Exhibit 10.2
CHANGE OF CONTROL
AGREEMENT
AGREEMENT by and between NetBank,
Inc., a Georgia corporation (“NBI”), and James P.
Gross (the “Executive”), dated as of April
1, 2003.
The Board of Directors of NBI (the
“Board”) has determined that it is in the best
interests of NBI and its shareholders to assure that the Company
(as defined below) will have the continued dedication of the
Executive, notwithstanding the possibility, threat or occurrence of
a Change of Control (as defined below) of NBI. The Board
believes it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to
encourage the Executive’s full attention and dedication to
the Company currently and in the event of any threatened or pending
Change of Control. Therefore, in order to accomplish these
objectives, the Board has caused NBI to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1.
Certain Definitions . As used in this Agreement, the
following terms shall have the meanings set forth below:
(a) “Affiliated
Company” shall mean any corporation, partnership or other
entity that controls, is controlled by or is under common control
with NBI.
(b) “Annual Base
Salary” shall mean the Executive’s annual base salary
in effect immediately prior to the Effective Date.
(c) “Board” shall
have the meaning set forth in the recitals to this
Agreement.
(d) “Cause” shall
mean:
(i)
the willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company (other
than any such failure resulting from incapacity due to physical or
mental illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chief Executive
Officer of NBI, which written demand specifically identifies the
manner in which the Board or Chief Executive Officer believes that
the Executive has not substantially performed the Executive’s
duties; or
(ii)
the willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the
Company.
For purposes of this provision, no
act, or failure to act, on the part of the Executive shall be
considered “willful” unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief
that the Executive’s action or omission was in the best
interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a
resolution duly adopted by the Board
or upon the instructions of the Chief Executive Officer or a senior
officer of NBI or based upon the advice of counsel for NBI shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall
not be deemed to be for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct
described in Section 1(d)(i) or 1(d)(ii) above, and specifying the
particulars thereof in detail.
(e) “Change of
Control” shall mean:
(i)
the acquisition by any Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934) of voting securities of NBI where such acquisition causes
any such Person to own forty percent (40%) or more of the combined
voting power of the Outstanding Voting Securities ; provided,
however, that for purposes of this paragraph (i) of this
definition, the following shall not be deemed to result in a Change
in Control, (1) any acquisition directly from the Company, unless
such a Person subsequently acquires additional shares of
Outstanding Voting Securities other than from the Company, in which
case any such subsequent acquisition shall be deemed to be a Change
in Control; (2) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or (3) any acquisition by
merger, consolidation, share exchange, combination, reorganization,
sale or transfer or like transaction that is NOT otherwise
described in paragraph (ii) or (iv) below as long as no Person
(other than an employee benefit plan or related trust sponsored or
maintained by the Company, any corporation controlled by the
Company or any company resulting from such business combination)
obtains beneficial ownership of forty percent (40%) or more
of the then Outstanding Voting Securities;
(ii)
a merger, consolidation, share exchange, combination,
reorganization or like transaction involving the Company in which
the stockholders of the Company immediately prior to such
transaction do not own at least fifty percent (50%) of the value or
voting power of the issued and outstanding capital stock of the
Company or its successor immediately after such
transaction;
(iii)
the sale or transfer (other than as security for the
Company’s obligations) of more than fifty percent (50%) of
the assets of the Company in any one transaction, a series of
related transactions or a series of transactions occurring within a
one (1) year period in which the Company, any corporation
controlled by the Company or the stockholders of the Company
immediately prior to the transaction do not own at least fifty
percent (50%) of the value or voting power of the issued and
outstanding equity securities of the acquiror immediately after the
transaction;
(iv)
(A) the sale or transfer of more than fifty percent (50%) of the
value or voting power of the issued and outstanding capital stock
of the Company by the holders thereof in any one transaction or a
series of related transactions or (B) the occurrence of a series of
transactions within a one (1) year period in which the Company, any
corporation controlled by the Company or the stockholders of the
Company immediately prior to the first transaction during such
period do not own at least fifty percent (50%) of the value or
voting power of the issued and outstanding equity securities of the
acquiror immediately after the last transaction during such period;
or
(v)
the dissolution or liquidation of the Company.
(f) “Change of Control
Period” shall mean the period commencing on the Effective
Date and ending on the first anniversary of the Effective
Date.
(g) “Code”
shall mean the Internal Revenue Code of 1986, as
amended.
(h)
“Company” shall include NBI and its Affiliated
Companies.
(i) “Date of
Termination” means (i) if the Executive’s employment is
terminated by NBI for Cause, or by the Executive for Good Reason,
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the
Executive’s employment is terminated by NBI other than for
Cause or Disability, the Date of Termination shall be the date on
which NBI notifies the Executive of such termination and (iii) if
the Executive’s employment is terminated by reason of death
or Disability, the Date of Termination shall be the date of death
of the Executive or the Disability Effective Date, as the case may
be.
(j) “Disability”
shall mean the absence of the Executive from the Executive’s
duties with the Company on a full-time basis for 120 consecutive
business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a
physician selected by NBI or its insurers and acceptable to the
Executive or the Executive’s legal
representatives.
(k) “Disability
Effective Date” means the 30 th day after the Executive’s receipt of
the written notice specified in Section 3.
(l) “Effective
Date” shall mean the first date on which a Change of Control
occurs. If a Change of Control occurs and the
Executive’s employment with the Company is terminated prior
to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment arose in connection with or anticipation of a Change of
Control, then “Effective Date” shall mean the date
immediately prior to the date of such termination of
employment.
(m) “Executive” shall
have the meaning set forth in the recitals to this
Agreement.
(n) “Good Reason”
shall mean:
(i)
a reduction by the Company in the Executive’s Annual Base
Salary;
(ii)
a material diminution in powers, responsibilities or duties of the
Executive;
(iii)
the Company requiring the Executive to be based at a location more
than 100 miles from the location at which he is based immediately
prior to the Effective Date (except for required travel which is
substantially consistent with travel obligations as of the date of
this Agreement);
(iv)
the failure by the Company to pay the Executive any portion of the
Executive’s current compensation within seven days of the
date such compensation is due, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(v)
the failure by the Company to continue any material benefit plan in
which the Executive participates immediately prior to the Effective
Date (unless (A) the discontinued plan is replaced by the Company
with another plan that, with respect to the Executive, is
reasonably equivalent to the discontinued plan or (B) the failure
did not occur in bad faith and is remedied by the Company, promptly
after receipt of notice thereof given by the Executive, by the
Company providing an equitable arrangement with respect to such
plan);
(vi)
any purported termination by the Company of the Executive’s
employment otherwise than as expressly permitted by this Agreement;
or
(vii)
any failure by NBI to comply with and satisfy Section 8(c) of this
Agreement.
For purposes of this Section 1(n),
any good faith determination of “Good Reason” made by
the Executive shall be conclusive.
(o) “Incentive
Compensation” means the highest annual incentive bonus paid
or payable to the Executive, including any bonus or portion thereof
that has been earned but deferred, for any of the two fiscal years
(annualized if the Executive has been employed only for a portion
thereof) immediately prior to the fiscal year in which the
Effective Date occurs.
(p) “NBI” shall
have the meaning set forth in the recitals to this
Agreement.
(q) “Notice of
Termination” means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, 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 and
(iii) if the Date of Termination is other than the date of receipt
of such notice, specifies the termination date (which date
shall
be not more than 30 days after the
giving of such notice). The failure by the Executive or NBI
to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or NBI, respectively, hereunder or
preclude the Executive or NBI, r
