Exhibit 10.1

 

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1700 South Patterson Boulevard

Dayton, OH 45479

 

July 29, 2005

 

Mr. William R. Nuti

 

Dear Bill:

 

Upon execution by you, this letter will constitute your agreement (this
“Agreement”) with NCR Corporation (“NCR” or the “Company”) regarding your
service as the President and Chief Executive Officer (“CEO”) of the Company
during the period from and after August 7, 2005 (or as soon as practicable
thereafter) (the “Start Date”). The period of your employment with the Company
is referred to herein as the “Engagement.”

 

Nature of the Engagement – During the Engagement, you will have the normal
duties, responsibilities and authority attendant to the position of President
and CEO of the Company, subject to the power of NCR’s Board of Directors (the
“Board”) to expand or limit such duties, responsibilities and authority from
time to time, but in all events you shall have the duties, responsibilities and
authority commensurate with the position of a CEO of a public entity of similar
capitalization from time to time. The Company will appoint you to serve as a
member of the Board, and you agree to serve as a member of the Board for no
additional compensation.

 

Annual Base Salary – As of the Start Date, you will be paid an annual base
salary of $1,000,000. Your base salary will be reviewed by the Compensation and
Human Resource Committee of the Board (the “Compensation Committee”) from time
to time for increase, but not decrease. Your base salary will be paid in
accordance with the Company’s usual payroll practices, and, if you elect, your
paycheck will be automatically deposited in your bank account via our convenient
Easipay plan.

 

Incentive Awards – You will be eligible to participate in the Management
Incentive Plan for Executive Officers (“MIP”), which provides year-end incentive
awards based on the success of NCR in meeting annual performance objectives.
Your targeted incentive opportunity is 100% of your annual base salary
($1,000,000) (the “Target MIP”), and can range from 0% if the target objective
is not met to a maximum award of 200% ($2,000,000) of your annual base salary.
For calendar year 2005, your MIP award will be a guaranteed minimum of $500,000
(subject to upward adjustment at the discretion of the Board).

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Stock Options – Effective as of the Start Date, the Company will grant you
nonqualified options to purchase 650,000 shares of NCR common stock (the
“Options”).

 

The Options will be subject to the existing standard terms and conditions
determined by the Committee, and will include substantially identical
restrictive covenants and penalty criteria as set forth in this Agreement, a
ten-year term, and will vest as follows (except as described below):

 

(i) 250,000 of the Options (the “Incentive Options”) will vest in 25% increments
on each of the first four anniversaries of the Start Date, subject to your
continued employment with the Company on each such anniversary date, and

 

(ii) 400,000 of the Options (the “Performance Options”) have the potential to
fully vest on December 31, 2008, subject to your continued employment with the
Company on such date, and subject to the achievement of the performance goals
set forth on Schedule A to this Agreement (the “Performance Goals”) over the 12
quarterly financial reporting periods beginning January 1, 2006 and ending
December 31, 2008 (the “Performance Period”).

 

The Incentive Options shall fully vest and shall immediately become exercisable
upon termination of your employment (i) due to your death or Permanent
Disability (as defined below), (ii) by the Company without “Cause” (as defined
in the CIC Plan) (and no provision in any equity grant or benefit program with
regard to misconduct shall apply except to the extent “Cause” exists under this
Agreement), (iii) by you for “Good Reason” (as defined below), or (iv) due to
the failure of a successor to the Company to assume or replace the Incentive
Options with equivalent value new stock options upon a Change in Control (as
defined in the CIC Plan).

 

As indicated above, the Performance Options shall vest based on the extent to
which the Performance Goals are met as of the end of the Performance Period, as
follows (for purposes of clarity, the “Number of Performance Options Vested”
below shall not be construed to be additive, and is set forth on a cumulative
basis):

 

Level of Achievement of Performance Goal

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   Percentage of
Performance
Options Vested

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    Number of
Performance
Options
Vested

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Below Threshold

   0 %   0

Threshold

   50 %   200,000

Target I

   75 %   300,000

Target II

   100 %   400,000

 

On a Change in Control (as defined in the CIC Plan), you shall be treated with
regard to the Performance Options in the manner provided in the CIC Plan, but no
less favorably than as provided therein as of the Start Date.

 

Once vested, the Options will be exercisable over the full ten-year term
(subject to the termination provisions set forth in the terms and conditions of
the Option grant); provided, however, that

 

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upon your termination of employment other than for Cause, your vested Options
will remain exercisable for the lesser of (i) one year following your
termination of employment or (ii) the remainder of the term of such Options.

 

The grant price of the Options will be equal to the fair market value of NCR
common stock on the Start Date.

 

Salomon Smith Barney (“SSB”) is the record-keeper for NCR’s option plan, which
is administered electronically. Your stock option agreement and a record of the
Options will be maintained on the SSB website. You will need to accept the stock
option agreement on-line before you can exercise the Options.

 

You agree to execute the Company’s standard form of stock option agreement with
respect to the Options (the “Stock Option Agreements”), subject, however, to
conforming the definitions of “cause” and “good reason” in the Stock Option
Agreement with respect to the Incentive Options to the definitions hereunder and
as otherwise provided herein.

 

Restricted Stock – Effective as of the Start Date, the Company will grant you
85,000 shares of restricted stock (the “Restricted Stock”). The Restricted Stock
shall vest and any restrictions thereon shall lapse in 25% increments on each of
the first four anniversaries of the Start Date; provided, however, that any
unvested Restricted Stock shall fully vest and any restrictions thereon shall
lapse upon termination of your employment (i) due to your death or Permanent
Disability (as defined below), (ii) by the Company without “Cause” (as defined
in the CIC Plan), (iii) by you for “Good Reason” (as defined below) or (iv) due
to the failure of a successor to the Company to assume or replace the Restricted
Stock with equivalent value new Restricted Stock upon a Change in Control (as
defined below).

 

You agree to execute the Company’s standard form of restricted stock agreement
with respect to the Restricted Stock (the “Restricted Stock Agreement”),
subject, however, to conforming the definitions of “cause” and “good reason” in
the Restricted Stock Agreement to the definitions hereunder and which Restricted
Stock Agreement will include substantially identical restrictive covenants and
penalty criteria as set forth in this Agreement.

 

Future Equity Awards – Subject to the provisions of this Agreement, you shall
receive an additional equity award in February 2006 which is expected to have a
minimum Black Scholes value of $2.5 million (the “Future Equity Award”), subject
to your continued employment with the Company as of the grant date of the Future
Equity Award. The Future Equity Award will be granted to you in conjunction with
the Company’s normal annual grant process and will be based on an analysis of
competitive data. The form and mix of the Future Equity Award will mirror the
incentive structure for all senior officers of the Company and will likely
include a mix of equity similar to the Restricted Stock, Incentive Options and
Performance Options.

 

NCR Benefits – You will be entitled to participate in normal Company-provided
benefits and perquisites at the level at least equal to other senior executive
officers of the Company. As of the Start Date, you are automatically eligible
for the Company’s core U.S. benefit coverage for yourself and your family,
including Health Care Coverage (Cigna PPO Plan), Dental Care Coverage (Cigna
Dental PPO Plan), Short-Term and Long-Term Disability Coverage, Life Insurance
Coverage,

 

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and Accidental Death and Dismemberment Insurance Coverage. Additionally, you
will be eligible to participate in the NCR Savings Plan (401(k)) and the NCR
Employee Stock Purchase Plan. Information about each program will be provided.
You may choose to waive participation in any of these plans.

 

Relocation – You will relocate to the Dayton, Ohio area as soon as practicable
after the Start Date and in any event by no later than August 1, 2006. In
connection with such relocation, the Company will reimburse you for all of the
normal and customary relocation expenses you incur in accordance with the
Company’s standard relocation policy in which you will participate. If you and
your family do not relocate to the Dayton, Ohio area by August 1, 2006, this
will constitute a material breach by you of the Agreement, and will be
considered “Cause” for the Company to terminate your employment hereunder.
Alternatively, the Company will have the option to retain your services under
this Agreement, but the next applicable tranche of Restricted Stock granted to
you hereunder that would have otherwise vested shall not vest and shall be
forfeited to the Company. As part of your relocation expenses, the Company shall
(i) pay or reimburse you for all your commuting to and from the Dayton, Ohio
area on the Company airplane (provided, however, that this will not include more
than one round-trip per week) and (ii) shall provide you with a $5,000 monthly
allowance for your living expenses in the Dayton, Ohio area from the Start Date
to the earlier of August 1, 2006 or your relocation to the Dayton, Ohio area
(the “Relocation Period”) and any amounts pursuant to (i) or (ii) shall be fully
grossed-up such that you will have no after tax cost.

 

Travel Expenses and Benefits – During the Engagement, NCR will permit you to use
the corporate aircraft for business travel and for travel between any of your
residences and the Company’s offices in Dayton, Ohio, and elsewhere as
desirable. During the Relocation Period, use of the aircraft shall be covered by
the prior paragraph. After the Relocation Period, you shall be permitted to use
the Company’s aircraft for limited additional travel for personal use (including
for security reasons) on an availability basis; provided, however, that the
taxable imputed income to you attributed to such use in any calendar year, using
the SIFL rates approved by the Internal Revenue Service, shall not exceed
$35,000 (or such higher amount as approved by the Committee), without the prior
approval of the Committee; and further provided, however, that the foregoing
shall be pro-rated for calendar year 2006 after the end of the Relocation
Period. The Company shall provide you a sufficient “gross-up” payment to cover
all federal and Ohio state income taxes on your personal use of the corporate
aircraft, payable by the Company upon notice of the payment and amount due, no
later than the day such taxes are due.

 

Other Business Expenses – As a general matter, the Company will reimburse you
for all reasonable expenses that you incur in the course of performing your
duties under this Agreement that are consistent with the Company’s policies with
respect to travel, entertainment and other business expenses. Reimbursement
shall be subject to the Company’s customary requirements imposed upon executive
level employees, with respect to reporting and documentation of such expenses.

 

Vacation – You will be eligible for five weeks of paid vacation during each
calendar year of the Engagement (pro-rated for 2005 based on the Start Date).

 

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Change in Control – You will be entitled to participate in the CIC Plan
effective as of the Start Date.

 

Severance – In the event of a Company initiated termination of your employment
other than for “Cause” (as defined in the CIC Plan), or a voluntary termination
for “Good Reason” (as defined below) you will receive cash severance payments
totaling (x) one and one half (1.5) times your annual base salary and Target MIP
(the “Severance Benefit”), payable in equal monthly installments, the number of
which will be determined so that you receive the full Severance Benefit no later
than two and one-half months after the start of the calendar year following the
calendar year during which your termination of employment occurs, and (y) a
pro-rated MIP, based on the achievement of applicable performance targets
pursuant to the MIP for the year of your termination, and based on the number of
days you are employed during the year of the termination of employment, payable
when the MIP is otherwise payable by the Company, but in no event later than two
and one-half months after the start of the calendar year following the calendar
year during which your termination of employment occurs; provided, that you
execute a release of claims substantially in the form attached as Schedule C
hereto, with such changes as are necessary or appropriate to account for changes
in law or regulation. In addition, during the 18-month period following your
termination of employment other than for “Cause” or for “Good Reason” (if you
are not otherwise employed during such period and covered under the group
medical plan provided to employees of such subsequent employer), the Company
agrees, if you so elect, that the Company will continue your (including your
dependents) medical benefits under COBRA, to the same extent as during your
employment, with your COBRA premiums paid by the Company.

 

The Company agrees to cooperate with you to amend this Agreement to the extent
you deem necessary to avoid imposition of any additional tax under Section 409A
of the Internal Revenue Code (and any Department of Treasury regulations
promulgated thereunder), but only to the extent such amendment would not have a
more than de minimis adverse effect on the Company.

 

Non-Competition – By signing this Agreement, you agree that during your
employment with NCR and for an eighteen (18) month period after termination of
employment for any reason (the “Restricted Period”), you will not yourself or
through others, without the prior written consent of the Board, render services
directly or indirectly to any Competing Organization involving the development,
manufacture, marketing, advertising or services of any product, process, system
or service of NCR’s during the last three years of your NCR employment.

 

For purposes of this Agreement, “Competing Organization” means any organization
listed on Schedule B, as reasonably amended from time to time by the
Compensation Committee, in consultation with you, as well as any subsidiaries of
such companies that become stand-alone companies as a result of a spin-off, IPO
or similar restructuring transaction after the date of the last update to
Schedule B. The list of Competing Organizations on Schedule B hereto may be
amended from time to time by the Compensation Committee by written notice to
you, provided that (i) the number of companies shall not increase, (ii) any
companies shall be from among those entities treated as “Competing
Organizations” on the annual list prepared jointly by you and the Compensation
Committee pursuant to the Company’s policies and (iii) the list of Competing
Organizations shall not be changed in contemplation of your accepting an offer
to join any company.

 

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Non-Solicitation/Non-Hire – By signing this Agreement, you agree that during the
Restricted Period, you will not yourself or through others, without the prior
written consent of the Board (i) directly or indirectly recruit, hire, solicit
or induce, or attempt to induce, any exempt employee of NCR or its associated
companies to terminate their employment with or otherwise cease their
relationship with NCR or its associated companies (provided that you may serve
as reference upon request with regard to a company with which you are not
affiliated and this provision shall not be violated by general advertising not
specifically targeted at employees of the Company), or (ii) canvass or solicit
business of the same nature that NCR or its associated companies is selling or
providing to any firm or company as of the date of your termination of
employment with or from such particular firm or company.

 

Confidentiality and Non-Disclosure – You agree that during the term of your
employment with the Company and thereafter, you will not, except as you deem
necessary in good faith discretion to perform your duties hereunder or as
required by applicable law, disclose to others or use, whether directly or
indirectly, any Confidential Information regarding the Company. “Confidential
Information” shall mean information about the Company, its subsidiaries and
affiliates, and their respective clients and customers that is not available to
the general public or generally known in the industry and that was learned by
you in the course of your employment by the Company, including (without
limitation) (i) any proprietary knowledge, trade secrets, ideas, processes,
formulas, cell lines, sequences, developments, designs, assays and techniques,
data, formulae, and client and customer lists and all papers, resumes, records
(including computer records), (ii) information regarding plans for research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers, (iii) information regarding the skills and compensation of other
employees of Company and (iv) the documents containing such Confidential
Information; provided, however, that any provision in any grant or agreement
that limits confidential disclosure shall not apply to the extent such
information is publicly filed with the Securities and Exchange Commission (the
“SEC”). Your rolodex and similar address books shall not be deemed Confidential
Information if and to the extent they contain only the names and contact
information you have personally used while employed (or acquired prior to
employment hereunder) and no other information that would otherwise be
Confidential Information. You acknowledge that such Confidential Information is
specialized, unique in nature and of great value to the Company, and that such
information gives the Company a competitive advantage. Upon the termination of
your employment for any reason whatsoever, you shall promptly deliver to the
Company all documents, slides, computer tapes and disks (and all copies thereof)
containing any Confidential Information.

 

Breach of Restrictive Covenants – You acknowledge and agree that the time,
territory and scope of the post-employment restrictive covenants in this
Agreement (the non-competition, non-solicitation, non-hire, confidentiality and
non-disclosure covenants are hereby collectively referred to as the “Restrictive
Covenants”) are reasonable and necessary for protection of the Company’s
legitimate business interests, and you agree not to challenge the reasonableness
of such restrictions. You acknowledge that you have been represented by counsel
in this matter, and have had a full and fair opportunity to consider these
restrictions prior to your execution of this Agreement. You further acknowledge
and agree that you have received sufficient and valuable consideration in
exchange for your agreement to the Restrictive Covenants, including but not
limited to your salary, equity awards and benefits under this Agreement, the
possibility of

 

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“Severance” under this Agreement and all other consideration provided to you
under this Agreement. Accordingly, if you materially breach any of the
Restrictive Covenants, NCR will be released from all obligations it may have
under this Agreement to provide you with “Severance.”

 

You further acknowledge and agree that if you breach the Restrictive Covenants,
NCR will sustain irreparable injury and may not have an adequate remedy at law.
As a result, you agree that in the event of your breach of any of the
Restrictive Covenants, NCR may, in addition to its other remedies, bring an
action or actions for injunction, specific performance, or both, and have
entered a temporary restraining order, preliminary or permanent injunction, or
order compelling specific performance.

 

Arbitration – Any controversy or claim related in any way to this Agreement
(including, but not limited to, any claim of fraud or misrepresentation or any
claim with regard to the CIC Plan), shall be resolved by arbitration on a de
novo standard pursuant to this paragraph and the then current rules of the
American Arbitration Association. The arbitration shall be held in Dayton, Ohio,
before an arbitrator who is an attorney knowledgeable of employment law. The
arbitrator’s decision and award shall be final and binding and may be entered in
any court having jurisdiction thereof. The arbitrator shall not have the power
to award punitive or exemplary damages. Issues of arbitrability shall be
determined in accordance with the federal substantive and procedural laws
relating to arbitration; all other aspects shall be interpreted in accordance
with the laws of the State of Ohio. Each party shall bear its own attorneys’
fees associated with the arbitration and other costs and expenses of the
arbitration shall be borne as provided by the rules of the American Arbitration
Association; provided, however, that if you are the prevailing party, you shall
be entitled to reimbursement for reasonable attorneys’ fees and expenses and
arbitration expenses incurred in connection with the dispute. If any portion of
this paragraph is held to be unenforceable, it shall be severed and shall not
affect either the duty to arbitrate or any other part of this paragraph.

 

Legal Expenses – The Company will pay up to $25,000 for the reasonable legal
advice expenses you incur in connection with the completion of this Agreement.

 

Defined Terms – For purposes of this Agreement, “Good Reason” shall be defined
as defined in the CIC Plan, but shall also include (i) a diminution in your job
title (other than temporarily while you are incapacitated); (ii) a material
diminution or adverse change (other than temporarily while you are
incapacitated) in your position, office or duties (including your removal from
or non-re-election to the Board); or (iii) a material breach of this Agreement
by the Company, which remains uncured, if curable, after more than ten (10) days
after your providing written notice of such breach to the Company.

 

For purposes of this Agreement, “Permanent Disability” shall mean your absence
from your duties with the Company on a full-time basis for 120 consecutive
business days or 180 business days in any 12-month period as a result of your
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and which
physician is acceptable to you or your legal representative.

 

Miscellaneous – This Agreement is personal to you and without the prior written
consent of the Company shall not be assignable by you other than by will or the
laws of descent and distribution.

 

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You may designate one or more beneficiaries to whom any payments earned by and
due to you will be made in the event of your death by completing such form as
the Board or one of its committees authorizes for that purpose. In the absence
of any such designation, any such payments will be made to your estate or
personal representative. This Agreement shall inure to the benefit of and be
enforceable by your legal representatives, and shall inure to the benefit of and
be binding upon the Company and its successors; provided, however, that the
Company may only assign this Agreement to an acquirer of all or substantially
all of its assets and any such acquirer shall be required to deliver to you an
assumption in writing of the Company’s obligations hereunder. This Agreement may
be amended, modified or changed only by a written instrument executed by you and
the Company.

 

You hereby represent and warrant to the Company that you are not party to any
contract, understanding, agreement or policy, whether or not written, with any
previous employer or otherwise, that would be breached by your entering into, or
performing services under, this Agreement, or, if you are a party to such a
contract, understanding, agreement or policy, you shall have obtained a written
acknowledgement from your previous employer (or such other party or parties)
such that your performance of services under this Agreement shall not be impeded
in any manner (other than confidentiality, nonsolicitation and noninterference
restrictions all as provided in your employment agreement with your prior
employer), or otherwise be subject to any claim, action or litigation by your
previous employer (or any other party or parties).

 

The Company hereby represents and warrants to you that the Company’s financial
statements for 2003, 2004 and the quarters ending March 31 and June 30, 2005
that have been or, with regard to the June 30, 2005, quarter will be filed with
the SEC are accurate in all material respects.

 

No provision of any restrictive covenant in any grant or other plan shall be any
broader than those set forth in this Agreement.

 

Notwithstanding any other provision of this Agreement, the Company may withhold
from any amounts payable hereunder, or any other benefits received pursuant
hereto, such minimum federal, state and/or local taxes as shall be required to
be withheld under any applicable law or regulation.

 

This Agreement reflects the entire agreement regarding the terms and conditions
of your employment. Accordingly, it supersedes and completely replaces any prior
oral or written communication on this subject. This Agreement is not an
employment contract, and should not be construed or interpreted as containing
any guarantee of continued employment or employment for a specific term. The
employment relationship at NCR is by mutual consent (employment-at-will), and
the Board or you may discontinue your employment with or without cause at any
time and for any reason or no reason.

 

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Bill, if you will please countersign a copy of this letter agreement, it will
constitute the terms of your service as President and CEO of the Company upon
the terms and conditions described above.

 

Sincerely,

 

/s/ Linda Fayne Levinson

Linda Fayne Levinson

Chair, NCR Compensation and Human Resource Committee

 

Agreed and accepted this 29 day of July, 2005.

/s/ William R. Nuti

William R. Nuti

 

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