EXHIBIT 10.3
CHANGE IN CONTROL
SEVERANCE COMPENSATION AGREEMENT
This CHANGE IN CONTROL SEVERANCE COMPENSATION AGREEMENT (this "Agreement")
is dated as of March 8, 2005 between Transaction Systems Architects, Inc., a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxx (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") has determined
that it is appropriate to reinforce and encourage the continued attention and
dedication of the Executive to his assigned duties without distraction arising
from the possibility of a change in control of the Company; and
WHEREAS, the Company and the Executive have entered into an employment
agreement dated as of March 8, 2005 (the "Employment Agreement").
NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under certain circumstances described
herein following a Change in Control (as defined herein) and the other benefits
the Company will provide the Executive following a Change in Control.
1. TERM.
This Agreement shall terminate, except to the extent that any
obligation of the Company hereunder remains unpaid as of such time, upon the
earlier of (i) the termination of Executive's employment for any reason prior to
a Change in Control; and (ii) two years after the date of a Change in Control.
2. CHANGE IN CONTROL.
For purposes of this Agreement, "Change in Control" shall mean:
(a) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a
Change in Control: (A) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (B) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or
(C) any acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in sub-clauses (i), (ii) and (iii) of clause (c) of this
Section 2 are satisfied; or
(b) if individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least
two-thirds of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
subject to Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) consummation of a reorganization, merger or consolidation, unless
following such reorganization, merger or consolidation (i) more than 60% of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such reorganization, merger, or consolidation in substantially the
same proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be (for purposes of determining
whether such percentage test is satisfied, there shall be excluded from the
number of shares and voting securities of the resulting corporation owned by the
Company's stockholders, but not from the total number of outstanding shares and
voting securities of the resulting corporation, any shares or voting securities
received by any such stockholder in respect of any consideration other than
shares or voting securities of the Company), (ii) no Person (excluding the
Company, any employee benefit plan (or related trust) of the Company, any
qualified employee benefit plan of such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then-outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the board of directors
of the corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or consolidation; or
(d) (i) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company or (ii) the first to occur of (A) the
sale or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, or
(B) the approval by the stockholders of the Company of any such sale or
disposition, other than, in each case, any such sale or disposition to a
corporation, with respect to which immediately thereafter, (1) more than 60% of,
respectively, the then-outstanding shares of common stock of such corporation
and the combined voting power of the then-outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be (for purposes of determining whether such
percentage test is satisfied, there shall be excluded from the number of shares
and voting securities of the transferee corporation owned by the Company's
stockholders, but not from the total number of outstanding shares and voting
securities of the transferee corporation, any shares or voting securities
received by any such stockholder in respect of any consideration other than
shares or voting securities of the Company), (2) no Person (excluding the
Company and any employee benefit plan (or related trust) of the Company, any
qualified employee benefit plan of such transferee corporation and any Person
beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 20% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then-outstanding
shares of common stock of such transferee corporation and the combined voting
power of the then-outstanding voting securities of such transferee corporation
entitled to vote generally in the election of directors and (3) at least a
majority of the members of the board of directors of such transferee corporation
were members of the Incumbent Board at the time of the execution of the initial
agreement or action of the board providing for such sale or other disposition of
assets of the Company.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL.
(a) Entitlement to Compensation. The Executive shall be entitled to the
compensation provided in Section 4 of this Agreement if all of the following
conditions are satisfied:
(i) there is a Change in Control of the Company while the Executive
is still an employee of the Company;
(ii) the Executive's employment with the Company is terminated within
two years after the Change in Control;
(iii) the Executive's termination of employment is not a result of (A)
the Executive's death; (B) the Executive's Disability (as defined in
section 3(b) below); (C) the Executive's Retirement (as defined in
section 3(c) below); (D) the Executive's termination by the Company
for Cause (as defined in Section 3(d) below); or (E) the Executive's
decision to terminate employment other than for Good Reason (as
defined in Section 3(e) below); and
(iv) the Executive executes and delivers to the Company the Release
Agreement contemplated under the Employment Agreement.
(b) Disability. For purposes of this Agreement only, "Disability" shall
mean that, as a result of the Executive's incapacity due to physical or mental
illness, the Executive shall have been unable, with or without a reasonable
accommodation, to perform his duties with the Company on a full-time basis for
six months and within 30 days after a Notice of Termination (as defined in
Section 3(f) below) is thereafter given by the Company, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(c) Retirement. For purposes of this Agreement only, "Retirement" shall
mean termination by the Company or the Executive of the Executive's employment
based on the Executive's having reached age 65 or such other age as shall have
been fixed in any arrangement established pursuant to this Agreement with the
Executive's consent with respect to the Executive.
(d) Cause. For purposes of this Agreement only, "Cause" shall mean the
occurrence of any of the following events: (i) the Executive's conviction of a
felony involving moral turpitude; (ii) the Executive's serious, willful gross
misconduct or the Executive's repeated failure or refusal to perform or observe
the Executive's material duties, responsibilities and obligations as an employee
or officer of the Company for reasons other than Disability, if such misconduct,
failure or refusal continues ten days following written notice thereof by the
Company to the Executive identifying the same and specifying that the
Executive's employment may be terminated if the same continues; (iii) the
Executive's breach of any provision of Section 7 of the Employment Agreement,
which is not cured within three days after written notice thereof to the
Executive; or (iv) the Executive's violation of any provision of the Company's
Code of Business Conduct and Ethics or the Company's Code of Ethics for the
Chief Executive Officer and Senior Financial Officers, as the same may be
amended from time to time.
For purposes of this Agreement, any termination of the Executive's
employment by the Company for Cause shall be authorized by a vote of at least a
majority of the non-employee members of the Board. No termination for Cause
shall take effect until the expiration of the correction period, if any,
described above and the determination by a majority of the non-employee members
of the Board that the Executive has failed to correct the act or failure to act.
(e) Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
after any Change in Control and without the Executive's express written consent,
any of the following:
(i) except in connection with the termination of the Executive's
employment for Disability, Retirement or Cause, the assignment to the
Executive of any material duties inconsistent with the Executive's
status or position with the Company, or any other action by the
Company that results in a substantial diminution in such status or
position, excluding any isolated, insubstantial, or inadvertent
action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof from the Executive;
provided, however, that any change in the Executive's title or
reporting relationship as a consequence of the Change in Control
shall not be considered Good Reason, and any determination of Good
Reason, to the extent such determination relates to Executive's title
or reporting relationship, shall be made by reference to Executive's
title or reporting relationship that exists as a consequence of the
Change in Control;
(ii) a material reduction by the Company in the Executive's annual
base salary or target incentive in effect immediately prior to the
Change in Control;
(iii) the failure by the Company to continue to provide the Executive
with benefits at least as favorable in the aggregate to those enjoyed
by the Executive under the Company's life insurance, medical, health
and accident, disability, deferred compensation, or savings plans in
which Executive was participating at the time of the Change in
Control, the taking of any action by the Company that would directly
or indirectly materially reduce any such benefits or deprive the
Executive of any material fringe benefit enjoyed at the time of the
Change in Control, or the failure of the Company to provide the
Executive with the number of paid vacation days to which the
Executive is entitled at the time of the Change in Control, but
excluding any failure or action by the Company that is not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof from the Executive;
(iv) the Company requiring the Executive to relocate to any place
other than a location within 40 miles of the location at which
Executive performed his primary duties immediately prior to the Change
in Control or, if the Executive is based at the Company's principal
executive offices, the relocation of the Company's principal
executive offices to a location more than 40 miles from its location
immediately prior to the Change in Control, except for required
travel on the Company's business to an extent substantially
consistent with the Executive's prior business travel obligations;
(v) any material breach of this Agreement that is not remedied by
the Company promptly after receipt of a written notice thereof from
the Executive; or
(vi) the failure of the Company to obtain agreement from any
successor to assume and agree to perform the Agreement.
(f) Notice of Termination. Any termination of the Executive by the Company
pursuant to Section 3(b), 3(c) or 3(d) above, or by the Executive pursuant to
Section 3(e) above, shall be communicated by a Notice of Termination to the
other party hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a written notice which shall indicate those specific termination
provisions in this Agreement relied upon and which 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. For purposes
of this Agreement, no such purported termination by the Company shall be
effective without such Notice of Termination.
(g) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by the Company for Disability, 30 days
after Notice of Termination is given to the Executive (provided that the
Executive shall not have returned to the performance of the Executive's duties
on a full-time basis during such 30-day period), (ii) if the Executive's
employment is terminated by the Executive for Good Reason, the date specified in
the Notice of Termination, and (iii) if the Executive's employment is terminated
by the Company for any other reason, the date on which a Notice of Termination
is given; provided, however, that if within 30 days after any Notice of
Termination is given to the Executive by the Company, the Executive notifies the
Company that a dispute exists concerning the termination, the Date of
Termination shall be the date the dispute is finally determined, whether by
mutual written agreement of the parties or upon final judgment, order or decree
of a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) Severance Compensation. If pursuant to Section 3(a) above the
Executive is entitled to the compensation provided in this Section 4, then the
Company shall pay to the Executive in a lump sum cash payment within five days
after the Date of Termination the following:
(i) the Severance Amount as defined in Section 4(b) below; plus
(ii) his earned but unpaid base salary through his Date of
Termination; plus
(iii) a quarterly incentive award for the current fiscal quarter
prorated through the Date of Termination equal to the greater of (A)
the quarterly incentive award (whether paid or payable in cash or in
securities of the Company) awarded to the Executive with respect to
the Company's most recent fiscal quarter ending prior to the Date of
Termination or (B) the average quarterly incentive award (whether
paid or payable in cash or in securities of the Company) made to the
Executive with respect to the Company's most recent three fiscal
years ending prior to the Date of Termination; provided, however,
that if the Executive's termination of employment occurs at any time
during fiscal year 2005, this Section 4(a)(iii) shall not apply and
the Executive shall not be entitled to any portion of the bonus for
fiscal year 2005; plus
(iv) interest on the amounts payable pursuant to clauses (i), (ii)
and (iii) above calculated from the Date of Termination until paid at
a rate equal to the prime rate as published in The Wall Street Journal
on the Date of Termination plus three percentage points, compounded
annually.
(b) Severance Amount. "Severance Amount" shall mean a lump sum payment
equal to two times the sum of (A) Executive's Base Salary at the time of such
termination, plus (B) the Bonus Amount in effect at the time of such
termination. For purposes of this subsection (b):
(i) "Base Salary" shall have the meaning set forth in the Employment
Agreement;
(ii) "Bonus Amount" means the quotient of (i) the total of the annual
bonus amounts described in Section 4(b) of the Employment Agreement
received by Executive during the fiscal year or years comprising the
Base Period, divided by (ii) the number of the Company's fiscal years
in the Base Period. "Base Period" means the two most recent fiscal
years of the Company ending prior to the date of Executive's
termination of employment; provided, however that if Executive was
not an employee of the Company (or a Predecessor Entity or a Related
Entity) at any time during one of such two fiscal years, the Base
Period is the one fiscal year of such two-fiscal year period during
which Executive performed personal services for the Company or a
Predecessor Entity or a Related Entity.
(iii) "Predecessor Entity" is any entity which, as a result of a
merger, consolidation, purchase or acquisition of property or stock,
corporate separation, or other similar business transaction transfers
some or all of its employees to the Company or to a Related Entity or
to a Predecessor Entity of the Company.
(iv) "Related Entity" includes any entity treated as a single
employer with the Company in accordance with subsections (b), (c),
(m) and (o) of Code Section 414.
(c) Continued Participation in Employee Benefits. If pursuant to Section
3(a) above the Executive is entitled to the compensation provided in this
Section 4, then the Executive will be entitled to continued participation in all
employee benefit plans or programs available to Company employees generally in
which the Executive was participating on the Date of Termination, such continued
participation to be at Company cost and otherwise on the same basis as Company
employees generally, until the earlier of (i) the date, or dates, he receives
equivalent coverage and benefits under the plans and programs of a subsequent
employer (such coverages and benefits to be determined on a coverage-by-coverage
or benefit-by-benefit basis) or (ii) two years from the Date of Termination;
provided (A) if the Executive is precluded from continuing his participation in
any employee benefit plan or program as provided in this sentence, he shall be
paid, in a lump sum cash payment, within 30 days following the date it is
determined he is unable to participate in any employee benefit plan or program,
the after-tax economic equivalent of the benefits provided under the plan or
program in which he is unable to participate for the period specified in this
sentence, and (B) the economic equivalent of any benefit foregone shall he
deemed to be the lowest cost that would be incurred by the Executive in
obtaining such benefit for himself (including family or dependent coverage, if
applicable) on an individual basis. The Executive agrees that the period of
coverage under such plans shall count against the plans' obligation to provide
continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1965, as amended (COBRA).
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) No Mitigation. The Executive shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement, except as provided in Section 4(c) above, be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination or otherwise.
(b) Effect on Other Rights. Except as otherwise provided in Section 11
hereof, the provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any benefit plan, incentive plan,
stock option agreement, employment agreement or other contract, plan or
agreement with or of the Company.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
Anything in this Agreement to the contrary notwithstanding, in the
event that this Agreement becomes operative and it is determined (as hereafter
provided) that any payment (other than the Gross-Up payments provided for in
this Section 6 and Appendix A) or distribution by the Company or any of its
affiliates to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, performance
share, performance unit, stock appreciation right or similar right, or the lapse
or termination of any restriction on or the vesting or exercisability of any of
the foregoing (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code (or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the "Excise
Tax"), then the Executive will be entitled to receive an additional payment or
payments (collectively, a "Gross-Up Payment"). The Gross-Up Payment will be in
an amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes
of determining the amount of the Gross-Up Payment, the Executive will be
considered to pay (x) federal income taxes at the highest rate in effect in the
year in which the Gross-Up Payment will be made and (y) state and local income
taxes at the highest rate in effect in the state or locality in which the
Gross-Up Payment would be subject to state or local tax, net of the maximum
reduction in federal income tax that could be obtained from deduction of such
state and local taxes. The obligations set forth in this Section 6 will be
subject to the procedural provisions described in Appendix A.
7. SUCCESSORS.
(a) The Company's Successors. The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place. Any
failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement
and shall entitle the Executive to terminate the Executive's employment for Good
Reason and receive the compensation provided for in Section 4 hereof. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this Section 7 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) Executive's Successors. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts are still payable to
him hereunder, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee or other designee or, if there be no such designee, to the Executive's
estate.
8. AMERICAN JOBS CREATION ACT.
Notwithstanding anything to the contrary in this Agreement, in the
event that it is determined that any payment to be made under this Agreement is
considered "nonqualified deferred compensation" subject to Section 409A of the
American Jobs Creation Act of 2004, payment under this Agreement will be delayed
for six months following termination of employment.
9. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company:
Transaction Systems Architects, Inc.
000 Xxxxx 000xx Xxxxxx
Xxxxx, XX 00000
Attn: General Counsel
If to the Executive:
Xxxxxx X. Xxxxxxx
c/o Transaction Systems Architects, Inc.
000 Xxxxx 000xx Xxxxxx
Xxxxx, XX 00000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same time or
at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement or
the Employment Agreement. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nebraska, without giving effect to any
principles of conflicts of law.
11. CONFLICT IN BENEFITS.
The provisions of this Agreement will not affect any rights that the
Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company (or any subsidiary or affiliate thereof) providing
employee benefits, which rights will be governed by the terms thereof, except
for any rights to severance compensation to which Executive may be entitled upon
termination of employment, including under the Employment Agreement between the
Executive and the Company, which rights will be deemed to have been satisfied to
the extent and only to the extent comparable benefits are provided under this
Agreement.
12. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
13. SURVIVORSHIP.
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations and to the extent that any
performance is required following termination of this Agreement. Without
limiting the foregoing, Sections 7, 8 and 14 shall expressly survive the
termination of this Agreement.
14. LEGAL FEES AND EXPENSES.
If a claim or dispute arises concerning the rights of the Executive
under this Agreement, regardless of the party by whom such claim or dispute is
initiated, the Company shall, upon presentation of appropriate vouchers, pay all
legal expenses, including reasonable attorneys' fees, court costs and ordinary
and necessary out-of-pocket costs of attorneys, billed to and payable by the
Executive or by anyone claiming under or through the Executive, in connection
with the bringing, prosecuting, arbitrating, defending, litigating, negotiating,
or settling such claim or dispute. In no event shall the Executive be required
to reimburse the Company for any of the costs of expenses incurred by the
Company relating to arbitration or litigation. Pending the outcome or resolution
of any claim or dispute, the Company shall continue payment of all amounts due
the Executive without regard to any dispute.
15. EFFECTIVE DATE.
This Agreement shall become effective upon execution.
16. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
17. NO GUARANTEE OF EMPLOYMENT.
Neither this Agreement nor any action taken hereunder shall be
construed as giving the Executive the right to be retained in employment with
the Company, nor shall it interfere with either the Company's right to terminate
the employment of the Executive at any time or the Executive's right to
terminate his employment at any time.
18. NO ASSIGNMENT BY EXECUTIVE.
Except as otherwise provided in Section 7(b), the Executive's rights
and interests under this Agreement shall not be assignable (in law or in equity)
or subject to any manner of alienation, sale, transfer, claims of creditors,
pledge, attachment, garnishment, levy, execution or encumbrances of any kind.
19. WAIVER.
The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement shall not be deemed a waiver of
such provision or any other provision of this Agreement. Any waiver of any
provision of this Agreement shall not be deemed to be a waiver of any other
provision, and any waiver of default in any provision of this Agreement shall
not be deemed to be a waiver of any later default thereof or of any other
provision.
20. WITHHOLDING.
All amounts paid pursuant to this Agreement shall be subject to
withholding for taxes (federal, state, local or otherwise) to the extent
required by applicable law.
21. HEADINGS.
The headings of this Agreement have been inserted for convenience of
reference only and are to be ignored in the construction of the provisions
hereof.
22. NUMBERS AND GENDER.
The use of the singular shall be interpreted to include the plural and
the plural the singular, as the context requires. The use of the masculine,
feminine or neuter shall be interpreted to include the masculine, feminine or
neuter as the context shall require.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TRANSACTION SYSTEMS ARCHITECTS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Title: Senior Vice President and
General Counsel
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
APPENDIX A
Excise Tax Gross-Up Procedural Provisions
(1) Subject to the provisions of Paragraph 5, all determinations required to be
made under Section 6 and Appendix A, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to the Executive and
the amount of such Gross-Up Payment, if any, will be made by a nationally
recognized accounting firm (the "National Firm") selected by the Executive
in the Executive's sole discretion. The Executive will direct the National
Firm to submit its determination and detailed supporting calculations to
both the Company and the Executive within 30 calendar days after the date
of termination of the Executive's employment, if applicable, and any such
other time or times as may be requested by the Company or the Executive. If
the National Firm determines that any Excise Tax is payable by the
Executive, the Company will pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the National
Firm determines that no Excise Tax is payable by the Executive with respect
to any material benefit or amount (or portion thereof), it will, at the
same time as it makes such determination, furnish the Company and the
Executive with an opinion that the Executive has substantial authority not
to report any Excise Tax on the Executive's federal, state or local income
or other tax return with respect to such benefit or amount. As a result of
the uncertainty in the application of Section 4999 of the Code and the
possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the National Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by the Company
should have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts or
fails to pursue its remedies pursuant to Paragraph 5 and the Executive
thereafter is required to make a payment of any Excise Tax, the Executive
will direct the National Firm to determine the amount of the Underpayment
that has occurred and to submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as possible.
Any such Underpayment will be promptly paid by the Company to, or for the
benefit of, the Executive within five business days after receipt of such
determination and calculations.
(2) The Company and the Executive will each provide the National Firm access to
and copies of any books, records and documents in the possession of the
Company or the Executive, as the case may be, reasonably requested by the
National Firm, and otherwise cooperate with the National Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Paragraph 1. Any determination by the National Firm as to
the amount of the Gross-Up Payment will be binding upon the Company and the
Executive.
(3) The federal, state and local income or other tax returns filed by the
Executive will be prepared and filed on a consistent basis with the
determination of the National Firm with respect to the Excise Tax payable
by the Executive. The Executive will report and make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of the Executive's
federal income tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested
by the Company, evidencing such payment. If prior to the filing of the
Executive's federal income tax return, or corresponding state or local tax
return, if relevant, the National Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive will within five business
days pay to the Company the amount of such reduction.
(4) The fees and expenses of the National Firm for its services in connection
with the determinations and calculations contemplated by Paragraph 1 will
be borne by the Company. If such fees and expenses are initially paid by
the Executive, the Company will reimburse the Executive the full amount of
such fees and expenses within five business days after receipt from the
Executive of a statement therefor and reasonable evidence of the
Executive's payment thereof.
(5) The Executive will notify the Company in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such
notification will be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim
and the Executive will further apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid (in each
case, to the extent known by the Executive). The Executive will not pay
such claim prior to the expiration of the 30-calendar-day period following
the date on which the Executive gives such notice to the Company or, if
earlier, the date that any payment of amount with respect to such claim is
due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive will:
(a) provide the Company with any written records or documents
in the Executive's possession relating to such claim reasonably
requested by the Company;
(b) take such action in connection with contesting such claim
as the Company reasonably requests in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim; and
(d) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company will bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and will indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income or other tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing provisions of this
Paragraph 5, the Company will control all proceedings taken in
connection with the contest of any claim contemplated by this Paragraph
5 and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim (provided, however, that the
Executive may participate therein at the Executive's own cost and
expense) and may, at its option, either direct the Executive to pay the
tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company determines; provided, however, that if the Company directs the
Executive to pay the tax claimed and xxx for a refund, the Company will
advance the amount of such payment to the Executive on an interest-free
basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including
interest or penalties with respect thereto, imposed with respect to
such advance; and provided further, however, that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim will be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(6) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Paragraph 5, the Executive receives any refund with respect to
such claim, the Executive will (subject to the Company's complying with the
requirements of Paragraph 5) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Paragraph 5, a determination is made
that the Executive is not entitled to any refund with respect to such claim
and the Company does not notify the Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar days
after such determination, then such advance will be forgiven and will not
be required to be repaid and the amount of any such advance will offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid by
the Company to the Executive pursuant to Section 6 and this Appendix A.
