Published on March 31, 1998
Exhibit 10.18
CONFIDENTIAL
Mr. Robert H. Rosseau
Deluxe Electronic Payment Systems, Inc.
400 West Deluxe Parkway
Milwaukee, WI 53212
Dear Bob:
In recognition that Deluxe Electronic Payment Systems, Inc. ("DEPS") has decided
to divest or restructure certain portions of its business and desires to
maximize shareholder value in so doing and values your expertise and
contributions to the business and to such divestiture and restructuring efforts
in your current position as Chief Executive Officer of DEPS, we agree with you
as follows:
I. RETENTION INCENTIVE: If you remain with DEPS in accordance with the
provisions of this agreement through March 31, 1998 (the "Retention
Date"), in addition to your base salary ("Salary") and all benefits,
you will receive a lump sum payment equal to eighteen (18) months
Salary (the "Retention Incentive Payment"). The Retention Incentive
Payment will be made on or before April 15, 1998. In the event that we
so request by providing you sixty (60) days notice prior to the
Retention Date, you agree to remain with DEPS in accordance with the
provisions of this agreement subsequent to the Retention Date for an
additional period of up to three (3) months as specified by us, in
which event, the Retention Date shall be extended for the period of
time you are requested by us to remain after the initial Retention
Date, and you shall be entitled to receive, in addition to your Salary
and all benefits through the extended Retention Date, an increment to
your Retention Incentive Payment, payable within fifteen (15) days
after the extended Retention date, equal to twice your aggregate Salary
for the full three (3) month period, provided you remain in your
position for the period of time specified by us.
II. SEVERANCE: In addition, upon your separation from service to DEPS and
its affiliates at any time for reasons other than (a) Cause (as
hereinafter defined) or (b) your voluntary resignation, upon signing a
severance agreement and release in form and substance reasonably
satisfactory to you, DEPS and Deluxe, you will receive certain benefits
and be subject to certain obligations (which shall not include any
non-compete obligation) as the agreement and release describe. The
benefits will consist of full "COBRA" benefits, upon payment by you of
appropriate premiums therefor, plus a lump sum payment of $900,000.
For the purposes hereof, "Cause" shall mean:
(i) You have breached your obligations of confidentiality to Deluxe,
DEPS or any of their affiliates; (ii) You have failed to perform
reasonable employment duties assigned to you from time to time by
Deluxe's chief executive officer (or person having equivalent
responsibilities) ("Deluxe's CEO"), which duties will be
commensurate with your title and consistent in nature with your
past responsibilities;
(iii)You commit an act, or omit to take action, in bad faith which
results in material detriment to Deluxe, DEPS or any of their
affiliates;
(iv) You have had excessive absences unrelated to illness or vacation
("excessive" shall be defined in accordance with local employment
customs);
(v) You have committed fraud, misappropriation, embezzlement or other
acts of dishonesty in connection with Deluxe, DEPS or any of their
affiliates or their businesses;
(vi) You have been convicted or have pleaded guilty or nolo contendere
to criminal misconduct constituting a felony or a gross
misdemeanor, which gross misdemeanor involves a breach of ethics,
moral turpitude, or immoral or other conduct reflecting adversely
upon the reputation or interest of Deluxe, DEPS or their
affiliates;
(vii) Your use of narcotics, liquor or illicit drugs has had a
detrimental effect on performance of employment responsibilities;
(viii) You are in material default under any other agreement between
you and Deluxe, DEPS or any of their affiliates beyond all
applicable notice, grace and cure periods;
(ix) You fail to exhibit professionalism in support of the goals of
Deluxe and DEPS and their affiliates, including supporting the
restructuring, sale and/or divestiture of certain portions of
DEPS, among your fellow employees, your customers and your
acquaintances; or
(x) You fail to perform your obligations under this agreement and to
keep the terms of this agreement confidential.
DEPS acknowledges that any material change in your employer
relationship, salary, reporting relationship, duties or title shall
constitute constructive termination without Cause. It is understood and
agreed, however, that your activities may not be limited to the
business of DEPS and that you may from time to time be reasonably
requested to undertake projects at a corporate level and that nothing
herein is intended to prevent DEPS from taking reasonable steps to
insure an orderly transition to a new management team.
III. SUCCESS INCENTIVE: In addition, if you are an active employee of DEPS
or any of its affiliates when the [***] and the business and assets of
Deluxe Data International Limited ("DDIL") relating to DDIL's
proprietary software product known as "SP Architect" are placed under
binding agreement to be sold or otherwise divested ("Incentive Payment
Date"), you will receive a lump sum payment of $500,000, it being
understood and agreed that the terms
and conditions of each such sale or divestiture shall be acceptable to
DEPS and Deluxe in their sole discretion. Payment under this Section
III will be made thirty (30) days after the Incentive Payment Date.
IV. DIRECT REPORT AND TRANSITION: From the date of this agreement through
your Retention Date, you shall continue to report directly to Deluxe's
CEO on a practical level, however, such reporting relationship may be
reflected differently for Deluxe's reasonable corporate organizational
purposes. During the period of your employment, you agree to perform
all reasonable employment duties assigned to you from time to time by
Deluxe's CEO; lead the effort to sell the [***] and SP Architect
businesses; and assist actively and to the best of your abilities in
the transition of the management of DEPS to a new management team.
V. CONFIDENTIALITY: During the term of this agreement and for a period of
three (3) years thereafter, you shall retain in confidence all
proprietary and confidential information concerning DEPS, Deluxe and
their affiliates, including, without limitation, customer lists, cost
and pricing information, employee data, trade secrets and software and,
not withstanding the exceptions contained in the next sentence, shall
return all copies and extracts thereof (however and on whatever medium
recorded) to DEPS, or as otherwise requested by Deluxe, without keeping
any copies thereof. The foregoing obligation with respect to the
protection of confidential information shall not apply to (a) any
information which was known to you prior to disclosure to you by
Deluxe, DEPS or any of their affiliates; (b) any information which was
in the public domain prior to its disclosure to you; (c) any
information which comes into the public domain through no fault of
yours; (d) any information which you are required to disclose by a
court or similar authority or under subpoena, provided that you provide
DEPS with notice thereof and assist, at DEPS' sole expense, any
reasonable Deluxe or DEPS endeavor by appropriate means to obtain a
protective order limiting the disclosure of such information; and (e)
any information which is disclosed to you by a third party which has a
legal right to make such disclosure.
VI. DEATH OR DISABILITY: Your death or disability prior to your Retention
Date shall not bar any payment (a) under Section II of this agreement
or (b) of the Salary earned by you under Section I prior to your death
or disability. In addition, upon your death or disability during your
employment by DEPS or its affiliates, you (or your estate) shall be
entitled to receive the ratable portion of your Retention Incentive
Payment attributable to the period (x) commencing on July 1, 1997
through the date of your death or disability (based on the period of
July 1, 1997 through March 31, 1998) if you die or become disabled
prior to March 31, 1998 or (y) of April 1, 1998 through the date of
your death or disability, if you die or become disabled after March
31,1998 and before such extended Retention Date,
payable at the time provided in Section I. In the event of your death
or disability prior to the Incentive Payment Date, DEPS will have no
obligation to make the payment to you under Section III above.
VII. CONDITIONS: The obligations of Deluxe and/or DEPS to you, including any
obligation to make the payments under this agreement, are conditional
upon the absence at all times of grounds for your dismissal for Cause.
VIII. PRIOR AGREEMENTS: This agreement is intended to contain all of the
terms and conditions relative to the subject matter hereof, and there
are no other terms, conditions, agreements or understandings relative
thereto not set forth herein. This agreement supersedes in its entirety
the offer of employment from Deluxe to you dated August 5, 1996 which,
as of the date hereof, is of no further force or effect. In connection
therewith, you acknowledge that upon the termination of your employment
for any reason, your options and rights in restricted shares and any
other stock-based compensation will terminate. Further, you acknowledge
and agree that you will not be eligible to receive an annual incentive
bonus for 1997 or thereafter participate in any similar program or
plan.
IX. MISCELLANEOUS: This agreement will be binding upon DEPS, its successors
and assigns and shall inure to the benefit of you, your heirs,
executors and permitted assigns. You acknowledge and agree that your
employment by DEPS may be transferred by DEPS from time to time to one
or more of Deluxe's affiliates, provided that Deluxe guarantees any and
all obligations to you hereunder and that your benefits are not reduced
in any material way (or that alternate payments or benefits having the
economic equivalency are substituted therefor). Where you agree in this
agreement to observe or perform certain covenants or obligations with
respect to Deluxe or any of its other affiliates, you agree that each
of Deluxe and such affiliate shall be a third party beneficiary
thereof. This agreement shall be governed by the substantive laws of
the State of Minnesota.
X. ASSIGNMENT: DEPS' payment obligations hereunder may be assigned at any
time and from time to time to any other Deluxe affiliate provided that
Deluxe guarantees any and all obligations to you hereunder and that
your benefits are not reduced in any material way (or that alternate
payments or benefits having the economic equivalency are substituted
therefor). Without DEPS' prior written consent, you may not assign this
agreement or any of your obligations hereunder and any attempted
assignment without such consent shall be null and void.
We need and appreciate the leadership you can provide in this transition period.
Thank you for your understanding and professionalism as we move forward.
DELUXE ELECTRONIC EMPLOYEE
PAYMENT SYSTEMS, INC.
By: /s/ J. A. Blanchard III /s/ Robert H. Rosseau
J. A. Blanchard III Robert H. Rosseau
Chairman
DELUXE CORPORATION
(as guarantor as required under
Sections IX and X only)
By: /s/ J. A. Blanchard III
J. A. Blanchard III
Dated as of 29 Oct. , 1997
STOCK OPTION AND RESTRICTED SHARE AWARD
AGREEMENT AMENDMENT
AMENDMENT, dated as of October 29 , 1997, to (i) a Non-qualified Stock
Option Agreement, dated August 20, 1996 (the "First Option Agreement"), (ii) a
Non-qualified Stock Option Agreement, dated January 31, 1997 (the "Second Option
Agreement), and (iii) an Agreement as to Award of Restricted Common Stock, dated
August 20, 1996 (the "Restricted Stock Agreement"), each by and between Deluxe
Corporation and Robert H. Rosseau.
1. The paragraph of the First Option Agreement entitled "Duration &
Exercisability" is hereby revised to read in full as follows:
You may not exercise any portion of this Option prior to one
year from the date of grant, and your right to exercise will
terminate ten years after the date of grant. You may exercise
this Option in cumulative installments of 50 percent
following the first and second anniversaries of the grant
date. If you cease to be employed by Deluxe or its affiliates
for any reason, the entire unexercised portion of this Option
will be canceled as of the date of such cessation.
2. The clause entitled "Retirement, Disability, Death or Termination"
in the First Option Agreement is hereby deleted.
3. The definitions of "Cause" and "Approved Retirement" appearing on
the back of the First Option Agreement (and the associated receipt) are hereby
deleted.
4. The last two sentences of the paragraph entitled "Duration &
Exercisability" in the Second Option Agreement are hereby deleted.
5. The paragraph entitled "Retirement, Disability, Death or
Termination" in the Second Option Agreement is hereby revised to read in full as
follows:
TERMINATION
If you cease to be employed by Deluxe or its affiliates for
any reason, the entire unexercised portion of this Option
will be canceled as of the date of such cessation.
6. The definition of "Approved Retirement" appearing on the back of the
Second Option Agreement (and the associated receipt) is hereby deleted.
7. The words "Except as provided on the reverse side of this
Agreement," in the paragraph of the Restricted Stock Agreement entitled
"Restrictions" are hereby deleted.
8. The Section entitled "1. Earlier Lapse of Restrictions" appearing on
the back of the Restricted Stock Agreement is hereby deleted.
9. This Amendment shall become effective as of the date above written
upon approval by the Compensation Committee of Deluxe Corporation.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
date set forth above.
/s/ Robert H. Rosseau
Robert H. Rosseau
DELUXE CORPORATION
By: /s/ J. A. Blanchard III
Its: Chairman + CEO
*** Denotes confidential information that has been omitted from this
Exhibit and filed separately, accompanied by a confidential treatment
request, with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities and Exchange Act of 1934.