SERVICES AGREEMENT
THIS SERVICES AGREEMENT dated as of the 18th day of January, 2002 by and
between DIRECT INSITE CORP., a Delaware corporation (hereinafter the "Company")
and James A. Cannavino, an individual residing at #1 Lovango Cay, USVI (mailing
address 6501 Red Hook Plaza, Suite 201- PMB, Red Hook, VI, 00802, (hereinafter
referred to as "Cannavino").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Services Agreement with
Cannavino; and
WHEREAS, Cannavino desires to enter into a Services Agreement with the
Company;
NOW, THEREFORE, it is agreed as follows:
1. Prior Agreements Superseded. This Agreement supersedes any services,
consulting or other agreements, oral or written, entered into between Cannavino
and the Company prior to the date of this Agreement except for stock options
previously granted to Cannavino, which stock options shall continue in full
force and effect.
2. Services. The Company hereby agrees to employ Cannavino and Cannavino
hereby agrees to serve as Chairman of the Board of the Company with commensurate
responsibilities and to perform such services as directed by the Board of
Directors. Cannavino shall serve in similar capacities of such of the subsidiary
corporations of the Company as may be selected by the Board of Directors without
additional compensation. Notwithstanding the foregoing, it is understood that
the duties of Cannavino during the performance of services shall not be
inconsistent with his position and title as Chairman of the Board of the
Company.
3. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, the term of this Services Agreement shall be for two years
ending January 17, 2004.
4. Compensation. For all services rendered by Cannavino under this
Agreement, compensation shall be paid to Cannavino as follows:
(a) During the first year of this Agreement, Cannavino shall receive
180,000 shares of the Company's common stock plus 240,000 stock options. The
shares of common stock shall vest ratably on a monthly (15,000 shares) basis
during the first year of this Agreement with the first shares vesting on
February 17, 2002. During the second year of this Agreement, Cannavino shall
receive $15,000 per month as compensation. The 240,000 stock options shall vest
ratably during months one through twenty- four of the term of this Agreement.
The stock options shall have an exercise price equal to the closing price of the
Company's common stock as indicated on NASDAQ on the date of this agreement. (b)
During the period of this Agreement, Cannavino shall be eligible to participate
in the Company's stock option and stock purchase plans to the extent determined
in the discretion of the Board of Directors of the Company or committee thereof.
(c) Cannavino shall be entitled to participate in any short-term or
long-term incentive plan which the Company has in existence or which may be
adopted.
(d) During the period of this Agreement, Cannavino shall be furnished with
office space and secretarial service and facilities commensurate with his
position and adequate for the performance of his duties.
(e) Cannavino shall be entitled to fully participate in all benefit
programs available to executive employees of the Company throughout the term of
this Agreement.
5. Expenses. Cannavino shall be reimbursed for all out-of-pocket expenses,
including medical expenses, reasonably incurred by him in the performance of his
duties hereunder, including New York City office and housing.
6. Severance Benefits. Cannavino shall be entitled to the severance
benefits provided for in subsection (c) hereof in the event of the termination
of this Agreement, by the Company without cause or in the event of a voluntary
termination of this service Agreement by Cannavino for good reason. In such
event, Cannavino shall have no duty to mitigate damages hereunder. Cannavino and
the Company acknowledge that the foregoing provisions of this paragraph 6 are
reasonable and are based upon the facts and circumstances of the parties at the
time of entering into this Agreement, and with this Agreement, and with due
regard to future expectations.
(a) The term "cause" shall mean:
(i) Cannavino's willful and continued failure to substantially perform
his duties under this Agreement (other than any such failure resulting from
his incapacity due to physical or mental illness) after demand for
substantial performance is delivered to Cannavino by the Board of Directors
of the Company which specifically identifies the manner in which the Board
believes Cannavino has not substantially performed his duties.
(ii) Cannavino's failure to refuse to follow directions from the
Company's Board of Directors provided that (a) Cannavino is provided
written notice of such directions and a reasonable period in which to
comply and (b) Cannavino's compliance with any such direction would not be
illegal or unlawful.
(iii) Any act or fraud, embezzlement or theft committed by Cannavino
whether or not in connection with his duties or in the course of his
performance as defined in this Service Agreement, which substantially
impairs his ability to perform his duties hereunder.
(iv) Any willful disclosure by Cannavino of confidential information
or trade secrets of the Company or its affiliates.
For purposes of this paragraph, no act or failure to act on Cannavino's
part shall be considered "willful" unless done, or omitted to be done, by
Cannavino not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
Cannavino shall not be deemed to have been terminated for cause unless and until
there shall have been delivered to him a copy of a notice of termination from
the Board of Directors of the Company after reasonable notice to Cannavino and
an opportunity for Cannavino with his counsel to be heard before the Board of
Directors of the Company finding that in the good faith opinion of such Board of
Directors Cannavino was guilty of the conduct set forth in clauses (i), (ii),
(iii) or (iv) of this paragraph and specifying the particulars thereof in
detail.
(b) For these purposes, Cannavino shall have "good reason" to terminate
this Agreement if the Company removes Cannavino from the position of Chairman of
the Board at any time during the term of this Agreement.
(c) The severance benefits under this section in the event of termination
without cause or by Cannavino for "good reason", shall consist of the immediate
vesting of all outstanding shares of common stock and options.
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7. Death. In the event of Cannavino's death during the term of this
Agreement, all shares and stock options issued hereunder shall immediately vest.
8. Non-Competition.
(a) Cannavino agrees that, during the term of this Agreement, he will not,
without the prior written approval of the Board of Directors of the Company,
directly or indirectly, through any other individual or entity, (i) become an
officer or employee of, or render any services [including consulting services]
to, any competitor of the Company, (ii) solicit, raid, entice or induce any
customer of the Company to cease purchasing goods or services from the Company
or to become a customer of any competitor of the Company, and Cannavino will not
approach any customer for any such purpose or authorize the taking of any such
actions by any other individual or entity, or (iii) solicit, raid, entice or
induce any employee of the Company, and Cannavino will not approach any such
employee for any such purpose or authorize the taking of any such action by any
other individual or entity. However, nothing contained in this paragraph 8 shall
be construed as preventing Cannavino from investing his assets in such form or
manner as will not require him to become an officer or employee of, or render
any services (including consulting services) to, any competitor of the Company.
(b) During the term hereof and at all times thereafter, Cannavino shall not
disclose to any person, firm or corporation other than the Company any trade
secrets, trade information, techniques or other confidential information of the
business of the Company, its methods of doing business or information concerning
its customers learned or acquired by Cannavino during Cannavino's relationship
with the Company and shall not engage in any unfair trade practices with respect
to the Company.
9. Enforcement.
(a) The necessity for protection of the Company and its subsidiaries
against Cannavino's competition, as well as the nature and scope of such
protection, has been carefully considered by the parties hereto in light of the
uniqueness of Cannavino's talent and his importance to the Company. Accordingly,
Cannavino agrees that, in addition to any other relief to which the Company may
be entitled, the Company shall be entitled to seek and obtain injunctive relief
(without the requirement of any bond) for the purpose of restraining Cannavino
from any actual or threatened breach of the covenants contained in paragraph 8
of this Agreement.
(b) If for any reason a court determines that the restrictions under
paragraph 8 of this Agreement are not reasonable or that consideration therefore
in adequate, the parties expressly agree and covenant that such restrictions
shall be interpreted, modified or rewritten by such court to include as much of
the duration and scope identified in paragraph 8 as will render the restrictions
valid and enforceable.
10. Notices. Any notice to be given to the Company or Cannavino hereunder
shall be deemed given if delivered personally, telefaxed or mailed by certified
or registered mail, postage prepaid, to the other party hereto at the following
addresses:
To the Company: Direct Insite Corp.
80 Orville Drive
Bohemia, New York 11716
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Copy to: David H. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Suite 225
Jericho, NY 11753
To Cannavino: James A. Cannavino
6501 Red Hook Plaza, Suite 201-PMB
New York, New York 10017
Either party may change the address to which notice may be given hereunder
by giving notice to the other party as provided herein.
11. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, and upon Cannavino,
his heirs, executors, administrators and legal representatives.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties except as specifically otherwise indicated herein.
13. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York.
14. Change of Control. In the event (a) the Company has been consolidated
or merged into or with any other corporation or all or substantially all of the
assets of the Company have been sold to another corporation, with or without the
consent of Employee, in his sole discretion; or (b) the Company undergoes a
Change of Control, as hereinafter defined below, without prior Board approval;
then Employee is entitled to the immediate vesting of all shares of common stock
issued hereunder.
A "Change of Control" of the Company, or in any person directly or
indirectly controlling the Company, shall mean:
(i) a change of control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934 (the
"Exchange Act");
(ii) if during the Term of this services agreement any "person" (as
such term is used in Section 13(d) and 14(d) of the Exchange Act) other
than the Company or any person who on the date of this Services agreement
Agreement is a director or officer of the Company, becomes the "beneficial
owner" (as defined in Rule 13(d)03 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% of the voting
power of the Company's then outstanding securities; or
(iii) if during the Term of this services agreement the individuals
who at the beginning of such period constitute the Board cease for any
reason other than death, disability or retirement to constitute at least a
majority thereof."
15. Consent under Rights Agreement. The parties acknowledge that this
Agreement has been approved by the Company's Board of Directors and accordingly
will not result in the issuance of any rights under the Rights Agreement dated
as of August 28, 2001.
IN WITNESS WHEREOF, the parties hereto have executed this Services
Agreement as of the day and year first above written.
DIRECT INSITE CORP.
/s/ Warren Wright
By: ____________________________
Warren Wright
Chief Executive Officer
/s/ James A. Cannavino
_________________________________
James A. Cannavino