Document:

exh10-1_17016.htm

EXHIBIT 10.1

 

 

This Note, and any securities to be acquired upon the conversion of this Note, have not been registered under the Securities Act of 1933, as amended, and may not be sold, hypothecated or otherwise transferred or disposed of in the absence of such registration, unless an exemption from the requirement of such registration is available under the circumstances at the time obtaining and, if required at the sole discretion of the Company, demonstrated by opinion of counsel satisfactory to the Company.

 

EMPIRE PETROLEUM CORPORATION

Convertible Note Due February 1, 2012

$100,000.00

Tulsa, Oklahoma

February 1, 2011

FOR VALUE RECEIVED, EMPIRE PETROLEUM CORPORATION, a Delaware corporation (the "Company"), promises to pay The Albert E. Whitehead Living Trust, or registered assigns, the principal sum of ONE HUNDRED THOUSAND United States Dollars ($100,000.00) on February 1, 2012 (the "Due Date"), together with interest from the date hereof on the unpaid balance of such principal amount from time to time outstanding at the rate of 4% per annum.

Payments of principal and interest shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts, by check mailed and addressed to the registered holder thereof at the address shown in the register maintained by the Company for such purpose or, at the option of the holder hereof, in such manner and at such place in the United States of America acceptable to the Company as the holder hereof shall have designated to the Company in writing.

1. Definitions. As used herein, unless the context otherwise requires, the following terms have the following respective meanings:

(a) "Common Stock" shall mean (i) the Common Stock, par value $.001, of the Company, (ii) any stock into which such Common Stock shall have been changed or any stock resulting from any reclassification of such Common Stock, (iii) all other stock of any class or classes (however designated) of the Company, the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions of any shares entitled to preference, (iv) other securities of the Company or of any other person (corporate or otherwise) which the holders of this Note at any time shall be entitled to receive, or shall have received, upon the conversion of this Note, in lieu of or in addition to Common Stock, and (v) other securities which at any time shall be issuable or shall have been issued to holders of Common Stock in exchange for, in addition to or in replacement of, Common Stock pursuant to Section 5 hereof or otherwise.

  

  

  

(b) "Company" includes any corporation which shall succeed to or assume the obligations of the Company hereunder in compliance with Section 5 hereof.

(c) "Conversion Price" shall mean $0.1000 per share for each share of Common Stock.

(d) "Pro Forma Dilution Price" shall have the meaning specified in section 4.l.

2. Conversion of Note.

2.l. Conversion. This Note may be converted at any time prior to the Due Date by the holder hereof, in whole or in part (but not as to less than 100 shares of Common Stock unless this Note entitles the holder to convert this Note into less than 100 shares of Common Stock), into that number of shares as shall be obtained by dividing the principal amount hereof to be so converted by the Conversion Price, on any business day, by surrender of this Note, with the form of conversion at the end hereof (or a reasonable facsimile thereof) duly executed by such holder, to the Company at its office in Tulsa, Oklahoma, or at the office or agency, if any, maintained for such purpose pursuant to Section 11, designating the amount of principal hereof to be converted. Such holder shall thereupon be entitled to receive the number of shares of Common Stock, determined as provided in Section 4.l, and the accrued and unpaid interest to and including the date of surrender on the principal amount of the Note so converted. Notwithstanding anything to the contrary herein, if the Company elects to prepay all or a portion of this Note pursuant to Section 3 hereof, the right to convert the portion of the Note to be prepaid shall expire unless exercised prior to the close of business on the business day preceding the Prepayment Date (as defined in Section 3).

2.2 When Conversion Effective. Each conversion of this Note shall be deemed to have been effected immediately prior to the close of business on the business day on which this Note shall have been surrendered to the Company as provided in section 2.l or as soon thereafter as compliance with section 2.5 shall have been completed. At such time, the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record thereof.

2.3 Delivery of Stock Certificates, etc. As soon as practicable after the conversion of this Note in full or in part, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the holder hereof, or (subject to the restrictions on transfer referenced in the legend at the head of this Note and to Section 2.5 hereof) as such holder (upon payment by such holder of any applicable transfer taxes) may direct:

(a) a certificate or certificates for the number of full shares of Common Stock to which such holder shall be entitled upon such conversion plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash in an amount equal to the portion of the Conversion Price representing such fractional share; and

  

  

  

(b) in case such conversion is in part only, a new Note of like tenor, in a principal amount equal to the principal amount hereof minus the principal amount of this Note converted as provided in Section 2.1.

2.4. Company to Reaffirm Obligations. The Company will, at the time of each conversion of this Note, upon the request of the holder hereof, acknowledge in writing its continuing obligation to afford to such holder all rights to which such holder shall continue to be entitled after such conversion in accordance with the terms of this Note, provided that if the holder of this Note shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford such rights to such holder.

2.5 Securities Act Compliance. At the time this Note is converted pursuant to section 2.l, if the Company has been directed to issue a certificate or certificates for shares of Common Stock to a person or entity other than the holder hereof, at the request of the Company, the holder hereof shall deliver to the Company (at the holder's expense) an opinion of counsel, in form and content reasonably satisfactory to the Company, to the effect that the issuance by the Company of the shares of Common Stock pursuant to the terms of this Note does not require registration under the Securities Act of 1933, as amended (the "Act").

3. Prepayment of Note. From and after the date of this Note, the outstanding principal amount of this Note may be prepaid by the Company, in whole or in part, on written notice from the Company to the holder hereof specifying the date of prepayment ("Prepayment Date"), which shall be no less than thirty (30) calendar days from the date of notice. On the Prepayment Date, upon receipt of the original Note, the Company shall pay to the holder of this Note the principal amount to be prepaid plus accrued and unpaid interest thereon to and including the Prepayment Date. Notwithstanding anything to the contrary herein, all rights of the Company to prepay this Note are subject to the rights of the holder hereof to convert such Note in accordance with section 2.1 hereof, which are exercised prior to the close of business on the business day preceding the Prepayment Date. After the close of business on the Prepayment Date, any portion of the principal amount of this Note which has been prepaid or which upon surrender of the original Note is to be repaid in accordance with this Section 3 shall cease to accrue interest and all rights of the holder thereof with respect to such prepaid principal amount shall cease on such date, except the right to receive the amount payable hereunder on presentation and surrender of the original Note. In the event of a prepayment hereunder by the Company of less than the entire principal amount of this Note, then promptly upon such partial prepayment, the Company shall issue and deliver to the holder hereof a new Note, of like tenor hereto, equal in principal amount to the unpaid principal amount of this Note.

4. Adjustment of Common Stock Issuable Upon Conversion.

4.l. General; Pro Forma Dilution Price. The number of shares of Common Stock which the holder of this Note shall be entitled to receive upon the conversion hereof shall be determined by multiplying the number of shares of Common Stock which would otherwise (but for the provisions of this section) be issuable upon such conversion, by the fraction of which (a) the numerator is the Conversion Price and (b) the denominator is the Pro Forma Dilution Price (as defined below in this section 4.l) in effect on the date of such conversion. The "Pro Forma 

  

  

  

Dilution Price" per share of Common Stock shall initially be the Conversion Price and shall be adjusted and readjusted from time to time as provided in this section (and, as so adjusted or readjusted, shall remain in effect until a further adjustment or readjustment thereof is required by this section), provided, that the Company shall not be required to make any adjustments required by this section, if the amount of such adjustment would be less than $1.00, but in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustments, which, together with any adjustment or adjustments so carried forward, shall amount to at least $1.00 per share.

4.2. Adjustment of Pro Forma Dilution Price. In case the Company shall declare, order, pay or make a dividend or other distribution (including, without limitation, any distribution of other or additional stock or other securities or property by way of dividend or spinoff, reclassification, recapitalization or similar corporate rearrangement) on the Common Stock other than a dividend payable in cash or other property and declared out of earned surplus of the Company, then, and in each such case, the Pro Forma Dilution Price shall, immediately after the close of business on the record date fixed for the determination of holders of any class of securities entitled to receive such dividend or distribution, be reduced or increased to a price (calculated to the nearest cent, a half cent being considered a full cent) determined by dividing

(x) an amount equal to

(i) the product obtained by multiplying the number of shares of Common Stock outstanding immediately prior to the close of business on such record date by the Pro Forma Dilution Price in effect at such time,

minus

(ii) the aggregate amount of such dividend or distribution (dividends or distributions of property other than cash being valued at the fair market value of such property as determined in good faith by the board of directors of the Company),

by

(y) the number of shares of Common Stock outstanding at the close of business on such record date, provided that, for the purposes of this section 4.2, treasury shares shall not be deemed to be outstanding; and provided, further, that in no event shall the effect of this section 4.2 result in a price to be paid upon actual conversion of this Note which is greater than the Conversion Price, as adjusted in the manner provided in section 4.3.

4.3. Stock Dividends, Stock Splits, etc. In case the Company at any time or from time to time shall declare or pay any dividend on the Common Stock payable in Common Stock or effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by reclassification or otherwise), the Pro Forma Dilution Price in effect immediately prior to such dividend shall, as of the opening of business on the date of payment of such dividend, be proportionately decreased.

  

  

  

4.4. Adjustments for Combinations, etc. In case the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Pro Forma Dilution Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.

5. Adjustments for Consolidation, Merger, Reorganization, etc. In case the Company, after the date of this Note, (a) shall consolidate with or merge into any other person and shall not be the continuing or surviving corporation of such consolidation or merger, or (b) shall permit any other person to consolidate with or merge into the Company and the Company shall be the continuing or surviving person but, in connection with such consolidation or merger, the Common Stock shall be changed into or exchanged for stock or other securities or property of any other person, or (c) shall effect a capital reorganization or reclassification of the Common Stock, then, and in each such case, proper provision shall be made so that, on the terms and in the manner provided in section 4, the holder of this Note, upon the conversion hereof at any time after the consummation of such consolidation, merger, reorganization or reclassification, shall be entitled to receive, in lieu of the Common Stock issuable upon such conversion prior to such consummation, the stock and other securities and property to which such holder would have been entitled upon such consummation if such holder had so converted this Note immediately prior thereto, subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for in section 4.

6. No Dilution or Impairment. The Company (a) will not permit the par value of any shares of stock receivable upon the conversion of this Note to exceed the amount payable therefor upon such conversion, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of stock upon the conversion of this Note from time to time outstanding, and (c) will not consolidate with or merge into any other person where the Company is not the continuing or surviving person, or permit any other person to consolidate with or merge into the Company where the Company is the continuing or surviving person if, in connection with such consolidation or merger, the Common Stock then issuable upon the conversion of this Note shall be changed into or exchanged for stock or other securities or property of any other person, unless, the continuing or surviving entity after such consolidation or merger or the entity issuing or distributing such stock or other securities or property, as the case may be, shall expressly assume in writing and be bound by all the terms of this Note.

7. Report as to Adjustments. In case of any adjustment or readjustment in the shares of Common Stock issuable upon the conversion of this Note, the Company at its expense will promptly compute such adjustment or readjustment in accordance with the terms of this Note and will prepare a report, certified by the principal financial officer of the Company setting forth such adjustment or readjustment and showing, in detail, the facts upon which such adjustment or readjustment is based, including a statement of (a) the number of shares of Common Stock outstanding or deemed to be outstanding and (b) the Pro Forma Dilution Price in effect as adjusted and readjusted (if required by section 4) on account thereof. The Company will forthwith mail a copy of each such report to the holder of this Note, and will, upon the written request at any time of the holder of this Note, furnish to such holder a like report setting forth the Pro Forma Dilution Price at the time in effect and showing how it was calculated.

  

  

  

8. Notices of Record Date, etc. In the event of

(a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a regular cash dividend payable out of earned surplus at the same rate as that applicable to the most recent such dividend, notice of which has been given pursuant to this section 8) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to any other person or any consolidation or merger involving the Company and any other person, or

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company will mail to the holder of this Note a notice specifying (i) the date or expected date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, and (ii) the date or expected date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is to take place and the time, if any such time is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up. Such notice shall be mailed at least 45 days prior to the date therein specified.

9. Reservation of Stock, etc. The Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion of this Note, all shares of Common Stock from time to time issuable upon the conversion of this Note at the time outstanding. All shares of Common Stock issuable upon the conversion of this Note shall be duly authorized, and when issued, validly issued, fully paid and non-assessable with no liability on the part of the holders thereof.

10. Substitution of Notes.

10.1. Exchange of Notes. Subject to the restrictions referenced at the top of the first page of this Note concerning, inter alia, the sale, transfer, encumbrance or other disposition of this Note, upon surrender for exchange of this Note, properly endorsed, to the Company, the Company at its expense will issue and deliver to or upon the order of the holder thereof a new Note or Notes of like tenor, in the name of such holder or as such holder (upon payment by such holder of any applicable transfer taxes) may direct.

  

  

  

10.2. Replacement of Notes. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Note and, in the case of any such loss, theft or destruction, upon delivery of an indemnity bond (or, in the sole discretion of the Company, an indemnity agreement satisfactory to the Company), reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Note, the Company at its expense will execute and deliver, in lieu thereof, a new Note of like tenor.

11. Note Agent. The Company may, by written notice to the holder of this Note, appoint an agent for the purpose of issuing Common Stock upon the conversion of this Note pursuant to Section 2, exchanging and replacing this Note pursuant to Section 10, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

12. Subordination.

(a) The holder of this Note by the holder's acceptance hereof, and each subsequent holder, by its acceptance of any interest in this Note, agree that the indebtedness represented hereby shall be subordinate in right of payment to the prior payment in full of all obligations of the Company in respect of indebtedness to banks or other lending institutions now existing or hereafter incurred which may be designated as senior indebtedness by the board of directors of the Company (hereinafter referred to as "Senior Indebtedness").

(b) In Furtherance of Subordination. No payments of principal or interest may be made while any event of default exists in respect of any Senior Indebtedness, and the holder hereof agrees that any payments which would otherwise be made pursuant hereto shall be applied to the Senior Indebtedness, and any such payments received by the holder hereof shall be held in trust for the holders of the Senior Indebtedness until all such events of default have been cured.

(c) Further Assurance. The holder hereof agrees to take any and all further action and to execute and deliver any further documents that any holder or holders of Senior Indebtedness may reasonably request in order to preserve and protect any right or interest granted or intended to be granted hereby.

(d) Convertibility. Nothing herein shall be deemed to restrict the right of conversion of this Note as elsewhere provided herein.

13. Default. Upon the occurrence and during the continuance of any of the following conditions or events:

(a) if the Company shall fail or refuse to make any payment of principal hereof or of interest hereon as and when the same shall become due and payable, which default shall continue for a period of 10 days or more after written notice to the Company by the holder hereof; or

(b) it the Company shall default in the due observance or performance of any of the covenants or conditions contained in this Note which default shall continue for a period of 10 days or more after written notice to the Company by the holder hereof; or

  

  

  

(c) if there shall occur an event which constitutes, or, upon the sending of notice or the passage of time or both, would constitute, a breach or default under the terms of any agreement or instrument between the Company and any third party as a result of which the Company is rendered liable for an amount in excess of $10,000 which is not paid or otherwise satisfied within 90 days of the final determination of such liability, or giving rights of acceleration or similar rights (whether or not exercised) against the Company or its property with respect to any Senior Indebtedness exceeding $10,000 in principal amount; or

(d) if the Company shall be in default (after the expiration of any applicable grace periods) in respect of any Senior Indebtedness; or

(e) if the Company shall make a general assignment for the benefit of its creditors, or shall admit in writing its inability to pay its debts as they become due, or shall file a voluntary petition in bankruptcy, or shall be adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, or shall file any answer admitting or not contesting the material allegations of a petition filed against the Company in any such proceeding, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of the Company or of all or any substantial part of the properties of the Company; or

(f) if, within 60 days after the commencement of any action against the Company seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such action shall not have been dismissed or all orders or proceedings thereunder affecting the operations or the business of the Company stayed, or if the stay of any such order or proceeding shall thereafter be set aside, or if, within 60 days after the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of the Company or of all or any substantial part of the properties of the Company, such appointment shall not have been vacated;

then, in each case, the holder of this Note may, by written notice to the Company, declare this Note to be due and payable, whereupon the principal of this Note and all interest thereon accrued and unpaid to and including the date of such declaration, shall forthwith mature and become due and payable without presentment, demand, protest or other notice, all of which are hereby waived; provided, however, that in the case of the occurrence of an event described in paragraphs (e) or (f) of this Section 13, the principal of this Note and all interest thereon accrued and unpaid to and including the date of such event shall automatically become immediately due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby waived.

14. This Note shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Company's obligations hereunder, or any part thereof, is, pursuant to 

  

  

  

 

applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the holder hereof, whether as a "voidable preference," "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Company's obligations hereunder shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

15. Ownership of Note. Until this Note is transferred on the books of the Company, the Company may treat the person in whose name this Note is issued as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary, except that, if and when this Note is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer hereof as the absolute owner of this Note for all purposes, notwithstanding any notice to the contrary. This Note, if properly assigned, may be converted by a new holder without first having a new Note issued.

16. Notices, etc. All notices and other communications from the Company to the holder of this Note shall be mailed by first class registered or certified mail, postage prepaid, or sent via Federal Express or similar overnight courier service, at such address as may have been furnished to the Company in writing by such holder, or, until an address is so furnished, to and at the address of the last holder of this Note who has so furnished an address to the Company.

17. Miscellaneous.

(a) This Note shall in all respects be governed by the laws of the State of Oklahoma applicable to contracts made and to be performed entirely in such State.

(b) This Note may not be altered or amended, except by a writing duly signed by the party against whom such alteration or amendment is sought to be enforced.

(c) Any provision of this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or enforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability of such provision in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.

(d) Any waiver by the holder hereof of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which such holder would otherwise have had on any future occasion. No failure to exercise nor any delay in exercising on the part of the holder hereof, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law.

  

  

  

(e) This Note and all obligations of the Company hereunder shall be binding upon the successors and assigns of the Company, and shall, together with the rights and remedies of the holder hereunder, inure to the benefit of the holder and its successors and registered assigns.

(f) The Company hereby waives presentment for payment, demand, notice of dishonor, notice of protest and protest and diligence in taking any action to collect amounts due hereunder.

DATED: February 1, 2011

EMPIRE PETROLEUM CORPORATION

By:  /s/ Albert E. Whitehead

Name: /s/ Albert E. Whitehead

Title: Chairman and C.E.O.ex101.htm

Exhibit 10.1

November 18, 2010

 

Mr. Joseph L. Mullen

Dear Joe:

 

    This letter agreement (the “Letter Agreement”) sets forth the amended and restated terms on which you and Bottomline Technologies (de), Inc., a Delaware corporation (the “Company”), agree that you will continue to be engaged by the Company for an additional three year term at the expiration of the current term.  Except as provided in Sections 4 and 5 below, from this date forward this Letter Agreement shall supersede and replace your Letter Agreements dated September 18, 2008 and November 18, 2006 and your Amended and Restated Employment Agreement, dated as of November 21, 2002, as amended by your letter agreement dated as of September 30, 2005 (as amended, the “Employment Agreement”).  This Letter Agreement shall not in any manner whatsoever affect your position as Chairman of the Board of Directors of the Company.

 

    1. Role and Period.  The Company agrees to retain your services as Chairman for (a) $100,000 per year during the period beginning on November 17, 2010 and ending on November 16, 2011 and (b) $115,000 per year for each year during the period beginning on November 17, 2011 and ending on November 17, 2014, at which time your role and services will be re-evaluated.  In this capacity you will (i) perform the duties of the Chairman of the Board of Directors during any periods you are appointed to such position by the Company’s Board of Directors and (ii) be available to the Company as required or requested by management for services including strategy analysis, merger and acquisition evaluation and analysis, strategic partnerships, executive coaching and other consultative services.  In addition, you shall be entitled to receive equity compensation, currently 3,000 shares of stock of the Company (or such other equity award as shall be made to non-employee directors) each year on the date of the annual meeting of stockholders provided that you are serving as a director of the Company during such periods, in each case vesting at the earlier of the one year anniversary of the grant date or the next annual meeting of stockholders.   In connection with your contemplated role under this paragraph 1, you agree to perform such services and undertake such duties and responsibilities to and for the Company as may be reasonably requested from time to time by the Company.

 

    2. Expenses.  The Company shall reimburse you for all reasonable business expenses incurred or paid by you in connection with the performance of your services hereunder, in accordance with expense reimbursement policies of the Company and your presentation of appropriate documentation.

 

    3. Termination.

 

       3.1 Either you or the Company may terminate this agreement upon 30 days’ prior written notice to the other party or the Company may do so effective immediately upon written notice to you for “cause” (as defined below).

 

       3.2 In the event this agreement is terminated by the Company other than for “cause,” you shall be entitled to be paid (1) in a lump sum the full amount due you with respect to the remainder of the term described in Section 1 above, and (2) for any expenses incurred prior to the termination.  In the event of your termination by the Company for “cause” or termination at your election, you shall be entitled to payment for services performed and expenses paid or incurred prior to the effective date of 

 

 

  

  

  

 

termination.  Such payments shall constitute full settlement of any and all claims by you of every description against the Company with respect to services rendered during the contract period.

 

       3.3 “Cause” shall mean you (A) have been convicted of a felony involving dishonesty, fraud, theft or embezzlement or any other felony or (B) have breached any of your material obligations under any agreement between you and the Company which imposes confidentiality, proprietary information, assignment of inventions, non-competition or similar obligations on you, as may be in effect from time to time.

 

    4. Stock Options and Restricted Stock.  In the event that, prior to November 17, 2014:

 

       (a) a Change of Control (as defined in the Employment Agreement) shall occur, your right to exercise all unvested stock options shall become immediately exercisable in full and all vesting restrictions applicable to restricted stock awards shall lapse in full; and

 

       (b) your engagement with the Company is terminated in the manner described in Section 6.2, 6.3 or 6.4 of your Employment Agreement and pursuant to the terms of such provision, Section 6.5 of your Employment Agreement would have applied, you shall have a period of two years (or the remainder of the applicable option term if less than two years) after the date of such termination to exercise any Stock Options; provided, however, that such two year period of exercisability shall not apply to any grant of stock options granted prior to June 1, 2001 with an exercise price of less than $6.76 per share.

 

    In addition, beginning on November 17, 2011, the provisions of Section 16 of the Employment Agreement related to tax gross-up payments shall no longer remain in effect.

 

    5. Vesting.    You shall retain any and all rights you have under the Employment Agreement through November 17, 2014 with respect to the acceleration of any restricted stock and unvested options and the related exercise period solely by reason of any termination of your employment other than as a result of a termination by you of your employment that does not constitute an Involuntary Termination (as defined in the Employment Agreement).  In addition, beginning on November 17, 2011, the provisions of Section 16 of the Employment Agreement related to tax gross-up payments shall no longer remain in effect.

 

    6. Health Insurance.    You shall be eligible to participate in the Company’s health insurance plan with the same terms, cost and coverage as then offered to Company employees until you reach age 65.  In the event of a Change of Control of the Company, the acquiring or surviving party shall be required to provide the same or equivalent coverage at a cost equivalent to that in effect at the time of the Change of Control.  The provision of health insurance under this paragraph shall be made to you in accordance with the Company’s regular payroll/benefits practice.

 

    7. Section 409A.    The payments and benefits provided to you upon the termination of your services pursuant to paragraphs 3.2 and 6 shall be subject to the terms and conditions set forth in Exhibit A.  In any event, the Company makes no representation or warranty and shall have no liability to you or any other person if any provisions of this Letter Agreement are determined to constitute deferred compensation subject to Section 409A but do not satisfy the conditions of such section.

 

    8. Taxes.  All payments to be made to you under this Letter Agreement shall be subject to any required withholding of federal, state and local income and/or employment taxes.  In addition, beginning on November 17, 2011, the provisions of Section 16 of the Employment Agreement related to tax gross-up payments shall no longer remain in effect.

 

    9. Waiver.  You agree that neither this Letter Agreement nor the transactions contemplated hereby constitutes an Involuntary Termination or a termination without Cause (as each such term is defined in the Employment Agreement) under the Employment Agreement.

 

 

  

  

  

 

    10. Survival.  In case any provision of this Letter Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

 

    11. Notices.  All notices required or permitted under this Letter Agreement shall be in writing and shall be deemed effective upon personal delivery or three days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, return receipt requested, addressed to the other party at the address shown above (and, in the case of any notice to the Company, with a copy to John A. Burgess, Esq., Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109), or at such other address or addresses as either party shall designate to the other in accordance with this Section 11.

 

    12. Governing Law.  This Letter Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New Hampshire, without regard to any principle of conflict of laws that would require or permit the application of the laws of any other jurisdiction.

 

    13. Successors and Assigns.  This Letter Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, provided, however, that your obligations as an employee of the Company are personal and shall not be assigned by you.

 

    14. Entire Agreement.  This Letter Agreement represents the entire agreement between the parties regarding the subject matter hereof, and, except as provided in Section 4 above, supersedes and replaces in its entirety the Employment Agreement.

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Letter Agreement as of the day and year set forth above.

 

	 	
BOTTOMLINE TECHNOLOGIES (de), INC.

	 
	 	 	 	 
	

November 18, 2010

	
By: 

	/s/ Joseph L. Barry, Jr.	 
	 	 	
Joseph L. Barry, Jr.

	 
	 	 	
Chairman of Compensation Committee

	 
	 	 	 	 

 

 

	 	
Accepted and Agreed:

	 
	 	 	 	 
	

November 18, 2010

	
By: 

	/s/ Joseph L. Mullen	 
	 	 	
Joseph L. Mullen

	 
	 	 	 	 
	 	 	 	 

 

 

  

  

  

Exhibit A:  Payments subject to Section 409A

 

    Subject to the provisions in this Exhibit A, any severance payments or benefits under the Letter Agreement shall begin only upon the date of your “separation from service” (determined as set forth below) which occurs on or after the date of termination of your services.  The following rules shall apply with respect to distribution of the payments and benefits, if any, to be provided to you under the Letter Agreement:

 

    1. It is intended that each installment of the severance payments and benefits provided under the Letter Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Internal Revenue Code and the guidance issued thereunder (“Section 409A”).  Neither the Company nor you shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.

 

    2. If, as of the date of your “separation from service” from the Company, you are not a “specified employee” (within the meaning of Section 409A), then each installment of the severance payments and benefits shall be made on the dates and terms set forth in the Letter Agreement.

 

    3. If, as of the date of your “separation from service” from the Company, you are a “specified employee” (within the meaning of Section 409A), then:

 

    a. Each installment of the severance payments and benefits due under the Letter Agreement that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the separation from service occurs, be paid within the Short-Term Deferral Period (as hereinafter defined) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A.  For purposes of this offer letter, the “Short-Term Deferral Period” means the period ending on the later of the fifteenth day of the third month following the end of your tax year in which the separation from service occurs and the fifteenth day of the third month following the end of the Company’s tax year in which the separation from service occurs; and

 

    b. Each installment of the severance payments and benefits due under the Letter Agreement that is not described in paragraph 3(a) above and that would, absent this subsection, be paid within the six-month period following your “separation from service” from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, your death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following your separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of severance payments and benefits if and to the maximum extent that that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from service).  Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of your second taxable year following your taxable year in which the separation from service occurs.

 

    4. The determination of whether and when your separation from service from the Company has occurred shall be made and in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h).  Solely for purposes of this paragraph 4, “Company” shall include all persons with whom the Company would be considered a single employer under Section 414(b) and 414(c) of the Code.

 

    5. All reimbursements and in-kind benefits provided under this letter agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during your lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not 

 

 

  

  

  

 

affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.

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