EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made effective as of the 26th day of
February, 1998, by and between ELECTRONIC PAYMENT SERVICES, INC. (the
"Company"), a Delaware corporation, and Xxxx Xxx Xxxxxxxx ("Executive").
WHEREAS the Company desires to retain Executive's services pursuant to
the terms of a written agreement, and Executive desires to provide such services
to the Company;
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree as follows: 1. Employment. The Company hereby agrees to continue to employ
Executive, and Executive hereby accepts such employment and agrees to perform
Executive's duties and responsibilities, in accordance with the terms,
conditions and provisions hereinafter set forth. 1.1. Employment Term. The term
of this Agreement shall commence on February 26, 1998 (the "Effective Date") and
shall continue for an indefinite period until terminated in accordance with
Section 5 or Section 6 hereof. The period commencing as of the Effective Date
and ending on the date on which the term of Executive's employment under the
Agreement shall terminate is hereinafter referred to as the "Employment Term".
1.2. Duties and Responsibilities. Executive shall serve as Executive
Vice President and Group Executive of the Company and in such other senior
positions, if any, to which Executive may be appointed during the Employment
Term. During the Employment Term, Executive shall perform all duties and accept
all responsibilities incident to such positions as may be assigned to Executive
by the Company's Board of Directors (the "Board") or the Company's Chief
Executive Officer (the "CEO"). Executive shall have the authority and
responsibility normally associated with such positions to which Executive may be
assigned, subject to the control of the Board and the CEO.
1.3. Extent of Service. During the Employment Term, Executive agrees to
use Executive's best efforts to carry out Executive's duties and
responsibilities under Section 1.2 hereof and, consistent with the other
provisions of this Agreement, to devote substantially all Executive's business
time, attention and energy thereto. Except as provided in Section 3 hereof, the
foregoing shall not be construed as preventing Executive from making minority
investments in other businesses or enterprises, from serving on corporate or
other business entity boards of directors or from serving in any charitable or
civic capacity provided that Executive agrees not to become engaged in any other
business activity which, in the reasonable judgment of the Board or the CEO, is
likely to interfere with Executive's ability to discharge Executive's duties and
responsibilities to the Company.
1.4. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary ("Base Salary"), commencing on the
Effective Date, at the annual rate of $200,000, payable in installments at such
times as the Company customarily pays its other senior level executives (but in
any event no less often than monthly). Executive's Base Salary shall be reviewed
annually for appropriate adjustment (but shall not be reduced below that in
effect on the Effective Date without Executive's written consent) by the Board
pursuant to its normal performance review policies for senior level executives.
1.5. Retirement and Benefit Coverages. During the Employment Term,
Executive shall be entitled to participate in all (a) employee pension and
retirement plans and programs ("Retirement Plans") and (b) welfare benefit plans
and programs ("Benefit Coverages"), in each case made available to the Company's
senior level executives as a group or to its employees generally, as such
Retirement Plans or Benefit Coverages may be in effect from time to time.
Executive shall also be covered by an individual long-term disability insurance
policy providing at least the level of coverage in effect for Executive on the
Effective Date.
1.6. Reimbursement of Expenses and Dues; Vacation. Executive shall be
provided with reimbursement of expenses related to Executive's employment by the
Company on a basis no less favorable than that which may be authorized from time
to time for senior level executives as a group, and shall be entitled to annual
vacation and holidays in accordance with the Company's normal personnel policies
for senior level executives.
1.7. Short-Term and Long-Term Incentive Compensation. Executive shall
be entitled to participate in any short-term or long-term incentive compensation
programs established by the Company for its senior level executives generally,
depending upon achievement of certain individual or business performance
objectives specified and approved by the Board (or a Committee thereof) in its
sole discretion.
2. Confidential Information. All work products of Executive's efforts
on behalf of or in relation to the Company, either on or off the Company's
facilities, during the Employment Term shall be disclosed to the Company, shall
be exclusive property of the Company and shall be used for the Company's
exclusive benefit. This shall apply to all inventions, discoveries, designs,
processes and improvements, and Executive shall cooperate fully with the Company
in realizing such benefits, including but not limited to obtaining patents,
copyrights, confidential treatment or the means of protecting the Company's
exclusive rights to such work products.
Executive recognizes and acknowledges that, during the Employment Term,
Executive will also have access to, learn, be provided with and, in some cases,
will prepare and create certain confidential and proprietary business
information, work products and trade secrets of the Company, included but not
limited to client and customer information and lists for the Company, internal
organization or business structure of the Company, financial products and
services of the Company, and work assignments or capabilities of any employee of
the Company (herein collectively called the "Confidential Materials"), all of
which are of substantial value to the Company in its business. Executive agrees
not to use or cause to be used for Executive's own benefit or for the benefit of
any third parties or to disclose to any third party in any manner, directly or
indirectly, any of the Confidential Materials without the express prior written
consent of the Board, unless such information is in the public domain through no
fault of Executive or except when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order Executive to divulge, disclose or
make accessible such information, in which case Executive will inform the
Company in writing promptly of such required disclosure, but in any event at
least five business days prior to disclosure. All written Confidential
Information (including, without limitation, in any computer or other electronic
format) which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company. Executive agrees to return
to the Company either before or immediately upon the termination of Executive's
employment with the Company, any and all Confidential Materials which are in
tangible form including electronic or software, and any other documents,
equipment and materials of any kind relating in any way to the business of the
Company which are or may be in the possession, custody and control of Executive
and which are or may be the property of the Company, whether Confidential or
not, including any and all copies thereof which may have been made by or for
Executive. Except as required in the performance of Executive's duties for the
Company, or unless expressly authorized in writing by the Board, Executive shall
not remove any written Confidential Information from the Company's premises,
except in connection with the performance of Executive's duties for the Company
and in a manner consistent with the Company's policies regarding Confidential
Information. For the purposes of this Section 2, the term "Company" shall be
deemed to include the Company and all Affiliates, as defined in Section 6.1(a),
of the Company.
3. Non-Competition; Non-Solicitation.
(a) During Executive's employment by the Company and for a
period of one year after Executive's termination of employment for any reason,
Executive will not, except with the prior written consent of the Board, directly
or indirectly, own, manage, operate, join, control, finance or participate in
the ownership, management, operation, control or financing of, or be connected
as an officer, director, employee, partner, principal, agent, representative,
consultant or otherwise with, or use or permit Executive's name to be used in
connection with, any business or enterprise which is engaged in any business
that is directly competitive with any business or enterprise in which the
Company is engaged at the time of Executive's termination of employment.
Executive acknowledges that the Company operates on a national basis (in the
United States) and that this covenant of Executive can not be limited to a
service area in which the Company does business.
(b) The foregoing restrictions shall not be construed to
prohibit the ownership by Executive of less than five percent (5%) of any class
of securities of any corporation which is engaged in a competitive business
having a class of securities registered pursuant to the Securities Exchange Act
of 1934 (the "Exchange Act"), provided that such ownership represents a passive
investment and that neither Executive nor any group of persons including
Executive in any way, either directly or indirectly, manages or exercises
control of any such corporation, guarantees any of its financial obligations,
otherwise takes any part in its business, other than exercising Executive's
rights as a shareholder, or seeks to do any of the foregoing.
(c) Executive further covenants and agrees that during
Executive's employment by the Company and for the period of one year thereafter,
Executive will not, directly or indirectly, (i) solicit, divert, take away, or
attempt to solicit, divert or take away, any of the Company's customers, or (ii)
encourage any customer to reduce its patronage of the Company.
(d) Executive further covenants and agrees that during
Executive's employment by the Company and for the period of one year thereafter,
Executive will not, except with the prior written consent of the Board or the
CEO, directly or indirectly, solicit or hire, or encourage the solicitation or
hiring of, any person who was a managerial or higher level employee of the
Company at any time during the term of Executive's employment by the Company by
any employer other than the Company for any position as an employee, independent
contractor, consultant or otherwise. The foregoing covenant of Executive shall
not apply to any person after 12 months have elapsed subsequent to the date on
which such person's employment by the Company has terminated.
(e) For the purposes of this Section 3, the term "Company"
shall be deemed to include the Company and the Affiliates, as defined in Section
6.1(a), of the Company.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in Sections 2 and 3 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by the
Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) Executive has been advised by the
Company to consult Executive's own legal counsel in respect of this Agreement,
and (ii) that Executive has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with Executive's counsel.
(b) Executive further acknowledges and agrees that a breach of
any of the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 2 or 3 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 2 or 3 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the provision shall be
amended to the extent of the maximum time, geographic, service, or other
limitations permitted by applicable law, that such amendment shall apply only
within the jurisdiction of the court that made such adjudication and that the
provision otherwise be enforced to the maximum extent permitted by law.
(c) If Executive breaches any of Executive's obligations under
Sections 2 or 3 hereof, and such breach constitutes "cause," as defined in
Section 5.3 hereof, or would constitute cause if it had occurred during the
Employment Term, the Company shall thereafter remain obligated only for any
benefits due in accordance with the terms of any applicable plans and programs
of the Company.
(d) Executive irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of Sections 2 or 3
hereof, including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in the United States District Court for the District of Delaware, or if
such court does not have jurisdiction or will not accept jurisdiction, in any
court of general jurisdiction in Wilmington, Delaware, (ii) consents to the
non-exclusive jurisdiction of any such court in any such suit, action or
proceeding, and (iii) waives any objection which Executive may have to the
laying of venue of any such suit, action or proceeding in any such court.
Executive also irrevocably and unconditionally consents to the service of any
process, pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 10 hereof.
(e) For the purposes of this Section 4, the term "Company"
shall be deemed to include the Company and the Affiliates, as defined in Section
6.1(a), of the Company.
5. Termination. The Employment Term shall terminate upon the occurrence
of any one of the following events:
5.1. Disability. The Company may terminate the Employment Term if
Executive is unable substantially to perform Executive's duties and
responsibilities hereunder to the full extent required by the Board by reason of
illness, injury or incapacity for six consecutive months, or for more than six
months in the aggregate during any period of twelve calendar months; provided,
however, that the Company shall continue to pay Executive's Base Salary until
the Company acts to terminate the Employment Term. If the Company terminates the
Employment Term, Executive shall be entitled to receive (i) any amounts earned,
accrued or owing but not yet paid under Section 1 above, (ii) a pro rata portion
of any Short-Term or Long-Term Incentive Compensation provided under a program
described in Section 1.7 for the portion of the performance period under any
such program that Executive participated prior to the end of the Employment Term
and (iii) any other benefits in accordance with the terms of any applicable
plans and programs of the Company. Otherwise, the Company shall have no further
liability or obligation to Executive for compensation under this Agreement.
Executive agrees, in the event of a dispute under this Section 5.1, to submit to
a physical examination by a licensed physician selected by the Board.
5.2. Death. The Employment Term shall terminate in the event of
Executive's death. In such event, the Company shall pay to Executive's
executors, legal representatives or administrators, as applicable, an amount
equal to the installment of Executive's Base Salary set forth in Section 1.4
hereof for the month in which Executive dies. In addition, Executive's estate
shall be entitled to receive (i) any other amounts earned, accrued or owing but
not yet paid under Section 1 above, (ii) a pro rata portion of any Short-Term or
Long-Term Incentive Compensation provided under a program described in Section
1.7 for the portion of the performance period under any such program that
Executive participated prior to the end of the Employment Term and (iii) any
other benefits in accordance with the terms of any applicable plans and programs
of the Company. Otherwise, the Company shall have no further liability or
obligation under this Agreement to Executive's executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
Executive.
5.3. Cause. The Company may terminate the Employment Term, at any time,
for "cause" upon written notice, in which event all payments under this
Agreement shall cease, except for Base Salary to the extent already accrued, but
Executive shall remain entitled to any other benefits in accordance with the
terms of any applicable plans and programs of the Company. For purposes of this
Agreement, Executive's employment may be terminated for "cause" if the Board
determines, in the exercise of good faith and reasonable judgment, that any of
the following has occurred:
(a) Gross negligence or willful misconduct by Executive in
the performance of Executive's duties for the Company; or
(b) Executive intentionally and materially breached this
Agreement, which breach has not been cured within 30 days after written notice
of the breach was given by the Board to Executive. For purposes of this
Agreement, an act or omission on the part of Executive shall be deemed
"intentional" only if it was not due primarily to an error in judgment or
negligence and was done by Executive not in good faith and without reasonable
belief that the act or omission was in the best interest of the Company.
5.4. Termination Without Cause and Non-Renewal.
(a) The Company may remove Executive, at any time, without
cause from the position in which Executive is employed hereunder (in such case
the Employment Term shall be deemed to have ended) upon not less than 60 days'
prior written notice to Executive; provided, however, that, in the event that
such notice is given, Executive shall be under no obligation to render any
additional services to the Company and, subject to the provisions of Section 3
hereof, shall be allowed to seek other employment. Upon any such removal,
Executive shall be entitled to receive, as liquidated damages for the failure of
the Company to continue to employ Executive, only the amount due to Executive
under the Company's then current severance pay plan for employees. No other
payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any other benefits in accordance with the terms
of any applicable plans and programs of the Company.
(b) Notwithstanding the provisions of Section 5.4(a), in the
event that Executive offers to execute, and executes and does not revoke if
offered, a written release upon such removal, termination or non-renewal,
substantially in the form attached hereto as Annex 1, (the "Release"), of any
and all claims against the Company and all related parties with respect to all
matters arising out of Executive's employment by the Company (other than any
entitlements under the terms of this Agreement or under any other plans or
programs of the Company in which Executive participated and under which
Executive has accrued a benefit), or the termination thereof, Executive shall be
entitled to receive, in lieu of the payment described in Section 5.4(a), which
Executive agrees to waive,
(i) as liquidated damages for the failure of the
Company to continue to employ Executive, 12 monthly cash payments, commencing
within 30 days after the effective date of the removal or non-renewal, equal to
one-twelfth of Executive's Base Compensation, as defined in Section 6.1 below;
(ii) for a period equal to one year following the
end of the Employment Term, Executive and Executive's spouse and dependents
shall be eligible for a continuation of those Benefit Coverages, as in effect at
the time of such termination or removal, and as the same may be changed from
time to time, as if Executive had been continued in employment during said
period or to receive cash in lieu of such benefits or premiums, as applicable,
where such Benefit Coverages may not be continued (or where such continuation
would adversely affect the tax status of the plan pursuant to which the Benefit
Coverage is provided) under applicable law or regulations;
(iii) any other amounts earned, accrued or owing but
not yet paid under Section 1 above; (iv) any other benefits in accordance with
the terms of any applicable plans and programs of the Company; and
(v) all options to purchase shares of common stock
of the Company previously granted to Executive shall be 100% vested and
nonforfeitable and shall be exercisable until the earlier of (a) the last day of
the 36th month following the removal, termination or non-renewal or (b) the
expiration of the original term of the option.
5.5. Voluntary Termination. Executive may voluntarily terminate the
Employment Term upon 30 days' prior written notice for any reason. In such
event, after the effective date of such termination, no further payments shall
be due under this Agreement except that Executive shall be entitled to any
benefits due in accordance with the terms of any applicable plan and programs of
the Company.
6. Other Payments and Definitions.
6.1. Definitions. For all purposes of this Section 6, the following
terms shall have the meanings specified in this Section 6.1 unless the context
otherwise clearly requires:
(a) "Affiliate" shall mean an "affiliate" as defined in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(b) "Base Compensation" shall mean, for the calendar year
immediately preceding Executive's Termination of Employment, Executive's Base
Salary and Short-Term Incentive Compensation, as reported for federal income tax
purposes on Form W-2 for such calendar year, together with any and all salary
reduction authorized amounts under any of the Company's benefit plans or
programs for such calendar year. "Base Compensation" shall not include the value
of any Long-Term Incentive Compensation, any stock options or any exercise
thereunder.
(c) "Change of Control" shall mean the happening of any of the
following: 1. Prior to any registration of the Company's shares of common stock
under Section 12 of the Securities Act of 1933:
(i) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act, other than the Company, its Affiliates, or any
Company employee benefit plan (including any trustee of such plan acting as
trustee), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing more than 50% of the combined voting power of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Common
Stock") or (ii) the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the "Voting Securities"); or
(ii) Consummation by the Company of a reorganization, merger
or consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Common Stock and Voting Securities
immediately prior to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation,
business trust or other entity resulting from or being the surviving entity in
such Business Combination in substantially the same proportion as their
ownership immediately prior to such Business Combination of the Outstanding
Common Stock and Voting Securities, as the case may be; or
(iii) Consummation of a complete liquidation or dissolution of
the Company or sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation, business trust or other
entity with respect to which, following such sale or disposition, more than 50%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Common Stock and Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Common Stock and Voting Securities, as the case may be, immediately
prior to such sale or disposition.
2. After any registration of the Company's shares of common stock under
Section 12 of the Securities Act of 1933:
(i) An event described in 1(i) above but substituting 20%
for 50%;
(ii) An event described in 1(ii) or (iii) above; or
(iii) Individuals who, as of the beginning of any twenty-four
month period, constitute the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board or cease to be able to
exercise the powers of the majority of the Board, provided that any individual
becoming a director subsequent to the beginning of such period whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Directors
shall be considered as though such individual were a member of the Incumbent
Directors, but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Board (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act).
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934.
(e) "Good Reason" shall mean grounds for Executive to
institute a Termination of Employment with the Company (1) upon any reduction
(from the level in effect on the date of the Change of Control) of Executive's
compensation or benefits due hereunder or (2) after a Change of Control, if
Executive is transferred, without Executive's written consent, to a location
that is more than 50 miles from Executive's principal place of business
immediately preceding the Change of Control.
(f) "Termination Date" shall mean the date of receipt of a
Notice of Termination of this Agreement or any later date specified therein.
(g) "Termination of Employment" shall mean the termination of
Executive's actual employment relationship with the Company occasioned by the
Company's action.
(h) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either (i) initiated by the Company for any reason other than Executive's (w)
disability, as defined in Section 5.1 hereof, (x) death, (y) retirement on or
after attaining age 65, or (z) "cause," as defined in Section 5.3 hereof, or
(ii) initiated by Executive for Good Reason.
6.2. Notice of Termination. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) briefly summarizes the
facts and circumstances deemed to provide a basis for a Termination of
Employment and the applicable provision hereof, and (iii) if the Termination
Date is other than the date of receipt of such notice, specifies the Termination
Date (which date shall not be more than 15 days after the giving of such
notice).
6.3. Payments upon Termination. Subject to the provisions of Section
6.6 hereof, in the event of Executive's Termination upon a Change of Control,
the Company agrees (a) in the event Executive executes the Release required by
Section 5.4(b), to pay to Executive, in a single cash payment, within thirty
days after the Termination Date, (i) Executive's Base Compensation, as defined
in Section 6.1(b), and, in addition, all amounts, benefits and Benefit Coverages
described in Section 5.4(b)(ii), (iii), (iv), and (v) or (b) in the event
Executive fails or refuses to execute the Release required by Section 5.4(b), to
pay to Executive, in a single cash payment, within thirty days after the
Termination Date, the amount due under Section 5.4(a) above and, in addition,
all other amounts and benefits described in Section 5.4(a).
6.4. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company and
for which Executive may qualify; provided, however, that if Executive becomes
entitled to and receives all of the payments provided for in this Agreement,
Executive hereby waives Executive's right to receive payments under any
severance plan or similar program applicable to all employees of the Company.
6.5 Shareholder Approval. In the event that a Change of Control occurs
prior to any registration of the Company's shares of common stock under Section
12 of the Securities Act of 1933, the Company covenants and agrees that it shall
obtain a favorable vote of more than 75% of its stockholders in order to satisfy
the requirements of Section 280G(b)(5)(B) of the Internal Revenue Code of 1986,
as amended (the "Code"), in order to preclude the limitations of Section 280G
and the excise tax of Section 4999 from applying.
6.6. Certain Increase in Payments.
After any registration of the Company's shares of common stock under Section 12
of the Securities Act of 1933 or in the event the Company is breaches its
obligation under Section 6.5:
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (the "Payment"), would constitute an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), Executive shall be paid an additional amount (the
"Gross-Up Payment") such that the net amount retained by Executive after
deduction of any excise tax imposed under Section 4999 of the Code, and any
federal, state and local income and employment tax and excise tax imposed upon
the Gross-Up Payment shall be equal to the Payment. For purposes of determining
the amount of the Gross-Up Payment, Executive shall be deemed to pay federal
income tax and employment taxes at the highest marginal rate of federal income
and employment taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of Executive's residence on the Termination
Date, net of the maximum reduction in federal income taxes that may be obtained
from the deduction of such state and local taxes.
(b) All determinations to be made under this Section 6 shall
be made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and Executive
within 10 days of the Termination Date. Any such determination by the Accounting
Firm shall be binding upon the Company and Executive. Within five days after the
Accounting Firm's determination, the Company shall pay (or cause to be paid) or
distribute (or cause to be distributed) to or for the benefit of Executive such
amounts as are then due to Executive under this Agreement.
(c) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of taxes
paid by Executive, appropriate adjustments shall be made under this Agreement
such that the net amount which is payable to Executive after taking into account
the provisions of Section 4999 of the Code shall reflect the intent of the
parties as expressed in subsection (a) above, in the manner determined by the
Accounting Firm.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses resulting
from the gross negligence or willful misconduct of the Accounting Firm.
7. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive's employment to
the extent necessary to the intended preservation of such rights and
obligations.
8. Mitigation. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.
9. Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in the
City of Wilmington, Delaware accordance with National Rules for the Resolution
of Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. If Executive prevails on any
material issue which is the subject of such arbitration or lawsuit, the Company
shall be responsible for all of the fees of the American Arbitration Association
and the arbitrators and any expenses relating to the conduct of the arbitration
(including the Company's and Executive's reasonable attorneys' fees and
expenses). Otherwise, each party shall be responsible for its own expenses
relating to the conduct of the arbitration (including reasonable attorneys' fees
and expenses) and shall share the fees of the American Arbitration Association.
10. Notices. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to:
Xxxxxx X. Xxxxxxx, General Counsel
Electronic Payment Services, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxxxx, Esquire
If to Executive, to:
Xxxx Xxx Xxxxxxxx
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
11. Contents of Agreement; Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between
the parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment approved
by the Board and executed on its behalf by a duly authorized officer and by
Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Executive
under this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the extent the Company would be required to perform if no such
succession had taken place.
12. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
13. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or power
under this Agreement or existing at law or in equity shall be construed as a
waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.
14. Beneficiaries/References. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
Executive's incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive's beneficiary, estate or other
legal representative.
15. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.
16. Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive shall
bear all expense of, and be solely responsible for, all federal, state and local
taxes due with respect to any payment received under this Agreement.
17. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the state of Delaware without giving effect to any conflict of
laws provisions.
18. Establishment of Trust. The Company has established an irrevocable
trust fund pursuant to a trust agreement to hold assets to satisfy any of its
obligations under certain employee benefit plans and shall use such trust, in
the event of a Change of Control or in the event that a Change of Control is
imminent, as defined in that trust, to satisfy its obligations under this
Agreement. Funding of such trust fund shall be subject to the terms of the
agreement pursuant to which the trust was established.
19. Prior Agreements. Any prior agreement between the Company and
Executive regarding Executive's employment by the Company is superseded by this
Agreement and shall be terminated and of no further force or effect.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
Attest: ELECTRONIC PAYMENT SERVICES, INC.
By:/s/Xxxxxx X. Xxxxxxx By:/s/Xxxxxxx X. Xxxxxx
---------------------------------- ----------------------------------
Secretary Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
Accepted:/s/Xxxx Xxx Xxxxxxxx
----------------------------
Xxxx Xxx Xxxxxxxx
