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EXHIBIT 10. 36
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
by and between NETZEE, INC., a Georgia corporation (the "Company"), and XXXXXXX
XXXX XXXXXX, an individual resident of the State of Georgia (the "Executive"),
to be effective as of the 7th day of May, 2001 (the "Effective Date").
The Company desires to employ the Executive as its Senior Vice
President of Sales, 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
defined herein are defined at Section 15 hereof.
1. Employment. The Company hereby employs the Executive, and the
Executive hereby agrees to serve the Company, as the Senior
Vice President of Sales of the Company, upon the terms and
conditions set forth herein. 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") or the President from time to time.
The Executive shall devote his full business time, attention,
skill, and efforts to the performance of his duties hereunder,
except during periods of illness or periods of vacation and
leaves of absence consistent with Company policy. This
employment relationship between the Executive and the Company
shall be exclusive; provided, however, the Executive may
devote reasonable periods of time 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
Atlanta, Georgia, but shall do such traveling as is reasonably
required of him in the performance of his duties.
2. Term. Unless earlier terminated as provided herein, the
Executive's employment under this Agreement shall be for a
continuing term (the "Term") of one year, commencing on May 7,
2001, which shall be extended automatically (without further
action by the Company or the Executive) each day for an
additional day so that the amount of time remaining in the
Term shall continue to be one year; provided, however, that
either party may at any time, by written notice to the other,
fix the Term to a finite term of one year, without further
automatic extension, which Term shall commence upon the date
of such notice. The initial term and the extended term shall
be individually and collectively referred to herein as the
"Term".
3. Compensation and Benefits.
a. The Company shall pay to the Executive a base salary
at a rate of $120,000 per annum, in accordance with
the salary payment practices of the Company in effect
from time to time. Executive may also be eligible for
commission or bonus
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payments from time to time, upon terms that are
mutually agreeable to the parties.
b. The Executive may participate in any employee 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 from time to time consider the Executive's
performance and determine if additional grants of
stock options, stock, and/or other awards are
appropriate. Any grants of stock options shall be
described in and subject to the terms and conditions
of a separate stock option agreement between the
Company and the Executive.
c. The Executive shall participate in all retirement,
welfare, deferred compensation, life and health
insurance, and other benefit plans or programs of the
Company now or hereafter applicable to the Executive
or applicable generally to employees of the Company
or to a class of employees that includes senior
executives of the Company; provided, however, that
during any 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.
d. The Company shall provide to the Executive a monthly
allowance of not less than $600.00 to partially cover
the cost of an automobile owned or leased by the
Executive.
e. The Executive shall be entitled to four (4) weeks
paid vacation and four (4) floating holidays (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. Unused vacation may not be
carried forward to subsequent years.
f. The Company shall reimburse the Executive for 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.
4. Termination.
a. 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:
(i) upon the death of the Executive;
(ii) by the Company due to the Disability of the
Executive upon delivery of a Notice of
Termination to the Executive;
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(iii) by the Company for Cause upon delivery of a
Notice of Termination to the Executive;
(iv) by the Company without Cause upon delivery
of a Notice of Termination;
(v) following a Change in Control wherein his
position is eliminated, 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;
(vi) 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;
and
(vii) by the Executive, for any reason upon
delivery of a Notice of Termination to the
Company.
b. If the Executive's employment with the Company shall
be terminated during the Term (i) by reason of the
Executive's death, or (ii) by the Company for
Disability or Cause, the Company shall pay to the
Executive (or in the case of his death, the
Executive's estate) within 15 days after the
Termination Date, a lump sum cash payment equal to
the Accrued Compensation and, if such termination is
other than by the Company for Cause, the Pro Rata
Bonus.
c. If the Executive's employment with the Company shall
be terminated during the Term pursuant to Sections
4.a. (iv), (v), or (vi), the Executive shall be
entitled to all of the following:
(i) 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
Accrued Compensation and the Pro Rata Bonus;
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(ii) the Company shall pay to the Executive in
cash, as a lump-sum, within 15 days of the
Termination Date, an amount equal to one
year's base salary.
d. Following any termination without cause or following
any change of control, the Executive shall not be
required to mitigate the amount of any payment
provided for in this Agreement by seeking other
employment or otherwise.
e. 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.
f. The severance pay and benefits provided for in this
Section 4 shall be in lieu of any other severance or
termination pay to which the Executive may be
entitled under any Company severance or termination
plan, program, practice or arrangement. The
Executive's entitlement to any other compensation or
benefits shall be determined in accordance with the
Company's employee benefit plans and other applicable
programs, policies and practices then in effect.
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5. Protection of Trade Secrets and Confidential Information.
a. Through exercise of his rights and performance of his
obligations under this Agreement, Executive will be
exposed to "Trade Secrets" and "Confidential
Information" (as those terms are defined below).
"Trade Secrets" shall mean information or data 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.
b. The Executive agrees to maintain in strict confidence
and, except as necessary to perform his duties for
the Company, not to use or disclose any Confidential
Business Information at any time 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 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
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information that is generally available to the
public, other than as a result of disclosure,
directly or indirectly, by the Executive, or was
available to the Executive on a non-confidential
basis prior to its disclosure to the Executive.
c. Upon termination of employment, the Executive shall
leave with the Company all business records relating
to the Company and its affiliates including, without
limitation, all contracts, calendars, and other
materials or business records concerning its business
or customers, including all physical, electronic, and
computer copies thereof, whether or not the Executive
prepared such materials or records herself. Upon such
termination, the Executive shall retain no copies of
any such materials.
d. As set forth above, the Executive shall not disclose
Trade Secrets or Confidential Business Information.
However, nothing in this provision shall prevent the
Executive from disclosing Trade Secrets or
Confidential Business Information pursuant to a court
order or court-issued subpoena, so long as the
Executive first notifies the Company of said order or
subpoena in sufficient time to allow the Company to
seek an appropriate protective order. The Executive
agrees that if he receives any formal or informal
discovery request, court order, or subpoena
requesting that he disclose Trade Secrets or
Confidential Business Information, he will
immediately notify the Company and provide the
Company with a copy of said request, court order, or
subpoena.
6. Non-Solicitation and Related Matters.
a. If the Executive is terminated for Cause or if the
Executive resigns pursuant to Section 4(a)(vii)
above, 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), on the Executive's own behalf or in the
service or on behalf of others, (i) solicit, divert,
or appropriate to or for a Competing Business, or
(ii) attempt to solicit, divert, or appropriate to or
for a Competing Business, any person or entity that
was a customer 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.
b. If the Executive is terminated for Cause or if the
Executive resigns pursuant to Section 4(a)(vii)
above, then for a period of two years following the
date of termination, the Executive shall not, 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 the Company, regardless of whether the employee is
full-time or temporary, the employment is pursuant to
written agreement, or the employment is for a
determined period or is at will.
c. The Executive acknowledges and agrees that great loss
and irreparable damage would be suffered by the
Company if the Executive should breach or violate any
of the terms or provisions of the covenants and
agreements set forth in this Section 6. The
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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 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.
d. The Executive acknowledges and agrees that: (i) the
covenants and agreements contained in clauses (a)
through (e) of this Section 6 are the essence of this
Agreement; (ii) that the Executive has received good,
adequate and valuable consideration for each of these
covenants; and (iii) each of these covenants is
reasonable and necessary to protect and preserve the
interests and properties of the Company. The
Executive also acknowledges and agrees that: (i)
irreparable loss and damage will be suffered by the
Company should the Executive breach any of these
covenants and agreements; (ii) each of these
covenants and agreements in clauses (a) through (e)
of this Section 6 is separate, distinct and severable
not only from the other covenants and agreements but
also from the remaining provisions of this Agreement;
and (iii) the unenforceability of any covenants or
agreements shall not affect the validity or
enforceability of any of the other covenants or
agreements or any other provision or provisions of
this Agreement. The Executive acknowledges and agrees
that if any of the provisions of clauses (a) and (b)
of this Section 6 shall ever be deemed to exceed the
time, activity, or geographic limitations permitted
by applicable law, then such provisions shall be and
hereby are reformed to the maximum time, activity, or
geographical limitations permitted by applicable law.
e. The Executive and the Company hereby acknowledge that
it may be appropriate from time to time to modify the
terms of this Section 6 and the definition of the
term "Business" to reflect changes in the Company's
business and affairs so that the scope of the
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.
a. This Agreement shall be binding upon and shall inure
to the benefit of the Company, its Successors and
Assigns and the Company shall require any Successors
and Assigns to expressly assume and agree to perform
this Agreement in the same manner and to the same
extent that the Company would be required to perform
it if no such succession or assignment had taken
place.
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b. 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. Notice. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement (including
the Notice of Termination) shall be in writing and shall be
deemed to have been duly given when personally delivered or
sent by certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses last given by
each party to the other; provided, however, that all notices
to the Company shall be 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.
9. Modification and Waiver. No provisions of this Agreement may
be 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.
10. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Georgia without giving effect to the conflict of laws
principles thereof. Any action brought by any party to this
Agreement shall be brought and maintained in a state or
federal court of competent jurisdiction in the State of
Georgia.
11. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of
the other provisions hereof.
12. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior
agreements, understandings and arrangements, oral or written,
between the parties hereto with respect to the subject matter
hereof.
13. Headings. The headings of Sections herein are included solely
for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
15. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
a. "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
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including (i) base salary and other amounts set forth
in Sections 3.e., f. and g., (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).
b. "Act" shall mean the Securities Act of 1933, as
amended.
c. "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.
d. "Business" shall mean the design, development,
marketing and implementation of electronic banking
software and services for financial institutions.
e. "Bylaws" shall mean the Bylaws of the Company, as
amended, supplemented or otherwise modified form time
to time.
f. "Cause" shall mean the occurrence of any of the
following:
(i) any act that constitutes, on the part of the
Executive, fraud or breach of duty;
provided, however, that such conduct shall
not constitute Cause unless (1) there shall
have been delivered to the Executive a
written notice setting forth with
specificity the reasons that either the
President or CEO 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 President or CEO
determines that the behavior has not been
cured;
(ii) the conviction (from which no appeal may be
or is timely taken) or plea of other than
"not guilty" of the Executive to a felony or
misdemeanor if such misdemeanor involves
moral turpitude; or
(iii) the material breach of this Agreement by the
Executive, upon thirty (30) days written
notice thereof and chance to cure therein.
g. A "Change in Control" shall mean the occurrence
during the Term of any of the following events:
An acquisition (other than directly from the Company)
of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term "person" is
used for purposes of Section 13(d) or 14(d) of the
Securities Exchange act of 1934 (the "1934 Act"))
immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3
promulgated under the 0000 Xxx) of 60% or more of the
combined voting power of the Company's then
outstanding Voting Securities; provided, however,
that in determining whether a Change in
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Control has occurred, Voting Securities 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).
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.
h. "Compensation Committee" shall mean the compensation
committee of the Board.
i. "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.
j. "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.
k. "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.
l. "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.
m. "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.
n. "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.
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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. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
-------------------------------------
Title: President & CEO
-----------------------------------
EXECUTIVE:
/s/ Xxxxxxx Xxxx Xxxxxx
------------------------------------------
Xxxxxxx Xxxx Xxxxxx
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