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EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
by and between NETZEE, INC., a Georgia corporation (the "Company") and CATHERINE
G. SILVER, an individual resident of the State of Georgia (the "Executive"), to
be effective as of the 26th day of July, 2000 (the "Effective Date).
The Executive is currently employed by the Company as the Company's
President and General Manager. The Company and the Executive desire to adopt
this Agreement in consideration for the outstanding efforts and achievements of
the Executive during her employment with the Company.
In this regard, the Company desires to continue the employment of the
Executive as its President and General Manager, and the Executive is willing to
continue 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 18 hereof.
1. Employment. The Company hereby employs the Executive, and the Executive
hereby agrees to serve the Company, as the President and General
Manager of the Company, upon the terms and conditions set forth herein.
The Executive shall have such authority and responsibilities as are
consistent with her position as provided herein and as may be set forth
in by 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 her full business time, attention, skill,
and efforts to the performance of her 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 her personal investments; provided, further, however,
that such activities do not interfere with the performance of her
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 her in the
performance of her duties.
2. Term. Unless earlier terminated as provided herein, the Executive's
employment under this Agreement shall commence as of the Effective Date
and shall continue until August 31, 2002 (the "Initial Term"). This
Agreement and the Executive's employment
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hereunder shall automatically continue for successive one-year periods
(the "Extended Term"), with Executive to receive a minimum of seven
percent (7%) increase to the Executive's then existing bas salary (as
described at Section 3.a. below) at the beginning of each successive
year. (The Initial Term and the Extended Term shall be individually and
collectively referred to herein as the "Term.")
3. Compensation Benefits.
a. The Company shall pay to the Executive a base salary at a rate
of not less than $200,000 per annum, in accordance with the
salary payment practices of the Company in effect from time to
time.
On or before each September 15 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).
b. During 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 15) the Executive's performance and determine
if additional bonus is appropriate.
c. 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 15) 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.
d. 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 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.
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e. 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 a monthly allowance of not
less than $800 to partially cover the cost of an automobile
owned or leased by the Executive.
f. The Executive shall be entitled to four (4) 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.
g. 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 her employment with the Company
ceases her 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.
h. 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.
i. 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.
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;
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, by the Executive upon
delivery of a Notice of Termination to the Company
within a 90-day period beginning on the 30th day
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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;
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 upon submitting her resignation in
writing to the Company at least thirty (30) days
prior to the Termination Date.
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 her 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 Executives 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;
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 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;
iii. 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;
iv. 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;
v. 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
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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 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.
d. 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.
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 her benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, her 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 her 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
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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.
a. Through exercise of her rights and performance of her
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 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"
mandates under applicable law, the latter definition shall
govern for purposes of interpreting Executive's 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 her duties for the Company, not
to use or disclose any Confidential Business Information at
any time during the term of her 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 her
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 her
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
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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.
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 (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 she receives
any formal or informal discovery request, court order, or
subpoena requesting that she disclose Trade Secrets or
Confidential Business Information, she 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 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
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.
b. 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 of 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.
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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 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
enforcements 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) 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.
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 and shall inure to the benefit
of the Company, its Successors and Assigns and the Company
shall require any Successors and Assigns to
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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.
b. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, her
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 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 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
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.
10. Settlement of Claim. The Company's obligation to make the payments
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
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and the
Company; provided, however, that if the CEO at the time of the signing
of this Agreement no longer continues in his capacity as CEO, for
whatever reason, then Executive shall have the right under this
Agreement to re-negotiate its terms, and further provided that the
parties' failure to reach agreement shall permit a resignation by
Executive under the terms of Section 4(a)(vii) and Adequate
Justification for resigning by Executive.
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.
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12. 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 court of competent jurisdiction in the State of
Georgia.
13. 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.
14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements
(including the Old Agreement), understandings and arrangements, oral or
written, between the parties hereto with respect to the subject matter
hereof.
15. 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.
16. 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.
17. Piggyback Registration Rights.
a. Rights. Subject to the provision of this Section 17, if the
Company 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 S-8, Form S-4, 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.
b. Offering Reduction. If a registration in which the Executive
has 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
exceeds the number than can be sold in such offering, then the
Company shall include in such registration only 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.
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18. 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 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).
b. "Act" shall mean the Securities Act of 1933, as amended.
c. "Adequate Justification" shall mean the occurrence either
before or 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.
d. "Bonus Amount" shall mean the great 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.
e. "Business" shall mean the design, development, marketing and
implementation of electronic banking software and services for
financial institutions.
f. "Bylaws" shall mean the Bylaws of the Company, as amended,
supplemented or otherwise modified from time to time.
g. "Cause" shall mean the occurrence of any of the following:
i. 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 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
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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.
h. A "Change in Control" shall mean the occurrence during the
Term of any of the following events:
i. 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 1934 Act) 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);
ii. 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 as 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 1934 Act) 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
iii. Approval by stockholders of the Company of:
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(1) A merger, consolidation, or reorganization involving
the Company, unless
the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own,
directly or indirectly, immediately following such
merger, consolidation or reorganization, own at least
two-thirds of the combined voting power of the
outstanding voting securities of the corporation
resulting from 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
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.
i. "Compensation Committee" shall mean the compensation committee of the
Board.
j. "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.
k. "Disability" shall mean the inability of the Executive to perform
substantially all of her current duties as required hereunder for a
continuous period of 90 days because of mental or physical condition,
illness or injury.
l. "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
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EXHIBIT 10.26
issuance and distribution as stated in the prospectus relating to such
offering, are equal to at least twelve million dollars ($12,000,000).
m. "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.
n. "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.
o. "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.
p. "Termination Date" shall mean, in the case of the Executive's death,
her date of death, and in all other cases, the date specified in the
Notice of Termination.
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/ Glenn W. Sturm
-----------------------------------------
Glenn W. Sturm
Chief Executive Officer
EXECUTIVE:
/s/ Catherine G. Silver
-------------------------------------------
Catherine G. Silver
14
