EXHIBIT 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of this
14th day of September, 2005, by and between CERTEGY, INC., a Georgia corporation
(the “Company”), and LEE A. KENNEDY (the “Employee”).

 

RECITALS:

 

WHEREAS, the Company and Employee have previously entered into a letter
agreement dated May 2002 (“Prior Agreement”) specifying the payments and
benefits payable to the Employee in the event the Employee’s employment is
terminated in connection with a “Change in Control” of the Company (as defined
in the Prior Agreement); and

 

WHEREAS, the Company entered into an Agreement and Plan of Merger (the “Merger
Agreement”) dated the date hereof with C Co Merger Sub, LLC and Fidelity
National Information Services, Inc.; and

 

WHEREAS, the Merger constitutes a Change in Control as defined in the Prior
Agreement; and

 

WHEREAS, the Company desires to terminate the Prior Agreement and enter into
this Agreement to recognize Employee’s superior performance and continuing value
to the Company and its shareholders; and

 

WHEREAS, Employee desires to continue his employment with the Company on the
terms and conditions provided herein

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties agree as follows:

 

1.                                       PURPOSE AND EFFECTIVENESS.

 

(A)                                  THE PURPOSE OF THIS AGREEMENT IS TO
TERMINATE THE PRIOR AGREEMENT, TO RECOGNIZE EMPLOYEE’S SIGNIFICANT CONTRIBUTIONS
TO THE OVERALL FINANCIAL PERFORMANCE AND SUCCESS OF THE COMPANY, TO PROTECT THE
COMPANY’S BUSINESS INTERESTS THROUGH THE ADDITION OF RESTRICTIVE COVENANTS, AND
TO PROVIDE A SINGLE, INTEGRATED DOCUMENT WHICH SHALL PROVIDE THE BASIS FOR
EMPLOYEE’S CONTINUED EMPLOYMENT BY THE COMPANY;

 

(B)                                 IN CONSIDERATION OF AND IMMEDIATELY UPON THE
TERMINATION OF THE PRIOR AGREEMENT, THE COMPANY SHALL PAY TO EMPLOYEE $6,250,000
AND EMPLOYEE SHALL RELEASE ALL RIGHTS AND CLAIMS THAT EMPLOYEE HAS, HAD OR MAY
HAVE AGAINST THE COMPANY PURSUANT TO OR ARISING UNDER SUCH PRIOR AGREEMENT OR
WITH RESPECT TO ANY OTHER BENEFITS TO WHICH EMPLOYEE MAY BE ENTITLED AS A RESULT
OF THE MERGER; AND

 

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(C)                                  THIS AGREEMENT SHALL NOT BE EFFECTIVE UNTIL
THE EFFECTIVE TIME (AS DEFINED IN THE MERGER AGREEMENT) (THE “EFFECTIVE DATE”),
AND THIS AGREEMENT SHALL TERMINATE IMMEDIATELY IF THE MERGER AGREEMENT IS
TERMINATED IN ACCORDANCE WITH ITS TERMS PRIOR TO THE EFFECTIVE TIME.

 

2.                                       EMPLOYMENT AND DUTIES.  SUBJECT TO THE
TERMS AND CONDITIONS OF THIS AGREEMENT, THE COMPANY EMPLOYS THE EMPLOYEE TO
SERVE IN AN EXECUTIVE CAPACITY AS CHIEF EXECUTIVE OFFICER.  EMPLOYEE ACCEPTS
SUCH EMPLOYMENT AND AGREES TO UNDERTAKE AND DISCHARGE THE DUTIES, FUNCTIONS AND
RESPONSIBILITIES COMMENSURATE WITH SAID POSITION AND AS THEY ARE FROM TIME TO
TIME ASSIGNED TO THE EMPLOYEE BY THE BOARD OF DIRECTORS OF THE COMPANY (THE
“BOARD”) CONSISTENT WITH THE TERMS AND PROVISIONS OF THIS AGREEMENT.

 

3.                                       TERM AND PLACE OF EMPLOYMENT.  THE TERM
OF THIS AGREEMENT SHALL COMMENCE ON THE EFFECTIVE DATE AND SHALL CONTINUE FOR A
PERIOD OF FOUR YEARS ENDING ON THE FOURTH ANNIVERSARY OF THE EFFECTIVE DATE,
SUBJECT TO PRIOR TERMINATION AS SET FORTH IN SECTION 9 (THE “EMPLOYMENT TERM”). 
NOTWITHSTANDING ANY TERMINATION OF THE EMPLOYMENT TERM OR THE EMPLOYEE’S
EMPLOYMENT, THE EMPLOYEE AND THE COMPANY AGREE THAT SECTION 9 THROUGH 11 SHALL
REMAIN IN EFFECT UNTIL ALL PARTIES’ OBLIGATIONS AND BENEFITS ARE SATISFIED
THEREUNDER.

 

4.                                       SALARY.  DURING THE EMPLOYMENT TERM,
THE COMPANY SHALL PAY THE EMPLOYEE AN ANNUAL BASE SALARY, BEFORE DEDUCTING ALL
APPLICABLE WITHHOLDINGS, OF $750,000 PER YEAR, PAYABLE AT THE TIME AND IN THE
MANNER DICTATED BY THE COMPANY’S STANDARD PAYROLL POLICIES.  SUCH MINIMUM ANNUAL
BASE SALARY MAY BE PERIODICALLY REVIEWED AND INCREASED AT THE COMPANY’S
DISCRETION TO REFLECT, AMONG OTHER MATTERS, COST OF LIVING INCREASES AND
PERFORMANCE RESULTS (SUCH ANNUAL BASE SALARY, INCLUDING ANY INCREASES PURSUANT
TO THIS SECTION 4, THE “ANNUAL BASE SALARY”).

 

5.                                       OTHER COMPENSATION AND FRINGE
BENEFITS.  IN ADDITION TO ANY EXECUTIVE BONUS, PENSION, DEFERRED COMPENSATION
AND LONG-TERM INCENTIVE PLANS WHICH THE COMPANY MAY FROM TIME TO TIME MAKE
AVAILABLE TO THE EMPLOYEE, THE EMPLOYEE SHALL BE ENTITLED TO THE FOLLOWING
DURING THE EMPLOYMENT TERM:

 

(A)                                  THE STANDARD COMPANY BENEFITS ENJOYED BY
THE COMPANY’S OTHER TOP EXECUTIVES AS A GROUP;

 

(B)                                 PAYMENT BY THE COMPANY OF THE EMPLOYEE’S
INITIATION AND MEMBERSHIP DUES IN ALL SOCIAL AND/OR RECREATIONAL CLUBS AS DEEMED
NECESSARY AND APPROPRIATE BY THE COMPANY TO MAINTAIN VARIOUS BUSINESS
RELATIONSHIPS ON BEHALF OF THE COMPANY; PROVIDED, HOWEVER, THAT THE COMPANY
SHALL NOT BE OBLIGATED TO PAY FOR ANY OF THE EMPLOYEE’S PERSONAL PURCHASES AND
EXPENSES AT SUCH CLUBS;

 

(C)                                  MEDICAL AND OTHER INSURANCE COVERAGE (FOR
THE EMPLOYEE AND ANY COVERED DEPENDENTS) PROVIDED BY THE COMPANY TO ITS OTHER
TOP EXECUTIVES AS A GROUP;

 

(D)                                 SUPPLEMENTAL DISABILITY INSURANCE SUFFICIENT
TO PROVIDE TWO-THIRDS OF THE EMPLOYEE’S PRE-DISABILITY ANNUAL BASE SALARY;

 

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(E)                                  AN ANNUAL INCENTIVE BONUS OPPORTUNITY
(“ANNUAL BONUS”) FOR EACH CALENDAR YEAR INCLUDED IN THE EMPLOYMENT TERM, WITH
SUCH OPPORTUNITY TO BE EARNED BASED UPON ATTAINMENT OF PERFORMANCE OBJECTIVES
ESTABLISHED BY THE COMPENSATION COMMITTEE (THE “COMMITTEE”) OF THE BOARD.  THE
EMPLOYEE’S TARGET ANNUAL BONUS OPPORTUNITY SHALL BE NOT LESS THAN 200% OF THE
EMPLOYEE’S ANNUAL BASE SALARY.  THE EMPLOYEE’S TARGET ANNUAL BONUS OPPORTUNITY
MAY BE PERIODICALLY REVIEWED AND INCREASED (BUT NOT DECREASED WITHOUT THE
EMPLOYEE’S EXPRESS WRITTEN CONSENT) AT THE DISCRETION OF THE COMPANY.  SUBJECT
TO SECTION 9, THE ANNUAL BONUS SHALL BECOME FULLY VESTED AT THE END OF EACH
CALENDAR YEAR WITHIN THE EMPLOYMENT TERM AND SHALL BE PAID NO LATER THAN
MARCH 15TH OF THE FOLLOWING YEAR.

 

6.                                       OPTIONS.  IN RECOGNITION OF THE VALUE
OF THE SERVICES THAT EMPLOYEE WILL PROVIDE TO THE COMPANY UNDER THIS AGREEMENT,
ON THE EFFECTIVE DATE, THE COMPANY SHALL GRANT TO THE EMPLOYEE A NON-QUALIFIED
OPTION TO ACQUIRE 750,000 SHARES OF THE COMPANY’S COMMON STOCK (THE “OPTIONS”). 
THE OPTIONS SHALL BE GRANTED PURSUANT TO THE COMPANY’S STOCK INCENTIVE PLAN (THE
“PLAN”) AND SHALL BE SUBJECT TO THE TERMS AND CONDITIONS OF A STOCK OPTION
AGREEMENT AND NOTICE OF STOCK OPTION TO BE ISSUED PURSUANT TO THE PLAN.  THE
OPTIONS WILL HAVE AN EIGHT-YEAR TERM, WILL VEST IN THREE EQUAL ANNUAL
INSTALLMENTS BEGINNING ON THE FIRST ANNIVERSARY OF THE EFFECTIVE DATE AND ENDING
ON THE THIRD ANNIVERSARY OF THE EFFECTIVE DATE, AND WILL BE GRANTED AT AN
EXERCISE PRICE EQUAL TO THE CLOSING PRICE PER SHARE OF THE COMPANY’S COMMON
STOCK AS QUOTED ON THE NEW YORK STOCK EXCHANGE ON THE EFFECTIVE DATE.

 

7.                                       VACATION.  FOR AND DURING EACH CALENDAR
YEAR WITHIN THE EMPLOYMENT TERM, THE EMPLOYEE SHALL BE ENTITLED TO REASONABLE
PAID VACATION PERIODS CONSISTENT WITH HIS POSITIONS WITH THE COMPANY AND IN
ACCORDANCE WITH THE COMPANY’S STANDARD POLICIES, OR AS THE BOARD MAY APPROVE. IN
ADDITION, THE EMPLOYEE SHALL BE ENTITLED TO SUCH HOLIDAYS CONSISTENT WITH THE
COMPANY’S STANDARD POLICIES OR AS THE BOARD OR THE COMMITTEE MAY APPROVE.

 

8.                                       EXPENSE REIMBURSEMENT.  IN ADDITION TO
THE COMPENSATION AND BENEFITS PROVIDED HEREIN, THE COMPANY SHALL, UPON RECEIPT
OF APPROPRIATE DOCUMENTATION, REIMBURSE THE EMPLOYEE EACH MONTH FOR HIS
REASONABLE TRAVEL, LODGING, ENTERTAINMENT, PROMOTION AND OTHER ORDINARY AND
NECESSARY BUSINESS EXPENSES TO THE EXTENT SUCH REIMBURSEMENT IS PERMITTED UNDER
THE COMPANY’S EXPENSE REIMBURSEMENT POLICY.

 

9.                                       TERMINATION OF EMPLOYMENT.  THE COMPANY
OR THE EMPLOYEE MAY TERMINATE THE EMPLOYEE’S EMPLOYMENT AT ANY TIME AND FOR ANY
REASON IN ACCORDANCE WITH SUBSECTION 9(A) BELOW.  THE EMPLOYMENT TERM SHALL BE
DEEMED TO HAVE ENDED ON THE LAST DAY OF THE EMPLOYEE’S EMPLOYMENT.  THE
EMPLOYMENT TERM SHALL TERMINATE AUTOMATICALLY UPON THE EMPLOYEE’S DEATH.

 

(A)                                  NOTICE OF TERMINATION.  ANY PURPORTED
TERMINATION OF THE EMPLOYEE’S EMPLOYMENT (OTHER THAN BY REASON OF DEATH) SHALL
BE COMMUNICATED BY WRITTEN NOTICE OF TERMINATION FROM ONE PARTY HERETO TO THE
OTHER PARTY HERETO IN ACCORDANCE WITH THE NOTICE PROVISIONS CONTAINED IN
SECTION 27.  FOR PURPOSES OF THIS AGREEMENT, A “NOTICE OF TERMINATION” SHALL
MEAN A NOTICE THAT INDICATES THE DATE OF TERMINATION (AS THAT TERM IS DEFINED IN
SECTION 9(B)) AND, WITH RESPECT TO A TERMINATION DUE TO DISABILITY, CAUSE OR
GOOD REASON, SETS FORTH IN REASONABLE

 

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DETAIL THE FACTS AND CIRCUMSTANCES THAT ARE ALLEGED TO PROVIDE A BASIS FOR SUCH
TERMINATION.  A NOTICE OF TERMINATION FROM THE COMPANY SHALL SPECIFY WHETHER THE
TERMINATION IS WITH OR WITHOUT CAUSE OR DUE TO THE EMPLOYEE’S DISABILITY.  A
NOTICE OF TERMINATION FROM THE EMPLOYEE SHALL SPECIFY WHETHER THE TERMINATION IS
WITH OR WITHOUT GOOD REASON OR DUE TO DISABILITY.

 

(B)                                 DATE OF TERMINATION.  FOR PURPOSES OF THIS
AGREEMENT, “DATE OF TERMINATION” SHALL MEAN THE DATE SPECIFIED IN THE NOTICE OF
TERMINATION (BUT IN NO EVENT SHALL SUCH DATE BE EARLIER THAN THE 30TH DAY
FOLLOWING THE DATE THE NOTICE OF TERMINATION IS GIVEN, UNLESS EXPRESSLY AGREED
TO BY THE PARTIES HERETO) OR THE DATE OF THE EMPLOYEE’S DEATH.

 

(C)                                  NO WAIVER.  THE FAILURE TO SET FORTH ANY
FACT OR CIRCUMSTANCE IN A NOTICE OF TERMINATION, WHICH FACT OR CIRCUMSTANCE WAS
NOT KNOWN TO THE PARTY GIVING THE NOTICE OF TERMINATION WHEN THE NOTICE WAS
GIVEN, SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO ASSERT SUCH FACT OR
CIRCUMSTANCE IN AN ATTEMPT TO ENFORCE ANY RIGHT UNDER OR PROVISION OF THIS
AGREEMENT.

 

(D)                                 CAUSE.  FOR PURPOSES OF THIS AGREEMENT,
“CAUSE” MEANS THE EMPLOYEE’S (I) PERSISTENT FAILURE TO PERFORM DUTIES CONSISTENT
WITH A COMMERCIALLY REASONABLE STANDARD OF CARE (OTHER THAN DUE TO A PHYSICAL OR
MENTAL IMPAIRMENT); (II) WILLFUL NEGLECT OF DUTIES (OTHER THAN DUE TO A PHYSICAL
OR MENTAL IMPAIRMENT); (III) CONVICTION OF, OR PLEADING NOLO CONTENDERE TO,
CRIMINAL OR OTHER ILLEGAL ACTIVITIES INVOLVING DISHONESTY; OR (IV) MATERIAL
BREACH OF THIS AGREEMENT.  NO ACT OR FAILURE TO ACT DIRECTLY RELATED TO COMPANY
ACTION OR INACTION THAT CONSTITUTES GOOD REASON SHALL CONSTITUTE CAUSE UNDER
THIS AGREEMENT IF THE EMPLOYEE HAS PROVIDED A NOTICE OF TERMINATION BASED ON
SUCH GOOD REASON EVENT PRIOR TO THE COMPANY’S GIVING OF THE NOTICE OF
TERMINATION FOR CAUSE.  THE EMPLOYEE’S TERMINATION FOR CAUSE SHALL BE EFFECTIVE
WHEN AND IF A RESOLUTION IS DULY ADOPTED BY AN AFFIRMATIVE VOTE OF AT LEAST
THREE FOURTHS (¾) OF THE BOARD (LESS THE EMPLOYEE IF THE EMPLOYEE IS A
DIRECTOR), STATING THAT, IN THE GOOD FAITH OPINION OF THE BOARD, THE EMPLOYEE IS
GUILTY OF THE CONDUCT DESCRIBED IN THE NOTICE OF TERMINATION AND SUCH CONDUCT
CONSTITUTES CAUSE UNDER THIS AGREEMENT; PROVIDED, HOWEVER, THAT THE EMPLOYEE
SHALL HAVE BEEN GIVEN REASONABLE OPPORTUNITY (I) TO CURE ANY ACT OR OMISSION
THAT CONSTITUTES CAUSE IF CAPABLE OF CURE AND (II), TOGETHER WITH COUNSEL,
DURING THE THIRTY (30) DAY PERIOD FOLLOWING THE RECEIPT BY THE EMPLOYEE OF THE
NOTICE OF TERMINATION AND PRIOR TO THE ADOPTION OF THE BOARD’S RESOLUTION, TO BE
HEARD BY THE BOARD.

 

(E)                                  DISABILITY.  FOR PURPOSES OF THIS
AGREEMENT, THE EMPLOYEE SHALL BE DEEMED TO HAVE A DISABILITY IF THE EMPLOYEE IS
ENTITLED TO LONG-TERM DISABILITY BENEFITS UNDER THE COMPANY’S LONG-TERM
DISABILITY PLAN OR POLICY, AS THE CASE MAY BE, AS IN EFFECT ON THE DATE OF
TERMINATION.

 

(F)                                    GOOD REASON.  FOR PURPOSES OF THIS
AGREEMENT, THE TERM “GOOD REASON” MEANS THE OCCURRENCE (WITHOUT THE EMPLOYEE’S
EXPRESS WRITTEN CONSENT) DURING THE EMPLOYMENT TERM OF ANY OF THE FOLLOWING ACTS
OR FAILURES TO ACT BY THE COMPANY:

 

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(I)                                     AN ADVERSE CHANGE IN THE EMPLOYEE’S
TITLE, THE ASSIGNMENT TO THE EMPLOYEE OF DUTIES MATERIALLY INCONSISTENT WITH THE
EMPLOYEE’S POSITION OF CHIEF EXECUTIVE OFFICER, OR A SUBSTANTIAL DIMINUTION IN
THE EMPLOYEE’S AUTHORITY;

 

(II)                                  THE MATERIAL BREACH BY THE COMPANY OF ANY
OF ITS OTHER OBLIGATIONS UNDER THIS AGREEMENT;

 

(III)                               FOLLOWING A CHANGE IN CONTROL, THE
RELOCATION OF THE EMPLOYEE’S PRIMARY PLACE OF EMPLOYMENT TO A LOCATION MORE THAN
50 MILES FROM THE EMPLOYEE’S PRIMARY PLACE OF EMPLOYMENT IMMEDIATELY PRIOR TO
THE CHANGE IN CONTROL; OR

 

(IV)                              THE FAILURE OF THE COMPANY TO OBTAIN THE
ASSUMPTION OF THIS AGREEMENT AS CONTEMPLATED IN SECTION 23.

 

The Employee’s continued employment shall not constitute consent to, or a waiver
of rights with respect to, any act or failure to act constituting Good Reason
hereunder; provided, however, that no such event described above shall
constitute Good Reason unless the Employee has given a Notice of Termination to
the Company specifying the condition or event relied upon for such termination
within ninety (90) days from the Employee’s actual knowledge of the occurrence
of such event and, if capable of cure, the Company has failed to cure the
condition or event constituting Good Reason within the thirty (30) day period
following receipt of the Employee’s Notice of Termination.

 

10.                                 OBLIGATIONS OF THE COMPANY UPON TERMINATION.

 

(A)                                  TERMINATION BY THE COMPANY FOR OTHER THAN
CAUSE OR DISABILITY OR TERMINATION BY THE EMPLOYEE FOR GOOD REASON.  IF THE
EMPLOYEE’S EMPLOYMENT IS TERMINATED BY THE COMPANY FOR ANY REASON OTHER THAN
CAUSE OR DISABILITY OR BY THE EMPLOYEE (X) FOR GOOD REASON OR (Y) FOR ANY REASON
DURING THE ONE (1) YEAR PERIOD THAT BEGINS ON THE FIRST ANNIVERSARY OF A CHANGE
IN CONTROL:

 

(I)                                     THE COMPANY SHALL PAY TO THE EMPLOYEE,
(A) WITHIN FIVE (5) BUSINESS DAYS AFTER THE DATE OF TERMINATION, ANY EARNED BUT
UNPAID ANNUAL BASE SALARY AND ANY EXPENSE REIMBURSEMENT PAYMENTS OWED TO THE
EMPLOYEE, AND (B) WITHIN FIVE (5) BUSINESS DAYS AFTER THE DATE OF TERMINATION
OR, IF LATER, BY MARCH 15 OF THE YEAR IN WHICH THE DATE OF TERMINATION OCCURS,
ANY EARNED BUT UNPAID ANNUAL BONUS PAYMENTS RELATING TO THE PRIOR CALENDAR YEAR
(THE “ACCRUED OBLIGATIONS”);

 

(II)                                  THE COMPANY SHALL PAY TO THE EMPLOYEE,
WITHIN THIRTY (30) BUSINESS DAYS AFTER THE DATE OF TERMINATION, A PRORATED
ANNUAL BONUS BASED ON (A) THE TARGET ANNUAL BONUS OPPORTUNITY IN THE YEAR IN
WHICH THE DATE OF TERMINATION OCCURS OR THE PRIOR YEAR IF NO TARGET ANNUAL BONUS
OPPORTUNITY HAS YET BEEN DETERMINED AND (B) THE FRACTION OF THE YEAR THE
EMPLOYEE WAS EMPLOYED;

 

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(III)                               THE COMPANY SHALL PAY TO THE EMPLOYEE,
WITHIN THIRTY (30) BUSINESS DAYS AFTER THE DATE OF TERMINATION, A LUMP-SUM
PAYMENT EQUAL TO 300% OF THE SUM OF (X) THE EMPLOYEE’S ANNUAL BASE SALARY IN
EFFECT IMMEDIATELY PRIOR TO THE DATE OF TERMINATION (DISREGARDING ANY REDUCTION
IN ANNUAL BASE SALARY TO WHICH THE EMPLOYEE DID NOT EXPRESSLY CONSENT IN
WRITING) AND (Y) THE HIGHEST ANNUAL BONUS PAID TO THE EMPLOYEE BY THE COMPANY
WITHIN THE THREE YEARS PRECEDING HIS TERMINATION OF EMPLOYMENT OR, IF HIGHER,
THE HIGHEST TARGET ANNUAL BONUS OPPORTUNITY IN THE YEAR IN WHICH THE DATE OF
TERMINATION OCCURS;

 

(IV)                              ALL STOCK OPTION, RESTRICTED STOCK AND OTHER
EQUITY-BASED INCENTIVE AWARDS GRANTED BY THE COMPANY THAT WERE OUTSTANDING BUT
NOT VESTED AS OF THE DATE OF TERMINATION SHALL BECOME IMMEDIATELY VESTED AND/OR
PAYABLE, AS THE CASE MAY BE; AND

 

(V)                                 FOR A THREE (3) YEAR PERIOD AFTER THE DATE
OF TERMINATION, THE COMPANY WILL PROVIDE OR CAUSE TO BE PROVIDED TO THE EMPLOYEE
(AND ANY COVERED DEPENDENTS), WITH LIFE AND HEALTH INSURANCE BENEFITS (BUT NOT
DISABILITY INSURANCE BENEFITS) SUBSTANTIALLY SIMILAR TO THOSE THE EMPLOYEE AND
ANY COVERED DEPENDENTS WERE RECEIVING IMMEDIATELY PRIOR TO THE NOTICE OF
TERMINATION AT THE SAME LEVEL OF BENEFITS AND AT THE SAME DOLLAR COST TO THE
EMPLOYEE AS IS AVAILABLE TO THE COMPANY’S EXECUTIVE OFFICERS GENERALLY, PROVIDED
THAT THE EMPLOYEE’S CONTINUED RECEIPT OF SUCH BENEFITS IS POSSIBLE UNDER THE
GENERAL TERMS AND PROVISIONS OF THE APPLICABLE PLANS AND PROGRAMS, AND PROVIDED
FURTHER, THAT SUCH BENEFITS WOULD NOT BE TAXABLE TO THE EMPLOYEE OR SUBJECT TO
SECTION 409A OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).  IN
THE EVENT THAT THE EMPLOYEE’S PARTICIPATION IN ANY SUCH PLAN OR PROGRAM IS
PROHIBITED, THE COMPANY SHALL, AT ITS EXPENSE, ARRANGE TO PROVIDE THE EMPLOYEE
WITH BENEFITS SUBSTANTIALLY SIMILAR TO THOSE WHICH THE EMPLOYEE WOULD OTHERWISE
HAVE BEEN ENTITLED TO RECEIVE UNDER SUCH PLANS AND PROGRAMS FROM WHICH HIS
CONTINUED PARTICIPATION IS PROHIBITED.  IF THE COMPANY ARRANGES TO PROVIDE THE
EMPLOYEE AND COVERED DEPENDENTS WITH LIFE AND HEALTH INSURANCE BENEFITS, THOSE
BENEFITS WILL BE REDUCED TO THE EXTENT COMPARABLE BENEFITS ARE RECEIVED BY, OR
MADE AVAILABLE TO, THE EMPLOYEE (AT NO GREATER COST TO THE EMPLOYEE) BY ANOTHER
EMPLOYER DURING THE THREE (3) YEAR PERIOD FOLLOWING THE EMPLOYEE’S DATE OF
TERMINATION.  THE EMPLOYEE MUST REPORT TO THE COMPANY ANY SUCH BENEFITS THAT HE
RECEIVES OR THAT ARE MADE AVAILABLE.  IN LIEU OF THE BENEFITS DESCRIBED IN THIS
SECTION 10(A)(V), THE COMPANY, IN ITS SOLE DISCRETION, MAY ELECT TO PAY TO THE
EMPLOYEE A LUMP SUM CASH PAYMENT EQUAL TO THE MONTHLY PREMIUMS THAT WOULD HAVE
BEEN PAID BY THE COMPANY TO PROVIDE SUCH BENEFITS TO THE EMPLOYEE FOR EACH MONTH
SUCH COVERAGE IS NOT PROVIDED UNDER THIS SECTION 10(A)(V).  NOTHING IN THIS
SECTION 10(A)(V) WILL EXTEND THE COBRA CONTINUATION COVERAGE PERIOD.

 

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The Company shall provide the Employee with advance written notice of the date
of the first anniversary of any Change in Control.

 

(B)                                 TERMINATION BY THE COMPANY FOR CAUSE OR BY
THE EMPLOYEE WITHOUT GOOD REASON.  IF THE EMPLOYEE’S EMPLOYMENT IS TERMINATED BY
THE COMPANY FOR CAUSE OR BY THE EMPLOYEE WITHOUT GOOD REASON, THE COMPANY’S ONLY
OBLIGATION UNDER THIS AGREEMENT SHALL BE PAYMENT OF ANY ACCRUED OBLIGATIONS.

 

(C)                                  TERMINATION DUE TO DEATH OR DISABILITY.  IF
THE EMPLOYEE’S EMPLOYMENT IS TERMINATED DUE TO DEATH OR DISABILITY, THE COMPANY
SHALL PAY TO THE EMPLOYEE (OR TO THE EMPLOYEE’S ESTATE OR PERSONAL
REPRESENTATIVE IN THE CASE OF THE EMPLOYEE’S DEATH), WITHIN THIRTY (30) BUSINESS
DAYS AFTER THE DATE OF TERMINATION, (I) ANY ACCRUED OBLIGATIONS AND (II) A
PRORATED ANNUAL BONUS BASED ON (A) THE TARGET ANNUAL BONUS OPPORTUNITY IN THE
YEAR IN WHICH THE DATE OF TERMINATION OCCURS OR THE PRIOR YEAR IF NO TARGET
ANNUAL BONUS OPPORTUNITY HAS YET BEEN DETERMINED AND (B) THE FRACTION OF THE
YEAR THE EMPLOYEE WAS EMPLOYED.

 

(D)                                 DEFINITION OF CHANGE IN CONTROL.  FOR
PURPOSES OF THIS AGREEMENT, THE TERM “CHANGE IN CONTROL” SHALL MEAN THAT THE
CONDITIONS SET FORTH IN ANY ONE OF THE FOLLOWING SUBSECTIONS SHALL HAVE BEEN
SATISFIED:

 

(I)                                     THE ACQUISITION, DIRECTLY OR INDIRECTLY,
BY ANY “PERSON” (WITHIN THE MEANING OF SECTION 3(A)(9) OF THE SECURITIES AND
EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”) AND USED IN SECTIONS
13(D) AND 14(D) THEREOF) OF “BENEFICIAL OWNERSHIP” (WITHIN THE MEANING OF
RULE 13D-3 OF THE EXCHANGE ACT) OF SECURITIES OF THE COMPANY POSSESSING MORE
THAN FIFTY PERCENT (50%) OF THE TOTAL COMBINED VOTING POWER OF ALL OUTSTANDING
SECURITIES OF THE COMPANY;

 

(II)                                  A MERGER OR CONSOLIDATION IN WHICH THE
COMPANY IS NOT THE SURVIVING ENTITY, EXCEPT FOR A TRANSACTION IN WHICH THE
HOLDERS OF THE OUTSTANDING VOTING SECURITIES OF THE COMPANY IMMEDIATELY PRIOR TO
SUCH MERGER OR CONSOLIDATION HOLD, IN THE AGGREGATE, SECURITIES POSSESSING MORE
THAN FIFTY PERCENT (50%) OF THE TOTAL COMBINED VOTING POWER OF ALL OUTSTANDING
VOTING SECURITIES OF THE SURVIVING ENTITY IMMEDIATELY AFTER SUCH MERGER OR
CONSOLIDATION;

 

(III)                               A REVERSE MERGER IN WHICH THE COMPANY IS THE
SURVIVING ENTITY BUT IN WHICH SECURITIES POSSESSING MORE THAN FIFTY PERCENT
(50%) OF THE TOTAL COMBINED VOTING POWER OF ALL OUTSTANDING VOTING SECURITIES OF
THE COMPANY ARE TRANSFERRED TO OR ACQUIRED BY A PERSON OR PERSONS DIFFERENT FROM
THE PERSONS HOLDING THOSE SECURITIES IMMEDIATELY PRIOR TO SUCH MERGER;

 

(IV)                              DURING ANY PERIOD OF TWO (2) CONSECUTIVE YEARS
DURING THE EMPLOYMENT TERM OR ANY EXTENSIONS THEREOF, INDIVIDUALS, WHO, AT THE
BEGINNING OF SUCH PERIOD, CONSTITUTE THE BOARD, CEASE FOR ANY REASON TO
CONSTITUTE AT LEAST A MAJORITY THEREOF, UNLESS THE ELECTION OF EACH DIRECTOR WHO
WAS NOT A

 

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DIRECTOR AT THE BEGINNING OF SUCH PERIOD HAS BEEN APPROVED IN ADVANCE BY
DIRECTORS REPRESENTING AT LEAST TWO-THIRDS OF THE DIRECTORS THEN IN OFFICE WHO
WERE DIRECTORS AT THE BEGINNING OF THE PERIOD.

 

(V)                                 THE SALE, TRANSFER OR OTHER DISPOSITION (IN
ONE TRANSACTION OR A SERIES OF RELATED TRANSACTIONS) OF ALL OR SUBSTANTIALLY ALL
OF THE ASSETS OF THE COMPANY; OR

 

(VI)                              THE APPROVAL BY THE STOCKHOLDERS OF A PLAN OR
PROPOSAL FOR THE LIQUIDATION OR DISSOLUTION OF THE COMPANY.

 

11.                                 EXCISE TAX GROSS-UP PAYMENTS.

 

(A)                                  IF ANY PAYMENTS OR BENEFITS PAID OR
PROVIDED OR TO BE PAID OR PROVIDED TO THE EMPLOYEE OR FOR HIS BENEFIT PURSUANT
TO THE TERMS OF THIS AGREEMENT OR OTHERWISE IN CONNECTION WITH, OR ARISING OUT
OF, HIS EMPLOYMENT WITH THE COMPANY OR ITS SUBSIDIARIES OR THE TERMINATION
THEREOF (A “PAYMENT” AND, COLLECTIVELY, THE “PAYMENTS”) WOULD BE SUBJECT TO THE
EXCISE TAX (THE “EXCISE TAX”) IMPOSED BY SECTION 4999 OF THE CODE, THEN, EXCEPT
AS OTHERWISE PROVIDED IN THIS SECTION 11(A), THE EMPLOYEE WILL BE ENTITLED TO
RECEIVE AN ADDITIONAL PAYMENT (A “GROSS-UP PAYMENT”) IN AN AMOUNT SUCH THAT,
AFTER PAYMENT BY THE EMPLOYEE OF ALL INCOME TAXES, ALL EMPLOYMENT TAXES AND ANY
EXCISE TAX IMPOSED UPON THE GROSS-UP PAYMENT (INCLUDING ANY RELATED INTEREST AND
PENALTIES), THE EMPLOYEE RETAINS AN AMOUNT OF THE GROSS-UP PAYMENT EQUAL TO THE
EXCISE TAX (INCLUDING ANY RELATED INTEREST AND PENALTIES) IMPOSED UPON THE
PAYMENTS.  NOTWITHSTANDING THE FOREGOING, IF THE AMOUNT OF THE PAYMENTS DOES NOT
EXCEED BY MORE THAN 3% THE AMOUNT THAT WOULD BE PAYABLE TO THE EMPLOYEE IF THE
PAYMENTS WERE REDUCED TO ONE DOLLAR LESS THAN WHAT WOULD CONSTITUTE A “PARACHUTE
PAYMENT” UNDER SECTION 280G OF THE CODE (THE “SCALED BACK AMOUNT”), THEN THE
PAYMENTS SHALL BE REDUCED, IN A MANNER DETERMINED BY THE EMPLOYEE, TO THE SCALED
BACK AMOUNT, AND THE EMPLOYEE SHALL NOT BE ENTITLED TO ANY GROSS-UP PAYMENT.

 

(B)                                 AN INITIAL DETERMINATION OF (I) WHETHER A
GROSS-UP PAYMENT IS REQUIRED PURSUANT TO THIS AGREEMENT, AND, IF APPLICABLE, THE
AMOUNT OF SUCH GROSS-UP PAYMENT OR (II) WHETHER THE PAYMENTS MUST BE REDUCED TO
THE SCALED BACK AMOUNT AND, IF SO, THE AMOUNT OF SUCH REDUCTION, WILL BE MADE AT
THE COMPANY’S EXPENSE BY AN ACCOUNTING FIRM SELECTED BY THE COMPANY.  THE
ACCOUNTING FIRM WILL PROVIDE ITS DETERMINATION, TOGETHER WITH DETAILED
SUPPORTING CALCULATIONS AND DOCUMENTATION, TO THE COMPANY AND THE EMPLOYEE
WITHIN TEN (10) BUSINESS DAYS AFTER THE DATE OF TERMINATION OF EMPLOYEE’S
EMPLOYMENT, OR SUCH OTHER TIME AS MAY BE REASONABLY REQUESTED BY THE COMPANY OR
THE EMPLOYEE.  IF THE ACCOUNTING FIRM DETERMINES THAT NO EXCISE TAX IS PAYABLE
BY THE EMPLOYEE WITH RESPECT TO A PAYMENT OR PAYMENTS, IT WILL FURNISH THE
EMPLOYEE WITH AN OPINION TO THAT EFFECT.  IF A GROSS-UP PAYMENT BECOMES PAYABLE,
SUCH GROSS-UP PAYMENT WILL BE PAID BY THE COMPANY TO THE EMPLOYEE WITHIN THIRTY
(30) BUSINESS DAYS OF THE RECEIPT OF THE

 

8

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ACCOUNTING FIRM’S DETERMINATION.  IF A REDUCTION IN PAYMENTS IS REQUIRED, SUCH
REDUCTION SHALL BE EFFECTUATED WITHIN THIRTY (30) BUSINESS DAYS OF THE RECEIPT
OF THE ACCOUNTING FIRM’S DETERMINATION.  WITHIN TEN (10) BUSINESS DAYS AFTER THE
ACCOUNTING FIRM DELIVERS ITS DETERMINATION TO THE EMPLOYEE, THE EMPLOYEE WILL
HAVE THE RIGHT TO DISPUTE THE DETERMINATION.  THE EXISTENCE OF A DISPUTE WILL
NOT IN ANY WAY AFFECT THE EMPLOYEE’S RIGHT TO RECEIVE A GROSS-UP PAYMENT IN
ACCORDANCE WITH THE DETERMINATION.  IF THERE IS NO DISPUTE, THE DETERMINATION
WILL BE BINDING, FINAL, AND CONCLUSIVE UPON THE COMPANY AND THE EMPLOYEE.  IF
THERE IS A DISPUTE, THE COMPANY AND THE EMPLOYEE WILL TOGETHER SELECT A SECOND
ACCOUNTING FIRM, WHICH WILL REVIEW THE DETERMINATION AND THE EMPLOYEE’S BASIS
FOR THE DISPUTE AND THEN WILL RENDER ITS OWN DETERMINATION, WHICH WILL BE
BINDING, FINAL, AND CONCLUSIVE ON THE COMPANY AND ON THE EMPLOYEE FOR PURPOSES
OF DETERMINING WHETHER A GROSS-UP PAYMENT IS REQUIRED PURSUANT TO THIS
SECTION 11(B) OR WHETHER A REDUCTION TO THE SCALED BACK AMOUNT IS REQUIRED, AS
THE CASE MAY BE.  IF AS A RESULT OF ANY DISPUTE PURSUANT TO THIS SECTION 11(B) A
GROSS-UP PAYMENT IS MADE OR ADDITIONAL GROSS-UP PAYMENTS ARE MADE, SUCH GROSS-UP
PAYMENT(S) WILL BE PAID BY THE COMPANY TO THE EMPLOYEE WITHIN THIRTY (30)
BUSINESS DAYS OF THE RECEIPT OF THE SECOND ACCOUNTING FIRM’S DETERMINATION.  THE
COMPANY WILL BEAR ALL COSTS ASSOCIATED WITH THE SECOND ACCOUNTING FIRM’S
DETERMINATION, UNLESS SUCH DETERMINATION DOES NOT RESULT IN ADDITIONAL GROSS-UP
PAYMENTS TO THE EMPLOYEE OR UNLESS SUCH DETERMINATION DOES NOT MITIGATE THE
REDUCTION IN PAYMENTS REQUIRED TO ARRIVE AT THE SCALED BACK AMOUNT, IN WHICH
CASE ALL SUCH COSTS WILL BE BORNE BY THE EMPLOYEE.

 

(C)                                  FOR PURPOSES OF DETERMINING THE AMOUNT OF
THE GROSS-UP PAYMENT AND, IF APPLICABLE, THE SCALED BACK AMOUNT, THE EMPLOYEE
WILL BE DEEMED TO PAY FEDERAL INCOME TAXES AT THE HIGHEST MARGINAL RATE OF
FEDERAL INCOME TAXATION IN THE CALENDAR YEAR IN WHICH THE GROSS-UP PAYMENT IS TO
BE MADE OR THE SCALED BACK AMOUNT IS DETERMINED, AS THE CASE MAY BE, AND
APPLICABLE STATE AND LOCAL INCOME TAXES AT THE HIGHEST MARGINAL RATE OF TAXATION
IN THE STATE AND LOCALITY OF THE EMPLOYEE’S RESIDENCE ON THE DATE OF TERMINATION
OF EMPLOYEE’S EMPLOYMENT, NET OF THE MAXIMUM REDUCTION IN FEDERAL INCOME TAXES
THAT WOULD BE OBTAINED FROM DEDUCTION OF THOSE STATE AND LOCAL TAXES.

 

(D)                                 AS A RESULT OF THE UNCERTAINTY IN THE
APPLICATION OF SECTION 4999 OF THE CODE, IT IS POSSIBLE THAT GROSS-UP PAYMENTS
WHICH WILL NOT HAVE BEEN MADE BY THE COMPANY SHOULD HAVE BEEN MADE, THE
EMPLOYEE’S PAYMENTS WILL BE REDUCED TO THE SCALED BACK AMOUNT WHEN THEY SHOULD
NOT HAVE BEEN OR THE EMPLOYEE’S PAYMENTS ARE REDUCED TO A GREATER EXTENT THAN
THEY SHOULD HAVE BEEN (AN “UNDERPAYMENT”) OR GROSS-UP PAYMENTS ARE MADE BY THE
COMPANY WHICH SHOULD NOT HAVE BEEN MADE, THE EMPLOYEE’S PAYMENTS ARE NOT REDUCED
TO THE SCALED BACK AMOUNT WHEN THEY SHOULD HAVE BEEN OR THEY ARE NOT REDUCED TO
THE EXTENT THEY SHOULD HAVE BEEN (AN “OVERPAYMENT”).  IF IT IS DETERMINED THAT
AN UNDERPAYMENT HAS OCCURRED, THE ACCOUNTING FIRM SHALL DETERMINE THE AMOUNT OF
THE UNDERPAYMENT THAT HAS OCCURRED AND ANY SUCH UNDERPAYMENT (TOGETHER WITH
INTEREST AT THE RATE PROVIDED IN SECTION 1274(B)(2)(B) OF THE CODE) SHALL BE
PROMPTLY PAID BY THE COMPANY TO OR FOR THE BENEFIT OF EMPLOYEE.  IF IT IS
DETERMINED THAT AN OVERPAYMENT HAS OCCURRED, THE ACCOUNTING FIRM SHALL DETERMINE
THE AMOUNT OF THE OVERPAYMENT THAT HAS OCCURRED AND ANY SUCH OVERPAYMENT
(TOGETHER WITH INTEREST AT THE RATE

 

9

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PROVIDED IN SECTION 1274(B)(2) OF THE CODE) SHALL BE PROMPTLY PAID BY THE
EMPLOYEE (TO THE EXTENT HE HAS RECEIVED A REFUND IF THE APPLICABLE EXCISE TAX
HAS BEEN PAID TO THE INTERNAL REVENUE SERVICE) TO OR FOR THE BENEFIT OF THE
COMPANY; PROVIDED, HOWEVER, THAT IF THE COMPANY DETERMINES THAT SUCH REPAYMENT
OBLIGATION WOULD BE OR RESULT IN AN UNLAWFUL EXTENSION OF CREDIT UNDER
SECTION 13(K) OF THE EXCHANGE ACT, REPAYMENT SHALL NOT BE REQUIRED.  THE
EMPLOYEE SHALL COOPERATE, TO THE EXTENT HIS EXPENSES ARE REIMBURSED BY THE
COMPANY, WITH ANY REASONABLE REQUESTS BY THE COMPANY IN CONNECTION WITH ANY
CONTEST OR DISPUTES WITH THE INTERNAL REVENUE SERVICE IN CONNECTION WITH THE
EXCISE TAX.

 

(E)                                  THE EMPLOYEE SHALL NOTIFY THE COMPANY IN
WRITING OF ANY CLAIM BY THE INTERNAL REVENUE SERVICE THAT, IF SUCCESSFUL, WOULD
REQUIRE A PAYMENT RESULTING IN AN UNDERPAYMENT.  SUCH NOTIFICATION SHALL BE
GIVEN AS SOON AS PRACTICABLE BUT NO LATER THAN TEN (10) BUSINESS DAYS AFTER THE
EMPLOYEE IS INFORMED IN WRITING OF SUCH CLAIM AND SHALL APPRISE THE COMPANY OF
THE NATURE OF SUCH CLAIM AND THE DATE ON WHICH SUCH CLAIM IS REQUESTED TO BE
PAID.  THE EMPLOYEE SHALL NOT PAY SUCH CLAIM PRIOR TO THE EXPIRATION OF THE
THIRTY (30) DAY PERIOD FOLLOWING THE DATE ON WHICH HE GIVES SUCH NOTICE TO THE
COMPANY (OR SUCH SHORTER PERIOD ENDING ON THE DATE THAT ANY PAYMENT OF TAXES
WITH RESPECT TO SUCH CLAIM IS DUE).  IF THE COMPANY NOTIFIES THE EMPLOYEE IN
WRITING PRIOR TO THE EXPIRATION OF SUCH PERIOD THAT IT DESIRES TO CONTEST SUCH
CLAIM, THE EMPLOYEE SHALL:

 

(I)                                     GIVE THE COMPANY ANY INFORMATION
REASONABLY REQUESTED BY THE COMPANY RELATING TO SUCH CLAIM,

 

(II)                                  TAKE SUCH ACTION IN CONNECTION WITH
CONTESTING SUCH CLAIM AS THE COMPANY SHALL REASONABLY REQUEST IN WRITING FROM
TIME TO TIME, INCLUDING, WITHOUT LIMITATION, ACCEPTING LEGAL REPRESENTATION WITH
RESPECT TO SUCH CLAIM BY AN ATTORNEY REASONABLY SELECTED BY THE COMPANY,

 

(III)                               COOPERATE WITH THE COMPANY IN GOOD FAITH IN
ORDER EFFECTIVELY TO CONTEST SUCH CLAIM, AND

 

(IV)                              PERMIT THE COMPANY TO PARTICIPATE IN ANY
PROCEEDING RELATING TO SUCH CLAIM;

 

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including related interest
and penalties) imposed as a result of such representation and payment of costs
and expenses.  Without limitation on the foregoing provisions of this
Section 11(e), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Employee to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Employee agrees to prosecute such contest to a
determination before any administrative

 

10

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tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Employee to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Employee, on an interest-free basis
and shall indemnify and hold the Employee harmless, on an after-tax basis, from
any Excise Tax or income tax (including related interest or penalties) imposed
with respect to such advance or with respect to any imputed income with respect
to such advance.  The Company’s control of the contest shall be limited to
issues that may impact Gross-Up Payments or reduction in Payments under this
Section 11, and the Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

(F)                                    IF, AFTER THE RECEIPT BY THE EMPLOYEE OF
AN AMOUNT ADVANCED BY THE COMPANY PURSUANT TO SECTION 11(E), THE EMPLOYEE
BECOMES ENTITLED TO RECEIVE ANY REFUND WITH RESPECT TO SUCH CLAIM, THE EMPLOYEE
SHALL (SUBJECT TO THE COMPANY’S COMPLYING WITH THE REQUIREMENTS OF
SECTION 11(E)) PROMPTLY PAY TO THE COMPANY THE AMOUNT OF SUCH REFUND (TOGETHER
WITH ANY INTEREST PAID OR CREDITED THEREON AFTER TAXES APPLICABLE THERETO).  IF,
AFTER THE RECEIPT BY THE EMPLOYEE OF AN AMOUNT ADVANCED BY THE COMPANY PURSUANT
TO SECTION 11(E), A DETERMINATION IS MADE THAT THE EMPLOYEE SHALL NOT BE
ENTITLED TO ANY REFUND WITH RESPECT TO SUCH CLAIM AND THE COMPANY DOES NOT
NOTIFY THE EMPLOYEE IN WRITING OF ITS INTENT TO CONTEST SUCH DENIAL OF REFUND
PRIOR TO THE EXPIRATION OF THIRTY (30) DAYS AFTER SUCH DETERMINATION, THEN SUCH
ADVANCE SHALL BE FORGIVEN AND SHALL NOT BE REQUIRED TO BE REPAID.

 

12.                                 NON-DELEGATION OF EMPLOYEE’S RIGHTS.  THE
OBLIGATIONS, RIGHTS AND BENEFITS OF THE EMPLOYEE HEREUNDER ARE PERSONAL AND MAY
NOT BE DELEGATED, ASSIGNED OR TRANSFERRED IN ANY MANNER WHATSOEVER, NOR ARE SUCH
OBLIGATIONS, RIGHTS OR BENEFITS SUBJECT TO INVOLUNTARY ALIENATION, ASSIGNMENT OR
TRANSFER.

 

13.                                 CONFIDENTIAL INFORMATION.  THE EMPLOYEE
ACKNOWLEDGES THAT IN HIS CAPACITY AS AN EMPLOYEE OF THE COMPANY HE WILL OCCUPY A
POSITION OF TRUST AND CONFIDENCE AND HE FURTHER ACKNOWLEDGES THAT HE WILL HAVE
ACCESS TO AND LEARN SUBSTANTIAL INFORMATION ABOUT THE COMPANY AND ITS AFFILIATES
AND THEIR OPERATIONS THAT IS CONFIDENTIAL OR NOT GENERALLY KNOWN IN THE INDUSTRY
INCLUDING, WITHOUT LIMITATION, INFORMATION THAT RELATES TO PURCHASING, SALES,
CUSTOMERS, MARKETING, AND THE COMPANY’S AND ITS AFFILIATES’ FINANCIAL POSITIONS
AND FINANCING ARRANGEMENTS.  THE EMPLOYEE AGREES THAT ALL SUCH INFORMATION IS
PROPRIETARY OR CONFIDENTIAL, OR CONSTITUTES TRADE SECRETS AND IS THE SOLE
PROPERTY OF THE COMPANY AND/OR ITS AFFILIATES, AS THE CASE MAY BE.  THE EMPLOYEE
WILL KEEP CONFIDENTIAL, AND WILL NOT REPRODUCE, COPY OR DISCLOSE TO ANY OTHER
PERSON OR FIRM, ANY SUCH INFORMATION OR ANY DOCUMENTS OR INFORMATION RELATING TO
THE COMPANY’S OR ITS AFFILIATES’ METHODS, PROCESSES, CUSTOMERS, ACCOUNTS,
ANALYSES, SYSTEMS, CHARTS, PROGRAMS, PROCEDURES, CORRESPONDENCE OR RECORDS, OR
ANY OTHER DOCUMENTS USED OR OWNED BY THE COMPANY OR ANY OF ITS AFFILIATES, NOR
WILL THE EMPLOYEE ADVISE, DISCUSS WITH OR IN ANY WAY ASSIST ANY OTHER PERSON,
FIRM OR ENTITY IN OBTAINING OR LEARNING ABOUT ANY OF THE ITEMS DESCRIBED IN THIS
SECTION 13.  ACCORDINGLY, THE EMPLOYEE AGREES THAT DURING THE EMPLOYMENT TERM
AND AT ALL TIMES THEREAFTER HE WILL NOT DISCLOSE, OR PERMIT OR ENCOURAGE ANYONE
ELSE TO DISCLOSE, ANY SUCH INFORMATION, NOR

 

11

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WILL HE UTILIZE ANY SUCH INFORMATION, EITHER ALONG OR WITH OTHERS, OUTSIDE THE
SCOPE OF HIS DUTIES AND RESPONSIBILITIES WITH THE COMPANY AND ITS AFFILIATES.

 

14.                                 NON-COMPETITION DURING EMPLOYMENT TERM.  THE
EMPLOYEE AGREES THAT, DURING THE EMPLOYMENT TERM, HE WILL DEVOTE SUBSTANTIALLY
ALL HIS BUSINESS TIME AND EFFORT, AND GIVE UNDIVIDED LOYALTY, TO THE COMPANY AND
ITS AFFILIATES, AND HE WILL NOT ENGAGE IN ANY WAY WHATSOEVER, DIRECTLY OR
INDIRECTLY, IN ANY BUSINESS THAT IS COMPETITIVE WITH THE COMPANY OR ITS
AFFILIATES, NOR SOLICIT CUSTOMERS, SUPPLIERS OR EMPLOYEES OF THE COMPANY OR
AFFILIATES ON BEHALF OF, OR IN ANY OTHER MANNER WORK FOR OR ASSIST ANY BUSINESS
WHICH IS COMPETITIVE WITH THE COMPANY OR ITS AFFILIATES.  IN ADDITION, DURING
THE EMPLOYMENT TERM, THE EMPLOYEE WILL UNDERTAKE NO PLANNING FOR OR ORGANIZATION
OF ANY BUSINESS ACTIVITY COMPETITIVE WITH THE WORK HE PERFORMS AS AN EMPLOYEE OF
THE COMPANY, AND THE EMPLOYEE WILL NOT COMBINE OR CONSPIRE WITH ANY OTHER
EMPLOYEE OF THE COMPANY OR ANY OTHER PERSON FOR THE PURPOSE OF ORGANIZING ANY
SUCH COMPETITIVE BUSINESS ACTIVITY.

 

15.                                 NON-COMPETITION AFTER EMPLOYMENT TERM.  THE
PARTIES ACKNOWLEDGE THAT AS AN EXECUTIVE OFFICER OF THE COMPANY THE EMPLOYEE
WILL ACQUIRE SUBSTANTIAL KNOWLEDGE AND INFORMATION CONCERNING THE BUSINESS OF
THE COMPANY AND ITS AFFILIATES AS A RESULT OF HIS EMPLOYMENT.  THE PARTIES
FURTHER ACKNOWLEDGE THAT THE SCOPE OF BUSINESS IN WHICH THE COMPANY AND ITS
AFFILIATES ARE ENGAGED AS OF THE EFFECTIVE DATE IS NATIONAL AND VERY COMPETITIVE
AND ONE IN WHICH FEW COMPANIES CAN SUCCESSFULLY COMPETE.  COMPETITION BY AN
EXECUTIVE OFFICER SUCH AS THE EMPLOYEE IN THAT BUSINESS AFTER THE EMPLOYMENT
TERM IS TERMINATED WOULD SEVERELY INJURE THE COMPANY AND ITS AFFILIATES. 
ACCORDINGLY, FOR A PERIOD OF ONE YEAR AFTER THE EMPLOYEE’S EMPLOYMENT TERMINATES
FOR ANY REASON WHATSOEVER, EXCEPT AS OTHERWISE STATED HEREIN BELOW, THE EMPLOYEE
AGREES (A) NOT TO BECOME AN EMPLOYEE, CONSULTANT, ADVISOR, PRINCIPAL, PARTNER OR
SUBSTANTIAL SHAREHOLDER OF ANY FIRM OR BUSINESS THAT IN ANY WAY COMPETES WITH
THE COMPANY OR ITS AFFILIATES IN ANY OF THEIR PRESENTLY-EXISTING OR
THEN-EXISTING PRODUCTS AND MARKETS; AND (B), ON BEHALF OF ANY SUCH COMPETITIVE
FIRM OR BUSINESS, NOT TO SOLICIT ANY PERSON OR BUSINESS THAT WAS AT THE TIME OF
SUCH TERMINATION AND REMAINS A CUSTOMER OR PROSPECTIVE CUSTOMER, A SUPPLIER OR
PROSPECTIVE SUPPLIER, OR AN EMPLOYEE OF THE COMPANY OR AN AFFILIATE. 
NOTWITHSTANDING ANY OF THE FOREGOING PROVISIONS TO THE CONTRARY, THE EMPLOYEE
SHALL NOT BE SUBJECT TO THE RESTRICTIONS SET FORTH IN THIS SECTION 15 UNDER THE
FOLLOWING CIRCUMSTANCES:

 

(A)                                  IF THE EMPLOYEE’S EMPLOYMENT IS TERMINATED
BY THE COMPANY WITHOUT CAUSE;

 

(B)                                 IF THE EMPLOYEE’S EMPLOYMENT IS TERMINATED
AS A RESULT OF THE COMPANY’S UNWILLINGNESS TO EXTEND THE EMPLOYMENT TERM; OR

 

(C)                                  IF THE EMPLOYEE TERMINATES EMPLOYMENT FOR
GOOD REASON.

 

16.                                 RETURN OF COMPANY DOCUMENTS.  UPON
TERMINATION OF THE EMPLOYMENT TERM, EMPLOYEE SHALL RETURN IMMEDIATELY TO THE
COMPANY ALL RECORDS AND DOCUMENTS OF OR PERTAINING TO THE COMPANY OR ITS
AFFILIATES AND SHALL NOT MAKE OR RETAIN ANY COPY OR EXTRACT OF ANY SUCH RECORD
OR DOCUMENT, AND OTHER PROPERTY OF THE COMPANY OR ITS AFFILIATES.

 

17.                                 IMPROVEMENTS AND INVENTIONS.  ANY AND ALL
IMPROVEMENTS OR INVENTIONS, WHICH THE EMPLOYEE MAY MAKE OR PARTICIPATE IN DURING
THE EMPLOYMENT TERM, UNLESS WHOLLY UNRELATED TO THE BUSINESS OF THE COMPANY AND
ITS AFFILIATES AND PRODUCED NOT IN THE SCOPE OF EMPLOYEE’S

 

12

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EMPLOYMENT HEREUNDER, SHALL BE THE SOLE AND EXCLUSIVE PROPERTY OF THE COMPANY. 
THE EMPLOYEE WILL, WHENEVER REQUESTED BY THE COMPANY, EXECUTE AND DELIVER ANY
AND ALL DOCUMENTS WHICH THE COMPANY SHALL DEEM APPROPRIATE IN ORDER TO APPLY FOR
AND OBTAIN PATENTS FOR IMPROVEMENTS OR INVENTIONS OR IN ORDER TO ASSIGN AND
CONVEY TO THE COMPANY THE SOLE AND EXCLUSIVE RIGHT, TITLE AND INTEREST IN AND TO
SUCH IMPROVEMENTS, INVENTIONS, PATENTS OR APPLICATIONS.

 

18.                                 ACTIONS.  THE PARTIES AGREE AND ACKNOWLEDGE
THAT THE RIGHTS CONVEYED BY THIS AGREEMENT ARE OF A UNIQUE AND SPECIAL NATURE
AND THAT THE COMPANY WILL NOT HAVE AN ADEQUATE REMEDY AT LAW IN THE EVENT OF A
FAILURE BY THE EMPLOYEE TO ABIDE BY ITS TERMS AND CONDITIONS NOR WILL MONEY
DAMAGES ADEQUATELY COMPENSATE FOR SUCH INJURY.  IT IS, THEREFORE, AGREED BETWEEN
AND HEREBY ACKNOWLEDGED BY THE PARTIES THAT, IN THE EVENT OF A BREACH BY THE
EMPLOYEE OF ANY OF HIS OBLIGATIONS CONTAINED IN THIS AGREEMENT, THE COMPANY
SHALL HAVE THE RIGHT, AMONG OTHER RIGHTS, TO DAMAGES SUSTAINED THEREBY AND TO
OBTAIN AN INJUNCTION OR DECREE OF SPECIFIC PERFORMANCE FROM ANY COURT OF
COMPETENT JURISDICTION TO RESTRAIN OR COMPEL THE EMPLOYEE TO PERFORM AS AGREED
HEREIN.  THE EMPLOYEE HEREBY ACKNOWLEDGES THAT OBLIGATIONS UNDER SECTIONS 13,
15, 16, 17, 18, 19 AND 20 SHALL SURVIVE THE TERMINATION OF HIS EMPLOYMENT AND HE
SHALL BE BOUND BY THEIR TERMS AT ALL TIMES SUBSEQUENT TO THE TERMINATION OF HIS
EMPLOYMENT FOR THE PERIODS SPECIFIED THEREIN.  NOTHING HEREIN CONTAINED SHALL IN
ANY WAY LIMIT OR EXCLUDE ANY OTHER RIGHT GRANTED BY LAW OR EQUITY TO THE
COMPANY.

 

19.                                 RELEASE.  NOTWITHSTANDING ANY PROVISION
HEREIN TO THE CONTRARY, THE COMPANY WILL REQUIRE THAT, PRIOR TO PAYMENT OF ANY
AMOUNT OR PROVISION OF ANY BENEFIT UNDER SECTION 10 OR PAYMENT OF ANY GROSS-UP
PAYMENT PURSUANT TO SECTION 11 OF THIS AGREEMENT (OTHER THAN DUE TO THE
EMPLOYEE’S DEATH), THE EMPLOYEE SHALL HAVE EXECUTED A COMPLETE RELEASE OF THE
COMPANY AND ITS AFFILIATES AND RELATED PARTIES IN SUCH FORM AS IS REASONABLY
REQUIRED BY THE COMPANY, AND ANY WAITING PERIODS CONTAINED IN SUCH RELEASE SHALL
HAVE EXPIRED.

 

20.                                 NO MITIGATION.  THE COMPANY AGREES THAT, IF
THE EMPLOYEE’S EMPLOYMENT HEREUNDER IS TERMINATED DURING THE EMPLOYMENT TERM,
THE EMPLOYEE IS NOT REQUIRED TO SEEK OTHER EMPLOYMENT OR TO ATTEMPT IN ANY WAY
TO REDUCE ANY AMOUNTS PAYABLE TO THE EMPLOYEE BY THE COMPANY HEREUNDER. 
FURTHER, THE AMOUNT OF ANY PAYMENT OR BENEFIT PROVIDED FOR HEREUNDER (OTHER THAN
PURSUANT TO SECTION 10(A)(V) HEREOF) SHALL NOT BE REDUCED BY ANY COMPENSATION
EARNED BY THE EMPLOYEE AS THE RESULT OF EMPLOYMENT BY ANOTHER EMPLOYER, BY
RETIREMENT BENEFITS OR OTHERWISE.

 

21.                                 ENTIRE AGREEMENT AND AMENDMENT.  THIS
AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING OF THE PARTIES HERETO
IN RESPECT OF THE SUBJECT MATTER OF THIS AGREEMENT, AND SUPERSEDES AND REPLACES
ALL PRIOR AGREEMENTS, UNDERSTANDINGS AND COMMITMENTS WITH RESPECT TO SUCH
SUBJECT MATTER, INCLUDING, WITHOUT LIMITATION, THE PRIOR AGREEMENT.  THIS
AGREEMENT MAY BE AMENDED ONLY BY A WRITTEN DOCUMENT SIGNED BY BOTH PARTIES TO
THIS AGREEMENT.

 

22.                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA,
EXCLUDING ANY CONFLICTS OR CHOICE OF LAW RULE OR PRINCIPLE THAT MIGHT OTHERWISE
REFER CONSTRUCTION OR INTERPRETATION OF THIS PLAN TO THE SUBSTANTIVE LAW OF
ANOTHER JURISDICTION.  ANY LITIGATION PERTAINING TO THIS AGREEMENT SHALL BE
ADJUDICATED IN COURTS LOCATED IN DUVAL COUNTY, FLORIDA.

 

13

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23.                                 SUCCESSORS.  IN ADDITION TO ANY OBLIGATIONS
IMPOSED BY LAW UPON ANY SUCCESSOR TO THE COMPANY, 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 EXPRESSLY ASSUME AND AGREE TO PERFORM THIS AGREEMENT IN THE SAME
MANNER AND TO THE SAME EXTENT THAT THE COMPANY WOULD BE REQUIRED TO PERFORM IT
IF NO SUCH SUCCESSION HAD TAKEN PLACE.  AS USED IN THIS AGREEMENT, “COMPANY”
SHALL MEAN THE COMPANY AS HEREIN BEFORE DEFINED AND ANY SUCH SUCCESSOR THAT
EXPRESSLY ASSUMES THIS AGREEMENT OR OTHERWISE BECOMES BOUND BY ALL THE TERMS AND
PROVISIONS OF THIS AGREEMENT BY OPERATION OF LAW.

 

24.                                 COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF
WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

25.                                 ATTORNEYS’ FEES.  IF ANY PARTY FINDS IT
NECESSARY TO EMPLOY LEGAL COUNSEL OR TO BRING AN ACTION AT LAW OR OTHER
PROCEEDINGS AGAINST THE OTHER PARTY TO INTERPRET OR ENFORCE ANY OF THE TERMS
HEREOF, THE PARTY PREVAILING IN ANY SUCH ACTION OR OTHER PROCEEDING SHALL BE
PAID BY THE OTHER PARTY ITS REASONABLE LEGAL FEES, COURT COSTS, LITIGATION
EXPENSES, ALL AS DETERMINED BY THE COURT AND NOT A JURY; PROVIDED, HOWEVER, THAT
ON OR AFTER A CHANGE IN CONTROL, IF ANY PARTY FINDS IT NECESSARY TO EMPLOY LEGAL
COUNSEL OR TO BRING AN ACTION AT LAW OR OTHER PROCEEDINGS AGAINST THE OTHER
PARTY TO INTERPRET OR ENFORCE ANY OF THE TERMS HEREOF, THE COMPANY SHALL PAY (ON
AN ONGOING BASIS) TO THE EMPLOYEE TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
LEGAL FEES, COURT COSTS AND LITIGATION EXPENSES REASONABLY INCURRED BY THE
EMPLOYEE OR OTHERS ON HIS BEHALF (SUCH AMOUNTS COLLECTIVELY REFERRED TO AS THE
“REIMBURSED AMOUNTS”); PROVIDED, FURTHER, THAT THE EMPLOYEE SHALL REIMBURSE THE
COMPANY FOR THE REIMBURSED AMOUNTS IF IT IS DETERMINED THAT A MAJORITY OF THE
EMPLOYEE’S CLAIMS OR DEFENSES WERE FRIVOLOUS OR WITHOUT MERIT.

 

26.                                 SEVERABILITY.  IF ANY SECTION, SUBSECTION OR
PROVISION HEREOF IS FOUND FOR ANY REASON WHATSOEVER TO BE INVALID OR
INOPERATIVE, THAT SECTION, SUBSECTION OR PROVISION SHALL BE DEEMED SEVERABLE AND
SHALL NOT AFFECT THE FORCE AND VALIDITY OF ANY OTHER PROVISION OF THIS
AGREEMENT.  IF ANY COVENANT HEREIN IS DETERMINED BY A COURT TO BE OVERLY BROAD
THEREBY MAKING THE COVENANT UNENFORCEABLE, THE PARTIES AGREE AND IT IS THEIR
DESIRE THAT SUCH COURT SHALL SUBSTITUTE A REASONABLE JUDICIALLY ENFORCEABLE
LIMITATION IN PLACE OF THE OFFENSIVE PART OF THE COVENANT AND THAT AS SO
MODIFIED THE COVENANT SHALL BE AS FULLY ENFORCEABLE AS IF SET FORTH HEREIN BY
THE PARTIES THEMSELVES IN THE MODIFIED FORM.  THE COVENANTS OF THE EMPLOYEE IN
THIS AGREEMENT SHALL EACH BE CONSTRUED AS AN AGREEMENT INDEPENDENT OF ANY OTHER
PROVISION IN THIS AGREEMENT, AND THE EXISTENCE OF ANY CLAIM OR CAUSE OF ACTION
OF THE EMPLOYEE AGAINST THE COMPANY, WHETHER PREDICATED ON THIS AGREEMENT OR
OTHERWISE, SHALL NOT CONSTITUTE A DEFENSE TO THE ENFORCEMENT BY THE COMPANY OF
THE COVENANTS IN THIS AGREEMENT.

 

27.                                 NOTICES.  ANY NOTICE, REQUEST, OR
INSTRUCTION TO BE GIVEN HEREUNDER SHALL BE IN WRITING AND SHALL BE DEEMED GIVEN
WHEN PERSONALLY DELIVERED OR THREE (3) DAYS AFTER BEING SENT BY UNITED STATES
CERTIFIED MAIL, POSTAGE PREPAID, WITH RETURN RECEIPT REQUESTED, TO THE PARTIES
AT THEIR RESPECTIVE ADDRESSES SET FORTH BELOW:

 

14

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To the Company:

 

Certegy, Inc.

601 Riverside Avenue

Jacksonville, FL 32204

Attention: Peter T. Sadowski

 

To the Employee:

 

Lee A. Kennedy

 

 

 

28.                                 WAIVER OF BREACH.  THE WAIVER BY ANY PARTY
OF ANY PROVISIONS OF THIS AGREEMENT SHALL NOT OPERATE OR BE CONSTRUED AS A
WAIVER OF ANY PRIOR OR SUBSEQUENT BREACH BY THE OTHER PARTY.

 

29.                                 TAX WITHHOLDING.  THE COMPANY OR AN
AFFILIATE MAY DEDUCT FROM ALL COMPENSATION AND BENEFITS PAYABLE UNDER THIS
AGREEMENT ANY TAXES OR WITHHOLDINGS THE COMPANY IS REQUIRED TO DEDUCT PURSUANT
TO STATE, FEDERAL OR LOCAL LAWS.

 

IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT TO BE EFFECTIVE AS
OF THE DATE FIRST SET FORTH ABOVE.

 

 

 

CERTEGY, INC.

 

 

 

 

 

 

 

By:

/s/Phillip B. Lassiter

 

 

 

ITS:

DIRECTOR AND MEMBER OF THE
COMPENSATION COMMITTEE

 

 

 

 

 

 

 

LEE A. KENNEDY

 

 

 

 

 

 

 

/S/LEE A. KENNEDDY

 

 

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