Exhibit 10.10
RETENTION AGREEMENT
BETWEEN
EFUNDS CORPORATION
AND
XXXX X. XXXXX
DATED AS OF
November 3, 2004
XXXXX AGREEMENT
1
EFUNDS
RETENTION AGREEMENT
AGREEMENT (this "Agreement"), by and between eFunds Corporation, a
Delaware corporation (the "Company"), and Xxxx X. Xxxxx (the "Executive"), dated
as of November 3, 2004 (the "Effective Date"). Capitalized terms used in this
Agreement that are not defined in the operative provisions shall have the
meanings ascribed to them in the Exhibit "B" hereto.
1. Employment Period. The Company hereby agrees to continue to employ
the Executive and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the
Employment Period. The term "Employment Period" means the period commencing on
the date hereof and ending on the third anniversary of such date as
automatically extended for successive additional one-year periods unless, at
least six months prior to the scheduled expiration of the Employment Period, the
Company, based upon a determination by its Board of Directors (the "Board"), or
the Executive shall give notice to the other party that the Employment Period
shall not be so extended.
2. Terms of Employment.
(a) Position.
(i) Commencing on the date hereof and for the remainder of
the Employment Period, the Executive shall serve as the
Chief Executive Officer and Chairman of the Board of the
Company. The Executive shall be based in Scottsdale,
Arizona.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote his full time
during normal business hours to the business and affairs
of the Company and to use his good faith efforts to
perform such responsibilities. During the Employment
Period, the Executive may, so long as such activities do
not interfere with the performance of his
responsibilities to the Company in accordance with this
Agreement, continue the corporate directorships on which
the Executive serves, if any, as of the date hereof and
such other corporate directorships as are consented to
by the Board.
1
(b) Compensation.
(i) Base Salary. During the Employment Period, the Company
shall pay the Executive a minimum base salary (the
"Annual Base Salary") of $575,000 per year (or such
higher amount as may be determined at the discretion of
the Compensation Committee of the Board (the
"Compensation Committee")), which will be paid in
accordance with the Company's regular payroll policies
as in effect from time to time.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be eligible to be paid, for each fiscal
year ending during the Employment Period, an annual
bonus (the "Annual Bonus"). The Executive's minimum
target Annual Bonus will be 100% of the Annual Base
Salary actually paid to the Executive for that fiscal
year (or such higher percentage as may be determined in
the discretion of the Compensation Committee). The
amount of the Annual Bonus actually paid to the
Executive for any given fiscal year may be higher or
lower than the target Annual Bonus and will be
determined in accordance with the performance parameters
established under, and the other terms and conditions
of, the Company's existing Annual Incentive Plan (or any
comparable successor plan). Any Annual Bonus earned by
the Executive shall be paid no later than the end of the
third month following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus in
accordance with the terms and conditions of any deferred
compensation plan established by the Company. If the
Employment Period shall expire prior to the end of a
given fiscal year, the bonus, if any, payable for the
portion of the year during which the Executive was
employed shall be determined by the Compensation
Committee.
(iii) Stock Options and Other Equity Awards. The Executive
shall be entitled to participate in the eFunds
Corporation 2000 Stock Incentive Plan (or any comparable
successor plan) on generally the same terms and
conditions as the other senior executive officers of the
Company (the "Senior Executives"), it being understood
and agreed that the Executive will be eligible for
option and other equity awards commensurate with the
Executive's status as Chief Executive Officer.
2
(iv) Savings, Retirement and Other Incentive Plans. The
Executive shall be entitled to participate in all other
incentive, savings, deferred compensation, stock
purchase and retirement plans, practices, policies and
programs applicable generally to the other Senior
Executives.
(v) Welfare Benefit Plans. The Executive and/or the
Executive's family, as the case may be, shall be
eligible to participate in all welfare benefit plans,
practices, policies and programs generally provided by
the Company to its Senior Executives (including, without
limitation, medical, prescription, dental, disability,
employee life, group life, accidental death and travel
accident insurance plans and programs).
(vi) Expenses. The Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses
incurred by the Executive in furtherance of the
Executive's duties in accordance with the then
prevailing policies, practices and procedures of the
Company.
(vii) Fringe Benefits. The Executive shall be entitled to
fringe benefits, including, without limitation, tax and
financial planning services, use or reimbursement for
the use of an automobile, as the case may be, and
payment of related expenses, in accordance with the
plans, practices, programs and policies of the Company.
(viii) Vacation. The Executive shall be entitled to six weeks
of paid time off per year and shall be entitled to
standard Company holidays in accordance with the plans,
policies, programs and practices of the Company.
(ix) Restricted Stock Right Award and Stock Option Amendment.
On the Effective Date, the Company shall make a grant of
a Restricted Stock Right to the Executive (the
"Retention Restricted Stock Right Award") in accordance
with the terms and conditions set forth in that certain
Restricted Stock Right Award Agreement attached as
Exhibit "D" hereto and the Company and the Executive
shall amend that certain 2004 Award Agreement in
accordance with the terms and conditions set forth in
that certain Amendment to 2004 Award Agreement attached
as Exhibit "E" hereto.
3
3. Termination of Employment.
Any purported termination of the Executive's employment during the
Employment Period (other than by reason of the death of the Executive)
shall be communicated by a Notice of Termination given by the party
seeking to terminate such employment to the other party hereto in
accordance with Section 11(d) of this Agreement. Notwithstanding the
existence of any dispute regarding the characterization of the reasons for
any termination, the date of termination of the employment of the
Executive (the "Termination Date") shall be the date set forth in the
Notice of Termination.
(a) Termination by the Company Without Cause; Resignation by the
Executive for Good Reason; Non-Renewal by the Company. If the
Executive's employment shall be terminated by the Company
without Cause during the Employment Period or if the Executive
resigns for Good Reason, or if the Company elects not to
extend the term of this Agreement pursuant to Section 1, then:
(i) the Company shall make a lump sum cash payment to
Executive equal to the sum of (x) the Executive's Annual
Base Salary through the Termination Date to the extent
not theretofore paid, (y) any Annual Bonus paid or
payable, including previously deferred amounts, in
respect of the most recently completed fiscal year of
the Company to the extent such amount is determinable
and not theretofore paid, together with any previously
deferred amounts, and (z) any vacation pay accrued by
the Executive through the Termination Date (the sum of
the amounts described in clauses (x), (y) and (z) shall
be hereinafter referred to as the "Accrued
Obligations"). In the event the Executive's Annual Bonus
for the most recently completed fiscal year of the
Company is not determinable on the Termination Date,
such Annual Bonus shall (subject to any deferral
election made by the Executive) be paid to Executive in
a lump sum, in cash, as soon as administratively
feasible after the date the amount of such Annual Bonus
is determined and in any event prior to the expiration
of the three month period referenced in Section
2(b)(ii). Any other amounts payable pursuant to this
Section 3(a)(i) shall be paid as soon as
administratively feasible following the Termination
Date;
(ii) the Company shall pay to the Executive in equal
installments, made at least monthly, over the
twenty-four (24) months following the Date of
Termination, an aggregate amount equal to two (2) times
the Executive's Annual Base Salary in effect on the
Termination Date
4
and two (2) times the target Annual Bonus with respect
to the Company's fiscal year in which the Termination
Date occurs;
(iii) except with respect to the Retention Restricted Stock
Right Award and except to the extent that provisions
that are more favorable to the Executive are contained
in Executive's option and other equity award agreements,
all options and any other unvested equity based awards
(including, without limitation, restricted stock) that
are granted to the Executive after the Effective Date
and that are scheduled to vest on or before the second
anniversary of the Termination Date shall vest in their
entirety on the Termination Date and (2) any options
that are granted to the Executive after the Effective
Date which are vested on the Termination Date or vest
pursuant to this Subsection (iii) may be exercised until
the earlier of (x) the second anniversary of the
Termination Date and (y) the expiration date of such
options; and
(iv) the Company shall provide the Executive and his
dependents with group healthcare benefits under the
Company's group healthcare plans for a period ending on
the earlier of twenty-four (24) months after the
Termination Date or the date that the Executive becomes
eligible to participate in group healthcare plans of any
successor employer.
Notwithstanding the foregoing, Subsections (ii), (iii) and
(iv) of this Section 3(a) shall be null and void and the
Company shall have no obligations thereunder unless the
Executive shall have timely executed and delivered the Release
attached to this Agreement as Exhibit A within ten (10) days
after the Company's request therefor as described below and
the seven (7) day rescission period referenced in Section 1(c)
thereof shall have expired without the Executive having sent a
notice of revocation or rescission to the Company, at which
point any accrued amounts ("Termination Payments") which are
then payable under such subsections shall be paid to Executive
as soon as administratively feasible. The Company agrees to
deliver to the Executive a written request for the execution
and delivery of the Release on or within five (5) days before
or after the Termination Date.
(b) Termination by the Company for Cause; Resignation by the
Executive Without Good Reason. If the Executive's employment
shall be
5
terminated by the Company for Cause during the Employment
Period or if the Executive resigns without Good Reason (as
both terms are hereinafter defined), then:
(i) the Company's only obligations to the Executive shall be
for the payment of any Accrued Obligations owed to the
Executive on the Termination Date, which shall (subject
to any deferral election by the Executive) be paid as
soon as administratively feasible after the Termination
Date; and
(ii) except to the extent that provisions that are more
favorable to the Executive are contained in the
Executive's option and other equity award agreements,
(1) all unvested options and any other unvested equity
based award (including, without limitation, restricted
stock) held by the Executive shall be forfeited on the
Termination Date and (2) any options held by the
Executive that are vested on the Termination Date may be
exercised until the earlier of (x) ninety (90) days
after the Termination Date and (y) the expiration date
of such options.
(c) Termination by Reason of Death or Retirement. The Executive's
employment shall terminate upon his death or Retirement during
the Employment Period. In the event of such termination:
(i) the Company shall pay the Executive (or his heirs,
estate or legal representatives, as the case may be) an
amount equal to any Accrued Obligations owed to the
Executive on the Termination Date, which shall (subject
to any deferral election by the Executive) be paid as
soon as administratively feasible after the Termination
Date;
(ii) except with respect to the Retention Restricted Stock
Right Award and except to the extent that provisions
that are more favorable to the Executive are contained
in the Executive's option and other equity award
agreements, (1) in the event of the Executive's death,
all unvested options and any other unvested equity based
awards (including, without limitation, restricted stock)
that are granted to the Executive after the Effective
Date shall vest on the Termination Date, (ii) in the
event of the Executive's Retirement, all unvested
options and any other unvested equity based awards
(including, without limitation, restricted stock) that
are granted to the Executive after the Effective Date
and that are scheduled
6
to vest on or before the second anniversary of the
Termination Date shall vest on the Termination Date and
(3) any options that are granted to the Executive after
the Effective Date which are vested on the Termination
Date or vest pursuant to this Subsection (ii) may be
exercised until the earlier of (x) the second
anniversary of the Termination Date and (y) the
expiration date of such options; and
(iii) the Company shall provide the Executive and his
dependents with group healthcare benefits under the
Company's group healthcare plans for a period ending on
twenty-four months (24) after the Termination Date.
(d) Termination by Reason of Disability. If the Executive incurs a
Disability during the Employment Period, the Company may give
a Notice of Termination to the Executive of its intention to
terminate the Executive's employment by reason of such
Disability. In such event, the Executive's employment with the
Company shall automatically terminate on the 30th day after
the date of such Notice of Termination (unless such
Termination Date is extended by the Board) if the Executive
shall not have returned to full-time performance of the
Executive's duties within such thirty (30) day notice period.
In the event of such termination:
(i) the Company shall pay the Executive (or his heirs,
estate or legal representatives, as the case may be) an
amount equal to any Accrued Obligations owed to the
Executive on the Termination Date, which shall (subject
to any deferral election by the Executive) be paid as
soon as administratively feasible after the Termination
Date;
(ii) except with respect to the Retention Restricted Stock
Right Award and except to the extent that provisions
that are more favorable to the Executive are contained
in the Company's standard form option and other equity
award agreements, (1) all unvested options and any other
unvested equity based awards (including, without
limitation, restricted stock) that are granted to the
Executive after the Effective Date shall vest on the
Termination Date and (2) any options that are granted to
the Executive after the Effective Date which are vested
on the Termination Date or vest pursuant to this
Subsection (ii) may be exercised until the earlier of
(x) the second anniversary of the Termination Date and
(y) the expiration date of such options; and
7
(iii) the Company shall provide the Executive and his
dependents with group healthcare benefits under the
Company's group healthcare plans for a period ending on
twenty-four (24) months after the Termination Date.
4. No Offset. The Company's payment obligations hereunder are absolute
and unconditional and shall not be subject to offset, counterclaim, recoupment,
defense or any other right the Company may have against him or anyone else.
5. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit plan for
which the Executive may qualify nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with the Company. Amounts that are vested benefits or that the Executive is
otherwise entitled to receive under any benefit plan, contract or agreement with
the Company at or subsequent to the Termination Date shall be payable in
accordance with such plan, contract or agreement except as explicitly modified
by this Agreement.
6. No Obligation to Mitigate; Expenses of Contests.
(a) No Obligation to Mitigate. In no event shall the Executive be
obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement, and, except as
specifically provided in this Agreement, such amounts shall
not be reduced whether or not the Executive obtains other
employment.
(b) Expenses. The Company shall reimburse the Executive for the
reasonable cost incurred in finalizing this Agreement and any
related plans or agreements. Each party shall be responsible
for its own legal and professional fees and other expenses
incurred as a result of any contest by the Executive, by the
Company or others of the validity or enforceability of, or
liability under, any provision of this Agreement or the
Release Agreement (including as a result of any contest by the
Executive about the amount of any payment pursuant to this
Agreement).
7. Certain Additional Payments by the Company. In the event it shall be
determined that any payment or benefit received or to be received by the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with the
Company, but determined without regard to any additional payments required under
Section (A) of Exhibit C) would be subject to the excise tax imposed by Section
4999 (or any successor section) of the Internal Revenue Code of 1986, as
amended, or any interest or penalties are incurred by the Executive with respect
to such or any other excise tax, then the Executive shall be entitled to receive
additional payments in an amount determined in accordance with Exhibit C.
8
8. Restrictions and Obligations of the Executive.
(a) Consideration for Restrictions and Covenants. The parties
hereto acknowledge and agree that the principal consideration
for the agreement to make the payments provided in Section 3
hereof from the Company to the Executive is the Executive's
compliance with the undertakings set forth in this Section 8.
Specifically, the Executive agrees to comply with the
provisions of this Section 8 irrespective of whether the
Executive is entitled to receive any payments under Section 3
of this Agreement.
(b) Confidentiality. The confidential and proprietary information
and trade secrets of the Company (collectively, "Confidential
Information") are among its most valuable assets. The
Company's Confidential Information may include, without
limitation, its customer and vendor lists, database, computer
programs, frameworks, models, its marketing programs, its
sales, financial, marketing, training and technical
information, and any other information, whether communicated
orally, electronically, in writing or in other tangible forms
concerning how the Company creates, develops, acquires or
maintains its products and marketing plans, targets its
potential customers and operates its retail and other
businesses. Confidential Information does not include
information that is or shall have become publicly known or
available, unless it shall have become publicly known or
available as a result of the Executive's breach of his
obligations hereunder. The Company has invested, and continues
to invest, considerable amounts of time and money in obtaining
and developing the goodwill of its customers, its other
external relationships, its data systems and data bases, and
Confidential Information, and any misappropriation or
unauthorized disclosure of Confidential Information in any
form, would irreparably harm the Company. The Executive shall
keep confidential, and not use or disclose except in
connection with the good faith performance of his duties to
the Company or as required by law or legal process, all
Confidential Information relating to the Company and its
business, which shall have been obtained by the Executive
during the Executive's employment by the Company and which
shall not be or become public knowledge (other than by acts by
the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without
the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate, divulge or
use any such information, knowledge or data to anyone other
than the Company and those designated by it.
(c) Non-Solicitation or Hire. During the Employment Period and for
a two-year period following the Termination Date, the
Executive shall
9
not, directly or indirectly:
(i) without the prior written consent of the Company's Board
of Directors, (x) solicit, encourage, cause or induce
any person who is at the Termination Date, or was at any
time within the six-month period preceding the
Termination Date, an officer, general manager or
director or equivalent or more senior level employee of
the Company or any of its subsidiaries (a "Key
Employee") to terminate such employee's employment with
the Company or such subsidiary for the employment of
another company (including for this purpose the
contracting with any person who was an independent
contractor (excluding consultant) of the Company during
such period) or (ii) employ or offer employment to any
Key Employee who is on the date of such employment or
offer of employment, or was at any time within the
six-month period preceding such date, an employee of the
Company or any of its subsidiaries; or
(ii) take any action that would interfere with the
relationship of the Company or its subsidiaries with
their suppliers and franchisees without, in either case,
the prior written consent of the Company's Board of
Directors, or engage in any other action or business
that would have a material adverse effect on the
Company.
(d) Non-Competition. As an essential inducement to the Company to
enter into this Agreement, and as consideration for the
promises of the Company contained herein, the Executive agrees
that during the term of his employment and for a period of
twenty-four (24) months after any Termination Date (other than
in connection with a Termination for Cause), the Executive
will not:
(i) Control or own (directly or indirectly) more than two
percent of the outstanding capital stock of or other
equity interest in any Competitor; or
(ii) Serve as an officer, member, director, contractor,
agent, consultant, advisor or employee of or to any
Competitor wherever located.
(e) Irreparable Injury. The Executive agrees that a breach by the
Executive of any of the terms of this Section 8 will cause
great and irreparable injury and damage to the Company and
that the Company shall have a right to equitable relief,
including, but not limited to, a temporary restraining order,
preliminary injunction, permanent
10
injunction and/or order of specific performance, as a remedy
to enforce this Section 8 or prevent a threatened breach of
this Section 8 by the Executive. In addition, the Company will
be immediately relieved of any remaining obligation to make
any Termination Payments to the Executive if the Executive
should breach this Section 8.
9. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable
by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
10. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws.
(b) Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
(c) Amendment. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal
representatives.
(d) Notices. All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
(i) if to the Executive, to Xxxx X. Xxxxx, 0000 Xxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx Xxxxxx, XX 00000, with a copy to
Xxxxxxx X. Xxxxxxxxx, Xxxxxxxxx & Xxxxxxx, P.A., 00 Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000-0000;
(ii) if to the Company, to it at eFunds Corporation, 0000
Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
00000, Attention: General Counsel;
(iii) or to such other address as either party shall have
furnished to the other in writing in accordance
herewith. Notice and communications shall be effective
when
11
actually received by the addressee.
(e) Assistance to Company. At all times during and after the
Employment Period and at the Company's expense for
out-of-pocket expenses actually and reasonably incurred by the
Executive in connection therewith, the Executive shall provide
reasonable assistance to the Company in the collection of
information and documents and shall make the Executive
available when reasonably requested by the Company in
connection with claims or actions brought by or against third
parties or investigations by governmental agencies based upon
events or circumstances concerning the Executive's duties,
responsibilities and authority during the Employment Period,
provided that this provision shall not require the Executive
to expend time or provide services in any manner or to any
degree, that would materially interfere with any subsequent
employment or consulting activity (including Board
memberships), and further provided that this provision shall
not require extensive or ongoing services without reasonable
compensation therefor.
(f) Severability of Provisions. Each of the sections contained in
this Agreement shall be enforceable independently of every
other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or
render unenforceable any other section contained in this
Agreement. The Executive acknowledges that the restrictive
covenants contained in Section 8 are a condition of this
Agreement and are reasonable and valid in geographical and
temporal scope and in all other respects. If any court or
arbitrator determines that any of the covenants in Section 8,
or any part of any of them, is invalid or unenforceable, the
remainder of such covenants and parts thereof shall not
thereby be affected and shall be given full effect, without
regard to the invalid portion. If any court or arbitrator
determines that any of such covenants, or any part thereof, is
invalid or unenforceable because of the geographic or temporal
scope of such provision, such court or arbitrator shall reduce
such scope to the minimum extent necessary to make such
covenants valid and enforceable.
(g) Withholding. The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
12
(h) Waiver. The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right
the Executive or the Company may have hereunder shall not be
deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(i) Intended to Supersede. This Agreement is intended to supersede
and replace any other prior employment, severance agreements
or arrangements between the parties, including that certain
Employment Agreement, dated as of September 9, 2002, between
the Executive and the Company, except such Employment
Agreement shall continue to apply solely for the purpose of
determining whether the Executive would have been entitled to
receive a "Termination Payment" under such Employment
Agreement upon the termination of his employment with the
Company for the purpose of determining the Executive's rights
under that certain Option Award Agreement, dated as of
September 16, 2002 between the Executive and the Company;
provided, however, that this Agreement shall not supersede or
replace that certain Change in Control Agreement, dated as of
September 16, 2002 (as amended, the "Change in Control
Agreement"), between the Executive and the Company. In
addition, nothing in this Agreement is intended to amend or
modify the terms of any stock option or other equity based
agreement between the Company and the Executive that is
outstanding as of the Effective Date, except to the extent
that any such award agreement is expressly amended pursuant to
or as described in this Agreement.
(j) Survival. The obligations of the Company and the Executive
under this Agreement which by their nature may require either
partial or total performance after the expiration of the term
of this Agreement shall survive such expiration.
(k) Subject to Change in Control Agreement. In no event shall any
amounts be payable under this Agreement if the Executive
should become entitled to any payments pursuant to the Change
in Control Agreement. This Agreement is expressly made subject
to Section XI.F. of the Change in Control Agreement.
(l) Delegation of Duties. Notwithstanding any other provision in
this Agreement to the contrary, the Board may delegate the
responsibilities, duties and powers specified under this
Agreement to be observed or performed by the Board to the
Compensation Committee or the Board Affairs Committee.
(m) Open for Acceptance and Execution. The Executive acknowledges
that the terms of this Agreement have been open for acceptance
and
13
execution for at least thirty (30) days during which time the
Executive has considered whether or not to accept this
Agreement and consulted with an attorney of the Executive's
choosing to advise the Executive regarding the same.
Signature Page Follows.
14
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and the Company has caused these presents to be executed in its name on its
behalf, all as of the day and year first above written.
XXXX X. XXXXX
/s/ Xxxx X. Xxxxx
EFUNDS CORPORATION
By: Xxxx X. Xxxxx III
/s/ Xxxx X. Xxxxx III
Its: Lead Director
15
EXHIBIT A
RELEASE
WHEREAS, Xxxx X. Xxxxx ("the Executive") is an employee of eFunds
Corporation, a Delaware corporation (the "Company");
WHEREAS, the Executive's employment with the Company has been
terminated effective as of ______________,______ (the "Termination Date");
WHEREAS, the Executive and the Company have previously entered into
that certain Retention Agreement, dated as of November 3, 2004 (the
"Agreement"), pursuant to which the Company has agreed to make certain payments
to the Executive following the termination of his employment;
WHEREAS, it is a condition to the Company's obligation to make
certain of the payments provided for in the Agreement that the Executive
execute, deliver and not rescind this Release; and
WHEREAS, it is a condition to the effectiveness of this Release that
the Company in fact make such payments.
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING, the Executive and
the Company hereby agree as follows:
1. Release.
(a) As consideration for the promises of the Company contained in
the Agreement, the Executive, for him and his successors and assigns,
hereby fully and completely releases and waives any and all claims,
complaints, rights, causes of action or demands of whatever kind, whether
known or unknown or suspected to exist by the Executive (collectively,
"Claims") which the Executive has or may have against the Company and any
company controlling, controlled by or under common control with the
Company (collectively with the Company, the "Controlled Group") and their
respective predecessors, successors and assigns and all officers,
directors, shareholders, employees and agents of those persons and
companies ("the Released Parties") arising out of or related to any
actions, conduct, promises, statements, decisions or events occurring
prior to or on the Termination Date, including, without limitation, any
Claims based on or arising out of the Executive's employment with the
Controlled Group and the cessation of that employment; provided, however,
that such release shall not operate (X) to relieve the members of the
Controlled Group of any obligation to indemnify the Executive pursuant to
the terms of the Company's by-laws or pursuant to any separate
indemnification agreement in effect between the Company and the Executive
or (Y) to release any claim the Executive may have under any insurance
policy maintained by the Company and in effect on the date hereof; and,
provided, further, that the effectiveness of such release shall be
suspended until such time as the Company shall have fulfilled its
obligation to make the
1
termination payments referenced under Subsections (ii), (iii), and (iv) of
Section 3(a) of the Agreement (it being understood and agreed that
following the fulfillment by the Company of such obligation, such
suspension shall be lifted and such release shall be fully effective and
enforceable from and as of its date of execution by the Executive); and
provided, further, that the Executive does not release the Company from
the provisions of Sections 3 through 7 of the Agreement, which shall
remain in effect. The Executive further agrees that he will not institute
any legal proceedings against the Released Parties in respect of any Claim
nor will he authorize any other party, whether governmental or otherwise,
to seek individual remedies on his behalf with respect to any Claim. The
Executive and the Company agree that, by signing this Release, the
Executive is not waiving any Claim arising after the Termination Date or
by reason of any breach of the Agreement.
(b) The Executive's release of Claims is intended to extend to and
include Claims of any kind arising Title VII of the Civil Rights Act of
1964, as amended, 42 U.S.C. Sections 2000e et seq., the Age Discrimination
in Employment Act, 29 U.S.C. Sections 621 et seq., the Americans with
Disabilities Act, 42 U.S.C. Sections 12101 et seq., the Delaware
Discrimination in Employment Act, Del. Code Xxx. Tit. 19, Sections
710-718, the Delaware Handicapped Persons Employment Protections Act, Del.
Code Xxx. Tit. 19, Sections 720-728, the Arizona Civil Rights Act, Ariz.
Rev. Stat. Sections 41-1401, et seq., the Arizona Employment Relationship
and Constructive Discharge Law, Ariz. Rev. Stat. Sections 23-1501, et seq.
and any other federal, state or local statute, Executive Order or
ordinance prohibiting employment discrimination or otherwise relating to
employment, as well as any claim for breach of contract (other than any
breach of the Agreement), wrongful discharge, breach of any express or
implied promise, misrepresentation, fraud, retaliation, violation of
public policy, infliction of emotional distress, defamation, promissory
estoppel, equitable estoppel, invasion of privacy or any other theory,
whether legal or equitable.
(c) The Executive has been informed of the Executive's right to
revoke this Release insofar as it extends to potential claims under the
Age Discrimination in Employment Act by informing the Company of the
Executive's intent to revoke this Release within seven (7) calendar days
following the execution of this Release by the Executive. The Executive
has further been informed and understands that any such rescission must be
in writing and hand-delivered to the Company or, if sent by mail,
postmarked within the applicable time period, sent by certified mail,
return receipt requested, and addressed as follows:
eFunds Corporation
Xxxxxx Ranch Center II
0000 X. Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: General Counsel
2
The Company and the Executive agree that if the Executive exercises the
Executive's right of rescission, under this Section 1(c), the Company's
obligations to make any termination payments to the Executive under Subsections
(ii), (iii), or (iv) of Section 3(a) of the Agreement shall be null and void.
2. Miscellaneous.
(a) The Executive may not assign or delegate any of the
Executive's rights or obligations in respect of this Release and any
attempted assignment or delegation shall be void and of no effect. This
Release is binding upon and enforceable by the Company and the other
members of the Controlled Group and their respective successors and
assigns and inures to the benefit of the Executive and the Executive's,
heirs and executors. This Release is governed by the substantive laws of
the State of Delaware, without regard to its conflicts of law rules.
(b) The failure of a party to insist upon strict compliance with
any of the terms, conditions or covenants expressed in this Release shall
not be deemed a waiver of such term, condition or covenant, or any other
term, condition or covenant, nor shall any waiver or relinquishment of any
right or power under this release on one or more times be deemed a waiver
or relinquishment of such right or power or any other right or power at
any other time or times.
(c) Whenever possible, each provision of this Release will be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Release is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Release.
(d) This Release may be executed in one or more counterparts, any
one of which need not contain the signatures of more than one party, but
all such counterparts taken together will constitute one and the same
instrument.
(e) The Executive has been informed that the terms of this Release
will be open for acceptance and execution for thirty (30) days after the
Termination Date, during which time the Executive may consider whether or
not to accept this Release and consult with an attorney of the Executive's
choosing to advise the Executive regarding the same. If the Executive does
not execute this Release and deliver the same to the Company by such date,
the obligation of the Company to make any termination payments under
Subsections (ii), (iii), or (iv) of Section 3(a) of the Agreement shall be
wholly null and void.
Signature Page Follows.
3
IN WITNESS WHEREOF, the Company and the Executive have hereunto set
their hands to this release as of the dates set forth below.
EFUNDS CORPORATION
Dated:
________________________________
By:_____________________________
Its:____________________________
Xxxx X. Xxxxx
Dated:
STATE OF __________________)
County of _________________)
Subscribed and sworn before me
This _____ day of _____________, 2___.
seal
Notary Public, State of
My Commission expires:
4
EXHIBIT B
DEFINITIONS
Capitalized terms used in the Retention Agreement by and between eFunds
Corporation, a Delaware corporation (the "Company"), and Xxxx X. Xxxxx (the
"Executive"), dated as of November 3, 2004 (the "Agreement") that are not
elsewhere defined in the Agreement shall have the definitions set forth below:
1. "Cause" means:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's material duties (other than as a
result of the mental of physical illness of the Executive or
any such failure as may allegedly occur after the Executive
issues a Notice of Termination for Good Reason pursuant to
Section 3(a) of the Agreement) for a period of thirty (30)
days or more after a demand for substantial performance is
delivered to the Executive by the Board which specifically
identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's
material duties;
(ii) the Executive engages in fraud or gross misconduct which is
materially and demonstrably injurious to the commercial
interests of the Company; or
(iii) the Executive is convicted or pleads guilty or nolo contendre
to criminal misconduct constituting a felony or gross
misdemeanor involving a breach of ethics, moral turpitude or
other immoral conduct which reflects adversely upon the
reputation or interests of the Company or its customers or
vendors or the Executive becomes subject to criminal sanctions
that will prevent the Executive from performing his duties in
the ordinary course for a period of time that is likely to
exceed thirty (30) days.
2. "Competitor" means mean any entity (or, with regard to an entity
which engages in multiple lines of business, any division or subsidiary of such
entity) primarily engaged in the business of (1) processing debit, ACH, ATM or
EBT transactions or providing software that allows others to process such
transactions, (2) providing data-based risk management, decision support,
collection services or customer relationship management products and services,
so long as the provision of such products and services is governed by the
Federal Fair Credit Reporting Act, 15 U.S.C. sections 1681 et. seq. (or any
successor provision), (3) managing or deploying networks of ATMs or providing
business process outsourcing services (such as call centers or accounts
receivable or payable processing). An entity, or a subsidiary or division
thereof, shall not be considered to be a Competitor merely by engaging in the
business of providing any of the foregoing products or services if the revenues
from one or more of such activities do not
1
constitute ten percent (10%) or more of the total revenues of such entity,
division or subsidiary. By way of example, if an entity maintains a subsidiary
which derives a ten percent (10%) or more of its revenues from debit transaction
processing, the Executive could not engage in any restricted Activity with
respect to that subsidiary. The Executive would not, however, be prohibited from
engaging in any restricted activity for another division or subsidiary of such
entity so long as the Executive's relationship with such other division or
subsidiary is not maintained as a pretext designed to enable Executive to avoid
compliance with the spirit of the foregoing and the Executive does not engage in
any restricted activity with respect to the debit processing subsidiary during
the restricted period. Without limiting the generality of the foregoing,
"Competitors" shall by definition include such companies as Equifax, Experian,
TransUnion, First Data Corporation, Concord EFS and M&I.
3. "Disability" means a disability entitling the Executive to long-term
disability payments under the Company's applicable long-term disability plan,
and in the absence of such a plan shall mean the inability of the Executive to
substantially perform the essential functions of the Executive's position for a
period of sixty (60) or more consecutive days as a result of a mental or
physical illness.
4. "Good Reason" means:
(i) except with the Executive's prior consent, the assignment to
the Executive of any significant duties inconsistent with the
Executive's status and position as the Chief Executive Officer
of the Company or any other action by the Board which results
in a material and ongoing diminution of the Executive's
position and authority;
(ii) any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated failure
not occurring in bad faith which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(iii) a requirement by the Company that the Executive maintain his
principal residence at a location outside of the Scottsdale,
Arizona area as a condition to his continued employment;
(iv) any request or requirement by the Company or the Board that
the Executive take any action or omit to take any action that
is inconsistent with or in violation of the Company's ethical
guidelines and policies or any professional ethical guidelines
or principles that may be applicable to the Executive; or
(v) except with the Executive's prior consent or as a result of a
failure of the stockholders of the Company to elect the
Executive to the Board or any legal or regulatory requirements
applicable to the Company, the removal of the Executive from
the office of
2
Chairman of the Board (it being understood and agreed that the
appointment by the Board of a Lead Director shall not be
deemed to constitute such a removal).
5. "Notice of Termination" means a notice communicated by any party
seeking to terminate the Executive's employment during the Employment Period.
Any Notice of Termination shall (1) indicate the specific termination section in
the Agreement relied upon by the party giving such notice (or that the
Executive's employment is being terminated by the Company without Cause or by
the Executive without Good Reason), (2) to the extent applicable, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for the
termination of the Executive's employment under the section of the Agreement so
indicated and (3) if the Termination Date is not the date of receipt of such
notice, specify a Termination Date (which date shall be not more than one
hundred eighty (180) days after the date of the Notice of Termination). A Notice
of Termination for Cause shall include a certified copy of a resolution to such
effect duly adopted by the affirmative vote of not less than three-quarters of
the entire membership of the Board. The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Disability, Good Reason or Cause shall not waive any
right of the Executive or the Company, as the case may be, from asserting such
fact or circumstance in enforcing their respective rights under the Agreement.
6. "Retirement" means any voluntary termination of employment with the
Company or any of its affiliates that is on or after the later of the date on
which (i) the Executive's age is at least fifty-five (55) and (ii) the Executive
shall have completed at least five (5) years of continuous service with the
Company or any of its affiliates. A failure by the Executive to extend the term
of this Agreement pursuant to Section 1 shall constitute his Retirement if he
shall have satisfied the conditions set forth in the preceding sentence as of
the date of the termination of his employment with the Company.
3
EXHIBIT C
CERTAIN ADDITIONAL PAYMENTS
A. Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or benefit (collectively, a "Payment") received or to be received by the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with the
Company, but determined without regard to any additional payments required under
this Section (A) would be subject to the excise tax imposed by Section 4999 or
any successor section) of the Internal Revenue Code of 1986, as amended (the
"Code") or any interest or penalties are incurred by the Executive with respect
to such or any other excise tax (any such tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount determined in accordance with this Exhibit C
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and 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
Payments. Notwithstanding the foregoing provisions of this Exhibit C, if it
shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the Executive, after taking into account the Payments and the Gross-Up
Payment, would not receive a net after-tax benefit of at least $50,000 (taking
into account both income taxes and any Excise Tax) as compared to the net
after-tax benefit the Executive would receive if the Gross-Up Payment were
eliminated and the Payments were reduced, in the aggregate, to an amount (the
"Reduced Amount") such that the receipt of Payments would not give rise to any
Excise Tax, then no Gross-Up Payment shall be made to the Executive and the
Payments, in the aggregate, shall be reduced to the Reduced Amount. For purposes
of determining whether any of the Payments will be subject to the Excise Tax and
the amount of such Excise Tax, (i) all of the Payments shall be treated as
"parachute payments" (within the meaning of Section 280G(b) of the Code (or any
successor section)) unless, in the opinion of tax counsel ("Tax Counsel")
selected by the Company and reasonably acceptable to the Executive, such
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of Section 280G(b)(4)(A) of the Code, (ii) all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel,
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered (within the meaning of Section
280G(b)(4)(B) of the Code) in excess of the "base amount" (as defined in Section
280G(b)(3) of the Code) allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the
"Accounting Firm" (as hereinafter defined) in accordance with the principals of
Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount
of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax
at the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made (determined by giving
1
affect to the maximum loss of itemized deductions that could be suffered by the
Executive by virtue of his receipt of the Gross-Up Payment) 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 (or if there is no Termination
Date, then the date on which the Gross-Up Payment is calculated for purposes of
this Exhibit C), net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
B. Subject to the provisions of Section (C), all determinations
required to be made under this Exhibit C, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the Company and
reasonably acceptable to the Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that a
Payment has been made or will be required, as the case may be, or such earlier
time as is requested by the Company. All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Exhibit C, shall be paid by the Company to the Executive within
five days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which should have been made by
the Company will not in fact have been made ("Underpayment"). In the event that
the Company exhausts its remedies pursuant to Section (C), fails to pursue such
remedies, or in any event fails to obtain a final, non-appealable determination
that no Excise Tax is due and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive. For purposes of making
all determinations and calculations required by this Exhibit C, Tax Counsel and
the Accounting Firm may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Internal Revenue Code, provided that such determinations and calculations must
be based upon substantial authority (within the meaning of Section 6662 of the
Code).
C. The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing
2
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
1. give the Company any information reasonably requested by the
Company relating to such claim,
2. take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
3. cooperate with the Company in good faith in order to
effectively contest such claim, and
4. permit the Company to participate in any proceedings relating
to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section
(C)(4), the Company shall control all proceedings taken in connection with
such contest 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 and may, at its sole 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 shall determine; provided, however, that if the
Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such
advance; and, further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall 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.
D. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (C), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with
3
the requirements of Section (C) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of any amount
advanced by the Company pursuant to Section (C), a determination is made that
the Executive shall not be 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 of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
E. The Gross-Up Payment shall be made not later than the fifth
day following the Termination Date or other event causing the Gross-Up Payment;
provided, however, that if the amount of such Gross-Up Payment, and the
limitation on such payments set forth in Section (A) hereof, cannot be finally
determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Accounting Firm, of the
minimum amount of such Gross-Up Payment to which the Executive is clearly
entitled and shall pay the remainder of such payments (together with interest on
the unpaid remainder (or on all such payments to the extent the Company fails to
make such payments when due) at 120% of the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the 30th day after the Termination Date. In the event
that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute an obligation of the
Executive to the Company payable immediately. At the time that payments are made
under this Agreement, the Company shall provide the Executive with a written
statement setting forth the manner in which such payments were calculated and
the basis for such calculations including, without limitation, any opinions or
other advice the Company has received from Tax Counsel, the Accounting Firm or
other advisors or consultants (and any such opinions or advice which are in
writing shall be attached to the statement).
4
