This EMPLOYMENT
AGREEMENT (“Agreement”) is entered into as of this 18th
day of December 2006 (the “Effective Date”), by
and between S1 Corporation, a Delaware corporation (the
“Company”), and Johann Dreyer, an individual (the
“Executive”).
WHEREAS, the
Executive is currently employed as the CEO and President of the
Company;
WHEREAS, the
Company and the Executive desire to enter into this Employment
Agreement to set out the terms and conditions for the employment
relationship of the Executive with the Company from and after the
Effective Date; and
WHEREAS, the board
of directors of the Company (the “Board”) has approved
and authorized the Company’s execution, delivery and
performance of this Agreement.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth
herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto
agree as follows:
1.
Employment Agreement . On the terms and conditions set forth
in this Agreement, the Company agrees to employ the Executive and
the Executive agrees to be employed by the Company for the
Employment Period set forth in Section 2 hereof and in the
position and with the duties set forth in Section 3 hereof.
Terms used herein with initial capitalization not otherwise defined
are defined in Section 20 below.
2.
Term . The initial term of employment under this Agreement
shall be for a three-year period commencing on the Effective Date
(the “Initial Term”). The term of employment shall be
automatically renewed for an additional consecutive 12-month period
(the “Extended Term”) as of the first and every
subsequent anniversary of the Effective Date, unless and until
either party provides written notice to the other party in
accordance with Section 10 hereof not less than 90 days before
such anniversary date that such party is terminating the term of
employment under this Agreement (“Non-Renewal”), which
termination shall be effective as of the end of such Initial Term
or Extended Term, as the case may be, or until such term of
employment is otherwise sooner terminated as hereinafter set forth.
Such Initial Term and all such Extended Terms are collectively
referred to herein as the “Employment Period.” A notice
of Non-Renewal given by either party to this Agreement shall not be
deemed a termination of the Executive’s employment for
purposes of Section 9 of this Agreement unless otherwise
expressly provided in such notice of Non-Renewal. The
Company’s obligations under Section 9 hereof shall
survive the expiration or termination of the Employment
Period.
3.
Position and Duties . The Executive shall serve as the Chief
Executive Officer of the Company during the Employment Period. As
the Chief Executive Officer, the Executive shall render executive,
policy and other management services to the Company of the type
customarily performed by persons serving in such capacity. The
Executive shall report to the Board of Directors of the Company.
The Executive shall also perform such other duties with the Company
and with any Subsidiary as the Chief Executive Officer of the
Company or the Board may from time to time reasonably determine and
assign to the Executive. The Executive shall devote the
Executive’s reasonable best efforts and substantially full
business time to the performance of the Executive’s duties
and the advancement of the business and affairs of the Company. The
Executive agrees that during the Employment Period he or she will
not be entitled to additional compensation for serving as a member
of the board of directors of the Company or any Subsidiary if he or
she is elected to serve thereon.
4. Place
of Performance . In connection with the Executive’s
employment by the Company, the Executive shall be based at the
offices of the Company in Atlanta, Georgia except as otherwise
agreed by the Executive and the Company and except for reasonable
travel on Company business.
5.
Compensation and Benefits; Stock Options .
(a)
Base Salary . During the Employment Period, the Company
shall pay to the Executive an annual base salary (the “Base
Salary”) at the rate of $375,000 per year. The Base Salary
shall be reviewed no less frequently than annually and may be
increased at the discretion of the Company. The Base Salary shall
be payable semi-monthly or in such other installments as shall be
consistent with the Company’s payroll procedures.
(b)
Annual Bonus . The Executive will be eligible to receive an
on target annual bonus, payable no later than the end of the first
fiscal quarter of each calendar year during the Employment Period
(pro-rated for any period that is less than 12 months) of up
to $225,000 for such calendar year, based on the attainment of
specific Company performance targets as may be agreed upon by the
Executive and the Company annually. The annual bonus will be
designed so that upon meeting specified minimum thresholds, partial
attainment of such targets will result in the payment of a
correspondingly reduced bonus amount.
(c)
Benefits . During the Employment Period, the Executive will
be entitled to participate in any retirement, deferred
compensation, fringe benefit or welfare benefit plan of the Company
(on the same terms as provided to senior executive officers of the
Company), including any plan providing for employee stock
purchases, pension or retirement income, retirement savings,
employee stock ownership, deferred compensation or medical,
prescription, dental, disability, employee life, group life,
accidental death or travel accident insurance benefits that the
Company may adopt for the benefit of executive employees, in
accordance with the terms of such plan. Nothing in this Agreement
shall restrict the right of the Company to change insurance
carriers and to adopt, amend, terminate or modify employee benefit
plans and arrangements at any time and without the consent of the
Executive.
(d)
Stock Options . The Company may grant options to purchase
the stock of the Company to the Executive in accordance with the
terms of the Company’s stock option plans.
(e)
Vacation; Holidays . The Executive shall be entitled to all
public holidays observed by the Company and to annual vacation for
such number of days as may be determined by the Company and
otherwise in accordance with the applicable vacation policies for
senior executives of the Company, which shall be taken at a
reasonable time or times.
(f)
Withholding Taxes and Other Deductions . To the extent
required by law, the Company shall withhold from any payments due
Executive under this Agreement any applicable federal, state or
local taxes and such other deductions as are prescribed by law or
Company policy or are otherwise authorized by the
Executive.
6.
Expenses . The Executive is expected and is authorized to
incur reasonable expenses in the performance of his duties
hereunder. The Company shall reimburse the Executive for all such
expenses promptly upon periodic presentation by the Executive of an
itemized account, including reasonable substantiation, of such
expenses.
7.
Confidentiality, Non-Disclosure and Non-Competition
Agreement .
Concurrently with
the execution of this Agreement, the parties are entering into a
Confidentiality, Non-Disclosure and Non-Competition Agreement (the
“Related Agreement”), a copy of which is attached
hereto as Exhibit A and incorporated herein by this
reference.
8.
Termination of Employment .
(a)
Permitted Terminations . The Executive’s employment
hereunder may be terminated during the Employment Period under the
following circumstances:
(i)
Death . The Executive’s employment hereunder shall
terminate upon the Executive’s death;
(ii) By
the Company . The Company may terminate the Executive’s
employment:
(A) If
the Executive shall have been substantially unable to perform the
Executive’s material duties hereunder by reason of illness,
physical or mental disability or other similar incapacity, which
inability shall continue for three consecutive months (provided,
that until such termination, the Executive shall continue to
receive his compensation and benefits hereunder, reduced by any
benefits payable to him or her under any disability insurance
policy or plan applicable to him or her); or
(iii) By
the Executive . The Executive may terminate his employment for
any reason or for no reason.
(b)
Termination . Any termination of the Executive’s
employment by the Company or the Executive (other than because of
the Executive’s death) shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a
“Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement
relied upon, if any, and shall set 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. Termination of the Executive’s employment shall
take effect on the Date of Termination.
9.
Compensation Upon Termination or Change in Control
.
(a)
Death . If the Executive’s employment is terminated
during the Employment Period as a result of the Executive’s
death, the Company shall pay to the Executive’s estate, or as
may be directed by the legal representatives of such estate, the
Executive’s Base Salary due through the Date of Termination,
a pro rata portion of the annual bonus that would have been payable
for the calendar year of termination if the Executive’s
employment had not terminated (calculated based upon actual results
through the Date of Termination and based upon budget for the
remainder of the period and pro rated for the portion of the year
during which the Executive was employed) and all other unpaid
amounts, if any, to which the Executive is entitled as of the Date
of Termination, at the time such payments are due, and the Company
shall have no further obligation to the Executive under this
Agreement.
(b)
Disability . If the Company terminates the Executive’s
employment during the Employment Period because of the
Executive’s disability pursuant to Section 8(a)(ii)(A)
hereof, the Company shall pay the Executive the Executive’s
Base Salary due through the Date of Termination, a pro rata portion
of the annual bonus that would have been payable for the calendar
year of termination if the Executive’s employment had not
terminated (calculated based upon actual results through the Date
of Termination and based upon budget for the remainder of the
period and pro rated for the portion of the year during which the
Executive was employed) and all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of Termination, at
the time such payments are due, and the Company shall have no
further obligations to the Executive under this Agreement;
provided , that payments so made to the Executive with
respect to any period that the Executive is substantially unable to
perform the Executive’s material duties hereunder by reason
of illness, physical or mental illness or other similar incapacity
shall be reduced by the sum of the amounts, if any, payable to the
Executive by reason of such disability, at or prior to the time of
any such payment, under any disability insurance policy or benefit
plan and which amounts have not previously been applied to reduce
any such payment.
(c)
Termination by the Company for Cause or by the Executive without
Good Reason . If, during the Employment Period, the Company
terminates the Executive’s employment for Cause pursuant to
Section 8(a)(ii)(B) hereof or the Executive terminates his
employment without Good Reason, the Company shall pay the Executive
the Executive’s Base Salary due through the Date of
Termination, and all other unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination, at the time
such payments are due, and the Company shall have no further
obligations to the Executive under this Agreement. In the event
that
the Company
intends to terminate the Executive for Cause, the Executive shall
have a reasonable opportunity, together with his counsel, to be
heard before the Board of Directors of the Company before such
termination.
(d)
Termination by the Company without Cause or by the Executive
with Good Reason . If the Company terminates the
Executive’s employment during the Employment Period other
than for Cause, disability or death pursuant to
Section 8(a)(i) or (ii) hereof or the Executive
terminates employment hereunder with Good Reason, the Company shall
(i) pay the Executive the Executive’s Base Salary due
through the Date of Termination, a pro rata portion of the annual
bonus that would have been payable for the calendar year of
termination if the Executive’s employment had not terminated
(calculated based upon actual results through the Date of
Termination and based upon budget for the remainder of the period
and pro rated for the portion of the year during which the
Executive was employed) and all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of Termination, at
the time such payments are due, (ii) pay, during the 12-month
period commencing on the Date of Termination (the “Severance
Period”), to the Executive an aggregate amount equal to
Executive’s Base Salary, payable in equal installments on the
Company’s regular salary payment dates, (iii) pay,
during the Severance Period an annual bonus equal to the average
annual bonus paid by the Company to the Executive during the last
36 months of the Executive’s employment preceding the
Date of Termination, which bonus shall be paid at the time that
such bonus would have become payable if the Executive had continued
to be employed by the Company during the Severance Period,
(iv) shall continue in effect during the Severance Period the
employee benefits provided to the Executive under Section 5(c)
hereof immediately before the Date of Termination (except to that,
to the extent such benefits are provided pursuant to a qualified
plan under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the “Code”), the Company shall provide a
substantially equivalent nonqualified benefit) and (v) shall
cause all of the outstanding options then held by the Executive to
purchase stock of the Company to be: (A) fully vested and
exercisable if such termination occurs within two years after a
Change in Control (or before a Change in Control has occurred, but
after the Company has commenced negotiations of a transaction that
results in a Change in Control) or (B) if (A) does not
apply, vested and exercisable to the same extent that such options
would have been vested and exercisable if the Executive had
continued to be employed by the Company during the 24 months
immediately following the Date of Termination (the “Vesting
Period”), plus additional pro rata vesting with respect to
the period between the last vesting date under such option during
the Vesting Period and the end of the Vesting Period, in accordance
with Schedule A attached to this Agreement (and such
additional vesting, if any, shall be effective as of the Date of
Termination); provided , that no notice of Non-Renewal shall
be deemed to be a termination of the Executive’s employment
for such purposes unless otherwise expressly provided in such
notice of Non-Renewal. As a condition precedent to the receipt of
the foregoing payments and benefits, if requested by the Company,
the Executive shall enter into an agreement with the Company
confirming the Company’s right to continued performance by
the Executive of the Executive’s obligations under the
Related Agreement during the period following termination of the
Executive’s employment.
(e)
Change in Control . If a Change in Control occurs during the
Employment Period, and the Executive holds one or more outstanding
options to purchase stock of the Company that do not, by the terms
of such options, become fully vested and exercisable as a result of
the Change in Control, with respect to the shares as to which each
such option is not vested and exercisable as of the date of the
Change in Control (the “Unvested Shares”), the Company
shall cause each such option to become vested and exercisable as
follows: (1) as of the date of the Change in Control (the
“Change Date”), such option shall become vested and
exercisable to the extent of (A) two-thirds of the Unvested Shares
multiplied by (B) a fraction, the numerator of which is the
number of full calendar months between (i) the date on which
the most recent incremental increase in the number of shares as to
which such option is vested and exercisable occurred pursuant to
the terms of such option as a result of the continued employment or
service of the Executive (the “Most Recent Vesting
Date”) and (ii) the Change Date, and the denominator of
which is the number of full calendar months between the Most Recent
Vesting Date and the date on which such option would have become
fully vested and exercisable as a result of the Executive’s
continued employment by the Company, assuming such employment
continued (the “Remaining Vesting Term”); (2) as
of the end of each full calendar month commencing on or after the
date of the Change in Control, so long as the continuous employment
of the Executive by the Company has not ended, such option shall
become vested and exercisable to the extent of two-thirds of the
Unvested Shares divided by the number of full calendar months in
the Remaining Vesting Term and (3) as to the remainder of the
Unvested Shares, the terms of such option as in effect before the
Change in Control shall continue to apply.
(f)
Liquidated Damages . The parties acknowledge and agree that
damages which will result to the Executive for termina
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