CEO Employment Agreement - Donny R. Jackson

EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into this 10th day of October, 2000 (the "Effective Date"), by and between Donny R. Jackson ("Executive") and Netzee, Inc., a Georgia corporation (the "Company").


WITNESSETH:


WHEREAS, the Company has agreed to employ Executive as its Chief Executive Officer, and Executive desires to be employed by the Company on the terms and conditions herein provided;


NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Executive and the Company, including, without limitation, the agreements and covenants contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:


Section 1. Scope of Employment.


1.1 Employment. The Company hereby employs Executive as the Chief Executive Officer of the Company, and Executive hereby accepts such employment. During Executive's term of employment pursuant to this Agreement, Executive shall perform the duties of the Chief Executive Officer of the Company and such other duties as may be requested by the Board of Directors of the Company. While receiving compensation under this Agreement, Executive shall devote his entire business time to the affairs of the Company, shall perform such duties to the best of his ability, shall use his best efforts to promote the success of the business of the Company and its subsidiaries and shall not engage in any other business activity or occupation for gain, profit or other pecuniary advantage without the consent of the Board of Directors of the Company; provided, however, that the foregoing shall not prevent Executive from (a) remaining an employee of The InterCept Group, Inc. ("InterCept") so long as only minimal time is spent on matters for InterCept, and (b) investing or trading for his own benefit in stocks, bonds, securities or other forms of investment or engaging in charitable, civic or other similar pursuits, so long as any of the foregoing in clause (a) or (b) does not interfere with Executive's performance of his duties hereunder. In addition to the foregoing, Executive will be a member of the Company's Board of Directors.


1.2 Compliance with Policies. Executive shall comply in all material respects with all policies and procedures applicable generally or specifically to Executive as may be established by the Company from time to time.


1.3 Location of Performing Services. Executive shall perform the Services at the Company's principal offices located at 6190 Powers Ferry Road, Atlanta, Georgia or its offices established in the Atlanta, Georgia area from time to time; provided, however, that Executive shall travel and work at such other locations as the Company may deem reasonably necessary or desirable from time to time.


Section 2. Term. Unless earlier terminated as provided herein, the Executive's employment under this Agreement shall be for a continuing term (the "Term") of three years, which


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shall be extended automatically (without further action of the Company or the Executive) each day for an additional day so that the remaining term shall continue to be three years; provided, however, that either party may at any time, by written notice to the other, fix the Term to a finite term of three years, without further automatic extension, commencing with the date of such notice.


Section 3. Compensation; Expenses.


3.1 Base Salary.


(a) Executive shall be paid a base salary (the "Base Salary") during the Term at the rate of $275,000 per year. The Base Salary and expense reimbursements pursuant to this Section 3 shall be (i) payable bi-monthly on the schedule that the Company may implement for similarly situated employees from time to time, and (ii) subject to any withholdings and deductions required by applicable law.


(b) Beginning in 2001, the Compensation Committee of the Board of Directors shall review the performance of Executive and shall recommend to the Board of Directors whether any adjustment in the Base Salary shall be made; provided, however, that in no event shall Executive's Base Salary be in any year less than the initial Base Salary.


3.2 Stock Options.


(a) Grant of Options. Executive shall be granted non-qualified stock options (the "Options") under the Company's 1999 Stock Option and Incentive Plan, as it may be amended from time to time (the "Plan") to purchase up to 1,000,000 shares of the Company's common stock (the "Common Stock") (with such number and all the other numbers of shares and dollar amounts in this Section 3.2 subject to appropriate adjustment for stock splits, stock dividends and recapitalizations). The Options shall have an exercise price equal to the fair market value of a share of the Common Stock on the date of grant, and subject to the other terms and conditions of the Options and the Plan, shall vest and become exercisable as follows:


(i) the Options shall vest and become exercisable in six installments of 100,000 shares each on the first through sixth anniversaries of the date of grant, and 400,000 shares shall vest and become exercisable on the seventh anniversary of the date of grant; provided, however, that in addition:


(A) the option to purchase 150,000 shares shall vest and become exercisable in full upon the date that the closing price for a share of the Common Stock is greater than or equal to $10.00 for a period of 30 consecutive trading days;


(B) the option to purchase 200,000 shares shall vest and become exercisable in full upon the date that the closing price for a share of the Common Stock is greater than or equal to $15.00 for a period of 30 consecutive trading days;


(C) the option to purchase 350,000 shares shall vest and become exercisable in full upon the date that the closing price for a share of the Common Stock is greater than or equal to $20.00 for a period of 30 consecutive trading days; and


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(D) all of the Options shall vest and become exercisable upon a Change in Control as defined in Exhibit A attached hereto.


(b) Compliance with Nasdaq Rules. The Options shall be granted in compliance with the Plan, applicable law and the rules of The Nasdaq Stock Market, Inc.


(c) Execution and Delivery of Documents. Executive and the Company shall execute and deliver an option agreement and other agreements, instruments and documents as may be required by the option agreement or as requested by the Company in connection with the grant or exercise of any of the Options.


3.3 Expense Reimbursement. The Company shall pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the course of performing his duties hereunder (including serving as a member of the Board of Directors) in accordance with the Company's policies and procedures as then in effect.


3.4 Supplemental Payments. 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.


Section 4. Executive Benefits.


4.1 Benefit Plans. During the Term, Executive shall be entitled to participate in such of the Company's bonus, incentive, retirement, supplemental retirement, profit sharing and pension plans, life, health, disability and other insurance programs, as well as other benefit programs, which are generally available to other similarly situated executive employees of the Company, subject to the Company's policies with respect to all such benefits in effect from time to time. The Company shall not be under any obligation to Executive to continue to maintain any particular plan or program or any particular benefit under any plan or program.


4.2 Vacation. Executive shall be entitled to vacation and perquisites during the Term no less favorable than the Company's policies applicable to similarly situated executive employees.


4.3 Automobile. The Company shall provide to Executive an automobile owned or leased by the Company suitable for the chief executive officer of a company, or in lieu thereof, at the Company's option, shall provide Executive with a monthly allowance of up to $1,500.00 to cover in whole or in part the cost of an automobile owned or leased by the Executive.


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4.4 Country Club Membership. The Company shall reimburse Executive's expenses for dues and capital assessments (but not initiation fees) of one country club membership currently held or to be held by Executive; provided, however, that if Executive during the Term ceases his membership in any such club and any dues or other capital assessments paid by the Company are repaid to Executive, Executive shall pay over such payments to the Company.


Section 5. Termination.


5.1 Death or Total Disability. Executive's employment hereunder shall terminate upon Executive's death. The Company may, in accordance with applicable laws, terminate Executive's employment hereunder in the event of Executive's total disability (total disability meaning the inability of 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).


5.2 Cause. The Company may terminate Executive's employment hereunder for "Cause." "Cause" shall mean (a) Executive's, willful malfeasance, fraud or dishonesty in the performance of his obligations hereunder; (b) the commission of a willful act or omission of an act by Executive which causes material harm to the Company or Executive's engaging in conduct involving moral turpitude that is or is reasonably likely to cause material harm to the Company; (c) the conviction of Executive for the commission by Executive of any felony or any act of fraud; (d) subject to the provisions of Section 1.1, the failure of Executive to devote his full time and attention to the business; or (e) Executive's failure to observe the terms of this Agreement in any material respect or the failure of Executive to perform his duties hereunder in a manner satisfactory to the Board of Directors, as determined in its reasonable discretion; provided, however, that Executive shall have 30 days (or such lesser amount of time as is necessary) to cure any such failure after receiving notice from the Company; and provided, further that the Company shall be obligated to provide only one notice to Executive with respect to any identified deficiency or failure pursuant to this Section 5.2(e) and, thereafter, the Company may terminate Executive, without Executive having a right to cure with respect to that identified failure or deficiency.


5.3 Termination Without Cause. In the event the Company shall terminate the employment of Executive without cause prior to the expiration of the Term, Executive shall be entitled to payment of his Base Salary for the greater of (a) twelve (12) months or (b) the remainder of the Term, which shall continue to be paid in equal monthly installments.


5.4 Termination Date and Notice of Termination. Any termination of Executive's employment by the Company (other than termination upon the death of Executive) shall be communicated by written notice to Executive, and the date of termination shall be the date on which such notice is given.


5.5 Resignation as Director. In the event that the Executive's employment hereunder is terminated for any reason, the Executive shall, and does hereby, tender his resignation as a director of the Company and its affiliates effective as of the date of termination.


Section 6. Representations of Executive. Executive represents and warrants to the Company that (a) his execution, delivery and performance of this Agreement does not and will not conflict with, violate, or constitute a breach of or default under any provision of applicable law or any contract or other instrument to which he is a party or otherwise bound; and (b) this Agreement


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constitutes the legal, valid and binding obligation of Executive, enforceable against Executive in accordance with its terms, subject to bankruptcy, insolvency and similar laws of general application relating to or affecting creditors rights and to general equitable principles.


Section 7. Restrictive Covenants.


7.1 Background. This Agreement is being entered into by Executive in consideration of the Company's employment of Executive pursuant to this Agreement. Executive expressly acknowledges that he has special knowledge, expertise, contacts and other information with respect to the business of the Company and the services to be provided hereunder, and that th ...