Document:

Exhibit 10.1

 

SEPARATION
AGREEMENT AND GENERAL RELEASE

This
Separation Agreement and General Release (this “Agreement”)
is made and entered into as of October 3, 2006, by and between Douglas K.
Freeman (“Executive”) and NetBank, Inc., a Georgia
corporation (the “Company”).

RECITALS

WHEREAS,
Executive has been employed by the Company as its Chief Executive Officer (“CEO”) pursuant to that certain Employment Agreement dated
November 18, 2001 by and between Executive and the Company, as amended on April
1, 2002 and April 30, 2004 (collectively, the “Employment
Agreement”).

WHEREAS,
Executive recently initiated discussions with the Board of Directors of the
Company (the “Board”) regarding whether, in the
Board’s judgment, a transition in leadership of the Company at this time is in
the best interests of the Company and its shareholders.  As a result of the ensuing discussions
between Executive and the Board, Executive and the Company have reached a
mutual agreement that Executive will, effective as of the close of business on October
5, 2006 (the “Separation Date”), resign from his
position as CEO and as Chairman of the Board and resign as a director of the
Company.

WHEREAS,
inasmuch as Executive’s separation is the result of mutual agreement of the
parties hereto, a termination circumstance not contemplated in the Employment
Agreement, the parties hereto desire to (i) terminate the Employment Agreement
and (ii) enter into this Agreement to define the terms and conditions of
Executive’s separation from the Company, such that this Agreement shall
supersede the Employment Agreement.

NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants
and agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Executive, intending to be legally bound, 
hereby agree as follows:

1)             Recitals.  The Recitals above are true and correct and
incorporated by reference as if fully set forth herein.

2)             Termination
of Employment Agreement; Other Agreements and Plans.  Executive and the Company mutually acknowledge
and agree that the Employment Agreement is hereby terminated and superseded by
this Agreement.  All terms and conditions
relating to Executive’s separation from the Company and the Company’s entire obligations
with respect thereto shall be as set forth in this Agreement.  In addition, and for the avoidance of doubt, this
Agreement supersedes any and all agreements set forth in the Employment
Agreement with respect to compensation and termination of benefits and the
Company’s obligations with respect thereto, including, but not limited to, annual
base salary, cash bonuses under the Management Incentive Plan, options to
purchase the stock of the Company (“Stock Options”),
restricted stock of the Company (“Restricted Stock”),
and any awards or grants under the NetBank, Inc. 1996 Stock Incentive Plan and
the NetBank, Inc. Mid-Term Incentive Plan thereunder (“Plan Awards”),
and any other fringe benefits and perquisite programs previously provided to
Executive; provided,

 

however,
that Executive’s rights under and pertaining to the NetBank, Inc. 401(k) Plan (“401(k) Plan”) will in all respects be governed by the terms
of the 401(k) Plan.

3)             Corporate
Positions.  Executive hereby resigns
from his positions as CEO and Chairman of the Board of the Company effective on
the Separation Date.

4)             Separation
Benefits.  Executive’s exclusive
compensation and remedy with respect to his separation from the Company shall
be to receive from the Company the following as set forth in this Section 4.  Executive shall be responsible for the payment
of all applicable income, transfer, sales, use and other taxes under federal,
state, local or other law, due and owing as a result of the payments or transfers
or use of property from the Company to Executive hereunder.

a)             Payments.  The Company shall pay Executive in one lump
sum on the Separation Date the sum of (i) $2,900,000; and (ii) any unpaid base salary
of Executive that is due and owing as of the Separation Date.

b)            Continuation
of Employment Benefits.  The Company shall provide
Executive with continued participation in the medical, dental and vision
insurance coverage plans of the Company (“Welfare Plans”)
in which Executive is participating on the Separation Date until the earlier
of: (i)  the termination by the Company
of Welfare Plans that permit the participation of former employees;  (ii) the end of the 36-month period following
the Separation Date; and (iii) the date, or dates, Executive receives
comparable coverage and benefits under the plans and programs of any subsequent
employer; provided, however, that the provision of such benefits
to Executive by the Company shall be in accordance with Welfare Plans as
maintained by the Company from time to time for its then current senior
executives.

c)             Equity-based
Compensation.  All unvested Stock Options
granted, and all unvested and outstanding Restricted Stock awarded, to
Executive by the Company prior to the date hereof shall immediately vest upon
the Separation Date.  For the avoidance
of doubt, Executive agrees that he is not entitled to receive shares of common
stock of the Company, if any, which are payable, or may otherwise be payable,
to him under the 2004 and 2006 Mid-Term Incentive Plans.  All outstanding Stock Options not exercised by
Executive within ninety (90) days from the Separation Date shall expire at the
end of such ninety (90) day period.

5)             Withholding
Taxes. The Company may withhold from all payments due to Executive (or his
beneficiary or estate) hereunder all taxes which, by applicable federal, state,
local or other law, the Company is required to withhold therefrom.

6)             Release of Claims.  Executive
does hereby unconditionally release, acquit, discharge, and agree to hold the Company,
its parent, subsidiaries and affiliated companies, and its and their officers,
directors, shareholders, employees, agents, representatives, successors and
assigns (collectively referred to in this paragraph as the “Releasees”), harmless from and against any and all actions,
claims, suits, rights, liabilities, or demands of any kind or nature (each such
action, claim, suit, right, liability, or demand being hereinafter individually
referred to as a “Claim” and
collectively referred to as “Claims”) that Executive
may now or hereafter have against Releasees, or any one or group of them, which
Claim arose or accrued on or prior to the

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Separation Date, including, but not limited to, (i)
any and all Claims in connection with (A) his employment relationship with the
Company, (B) the terms and conditions of such employment relationship
(including compensation and benefits), (C) his service as a director of the
Company (except for indemnification pursuant to the Company’s Certificate of
Incorporation, bylaws or any director or officer indemnification agreement
between Executive and the Company) or (D) the termination of such employment or
director relationship and the circumstances surrounding each such termination,
and (ii) any and all Claims arising pursuant to any law, constitution,
regulation, or any statute or common law theory, whether in tort, contract,
equity, or otherwise.  Without limiting
the generality of the foregoing, Executive specifically releases, acquits,
discharges, waives and agrees to hold Releasees harmless from and against any
and all Claims (i) arising under the Civil Rights Acts of 1866, 1964, and 1991;
the Americans with Disabilities Act; the Older Workers Benefit Protection Act
of 1990, the Family and Medical Leave Act of 1993 and any other federal law,
and the laws of the state(s) governing Executive’s employment with the Company
concerning fair employment practices (which Acts and laws prohibit
discrimination based upon race, religion, sex, national origin, color, age,
disability, and in some jurisdictions, sexual orientation); and Employee
Retirement Income Security Act of 1974, as amended (other than such rights as
are mandated or vested by law), or (ii) arising under federal, state, or local
laws or regulations, or any common law theories of recovery.  Executive hereby waives all rights to any
benefits, including, but not limited to, monetary recovery and reinstatement,
derived from any actions, suits, or proceedings brought on Executive’s behalf
related to his employment with Employer, including any action, suit, or
proceeding brought by the Equal Employment Opportunity Commission or anyone
else.  If Executive files any action,
suit, or proceeding with respect to any Claim released by him herein, Executive
agrees to indemnify Employer against any damages or judgments arising there
from.

7)             No
Admission.  Executive acknowledges
and agrees that this Agreement is not intended by either party to be construed,
and will not be construed, as an admission by the Company of any liability or violation
of any law, statute, ordinance, regulation or legal or moral duty of any nature
whatsoever.

8)             Cooperation
with Transition and Claims.  Executive
agrees that, as necessary and upon request, he will cooperate with the Company
and will render all reasonable assistance in the prosecution or defense by the
Company of all claims, demands, suits, actions, proceedings and causes of
action brought against or by any party, howsoever and whenever arising,
including, but not limited to, meeting with attorneys who represent the Company,
making affidavits or signed statements, giving deposition testimony and
appearing as a witness, whenever such evidence may be necessary or desirable in
any such matter.   Executive further
agrees that, during the month of October, 2006, he will provide all necessary
assistance to the Company’s new CEO as the new CEO transitions into such
position.  All of Executive’s reasonable
out of pocket expenses in connection with his performance under this Section 8
shall be reimbursed by the Company.

9)             Non-Disparagement.  Executive agrees not to disclose any
information or make or publish any statement or do any other thing that may
tend to harm or prejudice the reputation or good name of the Company or its officers,
directors, or employees.  Executive
agrees not to say or do anything to or in relation to officers, directors,
employees, clients, customers, agents, or

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representatives
of the Company that is adverse or prejudicial to the Company, or inconsistent
with the management or policies of the Company.

10)           Confidentiality.

a)             Executive shall keep confidential all non-public
information he has learned during his employment with the Company regarding the
Company, its business, its operations, its systems, its employees, its
customers, its clients and prospective clients. 
In addition, Executive agrees that he will not disclose non-public
information obtained from the Company or its officers, directors, or management
during his employment, including, but not limited to, information regarding or
statements by the Company or its officers, directors or management, to anyone
other than as required by law or in response to a lawful court order or
subpoena.  Nothing in this Section 10 shall
prohibit Executive from initiating a claim as a charging party with the Equal
Employment Opportunity Commission (“EEOC”), or
participating as a witness at the request of the Company or a third party, in
any investigation by the Securities and Exchange Commission, the EEOC, or any
other governmental agency charged with investigation of any matters related to Executive’s
employment with the Company (“investigating agency”),
nor shall Executive be prohibited from testifying in response to a subpoena,
court order, or notice of deposition.  Executive
agrees to notify the Company’s chief legal executive, in writing, at least ten
(10) days prior to the response deadline or appearance date (whichever is
earlier) for any such court order, subpoena, or notice of deposition issued by
the court or investigating agency which seeks disclosure of the information
referenced in this paragraph and agrees to take any actions reasonably
requested by the Company in order to allow the Company to protect the release
of information regarding Executive’s employment and separation from the Company
in such court or agency proceeding.

b)            Executive shall upon the Separation Date return to
the Company all records, lists, files and documents which are in his possession
and which relate to the Company, or any of its subsidiaries or affiliates.

11)           Use.
 Executive agrees that Executive will not
use any of the information or property described in Section 10 of this
Agreement for his own benefit or for the benefit of any new employer or any
third person.

12)           Non-solicitation;
Non-competition.  Executive
acknowledges that the Company operates its retail banking, financial
intermediary, transaction processing and servicing asset business segments
throughout the United States of America. 
By virtue of Executive’s position as Chairman of the Board and CEO, he
has significant confidential information about the Company and its existing and
future plans and strategies.  As a
result, Executive acknowledges that the Company has a legitimate business
interest supporting the restrictive covenants set forth in this Section 12. Until
the second (2nd) anniversary of the Separation Date, Executive shall not, in
any manner, directly or indirectly, within the United States of America (without
the prior written consent of the Company): (i) accept any engagement in any capacity
that involves Executive performing employment, management, consultation or
advisory services of any kind with a Competitive Enterprise (as hereinafter
defined), (ii) Solicit (as hereinafter defined) any Customer (as hereinafter
defined) to transact business with a Competitive Enterprise or to reduce or
refrain from doing any business with the Company or any of its subsidiaries or
affiliates (iii) transact

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business
with any Customer that would cause Executive to be a Competitive Enterprise, (iv)
interfere with or damage any relationship between the Company or any of its
subsidiaries or affiliates and a Customer or (v) Solicit anyone who is then an
employee of the Company or any of its subsidiaries or affiliates (or who was an
employee of the Company or any of its subsidiaries or affiliates within the
prior 12 months) to resign from the Company or any of its subsidiaries or to
apply for or accept employment with any other business or enterprise.  For purposes of this Agreement:  a “Customer” means
any customer or prospective customer of the Company or its subsidiaries or affiliates
whose identity became known to Executive in connection with Executive’s
relationship with or employment by the Company or its subsidiaries or affiliates;
and “Solicit” means any direct or indirect
communication of any kind, regardless of who initiates it, that in any way
invites, advises, encourages or requests any person to take or refrain from
taking any action.  In addition, for
purposes of this Agreement, “Competitive Enterprise”
means any business enterprise that either (A) engaged in any activity that
competes anywhere with any activity that the Company or its subsidiaries or affiliates
is then engaged in or (B) holds a 5% or greater equity, voting or profit
participation interest in any enterprise that competes anywhere with any
activity that the Company or its subsidiaries or affiliates is then engaged in;
provided, however, if the Company, including its subsidiaries and
affiliates, ceases to do, and intends to exit, a particular type of business
activity, the Company and its subsidiaries and affiliates will be deemed not to
be “then engaged” in such business; further provided, however, in
the case where the activity sought to be engaged in by Executive is retail
banking, the “business enterprise” will be deemed to not be engaged in an
activity that competes with the Company if such business enterprise’s current
or prospective business does not include as a significant component internet
banking.

13)           Remedies.  The Company shall be entitled to injunctive
or other equitable relief to enforce the covenants of this Agreement, such
relief to be without the necessity of posting a bond, cash or otherwise,
without limiting other possible remedies of the Company.  In any action to enforce any provision of
this Agreement, the prevailing party shall recover reasonable attorneys’ fees,
costs and expenses from the non-prevailing party.  If any aspect of the restrictive covenants
contained in Sections 9, 10, 11 or 12 are deemed by a court of competent
jurisdiction to be too broad as to time, area or restricted activity, then such
defective aspect shall be reduced to such scope as is reasonable and
enforceable, and the restrictive covenant as so modified shall be enforceable
by injunction or any other legal or equitable remedy.

14)           Consultation
with Legal Counsel.  Executive
expressly acknowledges that, before signing this Agreement, Executive was
advised of his right to consult with legal counsel and/or other advisors
selected by Executive regarding the terms and conditions of this Agreement,
that Executive knows and understands the contents of this Agreement and that
Executive enters into this Agreement of his own free will, and without any
inducement not described in this Agreement, and not under duress or coercion of
any nature.

15)           Severability.
 If any provision of this Agreement
should be declared or determined by any court to be illegal or invalid, the
validity of the remaining parts, terms or provisions will not be affected, and
the illegal or invalid parts, terms or provisions will be deemed not to be a
part of this Agreement.

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16)           Governing
Law. This Agreement will be governed by the laws of the State of Florida
without reference to any principles of conflict of laws.

17)           Arbitration.  

	
  Executive and the Company
  agree that all controversies that may arise between Executive and the Company
  concerning, arising out of or relating to Executive’s employment, or to the
  interpretation, construction, performance or breach of this Agreement (other
  than injunctive proceedings to enforce Executive’s obligations under this
  Agreement), shall be determined by arbitration conducted in Atlanta, Georgia,
  before a single arbitrator.  Executive
  hereby waives the right to a jury trial on such claims.  Any arbitration under this Agreement shall
  be pursuant to the Federal Arbitration Act and the laws of the State of
  Florida.  The arbitrator shall be
  selected, and the arbitration conducted, in accordance with the Employment
  Dispute Resolution Rules of the American Arbitration Association.  The award of the arbitrator shall be final,
  and judgment upon the award rendered may be entered in any court, state or
  federal, having jurisdiction.  The
  arbitrator shall have jurisdiction to award any and all damages other than
  injunctive relief.  This jury trial
  waiver specifically includes, but is not limited to, employment
  discrimination claims under Title VII of the Civil Rights Act of 1964, the
  Americans with Disabilities Act, the Age Discrimination in Employment Act,
  Executive Retirement Insurance Security Act, the Family and Medical Leave
  Act, and any other federal, state, or local anti-discrimination
  statutes.  In the event that suit is
  filed in court for injunctive relief, no claim that Executive may seek to
  assert against the Company shall be deemed to be a compulsory counterclaim,
  and any such claim by Executive shall be brought exclusively by arbitration.

  	
   

  	
  Arbitration

  
	
   

  	
  Accepted:

  
	
   

  	
   

  
	
   

  	
  /s/ DKF

  
	
   

  	
  Executive’s

  
	
   

  	
  initials

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ THM

  
	
   

  	
  Employer’s Initials

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

18)           Integration.  This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.  This Agreement supersedes any prior oral or
written agreements, drafts, understandings or representations between Executive
and the Company.  No other agreements
regarding Executive’s services or termination, oral or otherwise, shall be
deemed to exist or to bind either party.

19)           Amendments;
Modifications; Waivers.  The
provisions of this Agreement may be amended, modified or waived only with the
prior written consent of each party hereto.

20)           Counterparts.
This Agreement may be executed in one or more counterparts.  A copy or facsimile of a signature on this
Agreement shall have the same force and effect as an original signature.

21)           Binding
Effect.  This Agreement will be
binding upon and inure to the benefit of the parties hereto and their
successors, legal representatives and assigns.

22)           Construction.  Throughout this Agreement, nouns, pronouns
and verbs will be construed as masculine, feminine, neuter, singular or plural,
whichever will be applicable.  All

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references
herein to “Sections” and paragraphs will
refer to corresponding provisions of this Agreement.  The parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent or interpretation
arises, this Agreement will be construed as if drafted jointly by the parties,
and no presumption or burden of proof will arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this
Agreement.  The word “including” will mean including without limitation.   The headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.

23)           Expenses.  Each of the parties hereto shall pay its own
fees and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby.

[This space intentionally left blank; next page is signature page.]

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IN
WITNESS WHEREOF, and intending to be legally bound, the parties to this
Agreement have executed this Agreement as of the day and year first above
written.

 

	
  

  	
  /s/ DOUGLAS K. FREEMAN

  	
   

  
	
   

  	
  DOUGLAS K. FREEMAN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NETBANK, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ THOMAS H.
  MULLER, JR.

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
  Thomas H.
  Muller, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
									

 

 8Exhibit 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 30th 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, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or NBI’s rights hereunder.

(r)  “Outstanding Voting Securities” means the
outstanding voting securities then entitled to vote generally in the election
of directors.

(s)  “Person” means any individual, entity or “group”,
within the meaning of Section 13(d) (3) or Section 14(d) (2) of the Securities
Exchange Act of 1934, as amended.

(t)   “Severance Period” means a period of 12
months following the Date of Termination.

(u)  “Total Payments” means the aggregate of the
payments provided for in this Agreement and the other payments and benefits
which the Executive has the right to receive from NBI.

2.             Termination for Cause or Good
Reason; Notice of Termination.  NBI
may terminate the Executive’s employment with the Company during the Change of
Control Period for Cause and the Executive may terminate employment during the
Change of Control Period for Good Reason. 
Any termination by NBI for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other party hereto in
accordance with Section 9(b) of this Agreement.

3.             Termination by Reason of Death
or Disability.  The Executive’s
employment shall terminate automatically upon the Executive’s death.  If NBI determines in good faith during the
Change of Control Period that the Disability of the Executive has occurred, it
may give to the Executive written notice in accordance with Section 9(b) of its
intention to terminate the Executive’s employment.  In such event, the Executive’s employment
with the Company shall terminate effective on the Disability Effective Date,
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s duties.

4.             Obligations of NBI upon
Termination.  (a) Good Reason;
Without Cause; Death or Disability.  If,
during the Change of Control Period, NBI shall terminate the Executive’s employment
without Cause, the Executive shall terminate employment for Good Reason or the
Executive’s employment terminates for death or Disability, and subject to the
limitation set forth in Section 4(c), NBI shall pay to the Executive within 30
days after the Date of Termination as severance pay and liquidated damages a lump sum amount equal to the
sum of the (a) Annual Base Salary and 
(b) the Incentive Compensation, which amount shall be in lieu of any
other severance benefits that the Executive might otherwise have been entitled
to under any other plan, practice, arrangement or agreement of NBI.  In addition, for the “Severance Period, NBI
may continue to provide to the Executive, to the extent

 

practicable, the benefits to which the Executive would otherwise have
been entitled; provided, however, that in lieu of providing health benefits,
NBI shall pay the Executive an amount equal to the difference between (x) the
cost of COBRA health continuation coverage that would be charged by NBI to a
former employee and eligible dependents for the greater of the Severance Period
or the period during which the Executive and his eligible dependents are
entitled to COBRA health continuation coverage from NBI and (y) the amount for
which the Executive would have been responsible to pay under the health benefit
plans in effect for the Executive immediately prior to his termination.  To the extent NBI determines that the
continuation of any other benefits by NBI is not practicable, NBI shall pay the
Executive an amount equal to what would have been NBI’s cost of providing the
coverage for such benefits during the Severance Period to the Executive and his
eligible dependents as if the coverage had continued.  Notwithstanding the above provisions of this
Section 4(a), NBI may elect to retain the Executive on the payroll of NBI or an
Affiliated Company (with existing benefits continuing through standard payroll
deduction) for all or any part of the Severance Period in lieu of the payment
of a lump sum; provided that such election by 
NBI shall not reduce the total amount due to Executive by NBI pursuant
to this Section 4(a).

(b)           Cause; Without Good Reason.  If the Executive’s employment shall be
terminated for Cause during the Change of Control Period or if the Executive
voluntarily terminates employment during the Change of Control Period without
Good Reason, this Agreement shall terminate without further obligation to the
Executive other than the obligation to pay to the Executive (i) his Annual Base
Salary through the Date of Termination, and (ii) the amount of any compensation
previously deferred by the Executive.

(c)           Notwithstanding any other provision
of this Agreement to the contrary, if the Total Payments would constitute a  “parachute
payment,” as defined in Section 28OG(b)(2) of the Internal Revenue Code, as
amended (the “Code”), the Executive shall receive the Total Payments unless the
(a) after-tax amount that would be retained by the Executive (after taking into
account all federal, state and local income taxes payable by the Executive and
the amount of any excise taxes payable by the Executive pursuant to Section
4999 of the Code (the “Excise Taxes”)) if the Executive were to receive the
Total Payments has a lesser aggregate value than (b) the after-tax amount that
would be retained by the Executive (after taking into account all federal,
state and local income taxes and Excise Taxes payable by the Executive) if the
Executive were to receive the maximum amount of the Total Payments that the
Executive could receive without being subject to the Excise Tax (the “Reduced
Payments”), in which case the Executive shall be entitled only to the Reduced
Payments. If the Executive is to receive the Reduced Payments, the Executive
shall be entitled to determine which of the Total Payments, and the relative
portions of each, are to be reduced.

5.             Non-exclusivity of Rights.  Subject to the limitation set forth in
Section 4(c), nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any pension, profit sharing, 401(k),
supplemental executive retirement or stock option plan provided by the Company
and for which the Executive may qualify, nor, subject to Section 9(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company.  Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any pension,

 

profit sharing,
401(k), supplemental executive retirement or stock option plan or any contract
or agreement with the Company at or subsequent to the Date of Termination shall
be payable in accordance with such plan or contract or agreement except as
explicitly modified by this Agreement.

6.             Full Settlement.  NBI’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others.  In no event shall
the Executive be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment. 
NBI agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest by NBI, the Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement).  The Executive shall repay any such advanced
legal fees and expenses in the event a court determines that the Executive’s
claim or action was in bad faith.

7.             Confidential Information.  (a) The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company which shall have been obtained by the
Executive during the Executive’s employment by the Company and which shall not
be or become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement).  After termination of the Executive’s
employment with the Company, the Executive shall not, without the prior written
consent of NBI or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by NBI. 
In no event shall an asserted violation of the provisions of this
Section 7 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.

(b)           The Executive agrees and acknowledges
that a violation of the covenants contained in this Section 7 will cause
irreparable damage to the Company, and that it is and will be impossible to
estimate or determine the damage that will be suffered by the Company in the
event of a breach by the Executive of any such covenant.  Therefore, the Executive further agrees that
in the event of any violation or threatened violation of such covenants, the
Company shall be entitled as a matter of course to an injunction issued by any
court of competent jurisdiction restraining such violation or threatened
violation by the Executive, such right to an injunction to be cumulative and in
addition to whatever other remedies the Company may have.

8.             Successors.  (a) This Agreement is personal to the
Executive and without the prior written consent of NBI shall not be assignable
by the Executive otherwise than by will or the laws of descent and
distribution.  This Agreement shall inure
to the benefit of and be enforceable by the Executive’s legal representatives.

 

(b)           This Agreement shall inure to the
benefit of and be binding upon NBI and its successors and assigns.

(c)           NBI will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of NBI to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that NBI would be required to perform it if no such succession had
taken place.  As used in this Agreement, “NBI”
shall mean NBI as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

9.             Miscellaneous.  (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without
reference to principles of conflict of laws. 
The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect.  This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

(b)           All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

If
to the Executive:

James P. Gross

59 Mallet Hill Rd.

Columbia, SC 29223

If to
NBI:

NetBank, Inc.

11475 Great Oaks Way

Alpharetta, GA  30022

Attention:  Chief Executive Officer

or to such other
address as either party shall have furnished to the other in writing in
accordance herewith.  Notice and
communications shall be effective when actually received by the addressee.

(c)           The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.

 

(d)           NBI may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

(e)           The Executive’s or NBI’s failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or NBI may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 2, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

(f)            The Executive and NBI acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is “at will” and, subject to the terms hereof, the Executive’s
employment may be terminated by either the Executive or the Company at any time
prior to the Effective Date, in which case the Executive shall have no further
rights under this Agreement.  This
Agreement shall supersede any other agreement between the parties with respect
to the subject matter hereof.

(g)           This Agreement shall expire on March 31, 2004 (the “Stated Expiration Date”);
provided that if the Effective Date of a Change of Control shall have occurred
on or prior to the Stated Expiration Date, this Agreement shall expire on the
day immediately following the last day of the Change of Control Period (the “Conditional
Expiration Date”).  After the later of
the Stated Expiration Date or the Conditional Expiration Date, as applicable,
the Executive shall not be entitled to any benefits from this Agreement with
respect to any Change of Control with an Effective Date that is subsequent to
the Stated Expiration Date.

IN
WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from its Board of Directors, NBI has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.

 

	
   

  	
  /s/ JAMES P. GROSS

  	
   

  
	
   

  	
  James P. Gross

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NETBANK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ DOUGLAS K. FREEMAN

  	
   

  
	
   

  	
   

  	
  Douglas K.
  Freeman

  	
   

  
	
   

  	
   

  	
  Chief Executive
  Officer

  	
   

  

 

 

FIRST AMENDMENT TO CHANGE OF
CONTROL AGREEMENT

This
First Amendment to Change of Control Agreement is dated as of March 1, 2004 by
and between NetBank, Inc. (the “Company”)
and James P. Gross (the “Executive”).

The
Change of Control Agreement between the Company and the Executive dated as of
April 1, 2003 (the “Original Change of Control Agreement”) is hereby amended as
follows:

Amendment
to Stated Expiration Date.  The Stated Expiration Date set forth in
Section 9(g) of the Original Change of Control Agreement is hereby amended and
restated to read “March 31, 2005.”

The
amendments set forth above shall be effective immediately.  All other terms and provisions of the
Original Change of Control Agreement shall remain unaffected by this Amendment.

IN
WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date
first above written.

	
  COMPANY:

  	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  	
   

  
	
  NETBANK, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ JAMES P.
  GROSS

  	
   

  
	
  By:

  	
    /s/ DOUGLAS K. FREEMAN

  	
   

  	
  Name: James P.
  Gross

  	
   

  
	
   

  	
  Douglas K. Freeman

  	
   

  	
   

  	
   

  
	
   

  	
  Chairman and Chief Executive Officer

  	
   

  	
   

  	
   

  

 

 

SECOND AMENDMENT TO CHANGE OF
CONTROL AGREEMENT

This
Second Amendment to Change of Control Agreement is dated as of March 1, 2005 by
and between NetBank, Inc. (the “Company”)
and James P. Gross (the “Executive”).

The
Change of Control Agreement between the Company and the Executive dated as of
April 1, 2003 as amended by the First Amendment to Change of Control Agreement
dated as of March 1, 2004 (collectively, the “Original Change of Control
Agreement”) is hereby further amended as follows:

Amendment
to Stated Expiration Date.  The Stated Expiration Date set forth in
Section 9(g) of the Original Change of Control Agreement is hereby amended and
restated to read “March 31, 2006.”

The
amendments set forth above shall be effective immediately.  All other terms and provisions of the
Original Change of Control Agreement shall remain unaffected by this Amendment.

IN
WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date
first above written.

	
  COMPANY:

  	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  	
   

  
	
  NETBANK, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ JAMES P.
  GROSS

  	
   

  
	
  By:

  	
    /s/ DOUGLAS K. FREEMAN

  	
   

  	
  Name: James P.
  Gross

  	
   

  
	
   

  	
  Douglas K. Freeman

  	
   

  	
   

  	
   

  
	
   

  	
  Chairman and Chief Executive Officer

  	
   

  	
   

  	
   

  

 

 

THIRD AMENDMENT TO CHANGE OF
CONTROL AGREEMENT

This
Third Amendment to Change of Control Agreement is dated as of March 1, 2006 by
and between NetBank, Inc. (the “Company”)
and James P. Gross (the “Executive”).

The
Change of Control Agreement between the Company and the Executive dated as of
April 1, 2003 as amended by the First Amendment to Change of Control Agreement
dated as of March 1, 2004, and the Second Amendment to Change of Control
Agreement dated as of March 1, 2005 (collectively, the “Original Change of
Control Agreement”) is hereby further amended as follows:

Amendment
to Stated Expiration Date.  The Stated Expiration Date set forth in
Section 9(g) of the Original Change of Control Agreement is hereby amended and
restated to read “April 1, 2007.”

The
amendments set forth above shall be effective immediately.  All other terms and provisions of the
Original Change of Control Agreement shall remain unaffected by this Amendment.

IN
WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date
first above written.

	
  COMPANY:

  	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  	
   

  
	
  NETBANK, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ JAMES P.
  GROSS

  	
   

  
	
  By:

  	
    /s/ DOUGLAS K. FREEMAN

  	
   

  	
  Name: James P.
  Gross

  	
   

  
	
   

  	
  Douglas K. Freeman

  	
   

  	
   

  	
   

  
	
   

  	
  Chairman and Chief Executive Officer

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