Employment Agreement

EXHIBIT 10.1


EMPLOYMENT AGREEMENT


This Employment Agreement (this "Agreement") is made as of August 9, 2000, by and between Official Payments Corporation, a Delaware corporation (the "Company"), and Edward J. DiMaria ("Executive").


WHEREAS, the Company desires to employ Executive to serve as its Chief Financial Officer on the terms and conditions herein provided; and


WHEREAS, Executive desires to become an employee of the Company on the terms and conditions herein provided.


NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


1. Employment. Subject to the terms and conditions herein provided, the Company hereby employs Executive as Chief Financial Officer of the Company, reporting directly to the Chief Executive Officer. During the Employment Period (as hereinafter defined), Executive shall faithfully and diligently perform his duties under this Agreement and shall use his best efforts to promote the interests of the Company.


2. Term. Subject to the terms and conditions hereof, the initial term of employment of Executive by the Company under this Agreement shall be for the period commencing on September 11, 2000 or other date mutually agreed upon by the parties in writing (the "Commencement Date") and expiring when terminated as provided in Section 8 hereof. For purposes hereof, such period is referred to herein as the "Employment Period."


3. Executive's Obligations. Executive shall at all times comply with and be subject to the Company's policies, procedures, directives and regulations as established by the Company from time to time. Executive accepts such employment, responsibility and authority and agrees to perform the services of Chief Financial Officer of the Company and such other services as shall from time to time be reasonably assigned to him and agrees to devote all of his working time, skill and attention to such services. Executive shall not engage in any other business activity. Notwithstanding the foregoing, the parties agree that Executive may continue any educational, charitable and community activities (including membership on boards of educational, charitable or community organizations) in which he is engaged on the date hereof and may engage in other educational, charitable and community activities (including membership on the boards of educational, charitable or community organizations) and serve on the boards of directors of, or as an advisor to, other companies (including Conek Systems, Inc. and Best Friends Pet Care, Inc., in the latter case while such company is pursuing a sale or other recapitalization transaction) that do not compete (in the sole discretion of the Company's Board of Directors) with the Company, provided that such activities do not materially interfere with the performance of his duties to the Company.


4. Executive's Compensation and Benefits. During the Employment Period, as full compensation to the Executive for his performance of the services hereunder and for his acceptance of the responsibilities described herein, the Company agrees to pay the Executive, and the Executive agrees to accept, the following salary and other benefits:


(a) Base Salary. From the Commencement Date, the Company shall pay Executive a salary at the annual rate of $195,000 (as such may be increased from time to time in the sole discretion of the Compensation Committee of the Company's Board of Directors, the "Base Salary"). The Base Salary shall be payable in accordance with the Company's standard payment policy, less any amounts required to be withheld by the Company from such Base Salary pursuant to the Other Benefit Plans (as hereinafter defined) and applicable laws and regulations.


(b) Signing Bonus. On the Commencement Date, the Company shall make a one-time payment to Executive of $60,000.


(c) Bonus. Executive shall be eligible to receive annual bonuses of up to 50% of the Base Salary (each a "Bonus") at the discretion of, in the amounts, at the times and based upon certain written performance criteria determined by, the compensation committee of the Company's Board of Directors (the "Compensation Committee"). Executive agrees that there can be no assurance that the Compensation Committee will grant a Bonus in any year; provided, however, that Executive shall receive a guaranteed minimum Bonus for the year immediately following the Commencement Date of not less than $35,000 (the "Minimum First Year Bonus"), which shall be paid not later than the one-year anniversary of the Commencement Date.


(d) Long-Term Incentives. On the Commencement Date, Executive will be granted options (the "Executive Options") to purchase 200,000 shares of the common stock, par value $.01 per share, of the Company (the "Common Stock"), subject to (i) the terms and conditions set forth in the forms of Option Agreement annexed hereto as Annexes A and B (collectively, the "Option Agreements") and (ii) with respect to not more than 35,000 of the aforementioned 200,000 shares underlying the Executive Options, to the extent shares of Common Stock are not available for issuance pursuant to the exercise of stock options under the Company's 1999 Stock Incentive Plan, the stockholders of the Company approving an amendment to such plan increasing the number of shares of Common Stock available for issuance under such plan (the "Option Plan Amendment"). In connection with the foregoing, to the maximum extent permitted by Section 422 of the Internal Revenue Code of 1986, as amended, the Executive Options shall be incentive stock options, and the remainder of the Executive Options shall be non-qualified stock options. To the extent the Company's stockholders do not approve the Option Plan Amendment and the Executive is therefore unable to be granted a portion of the Executive Options, the parties shall negotiate in good faith to formulate an alternative compensation arrangement intended to provide Executive with substantially equivalent future economic value as represented by the Executive Options unable to be granted; provided, however, that in the event the parties are not able to agree upon such an alternative compensation arrangement prior to October 31, 2000, Executive may, prior to November 15, 2000, terminate the Employment Period on account of such failure to agree and receive the benefits described in Section 8(a) hereof (without duplication of benefits if Executive terminates the Employment Period pursuant to the proviso in the last sentence of Section 4(e) hereof), and notwithstanding anything in this Agreement to the contrary, neither party shall have any other obligations to the other hereunder upon and following such termination (except for obligations pursuant to Sections 5, 6, 8(g) and 10 of this Agreement).


(e) Additional Performance-Based Incentive Options. The Company shall grant Executive options to purchase an additional 50,000 shares of Common Stock (the "Additional Options") on the earliest to occur of the following dates (such earliest date, the "date of grant" for purposes of the Option Agreements): (i) the one-year anniversary of the Commencement Date (provided that Executive is still employed by the Company on such date) or (ii) the date as of which the Compensation Committee, in its sole discretion, shall have determined that Executive has satisfied the specific performance goals established (for the purposes of this Section 4(e) and Executive's employment under this Agreement) by the Compensation Committee (upon consultation with Executive) within 60 days of the Commencement Date. Any options granted pursuant to the preceding sentence shall (i) be subject to the terms and conditions of the Option Agreements and the stockholders of the Company approving the Option Plan Amendment and (ii) have an exercise price equal to the lower of (x) the exercise price of the Executive Options and (y) the fair market value of the Common Stock on the date on which the Additional Options are granted. In connection with the foregoing, to the maximum extent permitted by Section 422 of the Internal Revenue Code of 1986, as amended, the Additional Options shall be incentive stock options, and the remainder of the Additional Options shall be non-qualified stock options. To the extent the Company's stockholders do not approve the Option Plan Amendment and the Executive is therefore unable to be granted all or a portion of the Additional Options, the parties shall negotiate in good faith to formulate an alternative compensation arrangement intended to provide Executive with substantially equivalent future economic value as represented by the Additional Options; provided, however, that in the event the parties are not able to agree upon such an alternative compensation arrangement prior to October 31, 2000, Executive may, prior to November 15, 2000, terminate the Employment Period on account of such failure to agree and receive the benefits described in Section 8(a) hereof (without duplication of benefits if Executive terminates the Employment Period pursuant to the proviso in the last sentence of Section 4(d) hereof), and notwithstanding anything in this Agreement to the contrary, neither party shall have any other obligations to the other hereunder upon and following such termination (except for obligations pursuant to Sections 5, 6, 8(g) and 10 of this Agreement).


(f) Other Benefit Plans. Subject to eligibility requirements, and to the extent permitted by law, Executive shall be entitled to participate in any and all employee benefit plans (including, but not limited to, retirement, life insurance, medical, dental, disability and savings plans) established or maintained by the Company from time to time for the benefit of its employees (or executives) in general (collectively, the "Other Benefit Plans").


(g) Vacation. Executive shall be entitled to four weeks paid vacation per annum.


5. Reasonable Expenses. The Company will reimburse Executive for all reasonable business expenses, including travel and lodging, which are properly incurred by him in the performance of his duties hereunder, upon presentation of proper vouchers therefor and in accordance with such limitations and reporting requirements established from time to time by the Company for such reimbursements.


6. Assistance. Executive shall make himself reasonably available, upon the request of the Company, to testify or otherwise assist in litigation, arbitration, or other disputes involving the Company, or any of its officers, directors, employees, subsidiaries (whether or not in existence on the date hereof, for all purposes of this Agreement) or affiliates, during and after the Employment Period.


7. Covenant Not to Compete; Nonsolicitation.


(a) Non-Compete. During the Employment Period and for a period of one year after the termination thereof (the "Non-Compete Period"), except in the proper performance of his services as an officer and employee of the Company, Executive shall not, either individually or as a partner, joint venturer, consultant, shareholder, member or Representative (as hereinafter defined) of another Person (as hereinafter defined) or otherwise, directly or indirectly, participate in, engage in, or have a financial or management interest in, promote or assist any other Person in any business operation or enterprise if such business operation or enterprise engages, or would engage, in a Restricted Business (as hereinafter defined) in a Restricted Area (as hereinafter defined); provided, however, that Executive may own up to one percent of the outstanding equity securities of any Person.


For purposes of this Agreement:


"Person" means an individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization or division or operating group of any of the foregoing, a government or department or agency thereof, or any other entity.


"Representative" means any officer, director, principal, agent, employee, consultant or other duly authorized representative of a Person.


"Restricted Business" means any business involved in the processing of payments to government entities or any other business in which the Company is actively engaged on the date of termination of the Employment Period.


"Restricted Area" means any country in which the Company or a subsidiary of the Company conducts a Restricted Business on the date of termination of the Employment Period.


(b) Non-Solicitation. During the Non-Compete Period, Executive shall not, directly or indirectly (i) employ or seek to employ any person who is at the date on which the Employment Period is terminated (the "Termination Date"), an officer, general manager or director or equivalent or more senior level employee of the Company, its subsidiaries or affiliates, or otherwise solicit, ...