Exhibit 10.1

 

Execution Copy

 

FIRST AMENDMENT

OF THE

EMPLOYMENT AND NON-COMPETITION AGREEMENT

 

THIS FIRST AMENDMENT of the EMPLOYMENT AND NON-COMPETITION AGREEMENT (this
“Agreement”) is entered into effective as of April 17, 2017 (the “Effective
Date”), by and between CPI Card Group Inc., a Delaware corporation which was
formerly known as CPI Acquisition, Inc. (the “Company”) and Steve Montross, an
individual (the “Employee”).

 

RECITALS

 

A.                                    The Company and Employee entered into an
Employment and Non-Competition Agreement effective as of April 22, 2009 (the
“Employment Agreement”); and

 

B.                                    The Company’s Board of Directors (the
“Board”), including Employee, has engaged in a succession planning process that
will facilitate the orderly transition of Employee’s duties to a successor
President and Chief Executive Officer upon Employee’s retirement from the
Company; and

 

C.                                    The Company and Employee now consider it
desirable to agree to amend the Employment Agreement to provide the terms and
conditions of Employee’s continued employment with the Company for the period
from the Effective Date until Employee’s termination of employment from the
Company by Approved Retirement;

 

NOW, THEREFORE, in accordance with Section 9.1 of the Employment Agreement, and
in consideration of the premises and mutual agreements set forth below, Employee
and the Company hereby agree to amend the Employment Agreement, effective as of
April 17, 2017 (the “Effective Date”), in the following particulars:

 

1.                                      Term.  The Term of the Employment
Agreement shall end on June 30, 2018 (the “Retirement Date”), and shall not be
renewed.  Between the Effective Date and the Retirement Date, the Company shall
employ Employee, and Employee shall serve the Company, on the terms and
conditions set forth in the Employment Agreement, as modified by this Agreement,
unless sooner terminated pursuant to the provisions of the Employment Agreement
(the “Transition Period”).  Subject to the terms and conditions of this
Agreement, Employee’s retirement on the Retirement Date shall be deemed an
Approved Retirement for purposes of all equity awards under the CPI Card Group
Inc. Omnibus Incentive Plan.

 

2.                                      Title and Duties.  From the Effective
Date through the earlier of (a) the date the Company appoints a successor
President and Chief Executive Officer; or (b) December 31, 2017 (the “CEO
Transition Date”), Employee will continue to be employed as the President and
Chief Executive Officer of the Company, and Employee will perform the
responsibilities and duties that are usual to the position of a President and
Chief Executive Officer, unless sooner terminated in accordance with this
Agreement.  On the CEO Transition Date, Employee shall voluntarily resign as
President and Chief Executive Officer of the Company and from all other director
and officer positions with the Company and its Affiliates.  From the CEO
Transition

 

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Date through the Retirement Date, Employee shall remain an employee of the
Company until the Retirement Date and shall report to the Chairman of the Board.

 

3.                                      Transition Duties.  During the
Transition Period, Employee shall also assist the Board with a successful
transition of duties.  Employee shall use his reasonable best efforts in
transitioning key relationships to other employees of the Company.  In addition,
Employee shall reasonably cooperate with the Board in recruiting his successor. 
Employee shall work cooperatively with the Board and with members of the
Company’s management to develop and implement a plan of communicating Employee’s
departure from the Company that is intended to reflect positively on the Company
and on Employee.  Between the CEO Transition Date and the Retirement Date,
Employee shall provide transition services to the Company and to his successor,
including, but will not limited to, (i) discussing business and customer issues
and strategies, (ii) assisting with customer and supplier issues and/or
strategies and (iii) any other services that may reasonably be requested by the
Board or Employee’s successor.

 

4.                                      Compensation.  As compensation for the
services to be rendered and the other obligations undertaken by Employee during
the Transition Period, the Company shall pay Employee the following
compensation:

 

(a)                                 Base Salary.  During the Transition Period
and up through the Retirement Date, and in accordance with the Company’s
policies in effect from time to time, the Company shall pay to Employee an
Annual Base Salary of $560,000.00, payable on a bi-weekly basis ($21,538.46 per
pay period).

 

(b)                                 Incentive Compensation.  Under the Company’s
2017 STIP, Employee will have the opportunity for an incentive bonus at a target
of up to 100% of the Annual Base Salary per year, depending on performance
metrics to be agreed upon in writing between Employee and the Board.  Employee
will not be eligible for the Company’s 2018 STIP or any similar or successor
plan.

 

(c)                                  Equity Awards.  The treatment of Employee’s
outstanding equity grants would be under the terms of an Approved Retirement
under the CPI Card Group Inc. Omnibus Incentive Plan and the applicable award
agreements thereunder.  Employee will not be eligible for an equity grant under
the CPI Card Group Inc. Omnibus Incentive Plan or any similar or successor plan.

 

(d)                                 Benefits and Reimbursement.  During the
Transition Period, employee shall be continue to be entitled to the expense
reimbursements, vacation, company car, and additional benefits provided for
under Sections 6.2(d), (e), and (h) of the Employment Agreement.

 

5.                                      Succession Incentive.  Subject to the
terms of the Employment Agreement and this Agreement, including, without
limitation, Sections 6, 7, and 8 of this Agreement, following the Retirement
Date, the Company will pay to Employee the sum of $560,000.00, as follows:

 

(a)                                 On the Retirement Date, the Company will pay
to Employee a lump sum cash amount equal to $280,000; and

 

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(b)                                 From the Retirement Date through
December 31, 2018, the Company will pay to Employee a cash amount equal to
$280,000, payable on a bi-weekly basis ($21,538.46 per pay period).

 

6.                                      Severance Benefits.  On and after the
Retirement Date, Employee shall not be entitled to Severance Benefits under
Section 6.2(c) of the Employment Agreement.  In the event of Employee’s
termination of employment before the Retirement Date by the Company with or
without Cause, by Employee voluntarily or for Good Reason (other than due to the
succession process agreed to under this Agreement), or due to death or
Disability, Section 6 of the Employment Agreement shall apply; provided,
however, that in the event of Employee’s termination of employment without Cause
or resignation for Good Reason, in lieu of the Severance Benefits in
Section 6.2(c) of the Employment Agreement, Employee shall be entitled to:
(i) salary continuation payments equal to the Base Salary Employee would have
been paid if his employment had continued until the Retirement Date, (ii) if not
already paid to him, payment of his 2017 STIP at target as and when such amount
otherwise would have been paid to him, (iii) payment of the succession
incentives described in Section 5 herein as and when such amounts otherwise
would have been paid to him hereunder, and (iv) the treatment of Employee’s
equity grants as an Approved Retirement as described in Section 4(c) herein and
in the applicable equity documents.

 

7.                                      Restrictive Covenants.  During the
Transition Period and thereafter, Employee shall comply with the Restrictive
Covenants set forth in the Employment Agreement, the restriction of any equity
award or other agreement with the Company, and any other applicable
restrictions.  Nothing in this Agreement or the Employment Agreement is intended
or should be construed to prevent Employee from exercising his rights to file a
charge with, provide accurate information to or to cooperate with or participate
in an investigation or proceeding conducted by any governmental, regulatory or
administrative agency or from complying with compulsory legal process or legally
required disclosure obligation.

 

8.                                      Release.  Any and all amounts payable
under this Agreement on or after the Retirement Date or the date Employee’s
employment terminates, if earlier, shall only be payable if Employee delivers to
the Company an original, signed release of claims of Employee occurring up to
the release date, in a form substantially the same as attached hereto as
Exhibit A (the “Release”).  The Company shall deliver the Release to Employee
within ten (10) calendar days of the Retirement Date or the date Employee’s
employment terminates, if earlier, and Employee must deliver to the Company and
not revoke an executed and enforceable Release no later than sixty (60) calendar
days after the earlier of the Retirement Date or the date Employee’s employment
terminates (the “Release Deadline”).  Payment of the amounts described in
Sections 4, 5, and 6 of this Agreement or Section 6 of the Employment Agreement
that are due on or after the Retirement Date or the date Employee’s employment
terminates, if earlier, shall commence no earlier than the date on which
Employee delivers to the Company and does not revoke an executed and enforceable
release as described herein.  Payment of any severance or benefits that are not
exempt from Code Section 409A shall be delayed until the Release Deadline,
irrespective of when Employee executes the Release; provided, however, that
where Employee’s termination of employment and the Release Deadline occur within
the same calendar year, the payment may be made up to thirty (30) calendar days
prior to the Release Deadline, and provided further that where Employee’s
termination of employment and the Release Deadline occur in two separate

 

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calendar years, payment may not be made before the later of January 1 of the
second year or the date that is thirty (30) calendar days prior to the Release
Deadline.  If Employee does not deliver an original, signed release to the
Company by the Release Deadline (or such longer period if required by law), the
Company shall have no obligation to pay or provide to Employee any amount or
benefits under this Agreement, or any other monies on account of the termination
of Employee’s employment.

 

9.                                      Withholding.  All payments made to
Executive pursuant to this Agreement and the Employment Agreement shall be
subject to applicable withholding taxes, if any, and any amount so withheld
shall be deemed to have been paid to Employee for purposes of amounts due under
this Agreement and the Employment Agreement.

 

10.                               Governing Law.  This Agreement will in all
respects be governed by, and construed in accordance with, the laws of the State
of Delaware, without regard to conflict of laws principles that would require
the application of the laws of any other jurisdiction.  The Company and Employee
agree that the jurisdiction and venue for any disputes arising under, or any
action brought to enforce (or otherwise relating to), this Agreement shall be
exclusively in the courts in the State of Colorado, County of Arapahoe or
Denver, including the Federal Courts located therein (should Federal
jurisdiction exist), and the Company and Employee and hereby submit and consent
to said jurisdiction and venue.

 

11.                               Name Change.  The name “CPI Card Group Inc.,
f/k/a CPI Acquisition, Inc.” shall be substituted for the name “CPI
Acquisition, Inc.,” each place the latter name appears in the Employment
Agreement.

 

12.                               Notices.  All notices and other communications
required or permitted under this Agreement will be in writing and will be deemed
to have been duly given when delivered in person or when dispatched by telegram
or electronic facsimile transfer (confirmed in writing by mail simultaneously
dispatched) or one business day after having been dispatched by a nationally
recognized overnight courier service to the appropriate party at the address
specified below:

 

If to the Company:

CPI Card Group Inc.

10026 West San Juan Way, Suite 200

Littleton, CO 80127

Fax:  (303) 973-8420

Attention:  Chief Human Resources Officer

 

 

With copy to:

Winston & Strawn LLP

35 West Wacker Drive

Chicago, IL 60601

Fax:  (312) 558-5700

Attention:  Andrew McDonough, Esq.

 

If to Employee, at the address of Employee as set forth on the signature
page hereto.

 

13.                               Employment Agreement.  Except as expressly
provided in this Agreement, all terms and conditions the Employment Agreement
shall continue in full force and effect.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
and delivered by its duly authorized officer, and Employee has duly executed and
delivered this Agreement, as of the date first written above.

 

COMPANY:

 

EMPLOYEE:

CPI CARD GROUP INC.

 

 

 

 

 

 

 

 

By:

/s/ Lisa Jacoba

 

/s/ Steve Montross

Name: Lisa Jacoba

 

 

Title: Chief HR Officer

 

 

 

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Exhibit A

GENERAL RELEASE AND WAIVER OF CLAIMS

 

This General Release and Waiver Agreement (“Agreement”) is entered into this
         day of                          , 2018 by and between CPI Card Group
Inc., a Delaware corporation (the “Company”) and Steve Montross (hereinafter
“Employee”).

 

WHEREAS, Employee’s employment with the Company terminated effective
                            , 2018 (“Termination Date”) and the Company and
Employee have voluntarily agreed to the terms of this Agreement in exchange for
certain payments set forth in Employee’s Employment and Non-Competition
Agreement made effective as of April 22, 2009, as amended by the First Amendment
thereof dated April 17, 2017 (“Amended Employment Agreement”), to which Employee
otherwise would not be entitled;

 

WHEREAS, accordingly the Company has determined that Employee will receive the
payments set forth in Sections 4 and 5 of the Amended Employment Agreement
(“Transition Payments”) if Employee executes and complies with the terms of this
Agreement; and

 

WHEREAS, Employee acknowledges that the consideration received by Employee under
the terms of the Amended Employment Agreement for the release and waiver
contained herein is in addition to any consideration the Company is otherwise
required to provide Employee.

 

(a)                                 General Release by Employee.  Employee
individually and on behalf of his heirs, personal representatives, successors
and assigns, hereby forever releases, waives and discharges the Company and any
parent, subsidiary or otherwise affiliated corporation, partnership, firm or
business, and their respective present and former directors, officers,
shareholders, owners, managers, supervisors, employees, partners, attorneys,
agents and representatives, and their respective successors, heirs and assigns
(jointly and severally referred to as “Releasees”), from any and all actions,
causes of action, claims, charges, demands, losses, damages, costs, attorneys’
fees, judgments, liens, indebtedness and liabilities of every kind and
character, if any, whether known or unknown, suspected or unsuspected, that
Employee may have or claim to have, in any way relating to and/or arising out of
any event or act of omission or commission occurring prior to Employee’s
execution of this Agreement, or in any way relating to or arising out of
Employee’s employment or termination of employment with the Company and/or the
Company’s conduct pursuant to this Agreement and/or any tort, statutory or
contract claims Employee may have against any of the Releasees, arising or
existing prior to the date of this Agreement (collectively, “Claims”), including
but not limited to:

 

(i)                                     Claims arising under federal, state, or
local laws prohibiting age, sex, sexual orientation, marital status, race,
color, creed, disability, handicap, religion, national origin, or any other form
of discrimination lawful off-duty conduct, or retaliation, including, but not
limited to, the 1866 Civil Rights Act, 42 U.S.C. § 1981, the Equal Pay Act, 29
U.S.C. § 206(d), the Americans With Disabilities Act, 42 U.S.C. § 12101, and
Title VII of the 1964 Civil Rights Act, as amended, 42 U.S.C. § 2000e et seq.,
the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621,
et seq. (“ADEA”), including as amended

 

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by the Older Workers Benefit Protection Act of 1990, as amended (“OWBPA”), the
Colorado Anti-Discrimination Act, as amended;

 

(ii)                                  Claims arising under the Fair Labor
Standards Act, 29 U.S.C. § 201 et seq.;

 

(iii)                               Claims arising under the Family and Medical
Leave Act, as amended;

 

(iv)                              Claims arising under Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001 et seq.;

 

(v)                                 Any and all common law claims such as
wrongful discharge, violation of public policy, defamation, negligence,
infliction of emotional distress, any intentional torts, outrageous conduct,
interference with or breach of contract, fraud, misrepresentation, invasion of
privacy, and retaliation, including retaliation and other common law claims;

 

(vi)                              Any and all claims for the following; money
damages, including actual, compensatory, liquidated or punitive damages,
equitable relief such as reinstatement or injunctive relief, front or back pay,
wages, benefits, sick pay, vacation pay, liquidated damages, costs, interest,
expenses, attorneys’ fees, or any other remedies; and

 

(vii)                           All other legal and equitable claims regarding
Employee’s employment with the Company or the termination of said employment.

 

(b)                                 Release and Waiver of Rights under ADEA. 
Employee recognizes and agrees that under the terms and provisions of this
Agreement, he is releasing and waiving rights he may have to pursue any claims
against the Company and/or Releasees arising under the ADEA.  In connection with
his waiver of those rights, Employee specifically acknowledges the following:

 

(i)                                     Employee has been given a period of
twenty-one (21) days to review and consider this Agreement before signing it. 
Employee further understands that he may use as much of the twenty-one (21) day
period as he wishes prior to signing and is free to sign the Agreement before
the expiration of the twenty-one (21) day period.  Employee also understands
that if he does not execute the Agreement within the twenty-one (21) day period,
none of the parties hereto shall have any rights or obligations under this
Agreement;

 

(ii)                                  Employee was advised in writing that he
has the right to and may consult with an attorney before executing this
Agreement.  Employee has had the opportunity to consult with his attorneys about
the Agreement and he has exercised his right to do so;

 

(iii)                               Employee understands that he must knowingly
and voluntarily accept the terms of this Agreement before signing the Agreement;

 

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(iv)                              Employee has seven (7) days following
execution of this Agreement to revoke the Agreement.  The Agreement will not
become effective or enforceable until the expiration of the seven (7) day
revocation period.  To revoke the Agreement, Employee must advise the Company in
writing of his election to do so before the expiration of the seven (7) day
revocation period and by addressing his notice of revocation to: Lisa Jacoba,
CPI Card Group Inc., 10026 West San Juan Way, Suite 200 Littleton, CO 80127. 
The effective date of this Agreement shall be the eighth (8th) calendar day
after Employee has executed the Agreement, provided that he has not revoked the
Agreement as described in this paragraph;

 

(v)                                 Employee is specifically releasing, among
other potential causes of action, any claims he may have against the Company
arising under the ADEA and all amendments thereto;

 

(vi)                              Employee is not waiving or relinquishing any
rights or claims he may have against the Company that arise after the date this
Agreement is executed;

 

(vii)                           The consideration given for this waiver and
release is in addition to anything of value to which Employee is already
entitled; and

 

(viii)                        This Agreement is intended by the parties hereto
to comply with the terms and provisions of the OWBPA and all amendments thereto.

 

(c)                                  Representations of Employee.  Employee
represents that Employee has been given an adequate opportunity to advise the
Corporation’s human resources, legal, or other relevant management division, and
has so advised such division in writing, of any facts that Employee is aware of
that constitute or might constitute a violation of any ethical, legal, or
contractual standards or obligations of the Corporation or any Affiliate. 
Employee further represents that Employee is not aware of any existing or
threatened claims, charges, or lawsuits that he/she has not disclosed to the
Corporation.

 

By signing this Agreement, Employee represents that he has not filed any
complaint, charge, or lawsuit against any or all of the Releasees, and has not
raised any Claims with a court or government agency.  Employee agrees that
Employee is not entitled to any remedy or relief if Employee were to pursue with
or before any federal, state or other governmental authority or court any Claim
against any of the Releasees, relating to any of the matters released hereby. 
If the release with respect to any of the foregoing released claims is deemed to
be invalid, unenforceable, or illegal, then the court making such determination
shall reduce the effect of the release to be the minimum extent necessary in
order to preserve the enforceability of the remainder of the release.

 

(d)                                 Reservation of Rights.  Nothing in this
Agreement or the Employment Agreement is intended or should be construed to
prevent Employee from exercising his rights to file a charge with, provide
accurate information to or to cooperate with or participate in an investigation
or proceeding conducted by any governmental, regulatory or administrative agency
or from complying with compulsory legal process or legally

 

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required disclosure obligation; provided, however, that Employee waives and
agrees to waive any right to recover monetary damages in any charge, complaint
or lawsuit filed by Employee or anyone else on behalf of Employee for any
released Claims.  Further, claims challenging the validity of this Agreement
under the ADEA, as amended by the OWBPA, are not released.  This release shall
not release the Releasees or any of them from any Claim that by law cannot be
waived or released, from any rights Employee may have with respect to his
outstanding equity grants, from any rights to indemnification Employee may have
under the Amended Employment Agreement, the common law, applicable policies of
insurance, or the articles of incorporation and bylaws of the Company or similar
governing documents, nor shall it release the Company from its obligations under
this Agreement (which, for the avoidance of doubt, include the Company’s
obligation under the Amended Employment Agreement to provide the payments that
are conditioned on the return of this Agreement).

 

(e)                                  Unemployment.  The Company agrees not to
contest any unemployment benefits to which Employee may be entitled.

 

(f)                                   Authority to Release.  Employee hereby
warrants that he has not assigned or transferred to any person any portion of
any Claim that is released, waived, and discharged in Sections (a) or (b) above.

 

(g)                                  Severability.  If any provision of this
Agreement is declared by any court of competent jurisdiction to be invalid for
any reason, such invalidity shall not affect the remaining provisions of this
Agreement, which shall be fully severable, and given full force and effect.

 

(h)                                 Governing Law.  This Agreement will in all
respects be governed by, and construed in accordance with, the laws of the State
of Delaware, without regard to conflict of laws principles that would require
the application of the laws of any other jurisdiction.  The Company and Employee
agree that the jurisdiction and venue for any disputes arising under, or any
action brought to enforce (or otherwise relating to), this Agreement shall be
exclusively in the courts in the State of Colorado, County of Arapahoe or
Denver, including the Federal Courts located therein (should Federal
jurisdiction exist), and the Company and Employee and hereby submit and consent
to said jurisdiction and venue.

 

(i)                                     Counterparts.  This Agreement may be
signed in counterparts, each of which shall be deemed an original and all of
which together shall be one and the same instrument.  A signature hereon sent by
facsimile or other electronic means shall be as effective as an original
signature.

 

PLEASE READ CAREFULLY.  THIS
AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
indicated above.

 

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COMPANY:

 

 

EMPLOYEE:

CPI CARD GROUP INC.

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

Steve Montross

Name:

 

 

Address:

Title:

 

 

 

 

 

 

 

 

 

 

Fax:

 

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