Exhibit 10.17
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT
(“Agreement”), by and between TOTAL SYSTEM SERVICES,
INC. , a Georgia corporation (the “Company”) and
(the “Employee”) is entered into as of the 1
st day
of January, 2008 (the “Effective Date”);
WHEREAS, the Board of Directors of
the Company (the “Board”), has determined that it is in
the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the
Employee, notwithstanding the possibility, threat or occurrence of
a Change of Control (as defined below) of the Company;
WHEREAS, the Board believes it is
imperative to diminish the inevitable distraction of the Employee
by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the
Employee’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control, and to provide the Employee with appropriate compensation
and benefits arrangements upon a Change of Control which are
competitive with those of other corporations; and
WHEREAS, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1. Certain Definitions .
(a) The “Change of Control Date” shall mean the
first date during the Change of Control Period (as defined in
Section 1(b)) on which a Change of Control (as defined in
Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the
Employee’s employment with the Company is terminated prior to
the date on which the Change of Control occurs, and if it is
reasonably demonstrated by Employee that such termination of
employment (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or in anticipation of
a Change of Control, then for all purposes of this Agreement the
“Change of Control Date” shall mean the date
immediately prior to the date of such termination of
employment.
(b) The
“Change of Control Period” shall mean the period
commencing on the Effective Date and ending on the day after the
date of Employee’s termination of employment from the Company
or, if earlier, the date which is two years after the Change of
Control Date.
(c)
“Cause” shall mean:
(1)
the willful and continued failure of the Employee to perform
substantially the Employee’s duties with the Company or one
of its affiliates after a written demand for substantial
performance is delivered to the Employee by the Executive Committee
of the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Executive Committee
of the Board or Chief Executive Officer believes that the Employee
has not
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substantially performed the Employee’s duties, after which
Employee shall have a reasonable amount of time to remedy such
failure to substantially perform his or her duties; or
(2) the
willful engaging by the Employee in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company.
For
purposes of this provision, no act, or failure to act, on the part
of the Employee shall be considered “willful” unless it
is done, or omitted to be done, by the Employee in bad faith or
without reasonable belief that the Employee’s action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board, or the Executive Committee of the Board,
or upon the instructions of the Chief Executive Officer, or an
Executive Vice President (or higher ranking officer), of the
Company, or based upon the advice of counsel for the Company, shall
be conclusively presumed to be done, or omitted to be done, by the
Employee in good faith and in the best interests of the Company.
The cessation of employment of the Employee shall not be deemed to
be for Cause unless and until there shall have been delivered to
the Employee a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership
of the Executive Committee of the Board at a meeting of the
Executive Committee of the Board called and held for such purpose
(after reasonable notice is provided to the Employee and the
Employee is given an opportunity, together with counsel, to be
heard before the Executive Committee of the Board), finding that,
in the good faith opinion of the Executive Committee of the Board,
the Employee is guilty of the conduct described in subparagraph
(1) or (2) above, and specifying the particulars thereof
in detail.
(d)
“Good Reason” shall mean:
(1) a
material adverse reduction in the Employee’s position duties
or responsibilities excluding for this purpose: (i) a
change in the position or level of officer to whom the Employee
reports, (ii) a change that is part of a policy, program or
arrangement applicable to peer executives (including peer
executives of any successor to the Company), or (iii) an
isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Employee;
(2) the
Company’s requiring the Employee to be based at any office or
location more than 35 miles from the location where Employee was
employed on the Change of Control Date or the date which is
120 days prior to the Change of Control Date (if such earlier
date is selected by Employee);
(3) a
material reduction in Employee’s annual base salary, target
annual bonus opportunity (including, without limitation, the use of
bonus goals that are not reasonable and consistent with the bonus
goals established for the preceding year), or participation in
employee benefit plans, as such salary, bonus and plans were in
effect on either the Change of Control Date or the date which is
120 days prior to the Change of Control Date (if such earlier
date is selected by Employee) unless such reduction is part of a
policy, program or arrangement applicable to peer executives
(including peer executives to any successor to Company) ; or
(4) any
failure by the Company to comply with and satisfy Section 8(c) of
this Agreement.
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For
purposes of this Section 1(d), any good faith determination of
“Good Reason” made by the Employee shall be
conclusive.
(e)
“Disability” shall be defined the same as such term is
defined in either, at the selection of the Employee, (a) the
group long-term disability insurance plan sponsored or maintained
by Company on the Change of Control Date in which Employee
participates or (b) any individual long-term disability
insurance arrangement in effect on the Change of Control Date, the
premiums of which are paid by Company for the benefit of
Employee.
2. Change of Control .
For the purposes of this Agreement, a “Change of
Control” shall mean:
(a) the
acquisition by any “person” (“Person”), as
such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)
(other than the Company or a subsidiary or any Company employee
benefit plan (including its trustee), of “beneficial
ownership” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 20% or more of the total number of shares of the
Company’s then outstanding securities;
(b) individuals
who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute
at least two-thirds (2/3) of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds (2/3)
of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board;
or
(c) consummation
of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets or stock of
the Company (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the total number of shares of
the Company’s outstanding securities immediately prior to
such Business Combination beneficially own, directly or indirectly,
more than sixty percent (60%) of, respectively, the total number of
shares of the then outstanding securities of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination, of the total number of shares
of the Company’s outstanding securities, (ii) no Person
(excluding any corporation resulting from such Business
Combination, or any employee benefit plan (including its trustee)
of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the total number of shares of the then
outstanding securities of the corporation resulting from such
Business Combination except to the extent that such ownership
existed prior to the Business Combination and (iii) at least
two-thirds (2/3) of the members of the board of directors of
the
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Corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination.
For
purposes of this Section 2, a “Change of Control”
shall not result from any transaction precipitated by the
Company’s insolvency, appointment of a conservator, or
determination by a regulatory agency that the Company is insolvent,
nor from any transaction initiated by the Company in regard to
converting from a publicly traded company to a privately held
company.
3. Obligations of Company
Upon Termination . In the event Employee’s employment by
Company is terminated before the two-year anniversary date of the
Change of Control Date either (i) by the Company for any
reason other than Cause or Employee’s death or Disability, or
(ii) by Employee for Good Reason, then
(a) The
Company shall pay to Employee in a lump sum in cash on the date
which is six months and one day after the date Employee has a
separation from service (within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”))
the aggregate of the following amounts:
(1) three
times the sum of: (a) Employee’s annual base salary as
in effect immediately prior to Employee’s termination; plus
(b) the product of (i) Employee’s annual base
salary as in effect immediately prior to Employee’s
termination of employment multiplied by (ii) a percentage
equal to the average percentage of Employee’s annual bonus
earned with respect to the three calendar years ended prior to
Employee’s termination, measured as a percentage of
Employee’s annual base salary for the year the bonus was
earned; and
(2) the
product of (a) a fraction, the numerator of which is the
greater of (i) six, or (ii) number of full months Employee
worked in the calendar year of Employee’s termination (
e.g. , an October 1 termination date results in a numerator
of 9) and the denominator of which is 12; multiplied by
(b) the target annual bonus for which Employee was eligible
immediately prior to Employee’s termination.
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