Document:

rai-ex101_446.htm

 

Exhibit 10.1

REYNOLDS AMERICAN INC.
LONG-TERM INCENTIVE PROGRAM

PERFORMANCE SHARE AGREEMENT

DATE OF GRANT:  March 1, 2016

1.    Grant.  Pursuant to the provisions of the Reynolds American Inc. Amended and Restated 2009 Omnibus Incentive Compensation Plan (the “Plan”), Reynolds American Inc. (the “Company”), on the date set forth above, has granted to

[[FIRSTNAME]] [[LASTNAME]] (the “Grantee”),

subject to the terms and conditions which follow and the terms and conditions of the Plan, an initial grant (the “Target Number”) of

[[SHARESGRANTED]]  Performance Shares.

A copy of the Plan has been provided to the Grantee and is made part of this Performance Share Agreement (this “Agreement”) with the same force and effect as if set forth in this Agreement itself.  All capitalized terms used in this Agreement shall have the meaning set forth in the Plan, unless otherwise defined in this Agreement.

2.    Value.  Each Performance Share shall be equal in value to one share of common stock, par value $0.0001 per share, of the Company or any security or other consideration into which such share may be changed by reason of any transaction or event of the type referred to in Section 11 of the Plan (each, a “Share”).

3.    Scoring.  (a)   Subject to the terms and conditions of this Agreement, the Performance Shares shall have a three-year performance period, consisting of the Company’s fiscal years 2016, 2017 and 2018 (the “Performance Period”), after which the number of Performance Shares earned (the “Earned Number”) will be determined as provided below, and when vested, will be paid in Shares.

(b)    If the Company fails to pay to its shareholders cumulative dividends of at least $5.04 per Share (the “Dividend Threshold”) for the Performance Period (which would exclude the dividend paid on January 4, 2016, but would include the dividend paid on January 2, 2019), then the Target Number shall be reduced by an amount equal to three times the percentage of the dividend underpayment for the Performance Period, up to a maximum Target Number reduction of 50% (the “Revised Target Number”), provided that, if the Performance Shares are Assumed in connection with a Change of Control, the Dividend Threshold (and the reduction under this sentence based on the Dividend Threshold) shall not apply.

 

 

(c)    At the end of the Performance Period, after determining if the Dividend Threshold has been met, the Earned Number shall be determined by multiplying the Target Number, or Revised Target Number if the Dividend Threshold has not been met, by the average score for the Company under the Reynolds American Inc. Annual Incentive Award Program (such program, and any successor plan or program thereto, “AIAP”) for fiscal years 2016, 2017 and 2018; provided, however, that such three-year average score shall in no event be greater than 150%; and provided, further, that the value of the Earned Number of Performance Shares that vest as provided in Section 4 of this Agreement, and are paid as provided in Section 5 of this Agreement, shall not exceed any maximum limits set by the Board of Directors pursuant to its resolutions adopted on February 4, 2016, or otherwise contained in the Plan.  

(d)    Notwithstanding anything in Section 3 of this Agreement to the contrary, in the event of a Change of Control prior to the end of the Performance Period, the “Change of Control Earned Number” shall be equal to the product of (i) the Target Number and (ii) the average of the following:  (x) the score for the Company under the AIAP for each fiscal year of the Performance Period ending prior to the date of such Change of Control, and (y) a score of 100% for each fiscal year of the Performance Period ending after the date of such Change of Control.

4.    Vesting.  (a)   Subject to the terms and conditions of this Agreement, the Earned Number (or in the event of a Change of Control prior to the end of the Performance Period in connection with which the Performance Shares are Assumed, the greatest of (i) the Earned Number, (ii) the Change of Control Earned Number, or (iii) the Target Number) of Performance Shares shall vest on March 1, 2019 (the “Normal Vesting Date”), if the Grantee remains employed by the Company or a Subsidiary on such date.

(b)    Notwithstanding anything in Section 4(a) of this Agreement to the contrary but subject to the other terms of this Agreement, in the event of (i) the Grantee’s Retirement (as such term is defined below) or (ii) the Grantee’s Termination of Employment where the Grantee is eligible for and accepts severance benefits under a Company-sponsored severance plan or agreement with the Company (with eligibility for severance benefits to be determined in the sole discretion of the Company), in either case prior to the Normal Vesting Date, and in the case of clause (ii) above prior to the occurrence of a Change of Control, the number of Performance Shares that will vest on the Normal Vesting Date shall be equal to the product of (x) the Earned Number and (y) a fraction, the numerator of which shall be the number of days between the Date of Grant and the date of the Grantee’s Retirement or Termination of Employment, as applicable, and the denominator of which shall be the number of days between the Date of Grant and the Normal Vesting Date, and the remaining Performance Shares will be forfeited and cancelled on the Normal Vesting Date.  For purposes of this Agreement, the term “Retirement” shall mean the Grantee’s voluntary Termination of Employment on or after his or her 65th birthday, on or after his or her 55th birthday with 10 or more years of service with the Company or a Subsidiary, or on or after his or her 50th birthday with 20 or more years of service with the Company or a Subsidiary.  In addition, for purposes of applying the fraction set forth in clause (y) of the first sentence of this Section 4(b) solely in the case of the Grantee’s Retirement, if the Grantee is a level 8 through level 10 employee of the Company or a Subsidiary on the Date of Grant, the date of the Grantee’s Retirement shall be considered to be the earlier of (A) the Normal Vesting Date or (B) the first anniversary of the actual date of the Grantee’s Retirement if (I) the Grantee 
notifies the Company of the Grantee’s intent to retire at least one year in advance of the 

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Grantee’s intended date of Retirement and (II) the Grantee’s Retirement in fact occurs on the date provided by the Grantee to the Company in such notice (or such other date as is subsequently agreed to by the Grantee and the Company).  The Company shall establish such policies, procedures, rules and guidelines as it determines to be appropriate to administer the preceding sentence, including the form and timing of the Grantee’s notice of the Grantee’s intent to retire.  The Company’s determination of the Grantee’s eligibility for treatment under the second preceding sentence shall be final and binding on the Grantee.

(c)    Notwithstanding anything in Section 4(a) of this Agreement to the contrary but subject to the other terms of this Agreement, in the event of (i) the Grantee’s death or (ii) the Grantee’s Termination of Employment due to Permanent Disability (as such term is defined below), in either case prior to both the Normal Vesting Date and the occurrence of a Change of Control, while the Grantee is an active employee of the Company or a Subsidiary, the number of Performance Shares that will vest on the date of the Grantee’s death or the date of the Grantee’s Termination of Employment due to Permanent Disability, as applicable, shall be equal to the product of (x) the Target Number and (y) a fraction, the numerator of which shall be the number of days between the Date of Grant and the date of the Grantee’s death or the date of the Grantee’s Termination of Employment due to Permanent Disability, as applicable, and the denominator of which shall be the number of days between the Date of Grant and the Normal Vesting Date, and the remaining Performance Shares will be forfeited, cancelled and will no longer be considered outstanding on the date of the Grantee’s death or the date of the Grantee’s Termination of Employment due to Permanent Disability, as applicable.  For purposes of this Agreement, the term “Permanent Disability” shall mean that the Grantee has become eligible for and is in receipt of benefits under the Company’s Long-Term Disability Plan.  In addition, for purposes of applying the fraction set forth in clause (y) of the first sentence of this Section 4(c), if the Grantee is a level 8 through level 10 employee of the Company or a Subsidiary on the Date of Grant, the date of the Grantee’s death or the date of Grantee’s Termination of Employment due to Permanent Disability, as applicable, shall be considered to be the earlier of (A) the Normal Vesting Date or (B) the first anniversary of the date of the Grantee’s death or the date of Grantee’s Termination of Employment due to Permanent Disability, as applicable, if (I) the Grantee notifies the Company of the Grantee’s intent to retire at least one year in advance of the Grantee’s intended date of Retirement and (II) the date of the Grantee’s death or the date of Grantee’s Termination of Employment due to Permanent Disability, as applicable, occurs on a date when the Grantee would have been eligible for Retirement.  The Company shall establish such policies, procedures, rules and guidelines as it determines to be appropriate to administer the preceding sentence, including the form and timing of the Grantee’s notice of the Grantee’s intent to retire.  The Company’s determination of the Grantee’s eligibility for treatment under the second preceding sentence shall be final and binding on the Grantee.

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(d)    (i)  Notwithstanding anything in Section 4(a) or Section 4(b) of this Agreement to the contrary but subject to the other terms of this Agreement, in the event of a Change of Control (x) that occurs (A) prior to the Normal Vesting Date and (B) while the Performance Shares remain outstanding, and (y) in connection with which the Performance Shares are not Assumed, the number of Performance Shares that will vest on the date of such Change of Control shall be equal to the higher of (A) the Target Number or (B) the Change of Control Earned Number.

(ii)   For purposes of this Agreement, the Performance Shares shall be considered “Assumed” in connection with a Change of Control if this Agreement is continued without change in connection with such Change of Control or, if this Agreement is modified or the Performance Shares are adjusted in connection with such Change in Control, the following requirements are satisfied:  (w) the value of the Performance Shares is not reduced by such modification or adjustment, (x) the Performance Shares as so modified or adjusted relate to publicly traded equity securities of the Company or its successor in the Change of Control (or another entity that is affiliated with the Company or its successor following the Change of Control), (y) if the Grantee is subject to U.S. federal income tax under the Code, the tax consequences under the Code of the Performance Shares as so modified or adjusted are not less favorable to the Grantee than the tax consequences of the Performance Shares before such modification or adjustment, and (z) the other terms and conditions of the Performance Shares as so modified or adjusted are not less favorable to the Grantee than the terms and conditions of the Performance Shares before such modification or adjustment (including the provisions that would apply in the event of a subsequent Change of Control and in the event of the Grantee’s Termination of Employment) and are consistent with Sections 4(d)(iii) and (iv).  The Performance Shares may be Assumed only to the extent such assumption does not result in the Performance Shares failing to comply with Section 409A of the Code.  The determination of whether the conditions of this Section 4(d)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change of Control, in its sole discretion.

(iii)  Notwithstanding anything in Section 4(a) of this Agreement to the contrary but subject to the other terms of this Agreement, if the Performance Shares are Assumed in connection with a Change of Control and the Grantee incurs a Qualified Termination before the Normal Vesting Date and within the two year period following the Change of Control, the number of Performance Shares that shall vest upon such Qualified Termination shall be the higher of (x) the Target Number or (y) the Change of Control Earned Number.

(iv)  For purposes of this Section 4(d), a “Qualified Termination” shall mean (x) a Termination of Employment in connection with which the Grantee is or would be eligible to receive severance benefits under a severance plan or agreement that the Company sponsors or is party to as of the Change of Control (based on the terms of such plan or agreement in effect immediately prior to the Change of Control), (y) the Grantee’s death or (z) the Grantee’s Termination of Employment due to Permanent Disability.

(e)    Notwithstanding anything in this Agreement to the contrary but subject to the other terms of this Agreement, in the event of the Grantee’s (i) voluntary Termination of Employment (other than at Retirement or the Grantee’s Termination of Employment where the Grantee is eligible for and accepts severance benefits under a Company-sponsored severance 

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plan or agreement with the Company), (ii) involuntary Termination of Employment where the Grantee is not eligible for severance benefits under a Company-sponsored severance plan or agreement with the Company (including, without limitation, a Termination of Employment for Cause, as such term is defined in the relevant severance plan or agreement) or (iii) involuntary Termination of Employment where the Grantee is eligible for but does not accept the severance benefits under the relevant Company-sponsored severance plan or agreement with the Company, in each case, prior to the Normal Vesting Date, the Performance Shares shall be immediately forfeited and cancelled and shall not be considered outstanding.

5.    Payment.  (a)   Payment of vested Performance Shares shall be made only in Shares.  At the Company’s sole discretion, such Shares may be issued in certificated or book-entry form.

(b)    Except as set forth in Section 5(c) of this Agreement, or except under such other circumstances as the Committee deems appropriate if the Grantee is not a “Covered Employee” within the meaning of Section 162(m) of the Code, no payment of vested Performance Shares shall be made to the Grantee prior to the Normal Vesting Date.  Except as otherwise provided by this Agreement, payment of vested Performance Shares shall be made as soon as practicable following the Normal Vesting Date, and in any event no later than March 15, 2020.

(c)    In the event that the Performance Shares vest pursuant to Section 4(c), Section 4(d)(i) or Section 4(d)(iii), the payment of the vested Performance Shares shall be made as soon as practicable after the applicable vesting event, and in any case no later than March 15 after the end of the year in which such event occurs.

(d)    Any payment to which the Grantee is entitled under this Agreement by reason of (or otherwise after) the Grantee’s death shall be made to the Grantee’s estate.

6.    Termination of Employment.  For purposes of this Agreement, the term “Termination of Employment” shall mean termination from active employment with the Company or a Subsidiary, a successor to the Company or a Subsidiary in a Change of Control, or another entity that is affiliated with the Company or its successor following the Change of Control; it does not mean the termination of pay and benefits at the end of a period of salary continuation (or other form of severance pay or pay in lieu of salary).

7.    Dividend Equivalent Payment.  At the time of the payment of any vested Performance Shares, the Grantee shall receive a cash dividend equivalent payment in an amount equal to the product of (a) the Earned Number and (b) the aggregate amount of dividends per share declared and paid to the Company’s shareholders on Shares during the period from the Date of Grant through the date of the payment of the Performance Shares, without interest (the “Actual Dividends Paid”); provided, however, that in the event that Section 4(b), 4(c) or 4(d) applies, the amount of the dividend equivalent payment to the Grantee shall be equal to the product of (i) the number of Performance Shares in which the Grantee becomes vested pursuant to Section 4(b), 4(c) or 4(d) of this Agreement, as applicable, and (ii) the Actual Dividends Paid.  Notwithstanding anything in this Section 7 to the contrary, to the extent the payment of the vested Performance Shares occurs after both the date a dividend has been declared by the Company and the record date for such dividend, but prior to the dividend payment date related thereto, the amount of the Actual Dividend Paid also shall include such dividend.  In the case of 

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a dividend payment to be paid in property, the dividend payment shall be deemed to be the fair market value of the property at the time of distribution of the dividend payment to the Grantee, as determined by the Committee.

8.    Rights as a Shareholder.  The Grantee shall not be, nor have any of the rights or privileges of, a shareholder of the Company with respect to the Performance Shares unless and until, and to the extent, the Performance Shares vest and Shares have been paid to the Grantee in accordance with Section 5 of this Agreement.

9.    Transferability.  Other than as specifically provided in this Agreement with regard to the death of the Grantee, this Agreement and any benefit provided or accruing hereunder shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; and any attempt to do so shall be void.  No such benefit shall, prior to receipt thereof by the Grantee, be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the Grantee.

10.   No Right to Employment.  Neither the execution and delivery of this Agreement nor the granting of the Performance Shares evidenced by this Agreement shall constitute any agreement or understanding, express or implied, on the part of the Company or its subsidiaries to employ the Grantee for any specific period or in any specific capacity or shall prevent the Company or its subsidiaries from terminating the Grantee’s employment at any time with or without cause.

11.   Application of Laws.  The granting of Performance Shares under this Agreement shall be subject to all applicable laws, rules and regulations and to such approvals of any governmental agencies as may be required.

12.   Notices.  Any notices required to be given hereunder to the Company shall be addressed to the Corporate Secretary, Reynolds American Inc., Post Office Box 2990, Winston-Salem, NC 27102-2990 (other than any notice that the Grantee provides under Section 4(b) or Section 4(c), which shall be sent as described in the policies, procedures, rules and guidelines established by the Company pursuant to Section 4(b) and Section 4(c)), and any notice required to be given hereunder to the Grantee shall be sent to the Grantee’s address as shown on the records of the Company.

13.   Taxes.  Any taxes required by federal, state or local laws to be withheld by the Company in respect of the grant of Performance Shares or payment of vested Performance Shares hereunder shall be paid to the Company by the Grantee by the time such taxes are required to be paid or deposited by the Company.  The Grantee hereby authorizes the necessary withholding of Performance Shares by the Company to satisfy the minimum statutory tax withholding amount prior to delivery of the vested Performance Shares.

14.   Administration and Interpretation.  In consideration of the grant of Performance Shares hereunder, the Grantee specifically agrees that the Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan and Agreement as are consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations and determinations 

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made by the Committee shall be final, conclusive, and binding upon the Grantee, the Company and all other interested persons.  No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement.  The Committee may delegate its interpretive authority as permitted by the provisions of the Plan.

15.   Compliance with Section 409A of the Code.  This Agreement is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent.

16.   Amendment.  This Agreement is subject to the Plan, a copy of which has been provided to the Grantee.  The Board of Directors and the Committee, as applicable, may amend the Plan, and the Committee may amend this Agreement, at any time in any way, except that, other than as otherwise provided by the Plan, any amendment of the Plan or this Agreement that would impair the Grantee’s rights under this Agreement may not be made without the Grantee’s written consent.

17.   Litigation Assistance.  (a) In addition to any other obligations of the Grantee under law or any other agreement with any Related Company, in consideration of the grant of Performance Shares hereunder, the Grantee specifically agrees that the Grantee:

(i)    if requested by the Company, will personally provide reasonable assistance and cooperation to the Related Companies in activities related to the prosecution or defense of any pending or future lawsuits or claims involving any Related Company (with the Company reimbursing the Grantee for reasonable and necessary out-of-pocket costs and expenses incurred in connection therewith);

(ii)   will promptly notify the Company’s General Counsel, in writing, upon receipt of any requests from anyone other than an employee or agent of one of the Related Companies for information regarding any Related Company which could reasonably be construed as being proprietary, non-public or confidential, or if the Grantee becomes aware of any potential claim or proposed litigation against any Related Company;

(iii)  will refrain from providing any information related to any claim or potential litigation against any Related Company to any person who is not a representative of the Company without the Company’s prior written permission, unless required to provide information pursuant to legal process;

(iv)  will not disclose or misuse any confidential information or material concerning any Related Company; and

(v)   will not engage in any activity detrimental to the interests of any Related Company, including an act of dishonesty, moral turpitude or other misconduct that has or could have a detrimental impact on the business or reputation of any Related Company.

(b)    In further consideration of the grant of Performance Shares hereunder, the Grantee specifically agrees that, if required by law to provide sworn testimony regarding any matter related to any Related Company:  the Grantee will consult with and have Company 

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designated legal counsel present for such testimony (with the Company being responsible for the costs of such designated counsel); the Grantee will cooperate with the Company’s attorneys to assist their efforts, especially on matters the Grantee has been privy to, holding all privileged attorney-client matters in strictest confidence.

(c)    Notwithstanding anything herein to the contrary, nothing in this Agreement shall (i) prohibit the Grantee from reporting possible violations of federal law or regulation to any governmental agency or entity or making other disclosures in accordance with any whistleblower protection provisions of state or federal law or regulations, or (ii) require notification or prior approval by the Company or the Company’s General Counsel of any such reports or disclosures.

18.   Noncompetition and Other Prohibited Activities.  (a)  In addition to any other obligations of the Grantee under law or any other agreement with any Related Company, in consideration of the grant of Performance Shares hereunder, the Grantee, during the continuation of his or her employment by any Related Company and during the one-year period commencing upon his or her Termination of Employment for any reason (or, if the Grantee is receiving benefits under a severance plan or agreement, the period of time set forth in the non-competition agreement entered into by the Grantee in connection with the receipt of such severance benefits), will not, directly or indirectly:

(i)    be employed, or retained as an independent contractor, or otherwise provide advisory or consulting services (in each case, whether compensated or not compensated), in a sales-related capacity, marketing role, strategic planning role, financial role, or in a product research and development role for any Competitive Business;

(ii)   be employed by, or retained as an independent contractor by, or otherwise provide advisory or consulting services to (in each case, whether compensated or not compensated), any Competitive Business in any sort of position or capacity involving the performance of services that are the same as, or substantially similar to, the services the Grantee performed while an employee of any Related Company;

(iii)  serve (whether compensated or not compensated) as an officer or director of any Competitive Business;

(iv)  organize, own (other than owning up to 5% of the outstanding stock of a publicly traded company) or operate any Competitive Business;

(v)   (w) be employed, or retained as an independent contractor (in each case, whether compensated or not compensated) by, (x) provide advisory or consulting services (in each case, whether compensated or not compensated) to, (y) organize or operate or (z) serve as a director or official of (in each case, whether compensated or not-compensated) any Anti-Tobacco Organization;

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(vi)   (x) be employed, or retained as an independent contractor (in each case, whether compensated or not compensated) by, (y) provide advisory or consulting services (in each case, whether compensated or not compensated) to or (z) serve as a director or official of (in each case, whether compensated or non-compensated) any Regulator; or

(vii)  solicit, offer employment to, or hire any employee, independent contractor or any other individual providing services to any Related Company (other than secretarial and clerical personnel), who was employed by, or provided services to, any Related Company, at the time of the Grantee’s Termination of Employment, or who was employed by, or provided services to, any Related Company during the 90-day period preceding such date, to become employed by or otherwise provide services to, any person, firm, entity or corporation, or approach any such person for any of the foregoing reasons.

As used in this Agreement, the term “including,” or variations thereof, shall not be a term of limitation, but rather shall be deemed to be followed by the words “without limitation.”

(b)    For purposes of Section 17 and Section 18 of this Agreement, the terms set forth below have the following definitions:

(i)    “Anti-Tobacco Organization” means any firm, organization, entity, group, or sole proprietorship, the activities or purposes of which include opposing, advocating or lobbying against, or seeking the imposition of restrictions or prohibitions with respect to, any of the Related Companies’ Businesses or the use or consumption of any of the Products.

(ii)   “Competitive Business” means any corporation, limited liability company, partnership, person, firm, organization, entity, enterprise, business or activity that is engaged in any of the Related Companies’ Businesses in the Territory or seeking to engage in any of the Related Companies’ Businesses in the Territory.

(iii)  “Governmental Authority” means the government of the United States of America, any other nation or political subdivision thereof, whether state or local, and any agency, authority, administration, instrumentality, regulatory body, court or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

(iv)  “Regulator” means: (x) the U.S. Food and Drug Administration (the “FDA”), the Center for Tobacco Products established within the FDA (the “CTP”), the Tobacco Products Scientific Advisory Committee established within the CTP, or any other office, division, branch, committee, department or other body (collectively, an “Organizational Body”) established by the FDA or by an Organizational Body; or (y) any other Governmental Authority having the authority to regulate, or make recommendations regarding any proposed regulations affecting, any part of any of the Related Companies’ Businesses.

(v)    “Related Companies’ Businesses” means the businesses of manufacturing, distributing, advertising, promoting, marketing or selling any of the following products (collectively, “Products”):  (w) any cigarette, cigar, little cigar, “roll-your-own” tobacco, smokeless or smoke-free tobacco product (including moist snuff, dry snuff, snus, loose leaf, plug and twist tobacco and any other smokeless or smoke-free tobacco, including dissolvable 

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products, that may be invented through the date of Grantee’s Termination of Employment); (x) any nicotine replacement therapy products, including nicotine gum, mouth spray and pouches, and any products otherwise marketed or intended to be used as part of a smoking cessation program; (y) any product commonly referred to as an “e-cigarette”; and (z) any other product, including any tobacco or cigarette substitute, that any Related Company invents, develops and/or markets through the date of the Grantee’s Termination of Employment.

(vi)   “Related Company” means, at any time, individually, the Company and each of its subsidiaries; and “Related Companies” means, at any time, collectively, the Company and all of its subsidiaries, and, in any case, each and all of their respective subsidiaries, parents, affiliates (including partnerships and joint ventures in which any Related Company is a partner or joint venturer), successors and assigns.

(vii)  “Territory” means (x) the United States of America, its territories, commonwealths and possessions (including duty-free stores or outlets located anywhere in any of the foregoing places); (y) U.S. military installations located anywhere in the world; and (z) any other location in which any Related Company conducts any of the Related Companies’ Businesses through the date of the Grantee’s Termination of Employment.

(c)    Notwithstanding anything to the contrary contained in this Agreement, Section 18 of this Agreement will not prohibit a Grantee from engaging in the authorized practice of law, whether for a firm, corporation or otherwise, in any jurisdiction that prohibits agreements restricting the right of an individual to engage in such practice; provided, however, a Grantee will continue to be bound by any and all applicable professional and ethical rules of conduct that govern the use or disclosure of confidential information obtained during the course of any representation of the Company or any of its subsidiaries; and, provided further, this Agreement does prohibit a Grantee from engaging in any of the activities outlined in Section 18(a) of this Agreement in a non-legal, business role.

(d)    The Grantee understands and agrees that:

(i)    the purpose of this Section 18 is solely to protect the Related Companies’ legitimate business interests, including, but not limited to, the Related Companies’ confidential information, customer relationships and goodwill, all of which contribute to the Related Companies’ competitive advantage in operating the Related Companies’ Businesses in the Territory;

(ii)   the Related Companies manufacture, distribute, advertise, promote, market and sell Products in the Territory, and the restrictive covenants contained in this Agreement are necessary to protect the Related Companies’ legitimate business assets and interests, and they are reasonable in time, territory, and scope, and in all other respects;

(iii)  the restrictive covenants contained in this Agreement constitute a material inducement to the Company entering this Agreement, without which the Company would not have entered into this Agreement; and

(iv)  the covenants set forth in this Section 18 are essential elements of this Agreement and shall be construed as agreements independent of any other provision in this 

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Agreement, and the existence of any claim or cause of action of the Grantee against the Company or any other Related Company, whether predicated on this Agreement or otherwise, shall not excuse the Grantee’s breach, or constitute a defense to the enforcement by the Related Companies, of these restrictive covenants.  The Company and the Grantee have had the opportunity to independently consult with their respective counsel for advice in all respects concerning the reasonableness and propriety of such covenants, with specific regard to the nature of the businesses conducted by the Related Companies.

(e)    The Grantee agrees that any breach of the covenants contained in Section 18 of this Agreement would irreparably injure the Related Companies and that their remedies at law would be inadequate.  Accordingly, in the event of any breach or threatened breach of Section 18 of this Agreement, the Related Companies, in addition to any other rights and remedies available at law or in equity, shall be entitled to an injunction (and/or other equitable relief), restraining such breach or threatened breach, and be entitled to the reimbursement of court costs, attorneys’ fees and other costs and expenses incurred in connection with enforcing this Agreement.  The existence of any claim or cause of action on the part of the Grantee against any Related Company shall not constitute a defense to the enforcement of these provisions.  This Agreement shall be enforceable by any Related Company, either alone or together with any other Related Company or Related Companies.  The rights and remedies hereunder provided to the Related Companies shall be cumulative and shall be in addition to any other rights or remedies available at law, in equity or under this Agreement.

(f)    If any of the provisions of Section 18 of this Agreement are determined by a court of law to be excessively broad, whether as to geographical area, time, scope or otherwise, such provision shall be reduced to whatever extent is reasonable and shall be enforced as so modified.  Any provisions of Section 18 of this Agreement not so modified shall remain in full force and effect.

19.   Recoupment Provisions.  (a)   Subject to the clawback provisions of the Sarbanes-Oxley Act of 2002, the Committee may, in its sole discretion, direct that the Company recoup, and upon demand by the Company the Grantee agrees to return to the Company, all or a portion of any Shares paid to the Grantee hereunder computed using financial information or performance metrics later found to be materially inaccurate.  The number of Shares to be recovered shall be equal to the excess of the number of Shares paid out over the number of Shares that would have been paid out had such financial information or performance metric been fairly stated at the time the payout was made.

(b)    The Committee may direct recoupment of Shares pursuant to Section 19(a) of this Agreement whether or not it directs recoupment of related AIAP payouts.  The Committee also may amend a yearly AIAP payout percent for purposes of recoupment of Shares under this Agreement without directing recoupment of related AIAP payouts.

(c)    If the Company reasonably determines that the Grantee has materially violated any of the Grantee’s obligations under Section 17 or 18 of this Agreement, then effective the date on which such violation began, (i) any Performance Shares that have not yet vested and been paid to the Grantee under this Agreement shall be forfeited and cancelled, and (ii) the 

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Company may, in its sole discretion, recoup any and all of the Shares previously paid to the Grantee under this Agreement.

(d)    If, after a demand for recoupment of Shares under Section 19 of this Agreement, the Grantee fails to return such Shares to the Company, the Grantee acknowledges that the Company (or the Company through the actions of any of its subsidiaries employing the Grantee, if applicable) has the right to effect the recovery of the then current value of such Shares and the amount of its court costs, attorneys’ fees and other costs and expenses incurred in connection with enforcing this Agreement by (i) deducting (subject to applicable law and the terms and conditions of the Plan) from any amounts the Company (and if applicable, any Subsidiary employing the Grantee) owes to the Grantee (including, but not limited to, wages or other compensation), except with respect to any non-qualified deferred compensation under Section 409A of the Code, (ii) withholding, except with respect to any non-qualified deferred
compensation under Section 409A of the Code, payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that  otherwise would have been made in accordance with the Company’s or any of its subsidiaries’ otherwise applicable compensation practices, or (iii) any combination of the foregoing.  The right of recoupment set forth in the preceding sentence shall not be the exclusive remedy of the Company, and the Company may exercise each and every other remedy available to it under applicable law.

20.   Qualified Performance-Based Awards.  If the Grantee is a Covered Employee, the grant of Performance Shares evidenced by this Agreement shall be considered a Qualified Performance-Based Award.  In furtherance thereof, and notwithstanding anything in this Agreement or the Plan to the contrary, the Earned Number of Performance Shares that the Grantee may earn for the Performance Period pursuant to the grant evidenced by this Agreement (the “Earned Shares”) shall be determined by the Committee based on, and must have a value (the “Earned Shares Value”) that in no event exceeds a value equal to, the percentage of the Company’s cumulative Cash Net Income (as defined below) for the Performance Period previously established by the Board of Directors of the Company in resolutions adopted on February 4, 2016 to apply with respect to the Grantee for the Performance Period (the “Award Pool Value”).  Notwithstanding the prior sentence, the Committee shall have the power and authority, in its sole and absolute exercise of negative discretion, to reduce the Earned Shares such that the Earned Shares Value will be less than the Award Pool Value, which reduction may be made by taking into account the factors described above under Section 3 of this Agreement or any other criteria the Committee deems appropriate.  The reductions in Earned Shares Value, if any, shall not result in any increases in the value of performance shares earned by any other Participant.  For purposes of this Agreement, the term “Cash Net Income” shall mean the Company’s net income from continuing operations in the consolidated statement of income adjusted for the impact of non-cash items, such as depreciation, amortization, unrealized gains and losses, intangible asset impairments and other non-cash gains/losses included in net income (as reported in the Company’s annual reports for 2016, 2017 and 2018, respectively).

21.   Electronic Signature.  This Agreement is delivered electronically.  The Grantee consents to using an electronic signature to sign this Agreement and be legally bound to his or her acceptance or rejection of the grant.  By electronically signing the Agreement, the Grantee also consents to entering into this Agreement in electronic form.  The Grantee acknowledges that 

12

 

his or her electronic signature will have the same legal force and effect as a handwritten signature.  The Grantee’s electronic signature, including date and time of signing will be stored electronically with the Performance Share grant record.

22.   GOVERNING LAWS.  THE LAWS OF THE STATE OF NORTH CAROLINA SHALL GOVERN THE INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT, REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF LAWS.  EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 22, ANY CONTROVERSY OR DISPUTE ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY IN THE COURTS (FEDERAL AND STATE) SITUATED IN THE STATE OF NORTH CAROLINA, FORSYTH COUNTY.  THE GRANTEE CONSENTS TO PERSONAL JURISDICTION IN THE STATE OF NORTH CAROLINA AND IN THE COURTS THEREOF FOR THE ENFORCEMENT OF THIS AGREEMENT, AND WAIVES ANY RIGHTS THE GRANTEE OTHERWISE MAY HAVE UNDER THE LAWS OF ANY JURISDICTION TO OBJECT ON ANY BASIS TO JURISDICTION OR VENUE WITHIN THE STATE OF NORTH CAROLINA TO ENFORCE THIS AGREEMENT.  IN ADDITION, AND NOTWITHSTANDING THE FOREGOING, THE COMPANY MAY ELECT, IN ITS DISCRETION, TO SEEK A TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTIVE (OR SIMILAR) RELIEF TO ENFORCE ITS RIGHTS UNDER SECTIONS 17 AND 18 OF THIS AGREEMENT IN ANY JURISDICTION OR COURT ANYWHERE IN THE WORLD THAT THE COMPANY DETERMINES TO BE APPROPRIATE, AND THE GRANTEE HEREBY CONSENTS TO VENUE IN ANY SUCH JURISDICTION OR COURT IN SUCH EVENT.

IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the Grantee have executed this Agreement as of the Date of Grant first above written.

 

	
 
	
 
	
REYNOLDS AMERICAN INC.

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	

	
 
	
 
	
 
	
Authorized Signature

	
 
	
 
	
 

	
Grantee’s Signature
	
 
	
 

	
 
	
 
	
 
	
 

	
Print Name:
	
 
	
 
	
 

 

13csgs-ex1049c_29.htm

Exhibit 10.49C

 

SEPARATION AGREEMENT WITH JOSEPH T. RUBLE

THIS SEPARATION AGREEMENT (the “Agreement”) is made and entered into on April 21, 2016, by and among CSG SYSTEMS INTERNATIONAL, INC. (“CSGS”), a Delaware corporation, CSG SYSTEMS, INC. (“Systems”), a Delaware corporation, and JOSEPH T. RUBLE (the “Executive”).  CSGS and Systems collectively are referred to in this Agreement as the “Company”.

W I T N E S S E T H:

WHEREAS, Executive and the Company are parties to that certain Amended and Restated Employment Agreement dated November 30, 2015 (the “Employment Agreement”), pursuant to which Executive currently serves as an Executive Vice President, General Counsel, Corporate Secretary, and Chief Administrative Officer of the Company; and

WHEREAS, effective May 31, 2016, the Company intends to implement significant organizational changes in its management structure which will include, among other things, elimination of the position of Chief Administrative Officer; and 

WHEREAS, when implemented, certain of the organizational changes referred to in the preceding preamble will give rise to Executive’s rights under Paragraph 10(f) of the Employment Agreement; and 

WHEREAS, Executive has informed the Company that he intends to exercise his right to terminate his employment under Paragraph 10(f) of the Employment Agreement on May 31, 2016, and the Company and Executive mutually desire to arrange for such termination to be accomplished upon terms and conditions intended both to provide Executive with certain compensation and benefits and to provide for an orderly transition of Executive's duties within the Company; 

NOW, THEREFORE, in consideration of the terms and provisions set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree as follows:

1.Separation Pursuant to Paragraph 10(f) of the Employment Agreement.  The Company acknowledges and agrees that the significant organizational changes in its management structure which the Company intends to implement on May 31, 2016, when implemented will give rise to Executive’s rights under Paragraph 10(f) of the Employment Agreement and at such time will entitle Executive to terminate his employment with the Company and to receive the payments and benefits provided in Paragraph 10(d) of the Employment Agreement.  The Company waives the requirement under Paragraph 10(f) of the Employment Agreement that Executive give the Company the written notice specified in such Paragraph 10(f) and acknowledges that, given the intended significant organizational changes in the Company's management structure, the Company is unable to cure the conditions giving rise to such rights of Executive. 

 

 

2.Continued Employment; Resignation.  Executive will continue his employment as an Executive Vice President, General Counsel, Corporate Secretary, and Chief Administrative Officer of the Company under and pursuant to the terms of the Employment Agreement until May 31, 2016 (the “Resignation Date”), and on such date Executive will cease to be an Executive Vice President, General Counsel, Corporate Secretary, and Chief Administrative Officer of the Company.  Executive will continue his employment as a non-executive employee of the Company from June 1, 2016, through July 15, 2016 (the “Separation Date”), and the Company agrees in all events (other than Executive's death or termination for Cause) to continue Executive's employment from the date of this Agreement through the Separation Date regardless of any disability of Executive and will not take any action to terminate the employment of Executive prior to July 15, 2016, except for Cause and only in the event that Cause actually exists.  Until the Resignation Date, Executive will continue to have the responsibilities, duties, and authorities currently associated with his positions as an Executive Vice President, General Counsel, Corporate Secretary, and Chief Administrative Officer of the Company. After the Resignation Date, from June 1, 2016, through July 15, 2016, Executive’s employment will be in a non-executive, non-officer capacity solely to assist, as requested by the Chief Executive Officer of the Company, with the transition of his previous duties to other employees of the Company.  After the Resignation Date, Executive (i) will not have any duties or perform any functions for the Company or any subsidiary or affiliate of the Company corresponding to the duties or functions of an officer of the Company or any subsidiary or affiliate of the Company and (ii) will not perform any policy-making functions for the Company or any subsidiary or affiliate of the Company.  Executive hereby resigns as an officer of and from all other positions with CSGS and Systems, effective on the Resignation Date, and the Company accepts such resignation.  The Company and Executive will use their respective best efforts to effect Executive's resignation or removal from all positions with any direct or indirect subsidiaries or affiliates of CSGS other than Systems as soon as practicable after the Resignation Date.   

	
 
	
(a)
	
Compensation in Respect of Continued Employment.

(i)General.  Executive’s base salary, perquisites, and expense reimbursements under Paragraphs 6, 7, and 8 of the Employment Agreement through the Resignation Date will remain the same as those in effect on the date of this Agreement.  During the period from June 1, 2016, through July 15, 2016, the Company will pay Executive a salary at an annual rate equal to fifty percent (50%) of his base salary in effect as of the date of this Agreement and at the expense of the Company will continue to provide to Executive and his eligible dependents individual or group medical, hospital, dental, and long-term disability insurance coverages and group life insurance coverage comparable to those coverages which are provided to the Company's then senior executives.  Such salary will be paid in accordance with the Company's regular payroll practices. 

(ii)Equity Incentives.  Executive’s existing Restricted Stock Awards from CSGS will continue to vest and be earned and payable to Executive in accordance with their terms through July 15, 2016.  Further, the 17,825 time-based Restricted Stock Awards which were granted to Executive on November 18, 2015, pursuant to the Restricted Stock Award Agreement executed on November 30, 2015 (“November RSAA”) will vest in their entirety without restriction on the Resignation Date pursuant to Section 15(a) of the November RSAA 

2

 

 

unless the employment of Executive is terminated by the Company for Cause prior to the Resignation Date.  

(iii)Resignation from Stock Repurchase Committee.  The Stock Repurchase Committee of the Company is comprised of certain members of the Company's senior management and is generally responsible for the governance and administration of the repurchase of shares of CSGS.  This Agreement constitutes the immediate resignation of Executive from the Stock Repurchase Committee, and the Company hereby accepts such resignation.

(iv)Stock Ownership Guideline Termination.  The Company has a policy in effect whereby the Executive is required to hold shares equivalent to one times his base salary.  The Company agrees that such stock holding requirement will no longer apply to Executive after the date of this Agreement.  However, Executive shall continue to comply with all applicable securities and other laws and Company policies with respect to dispositions of CSGS stock. 

(v)Electronic Devices.  As of the Separation Date, Executive shall be entitled to retain as his own property the Company-owned HP computer, iPad, and iPhone which he currently uses and all personal information contained on each such device, including Outlook Contacts and Calendar entries.  The Company shall have its IT department remove all confidential or proprietary material from such devices, and the office of the CISO shall audit such devices for compliance.  

(vi)Personal Effects.  The Company shall arrange for the professional packing of Executive’s personal effects in his office and the shipment of such items to his personal residence.

(b)Death of Executive.  If Executive dies prior to the date on which he becomes entitled to receive (and has received) all compensation and benefits which he is due under Paragraph 10(d) of the Employment Agreement, the November RSAA, or this Agreement (without duplication), then the Company shall pay to his estate all such compensation when otherwise due, and all such equity and benefits when otherwise payable, as though Executive had not died.  

 

3.Definition of "Cause".  For purposes of this Agreement, "Cause" means only (i) Executive's confession or conviction of theft, fraud, embezzlement, or other crime involving dishonesty associated with the Company, (ii) Executive's certification of materially inaccurate financial or other information pertaining to the Company or any of the subsidiaries of the Company with actual knowledge on the part of Executive that such financial or other information was inaccurate, (iii) Executive's refusal or willful failure to cooperate with an investigation by a governmental agency pertaining to the financial or other business affairs of the Company or any of the subsidiaries of the Company unless such refusal or willful failure is based upon a written directive of the Board of Directors of CSGS or the written advice of counsel, (iv) a material breach by Executive of any of his fiduciary duties to the Company or any of the subsidiaries of the Company and, if such breach is curable, Executive's failure to cure such breach within ten (10) days after Executive's receipt of a written notice from the Board of Directors of CSGS 

3

 

 

setting forth in reasonable detail the particulars of such breach, or (v) fraud or willful and material misconduct on the part of Executive in the performance of Executive's duties under this Agreement as determined in good faith by the Board of Directors of CSGS.   

4.Continuing Obligations.  The following provisions of the Employment Agreement are incorporated in this Agreement by this reference and will remain in effect from and after the Separation Date as follows:

(a)Nondisclosure.  Paragraph 11 of the Employment Agreement (regarding the nondisclosure of confidential information, trade secrets, or proprietary data) will remain in effect in accordance with its provisions.

(b)Non-Solicitation of Employees.  Paragraph 18 of the Employment Agreement (regarding the non-solicitation of employees) will remain in effect in accordance with its provisions. 

(c)Post-Termination Noncompetition.  Paragraph 19 of the Employment Agreement (regarding post-termination noncompetition) will remain in effect in accordance with its provisions.

5.Compensation, Benefits, and Other Payments Pursuant to Paragraph 10(d) of the Employment Agreement.  The Company and Executive agree that, unless the employment of Executive is terminated by the Company for Cause prior the Resignation Date, on the Resignation Date Executive will become entitled to all of the compensation, benefits, and other payments which are provided pursuant to Paragraph 10(d) of the Employment Agreement and that such compensation, benefits, and other payments will be payable in accordance with the terms and upon the conditions set forth in Paragraph 10(d) of the Employment Agreement; for such purpose, the provisions of Paragraph 10(d) of the Employment Agreement are incorporated in this Paragraph 5 by this reference.  The amount payable to Executive pursuant to Paragraph 10(d)(ii) of the Employment Agreement is $1,444,511.07.  The Resignation Date shall serve as the “Termination Date” referenced in Paragraph 10(d) of the Employment Agreement.  Because Executive will conditionally be entitled to continue to participate in the Company benefit plans specified in Paragraph 10(d)(iv) of the Employment Agreement after the Resignation Date, Executive’s COBRA rights shall not commence until the date on which Executive is no longer entitled to participate in such benefit plans.

6.Nonassignability.  Except for those rights that may accrue to Executive’s family or estate in the event of his death or disability, neither this Agreement nor any right or interest of Executive under this Agreement shall be subject, in any manner, to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, whether voluntary or involuntary, by operation of law or otherwise, and any attempt at such will be void.  No compensation or benefit due Executive under this Agreement shall in any way be subject to the debts, contracts, liabilities, engagements or torts of Executive or subject to attachment or legal process against Executive.

7.Entire Agreement; Modification.  Except as specifically set forth in Paragraph 4 and Paragraph 5 of this Agreement with respect to specified provisions of the Employment 

4

 

 

Agreement incorporated in this Agreement, this Agreement will supersede the Employment Agreement in its entirety as of the Resignation Date, and the Employment Agreement will cease to have any further force or effect from and after the Resignation Date.  This Agreement sets forth the entire agreement and understanding of the parties concerning the subject matter of this Agreement and supersedes all prior agreements, arrangements, and understandings relating to that subject matter including, without limitation, the Employment Agreement (except as specifically set forth in the preceding sentence).  No term or provision of this Agreement may be modified or extinguished, in whole or in part, except by a writing which is dated and signed by the parties to this Agreement.  No representation, promise, or inducement has been made to or relied upon by or on behalf of the Company or Executive concerning the subject matter of this Agreement which is not set forth in this Agreement.  In particular, Executive acknowledges and agrees that he is not entitled to receive from the Company any severance, incentive, or other compensation or payment related to his services to the Company or the termination of his employment by the Company, other than the compensation and payments specifically set forth in this Agreement. 

8.Waiver.  No term or condition of this Agreement shall be deemed to have been waived, nor shall there be an estoppel against the enforcement of any provision of this Agreement, except by a written instrument signed by the party charged with such waiver or estoppel. 

9.Notices.  All notices or communications hereunder shall be in writing, addressed as follows: 

To the Company:

 

CSG Systems International, Inc.

9555 Maroon Circle

Englewood, CO 80112

Attn:  Chief Executive Officer

bret.griess@csgi.com

 

and

 

CSG Systems, Inc.

9555 Maroon Circle

Englewood, CO 80112

Attn:  Chief Executive Officer

bret.griess@csgi.com

 

To Executive:  

 

Joseph Ruble

At the address, e-mail, or fax number of record in the Company’s file

 

and

 

5

 

 

Andrew Shoemaker

Shoemaker Ghiselli + Schwartz LLC

1811 Pearl Street

Boulder, CO  80302

ashoemaker@sgslitigation.com

 

All such notices shall be conclusively deemed to be received and shall be effective: (i) if sent by hand delivery, upon receipt, (ii) if sent by e-mail, telecopy or facsimile transmission, upon confirmation of receipt by the sender of such transmission, or (iii) if sent by registered or certified mail, on the fifth day after the day on which such notice is mailed.

10.Source of Payments.  All cash payments provided for in this Agreement will be paid from the general funds of the Company.  Executive’s status with respect to amounts owed under this Agreement will be that of a general unsecured creditor of the Company.

11.Payment Acceleration upon Anticipated Change of Control.  If the Company enters into any definitive agreement whereby all or substantially all of the assets or stock of the Company is to be acquired by an unrelated third party, then the Company agrees that it will pay to Executive within 10 business days after the signing such definitive agreement by the parties thereto all payments to which Executive is entitled under this Agreement but which are then unpaid.

12.Federal Income Tax Withholding.  The Company may withhold from any compensation or benefits payable under this Agreement all federal, state, city, or other taxes to the extent required pursuant to any law or governmental regulation or ruling.

13.Severability.  If any provision of this Agreement is held to be invalid, illegal or unenforceable, in whole or part, then such invalidity will not affect any otherwise valid provision, and all other valid provisions will remain in full force and effect.

14.Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one document.

15.Titles.  The titles and headings preceding the text of the paragraphs and subparagraphs of this Agreement have been inserted solely for convenience of reference and do not constitute a part of this Agreement or affect its meaning, interpretation or effect.

16.Section 409A Compliance.

(a)Each payment under this Agreement, including each payment in a series of installment payments, is intended to be a separate payment for purposes of Treas. Reg. § 1.409A-2(b), and is intended to be: (i) exempt from Section 409A of the Code, the regulations and other binding guidance promulgated thereunder (“Section 409A”), including, but not limited to, by compliance with the short-term deferral exemption as specified in Treas. Reg. § 1.409A-1(b)(4) and the involuntary separation pay exception within the meaning of Treas. Reg. § 1.409A-1(b)(9)(iii), or (ii) in compliance with Section 409A, including, but not limited to, being paid pursuant to a fixed schedule or specified date pursuant to Treas. Reg. § 1.409A-3(a) and the 

6

 

 

provisions of this Agreement will be administered, interpreted and construed accordingly.  Notwithstanding the foregoing provisions of this Agreement, if the payment of any compensation or benefits under this Agreement would be subject to additional taxes and interest under Section 409A because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B)(i) of the Code, and Executive constitutes a specified employee within the meaning of Section 409A(a)(2)(B)(i) of the Code, then any such payments that Executive would otherwise be entitled to during the first six months following Executive’s separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Code shall be accumulated and paid on the date that is six months after Executive’s separation from service (or if such payment date does not fall on a business day of the Company, the next following business day of the Company), or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes and interest. 

(b)All taxable reimbursements pursuant to this Agreement shall be made in accordance with Treas. Reg. § 1.409A-3(i)(l)(iv) such that the reimbursements will be deemed payable at a specified time or on a fixed schedule relative to a permissible payment event.  Specifically, the amounts reimbursed under this Agreement during Executive’s taxable year may not affect the amounts reimbursed in any other taxable year (except that total reimbursements may be limited by a lifetime maximum under a group health plan), the reimbursement of an eligible expense shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense was incurred, and the right to reimbursement is not subject to liquidation or exchange for another benefit.

17.Governing Law; Venue.  This Agreement shall be construed and enforced in accordance with the laws of the State of Colorado.  Any suit, action or other legal proceeding arising out of this Agreement shall be brought in the state or federal courts having jurisdiction in Denver, Colorado.  Each of Executive and the Company consents to the jurisdiction of any such court in any such suit, action, or proceeding and waives any objection that he or it may have to the laying of venue of any such suit, action, or proceeding in any such court.  If any dispute arises under this Agreement after a change in control of the Company has occurred, then the acquiring company shall pay the reasonable legal and associated fees of Executive reasonably incurred in connection with such dispute, regardless of the outcome of such dispute, unless it is determined that such dispute was initiated by Executive in bad faith and without a substantial basis in belief or fact.

18.Terms.  The term “affiliate” means any subsidiary, any officer, director or employee of the Company or any subsidiary, and any former officer, director or employee of the Company or any subsidiary.

19.Successor Obligations.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement if no such succession had taken place.  As used in this Agreement, “Company” includes both the Company as defined above and any such successor to the Company's business and/or assets which assumes and agrees to perform this Agreement by operation of law or otherwise.

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20.Reimbursement of Attorney Fees.  The Company shall pay Executive’s legal counsel for any reasonable fees incurred in connection with Executive’s resignation and separation from the Company and the negotiation of this Agreement, promptly upon receipt of documentation of such fees. 

21.Directors and Officers Insurance Coverage.  

(a)General.  The Company hereby covenants and agrees that, so long as Executive shall continue to serve as an officer or director of the Company (or its subsidiaries or affiliates)  and thereafter so long as Executive shall be subject to any possible proceeding by reason of the fact that Executive was an officer or director of the Company (or its subsidiaries or affiliates), the Company shall, subject to Section 21(b) below, use reasonable efforts to obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable amounts from established and reputable insurers, and Executive shall be a covered party under such D&O Insurance to the maximum extent of the coverage available for any director or officer of the Company.

(b)Commercial Reasonableness.  Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, or the coverage is reduced by exclusions so as to provide an insufficient benefit and D&O Insurance is in fact not provided for the other directors and officers of the Company.

(c)Change in Control.  In the event of a Change in Control pursuant to which the Company or any successor is obligated to provide D&O Insurance for a period of time following the effective date of the transaction or to purchase a D&O Insurance tail policy, Executive shall be a covered party under such D&O Insurance or tail policy to the maximum extent of the coverage available for any director or officer of the Company.

22.Waiver and Release.  Promptly after the Separation Date, Executive and the Company will enter into a mutual waiver and release of all claims against the other (and in respect of the Company, its officers, directors, agents, and employees), whether known or unknown, in a form mutually acceptable to the Company and Executive.  Such release shall, on the part of Executive, contain provisions customarily included in a release executed by an employee in consideration of payments or benefits received by the employee in connection with the employee's termination of employment. 

 

 

 

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

 

8

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

				
	
 
	
 

	
 
	
CSG SYSTEMS INTERNATIONAL, INC.

	
 
	
 

	
 
	
By: /s/ Bret C. Griess

Chief Executive Officer

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
CSG SYSTEMS, INC.

	
 
	
 

	
 
	
By: /s/ Bret C. Griess

Chief Executive Officer

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
/s/ Joseph T. Ruble

Joseph T. Ruble

 

9

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