purposes of this paragraph, no act or failure to act on Xxxxxxxxx'x
part shall be considered "willful" unless done, or omitted to be done, by
Xxxxxxxxx not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
Xxxxxxxxx shall not be deemed to have been terminated for cause unless and until
there shall have been delivered to him a copy of a notice of termination from
the Board of Directors of the Company after reasonable notice to Xxxxxxxxx and
an opportunity for Xxxxxxxxx with his counsel to be heard before the Board of
Directors of the Company, finding that in the good faith opinion of such Board
of Directors Xxxxxxxxx was guilty of the conduct set forth in clauses (i), (ii),
(iii) or (iv) of this paragraph and specifying the particulars thereof in
detail.
(b) For these purposes, Xxxxxxxxx shall have "good reason" to terminate
this Agreement if the Company removes Xxxxxxxxx from the position of Chairman of
the Board, or changes his duties without his written consent at any time during
the term of this Agreement.
(c) The severance benefits to be paid to Xxxxxxxxx in the event of
termination without cause or by Xxxxxxxxx for "good reason", shall consist of
the continued payment to Xxxxxxxxx for the remaining term of the Term this
Agreement, of the compensation provided in Section 4 (a) hereof plus the
immediate vesting of all outstanding options and removal of any restrictions on
common stock issued; and the continued payment to Xxxxxxxxx of the expenses
provided for in paragraph 5 hereof.
(d) Upon the termination of this agreement Xxxxxxxxx can purchase , for the
depreciated net book value (as of 12-31 of the year of termination) all office
equipment, furnishings, cars etc. which were used by or in the possession of
Consultant as of the date of termination.
7. Death. In the event of Xxxxxxxxx'x death during the term of this Agreement,
all shares and stock options issued hereunder shall immediately vest and/or
become unrestricted.
8. Non-Competition.
(a) Xxxxxxxxx agrees that, during the term of this Agreement, he will not,
without the prior written approval of the Board of Directors of the Company,
directly or indirectly, through any other individual or entity, (i) become an
officer or employee of, or render any services [including consulting services]
to, any competitor of the Company, (ii) solicit, raid, entice or induce any
customer of the Company to cease purchasing goods or services from the Company
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or to become a customer of any competitor of the Company, and Xxxxxxxxx will not
approach any customer for any such purpose or authorize the taking of any such
actions by any other individual or entity, or (iii) solicit, raid, entice or
induce any employee of the Company, and Xxxxxxxxx will not approach any such
employee for any such purpose or authorize the taking of any such action by any
other individual or entity. However, nothing contained in this paragraph 8 shall
be construed as preventing Xxxxxxxxx from investing his assets in such form or
manner as will not require him to become an officer or employee of, or render
any services (including consulting services) to, any competitor of the Company.
(b) During the term hereof and at all times thereafter, Xxxxxxxxx shall not
disclose to any person, firm or corporation other than the Company any trade
secrets, trade information, techniques or other confidential information of the
business of the Company, its methods of doing business or information concerning
its customers learned or acquired by Xxxxxxxxx during Xxxxxxxxx'x relationship
with the Company and shall not engage in any unfair trade practices with respect
to the Company.
9. Enforcement.
(a) The necessity for protection of the Company and its subsidiaries
against Xxxxxxxxx'x competition, as well as the nature and scope of such
protection, has been carefully considered by the parties hereto in light of the
uniqueness of Xxxxxxxxx'x talent and his importance to the Company. Accordingly,
Xxxxxxxxx agrees that, in addition to any other relief to which the Company may
be entitled, the Company shall be entitled to seek and obtain injunctive relief
(without the requirement of any bond) for the purpose of restraining Xxxxxxxxx
from any actual or threatened breach of the covenants contained in paragraph 8
of this Agreement.
(b) If for any reason a court determines that the restrictions under
paragraph 8 of this Agreement are not reasonable or that consideration therefore
in adequate, the parties expressly agree and covenant that such restrictions
shall be interpreted, modified or rewritten by such court to include as much of
the duration and scope identified in paragraph 8 as will render the restrictions
valid and enforceable.
10. Notices. Any notice to be given to the Company or Xxxxxxxxx hereunder shall
be deemed given if delivered personally, faxed or mailed by certified or
registered mail, postage prepaid, to the other party hereto at the following
addresses:
To the Company: Direct Insite Corp.
00 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Copy to: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx, Xxxxxxxxx & Xxxxxxxx, LLP
000 Xxxxxxx Xxxxxxxxxx
Xxxxx #000
Xxxxxxx, Xxx Xxxx 00000
To: Xxxxxxxxx: Xxxxx X. Xxxxxxxxx
0000 Xxx Xxxx Xxxxx, Xxxxx 000-XXX
Xxx Xxxx, Xx. Xxxxxx, USVI 00802
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Copy to: Xxx.xxxxxxxxx@xxxx.xxx
Either party may change the address to which notice may be given hereunder by
giving notice to the other party as provided herein.
11. Duties as a consultant.
(a) During the consulting period, if any, Xxxxxxxxx shall consult with the
Company and its senior executive officers regarding its respective businesses
and operations. Such consulting services shall not require more than 48 days in
any calendar year inclusive of the time required as chairman of the board of
directors, nor more than four days in any month, it being understood and agreed
that during the Consulting Period Xxxxxxxxx shall have the right, consistent
with the prohibitions of Section 8 above, to engage in full time or part-time
employment with any business enterprise that is not a competitor of the Company.
(b) Xxxxxxxxx'x services as a consultant shall only be required at such
times and such places as shall not result in unreasonable inconvenience to him,
recognizing his other business commitments that he may have to accord priority
over the performance of services for the Company. In order to minimize
interference with Xxxxxxxxx'x other commitments, his consulting services may be
rendered by personal consultation at his residence or office wherever
maintained, or by correspondence through mail, telephone, fax or other similar
mode of communication at times, including weekends and evenings, most convenient
to him.
(c) The Consulting Period shall terminate earlier, upon Xxxxxxxxx'x death
or upon his failure to perform consulting services as provided in this Section
11 pursuant to 30 days' written notice by the Company to Xxxxxxxxx of the
grounds constituting such failure and reasonable opportunity afforded Xxxxxxxxx
to cure the alleged failure. Upon any such termination, all payments of fees,
benefits and expenses shall cease.
12. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns, and upon Xxxxxxxxx, his
heirs, executors, administrators and legal representatives.
13. Entire Agreement. This Agreement constitutes the entire agreement between
the parties except as specifically otherwise indicated herein.
14. Jurisdiction and Venue. It is hereby irrevocably agreed that all disputes or
controversies between the Company and Xxxxxxxxx arising out of, in connection
with or relating to this Agreement shall be exclusively heard, settled and
determined by arbitration to be held in the City of New York, County of New
York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association to be conducted before three arbitrators, who shall all
be either attorney(s) or retired judge(s) licensed to practice law in the State
of New York. York, New York. Any award made by such arbitrators shall be binding
and conclusive for all purpose thereof and may be entered as a final judgment in
any court of competent jurisdiction. The parties also agree that judgment may be
entered on the arbitrator's award by any court having jurisdiction thereof and
the parties consent to the jurisdiction of any court located in the City of New
York, County of New York, or in the State of New York for this purpose. The cost
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and expenses of such arbitration shall be borne in accordance with the
determination of the arbitrators and may include reasonable attorney's fees,
however, Xxxxxxxxx'x maximum liability for costs and fees shall not exceed
$5,000. Each party hereby further agrees that service of process may be made
upon it by registered or certified mail or personal service at the address
provided for herein. In the event of any material breach of this Agreement by
the Company, when no material breach has occurred by Xxxxxxxxx, actual damages
would be difficult to determine, and the parties, therefore, agree that as
liquidated damages the Consultant shall be entitled to receive the balance of
the compensation/ payments payable through the term of this Agreement under
paragraphs 4 (a) and 5 plus the immediate vesting of all unvested options and
removal of restrictions on common stock.
15. Governing Law. This Agreement shall be construed in accordance with the laws
of the State of New York.
16. Change of Control. In the event (a) the Company has been consolidated or
merged into or with any other corporation or all or substantially all of the
assets of the Company have been sold to another corporation, with or without the
consent of Employee, in his sole discretion; or (b) the Company undergoes a
Change of Control, as hereinafter defined below, without prior Board approval;
then Xxxxxxxxx is entitled to the immediate vesting of all shares of common
stock and options issued hereunder.
A "Change of Control" of the Company, or in any person directly or indirectly
controlling the Company, shall mean:
(i) a change of control as such term is presently defined in Regulation
240.12b-2 under the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx");
(ii) if during the Term of this services agreement any "person" (as such
term is used in Section 13(d) and 14(d) of the Exchange Act) other than the
Company or any person who on the date of this Services Agreement is a director
or officer of the Company, becomes the "beneficial owner" (as defined in Rule
13(d)03 under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% of the voting power of the Company's then outstanding
securities; or
(iii) if during the Term of this services agreement the individuals who at
the beginning of such period constitute the Board cease for any reason other
than death, disability or retirement to constitute at least a majority thereof."
17. Consent under Rights Agreement. The parties acknowledge that this Agreement
has been approved by the Company's Board of Directors and accordingly will not
result in the issuance of any rights under the Rights Agreement dated as of
August 28th, 2001.
18. Indemnification. The Company indemnifies Xxxxxxxxx to the maximum extent
permissible for all activities taken since he has been involved with the Company
and for 5 years thereafter in accordance with the 2004 Indemnification Agreement
executed between Xxxxxxxxx and the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Services Agreement as
of the day and year first above written.
DIRECT INSITE CORP.
By:/s/ Xxxxxxx Xxxxxxx /s/ Xxxxx X. Xxxxxxxxx
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Xxxxxxx Xxxxxxx / Chief Financial Officer Xxxxx X. Xxxxxxxxx
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