NETBANK, INC. TURN-AROUND INCENTIVE BONUS PLAN

Exhibit 10.2

NetBank, Inc.

Turn-Around Incentive Bonus Plan

Plan Document

Plan Purpose

The following is a description of the NetBank, Inc. (the “Company”) Turn-Around Incentive Bonus Plan (the “Plan”). The purpose of the Plan is to:

·                   Align Plan participants interests with that of the shareholders of the Company

·                   Motivate participants to accomplish specific goals and provide significant rewards for high-level performance

·                   Retain experienced and tenured executives

Plan Performance Period

The Performance Period under the Plan shall be from October 5, 2006 to June 30, 2007.

Eligible Participants

The Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) has determined that the following executive and other officers of the Company are eligible to participate (each, a “Participant”) in the Plan: 1) Steven F. Herbert, Chief Executive Officer; 2) James P. Gross, Chief Finance Officer; 3) Charles E. Mapson, Chief Legal Counsel; and 4) Patricia Hart, Chief Human Resources Officer.

Plan Structure

The Plan structure is made up of several components:  Target Incentive, Sections, Section Goals and Performance Measures.  The Plan is divided into two Sections – Tactical Action Plans and Restoring Profitability.  Each Section is weighted separately and the weight for each Section is 50%.  One or more specific Section Goals are assigned under each Section.   All Section Goals within a Section are given a percentage weight and the aggregate weight of the goals within such Section is equal to the overall Section weight (50%).  Each Section Goal is assigned performance measures that correspond to five possible performance levels.

The following chart sets forth the Sections, Section Goals and Performance Measures of the Plan:

Overriding Condition to Payout (“Plan Circuit Breaker”)

Notwithstanding anything in the Plan to the contrary, if the Company has a pre-tax net loss of greater than $18 million (adjusted for unusual items in the discretion of the Compensation Committee) for the period beginning January 1, 2007 and ending June, 30, 2007, then no payout of any kind shall be due and payable under the Plan to any Participant regardless of the performance level achieved by such Participant for any goals under the Plan.

Target, Maximum and Minimum Incentive Bonus

Each Participant’s target incentive bonus under the Plan is set forth in the chart below.  Minimum and maximum payouts are also established relative to the target payout.  If a Participant achieves overall level 3 performance (Target Performance), the Participant would receive an incentive bonus equal to the target payout.  Exceeding such performance level would result in an incentive bonus that exceeds the target payout and falling short of such performance level would result in an incentive bonus that is less than the target payout.

The chart below sets forth the target payout for each Participant and the potential payout at each performance level. Potential payouts range from 200% to 0% of the target payout.

Plan Scoring

After the end of the Performance Period, each goal is scored (1-5) based upon actual results under the Performance Measures and Section Goals within each Section and a weighted performance level rating is determined for each such goal based on the weight assigned to such goal.  The weighted performance level rating for each Section Goal is combined to determine the overall performance level, which is then used to determine the payout for each Participant.

Payouts Under the 1996 Stock Incentive Plan

All payouts under the Plan are subject to the approval of the Compensation Committee. Except as set forth below in the Early Settlement section of this Plan, all payouts of incentive bonus hereunder shall be paid as soon as practicable after approval by the Compensation Committee  and no later than September 1, 2007.  Awards under the Plan are cash denominated, however, any payout of an incentive bonus under the Plan shall be paid in the number of shares of the Company’s common stock (“Shares”) equal to the earned cash amount.  The number of Shares will be calculated by dividing the earned cash amount by the closing price of the Shares at the close of business on the date the payout is approved by the Compensation Committee of the Board.  Except as set forth below in the Early Settlement section of this Plan, bonus awards shall be in the form of a “Stock Award” under, and pursuant to, the Company’s 1996 Stock Incentive Plan, as amended (the “1996 Plan”), and also pursuant to a Stock Award Agreement, substantially in the form attached hereto as Exhibit A , between the Company and the Participant, which shall be entered into at the time of award, in connection a payout hereunder, if any.

Early Settlement

Regardless of a Participant’s achievement of any Section Goals or other performance criteria hereunder, a Participant shall receive a payout prior to the end of the Performance Period if any one of the following events occurs prior to the end of the Performance Period (each, an “Early Settlement Event”) with respect to such Participant:

·              Participant’s service as an employee of the Company ends because of the Participant’s death or total disability (as determined by the Compensation Committee of the Board).

·                   Participant’s service as an employee of the Company is terminated by the Company without Cause (as defined in the 1996 Plan) and the Participant agrees to release any and all employment-related claims against the Company.

·                   A Change in Control (as defined in the 1996 Plan) occurs with respect to the Company.

The payout due in the case of an Early Settlement Event shall be the maximum incentive potential (200% of Target).  Any and all Shares awarded due to an Early Settlement Event, as set forth above, shall be fully vested upon grant and shall be paid as soon as practicable after such Early Settlement Event and no later than September 1, 2007 .  In the case of an Early Settlement Event, the form of Stock Award Agreement attached hereto as Exhibit A shall be amended for the Participant subject to an Early Settlement Event to reflect on Schedule 1 thereof that the Shares shall be 100% vested immediately upon the date of grant.

Plan Administration

Plan Administrator.   The Compensation Committee will administer the Plan in accordance with the provisions of the 1996 Plan, which provisions are incorporated herein by reference.

Plan Duration.  The Compensation Committee reserves the right to amend, change and/or terminate this Plan at any time, without prior notice.

No Employment Contract .  The Plan does not create, nor should it be construed to constitute, a contract of employment between the Company and any Participant.  Participation in the Plan does not create a right to continued employment with the Company or any subsidiary or affiliate of the Company in any capacity.

Payment Eligibility .  Except as otherwise provided in the Early Settlement section of this Plan, to be eligible for an incentive bonus payout, the Participant must be employed by the Company at the time of payout, unless otherwise approved by the Compensation Committee in its sole and absolute discretion.

Plan Interpretation .   Any revisions to the Plan must be approved by the Compensation Committee.  If there is any ambiguity as to the meaning of any terms or provisions of the Plan, the Compensation Committee’s interpretation or determination will be final and binding.  The altering, inflating and/or inappropriate manipulation of performance/sales results or any other infraction of recognized ethical business standards may subject the Participant to disciplinary action up to and including termination of employment.  In addition, any incentive compensation as provided by the Plan to which the Participant would otherwise be entitled may be revoked.

General Conditions.   The Plan, and the transactions and payments hereunder shall, in all respects, be governed by, and construed and enforced in accordance with the laws of the State of Georgia.  Each provision of the Plan is severable, and if any provision is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not, in any way, be affected or impaired thereby.

EXHIBIT A

NetBank, Inc.

Turn-Around Incentive Bonus Plan

Plan Document

Form of Stock Award Agreement

This STOCK AWARD AGREEMENT (“Agreement”) is made and entered into as of the     day of        ,     by and between NetBank, Inc. (the “Company”), a Georgia corporation, and                    (the “Participant”).

The Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company has determined that Participant is eligible to participate in the Company’s Turn-Around Incentive Bonus (the “Plan”) and has approved under the Plan an incentive bonus award payable in shares of the Company’s Common Stock.  The Compensation Committee administers the Plan and has the same powers with respect to this Agreement as it has under the Plan.

The Company hereby awards to the Participant, as of the Grant Date, the Restricted Shares described below pursuant to the Plan and the Company’s 1996 Stock Incentive Plan, as amended, (the “Stock Award”).   The terms and conditions of the Stock Award hereunder are set forth in this Agreement, including in the Additional Terms and Conditions attached hereto and incorporated herein by reference as part of this Agreement, and in the Plan.

A.                                    Grant Date :                       ,          .

B.                                      Restricted Shares :        &