Exhibit 10.1



 





 Exhibit 10.1




AMENDED AND RESTATED EMPLOYMENT AGREEMENT




BETWEEN




AGILYSYS, INC.




AND




ARTHUR RHEIN




Amendment and Restatement Effective Date: January 1, 2006

or Date of Execution if Other than January 1, 2006





 









 








Table of Contents




	 	 	 	 	 
	 	 	Page	 
	DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	TERMINATION OF PRIOR AGREEMENT
	 	 	5	 
	 
	 	 	 	 
	EMPLOYMENT TERM
	 	 	5	 
	 
	 	 	 	 
	POSITION, DUTIES, AND RESPONSIBILITIES
	 	 	5	 
	 
	 	 	 	 
	SALARY, BONUS AND BENEFITS
	 	 	6	 
	 
	 	 	 	 
	TERMINATION OF EMPLOYMENT
	 	 	7	 
	 
	 	 	 	 
	SEVERANCE COMPENSATION
	 	 	8	 
	 
	 	 	 	 
	CHANGE OF CONTROL
	 	 	13	 
	 
	 	 	 	 
	SEVERANCE PLAN
	 	 	14	 
	 
	 	 	 	 
	PLAN AMENDMENTS
	 	 	14	 
	 
	 	 	 	 
	NON-COMPETITION, CONFIDENTIAL INFORMATION AND NON-INTERFERENCE
	 	 	15	 
	 
	 	 	 	 
	ARBITRATION
	 	 	16	 
	 
	 	 	 	 
	NOTICES
	 	 	17	 
	 
	 	 	 	 
	ASSIGNMENT; BINDING EFFECT
	 	 	18	 
	 
	 	 	 	 
	INVALID PROVISIONS
	 	 	18	 
	 
	 	 	 	 
	ALTERNATIVE SATISFACTION OF COMPANY’S OBLIGATIONS
	 	 	18	 
	 
	 	 	 	 
	ENTIRE AGREEMENT, MODIFICATION
	 	 	19	 
	 
	 	 	 	 
	NON-EXCLUSIVITY OF RIGHTS
	 	 	19	 
	 
	 	 	 	 
	WAIVER OF BREACH
	 	 	19	 
	 
	 	 	 	 
	GOVERNING LAW
	 	 	19	 
	 
	 	 	 	 
	WITHHOLDING
	 	 	19	 
	 
	 	 	 	 
	EXPENSES
	 	 	19	 
	 
	 	 	 	 
	REPRESENTATION
	 	 	20	 
	 
	 	 	 	 
	SUBSIDIARIES AND AFFILIATES
	 	 	20	 
	 
	 	 	 	 
	NO MITIGATION OR OFFSET
	 	 	20	 
	 
	 	 	 	 
	SOLE REMEDY
	 	 	20	 







 









 








AMENDED AND RESTATED EMPLOYMENT AGREEMENT




     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into as of the 23 day of December,
2005, by and between AGILYSYS, INC., formerly known as PIONEER-STANDARD ELECTRONICS, INC., an Ohio
corporation (the “Company”), and ARTHUR RHEIN (“Rhein”).



W I T N E S S E T H:




     WHEREAS, the Company and Rhein (collectively “the Parties”) desire to enter into this Amended
and Restated Employment Agreement (the “Agreement”) as hereinafter set forth;



     NOW, THEREFORE, the Company and Rhein agree as follows:



     1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the
meanings set forth in this Section 1 when used in this Agreement. Certain other terms are defined
in the body of this Agreement.




	 	(a)	 	Agreement. The term “Agreement” shall mean this Amended
and Restated Employment Agreement, as it may be amended from time to time.
	 
	 	(b)	 	Annual Incentive Plan. The term “Annual Incentive Plan”
shall mean the Agilysys, Inc. Executive Officer Annual Incentive Plan or
individual annual incentive arrangement which is approved by the Compensation
Committee.
	 
	 	(c)	 	Base Salary. The term “Base Salary” shall mean the
salary provided for in Section 5 or any increased salary granted to Rhein in
accordance with Section 5.
	 
	 	(d)	 	Board. The term “Board” shall mean the Board of
Directors of the Company.
	 
	 	(e)	 	Cause. The term “Cause” shall mean:






	 	(i)	 	Commission by Rhein (evidenced by a conviction or
written, voluntary and freely given confession) of a criminal act
constituting a felony involving fraud or moral turpitude;
	 
	 	(ii)	 	Commission by Rhein of a material breach or material
default of any of Rhein’s agreements or obligations under any provision of
this Agreement, including, without limitation, Rhein’s agreements and
obligations under Subsections 4(a) through 4(e) or Section 11 of this
Agreement, which is not substantially cured within ninety (90) days after
the Board gives written notice thereof to Rhein;
	 
	 	(iii)	 	Commission by Rhein, when carrying out Rhein’s duties
under this Agreement, of acts or the omission of any act, which constitutes
willful misconduct or which constitutes gross negligence and results in
material




(2)









 






	 	 	 	economic harm to the Company or has a materially adverse effect on the
Company’s operations, properties or business relationships; or
	 
	 	(iv)	 	A substantial and continued failure or refusal by
Rhein to perform under this Agreement which Rhein shall have failed to
remedy within ninety (90) days after his receipt of written notice from
the Board.






	 	(f)	 	Change in Control. The term “Change in Control” shall
mean a change in control of the Company of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934 as in effect on the date of this
Agreement, regardless of whether the Company is then subject to such reporting
requirement; provided that, without limitation, such a Change in Control shall
be deemed to have occurred if and when (a) any “person” (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), excluding
any employee benefit plan of the Company, any trust established under any
employee benefit plan of the Company, or any trustee of any trust established
under any employee benefit plan of the Company, becomes a beneficial owner,
directly or indirectly, of securities of the Company representing twenty percent
(20%) or more of the combined voting power of the Company’s then outstanding
securities, or (b) during any period of twelve (12) consecutive months,
commencing before or after the date of this Agreement, individuals who, at the
beginning of such twelve (12) month period were directors of the Company for
whom Rhein, as a shareholder, shall have voted, cease for any reason to
constitute at least a majority of the Board; provided, however, that in
no event shall a Change in Control be deemed to have occurred
for purposes of this Agreement if such Change in Control occurs as a part of the
Company’s strategic plan unless the Change in Control occurs as a part of a
change to the Company’s strategic plan initiated by the Board of Directors. A
Change in Control resulting from an unsolicited offer by a third party shall not
be considered to be part of the Company’s strategic plan and, therefore, would
be considered a Change in Control for purposes of this Agreement. A Change in
Control resulting from an offer by a third party solicited by the Company would
not be considered a Change in Control for purposes of this Agreement unless the
solicitation is authorized in advance by the Board of Directors.
	 
	 	(g)	 	Company. The term “Company” shall mean Agilysys, Inc.,
formerly known as Pioneer-Standard Electronics, Inc., an Ohio corporation, and
its successors and assigns to the extent permitted under this Agreement.
	 
	 	(h)	 	Compensation Committee. The term “Compensation
Committee” shall mean the Compensation Committee of the Board or its successor.
	 
	 	(i)	 	Disability. The term “Disability” shall mean a condition
resulting from illness or accident which has prevented Rhein from performing his
duties under this Agreement for a period of six (6) consecutive months. The
Employment Term shall be deemed to have ended as of the close of business on a
day designated by the Company, which shall not be earlier than (x) the last day
of such period




(3)









 






	 	 	 	of six (6) consecutive months and (y) the day on which the Company provides
written notice pursuant to Subsection 6(b) of this Agreement.
	 
	 	(j)	 	Effective Date. The term “Effective Date” shall mean the
effective date of this amended and restated Agreement, which shall be January 1,
2006, or, if other, the date of execution hereof.
	 
	 	(k)	 	Employment Term. The term “Employment Term” shall have
the meaning set forth in Subsection 3(b) of this Agreement.
	 
	 	(l)	 	Good Reason. The term “Good Reason” shall mean the
occurrence of any of the following:






	 	(i)	 	there is any reduction in Rhein’s title or
position or change in his reporting relationship;
	 
	 	(ii)	 	there is a material reduction in Rhein’s duties
or responsibilities;
	 
	 	(iii)	 	Rhein’s compensation is reduced or his
participation in any benefit plan, program or arrangement is eliminated,
or benefits payable to Rhein under any such plan, program or arrangement
or Rhein’s perquisites are materially reduced or restricted,
except where either (A) such reduction, restriction, elimination
or other change is both generally applicable to all members of senior
management and does not reduce either Rhein’s annual salary or Target
Annual Bonus, or (B) such reduction, restriction, elimination or other
change is merely the result of application of a formula measuring
individual or corporate performance or both, or (C) such reduction,
restriction, elimination or other change is merely the result of carrying
out the terms of this Agreement (e.g., it is intended that Rhein’s grants
in Fiscal Year 2007 under the Company’s long term incentive plan will be
his last grants thereunder, and it is expected that his Base Salary will
remain at the level set forth herein from April 1, 2006, through the end
of the Employment Term, neither of which circumstances shall constitute a
Good Reason);
	 
	 	(iv)	 	there is a material breach or material default by
the Company or its successor of any of its agreements or obligations
under any provision of this Agreement, unless such breach or default is
substantially cured within a reasonable period of time (hereby defined as
ten (10) days for simple non-payment of an agreed amount without any
related issues and ninety (90) days in all other cases) after written
notice advising the Company or its successor of the acts or omissions
constituting such breach or default has been received by the Company; or
	 
	 	(v)	 	the failure of the Company to obtain an agreement
from any successor to the Company to assume this Agreement as
contemplated by Section 14 of this Agreement.






	 	(m)	 	Parties. The term “Parties” shall mean the Company and
Rhein.




(4)









 






	 	(n)	 	Pro Rata. The term “Pro Rata” shall mean, when used with
respect to the Company’s Annual Incentive Plan, a fraction, the numerator of
which is the number of days that Rhein was employed by the Company in the
applicable performance period (typically one fiscal year of the Company) and the
denominator of which shall be the number of days in the applicable performance
period.
	 
	 	(o)	 	Retirement. The term “Retirement” shall have the
definition ascribed to such term in the Company’s Supplemental Executive
Retirement Plan as in effect on April 1, 2003.
	 
	 	(p)	 	Severance Benefit Plan. The term “Severance Benefit
Plan” shall mean any plan, policy or arrangement providing severance benefits
for executive officers (and any other employees) of the Company.
	 
	 	(q)	 	Target Annual Bonus. The term “Target Annual Bonus”
shall mean Rhein’s target annual incentive opportunity under the Annual
Incentive Plan.





     2. AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT. This Agreement amends and restates
the employment agreement between the Parties effective as of April 1, 2003, and shall be deemed
effective as of 12:00 a.m. on the Effective Date. Amendment and restatement of the employment
agreement does not revoke any right that either party to the agreement had with respect to periods
prior to the Effective Date.



     3. EMPLOYMENT TERM.




	 	(a)	 	During the Employment Term, the Company shall employ Rhein, and
Rhein shall serve the Company, as President and Chief Executive Officer, based
on the terms and subject to the conditions set forth herein.
	 
	 	(b)	 	The Employment Term shall commence on the Effective Date and
shall end on March 31, 2009, provided that the Employment Term may terminate
prior to the date specified above in this Subsection 3(b) as provided in Section
6 hereof.
	 
	 	(c)	 	This Agreement will terminate March 31, 2009, unless the Parties
shall agree otherwise in accordance with Section 17 hereof. If this Agreement
terminates without a new employment agreement having been executed by the
Company and Rhein by the date of such termination, Rhein’s employment with the
Company thereafter shall be at will.





     4. POSITION, DUTIES, AND RESPONSIBILITIES. At all times during the Employment Term,
Rhein shall:




	 	(a)	 	Hold the position of President and Chief Executive Officer of the
Company reporting to the Board;
	 
	 	(b)	 	Have those duties and responsibilities, and the authority,
customarily possessed by the Chief Executive Officer of a major corporation and
such additional duties




(5)









 






	 	 	 	as may be assigned to Rhein from time to time by the
Board which are consistent with the position of Chief Executive Officer of a
major corporation;
	 
	 	(c)	 	For so long as Rhein shall serve as Chief Executive Officer of
the Company, be nominated by the Board for election as a Director at such time
as the nominees for the class of Directors of which Rhein is a member (as of the
Effective Date, Class C) are being proposed for election at the annual meeting
of shareholders of the Company;
	 
	 	(d)	 	Adhere to such reasonable written policies and directives as may
be promulgated from time to time by the Board and which are applicable to
executive officers of the Company; and
	 
	 	(e)	 	Devote Rhein’s entire business time, energy, and talent (subject
to vacation time in accordance with the Company’s policy applicable to executive
officers, illness or injury) to the business, and to the furtherance of the
purposes and objectives, of the Company, and neither directly nor indirectly act
as an employee of or render any business, commercial, or professional services
to any other person, firm or organization for compensation, without the prior
written approval of the Board.





     Nothing in this Agreement shall preclude Rhein from devoting reasonable periods of time to
charitable and community activities or the management of Rhein’s investment assets, provided such
activities do not interfere with the performance by Rhein of Rhein’s duties hereunder.
Furthermore, service by Rhein on the boards of directors of up to two (2) noncompeting companies
(in addition to affiliates of the Company) shall not be deemed to be a violation of this Agreement,
provided such service does not interfere with the performance of Rhein’s duties hereunder.



     5. SALARY, BONUS AND BENEFITS. For services rendered by Rhein on behalf of the
Company during the Employment Term, the following salary, bonus and benefits shall be provided to
Rhein by the Company during such Employment Term:




	 	(a)	 	The Company shall pay to Rhein, in equal installments, according
to the Company’s then current practice for paying its executive officers in
effect from time to time during the Employment Term, an annual Base Salary at
the rate of:






	 	(i)	 	The rate then in effect from the Effective Date
through March 31, 2006; and
	 
	 	(ii)	 	The rate of Seven Hundred Twenty-Five Thousand
Dollars ($725,000.00) effective April 1, 2006. This salary shall be
subject to annual review, at the beginning of each fiscal year of the
Company commencing with Fiscal Year 2008, by the Compensation Committee
or the Board and may be increased, but not decreased, to the extent, if
any, that the Compensation Committee, or the Board, may determine. It
is not
anticipated that this amount will be increased during the Employment
Term.




(6)









 












	 	(b)	 	Rhein shall participate in the Annual Incentive Plan. Rhein’s
Target Annual Bonus will be one hundred percent (100%) of his annual Base
Salary, with a range of zero percent (0%) to two hundred fifty percent (250%) of
his annual Base Salary.
	 
	 	(c)	 	Rhein shall be eligible for participation in such other benefit
plans, including, but not limited to, the Company’s Retirement Plan, Severance
Benefit Plan, 2000 Stock Incentive Plan, Supplemental Executive Retirement Plan,
Benefit Equalization Plan, Short-Term and Long Term Disability Plans, Group Term
Life Insurance Plan, Medical Plan, and Dental Plan, as the Company may adopt
from time to time and in which the Company’s executive officers, or employees in
general, are eligible to participate. This Subsection 5(c) shall not be deemed
to prevent participation in any special plan or arrangement providing special
benefits to Rhein which are not available to other employees. Such
participation shall be subject to the terms and conditions set forth in the
applicable plan documents. As is more fully set forth in Section 9 hereof,
Rhein shall not be entitled to duplicative payments under this Agreement and any
Severance Benefit Plan.
	 
	 	(d)	 	Without limiting the generality of Subsection 5(c) above, as soon
as reasonably possible following the Effective Date, and thereafter throughout
the Employment Term, Rhein shall be provided with life insurance protection, at
the Company’s expense, in an aggregate amount of not less than two hundred
percent (200%) of his earnings from the Company as reported on IRS Form W-2 for
the preceding calendar year.
	 
	 	(e)	 	Without limiting the generality of Subsection 5(c) above, Rhein
shall be entitled to an automobile allowance in accordance with the Company’s
automobile policy for its executive officers (but not less than Twelve Thousand
Dollars ($12,000.00) per year), an allowance for estate, financial and tax
planning of Ten Thousand Dollars ($10,000.00) per year, and reimbursement for
reasonable club dues and membership fees consistent with the Company’s past
practice.
	 
	 	(f)	 	Without limiting the generality of Subsection 5(c) above, Rhein
shall be entitled to director’s and officer’s liability insurance coverage with
respect to claims against Rhein arising in connection with his activities
performed on behalf of or in connection with his service as an officer or
Director of the Company or any affiliate.





     6. TERMINATION OF EMPLOYMENT. As indicated in Subsection 3(b), the Employment Term
may terminate prior to the date specified therein as follows:




	 	(a)	 	Death. Rhein’s employment hereunder will terminate
without further notice upon the death of Rhein.
	 
	 	(b)	 	Disability. The Company may terminate Rhein’s employment
hereunder effective immediately upon giving written notice of such termination
for “Disability.”




(7)









 






	 	(c)	 	Termination for Cause. The Company may terminate Rhein’s
employment hereunder effective immediately upon giving written notice of such
termination for “Cause.” In order for Rhein’s termination to be deemed to be
for Cause, the Company shall, within sixty (60) days following the later of the
event constituting Cause or the Company’s actual knowledge thereof, give written
notice to Rhein on or before the date of termination of employment for Cause
stating that the Company is terminating Rhein’s employment with the Company and
specifying in detail the reasons for such termination. If Rhein does not object
to such notice by notifying the Company in writing within ten (10) business days
following the date of Rhein’s receipt of the Company’s notice of termination,
Rhein shall be deemed to have agreed that such termination was for Cause. If
the Company fails to give such timely notice of termination for Cause, its right
to terminate Rhein’s employment for Cause with respect to such event shall be
permanently waived. Non-notification by the Company with respect to a specific
event constituting Cause does not preclude the Company from filing a notice with
respect to a subsequent event constituting Cause.
	 
	 	(d)	 	Termination Not for Cause. The Company may terminate
Rhein’s employment hereunder without Cause at any time upon thirty (30) days
written notice.
	 
	 	(e)	 	Resignation for Good Reason. Rhein may terminate his
employment hereunder effective immediately upon giving written notice of such
termination for “Good Reason.” In order for Rhein’s termination to be deemed to
be for Good Reason, Rhein shall, within sixty (60) days following the later of
the event constituting Good Reason or his actual knowledge thereof, give written
notice to the Company on or before the date of termination of employment for
Good Reason stating that Rhein is terminating employment with the Company and
specifying in detail the reasons for such termination. If the Company does not
object to such notice by notifying Rhein in writing within ten (10) business
days following the date of the Company’s receipt of Rhein’s notice of
termination, the Company shall be deemed to have agreed that such termination
was for Good Reason. If Rhein fails to give such timely notice of termination
for Good Reason, his right to resign for Good Reason with respect to such event
shall be permanently waived. Non-notification by Rhein with respect to a
specific event constituting Good Reason does not preclude Rhein from filing a
notice with respect to a subsequent event constituting Good Reason.
	 
	 	(f)	 	Resignation Not for Good Reason. Rhein may terminate his
employment hereunder without Good Reason at any time upon thirty (30) days
written notice.
	 
	 	(g)	 	Retirement. Rhein may terminate his employment due to
his Retirement.





     7. SEVERANCE COMPENSATION. If Rhein’s employment terminates, the following severance
provisions will apply:




	 	(a)	 	Death. If Rhein’s employment is terminated by his death,
his estate or his beneficiaries, as the case may be, shall be entitled to the
following:




(8)









 












	 	(i)	 	Base Salary through the end of the month of his
death;
	 
	 	(ii)	 	Pro Rata award under the Annual Incentive Plan
for the year of his death, payable when such awards are payable to other
officers;
	 
	 	(iii)	 	All of Rhein’s then outstanding stock options,
whether or not then exercisable, shall become exercisable in full, and
then outstanding stock options which were granted to Rhein after April 1,
2003, shall not terminate prior to the end of their respective terms;
	 
	 	(iv)	 	Restrictions on Rhein’s restricted stock shall
lapse;
	 
	 	(v)	 	Director’s and officer’s liability insurance
coverage as described in Subsection 5(f) for the two (2) year period
following the date of his death; and
	 
	 	(vi)	 	Such other benefits shall be payable as shall be
provided under the relevant plans and arrangements of the Company.






	 	(b)	 	Disability. If Rhein’s employment is terminated due to
his Disability, he shall be entitled to the following:






	 	(i)	 	Base Salary through the end of the month of the
termination of his employment;
	 
	 	(ii)	 	Pro Rata award under the Annual Incentive Plan
for the year of his termination of employment, payable when such awards
are payable to other officers;
	 
	 	(iii)	 	All of Rhein’s then outstanding stock options,
whether or not then exercisable, shall become exercisable in full, and
then outstanding stock options which were granted to Rhein after April 1,
2003, shall not terminate prior to the end of their respective terms;
	 
	 	(iv)	 	Restrictions on Rhein’s restricted stock shall
lapse;
	 
	 	(v)	 	Director’s and officer’s liability insurance
coverage as described in Subsection 5(f) until the later of the date on
which Rhein attains age sixty-five (65) or the date which is two (2)
years from the date of such termination of employment;
	 
	 	(vi)	 	Such other benefits shall be payable as shall be
provided under the relevant plans and arrangements of the Company; and
	 
	 	(vii)	 	Rhein’s life insurance provided under Subsection
5(d) and medical insurance coverage substantially equivalent to the
coverage to Rhein, his spouse and dependents provided under the Company’s
Medical Plan at the time of such termination due to Rhein’s Disability
shall continue in effect until Rhein attains age sixty-five (65).




(9)









 












	 	(c)	 	Retirement. If Rhein’s employment is terminated due to
his Retirement, he shall be entitled to the following:






	 	(i)	 	Base Salary through the end of the month of the
termination of his employment;
	 
	 	(ii)	 	Pro Rata award under the Annual Incentive Plan
for the year of his termination of employment, payable when such awards
are payable to other officers;
	 
	 	(iii)	 	All of Rhein’s then outstanding stock options,
whether or not then exercisable, shall become exercisable in full, except
for options granted on or after the Effective Date of this Agreement
(which options shall not become exercisable to any greater extent
after such termination even in the event of his death or disability
following such termination of employment) but then outstanding stock
options which were granted to Rhein after April 1, 2003, shall not
terminate prior to the end of their respective terms;
	 
	 	(iv)	 	Director’s and officer’s liability insurance
coverage as described in Subsection 5(f) until the later of the date on
which Rhein attains age sixty-five (65) or the date which is two (2)
years from the date of his termination of employment;
	 
	 	(v)	 	Such other benefits shall be payable as shall be
provided under the relevant plans and arrangements of the Company; and
	 
	 	(vi)	 	Rhein’s life insurance provided under Subsection
5(d) and medical insurance coverage substantially equivalent to the
coverage to Rhein, his spouse and his dependents provided under the
Company’s Medical Plan at the time of such Retirement shall continue in
effect until Rhein attains age sixty-five (65).






If Rhein dies under the conditions described in Subsection 7(a) at a time when
he could have retired and satisfied the requirements for Retirement under this
Subsection 7(c), or if Rhein’s termination of employment qualifies as both a
Retirement and another type of termination described in Subsection 7(b), 7(d),
7(e) or 8(a), the following provisions of this Subsection 7(c) shall explain
the interaction of this Subsection 7(c) and such other Subsection. If Rhein
shall die as provided in Subsection 7(a) at a time when he could have retired
and satisfied the requirements for Retirement, Subsection 7(a) generally will
apply rather than this Subsection 7(c) but, in addition, medical insurance
coverage substantially equivalent to the coverage Rhein’s spouse and his
dependents were
provided under the Company’s Medical Plan at the time of Rhein’s death shall
continue in effect until Rhein would have attained age sixty-five (65). If
Rhein’s termination of employment occurs at a time when Rhein could have
retired and satisfied the requirements for Retirement under this Subsection
7(c) and also is a type of termination described in Subsection 7(b)
(Disability), 7(d)



(10)









 






(Protected Termination), or 8(a) (termination under certain
circumstances in connection with a Change in Control), the provisions of such
Subsection 7(b), 7(d), or 8(a), as applicable, generally will apply rather
than this Subsection 7(c); provided, however, that the Company intends that
the following beneficial provisions of this Subsection 7(c) will apply in such
case if more favorable to Rhein, his spouse, dependents or beneficiaries, as
the case may be, than the corresponding benefits provided under such
Subsection 7(b), 7(d) or 8(a), as applicable: (A) upon such termination of
employment, all of Rhein’s then outstanding stock options, whether or not then
exercisable, shall become exercisable in full (but, with respect to options
granted on or after the Effective Date, only if such termination is due to
Rhein’s Disability or is in connection with a Change in Control or is a
Protected Termination due to Rhein’s involuntary termination not for Cause but
not if such termination is a Protected Termination due to Rhein’s
termination for Good Reason), and then outstanding stock options which were
granted to Rhein after April 1, 2003, shall not terminate prior to the end of
their respective terms; and (B) Rhein’s life insurance provided under
Subsection 5(d) and medical insurance coverage substantially equivalent to the
coverage to Rhein, his spouse and his dependents provided under the Company’s
Medical Plan at the time of such termination of employment shall continue in
effect until Rhein attains age sixty-five (65). If Rhein’s termination of
employment occurs at a time when Rhein could have retired and satisfied the
requirements for Retirement under this Subsection 7(c) and also is a type of
termination described in Subsection 7(e) (Unprotected Termination), (x) the
provisions of such Subsection 7(e) shall apply if such termination is a
termination of Rhein’s employment by the Company for Cause and (y) the
provisions of this Subsection 7(c) shall apply if such termination is a
termination of employment by Rhein other than for Good Reason.




	 	(d)	 	Protected Termination. If Rhein’s employment is
terminated by the Company other than due to his Disability or for Cause or is
terminated by Rhein for Good Reason, he shall be entitled to the following:






	 	(i)	 	Base Salary through the date of his termination
of his employment;
	 
	 	(ii)	 	Pro Rata award under the Annual Incentive Plan
for the year of his termination of employment, payable when such awards
are payable to other officers;
	 
	 	(iii)	 	Payment of his annual Base Salary and Target
Annual Bonus as follows:






	 	(A)	 	For the one year period from the
date of such termination of employment, the Company shall (x)
continue to pay Rhein’s annual Base Salary at the times specified
in Subsection 5(a) and (y) pay Rhein, in equal monthly amounts,
an amount equal to
Rhein’s Target Annual Bonus for the year of his termination of
employment; and
	 
	 	(B)	 	Within thirty (30) days following
the date which is one year from the date of such termination of
employment, the Company shall




(11)









 






	 	 	 	pay Rhein, in a single sum, an
amount equal to the sum of (x) his annual Base Salary plus (y)
his Target Annual Bonus for the year of his termination of
employment.






	 	(iv)	 	For the period of two (2) years from the date of
such termination of employment (such two (2) year period is hereinafter
referred to as the “Payment Term”), such other benefits shall be payable
as shall be provided under the relevant plans and arrangements of the
Company;
	 
	 	(v)	 	Director’s and officer’s liability insurance
coverage as described in Subsection 5(f) until the later of the date on
which Rhein attains age sixty-five (65) or the date which is two (2)
years from the date of his termination of employment;
	 
	 	(vi)	 	Rhein’s life insurance shall continue in effect
throughout the Payment Term;
	 
	 	(vii)	 	Throughout the Payment Term, Rhein shall be
entitled to an automobile allowance in accordance with the Company’s
automobile policy for its executive officers (but not less than Twelve
Thousand Dollars ($12,000.00) per year), an allowance for estate,
financial and tax planning of Ten Thousand Dollars ($10,000.00) per year,
and reimbursement for reasonable club dues and membership fees consistent
with the Company’s past practice; and
	 
	 	(viii)	 	Throughout the Payment Term, Rhein shall enjoy
continued participation in all of the benefit plans of the Company in
which he was a participant at the time of his termination of employment.






	 	(e)	 	Unprotected Termination. If Rhein’s employment hereunder
terminates due to Rhein’s termination by the Company for Cause or termination by
Rhein other than for Good Reason or Retirement, then no further compensation or
benefits will be provided to Rhein by the Company under this Agreement following
the date of such termination of employment other than payment of compensation
earned to the date of termination of employment but not yet paid. As more
fully and generally provided in Section 18 hereof, this Subsection 7(e) shall
not be interpreted to deny Rhein any benefits to which he may be entitled under
any plan or arrangement of the Company applicable to Rhein. Likewise, this
Subsection 7(e) shall not be interpreted to entitle Rhein to a bonus under the
Annual Incentive Plan following Rhein’s termination of employment except as
provided in the Annual Incentive Plan.
	 
	 	(f)	 	Forfeiture. Notwithstanding anything contained in this
Agreement to the contrary, other than Section 18 hereof, if Rhein breaches any
of Rhein’s
obligations under Section 11 hereof, and such breach is not substantially
cured within ninety (90) days after the Board gives written notice thereof to
Rhein, no further severance payments or other benefits will be payable to
Rhein under this Section 7.




(12)









 











     8. CHANGE IN CONTROL.




	 	(a)	 	In General. If the Company shall terminate Rhein’s
employment other than for Disability or Cause or if Rhein shall terminate his
employment, and such termination shall occur in connection with a Change in
Control as described in Subsection 8(b) hereof, there shall be paid to Rhein,
within thirty (30) days following such termination of employment, a single sum
payment equal to the sum of the Base Salary and Target Annual Bonus payments
provided for in Subsection 7(d)(iii), except that the amount of such payment
shall be three (3) times the sum of Rhein’s annual Base Salary and Target Annual
Bonus for the year of his termination of employment. Such single sum payment
shall be in lieu of such payments of Base Salary and Target Annual Bonus
provided for in Subsection 7(d)(iii). The other payments and benefits provided
for in Subsection 7(d) shall be provided as set forth in Subsection 7(d), except
that, for such purpose, the Payment Term shall be deemed to be a three (3) year
period from the date of Rhein’s termination of employment. In addition, all of
Rhein’s then outstanding stock options, whether or not then exercisable, shall
become exercisable in full and then outstanding stock options which were granted
to Rhein after April 1, 2003, shall not terminate prior to the end of their
respective terms and restrictions on Rhein’s restricted stock shall lapse.
	 
	 	(b)	 	In Connection with a Change in Control. For purposes of
this Agreement, Rhein’s termination of employment shall be considered “in
connection with” a Change in Control as defined in Section 1 either:






	 	(i)	 	if such termination of employment is by the Company
other than for Disability or for Cause or such termination of employment
is by Rhein for any reason and, in any such case, occurs within the one
(1) year period commencing on a Change in Control; or
	 
	 	(ii)	 	if such termination of employment is by the Company
other than for Disability or for Cause or such termination of employment
is by Rhein for Good Reason and, in any such case, occurs within the
period commencing on the commencement date of a tender offer for the
Company’s Common Shares, the execution of a letter of intent or the
execution of a definitive agreement which, in each case, could reasonably
be expected to lead to a Change in Control as defined in Section 1
hereof, and ending on either (A) the date of the Change in Control
resulting from such tender offer or the consummation of the transaction
contemplated by such letter of intent or such definitive agreement, as
the case may be, or (B) the date as of which the Board determines in good
faith that such tender offer has been withdrawn or has reached a final
conclusion not resulting in a Change in Control or the transaction
contemplated by such letter of intent or such definitive
agreement is not to be consummated or if consummated, will not lead to
a Change in Control, as the case may be.






	 	(c)	 	Section 280G Protection. Rhein shall be entitled to a
cash payment (the “Excise Tax Gross-Up Payment”) equal to the amount of excise
taxes which Rhein is




(13)









 






	 	 	 	required to pay pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended (“Code”), as a result of any “parachute
payments” as defined in Section 280G(b)(2) of the Code made by or on behalf of
the Company or any successor thereto, under this Agreement or otherwise,
resulting in an “excess parachute payment” as defined in Section 280G(b)(1) of
the Code. In addition to the foregoing, the Excise Tax Gross-Up Payment due to
Rhein under this Section 8 shall be increased by the aggregate of the amount of
federal, state and local income, excise and penalty taxes, and any interest on
any of the foregoing, for which Rhein will be liable on account of the Excise
Tax Gross-Up Payment to be made under this Section 8, such that Rhein will
receive the Excise Tax Gross-Up Payment net of all income, excise and penalty
taxes, and any interest on any of the foregoing, imposed on Rhein on account of
the receipt of the Excise Tax Gross-Up Payment. The computation of the Excise
Tax Gross-Up Payment shall be determined, at the expense of the Company or its
successor, by an independent accounting, actuarial or consulting firm selected
by the Company or its successor. Such Excise Tax Gross-Up Payment shall be made
by the Company or its successor at such time as the Company or its successor
shall determine, in its sole discretion, but in no event later than the date
five (5) business days before the due date, without regard to any extension, for
filing Rhein’s federal income tax return for the calendar year for which it is
determined that excise taxes are payable under Section 4999 of the Code.
Notwithstanding the foregoing, there shall be no duplication of payments by the
Company or its successor under this Section 8 in respect of excise taxes under
Section 4999 of the Code to the extent the Company or its successor is making
payments in respect of such excise taxes under any other arrangement with Rhein.
In the event that Rhein is ultimately assessed with excise taxes under Section
4999 of the Code which exceed the amount of excise taxes used in computing
Rhein’s payment under this Section 8, the Company or its successor shall
indemnify Rhein for such additional excise taxes plus any additional excise
taxes, income taxes, interest and penalties resulting from the additional excise
taxes and the indemnity hereunder.





     9. SEVERANCE PLAN. It is the intention of the Parties that this Agreement provide
special benefits to Rhein. If benefits shall be payable pursuant to this Agreement due to a cause
compensable under the Company’s Severance Benefit Plan, benefits pursuant to this Agreement shall
be in lieu of, and not duplicative of, corresponding benefits under the Company’s Severance Benefit
Plan.



     10. PLAN AMENDMENTS. To the extent any provisions of this Agreement modify the terms
of any existing plan, policy or arrangement affecting the compensation or benefits of Rhein, as
appropriate, (a) such modification as set forth herein shall be deemed an amendment to such plan,
policy or arrangement as to Rhein, and both the Company and Rhein hereby consent to such amendment,
(b) the Company will appropriately modify such plan, policy or arrangement to correspond to this
Agreement with respect to Rhein, or (c) the Company will
provide an “Alternative Benefit,” as defined in Section 16 hereof, to or on behalf of Rhein in
accordance with the provisions of such Section 16.



(14)









 





     11. NON-COMPETITION, CONFIDENTIAL INFORMATION AND NON-INTERFERENCE.




	 	(a)	 	Non-Competition. In consideration of this Agreement,
Rhein agrees that, during the Employment Term and the longer of (i) the Payment
Term or (ii) the two (2) year period following Rhein’s termination of
employment, Rhein shall not (except in the case of an involuntary termination of
employment not for Cause or a voluntary termination of employment, either of
which occurs within one (1) year after a Change in Control) become an officer,
director, joint venturer, employee, consultant or five percent (5%) shareholder
(directly or indirectly) of, or promote or assist (financially or otherwise),
any entity which directly competes with any business of the Company or any of
its affiliates in which the Company or such affiliate(s) are engaged as of the
date of such termination of employment and which constitutes, on a consolidated
basis, at least one percent (1%) of the Company’s revenues. Rhein understands
that the foregoing restrictions may limit his ability to engage in certain
business pursuits during the period provided for herein, but acknowledges that
he will receive sufficiently higher remuneration and other benefits from the
Company hereunder than he would otherwise receive to justify such restriction.
Rhein acknowledges that he understands the effect of the provisions of this
Subsection 11(a), and that he has had reasonable time to consider the effect of
these provisions, and that he was encouraged to and had an opportunity to
consult an attorney with respect to these provisions.
	 
	 	(b)	 	Confidential Information. Except for information which
is already in the public domain, or which is publicly disclosed by persons other
than Rhein, or which is required by law or court order to be disclosed, or
information given to Rhein by a third party not bound by any obligation of
confidentiality, Rhein shall at all times during and after his employment with
the Company hold in strictest confidence any and all confidential information
within his knowledge (whether acquired prior to or during his employment with
the Company) concerning the inventions, products, processes, methods of
distribution, customers, services, business, suppliers or trade secrets of the
Company, except that Rhein may, in connection with the performance of his duties
to the Company, divulge confidential or proprietary information to the
directors, officers, employees and shareholders of the Company and to the
advisors, accountants, attorneys or lenders of the Company or such other
individuals as deemed prudent in the course of business to carry out the
responsibilities and duties of his position, or when required to do so by legal
process, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) that requires Rhein to divulge, disclose or make accessible
such information. In the event that Rhein is so ordered, Rhein shall so advise
the Company in order to allow the Company to object to or otherwise resist such
order. Such confidential information includes, without limitation, financial
information, sales
information, price lists, marketing data, the identity and lists of actual and
potential customers and technical information, all to the extent that such
information is not intended by the Company for public dissemination.




(15)









 






	 	 	 	Rhein also agrees that upon leaving the Company’s employ he will not take with
him, without the prior written consent of an officer authorized to act in the
matter by the Board, any Company document, contract, internal financial or
management reports, customer list, product list, price list, catalog, employee
list, procedures, software, MIS data, drawing, blueprint, specification or
other document of the Company, its subsidiaries, affiliates and divisions,
which is of a confidential nature relating to the Company, its subsidiaries,
affiliates and divisions, or, without limitation, relating to its or their
methods of purchase or distribution, or any description of any trade secret,
formulae or secret processes.






	 	(c)	 	Noninterference. Rhein agrees that, during the
Employment Term and the longer of (i) the Payment Term or (ii) two (2) years
after Rhein’s termination of employment, Rhein shall not (except in the case of
an involuntary termination of employment not for Cause or a voluntary
termination of employment, either of which occurs within one (1) year after a
Change in Control), without the prior written consent of the Company, directly
or indirectly, induce or attempt to induce any employee, agent, consultant or
other representative or associate of the Company to terminate his or her
employment, representation or other relationship with the Company, or in any way
directly or indirectly interfere with any relationship between the Company and
its suppliers or customers.
	 
	 	(d)	 	Remedy. Rhein understands, acknowledges and agrees that
Subsections 11(a), 11(b) and 11(c) hereof were negotiated at arms length and are
required for the fair and reasonable protection of the Company. Nevertheless,
if any aspect of these restrictions is found to be unreasonable or otherwise
unenforceable by a court of competent jurisdiction, the Company and Rhein intend
for such restrictions to be modified by such court so as to be reasonable and
enforceable and, as so modified by the court, to be fully enforced. Rhein and
the Company further acknowledge and agree that a breach of those obligations and
agreements will result in irreparable and continuing damage to the Company for
which there will be no adequate remedy at law and, therefore, Rhein and the
Company agree that in the event of any breach of said obligations and agreements
the Company, and its successors and assigns, shall be entitled to injunctive
relief (without bond or security), including immediate injunctive relief
restraining any threatened or further breach without the necessity of proof of
actual damage, and such other and further relief, including monetary damages, as
is proper in the circumstances. It is further agreed that the running of the
periods provided in Subsections 11(a) and 11(c) hereof shall be tolled during
any period which Rhein shall be adjudged to have been in violation of any of his
obligations under such Sections.





     12. ARBITRATION. The following arbitration rules shall apply to this Agreement:




	 	(a)	 	In the event that Rhein’s employment shall be terminated by the
Company during the Employment Term or the Company shall withhold payments or
provision of benefits because Rhein is alleged to be engaged in activities
prohibited by Section 11 hereof or for any other reason, Rhein shall have the
right, in addition to all other rights and remedies provided by law, at his
election either to seek arbitration in the metropolitan area of Cleveland, Ohio
(or the




(16)









 






	 	 	 	metropolitan area in which the Company’s headquarters then is located,
if other than metropolitan Cleveland, Ohio), under the Commercial Arbitration
Rules of the American Arbitration Association by serving a notice to arbitrate
upon the Company or to institute a judicial proceeding, in either case within
one hundred and twenty (120) days after having received notice of termination of
his employment.
	 
	 	(b)	 	Without limiting the generality of Subsection 12(a), this
Subsection 12(b) shall apply to termination asserted to be for “Cause” or for
“Good Reason.” In the event that (i) the Company terminates Rhein’s employment
for Cause and Rhein submits a written objection to the Company within the ten
(10) days specified in Subsection 6(c) hereof, or (ii) Rhein resigns his
employment for Good Reason and the Company submits a written objection to Rhein
within the ten (10) days specified in Subsection 6(e) hereof, the Company and
Rhein each shall have thirty (30) days after the date of such written objection
to demand of the American Arbitration Association in writing (with a copy to the
other Party) that arbitration be commenced to determine whether Cause or Good
Reason, as the case may be, existed with respect to such termination or
resignation. The Parties shall have thirty (30) days from the date of such
written request to select such third party arbitrator. Upon the expiration of
such thirty (30) day period, the Parties shall have an additional thirty (30)
days in which to present to such third party arbitrator such arguments, evidence
or other material (oral or written) as may be permitted and in accordance with
such procedures as may be established by such third party arbitrator. The
thirty party arbitrator shall furnish a written summary of his findings to the
Parties not later than thirty (30) days following the last day on which the
parties were entitled to present arguments, evidence or other material to the
third party arbitrator.





     During the period of resolution of a dispute under this Subsection 12(b), Rhein shall receive
no compensation by the Company (other than payment by the Company of premiums due before or during
such period on any insurance coverage applicable to Rhein hereunder) and Rhein shall have no duties
for the Company. If the arbitrator determines that the Company did not have Cause to terminate
Rhein’s employment or that Rhein had Good Reason to resign his employment, as the case may be, the
Company shall promptly pay Rhein in a lump sum any compensation to which Rhein would have been
entitled, for the period commencing with the date of Rhein’s termination or resignation and ending
on the date of such determination, had his employment not been terminated or had he not resigned.



     13. NOTICES. For purposes of this Agreement, all communications provided for herein
shall be in writing and shall be deemed to have been duly given when hand delivered or mailed by
United States registered or certified mail, return receipt requested, postage prepaid, addressed as
follows:




	 	(a)	 	If the notice is to the Company:




  Agilysys, Inc.

  6065 Parkland Boulevard

  Mayfield Heights, OH 44124

  Attention: Secretary or Assistant Secretary




(17)









 









	 	(b)	 	If the notice is to Rhein:




  Arthur Rhein

  40 Stonehill Lane

  Moreland Hills, Ohio 44022



or to such other address as either party may have furnished to the other in writing and in
accordance herewith; except that notices of change of address shall be effective only upon receipt.




     14. ASSIGNMENT; BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors, heirs (in the case of
Rhein) and permitted assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations may be assigned or
transferred in connection with the sale or transfer of all or substantially all of the assets of
the Company, provided that the assignee or transferee is the successor to all or substantially all
of the assets of the Company and such assignee or transferee expressly assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either contractually or as a
matter of law. The Company further agrees that, in the event of a sale or transfer of assets as
described in the preceding sentence, it shall be a condition precedent to the consummation of any
such transaction that the assignee or transferee expressly assumes the liabilities, obligations and
duties of the Company hereunder. No rights or obligations of Rhein under this Agreement may be
assigned or transferred by Rhein other than Rhein’s rights to compensation and benefits, which may
be transferred only by will or operation of law, except as provided in this Section 14.



     Rhein shall be entitled, to the extent permitted under any applicable law, to select and
change a beneficiary or beneficiaries to receive any compensation or benefits payable hereunder
following Rhein’s death by giving the Company written notice thereof. In the absence of such a
selection, any compensation or benefit payable under this Agreement following the death of Rhein
shall be payable to Rhein’s spouse, or if such spouse shall not survive Rhein, to Rhein’s estate.
In the event of Rhein’s death or a judicial determination of Rhein’s incompetence, reference in
this Agreement to Rhein shall be deemed, where appropriate, to refer to Rhein’s beneficiary, estate
or other legal representative.



     15. INVALID PROVISIONS. Any provision of this Agreement that is prohibited or
unenforceable shall be ineffective to the extent, but only to the extent, of such prohibition or
unenforceability without invalidating the remaining portions hereof and such remaining portions of
this Agreement shall continue to be in full force and effect. In the event that any provision of
this Agreement shall be determined to be invalid or unenforceable, the Parties will negotiate in
good faith to replace such provision with another provision that will be valid or enforceable and
that is as close as practicable to the provisions held invalid or unenforceable.



     16. ALTERNATIVE SATISFACTION OF COMPANY’S OBLIGATIONS. In the event this Agreement
provides for payments or benefits to or on behalf of Rhein which cannot be provided under the
Company’s benefit plans, policies or arrangements either because such plans, policies or
arrangements no longer exist or no longer provide such benefits or because provision of such
benefits to Rhein would adversely affect the tax qualified or tax advantaged status of such plans,
policies or arrangements for Rhein or other participants therein, the Company may provide Rhein
with an “Alternative Benefit,” as defined in this Section 16, in lieu thereof. The Alternative
Benefit is a benefit or payment which places Rhein and Rhein’s dependents or beneficiaries, as the
case may be, in at least as good of an economic position as if the benefit promised by this
Agreement (a) were



(18)









 




provided exactly as called for by this Agreement, and (b) had the favorable
economic, tax and legal characteristics customary for plans, policies or arrangements of that type.
Furthermore, if such adverse consequence would affect Rhein or Rhein’s dependents, Rhein shall
have the right to require that the Company provide such an Alternative Benefit.




     17. ENTIRE AGREEMENT, MODIFICATION. Subject to the provisions of Section 18 hereof,
this Agreement contains the entire agreement between the Parties with respect to the employment of
Rhein by the Company and supersedes all prior and contemporaneous agreements, representations, and
understandings of the Parties, whether oral or written. No modification, amendment, or waiver of
any of the provisions of this Agreement shall be effective unless in writing, specifically
referring hereto, and signed by both Parties.



     18. NON-EXCLUSIVITY OF RIGHTS. Notwithstanding the foregoing provisions of Section
17, nothing in this Agreement shall prevent or limit Rhein’s continuing or future participation in
any benefit, bonus, incentive or other plan, program, policy or practice provided by the Company
for its executive officers, nor shall anything herein limit or otherwise affect such rights as
Rhein has or may have under any stock option, restricted stock or other agreements with the Company
or any of its subsidiaries. Amounts which Rhein or Rhein’s dependents or beneficiaries, as the
case may be, are otherwise entitled to receive under any such plan, policy, practice or program
shall not be reduced by this Agreement except as provided in Section 9 hereof with respect to
payments under the Severance Benefit Plan if cash payments are made hereunder.



     19. WAIVER OF BREACH. The failure at any time to enforce any of the provisions of
this Agreement or to require performance by the other party of any of the provisions of this
Agreement shall in no way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement or any part of this Agreement or the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with the terms of this Agreement.



     20. GOVERNING LAW. This Agreement has been made in, and shall be governed and
construed in accordance with the laws of, the State of Ohio, unless the Parties subsequently agree
that the laws of another state shall govern. The Parties agree that this Agreement is not an
“employee benefit plan” or part of an “employee benefit plan” which is subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended.



     21. WITHHOLDING. The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes or other amounts as shall
be required to be withheld pursuant to any applicable law or regulation. Where withholding
applies to Common Shares, the Company shall make cashless withholding available to Rhein if
permissible by law.



     22. EXPENSES.




	 	(a)	 	Expenses of Agreement. The Company shall pay or
reimburse reasonable attorney fees and expenses incurred by Rhein, not to exceed
Fifteen Thousand Dollars ($15,000.00), in connection with the preparation and
negotiation of this Agreement.
	 
	 	(b)	 	Enforcement Costs. The Company is aware that upon the
occurrence of a Change in Control the Board or a shareholder of the Company may
then cause or attempt to cause the Company to refuse to comply with its
obligations under




(19)









 






	 	 	 	this Agreement, or may cause or attempt to cause the Company
to institute, or may institute, litigation seeking to have this Agreement
declared unenforceable, or may take, or attempt to take, other action to deny
Rhein the benefits intended under this Agreement. In these circumstances, the
purpose of this Agreement could be frustrated. It is the intent of the Company
that Rhein not be required to incur the expenses associated with the enforcement
of his rights under this Agreement by litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to Rhein hereunder, nor be bound to negotiate any
settlement of his rights hereunder under threat of incurring such expenses.
Accordingly, if following a Change in Control it should appear to Rhein that the
Company has failed to comply with any of its obligations under this Agreement or
in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation or other
legal action designed to deny, diminish or to recover from, Rhein, the benefits
intended to be provided to Rhein hereunder, and that Rhein has complied with all
of his obligations under this Agreement, the Company irrevocably authorizes
Rhein from time to time to retain counsel of his choice at the expense of the
Company as provided in this Section 22, to represent Rhein in connection with
the initiation or defense of any litigation or other legal action, whether by or
against the Company or any Director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Rhein entering into an attorney-client
relationship with such counsel, and in that connection the Company and Rhein
agree that a confidential relationship shall exist between Rhein and such
counsel. The reasonable fees and expenses of counsel selected from time to time
by Rhein as herein provided shall be paid or reimbursed to Rhein by the Company
on a regular, periodic basis upon presentation by Rhein of a statement or
statements prepared by such counsel in accordance with its customary practices,
up to a maximum aggregate amount of $500,000.





     23. REPRESENTATION. The Company represents and warrants that it is fully authorized
and empowered to enter into this Agreement and that the performance of its obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization.



     24. SUBSIDIARIES AND AFFILIATES. Notwithstanding any contrary provision of this
Agreement, to the extent it does not adversely affect Rhein, the Company may provide the
compensation and benefits to which Rhein is entitled hereunder through one or more subsidiaries or
affiliates.



     25. NO MITIGATION OR OFFSET. In the event of any termination of employment, Rhein
shall be under no obligation to seek other employment. Amounts due Rhein under this Agreement
shall not be offset by any remuneration attributable to any subsequent employment he may obtain.



     26. SOLE REMEDY. The Parties agree that the remedies of each against the other for
breach of this Agreement shall be limited to enforcement of this Agreement and recovery of the
amounts and remedies provided for herein. The Parties, however, further agree that such limitation



(20)









 





shall not prevent either Party from proceeding against the other to recover for a claim other than
under this Agreement.




     27. SECTION 409A. If this Agreement is deemed by either Party not to comply with the
final regulations under Section 409A of the Internal Revenue Code of 1986, the Parties agree to
modify this Agreement in a timely manner so that its terms comply so as to avoid penalties on Rhein
while providing benefits as close to those agreed to herein as reasonably possible.



     IN WITNESS WHEREOF, the Company and Rhein have executed this Agreement as of the day and year
first above written.



	 	 	 	 	 
	 	AGILYSYS, INC.





          (the “Company”)

 	 
	 	By:  	/s/ Charles F. Christ
 	 
	 	 	Charles F. Christ 	 
	 	 	Chairman of the Compensation Committee
 	 
	 
	 	ARTHUR RHEIN





          (“Rhein”)

 	 
	 	/s/ Arthur Rhein
 	 
	 	Arthur Rhein 	 
	 	 	 
	 




(21)