Exhibit 10.2
EMPLOYMENT AND CONSULTING AGREEMENT
THIS EMPLOYMENT AGREEMENT effective as of the 1st day of January, 2003 by
and between DIRECT INSITE CORP, a Delaware corporation (hereinafter the
"Company") and XXXXXX X. XXXXXXXX, an individual residing at 0000 XX 00 Xxx,
Xxxx Xxxxx, Xxxxxxx 00000. (hereinafter called "Xxxxxxxx").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Employment Agreement with
Xxxxxxxx (the "Agreement"); and
WHEREAS, Xxxxxxxx desires to enter into the Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Prior Agreements Superseded. This Agreement supersedes any employment,
consulting or other agreements, oral or written, entered into between, Xxxxxxxx
and or Telluride Group, and the Company prior to the date of this Agreement
except for stock options or stock issuances previously granted to, Xxxxxxxx and
or Telluride Group, which stock options and stock issuances shall continue in
full force and effect.
2. Employment. The Company hereby agrees to employ Xxxxxxxx and Xxxxxxxx
hereby agrees to serve as President or Vice Chairman of the Company through
August 15, 2004 reporting to the CEO and Chairman; and as a Consultant
contiguously thereafter until February 15, 2007. Xxxxxxxx'x employment as
President or Vice Chairman hereunder shall be on a full-time basis and he shall
not engage in any other business, except with the prior approval of the Board
and Chief Executive Officer. . Notwithstanding the foregoing, it is understood
that the duties of Xxxxxxxx during the performance of employment shall not be
inconsistent with his then position and title.
3. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, the Term of this Agreement is:
(a) the Employment Term of this Agreement shall end on August 15, , 2004
and
(b) the Consulting Period of this Agreement shall end February 15, 2007.
(c) these terms shall run sequentially.
4. Compensation. For all services rendered by Xxxxxxxx during the
Employment Term under this Agreement, compensation shall be paid to Xxxxxxxx as
follows:
(a) Xxxxxxxx shall be paid at the annual rate of Two Hundred Forty Thousand
($240,000) Dollars.
(b) Xxxxxxxx shall be granted stock options to purchase 200,000 shares of
the Company's common stock at fair market value per share on the date of
issuance. 150,000 options shall vest immediately and the remaining options shall
vest pro rata on a monthly basis between the date of execution of this Agreement
and January 1, 2004. . During the period of employment, Xxxxxxxx shall be
eligible to further participate in the Company's stock option and stock purchase
plans to the extent determined in the discretion of the Board.
(c) Xxxxxxxx shall be entitled to participate in any short-term or
long-term incentive plan available to executive employees.
(d) Xxxxxxxx shall receive a transportation allowance of $600 monthly and
also be reimbursed for weekend transportation expenses from the Company's
offices in New York to his home in Florida during the Employment Term.
(e) During the period of employment, Xxxxxxxx shall be furnished with
office space and secretarial service and facilities commensurate with his
position and adequate for the performance of his duties at 00 Xxxxxxx Xxxxx,
Xxxxxxx, Xxx Xxxx.
(f) Xxxxxxxx shall be entitled to fully participate in all benefit programs
available to executive employees of the Company throughout the Employment Term
and the Consulting Period of this Agreement.
5. Expenses. Xxxxxxxx, during both the Employment Term and the Consulting
Period, shall be reimbursed for all out-of-pocket expenses, reasonably incurred
by him in the performance of his duties hereunder. Expense reports, with
receipts and justifications, must be submitted to the Chief Executive Officer
for approval. During the Employment Term such expenses may include but not be
limited to temporary living accommodation expenses which are not to exceed $
2,500.00 per month.
6. Severance Benefits. Xxxxxxxx shall be entitled to the severance benefits
provided for in subsection (c) hereof in the event of the termination of his
employment by the Company without cause or in the event of a voluntary
termination of employment by Xxxxxxxx for good reason. In such event, Xxxxxxxx
shall have no duty to mitigate damages hereunder. Xxxxxxxx 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) Xxxxxxxx'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 demand for
substantial performance is delivered to Xxxxxxxx by the Chairman of the
Board of the Company which specifically identifies the manner in which the
Board believes Xxxxxxxx has not substantially performed his duties pursuant
to 30 days' written notice by the Company to Xxxxxxxx of the grounds
constituting such failure and reasonable opportunity afforded Xxxxxxxx to
cure the alleged failure.
(ii) Xxxxxxxx'x repeated or willful failure or refusal to follow
reasonable directions from the Company's Board provided that (a) Xxxxxxxx
is provided written notice of such directions and a reasonable period in
which to comply or cure and (b) Xxxxxxxx'x compliance with any such
direction would not be illegal or unlawful.
(iii) Any act or fraud, embezzlement or theft committed by Xxxxxxxx
whether or not in connection with his duties or in the course of his
employment which substantially impairs his ability to perform his duties
hereunder.
(iv) Any willful disclosure by Xxxxxxxx of confidential information or
trade secrets of the Company or its affiliates.
For purposes of this paragraph, no act or failure to act on Xxxxxxxx'x
part shall be considered "willful" unless done, or omitted to be done, by
Xxxxxxxx not in good faith. . Notwithstanding the foregoing, Xxxxxxxx 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
Chairman of the Board of the Company after reasonable notice to Xxxxxxxx
and an opportunity for Xxxxxxxx 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 Xxxxxxxx committed prohibited conduct as set forth
in clauses (i), (ii),(iii) or (iv) of this paragraph and specifying the
particulars thereof in detail.
(b) For these purposes, Xxxxxxxx shall have "good reason" to terminate the
Employment Term of this Agreement if:
(i) the Company removes Xxxxxxxx from his then current position.or
(ii) if the Company has a change of control defined as in the event
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, or if any entity acquires voting control
of the Company with or without the consent of Xxxxxxxx and as a consequence
of such change of control Xxx Xxxxxxxxx is no longer the CEO of the Company
during the Employment Term of this Agreement; (iii) the Company fails to
comply with the terms and conditions under this Agreement;
(c) The severance benefits under this section in the event of termination
without cause or by Xxxxxxxx for "good reason", shall consist of the continued
payment to Xxxxxxxx for the remaining term of Employment Term this Agreement, of
the annual salary provided in Section 4(a) hereof plus the immediate vesting of
all outstanding options; and of the payment to Xxxxxxxx of the Consulting Period
fees provided in the Section 8.
7. Death. In the event of Xxxxxxxx'x death during the term of this
Agreement, Xxxxxxxx'x legal representative shall be entitled to receive his per
annum base salary as provided in paragraph 4(a) of this Agreement to the last
day of the calendar quarter following the calendar quarter in which Xxxxxxxx'x
death shall have occurred.
8. Consulting Period. (a) Effective upon the end of the Employment Term
(unless the Agreement is terminated for cause by the Company), Xxxxxxxx shall
become a consultant to the Company in recognition of the continued value to the
Company of his extensive knowledge and expertise. Unless earlier terminated as
provide in Section 8(g), the consulting period shall continue for two years and
six months. ("Consulting Period").
(b) During the Consulting Period, Xxxxxxxx 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, nor more than four days in any month, it being understood and
agreed that during the Consulting Period Xxxxxxxx shall have the right,
consistent with the prohibitions of Section 9 below, to engage in full time or
part-time employment with any business enterprise that is not a competitor of
the Company.
(c) Xxxxxxxx'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 Xxxxxxxx'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.
(d) During the Consulting Period, Xxxxxxxx shall not be obligated to serve
as a member of the Board or to occupy any office on behalf of the Company or any
of its subsidiaries.
(e) During the Consulting Period, Xxxxxxxx shall receive from the Company
each month the sum of Twelve Thousand Dollars ($12,000).
(f) In the event of disability during the Consulting Period, the Company or
Xxxxxxxx may terminate Xxxxxxxx'x consulting services. If Xxxxxxxx'x consulting
services are terminated due to disability, he shall be entitled to compensation,
in accordance with Section 8(e), for the remainder of the Consulting Period.
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(g) The Consulting Period shall terminate earlier, upon Xxxxxxxx'x death or
upon his failure to perform consulting services as provided in Section 8
pursuant to 30 days' written notice by the Company to Xxxxxxxx of the grounds
constituting such failure and reasonable opportunity afforded Xxxxxxxx to cure
the alleged failure. Upon any such termination, payment of consulting fees and
benefits shall cease.
9 Non-Competition.
(a) Xxxxxxxx agrees that, during the term of this Agreement, he will not,
without the prior written approval of the Board, directly or indirectly, through
any other individual or entity, (a) become an officer or employee of, or render
any services [including consulting services] to, any competitor. of the Company,
(b) solicit, raid, entice or induce any customer of the Company to cease
purchasing goods or services from the Company or to become a customer of any
competitor of the Company, and Xxxxxxxx will not approach any customer for any
such purpose or authorize the taking of any such actions by any other individual
or entity, or (c) solicit, raid, entice or induce any employee of the Company,
and Xxxxxxxx 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 9 shall be construed as preventing
Xxxxxxxx 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, Xxxxxxxx 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 Xxxxxxxx during Xxxxxxxx'x relationship
with the Company and shall not engage in any unfair trade practices with respect
to the Company provided that the Company has not ceased operations.
10 Enforcement.
(a) The necessity for protection of the Company and its subsidiaries
against Xxxxxxxx'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 Xxxxxxxx'x talent and his importance to the Company. Accordingly,
Xxxxxxxx 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 Xxxxxxxx
from any actual or threatened breach of the covenants contained in paragraph 9
of this Agreement.
(b) If for any reason a court determines that the restrictions under
paragraph 9 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 9 as will render the restrictions
valid and enforceable.
11. Jurisdiction and Venue.
It is hereby irrevocably agreed that all disputes or controversies between
the Company and Employee 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
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conducted before a single arbitrator, who shall be either an attorney or retired
judge licensed to practice law in the State of New York. 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.
12. Notices.
Any notice to be given to the Company or Xxxxxxxx hereunder shall be deemed
given if delivered personally, telefaxed 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
Attn: Xxxxx X. Xxxxxxxxx
Chairman and Chief Executive Officer
Copy to: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx, Xxxxxxxxx & Xxxxxxxx, LLP
000 Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
To Xxxxxxxx: Xxxxxx X. Xxxxxxxx
0000 XX 00 Xxx
Xxxx Xxxxx, Xxxxxxx 00000
Either party may change the address to which notice may be given hereunder by
giving notice to the other party as provided herein.
11. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, and upon Xxxxxxxx,
his heirs, executors, administrators and legal representatives.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties except as specifically otherwise indicated herein.
13. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
DIRECT INSITE CORP.
By: /s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
Chairman and Chief Executive Officer
/s/ Xxxxxx X.Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Employee
