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EMPLOYMENT AGREEMENT
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
(B) For
Cause;
(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 termination by the
Company without Cause or o
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