Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of

the 1st day of April, 2002, between NetBank, Inc. (the “Company”), a

Georgia corporation, and Jerald W. McCoy

(the “Executive”), a resident of the State of Florida,

to be effective as of the date described in Section 1.10 hereof.

 

RECITALS:

 

The Company desires to employ the Executive and the Executive desires

to accept such employment.

 

In consideration of the

above premises and the mutual agreements hereinafter set forth, the parties

hereby agree as follows:

 

1.     Definitions.

Whenever used in this Agreement, the following terms and their

variant forms shall have the meaning set forth below:

 

1.1           “Agreement” shall mean this

Agreement and any Annexes and Exhibits incorporated herein together with any

amendments hereto made in the manner described in this Agreement.

 

1.2           “Affiliate” shall mean any

business entity that controls, is controlled by, or is under common control

with, the Company.

 

1.3           “Average Monthly

Compensation” shall mean the quotient determined by dividing (A) the sum of

(i) the Executive’s Base Salary and (ii) Executive maximum Incentive

Compensation (as defined in Section 4.2(a)) for the year of termination by (B)

twelve (12).

 

1.4           “Base Salary”

shall have the meaning set forth in Annex A. 

 

1.5           “Business of the Company” shall mean the business

conducted by the Company and its Affiliates, which is currently banking,

residential mortgage lending, commercial lending and leasing and provision of

other financial services.

 

1.6           “Cause” shall mean:

 

1.6.1        With respect to  termination by the Company,

 

(a) a material

breach of the terms of this Agreement by the Executive (including, without

limitation, failure by the Executive to perform his duties and responsibilities

in the manner and to the extent required under this Agreement, or a breach of

any representation or warranty of the Executive set forth herein); which breach

remains uncured after the expiration of thirty (30) days following the delivery

of written notice of such breach to the Executive by the Company; or

 

 

(b)

conduct by the Executive that amounts to personal dishonesty, willful

misconduct, breach of fiduciary duty involving personal profit, intentional

failure to perform stated duties, willful violation of any law, rule or

regulation (other than traffic violations or similar offenses), or willful

violation of any final cease and desist order applicable to the Executive.

 

1.6.2        With respect to

termination by the Executive,

 

(a) a material diminution in the powers, responsibilities or duties of

Executive;

 

(b)  a material breach of the

terms of this Agreement by the Company that remains uncured after the

expiration of thirty (30) days following the delivery of written notice of such

breach to the Company by the Executive; or

 

(c)  any requirement by the

Company that the Executive’s services be rendered primarily at a location or

locations other than the Business Location set forth in Annex A.

 

1.7           “Change in Control” has the

meaning set forth in Annex B attached hereto.

 

1.8           “Permanent Disability” shall

mean the total inability of the Executive to perform his duties under this

Agreement for a period of ninety (90) consecutive days as certified by a

physician chosen by the Company and reasonably acceptable to the Executive;

provided, however, if the Executive is  covered

by a disability insurance policy, the term “Permanent Disability” shall have

the meaning set forth in such policy.

 

1.9           “Proprietary Information” shall mean:

 

(a)           Information

related to the Company or any Affiliate,

 

(i)

which derives economic value, actual or potential, from not being generally

known to or readily ascertainable by other persons who can obtain economic

value from its disclosure or use; and

 

(ii) which is the subject of efforts that are reasonable under the

circumstances to  maintain its

secrecy; and

 

(b) All tangible reproductions or embodiments of such information.

 

Assuming the criteria in (a)(i) and (a)(ii) above are satisfied,

Proprietary Information includes, but is not limited to, technical and

non-technical data related to the compilations, programs, methods, techniques,

finances, actual or potential customers and suppliers, existing and future

products, and employees of the Company or its Affiliates. Proprietary

Information also includes information which has been disclosed to the Company

or its Affiliates by a third party and which the Company or any Affiliate is

obligated to treat as confidential.

 

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1.10         “Term” means the period commencing on the date on

which the Merger (as defined in the Agreement and Plan of Merger dated as of

November 18, 2001 by and between the Company, Resource Bancshares Mortgage

Group, Inc. and Palmetto Acquisition Corp.) is consummated and ending on the

second anniversary of such date. 

Notwithstanding the foregoing, in the event the Merger does not occur,

this Agreement shall be void.

 

2.  Duties.

 

2.1           The

Executive is employed in the position set forth in Annex A and, subject to the

direction of the Chief Executive Officer of the Company, shall perform and

discharge well and faithfully the duties which may be assigned to him from time

to time by the Company in connection with the conduct of its business. The

duties and responsibilities of the Executive are include those set forth on

Annex A attached hereto as well as such other duties from time to time

established by the Chief Executive Officer.

 

2.2           In addition to the duties and responsibilities

specifically assigned to the Executive pursuant to Section 2.1 hereof, the

Executive shall: (a) devote substantially all of his time, energy and skill

during regular business hours to the performance of the duties of his

employment (reasonable vacations and reasonable absences due to illness

excepted), and faithfully and industriously perform such duties; (b) diligently

follow and implement all management policies and decisions communicated to him

by the Chief Executive Officer of the Company; and (c) timely prepare and

forward to the Chief Executive Officer of the Company all reports and

accounting as may be requested of the Executive.

 

2.3           The Executive shall devote substantially his entire

business time, attention and energies to the Business of the Company and shall

not during the term of this Agreement be engaged (whether or not during normal

business hours) in any other business or professional activity which is

competitive in nature; or interferes with his ability to perform his duties

fully; or which promotes an activity inconsistent with the nature or status of

the Company, whether or not such activity is pursued for gain, profit or other

pecuniary advantage; but this shall not be construed as preventing the

Executive from (a) investing his personal assets in businesses which (subject

to item (b) below) are not in competition with the Business of the Company and

which will not require any services on the part of the Executive in their

operation or affairs and in which his participation is solely that of an

investor, (b) purchasing securities in any corporation whose securities are

regularly traded provided that such purchase shall not result in his

collectively owning beneficially at any time five percent (5%) or more of the

equity securities of any business in competition with the Business of the

Company, and (c) participating in civic and professional affairs and

organizations and conferences, preparing or publishing papers or books or

teaching so long as such activity does not materially interfere with the

performance of his duties hereunder.

 

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3.  Term and Termination.

 

3.1           Term. This Agreement shall

remain in effect for the Term.  However,

notwithstanding the provisions of Section 1.10, this Agreement shall terminate

upon the death or Permanent Disability of Executive.

 

3.2           Termination. 

During the Term, the employment of the Executive under this Agreement

may  be terminated only as follows:

 

3.2.1

By the Company:

 

(a)  For Cause, with no prior notice except as

provided in Section 1.6.1; or

 

(b) Without Cause at any time, provided that

the Company shall give the Executive thirty (30) days prior written notice of

its intent to terminate.

 

3.2.2 By the Executive:

 

(a)  For Cause, with no prior notice except as

provided in Section 1.6.2; or

 

(b) Without Cause, provided that the Executive shall give the Company

thirty (30) days prior written notice of his intent to terminate.

 

3.2.3

        By the Executive following a Change in Control of the Company,

provided that the Executive shall give written notice to the Company of his  intention to terminate this Agreement and

terminates employment prior to the expiration of the Term.

 

3.2.4        At

any time upon mutual, written agreement of the parties.

 

3.3           Effect of Termination. The effect of termination of

the employment of the  Executive

pursuant to Section 3.2 shall be as set forth in this Section 3.3:

 

3.3.1

       In the event of termination by the

Company:

 

(a)  For Cause, pursuant to Section 3.2.1(a), the

Company shall have no further obligation to the Executive except for the

payment of any amounts due and owing under Section 4 on the effective date of

termination;

 

(b) Without Cause, pursuant to Section 3.2.1(b), the Company shall be

required to meet its obligations to the Executive under Section 3.4 below.

 

3.3.2

       In the event of termination by the

Executive:

 

(a)  For Cause, pursuant to

Section 3.2.2(a), the Company shall be required to meet its obligations to the

Executive under Section 3.4 below.

 

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(b) Without Cause, pursuant to  Section

3.2.2(b), the Company shall have  no

further obligation to the Executive, except for the payment of any amounts due

and owing under Section 4 on the effective date of termination.

 

3.3.3        In the event of

termination by the Executive in connection with a Change in Control pursuant to

Section 3.2.3, the Company shall be required to meet its obligations to the

Executive under Section 3.4 below.

 

3.3.4

       In the event of termination upon

mutual agreement of the parties pursuant to Section 3.2.4, the Company shall

have no further obligation to the Executive except for the payment of any

amounts due and owing under Section 4.1 on the effective date of termination

unless otherwise set forth in the written agreement.

 

3.3.5        Notwithstanding anything in this Section 3.3 to the contrary,

following any termination of the Executive’s employment, the Executive shall be

entitled to receive benefits pursuant to the employee benefit plans in which

the Executive participated during his employment with Company in accordance with

the terms of such plans.

 

3.4           Termination Payments. In the event Executive’s

employment is terminated under this Agreement prior to the expiration of the

Term pursuant to Section 3.3.1(b), Section 3.3.2(a), or Section 3.3.3, the

Company shall pay to the Executive as severance pay and liquidated damages a

lump sum amount equal to the product of the (a) Average Monthly Compensation

multiplied by (b) Twenty-Four (24), 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 the Company.  In addition, for a period of twenty-four

months following the effective date of the termination (the “Severance Period”),

the Company may continue to provide to the Executive, to the extent

practicable, the benefits described in Section 4.3; provided, however, that in

lieu of providing health benefits, the Company shall pay the Executive an

amount equal to the difference between (x) the cost of COBRA health continuation

coverage that would be charged by the Company 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 the Company 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 the Company determines that

the continuation of any other benefits by the Company is not practicable, the

Company shall pay the Executive an amount equal to what would have been the

Company’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 3.4, the Company may elect to retain the Executive

on the payroll of the Company or an Affiliate (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 the Company shall not reduce the total amount due to Executive by

the Company pursuant to this Section 3.4.

 

Notwithstanding any other

provision of this Agreement to the contrary, if the aggregate of the payments

provided for in this Agreement and the other payments and benefits which the 

 

5

 

Executive has the right to

receive from the Company (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.

 

3.5           Vesting in Executive Benefits.  In the event the Executive’s employment is terminated under this

Agreement prior to the expiration of the Term pursuant to Section 3.2.1(b),

Section 3.2.2(a), or Section 3.2.3, all benefits and entitlements of Executive

under any plan established for executives of the Company shall fully vest at

the end of the Severance Period, unless otherwise prohibited by law.

 

4.  Compensation.  The

Executive shall receive the following salary and benefits:

 

4.1           Base Salary. During the Term, the Executive shall

be compensated at an annual rate equal to the Base Salary set forth in Annex A.

The Base Salary and performance shall be reviewed by the Chief Executive

Officer annually, and the Executive shall be entitled to receive annually an

increase in such amount, if any, as may be determined by the Chief Executive

Officer. Such salary shall be payable in accordance with the Company’s normal

payroll practices.

 

4.2           Incentive Compensation.

 

(a)           The Executive shall be eligible for

an annual incentive bonus determined in accordance with the provisions of Annex

A attached hereto (the “Incentive Compensation”).

 

(b)           The Executive shall

be entitled to participate in such stock option programs as are made available

to senior management of the Company from time to time. Any options granted will

comply in all respects with the terms of the NetBank, Inc. Stock Option Plan.

 

4.3           Benefits.

 

(a)           In addition to the Base Salary and

Incentive Compensation, the Executive shall be entitled to such other benefits

as may be available from time to time for employees of the Company.  All such benefits shall be awarded and

administered in accordance with the Company’s standard policies and practices.

Such benefits may 

 

6

 

include, by way of example

only, profit sharing plans, retirement or investment funds, dental, health,

life and disability insurance benefits, and such other benefits as the Company

deems appropriate.

 

(b)           The Company

specifically agrees to reimburse the Executive for reasonable business expenses

incurred by him in performance of his duties hereunder, as approved from time

to time by the Chief Executive Officer; provided that the Executive shall, as a

condition of reimbursement, submit verification of the nature and amount of

such expenses in accordance with reimbursement policies from time to time

adopted by the Company and in sufficient detail to comply with Internal Revenue

Service regulations.

 

(c)           On a non-cumulative basis the

Executive shall be entitled to four weeks of vacation each year, during which

his compensation shall be paid in full, and which shall be taken as approved in

advance by the Company, taking into account the requirements of the Company.

 

4.4           Withholding. The Company may deduct from each

payment of compensation hereunder all amounts required to be deducted and withheld

in accordance with applicable federal and state income, FICA and other

withholding requirements.

 

5.  Proprietary Information.

 

5.1           Treatment of Proprietary

Information.  As a management

official of the Company, the Executive has access to Proprietary Information.

The Executive agrees to maintain the confidentiality of all Proprietary

Information throughout the Term and after the termination of this Agreement.

 

5.2           Obligations of Executive.  During the period described in Section 5.1, the Executive will

hold the Proprietary Information in trust and strictest confidence, and will

not use, reproduce, distribute, disclose or otherwise disseminate the

Proprietary Information except to the extent necessary to perform the duties

assigned to him by the Company.

 

5.3           Delivery upon Termination.

Upon termination of his employment with the Company, the Executive will

promptly deliver to the Company all property belonging to the Company,

including, without limitation, all Proprietary Information then in his possession

or control.

 

6.  Non-Solicitation.  The Executive agrees that during his

employment by the Company and, in the event of his termination, other than

pursuant to Sections 3.2.1(b) or 3.2.2(a), for a period of twelve (12) months

thereafter, he will not (except on behalf of or with the prior written consent

of the Company) on his own behalf or in the service or on behalf of others, do

any of the following:

 

6.1           Customers.  Solicit, divert or appropriate, or  attempt to solicit, divert or appropriate,

directly or by assisting others, any business from any of the Company’s

customers, including actively-sought prospective customers, with whom the

Executive has or had material 

 

7

 

contact during the last two (2)

years of his employment, for purposes of providing products or services that

are competitive with those provided by the Company or its Affiliates.

 

6.2           Vendors.  Solicit, divert or appropriate, or  attempt to solicit, divert or appropriate,

directly or by assisting others, any products any products or services

being provided to the Company from any of its vendors with whom the Executive

has or had material contact during the last two (2) years of his employment to

the extent such solicitation, diversion or appropriation would interfere with

any such vendor’s ability to continue to provide the products or services to

the Company or its Affiliates in the same manner and to the same extent as

those provided to the Company or its Affiliates immediately prior to the

Executive’s actions.

 

6.2           Employees.  Solicit, recruit or hire away, or

attempt to solicit, recruit or hire away, directly or by assisting others, any

employee of the Company or its Affiliates, whether or not such employee is a

full-time employee or a temporary employee of the Company or its Affiliates,

and whether or not such employment is pursuant to written agreement and whether

or not such employment is for a determined period or is at will.

 

7. 

Non-Competition.  The Executive agrees that during his employment by the Company

and, in the event of his termination, other than pursuant to Sections 3.2.1(b)

or 3.2.2(a), for a period of twelve (12) months thereafter, he will not (except on behalf of or with the prior

written consent of the Company), within the Non-Competition Area (as defined in

Annex A), either directly or indirectly, on his own behalf or in the service or

on behalf of others, in any capacity which involves duties and responsibilities

similar to those undertaken for the Company, engage in any business which is

the same as or essentially the same as the Business of the Company.

 

8.  Remedies. 

The Executive agrees that the covenants

contained in Sections 5 through 7 of this Agreement are of the essence of this

Agreement; that each of the covenants is reasonable and necessary to protect

the business, interests and properties of the Company; and that irreparable

loss and damage will be suffered by the Company should he breach any of the

covenants. Therefore, the Executive agrees and consents that, in addition to

all the remedies provided by law or in equity, the Company shall be entitled to

a temporary restraining order and temporary and permanent injunctions to

prevent a breach or contemplated breach of any of the covenants. The Company

and the Executive agree that all remedies available to the Company or the

Executive, as applicable, shall be cumulative.

 

9.  Severability.  The parties agree that each of the

provisions included in this Agreement is separate, distinct, and severable from

the other provisions of this Agreement, and that the invalidity or

unenforceability of any Agreement provision shall not affect the validity or

enforceability of any other provision of this Agreement. Further, if any

provision of this Agreement is ruled invalid or unenforceable by a court of

competent jurisdiction because of a conflict between the provision and any

applicable law or public policy, the provision shall be redrawn to make the

provision consistent with and valid and enforceable under the law or public

policy.

 

10.  Notice. 

All notices and other communications required

or permitted under this Agreement shall be in writing and, if mailed by prepaid

first-class mail  or certified

mail, return receipt requested, shall be deemed to have been received on the

earlier of the date shown on the 

 

8

 

receipt or three (3) business

days after the postmarked date thereof. 

In addition, notices hereunder may be delivered by hand, facsimile

transmission or overnight courier, in which event the notice shall be deemed

effective when delivered or transmitted. 

All notices and other communications under this Agreement shall be given

to the parties hereto at the following addresses:

 

(i)

If to the Company, to it at:

NetBank, Inc.

Royal Centre Three

Suite 100

Alpharetta, Georgia 30022

Attn:  Chief Human Resources

Executive

 

(ii)

If to the Executive, to  him

at:

 

                                                                      

                                                                      

                                                                      

 

11.  Assignment. 

Neither party

hereto may assign or delegate this Agreement or any of its rights and

obligations hereunder without the written consent of the other party hereto.

 

12.  Waiver. 

A waiver by the Company of any breach of this

Agreement by the Executive shall not be effective unless in writing, and no

waiver shall operate or be construed as a waiver of the same or another breach

on a subsequent occasion.

 

13.  Attorneys’ Fees.   In the event of litigation between the

parties concerning this Agreement, the party prevailing in such litigation

shall be entitled to receive from the other party all reasonable costs and

expenses, including without limitation attorneys’ fees, incurred by the

prevailing party in connection with such litigation, and the other party shall

pay such costs and expenses to the prevailing party promptly upon demand by the

prevailing party.

 

14.  Applicable Law.  This Agreement shall be construed and

enforced under and in accordance with Federal law, where applicable, and then

with the laws of the State of Georgia.

 

15.  Entire Agreement; No Additional

Benefit.  This Agreement

embodies the entire and final  agreement

of the parties on the subject matter stated in the Agreement.  No amendment or modification of this

Agreement shall be valid or binding upon the Company or the Executive unless

made in writing and signed by both parties. All prior understandings and

agreements relating to the subject matter of this Agreement are hereby

expressly terminated.   The Executive

and the Company acknowledge that, as of the date on which the Term commences,

this Agreement supersedes any employment agreement between the Executive and

Resource 

 

9

 

Bancshares Mortgage Group, Inc. and/or any

Affiliate thereof (collectively, “RBMG”) and any other agreement between them

concerning the subject matter hereof, including any change in control agreement

between the Executive and RBMG.  The

Executive and the Company also acknowledge that even though the Executive may

be paid from the payroll of a direct or indirect subsidiary of the Company, the

Executive is entitled to no additional employment benefits than those from the

Company as set forth herein.

 

16.  Rights of Third Parties.  Nothing herein

expressed is intended to or shall be construed to confer upon or give to any

person, firm or other entity, other than the parties hereto and their permitted

assigns, any rights or remedies under or by reason of this Agreement.

 

17.  Survival. The

obligations of the Executive pursuant to Sections 5, 6 and 7 shall survive the

termination of the employment of the Executive hereunder.

 

IN WITNESS WHEREOF, the

Company and the Executive have executed and delivered this Agreement as of the

date first  shown above.

 

	

   

  	

  THE COMPANY:

  
	

   

  	

   

  
	

   

  	

  NETBANK, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Douglas K.

  Freeman

  
	

   

  	

  Name:  Douglas K. Freeman

  
	

   

  	

  Title: Chief

  Executive Officer

  
	

   

  	

   

  
	

   

  	

  THE

  EXECUTIVE:

  
	

   

  	

   

  
	

   

  	

   

  	

  /s/ Jerald

  W. McCoy

  
	

   

  	

   

  	

  Jerald W. McCoy

  
				

 

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Annex A

 

Position:                                                                                                                                                                                             Chief

Capital Markets Executive

 

Duties and

Responsibilities:                                                                                           As a senior executive duties focus on

establishing and executing corporate strategies and objectives with primary

responsibilities being the coordination of employees engaged in the execution

of the capital markets strategies for the entire organization.  These strategies are divided into the

following categories:

Secondary Marketing and

Balance Sheet Management

activities focus on the disposition of assets to the investor community through

securitizations, whole loan sales and a variety of other more exotic methods

all ensuring the portfolio is properly hedge from commitment to sale.  In addition, manage the inventory control

and appraisal review groups.

Investor Management responsibilities focus on the development

and management of extensive relationships with Fannie Mae, Freddie Mac; CSFB;

Chase, RFC and numerous other financial institutions the organization conducts

business for the purposes of disposing assets into the secondary market.

Product Development activities leverage investor relationships

and secondary marketing expertise to create, enhance and deliver innovate

product solutions.

Quantitative Methods activities directed at performance analysis,

customer and product profitability modeling and mitigation strategies.

Other General activities focus on team development,

business development, economic updates and analysis; and in conjuncture with

Treasury Management and Finance establish/manage the Asset/Liability management

function.

 

Base Salary:                                                                                                                                                                               $225,000.00

 

Incentive

Compensation:                                                                                                           Potential

of $337,500.00

 

Business Location:                                                                                                                                          Other

than for periods spent traveling in connection with the performance of the

Executive’s duties hereunder, the Executive shall be based in Jacksonville,

Florida.

 

Non-Competition Area:                                                                                                                    Within

a radius of one hundred (100) miles

from the location of the Business Location.

 

11

 

Annex B

 

“Change in Control” means any

one of the following events:

 

(1)           the acquisition by 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, (a “Person”) of beneficial

ownership (within the meaning of Rule 13d-3 promulgated under the Securities

Exchange Act of 1934) of voting securities of the Company where such

acquisition causes any such Person to own twenty-five percent (25%) or more of

the combined voting power of the then outstanding voting securities then

entitled to vote generally in the election of directors (the “Outstanding

Voting Securities”); provided, however, that for purposes of this paragraph (1)

of this definition, the following shall not be deemed to result in a Change in

Control, (i) 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; (ii) any acquisition by any employee benefit

plan (or related trust) sponsored or maintained by the Company or any

corporation controlled by the Company; or (iii) any acquisition by merger,

consolidation, share exchange, combination, reorganization, sale or transfer or

like transaction that is NOT otherwise described in paragraph (2) or (4) 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 twenty-five percent (25%) or more of the then

Outstanding Voting Securities;

 

(2)           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;

 

(3)           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;

 

(4)           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, 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; or

 

(5)           the dissolution or liquidation of the

Company.

 

12Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT

is made as of the 1st day of April, 2002, between NetBank, Inc. (the

“Company”), a Georgia corporation, and Steven

F. Herbert (the “Executive”), a resident of the State of South Carolina, to be effective as of the

date described in Section 1.10 hereof.

 

RECITALS:

 

The Company desires to employ the Executive and the Executive desires

to accept such employment.

 

In consideration of the

above premises and the mutual agreements hereinafter set forth, the parties

hereby agree as follows:

 

1.     Definitions.

Whenever used in this Agreement, the following terms and their

variant forms shall have the meaning set forth below:

 

1.1           “Agreement” shall mean this

Agreement and any Annexes and Exhibits incorporated herein together with any

amendments hereto made in the manner described in this Agreement.

 

1.2           “Affiliate” shall mean any

business entity that controls, is controlled by, or is under common control

with, the Company.

 

1.3           “Average Monthly

Compensation” shall mean the quotient determined by dividing (A) the sum of

(i) the Executive’s Base Salary and (ii) Executive maximum Incentive

Compensation (as defined in Section 4.2(a)) for the year of termination by (B)

twelve (12).

 

1.4           “Base Salary”

shall have the meaning set forth in Annex A. 

 

1.5           “Business of the Company” shall mean the business

conducted by the Company and its Affiliates, which is currently banking,

residential mortgage lending, commercial lending and leasing and provision of

other financial services.

 

1.6           “Cause” shall mean:

 

1.6.1        With respect to  termination by the Company,

 

(a) a material

breach of the terms of this Agreement by the Executive (including, without

limitation, failure by the Executive to perform his duties and responsibilities

in the manner and to the extent required under this Agreement, or a breach of

any representation or warranty of the Executive set forth herein); which breach

remains uncured after the expiration of thirty (30) days following the delivery

of written notice of such breach to the Executive by the Company; or

 

 

(b)

conduct by the Executive that amounts to personal dishonesty, willful

misconduct, breach of fiduciary duty involving personal profit, intentional

failure to perform stated duties, willful violation of any law, rule or

regulation (other than traffic violations or similar offenses), or willful

violation of any final cease and desist order applicable to the Executive.

 

1.6.2        With respect to

termination by the Executive,

 

(a) a material diminution in the powers, responsibilities or duties of

Executive;

 

(b)  a material breach of the

terms of this Agreement by the Company that remains uncured after the

expiration of thirty (30) days following the delivery of written notice of such

breach to the Company by the Executive; or

 

(c)  any requirement by the

Company that the Executive’s services be rendered primarily at a location or

locations other than the Business Location set forth in Annex A.

 

1.7           “Change in Control” has the

meaning set forth in Annex B attached hereto.

 

1.8           “Permanent Disability” shall

mean the total inability of the Executive to perform his duties under this

Agreement for a period of ninety (90) consecutive days as certified by a

physician chosen by the Company and reasonably acceptable to the Executive;

provided, however, if the Executive is  covered

by a disability insurance policy, the term “Permanent Disability” shall have

the meaning set forth in such policy.

 

1.9           “Proprietary Information” shall mean:

 

(a)           Information

related to the Company or any Affiliate,

 

(i)

which derives economic value, actual or potential, from not being generally

known to or readily ascertainable by other persons who can obtain economic

value from its disclosure or use; and

 

(ii) which is the subject of efforts that are reasonable under the

circumstances to  maintain its

secrecy; and

 

(b) All tangible reproductions or embodiments of such information.

 

Assuming the criteria in (a)(i) and (a)(ii) above are satisfied,

Proprietary Information includes, but is not limited to, technical and

non-technical data related to the compilations, programs, methods, techniques,

finances, actual or potential customers and suppliers, existing and future

products, and employees of the Company or its Affiliates. Proprietary

Information also includes information which has been disclosed to the Company

or its Affiliates by a third party and which the Company or any Affiliate is

obligated to treat as confidential.

 

2

 

1.10         “Term” means the period commencing on the date on

which the Merger (as defined in the Agreement and Plan of Merger dated as of

November 18, 2001 by and between the Company, Resource Bancshares Mortgage

Group, Inc. and Palmetto Acquisition Corp.) is consummated and ending on the

second anniversary of such date. 

Notwithstanding the foregoing, in the event the Merger does not occur,

this Agreement shall be void.

 

2.  Duties.

 

2.1           The

Executive is employed in the position set forth in Annex A and, subject to the

direction of the Chief Executive Officer of the Company, shall perform and

discharge well and faithfully the duties which may be assigned to him from time

to time by the Company in connection with the conduct of its business. The

duties and responsibilities of the Executive are include those set forth on

Annex A attached hereto as well as such other duties from time to time

established by the Chief Executive Officer.

 

2.2           In addition to the duties and responsibilities

specifically assigned to the Executive pursuant to Section 2.1 hereof, the

Executive shall: (a) devote substantially all of his time, energy and skill

during regular business hours to the performance of the duties of his

employment (reasonable vacations and reasonable absences due to illness

excepted), and faithfully and industriously perform such duties; (b) diligently

follow and implement all management policies and decisions communicated to him

by the Chief Executive Officer of the Company; and (c) timely prepare and

forward to the Chief Executive Officer of the Company all reports and

accounting as may be requested of the Executive.

 

2.3           The Executive shall devote substantially his entire

business time, attention and energies to the Business of the Company and shall

not during the term of this Agreement be engaged (whether or not during normal

business hours) in any other business or professional activity which is

competitive in nature; or interferes with his ability to perform his duties

fully; or which promotes an activity inconsistent with the nature or status of

the Company, whether or not such activity is pursued for gain, profit or other

pecuniary advantage; but this shall not be construed as preventing the

Executive from (a) investing his personal assets in businesses which (subject

to item (b) below) are not in competition with the Business of the Company and

which will not require any services on the part of the Executive in their

operation or affairs and in which his participation is solely that of an

investor, (b) purchasing securities in any corporation whose securities are

regularly traded provided that such purchase shall not result in his

collectively owning beneficially at any time five percent (5%) or more of the

equity securities of any business in competition with the Business of the

Company, and (c) participating in civic and professional affairs and

organizations and conferences, preparing or publishing papers or books or

teaching so long as such activity does not materially interfere with the

performance of his duties hereunder.

 

3

 

3.  Term and Termination.

 

3.1           Term. This Agreement shall

remain in effect for the Term.  However,

notwithstanding the provisions of Section 1.10, this Agreement shall terminate

upon the death or Permanent Disability of Executive.

 

3.2           Termination. 

During the Term, the employment of the Executive under this Agreement

may  be terminated only as follows:

 

3.2.1

By the Company:

 

(a)  For Cause, with no prior notice except as

provided in Section 1.6.1; or

 

(b) Without Cause at any time, provided that

the Company shall give the Executive thirty (30) days prior written notice of

its intent to terminate.

 

3.2.2 By the Executive:

 

(a)  For Cause, with no prior notice except as

provided in Section 1.6.2; or

 

(b) Without Cause, provided that the Executive shall give the Company

thirty (30) days prior written notice of his intent to terminate.

 

3.2.3

        By the Executive following a Change in Control of the Company,

provided that the Executive shall give written notice to the Company of his  intention to terminate this Agreement and

terminates employment prior to the expiration of the Term.

 

3.2.4        At

any time upon mutual, written agreement of the parties.

 

3.3           Effect of Termination. The effect of termination of

the employment of the  Executive

pursuant to Section 3.2 shall be as set forth in this Section 3.3:

 

3.3.1

       In the event of termination by the

Company:

 

(a)  For Cause, pursuant to Section 3.2.1(a), the

Company shall have no further obligation to the Executive except for the payment

of any amounts due and owing under Section 4 on the effective date of

termination;

 

(b) Without Cause, pursuant to Section 3.2.1(b), the Company shall be

required to meet its obligations to the Executive under Section 3.4 below.

 

3.3.2

       In the event of termination by the

Executive:

 

4

 

(a)  For Cause, pursuant to

Section 3.2.2(a), the Company shall be required to meet its obligations to the

Executive under Section 3.4 below.

 

(b) Without Cause, pursuant to  Section

3.2.2(b), the Company shall have  no

further obligation to the Executive, except for the payment of any amounts due

and owing under Section 4 on the effective date of termination.

 

3.3.3        In the event of

termination by the Executive in connection with a Change in Control pursuant to

Section 3.2.3, the Company shall be required to meet its obligations to the

Executive under Section 3.4 below.

 

3.3.4        In the event of termination upon mutual

agreement of the parties pursuant to Section 3.2.4, the Company shall have no

further obligation to the Executive except for the payment of any amounts due

and owing under Section 4.1 on the effective date of termination unless

otherwise set forth in the written agreement.

 

3.3.5        Notwithstanding anything in this Section 3.3 to the contrary,

following any termination of the Executive’s employment, the Executive shall be

entitled to receive benefits pursuant to the employee benefit plans in which

the Executive participated during his employment with Company in accordance

with the terms of such plans.

 

3.4           Termination Payments. In the event Executive’s

employment is terminated under this Agreement prior to the expiration of the

Term pursuant to Section 3.3.1(b), Section 3.3.2(a), or Section 3.3.3, the

Company shall pay to the Executive as severance pay and liquidated damages a

lump sum amount equal to the product of the (a) Average Monthly Compensation

multiplied by (b) Twenty-Four (24), 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 the Company.  In addition, for a period of twenty-four

months following the effective date of the termination (the “Severance

Period”), the Company may continue to provide to the Executive, to the extent

practicable, the benefits described in Section 4.3; provided, however, that in

lieu of providing health benefits, the Company shall pay the Executive an

amount equal to the difference between (x) the cost of COBRA health

continuation coverage that would be charged by the Company 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 the Company 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 the Company determines that

the continuation of any other benefits by the Company is not practicable, the

Company shall pay the Executive an amount equal to what would have been the

Company’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 3.4, the Company may elect to retain the Executive

on the payroll of the Company or an Affiliate (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 the Company shall not reduce the total amount due to Executive by

the Company pursuant to this Section 3.4.

 

5

 

Notwithstanding any other

provision of this Agreement to the contrary, if 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 the Company (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.

 

3.5           Vesting in Executive Benefits.  In the event the Executive’s employment is terminated under this

Agreement prior to the expiration of the Term pursuant to Section 3.2.1(b),

Section 3.2.2(a), or Section 3.2.3, all benefits and entitlements of Executive

under any plan established for executives of the Company shall fully vest at

the end of the Severance Period, unless otherwise prohibited by law.

 

4.  Compensation.  The

Executive shall receive the following salary and benefits:

 

4.1           Base Salary. During the Term, the Executive shall

be compensated at an annual rate equal to the Base Salary set forth in Annex A.

The Base Salary and performance shall be reviewed by the Chief Executive

Officer annually, and the Executive shall be entitled to receive annually an

increase in such amount, if any, as may be determined by the Chief Executive Officer.

Such salary shall be payable in accordance with the Company’s normal payroll

practices.

 

4.2           Incentive Compensation.

 

(a)           The Executive shall be eligible for

an annual incentive bonus determined in accordance with the provisions of Annex

A attached hereto (the “Incentive Compensation”).

 

(b)           The Executive shall

be entitled to participate in such stock option programs as are made available

to senior management of the Company from time to time. Any options granted will

comply in all respects with the terms of the NetBank, Inc. Stock Option Plan.

 

4.3           Benefits.

 

(a)           In addition to the Base Salary and

Incentive Compensation, the Executive shall be entitled to such other benefits

as may be available from time to time for 

 

6

 

employees of the

Company.  All such benefits shall be

awarded and administered in accordance with the Company’s standard policies and

practices. Such benefits may include, by way of example only, profit sharing

plans, retirement or investment funds, dental, health, life and disability

insurance benefits, and such other benefits as the Company deems appropriate.

 

(b)           The Company

specifically agrees to reimburse the Executive for reasonable business expenses

incurred by him in performance of his duties hereunder, as approved from time

to time by the Chief Executive Officer; provided that the Executive shall, as a

condition of reimbursement, submit verification of the nature and amount of

such expenses in accordance with reimbursement policies from time to time

adopted by the Company and in sufficient detail to comply with Internal Revenue

Service regulations.

 

(c)           On a non-cumulative basis the

Executive shall be entitled to four weeks of vacation each year, during which

his compensation shall be paid in full, and which shall be taken as approved in

advance by the Company, taking into account the requirements of the Company.

 

4.4           Withholding. The Company may deduct from each

payment of compensation hereunder all amounts required to be deducted and

withheld in accordance with applicable federal and state income, FICA and other

withholding requirements.

 

5.  Proprietary Information.

 

5.1           Treatment of Proprietary

Information.  As a management

official of the Company, the Executive has access to Proprietary Information.

The Executive agrees to maintain the confidentiality of all Proprietary

Information throughout the Term and after the termination of this Agreement.

 

5.2           Obligations of Executive.  During the period described in Section 5.1, the Executive will

hold the Proprietary Information in trust and strictest confidence, and will

not use, reproduce, distribute, disclose or otherwise disseminate the

Proprietary Information except to the extent necessary to perform the duties

assigned to him by the Company.

 

5.3           Delivery upon Termination.

Upon termination of his employment with the Company, the Executive will

promptly deliver to the Company all property belonging to the Company,

including, without limitation, all Proprietary Information then in his possession

or control.

 

6.  Non-Solicitation.  The Executive agrees that during his

employment by the Company and, in the event of his termination, other than

pursuant to Sections 3.2.1(b) or 3.2.2(a), for a period of twelve (12) months

thereafter, he will not (except on behalf of or with the prior written consent

of the Company) on his own behalf or in the service or on behalf of others, do

any of the following:

 

6.1           Customers.  Solicit, divert or appropriate, or  attempt to solicit, divert or appropriate,

directly or by assisting others, any business from any of the Company’s

customers, 

 

7

 

including actively-sought

prospective customers, with whom the Executive has or had material contact

during the last two (2) years of his employment, for purposes of providing

products or services that are competitive with those provided by the Company or

its Affiliates.

 

6.2           Vendors.  Solicit, divert or appropriate, or  attempt to solicit, divert or appropriate,

directly or by assisting others, any products any products or services

being provided to the Company from any of its vendors with whom the Executive

has or had material contact during the last two (2) years of his employment to

the extent such solicitation, diversion or appropriation would interfere with

any such vendor’s ability to continue to provide the products or services to

the Company or its Affiliates in the same manner and to the same extent as

those provided to the Company or its Affiliates immediately prior to the

Executive’s actions.

 

6.2           Employees.  Solicit, recruit or hire away, or

attempt to solicit, recruit or hire away, directly or by assisting others, any

employee of the Company or its Affiliates, whether or not such employee is a

full-time employee or a temporary employee of the Company or its Affiliates,

and whether or not such employment is pursuant to written agreement and whether

or not such employment is for a determined period or is at will.

 

7. 

Non-Competition.  The Executive agrees that during his employment by the Company

and, in the event of his termination, other than pursuant to Sections 3.2.1(b)

or 3.2.2(a), for a period of twelve (12) months thereafter, he will not (except on behalf of or with the prior

written consent of the Company), within the Non-Competition Area (as defined in

Annex A), either directly or indirectly, on his own behalf or in the service or

on behalf of others, in any capacity which involves duties and responsibilities

similar to those undertaken for the Company, engage in any business which is

the same as or essentially the same as the Business of the Company.

 

6.  Non-Solicitation.  The Executive agrees that during his

employment by the Company and, in the event of his termination, other than

pursuant to Sections 3.2.1(b) or 3.2.2(a), for a period of twelve (12) months

thereafter, he will not (except on behalf of or with the prior written consent

of the Company) on his own behalf or in the service or on behalf of others, do

any of the following:

 

6.1           Customers.  Solicit, divert or appropriate, or  attempt to solicit, divert or appropriate,

directly or by assisting others, any business from any of the Company’s

customers, including actively-sought prospective customers, with whom the

Executive has or had material contact during the last two (2) years of his

employment, for purposes of providing products or services that are competitive

with those provided by the Company or its Affiliates.

 

6.2           Vendors.  Solicit, divert or appropriate, or  attempt to solicit, divert or appropriate,

directly or by assisting others, any products any products or services

being provided to the Company from any of its vendors with whom the Executive

has or had material contact during the last two (2) years of his employment to

the extent such solicitation, diversion or appropriation would interfere with

any such vendor’s ability to continue to provide the products or services to

the Company or its Affiliates in the same manner and to the same extent as

those provided to the Company or its Affiliates immediately prior to the

Executive’s actions.

 

8

 

6.2           Employees.  Solicit, recruit or hire away, or

attempt to solicit, recruit or hire away, directly or by assisting others, any

employee of the Company or its Affiliates, whether or not such employee is a

full-time employee or a temporary employee of the Company or its Affiliates,

and whether or not such employment is pursuant to written agreement and whether

or not such employment is for a determined period or is at will.

 

7. 

Non-Competition.  The Executive agrees that during his employment by the Company

and, in the event of his termination, other than pursuant to Sections 3.2.1(b)

or 3.2.2(a), for a period of twelve (12) months thereafter, he will not (except on behalf of or with the prior

written consent of the Company), within the Non-Competition Area (as defined in

Annex A), either directly or indirectly, on his own behalf or in the service or

on behalf of others, in any capacity which involves duties and responsibilities

similar to those undertaken for the Company, engage in any business which is

the same as or essentially the same as the Business of the Company.

 

8.  Remedies. 

The Executive agrees that the covenants

contained in Sections 5 through 7 of this Agreement are of the essence of this

Agreement; that each of the covenants is reasonable and necessary to protect

the business, interests and properties of the Company; and that irreparable

loss and damage will be suffered by the Company should he breach any of the

covenants. Therefore, the Executive agrees and consents that, in addition to

all the remedies provided by law or in equity, the Company shall be entitled to

a temporary restraining order and temporary and permanent injunctions to prevent

a breach or contemplated breach of any of the covenants. The Company and the

Executive agree that all remedies available to the Company or the Executive, as

applicable, shall be cumulative.

 

9.  Severability.  The parties agree that each of the

provisions included in this Agreement is separate, distinct, and severable from

the other provisions of this Agreement, and that the invalidity or

unenforceability of any Agreement provision shall not affect the validity or

enforceability of any other provision of this Agreement. Further, if any

provision of this Agreement is ruled invalid or unenforceable by a court of

competent jurisdiction because of a conflict between the provision and any

applicable law or public policy, the provision shall be redrawn to make the

provision consistent with and valid and enforceable under the law or public

policy.

 

10.  Notice. 

All notices and other communications required

or permitted under this Agreement shall be in writing and, if mailed by prepaid

first-class mail  or certified mail,

return receipt requested, shall be deemed to have been received on the earlier

of the date shown on the receipt or three (3) business days after the

postmarked date thereof.  In addition,

notices hereunder may be delivered by hand, facsimile transmission or overnight

courier, in which event the notice shall be deemed effective when delivered or

transmitted.  All notices and other

communications under this Agreement shall be given to the parties hereto at the

following addresses:

 

(i)

If to the Company, to it at:

NetBank, Inc.

Royal Centre Three

Suite 100

Alpharetta, Georgia 30022

Attn:  Chief Human Resources

Executive

 

(ii)

If to the Executive, to  him

at:

 

______________________________

______________________________

______________________________

 

9

 

 

11.  Assignment. 

Neither party

hereto may assign or delegate this Agreement or any of its rights and

obligations hereunder without the written consent of the other party hereto.

 

12.  Waiver. 

A waiver by the Company of any breach of this

Agreement by the Executive shall not be effective unless in writing, and no

waiver shall operate or be construed as a waiver of the same or another breach

on a subsequent occasion.

 

13.  Attorneys’ Fees.   In the event of litigation between the

parties concerning this Agreement, the party prevailing in such litigation

shall be entitled to receive from the other party all reasonable costs and

expenses, including without limitation attorneys’ fees, incurred by the

prevailing party in connection with such litigation, and the other party shall

pay such costs and expenses to the prevailing party promptly upon demand by the

prevailing party.

 

14.  Applicable Law.  This Agreement shall be construed and

enforced under and in accordance with Federal law, where applicable, and then

with the laws of the State of Georgia.

 

15.  Entire Agreement; No Additional

Benefit.  This Agreement

embodies the entire and final  agreement

of the parties on the subject matter stated in the Agreement.  No amendment or modification of this

Agreement shall be valid or binding upon the Company or the Executive unless

made in writing and signed by both parties. All prior understandings and

agreements relating to the subject matter of this Agreement are hereby expressly

terminated.   The Executive and the

Company acknowledge that, as of the date on which the Term commences, this

Agreement supersedes any employment agreement between the Executive and

Resource Bancshares Mortgage Group, Inc. and/or any Affiliate thereof

(collectively, “RBMG”) and any other agreement between them concerning the

subject matter hereof, including any change in control agreement between the

Executive and RBMG.  The Executive and

the Company also acknowledge that even though the Executive may be paid from

the payroll of a direct or indirect subsidiary of the Company, the Executive is

entitled to no additional employment benefits than those from the Company as

set forth herein.

 

16.  Rights of Third Parties.  Nothing herein

expressed is intended to or shall be construed to confer upon or give to any

person, firm or other entity, other than the parties hereto and their permitted

assigns, any rights or remedies under or by reason of this Agreement.

 

10

 

17.  Survival. The

obligations of the Executive pursuant to Sections 5, 6 and 7 shall survive the

termination of the employment of the Executive hereunder.

 

IN WITNESS WHEREOF, the

Company and the Executive have executed and delivered this Agreement as of the

date first  shown above.

 

	

   

  	

  THE COMPANY:

  
	

   

  	

   

  
	

   

  	

  NETBANK, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Douglas K. Freeman

  
	

   

  	

  Name:

  Douglas K. Freeman

  
	

   

  	

  Title:  Chief Executive Officer

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  THE

  EXECUTIVE:

  
	

   

  	

   

  
	

   

  	

   

  	

  /s/ Steven

  F. Herbert

  
	

   

  	

   

  	

  Steven F. Herbert

  
				

 

11

 

Annex A

 

Position:                                                                                                                                                                                                 Treasurer

 

Duties and

Responsibilities:                                                                                           Reports

directly to the Chief Executive Officer and has primarily responsibility for the measurement, monitoring and managing

of the asset-liability, interest rate and liquidity risks of the Company.

 

Base Salary:                                                                                                                                                                               $220,500.00

 

Incentive

Compensation:                                                                                                           Potential

of $275,625.00

 

Business Location:                                                                                                                                          Other

than for periods spent traveling in connection with the performance of the

Executive’s duties hereunder, the Executive shall be based in Columbia, South

Carolina.

 

Non-Competition Area:                                                                                                                    Within

a radius of one hundred (100) miles

from the location of the Business Location.

 

12

 

Annex B

 

“Change in Control” means any

one of the following events:

 

(1)           the acquisition by 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, (a “Person”) of beneficial

ownership (within the meaning of Rule 13d-3 promulgated under the Securities

Exchange Act of 1934) of voting securities of the Company where such

acquisition causes any such Person to own twenty-five percent (25%) or more of

the combined voting power of the then outstanding voting securities then

entitled to vote generally in the election of directors (the “Outstanding

Voting Securities”); provided, however, that for purposes of this paragraph (1)

of this definition, the following shall not be deemed to result in a Change in

Control, (i) 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; (ii) any acquisition by any employee benefit

plan (or related trust) sponsored or maintained by the Company or any

corporation controlled by the Company; or (iii) any acquisition by merger,

consolidation, share exchange, combination, reorganization, sale or transfer or

like transaction that is NOT otherwise described in paragraph (2) or (4) 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 twenty-five percent (25%) or more of the then

Outstanding Voting Securities;

 

(2)           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;

 

(3)           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;

 

(4)           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, 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; or

 

(5)           the dissolution or liquidation of the

Company.

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]