Exhibit 10.3
AGREEMENT
THIS AGREEMENT (the “Agreement”), by and between S1 Corporation (the “Company”)
and Meigan Putnam (“You” or “Your”) (collectively, the “Parties”), is entered
into and effective as of December 24, 2008 (the “Effective Date”).
WHEREAS, the Parties desire to enter into this Agreement to express the terms
and conditions in the event of Your termination of employment from the Company
(or any of its affiliates) as described herein;
NOW, THEREFORE, in consideration of the mutual agreements in this Agreement, the
Parties agree as follows:
1. Termination of Prior Agreement. Upon the execution of this Agreement, that
certain Employment Agreement dated as of December 8, 2006 by and between the
Company and You (the “Prior Agreement”) shall be terminated and of no further
force or effect.
2. At-Will Employment/Compensation. This Agreement does not create a contract
for employment or a contract for benefits. Your employment with the Company
shall be and remain at all times an at-will relationship. This means that at
either Your option or the Company’s option, Your employment may be terminated at
any time, with or without Cause, and with or without notice. While You are
employed by the Company (or any of its affiliates) (i) the Company shall pay You
an annual base salary at the rate of $225,000 per year (which base salary will
be reviewed at least annually and may be increased at the discretion of the
Company), and (ii) You shall be eligible to receive an annual on-target cash
bonus of up to $175,000 for each calendar year (a “Bonus Calendar Year”)
occurring while You are employed by the Company (or any of its affiliates)
(pro-rated for any period that is less than 12 months), based on the attainment
of specific Company and individual performance targets during such Bonus
Calendar Year as may be assigned by the Company annually. Such annual bonus for
a given Bonus Calendar Year shall be paid no later than March 15th of the
calendar year immediately following such Bonus Calendar Year.
3. Compensation Upon Termination. Subject to the terms and conditions of this
Agreement:
(a) Death. If Your employment with the Company (or any of its affiliates) is
terminated as a result of Your death, the Company shall pay Your estate, or as
may be directed by the legal representatives of Your estate, (i) Your base
salary due through the date of termination, and (ii) within thirty (30) days
following Your date of termination, a pro rata portion of the annual bonus that
would have been payable to You for the calendar year of termination if Your
employment had not terminated (calculated based upon actual results through Your
date of termination and based upon budget for the remainder of the period and
pro rated for the portion of the year during which You were employed).
(b) Disability. If Your employment with the Company (or any of its affiliates)
is terminated as a result of You being substantially unable to perform the
material duties of Your then current position with the Company (or any of its
affiliates) by reason of illness, physical or mental disability or other similar
incapacity, which inability shall continue for three consecutive months
(provided, that until such termination, You shall continue to receive Your then
current compensation and benefits, reduced by any benefits payable to You or
under any disability insurance policy or plan applicable You), the Company shall
pay You (i) Your base salary due through the date of termination, and
(ii) within thirty (30) days following Your date of termination, a pro rata
portion of the annual bonus that would have been payable to You for the calendar
year of termination if Your employment had not terminated (calculated based upon
actual results through Your date of termination and based upon budget for the
remainder of the period and pro rated for the portion of the year during which
You were employed); provided, that payments so made to You with respect to any
period that You are substantially unable to perform the material duties of Your
then current position with the Company (or any of its affiliates) by reason of
illness, physical or mental illness or other similar incapacity shall be reduced
by the sum of the amounts, if any, payable to You by reason of such disability,
at or prior to the time of any such payment, under any disability insurance
policy or benefit plan and which amounts have not previously been applied to
reduce any such payment.
(c) Termination by the Company for Cause or by You without Good Reason. If the
Company (or any of its affiliates) terminates Your employment for Cause or You
terminate Your employment without Good Reason, the Company shall pay You Your
base salary due through the date of termination and shall have no further
obligations to You. In the event the Company intends to terminate You for Cause,
You shall have a reasonable opportunity, together with Your counsel, to be heard
before the Board of Directors of the Company before such termination.

 

 

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(d) Termination by the Company without Cause or by You with Good Reason. If
(i) the Company (or any of its affiliates) terminates your employment without
Cause, or (ii) You terminate Your employment for Good Reason, then the Company
shall:
(A) pay You (i) in equal installments as of the 1st and 15th day of each month
during the 12-month period commencing on Your date of termination (the
“Severance Period”), an aggregate amount equal to Your then current base salary,
(ii) within thirty (30) days following Your date of termination, a pro rata
portion of the annual bonus that would have been payable to You for the calendar
year of termination if Your employment had not terminated (calculated based upon
actual results through Your date of termination and based upon budget for the
remainder of the period and pro rated for the portion of the year during which
You were employed), and (iii) within thirty (30) days following Your date of
termination, an aggregate amount equal to the average annual bonus/commission
actually paid to You for the immediately prior three calendar years;
(B) reimburse You for any COBRA premiums You pay for You and any of Your
dependents during the Severance Period, if and to the extent You and/or Your
dependents are entitled to COBRA continuation coverage under the Company’s major
medical group plan in which You and/or Your dependents participated immediately
prior to the date of termination, provided, however, that notwithstanding
anything in this subsection to the contrary, all other terms and provisions of
the Company major medical group plan governing Your rights and Your dependent’s
rights under COBRA shall apply; and
(C) shall cause all outstanding options then held by You to purchase stock of
the Company to be: (A) fully vested and exercisable if such termination occurs
within two years after a Change in Control (or before a Change in Control has
occurred, but after the Company has commenced negotiations of a transaction that
results in a Change in Control) or (B) if (A) does not apply, vested and
exercisable to the same extent that such options would have been vested and
exercisable if You had continued to be employed by the Company during the
24 months immediately following the date of termination.
4. Release Obligations. The Company’s obligation to pay You the separation
payments set forth in Section 3(d) shall be conditioned upon Your execution,
compliance with, and non-revocation of, a valid, binding and irrevocable
Separation & Release Agreement in a form prepared by the Company in its sole and
absolute discretion, which includes, but is not limited to, Your release of the
Company and its officers, directors, employees, stockholders and affiliates from
any and all liability and claims of any kind and Your confirmation of the
Company’s right to continued performance by You of Your obligations under the
Covenants Agreement (defined below) during the period following the termination
of Your employment.
5. Withholding. All payments made pursuant to this Agreement will be subject to
applicable withholdings, including taxes and Social Security.
6. Definitions.
(a) “Cause” means (i) the indictment by a grand jury or conviction of a felony
or a crime involving moral turpitude (excluding a traffic violation not
involving any period of incarceration) or the willful commission of any other
act or omission involving dishonesty or fraud with respect to, and materially
adversely affecting the business affairs of, the Company or any of its
subsidiaries or any of their customers or suppliers, (ii) conduct tending to
bring the Company or any of its subsidiaries into public disgrace or disrepute
that is determined by the Company to cause or be reasonably likely to cause
substantial injury to the business and operations of the Company or such
subsidiary, (iii) substantial and repeated failure to perform duties, including
but not limited to, achieving mutually agreed to quarterly goals, of the office
held by You as reasonably directed by the Company (other than any such failure
resulting from Your incapacity due to injury or illness), and such failure is
not cured within 30 days after You receive written notice thereof from the
Company that specifically identifies the manner in which the Company believes
You have not substantially performed Your duties, (iv) gross negligence or
willful misconduct with respect to the Company or any of its subsidiaries that
causes substantial and material injury to the business and operations of the
Company or such subsidiary or (v) any material breach of the Covenants
Agreement. For purposes of this provision, no act or failure to act on Your part
shall be considered “willful” unless it is done, or omitted to be done, by You
in bad faith or without reasonable belief that Your action or omission was in
the best interests of the Company. Any act or failure to act based upon
authority given pursuant to a resolution duly adopted by the Board of Directors
of the Company or based upon advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by You in good faith
and in the best interests of the Company;

 

 

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(b) “Change in Control” means the earliest to occur of the following: (i) any
person (other than a corporation (a “Holding Company”) all of the common stock
of which is owned, immediately after the transaction, by persons who owned more
than 50 percent of the voting shares of the Company immediately before the
transaction) becomes the beneficial owner of 50 percent or more of the total
number of voting shares of the Company; (ii) any person (other than the persons
named as proxies solicited on behalf of the Board) holds revocable or
irrevocable proxies, as to the election or removal of two or more directors of
the Company, for more than 50 percent of the total number of voting shares of
the Company; (iii) any person (other than a Holding Company) has commenced a
tender or exchange offer, or entered into an agreement or received an option, to
acquire beneficial ownership of more than 50 percent of the total number of
voting shares of the Company; (iv) there is a sale or other transfer of all or
substantially all of the assets of the Company other than to a Holding Company
or a corporation controlled by the Company, or (v) as the result of, or in
connection with, any cash tender or exchange offer, merger, or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions, the persons who were directors of the Company before
such transaction shall cease to constitute at least a majority of the Board of
any successor corporation. In the event that the Company (or any successor
entity) becomes a subsidiary of a Holding Company, references to the Company in
the preceding sentence shall be deemed to be references to the Holding Company.
Notwithstanding the foregoing, a “Change in Control” will not be deemed to have
occurred under clauses (ii) or (iii) above if within 30 days of such action, the
Board of Directors of the Company (by a two-thirds affirmative vote of the
directors in office before such action occurred) makes a determination that such
action does not and is not likely to constitute a change in control of the
Company. For purposes of this definition, a “person” includes an individual,
corporation, partnership, trust, association, joint venture, pool, syndicate,
unincorporated organization, joint-stock company, or similar organization or
group acting in concert. A person for these purposes shall be deemed to be a
beneficial owner as that term is used in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended;
(c) “Code” means the Internal Revenue Code of 1986, as amended;
(d) “Controlled Group” means the Company and any other entity the employees of
which would be required to be aggregated with the employees of the Company
pursuant to Code §414(b), (c), (m), or (o);
(e) “Good Reason” shall exist if (A)(i) the Company, without Your written
consent (a) materially reduces the scope of Your duties, or (b) requires You to
relocate to a place more than 50 miles from Norcross, Georgia to perform Your
duties; (ii) You provide written notice to the Company of such action and
provide the Company with 30 days to remedy such action (the “Cure Period”);
(iii) the Company fails to remedy such action within the Cure Period; and
(iv) You elect to resign within 30 days of the expiration of the Cure Period; or
(B) there is a Change in Control and You have provided at least six months’
prior written notice to the Company of Your intention to exercise a termination
for Good Reason within thirty (30) days following the occurrence of a Change in
Control and, unless the Company advises You in writing that it will not be
necessary for You to continue as an employee during such six month period, You
shall have continued as an employee in good standing for such six month notice
period.
(f) “Separation from Service” means, with respect to You, a “separation from
service” (within the meaning of Code §409A(a)(2)(A)(i) and regulations issued
thereunder) of You from all members of the Controlled Group; and
(g) “Specified Employee” means a “key employee” (within the meaning of Code
§416(i) without regard to Code §416(i)(5) thereof) of any member of the
Controlled Group which has stock which has publicly traded on an established
securities market or otherwise. You shall be treated as being a Specified
Employee as of any date occurring during the period beginning April 1 of a given
calendar year and ending on the next following March 31 if You meet the
definition of a Specified Employee in the preceding sentence at any time during
the calendar year immediately preceding such given calendar year.

 

 

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7. Deferral of Compensation. Notwithstanding any provision of this Agreement to
the contrary, to the extent that (i) any amount(s) would be payable to You under
Section 3(a), (b), (c) or (d) above by reason of Your termination of employment,
and (ii) such amount(s) constitute a “deferral of compensation” within the
meaning of Treasury regulations issued under Code §409A as reasonably determined
by the Company, then such amount(s) shall not be paid until You have incurred a
Separation from Service if such termination of employment does not constitute a
Separation from Service. Furthermore, to the extent that (i) any amount(s) would
be payable to You within the first six (6) months following Your Separation from
Service on account of Your Separation from Service, (ii) You are a Specified
Employee as of the date of Your Separation from Service, and (iii) such
amount(s) constitute a “deferral of compensation” within the meaning of Treasury
regulations issued under Code §409A as reasonably determined by the Company,
then such amount(s) shall not be paid and shall instead be held and accumulated
and paid as of the date which is six (6) months and one (1) day after the date
of Your Separation from Service. Any amounts paid which are excepted from being
a “deferral of compensation” shall not be subject to the foregoing restrictions.
For all purposes of this Agreement, the right to a series of installment
payments shall be treated as a right to a series of separate payments for
purposes of Code §409A.
8. Limitation on Parachute Payments. Notwithstanding any other provision of this
Agreement or of any other agreement, contract, or understanding heretofore or
hereafter entered into by You with the Company or any subsidiary or affiliate,
except an agreement, contract, or understanding hereafter entered into that
expressly modifies or excludes application of this Section (an “Other
Agreement”), and notwithstanding any formal or informal plan or other
arrangement for the direct or indirect provision of compensation to You
(including groups or classes of participants or beneficiaries of which You are a
member), whether or not such compensation is deferred, is in cash, or is in the
form of a benefit to or for You (a “Benefit Arrangement”), if You are a
“disqualified individual,” as defined in Section 280G(c) of the Code, no payment
or benefit shall be made or provided to You or become vested, exercisable or
payable, as applicable, (i) to the extent that such payment, right to exercise,
vesting, or other benefit, taking into account all other payments, rights, or
benefits to or for You, or becoming vested, exercisable or payable, as the case
may be, under this Agreement, all Other Agreements and all Benefit Arrangements,
would cause any such payment, right to exercise, vesting or other benefit to
which You are or would be entitled under this Agreement to be considered a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code as then
in effect (a “Parachute Payment”) and (ii) if, as a result of receiving a
Parachute Payment, the aggregate after-tax amounts received by You under this
Agreement, all Other Agreements, and all Benefit Arrangements would be less than
the maximum after-tax amount that could be received by You without causing any
such payment, right to exercise, vesting or other benefit to be considered a
Parachute Payment. In the event that the receipt of any such payment, right to
exercise, vesting, or other benefit under this Agreement, in conjunction with
all other rights, payments, or benefits to or for You under any Other Agreement
or any Benefit Arrangement would cause You to be considered to have received a
Parachute Payment under this Agreement that would have the effect of decreasing
the after-tax amount received by You as described in clause (ii) of the
preceding sentence, then You shall have the right, in Your sole discretion, to
designate those rights, payments or benefits (or the vesting or exercisability
thereof) under this Agreement, any Other Agreements and any Benefit Arrangements
that should be reduced or eliminated so as to avoid having the right, payment or
benefit to You (or the vesting or exercisability thereof) under this Agreement
be deemed to be a Parachute Payment. All determinations required to be made
under this Section, including whether and when a reduction in rights, payments
or benefits (or the vesting or exercisability thereof) is required and the
amount of such reduction and the assumptions to be utilized in arriving at such
determination, shall be made by PricewaterhouseCoopers LLP or such other
certified public accounting firm reasonably acceptable to the Company as may be
designated by You in writing (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and You within 15 business
days of the receipt of notice from You or the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the Company or any
individual, entity or group effecting a change in the ownership or effective
control of the Company (within the meaning of Section 280G of the Code), You
shall appoint another nationally recognized accounting firm that is reasonably
acceptable to the Company to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any determination by the Accounting Firm shall be binding upon the Company and
You.

 

 

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9. Entire Agreement. This Agreement constitutes the entire agreement between the
Parties concerning the subject matter of this Agreement and supersedes any prior
communications, agreements or understandings, whether oral or written, between
You and the Company relating to severance payments of any type or nature,
including without limitation, the Prior Agreement. Other than the terms of this
Agreement, no other representation, promise or agreement has been made with You
to cause You to sign this Agreement.
10. Confidentiality, Non-Disclosure and Non-Solicitation Agreement. By execution
of this Agreement, the Parties acknowledge the continuing validity and
effectiveness of the Confidentiality, Non-Disclosure and Non-Solicitation
Agreement (the “Covenants Agreement”) entered into concurrently with the
execution of the Prior Agreement.
11. Governing Law, Jurisdiction and Venue. The laws of the State of Georgia will
govern this Agreement. If Georgia’s conflict of law rules would apply another
state’s laws, the Parties agree that Georgia law will still govern. You agree
that any claim arising out of or relating to this Agreement will be brought in a
state or federal court of competent jurisdiction in Georgia. You consent to the
personal jurisdiction of the state and/or federal courts located in Georgia. You
waive (i) any objection to jurisdiction or venue, or (ii) any defense claiming
lack of jurisdiction or improper venue, in any action brought in such courts.
12. Waiver. The Company’s failure to enforce any provision of this Agreement
will not act as a waiver of that or any other provision. The Company’s waiver of
any breach of this Agreement will not act as a waiver of any other breach.
13. Severability. The provisions of this Agreement are severable. If any
provision is determined to be invalid, illegal, or unenforceable, in whole or in
part, the remaining provisions and any partially enforceable provisions will
remain in full force and effect.
14. Amendments. This Agreement may not be amended or modified except in writing
signed by both Parties.
15. Successors and Assigns. This Agreement will be assignable to, and will inure
to the benefit of, the Company’s successors and assigns, including, without
limitation, successors through merger, name change, consolidation, or sale of a
majority of the Company’s stock or assets, and will be binding upon You and Your
heirs and assigns.
[Signatures Appear on Following Page]

 

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.

            S1 CORPORATION
      By:   /s/ Gregory D. Orenstein         Name:   Gregory D. Orenstein       
Title:   SVP, Chief Legal Officer and Secretary     

                  /s/ Meigan Putnam       Meigan Putnam