EX-10.1






Exhibit 10.1

December 30, 2008




AMENDED AND RESTATED EARNOUT AGREEMENT




     This Amended and Restated Earnout Agreement (“Agreement”) is made and entered into as
of April 10, 2008, among Agilysys, Inc., an Ohio corporation (“Parent”), Agilysys NJ, Inc.,
a New Jersey corporation and wholly-owned subsidiary of Parent (f/k/a Innovative Systems Design,
Inc. d/b/a Innovativ Systems Design, Inc.) (the “Company” or the “Surviving
Corporation”), each of Anthony Mellina, David Vogelzang and Frank G. Batula (the “Remaining
Sellers”) and, solely for purposes of acting as the representative for the Remaining Sellers,
Anthony Mellina (the “Seller Representative”).



RECITALS




     A. Pursuant to an Agreement and Plan of Merger, dated as of May 25, 2007 (the “Merger
Agreement”), among Parent, Merger Sub, the Company, and Vincent James Spinella, as the
Stockholder Representative for the Company Stockholders (as defined in the Merger Agreement), on
July 2, 2007, Parent acquired the Company through the merger of the Merger Sub with and into the
Company with the Company as the Surviving Corporation (the “Merger”).



     B. Pursuant to the terms of the Merger Agreement, Parent, Merger Sub, the Company and Vincent
James Spinella, as Stockholder Representative for the Company Stockholders, entered into an Earnout
Agreement, dated July 2, 2007 (the “Original Agreement”), which Original Agreement provided
that a portion of the purchase price was to be calculated and paid as Additional Consideration
based upon the Surviving Corporation’s EBITDA (as defined in the Original Agreement) over the
Period (as defined in the Original Agreement).



     C. Pursuant to the terms of a Settlement, Withdrawal ands Release Agreement, dated of even
date herewith (the “Settlement Agreement”), among Parent, the Company and the Company
Stockholders, including the Sellers, (i) Parent will, conditioned upon the execution and delivery
of this Agreement and the other conditions set forth in the Settlement Agreement, pay Thirty Five
Million Dollars ($35,000,000) to the Payment Agent for distribution to each Company Stockholder;
(ii) immediately upon such payment, the Company Stockholders other than the Remaining Sellers agree
to withdraw as parties to and terminate all rights, interests and claims under the Original
Agreement and not become parties to this Agreement; and (iii) the parties hereto have agreed to
enter into this Amended and Restated Earnout Agreement to amend and restate the Original Agreement.



     D. The Remaining Sellers have agreed to enter into and deliver this Agreement in order to
induce Parent and the Company to enter into the Settlement Agreement and pay the Thirty Five
Million Dollars ($35,000,000) to the Payment Agent for distribution to each Company Stockholder.



     NOW, THEREFORE, in consideration of the premises and of the respective covenants and
provisions herein contained, Parent, the Company, the Remaining Sellers and the Seller
Representative agree as follows:



 









 





ARTICLE I. DEFINITIONS




     1.1 Certain Defined Terms. Capitalized terms used but not otherwise defined herein
shall have the respective meanings given such terms in the Merger Agreement. In addition to the
terms defined in the Merger Agreement, for purposes of this Agreement, the terms listed below have
the following meanings.



     1.2 Additional Consideration means the amount determined in accordance with
Section 2.2 hereof.



     1.3 Business Plan is defined in Section 4.2.



     1.4 EBITDA is defined in Article III.



     1.5 Final Payment is defined in Section 2.2(d).



     1.6 Final Target means an amount equal to Fifty Million Dollars ($50,000,000).



     1.7 First Anniversary Payment means an amount equal to Thirty Five Million
Dollars ($35,000,000).



     1.8 Income Statement is defined in Section 2.2(b).



     1.9 Operationally Autonomous is defined in Section 4.3.



     1.10 Parent’s Accountants is defined in Section 3.1.



     1.11 Period means the first full eight (8) fiscal quarters commencing as of the
Closing Date.



     1.12 Quarterly Earn-Out Meetings is defined in Section 4.4.



     1.13 Seller Representative is defined in the Preamble and in Section 5.9(a).



ARTICLE II. ADDITIONAL CONSIDERATION PAYMENT




     2.1 Nature of Additional Consideration Payment. The parties hereto acknowledge that,
contemporaneously with and subject to the execution and delivery of this Agreement, the First
Anniversary Payment was paid to the Payment Agent for distribution to each Company Stockholder in
the same allocation and same manner as the Merger Consideration. The balance of the Additional
Consideration, if any, will be payable solely to the Remaining Sellers as provided for in Section
2.2 below; provided, however, that such Additional Consideration, which the
Remaining Sellers acknowledge and agree is inclusive of the First Anniversary Payment, in no event
will exceed Fifty Eight Million Six Hundred Fifty Thousand Dollars ($58,650,000) (the “Maximum
Total Payment”). The parties hereto acknowledge that the Maximum Total Payment in this
Agreement was calculated and determined as (i) the First Anniversary Payment plus (ii)
forty-three percent (43%) of the excess of the $90 million maximum payment from the Original
Agreement less the $35 million First Anniversary Payment under this Agreement; with the
forty-



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three percent (43%) representing the percentage of the Additional Consideration allocable
solely to the Remaining Sellers.



     2.2 Final Payment of Additional Consideration.



          (a) As soon as practical and in no event later than forty-five (45) days after the end
of the Period, Parent will determine for distribution to each Remaining Seller to be allocated
among the Remaining Sellers based on the percentages next to their names on the signature page
hereto (which percentages, the Remaining Sellers acknowledge and agree, are based on their
percentage allocation of Merger Consideration in the Merger Agreement), the Additional
Consideration and any resulting Final Payment as determined in this Section 2.2. Additional
Consideration will be available only if the Surviving Corporation generates EBITDA for the entire
Period, greater than the Final Target. The Additional Consideration will be paid as follows: (i)
if EBITDA during the Period is less than or equal to the Final Target, no Final Payment will be
payable or (ii) if EBITDA during the Period is greater than the Final Target, then for each one
dollar ($1.00) of EBITDA in excess of the Final Target, two dollars ($2.00) of Additional
Consideration will be payable in accordance with Section 2.2(d) below up to the Maximum Total
Payment of Additional Consideration — comprised of both the First Anniversary Payment and the
Final Payment — of Fifty Eight Million Six Hundred Fifty Thousand Dollars ($58,650,000).




          (b) As soon as practical (and in no event later than sixty (60) days after the end of
the Period), Parent shall cause to be prepared and delivered to the Seller Representative (i) an
income statement of the Surviving Corporation for the entire Period (the “Income
Statement”) and (ii) a calculation of the Additional Consideration, if any, based on the
calculation of EBITDA for the Period determined from the financial information contained in the
Income Statement, including such schedules and data as may be appropriate to support such
calculation. The Income Statement shall be prepared in accordance with GAAP subject to the
guidelines described in Section 3 below. The Seller Representative or his designees and agents
shall be entitled to review the Income Statement, Parent’s calculations of the Additional
Consideration, and any working papers and similar materials relating to such Income Statement
prepared by Parent or Parent’s Accountants. Parent also shall provide the Seller Representative
with timely access, during normal business hours, to the personnel, properties, books and records
of the Surviving Corporation and all other information reasonably requested, to the extent related
to the determination of the Income Statement and the applicable Additional Consideration, if any.
The Seller Representative agree to keep any and all such information received by him confidential
and not to disclose such information or otherwise use it for any purposes other than reviewing the
Income Statement, the related calculation of EBITDA and the Additional Consideration (if any) and
to resolve any disputes with respect to the foregoing.




          (c) The Seller Representative shall review the Income Statement and, on or before the
sixtieth (60th) day after the Seller Representative’s receipt of the Income Statement, the Seller
Representative shall deliver to Parent, in writing, any objection or dispute thereto which the
Seller Representative may have with respect to the Income Statement, including Parent’s calculation
of EBITDA or the Additional Consideration, which shall be quantified and items so contested shall
be described in sufficient detail in order to permit Parent to evaluate the basis for such dispute.
If the Seller Representative fail to make an objection to the Income



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Statement or to Parent’s calculation of the Additional Consideration during this sixty (60)
day period, the Seller Representative, on behalf of the Remaining Sellers, will be deemed to have
accepted the calculation of EBITDA and the amount of Additional Consideration. If the Seller
Representative make a timely objection to the Income Statement or to Parent’s calculation of the
Additional Consideration, and Parent and the Seller Representative are unable to resolve their
disputes within fifteen (15) days after the objection of the Seller Representative, the dispute
shall be resolved by the Independent Accountants. The determinations of the Independent
Accountants shall be final, binding and conclusive to Parent, the Seller Representative and the
Remaining Sellers and their respective Affiliates, successors, assigns or heirs. The fees,
expenses and disbursements of the Independent Accountants (i) shall be borne by the Seller
Representative (and payable first from any Additional Consideration due the Remaining Sellers) in
the proportion that the aggregate dollar amount of such disputed items so submitted that are
unsuccessfully disputed by the Seller Representative bears to the aggregate dollar amount of such
items so submitted and (ii) shall be borne by Parent in the proportion that the aggregate dollar
amount of such disputed items so submitted that are successfully disputed by the Seller
Representative bears to the aggregate dollar amount of such items so submitted.




          (d) The Additional Consideration less the amount of the First Anniversary
Payment (the “Final Payment”) shall, within ten (10) days after the Additional
Consideration has been finally determined, be paid by Parent to the Remaining Sellers based on the
percentage allocation of such Remaining Seller as set forth next to such Remaining Seller’s name on
the signature page hereto. Notwithstanding anything in this Agreement, the Merger Agreement, the
Original Agreement, the Settlement Agreement or any other agreement to the contrary, in no event
shall the aggregate of the First Anniversary Payment plus the Final Payment exceed the Maximum
Total Payment. In the event that the First Anniversary Payment exceeds the Additional
Consideration, no Final Payment will be due or owing by Parent under this Agreement and the
Remaining Sellers will not be liable for or otherwise obligated to pay or reimburse any such excess
to Parent.




ARTICLE III. COMPUTATION OF EBITDA




     3.1 Manner of Computation. For purposes of this Agreement, “EBITDA” of the
Surviving Corporation for any period shall mean its cumulative earnings before interest, taxes,
depreciation, amortization and reasonable allocations for such period. EBITDA shall be determined
in accordance with the principals and methods of accounting set forth on Addendum A
attached hereto and incorporated herein and, to the extent not covered in Addendum A,
otherwise in accordance with generally accepted accounting principles (GAAP) applied by Parent in a
manner substantially consistent with the past practices of the Company and as determined by the
firm of independent certified public accountants engaged by Parent for purposes of its own audit
(the “Parent’s Accountants”).



     3.2 Specific Items. In determining such EBITDA:



          (a) EBITDA shall be computed without regard to “extraordinary items” of gain or loss as that
term is defined in GAAP;




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          (b) EBITDA shall not include any gains, losses or profits realized from the sale of any assets
other than in the ordinary course of business;




          (c) no deduction shall be made for any management fees, general overhead expenses or other
intercompany charges, of whatever kind or nature, charged by Parent to the Surviving Corporation
except to the extent provided for in Addendum A;




          (d) no deduction shall be made for legal or accounting fees and expenses arising out of this
Agreement, the Merger Agreement, the Original Agreement or the Settlement Agreement except for fees
in support of receivables’ collection or contract enforcement with a customer of the Business;




          (e) the purchase and sales prices of goods and services sold by the Surviving
Corporation to Parent or its Affiliates or purchased by the Surviving Corporation from Parent or
its Affiliates shall be adjusted to reflect the amounts that the Surviving Corporation would have
realized or paid if dealing with an independent party in an arm’s-length commercial transaction;
and




          (f) EBITDA will be determined on a cumulative basis during the Period (with respect to
the Surviving Corporation only) from the financial statements prepared by Parent. For purposes of
determining EBITDA, except as specifically provided for on Addendum A, no corporate
overhead or intercompany charges, including, without limitation, any additional costs or expenses
associated with the Surviving Corporation being a subsidiary of a publicly traded company (e.g.
management expenses or regulatory compliance) will be allocated to the business of the Surviving
Corporation during the Period.




ARTICLE IV. COVENANTS REGARDING OPERATIONS




     4.1 Covenants of Parent, Surviving Corporation, the Remaining Sellers and the Seller
Representative During the Period. Parent, Surviving Corporation, the Remaining Sellers and the
Seller Representative agree that each party will act in good faith with respect to the covenants
set forth in this Article IV.



     4.2 Operations of the Business. Except to the extent specifically provided in Section
4.3 below, the Business of the Surviving Corporation will be operated during the Period in
accordance with the Parent’s policies and procedures applicable to its subsidiaries in general as
such policies and procedures may be modified or amended from time to time by Parent at its sole and
absolute discretion (including, by way of example only, that the Surviving Corporation will refrain
from booking unprofitable business that may enhance revenue at the risk of impairing the long-term
success of the Surviving Corporation; and that the Board of Directors of the Surviving Corporation,
as appointed by Parent, will have the ultimate control and responsibility for the material
operations and decision making of the Surviving Corporation such as geographic expansion and
entering into new lines of business).



     4.3 Operational Autonomy. During the Period, Parent agrees that, so long as the
Company is operating at an aggregate gross margin for the Company’s business as a whole of not
less than 15% on a trailing 12-month basis and is generating, on a trailing 12-month basis
beginning for the period ended December 31, 2007, EBITDA in excess of $25,000,000, (i) the



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Surviving Corporation shall remain Operationally Autonomous (as defined below) and (ii)
Anthony Mellina and David Vogelzang shall have the authority to manage the Surviving Corporation as
provided by the terms of their employment agreements entered into with Parent in connection with
the Settlement Agreement (the “Management Employment Agreements”); provided,
however, that payment of Additional Consideration to a Remaining Seller is not conditioned
upon the continuing employment of such Remaining Seller with Parent, the Company or any Affiliate
thereof. As used in this Section 4.3, “Operationally Autonomous” means that, from and
after the Effective Time, Parent shall (i) cause the Surviving Corporation to maintain, in all
material respects, its existence as a distinct operating entity apart from the other Affiliates of
Parent, including maintaining for the Surviving Corporation a separate income statement, (ii) allow
the Surviving Corporation to make employment decisions that are reasonable and in the best
interests of the Business, (iii) allow capital investments that are approved in accordance with the
Parent’s capital approval process, (iv) subject to (v) below, allow the Surviving Corporation to
enter into customer agreements so long as such contracts meet risk tolerances as established by the
Parent and (v) allow the Surviving Corporation to enter into customer agreements so long as such
contracts, on a pro forma basis, generate at least 10% gross margins, whereby gross margin is
defined as gross profit divided by revenue, as calculated in accordance with GAAP;
provided, however, part (v) of this Section 4.3 shall not apply to a transaction or
a series of related transactions that have a pro forma revenue amount of less than of $1 million or
that otherwise have been pre-approved, in writing, by Parent.



     4.4 Quarterly Meetings. During the Period, Parent shall, at the Seller
Representative’s reasonable request, but not more frequently than quarterly, meet (telephonically
or in person) (the “Quarterly Earn-Out Meetings”) with Seller Representative to discuss the
operation of the Business, including, but not limited to, financial results or other issues
relating to the Additional Consideration.



     4.5 Acknowledgment of the Company, the Remaining Sellers and the Seller
Representative. Each of the Company, the Remaining Sellers and the Seller Representative
acknowledges and agrees that (i) Parent makes no representations nor provides any assurances
whatsoever as to the feasibility of achieving the Additional Consideration or any portion thereof
(over and above the First Anniversary Payment) and (ii) neither Parent nor the Surviving
Corporation owe any fiduciary duty to the Remaining Sellers or the Seller Representative.



     4.6 Remedy for Breach of Covenants. In the event that Parent or Surviving Corporation
materially breach the covenants set forth in this Section 4, and (i) such material breach continues
for a period of thirty (30) days after the Seller Representative has provided written notice to
Parent and Surviving Corporation setting forth, in reasonable detail, the terms of such material
breach, and (ii) thereafter, the Seller Representative receives a final, non-appealable order of a
court of competent jurisdiction wherein Parent or the Surviving Corporation is found to be in
material breach of this Section 4, this Agreement shall be subject to immediate termination at the
option, to be exercise in writing, of the Seller Representative. Upon any such termination, Parent
shall be obligated to pay to the Remaining Sellers for distribution in accordance with the terms
hereof, in immediately available funds, as Additional Consideration, an amount equal to $1,000,000.
Any such payment under this Section 4.6 shall be the Remaining Sellers’ sole and exclusive remedy
for a breach by Parent or the Surviving



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Corporation for a breach of this Section 4.6 and, without limiting the foregoing, shall be in
lieu of any further payment of Additional Consideration.



ARTICLE V. MISCELLANEOUS




     5.1 Severability. If any provision of this Agreement is held to be illegal, invalid
or unenforceable under any present or future Law, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any party. Upon the
determination that any provision of this Agreement is illegal, invalid or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by applicable Law to
the end that the transactions contemplated hereby are fulfilled to the maximum extent possible.



     5.2 Entire Agreement; Assignment. This Amended and Restated Earnout Agreement,
including the Addendum hereto, and, to the extent referenced herein, the Merger Agreement, the
Management Employment Agreements and the Settlement Agreement, constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the subject matter hereof,
including, specifically, the Original Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted assigns; provided,
that no party may assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that Parent or the Surviving
Corporation may, without such prior written consent, at any time, transfer or assign, in whole or
from time to time in part, its rights or obligations under this Agreement (i) to one or more of its
Affiliates or (ii) to any Person acquiring all or a significant portion of Parent’s or the
Surviving Corporation’s assets or equity interests.



     5.3 Counterparts. This Agreement may be executed in counterparts, all of which shall
be considered one and the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.



     5.4 Notices. All notices, requests and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or sent by a reputable overnight courier
service (providing proof of delivery) or sent via facsimile (with confirmation of receipt) to the
parties at the following address (or at such other address or facsimile number as such party may
hereafter specify by like notice):



          (a) if to Parent or Merger Sub, to:



Agilysys, Inc.

2255 Glades Road, Suite 301E

Boca Raton, Florida 33431

Attn: Chief Executive Officer

and Chief Financial Officer




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Facsimile No.: 561-999-8765




               with a copy to:


Calfee, Halter & Griswold LLP

800 Superior Avenue #1400

Cleveland, Ohio 44114-2688

Attention: Robert A. Ross

Facsimile No.: 216-241-0816




          (b) if to the Seller Representative, to:



Anthony Mellina

3 Colts Gait Lane

Colts Neck, NJ 07722

Facsimile: (     )      -     




               with copies (which shall not constitute notice) to:


Lowenstein Sandler PC

65 Livingston Avenue

Roseland, New Jersey

Facsimile: (973) 597-2569

Attention: Raymond P. Thek, Esq.




               All such notices, requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 11:59 p.m. in the place of receipt and such
day is a Business Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next succeeding Business Day in
the place of receipt



     5.5 Waiver of Compliance. The party for whose benefit a warranty, representation,
covenant or condition is intended may, in writing, waive any inaccuracies in the warranties,
representations, covenants or conditions contained in this Agreement or waive compliance with any
of the foregoing and so waive performance of any of the obligations of the other party hereto and
any defaults hereunder, provided, however, that such waiver shall not affect or impair the waiving
party’s rights in respect to any other warranty, representation, covenant, condition or default
hereunder.



     5.6 Headings. The headings contained in this Agreement are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning or interpretation of
any of the terms or provisions of this Agreement.



     5.7 Amendment or Supplement. This Agreement may be amended, modified, or
supplemented solely by written agreement of all of the parties hereto making specific reference to
this Agreement.



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     5.8 Governing Law. This Agreement and all matters arising directly or
indirectly herefrom shall be governed by, and construed in accordance with, the internal laws of
the State of Delaware, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Delaware. All Legal Proceedings arising
out of or relating to this Agreement shall be heard and determined in any state or federal court
sitting in the State of Ohio, and the parties hereto hereby irrevocably submit to the exclusive
jurisdiction of such courts in any such Legal Proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such Legal Proceeding. The consents to jurisdiction
set forth in this paragraph shall not constitute general consents to service of process in the
state described in the preceding sentence and shall have no effect for any purpose except as
provided in this paragraph and shall not be deemed to confer rights on any Person other than the
parties hereto. The parties hereto agree that a final judgment in any such Legal Proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by applicable law.



     5.9 Appointment of Seller Representative.



          (a) The Seller Representative is hereby appointed as agent and attorney-in-fact for and on
behalf of the Remaining Sellers (the “Seller Representative”), to give and receive notices
and communications, to agree to, negotiate and enter into settlements and compromises of claims, to
demand, prosecute and defend claims arising out of this Agreement and to comply with orders of
courts and determinations and awards with respect to claims, and to take all actions necessary or
appropriate in the judgment of the Seller Representative for the accomplishment of the foregoing.
Such agency may be changed by the Remaining Sellers from time to time upon not less than ten (10)
calendar days’ prior written notice to Parent. Any vacancy in the position of Seller
Representative shall be filled by a majority-in-interest of the Remaining Sellers. The Seller
Representative may resign upon ten (10) calendar days’ prior written notice to Parent and the
Company provided that no such resignation shall become effective until the appointment of a
successor Seller Representative. No bond shall be required of the Seller Representative, and the
Seller Representative shall not receive compensation for his services. Notices or communications
to or from the Seller Representative shall constitute notice to or from each Remaining Seller.




          (b) The Seller Representative shall not have any liability to the Remaining Sellers for
any action taken or suffered by him or omitted by him hereunder as Seller Representative, except as
caused by the Seller Representative’s gross negligence or willful misconduct. The Seller
Representative may, in all questions arising hereunder, rely on the advice of counsel and the
Seller Representative shall not be liable to the Remaining Sellers for anything done, omitted or
suffered by the Seller Representative based on such advice. The Seller Representative undertakes
to perform such duties and only such duties as are specifically set forth in this Agreement and no
implied covenants or obligations shall be read into this Agreement against the Seller
Representative.




          (c) A decision, act, consent or instruction of the Seller Representative in a matter
entrusted to the Seller Representative by this Agreement shall be deemed to have been taken or
given on behalf of all Remaining Sellers and shall be final, binding and conclusive upon



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all Remaining Sellers, and Parent and the Company may rely upon any such decision, act,
consent or instruction of the Seller Representative as being the decision, act, consent or
instruction of, and binding on, each of the Remaining Sellers. Parent, the Company and their
respective Affiliates are hereby relieved from any liability to any person for any acts done by
them in accordance with such decision, act, consent or instruction of the Seller Representative.




[signature page to follow]




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          IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Earnout Agreement
to be executed and delivered all as of the date first written above.




	 	 	 	 	 
	 

	 	PARENT
	 	 
	 
	 	 	 	 
	 

	 	Agilysys, Inc., an Ohio corporation	 	 
	 
	 	 	 	 
	 

	 	     /s/ Martin F. Ellis	 	 
	 

	 	 	 	 
	 

	 	By: Martin F. Ellis	 	 
	 

	 	Its: EVP, Treasurer & CFO	 	 
	 
	 	 	 	 
	 

	 	COMPANY/MERGER SUB	 	 
	 
	 	 	 	 
	 

	 	Agilysys NJ, Inc., a New Jersey corporation	 	 
	 
	 	 	 	 
	 

	 	     /s/ Martin F. Ellis	 	 
	 

	 	 	 	 
	 

	 	By: Martin F. Ellis	 	 
	 

	 	Its: Vice President	 	 
	 
	 	 	 	 
	 

	 	REMAINING SELLERS	 	 
	 
	 	 	 	 
	 

	 	Anthony Mellina (44.2%)	 	 
	 
	 	 	 	 
	 

	 	     /s/ Anthony Mellina	 	 
	 

	 	 	 	 
	 

	 	     Anthony Mellina	 	 
	 
	 	 	 	 
	 

	 	David Vogelzang (44.2%)	 	 
	 
	 	 	 	 
	 

	 	     /s/ David Vogelzang	 	 
	 

	 	 	 	 
	 

	 	     David Vogelzang	 	 
	 
	 	 	 	 
	 

	 	Frank G. Batula (11.6%)	 	 
	 
	 	 	 	 
	 

	 	     /s/ Frank Batula	 	 
	 

	 	 	 	 
	 

	 	     Frank Batula	 	 
	 
	 	 	 	 
	 

	 	SELLER REPRESENTATIVE	 	 
	 
	 	 	 	 
	 

	 	     /s/ Anthony Mellina	 	 
	 

	 	 	 	 
	 

	 	     Anthony Mellina	 	 






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ADDENDUM A




EBITDA Principals



EBITDA shall be defined as the Surviving Corporation’s operating income, as defined by GAAP, plus
any depreciation and amortization charged to the Surviving Corporation’s income statement.
Revenues and expenses shall be calculated in accordance with GAAP consistently applied in
accordance with the Parent’s accounting policies. Solely for purposes of determining EBITDA during
the Period:



1. The Surviving Corporation shall earn a 3% finders fee for all revenue recognized by the Parent
during the Period on sales of non-Sun related products and services to existing customer accounts
of the Surviving Corporation at the Effective Time, which is not directly recorded on the Surviving
Corporation’s income statement. The finders fee shall be the product of the revenue recognized by
the Parent and .03.



2. The Surviving Corporation may be charged allocations for marketing and inside sales functions to
the extent such functions are recorded on the Parent’s or an Affiliate’s income statement.
Calculation of these allocations will be on a basis consistent with such charges to Parent’s other
operating business units and will be commensurate with the actual costs related to providing such
support.



3. Expenses related to corporate functions, including financial accounting, accounts payable,
accounts receivable collection, payroll, customer credit evaluation, tax, treasury, information
technology, legal, and human resource provided to the Surviving Corporation will be determined by
taking two times the expense incurred by the Company for such functions in the twelve months prior
to the Effective Time.



4. Provisions for bad debt and inventory obsolescence shall be calculated on a basis that is
consistent with the Parent’s estimate for these items, which estimates will be applied consistent
with GAAP and the Parent’s accounting policies.



5. The Surviving Corporation’s expenses for payroll taxes and employee benefits shall be 14.00% of
salaries, wages, incentives and overtime for the period ending June 30, 2008, and 15.75% of
salaries, wages, incentives and overtime for all periods thereafter.



6. Severance expense related to terminating any Surviving Corporation employee shall be charged
to the Surviving Corporation’s income statement and included in the calculation of EBITDA only if
the termination decision is agreed to by the management of the Surviving Corporation. Such
severance expense will be calculated in accordance with the Parent’s severance policy.



7. Parent and its Subsidiaries shall account for all revenue generated by the Parent and its
Subsidiaries from sales of Sun products by Parent and its Subsidiaries, except for those in the
Southern California region covered by Agilysys CA, Inc. (fka Stack Computer), as sales of the
Company, subject to appropriate and good faith adjustments in the event of subsequent acquisitions
by Agilysys CA, Inc.





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