Document:

Exhibit 10.1

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is
entered into as of January 7, 2009 (the “Effective Date”) between
ACI Worldwide, Inc., a Delaware corporation formerly known as Transaction
Systems Architects, Inc. (the “Company”), and Philip G. Heasley (“Executive”),
and supersedes in its entirety that certain Employment Agreement dated as of March 5,
2005, and amended by the First Amendment thereto dated as of September 5,
2007, pertaining to the terms of the employment of Executive by the Company.

 

RECITALS:

 

WHEREAS, Executive has served as the President and Chief Executive
Officer of the Company since March 5, 2005 (the “Initial Employment Date”),
and Executive desires to continue to serve as the President and Chief Executive
Officer of the Company;

 

WHEREAS, the Company shall employ Executive on the terms and conditions
set forth in this Agreement, and Executive shall be retained and employed by
the Company to perform such services under the terms and conditions of this
Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       Certain
Definitions. Certain words or phrases with initial capital letters not
otherwise defined herein shall have the meanings set forth in Section 8
hereof.

 

2.                                       Employment.
The Company shall employ Executive, and Executive accepts employment with the
Company, upon the terms and conditions set forth in this Agreement for the
period beginning on the Effective Date and ending as provided in Section 5
hereof (the “Employment Period”).

 

3.                                       Position
and Duties.

 

(a)                                  During the Employment
Period, Executive shall serve as the President and Chief Executive Officer of
the Company and shall have the normal duties, responsibilities and authority of
an executive serving in such position, subject to the power of the Board of
Directors of the Company (the “Board”) to provide oversight and
direction with respect to such duties, responsibilities and authority, either
generally or in specific instances and consistent with such position. So long
as Executive is the President and Chief Executive Officer of the Company, the
Board will nominate Executive to serve as a member of the Board.

 

(b)                                 Executive shall report
to the Board.

 

 

(c)                                  During the Employment
Period, Executive shall devote Executive’s best efforts and Executive’s full
business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company, its subsidiaries and affiliates. Executive shall perform
Executive’s duties and responsibilities to the best of Executive’s abilities in
a diligent, trustworthy, business-like and efficient manner. During the
Employment Period, Executive may not serve as a director or a principal of
another company without the Board’s prior consent.

 

(d)                                 Executive
shall perform Executive’s duties and responsibilities principally in the
metropolitan area of the Company’s headquarters.

 

(e)                                  Executive
has acquired through purchase on the NASDAQ National Market System at least
100,000 shares (the “Threshold Ownership”) of the Company’s common stock.  Executive shall at all times during the
Initial Employment Period (as defined in Section 5 below) continue to meet
the Threshold Ownership.

 

4.                                       Compensation
and Benefits.

 

(a)                                  Salary. The
Company agrees to pay Executive a salary during the Employment Period in
installments based on the Company’s payroll practices as may be in effect from
time to time. Executive’s salary during the Initial Employment Period (as
defined in Section 5) shall be at the rate of $575,000 per year (“Base
Salary”). For any renewal periods as set forth in Section 5(b) below,
the amount of the Executive’s Base Salary will be mutually agreed to by the
Board and Executive. Notwithstanding the foregoing, the Board may decrease
Executive’s Base Salary only if, as a result of a reasonable business judgement
of the Board, there is an across-the-board salary reduction for all executive
level management employees of the Company. If there is any modification to the
Base Salary as defined herein, “Base Salary” in this Agreement will refer to
such modified Base Salary.

 

(b)                                 Bonus.   During the Initial Employment Period,
Executive will be eligible for a bonus under the Company’s Management Incentive
Compensation Plan (or any successor plan), with a targeted annual bonus of
$575,000 and with such performance criteria as are approved by the Board for
each fiscal year. During any renewal period as set forth in Section 5(b) below,
Executive’s bonus will be mutually agreed to by the Board and Executive.

 

(c)                                  Stock Options.  During Executive’s employment with the
Company, Executive has received certain stock option grants.  The terms and conditions for the grants are
set forth in those certain stock option agreements between the Company and
Executive as the same may be amended from time to time by the parties.

 

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(d)                                 Expense
Reimbursement. The Company shall reimburse Executive for all reasonable
expenses incurred by Executive during the Employment Period in the course of
performing Executive’s duties under this Agreement that are consistent with the
Company’s policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company’s
requirements applicable generally with respect to reporting and documentation
of such expenses.    The Company shall
reimburse Executive for the cost incurred in maintaining a parking space in New
York, New York, the amount of which reimbursement shall be approved by the
Board.  The Company shall also reimburse
Executive an amount up to $18,000 for the transportation of Executive’s
household goods in connection with Executive’s relocation to the metropolitan
area of the Company’s headquarters.

 

(e)                                  Standard Executive
Benefits Package. Executive shall be entitled during the Employment Period
to participate, on the same basis as other executives of the Company, in the
Company’s Standard Executive Benefits Package. The Company’s “Standard
Executive Benefits Package” means those benefits (including insurance and other
benefits, but excluding, except as hereinafter provided in Section 6, any
severance pay program or policy of the Company) for which substantially all of
the executives of the Company are from time to time generally eligible, as
determined from time to time by the Board. Notwithstanding the foregoing,
Executive shall be entitled to four weeks of paid vacation per calendar year.

 

(f)                                    Additional
Compensation/Benefits. Any compensation or benefits to be provided to
Executive during the Employment Period other than as set forth in this
Agreement, including, without limitation, any future grant of stock options or
other equity awards, shall be determined by the Board in its sole discretion.

 

5.                                       Employment
Period.

 

(a)                                  Except as hereinafter
provided, the Employment Period shall commence on the Effective Date and shall
continue until, and shall end upon, the sixth anniversary of the Initial
Employment Date (the “Initial Employment Period”).

 

(b)                                 On the sixth
anniversary of the Initial Employment Date and on each anniversary thereafter,
unless the Employment Period shall have ended pursuant to Section 5(c) below
or the Company shall have given Executive 30 days written notice that the
extension provision in this sentence shall not apply, the Employment Period
shall be extended for an additional year.

 

(c)                                  Notwithstanding (a) or
(b) above, the Employment Period shall end early upon the first to occur
of any of the following events:

 

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(i)                                     Executive’s
death;

 

(ii)                                  the
Company’s termination of Executive’s employment on account of Disability;

 

(i)                                     the
Company’s termination of Executive’s employment for Cause (a “Termination
for Cause”);

 

(iv)                              the
Company’s termination of Executive’s employment without Cause (a “Termination
without Cause”);

 

(v)                                 Executive’s
termination of Executive’s employment for Good Reason (a “Termination for
Good Reason”); or

 

(vi)                              Executive’s
termination of Executive’s employment for any reason other than Good Reason (a “Voluntary
Termination”).

 

(d)                                 Notwithstanding
anything herein to the contrary, this Agreement and the Employment Period
hereunder shall terminate immediately upon the occurrence of the “Effective
Date” defined in that certain Change In Control Employment Agreement between
the Company and Executive dated September 5, 2008, or any change in
control employment agreement that supersedes and replaces that agreement (the “Change
In Control Employment Agreement”). 
Thereafter, Executive’s employment with the Company shall be governed by
the terms and conditions of the Change In Control Employment Agreement.

 

6.                                       Post-Employment
Period Payments.

 

(a)                                  At the end of the
Employment Period for any reason, Executive shall cease to have any rights to
salary, bonus, expense reimbursements or other benefits and Executive shall be
entitled to (i) any Base Salary which has accrued but is unpaid, any
reimbursable expenses which have been incurred but are unpaid, and any
unexpired vacation days which have accrued under the Company’s vacation policy
but are unused, as of the end of the Employment Period, (ii) any plan
benefits which by their terms extend beyond termination of Executive’s
employment (but only to the extent provided in any such benefit plan in which
Executive has participated as an employee of the Company and excluding, except
as hereinafter provided in Section 6, any severance pay program or policy
of the Company) and (iii) any benefits to which Executive is entitled
under Part 6 of Subtitle B of Title I of the Employee Retirement Income
Security Act of 1974, as amended (“COBRA”). In addition, Executive shall
be entitled to the additional benefits and amounts described in the succeeding
subsections of this Section 6, in the circumstances described in such
subsections.

 

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(b)                                 If the Employment
Period ends pursuant to Section 5 hereof on account of Executive’s death,
Disability or Voluntary Termination, or on account of a Termination for Cause,
the Company shall make no further payments to Executive except as contemplated
in subsection (a) above.

 

(c)                                  If the Employment
Period ends early pursuant to Section 5 hereof on account of a Termination
without Cause or a Termination for Good Reason, Executive shall be entitled to
the following:

 

(i)                                     a lump sum payment
equal to Executive’s bonus for the quarter in which the Employment Period ends;
provided, however, that if such Termination without Cause or Termination
for Good Reason occurs at any time during fiscal year 2005, this Section 6(c) shall
not apply and Executive shall not be entitled to any portion of the bonus for
fiscal year 2005;

 

(ii)                                  a lump sum payment
equal to two times the sum of (A) Executive’s Base Salary at the time of
such termination, plus (B) the Bonus Amount in effect at the time of such
termination; and

 

(iii)                               Executive shall be
entitled to continue to participate, on the same basis as active employees
participate in such plans, in the Company’s medical and dental plans until the
earlier of (A) Executive’s eligibility for any such coverage under another
employer’s or any other medical or dental insurance plans or (B) two years
from the date of termination of Executive’s employment (the “Benefit
Continuation Period”) but only to the extent that Executive makes a payment to
the Company in an amount equal to the monthly premium payments (both the
employee and employer portion) required to maintain such coverage on the first
day of each calendar month commencing with the first calendar month following
the date of termination of Executive’s employment and the Company shall
reimburse Executive on an after-tax basis for the amount of such premiums, if
any, in excess of any employee contributions necessary to maintain such
coverage for the Benefit Continuation Period and such reimbursement shall
comply with the Reimbursement Rules set forth below. Executive agrees that
the period of coverage under such plans (or the period of reimbursement if
participation is barred) shall count against the plans’ obligation to provide
continuation coverage pursuant to COBRA.

 

Notwithstanding any other provision to the
contrary in this Section 6(c), the medical and dental plan benefits
provided pursuant to Section 6(c)(iii) that are not non-taxable
medical benefits within the meaning of Treasury Regulation Section 1.409A-1(a)(5) shall
be treated as follows (the “Reimbursement Rules”):  (i) the amount of such benefits provided
during one taxable year shall not affect the amount of such benefits provided
in any other taxable year, except that to the 

 

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extent such benefits consist of the reimbursement of expenses referred
to in Section 105(b) of the Code, a limitation may be imposed on the
amount of such reimbursements over some or all of the Benefit Continuation
Period, as described in Treasury Regulation Section 1.409A-3(i)(1)(iv)(B),
(ii) to the extent that any such benefits consist of reimbursement of
eligible expenses, such reimbursement must be made on or before the last day of
the calendar year following the calendar year in which the expense was
incurred, and (iii) no such benefit may be liquidated or exchanged for
another benefit.

 

(d)                                 Subject to the delay
of certain payments pursuant to Section 20 of this Agreement, the Company
shall make all payments required to be made pursuant to this Section 6
within seventy-five (75) days of the end of the Employment Period; provided,
however, no payments shall be made under Section 6(c), and all such
payments and benefits shall be forfeited, if Executive fails to sign and return
a Release Agreement to the Company within seventy-five (75) days after the end
of the Employment Period or revokes such Release Agreement within the time
period provided therein.

 

(e)                                  Except as provided in
Section 6(c)(iii) above, Executive shall not be required to mitigate
the amount of any payment or benefit provided for in this Agreement by seeking
other employment or otherwise.

 

(f)                                    Notwithstanding any
other provision of this Agreement, no payment will be made pursuant to this
Agreement if Executive is entitled to, and receives, payments or other benefits
pursuant to the Change in Control Agreement.

 

7.                                       Competitive
Activity: Confidentiality: Nonsolicitation.

 

(a)                                  Acknowledgements
and Agreements. Executive hereby acknowledges and agrees that in the
performance of Executive’s duties to the Company during the Employment Period,
Executive will be brought into frequent contact, either in person, by telephone
or through the mails, with existing and potential customers of the Company.
Executive also agrees that trade secrets and confidential information of the
Company, more fully described in Section 7(j) of this Agreement,
gained by Executive during Executive’s association with the Company, have been
developed by the Company through substantial expenditures of time, effort and
money and constitute valuable and unique property of the Company. Executive
further understands and agrees that the foregoing makes it necessary for the
protection of the business of the Company that Executive not compete with the
Company during the Employment Period and not compete with the Company for a
reasonable period thereafter, as further provided in the following subsections.

 

(b)                                 Covenants During
the Employment Period. During the Employment Period, Executive will not
compete with the Company anywhere within the United States. 

 

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In accordance with this restriction, but without limiting its terms,
during the Employment Period, Executive will not:

 

(i)                                     enter
into or engage in any business which competes with the business of the Company;

 

(ii)                                  solicit
customers, business, patronage or orders for, or sell, any products and
services in competition with, or for any business that competes with, the
business of the Company;

 

(iii)                               divert,
entice or otherwise take away any customers, business, patronage or orders of
the Company or attempt to do so; or

 

(iv)                              promote or assist,
financially or otherwise, any person, firm, association, partnership,
corporation or other entity engaged in any business which competes with the
business of the Company.

 

(c)                                  Covenants
Following Termination. For a period of one year following the termination
of Executive’s employment for any reason, Executive will not:

 

(i)                                     enter into or
engage in any business which competes with the Company’s business within the
Restricted Territory (as defined in Section 7(g));

 

(ii)                                  solicit customers,
business, patronage or orders for, or sell, any products and services in
competition with, or for any business, wherever located, that competes with, the
Company’s business within the Restricted Territory;

 

(iii)                               divert, entice or
otherwise take away any customers, business, patronage or orders of the Company
within the Restricted Territory, or attempt to do so; or

 

(iv)                              promote or assist,
financially or otherwise, any person, firm, association, partnership,
corporation or other entity engaged in any business which competes with the
Company’s business within the Restricted Territory.

 

(d)                                 Indirect
Competition. For the purposes of Sections 7(b) and 7(c), but without
limitation thereof, Executive will be in violation thereof if Executive engages
in any or all of the activities set forth therein directly as an individual on
Executive’s own account, or indirectly as a partner, joint venturer, employee,
agent, salesperson, consultant, officer and/or director of any firm,
association, partnership, corporation or other entity, or as a stockholder of
any corporation or the owner of the interests in any other entity, in which
Executive or Executive’s spouse, child or parent owns, directly or indirectly,
individually or in the 

 

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aggregate, more than five percent (5%) of the outstanding stock or
other ownership interests.

 

(e)                                  The Company.
For purposes of this Section 7, the Company shall include any and all
direct and indirect subsidiary, parent, affiliated, or related companies of the
Company.

 

(f)                                    The Company’s
Business. For the purposes of Sections 7(b), 7(c), 7(k) and 7(1), the
Company’s business is defined to be the development and sale of software
products that facilitate electronic payments, as further described in any and
all manufacturing, marketing and sales manuals and materials of the Company as
the same may be altered, amended, supplemented or otherwise changed from time
to time, or of any other products or services substantially similar to or
readily suitable for any such described products and services.

 

(g)                                 Restricted
Territory. For the purposes of Section 7(c), the Restricted Territory
shall be defined as and limited to:

 

(i)                                     the geographic
area(s) within a 100 mile radius of any and all Company location(s) in,
to, or for which Executive worked, to which Executive was assigned or had any
responsibility (either direct or supervisory) at the time of termination of
Executive’s employment and at any time during the one (1) year period
prior to such termination; and

 

(ii)                                  all of the specific
customer accounts, whether within or outside of the geographic area described
in (i) above, with which Executive had any contact or for which Executive
had any responsibility (either direct or supervisory) at the time of
termination of Executive’s employment and at any time during the one (1) year
period prior to such termination.

 

(h)                                 Extension. If
it shall be judicially determined that Executive has violated any of Executive’s
obligations under Section 7(c), then the period applicable to each
obligation that Executive shall have been determined to have violated shall
automatically be extended by a period of time equal in length to the period
during which such violation(s) occurred.

 

(i)                                     Non-Solicitation.
For a period of two years following the termination of Executive’s employment
for any reason, Executive will not directly or indirectly solicit or induce or
attempt to solicit or induce any employee(s), sales representative(s), agent(s) or
consultant(s) of the Company and/or of its parent, or its other
subsidiary, affiliated or related companies to terminate their employment,
representation or other association with the Company and/or its parent or its
other subsidiary, affiliated or related companies.

 

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(j)                                     Further
Covenants.

 

(i)                                     Executive will
keep in strict confidence, and will not, directly or indirectly, at any time
during or after Executive’s employment with the Company, disclose, furnish,
disseminate, make available or, except in the course of performing Executive’s
duties of employment, use any trade secrets or confidential business and
technical information of the Company or its customers or vendors, including
without limitation as to when or how Executive may have acquired such
information. Such confidential information shall include, without limitation,
the Company’s unique selling, manufacturing and servicing methods and business
techniques, training, service and business manuals, promotional materials,
training courses and other training and instructional materials, vendor and
product information, customer and prospective customer lists, other customer
and prospective customer information and other business information. Executive
specifically acknowledges that all such confidential information, whether
reduced to writing, maintained on any form of electronic media, or maintained
in Executive’s mind or memory and whether compiled by the Company, and/or
Executive, derives independent economic value from not being readily known to
or ascertainable by proper means by others who can obtain economic value from
its disclosure or use, that reasonable efforts have been made by the Company to
maintain the secrecy of such information, that such information is the sole
property of the Company and that any retention and use of such information by
Executive during Executive’s employment with the Company (except in the course
of performing Executive’s duties and obligations to the Company) or after the
termination of Executive’s employment shall constitute a misappropriation of
the Company’s trade secrets.

 

(ii)                                  Executive agrees that
upon termination of Executive’s employment with the Company, for any reason,
Executive shall return to the Company, in good condition, all property of the
Company, including without limitation, the originals and all copies of any
materials which contain, reflect, summarize, describe, analyze or refer or relate
to any items of information listed in Section 7G)(i) of this
Agreement. In the event that such items are not so returned, the Company will
have the right to charge Executive for all reasonable damages, costs, attorneys’
fees and other expenses incurred in searching for, taking, removing and/or
recovering such property.

 

(k)                                  Discoveries
and Inventions: Work Made for Hire.

 

(i)                                     Executive hereby
assigns and agrees to assign to the Company, its successors, assigns or
nominees, all of Executive’s rights to any discoveries, inventions and
improvements, whether patentable or not, made, conceived or suggested, either
solely or jointly with others, by 

 

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Executive while in the Company’s employ, whether in the course of
Executive’s employment with the use of the Company’s time, material or
facilities or that is in any way within or related to the existing or
contemplated scope of the Company’s business. Any discovery, invention or
improvement relating to any subject matter with which the Company was concerned
during Executive’s employment and made, conceived or suggested by Executive,
either solely or jointly with others, within one (1) year following
termination of Executive’s employment under this Agreement or any successor
agreements shall be irrebuttably presumed to have been so made, conceived or
suggested in the course of such employment with the use of the Company’s time,
materials or facilities. Upon request by the Company with respect to any such
discoveries, inventions or improvements, Executive will execute and deliver to
the Company, at any time during or after Executive’s employment, all
appropriate documents for use in applying for, obtaining and maintaining such
domestic and foreign patents as the Company may desire, and all proper
assignments therefor, when so requested, at the expense of the Company, but
without further or additional consideration.

 

(ii)                                  Executive
acknowledges that, to the extent permitted by law, all work papers, reports,
documentation, drawings, photographs, negatives, tapes and masters therefor,
prototypes and other materials (hereinafter, “items”), including without
limitation, any and all such items generated and maintained on any form of
electronic media, generated by Executive during Executive’s employment with the
Company shall be considered a “work made for hire” and that ownership of any
and all copyrights in any and all such items shall belong to the Company. The
item will recognize the Company as the copyright owner, will contain all proper
copyright notices, e.g., “(creation date) [Company Name], All Rights Reserved,”
and will be in condition to be registered or otherwise placed in compliance
with registration or other statutory requirements throughout the world.

 

(l)                                     Communication
of Contents of Agreement. During Executive’s employment and for one (1) year
thereafter, Executive will communicate the contents of this Agreement to any
person, firm, association, partnership, corporation or other entity which
Executive intends to be employed by, associated with, or represent.

 

(m)                               Relief. Executive
acknowledges and agrees that the remedy at law available to the Company for
breach of any of Executive’s obligations under this Agreement would be
inadequate. Executive therefore agrees that, in addition to any other rights or
remedies that the Company may have at law or in equity, temporary and permanent
injunctive relief may be granted in any proceeding which may be brought to
enforce any provision contained in Sections 7(b), 7(c), 7(d), 7(h), 7(i), 7(j),
7(k) and 7(1) of this Agreement, without the necessity of proof of
actual damage.

 

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(n)                                 Reasonableness.
Executive acknowledges that Executive’s obligations under this Section 7
are reasonable in the context of the nature of the Company’s business and the
competitive injuries likely to be sustained by the Company if Executive was to
violate such obligations. Executive further acknowledges that this Agreement is
made in consideration of, and is adequately supported by the agreement of the
Company to perform its obligations under this Agreement and by other
consideration, which Executive acknowledges constitutes good, valuable and
sufficient consideration.

 

8.                                       Definitions.

 

(a)                                  “Base Period”
means the two most recent fiscal years of the Company ending prior to the date
of Executive’s termination of employment; provided, however that if Executive
was not an employee of the Company (or a Predecessor Entity or a Related
Entity, as such terms are defined in Section 8 hereof) at any time during
one of such two fiscal years, the Base Period is the one fiscal year of such
two fiscal year period during which Executive performed personal services for
the Company or a Predecessor Entity or a Related Entity.

 

(b)                                 “Bonus Amount”
means the quotient of (i) the total of the annual bonus amounts described
in Section 4(b) of this Agreement received by Executive during the
fiscal year or years comprising the Base Period, divided by (ii) the
number of the Company’s fiscal years in the Base Period.

 

(c)                                  “Cause” means
the occurrence of any of the following events prior to the termination of the
Employment Period:

 

(i)                                   Executive’s
conviction of a felony involving moral turpitude;

 

(ii)                                Executive’s
serious, willful gross misconduct or Executive’s repeated failure or refusal to
perform or observe Executive’s material duties, responsibilities and
obligations as an employee or officer of the Company for reasons other than
Disability, if such misconduct, failure or refusal continues ten days following
written notice thereof by the Company to Executive identifying the same and
specifying that Executive’s employment may be terminated if the same continues;

 

(iii)                             Executive’s
breach of any provision of Section 7 of this Agreement, which is not cured
within three days after written notice thereof to Executive; or

 

(iv)                            Executive’s
violation of any provision of the Company’s Code of Business Conduct and Ethics
or the Company’ Code of Ethics for the Chief Executive Officer and Senior
Financial Officers, as the same may be amended from time to time.

 

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For purposes of this Agreement, any
termination of Executive’s employment by the Company for Cause shall be
authorized by a vote of at least a majority of the nonemployee members of the
Board. No termination for Cause shall take effect until the expiration of the
correction period, if any, described above and the determination by a majority
of the non-employee members of the Board that Executive has failed to correct
the act or failure to act.

 

(d)                                 “Code” means
the Internal Revenue Code of 1986, as amended.

 

(e)                                  “Disability”
means, as a result of Executive’s incapacity due to physical or mental illness,
Executive shall have been unable, with or without a reasonable accommodation,
to perform his duties with the Company on a full-time basis for six months and,
within 30 days after a written notice of termination of employment is
thereafter given by the Company, Executive shall not have returned to the
full-time performance of Executive’s duties.

 

(f)                                    “Good Reason”
means a material adverse change in Executive’s title, duties, authority or
reporting relationship, without Executive’s consent, excluding any inadvertent
change that is remedied by the Company promptly after receipt of a written
notice thereof from Executive or any other material breach of this Agreement
that is not remedied by the Company promptly after receipt of a written notice
thereof from Executive; provided, however, that during the two year period
following a Change in Control (as such phrase is defined in the Change in
Control Agreement), no Good Reason for termination shall have occurred under
this Agreement unless Good Reason for termination exists under the terms of the
Change in Control Agreement.

 

(g)                                 “Predecessor Entity”
is any entity which, as a result of a merger, consolidation, purchase or
acquisition of property or stock, corporate separation, or other similar
business transaction transfers some or all of its employees to the Company or
to a Related Entity or to a Predecessor Entity of the Company.

 

(h)                                 “Related Entity”
includes any entity treated as a single employer with the Company in accordance
with subsections (b), (c), (m) and (0) of Code Section 414.

 

(i)                                     “Release
Agreement” means an agreement, substantially in a form approved by the
Company, pursuant to which Executive releases all current or future claims,
known or unknown, arising on or before the date of the release against the
Company, its subsidiaries and its officers.

 

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9.                                       Certain
Additional Payments by the Company.

 

(a)                                  Anything in this
Agreement to the contrary notwithstanding, in the event that this Agreement
becomes operative and it is determined (as hereafter provided) that any payment
(other than the Gross-Up payments provided for in this Section 9 and Annex
A) or distribution by the Company or any of its affiliates to or for the
benefit of Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or by reason
of any other agreement, policy, plan, program or arrangement, including without
limitation any stock option, performance share, performance unit, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code (or
any successor provision thereto) by reason of being considered “contingent on a
change in ownership or control” of the Company, within the meaning of Section 280G
of the Code (or any successor provision thereto) or to any similar tax imposed
by state or local law, or any interest or penalties with respect to such tax
(such tax or taxes, together with any such interest and penalties, being
hereafter collectively referred to as the “Excise Tax”), then Executive will be
entitled to receive an additional payment or payments (collectively, a “Gross-Up
Payment”). The Gross-Up Payment will be in an amount such that, after payment
by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payment. For purposes of determining the amount of
the Gross-Up Payment, Executive will be considered to pay (x) federal
income taxes at the highest rate in effect in the year in which the Gross-Up
Payment will be made and (y) state and local income taxes at the highest
rate in effect in the state or locality in which the Gross-Up Payment would be
subject to state or local tax, net of the maximum reduction in federal income
tax that could be obtained from deduction of such state and local taxes.

 

(b)                                 The obligations set
forth in Section 9(a) will be subject to the procedural provisions
described in Annex A.

 

(c)                                  Any Gross-Up Payment
provided under this Section 9 and the procedural provisions described in
Annex A shall be paid to the Executive at the time or times specified in Annex
A but in no event later than the last day of the calendar year next following
the calendar year in which the Executive remits the related taxes (together
with any interest or penalties with respect to such taxes) which has resulted
in the obligation of the Company to make such Gross-Up Payment.  Any reimbursement by the Company of any fees,
costs and expenses incurred by the Executive in connection with the
determination of tax or which are incurred with respect to any audit, contest
or litigation involving such taxes and which are required to be reimbursed in
accordance with the provisions of Annex A shall be paid to the Executive at the
time or times specified in Annex A but in no event later than the last day of
the calendar year following the calendar year in which 

 

13

 

the taxes that are the subject of the audit, contest or litigation are
remitted by the Executive or, where no taxes are remitted, the end of the
calendar year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the contest or litigation.

 

10.                                 Executive
Representations. Executive represents and warrants to the Company that (a) the
execution, delivery and performance of this Agreement by Executive does not and
will not conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which Executive is a party
or by which Executive is bound, (b) Executive is not a party to or bound
by any employment agreement, noncompete agreement or confidentiality agreement
with any other person or entity and (c) upon the execution and delivery of
this Agreement by the Company, this Agreement shall be the valid and binding
obligation of Executive, enforceable in accordance with its terms.

 

11.                                 Survival. Subject
to any limits on applicability contained therein, Section 7 hereof shall
survive and continue in full force in accordance with its terms notwithstanding
any termination of the Employment Period.

 

12.                                 Withholding of
Taxes. The Company may withhold from any amounts payable under this
Agreement all federal, state, city or other taxes as the Company is required to
withhold pursuant to any applicable law, regulation or ruling.

 

13.                                 Notices.
Any notice provided for in this Agreement shall be in writing and shall be
either personally delivered, sent by reputable overnight carrier or mailed by
first class mail, return receipt requested, to the recipient at the address
below indicated:

 

Notices to Executive:

 

Philip G. Heasley

c/o ACI Worldwide, Inc.

120 Broadway, Suite 3350

New York, NY 10271

 

Notices to the Company:

 

ACI Worldwide, Inc.

6060 Coventry Drive

Elkhorn, NE 68022

Attn: General Counsel

 

or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party. Any notice under this Agreement will be deemed to have been given when
so delivered, sent or mailed.

 

14

 

14.                                 Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or any
other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.

 

15.                                 Complete Agreement.
This Agreement embodies the complete agreement and understanding between the
parties with respect to the subject matter hereof and effective as of its date
supersedes and preempts any prior understandings, agreements or representations
by or between the parties, written or oral, which may have related to the
subject matter hereof in any way.

 

16.                                 Counterparts.
This Agreement may be executed in separate counterparts, each of which shall be
deemed to be an original and both of which taken together shall constitute one
and the same agreement.

 

17.                                 Successors and
Assigns. This Agreement shall bind and inure to the benefit of and be
enforceable by Executive, the Company and their respective heirs, executors,
personal representatives, successors and assigns, except that neither party may
assign any rights or delegate any obligations hereunder without the prior
written consent of the other party. Executive hereby consents to the assignment
by the Company of all of its rights and obligations hereunder to any successor
to the Company by merger or consolidation or purchase of all or substantially
all of the Company’s assets, provided such transferee or successor assumes the
liabilities of the Company hereunder.

 

18.                                 Choice of Law.
This Agreement shall be governed by the internal law, and not the laws of
conflicts, of the State of Nebraska.

 

19.                                 Amendment and
Waiver. The provisions of this Agreement may be amended or waived only with
the prior written consent of the Company and Executive, and no course of
conduct or failure or delay in enforcing the provisions of this Agreement shall
affect the validity, binding effect or enforceability of this Agreement. This
Agreement is intended to comply with the provisions of Section 409A of the
Internal Revenue Code so that the income inclusion provisions of said Section 409A
do not apply to Executive, and the Company and Executive accordingly agree to
such amendments to the Agreement as may be necessary or appropriate to reform
the provisions of the Agreement to comply with the applicable requirements of Section 409A
of the Internal Revenue Code and the regulations and Treasury guidance
thereunder to prevent any of the benefits provided by this Agreement from being
includible in Executive’s gross income before being paid pursuant to this
Agreement or otherwise subject to additional income taxes and interest
penalties under Section 409A of the Internal Revenue Code.

 

15

 

20.                                 Delay of Payment Date
for Nonqualified Deferred Compensation. 
Notwithstanding anything to the contrary in this Agreement, any payments
to be made to Executive upon his separation from service (within the meaning of
Section 409A of the Internal Revenue Code) which constitutes nonqualified
deferred compensation (within the meaning of Section 409A of the Internal
Revenue Code), will not be made to Executive until the earliest to occur of:

 

(a)                                  the first day of the
seventh month following the date of the Executive’s separation from service; or

 

(b)                                 Executive’s death.

 

The foregoing provisions which delay the payment date of certain
nonqualified deferred compensation shall only apply if the Executive is a “specified
employee” (within the meaning of Section 409A of the Internal Revenue
Code) as determined by the Company under the methodology established by the
Company at the time of his separation from service.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

 

	
  ACI Worldwide, Inc.

  	
   

  	
  Philip G. Heasley

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Dennis P. Byrnes

  	
   

  	
  /s/
  Philip G. Heasley

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Senior
  Vice President

  	
   

  	
   

  

 

 

Annex A -Procedural provisions regarding the Gross Up Payment

 

16

 

Annex A

 

Excise Tax Gross-Up Procedural Provisions

 

(1)                                  Subject to the
provisions of Paragraph 5, all determinations required to be made under Section 9
and Annex A, including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required to be paid
by the Company to Executive and the amount of such Gross-Up Payment, if any,
will be made by a nationally recognized accounting firm (the “National Firm”)
selected by Executive in Executive’s sole discretion. Executive will direct the
National Firm to submit its determination and detailed supporting calculations
to both the Company and Executive within 30 calendar days after-the date of
termination of Executive’s employment, if applicable, and any such other time
or times as may be requested by the Company or Executive. If the National Firm
determines that any Excise Tax is payable by Executive, the Company will pay
the required Gross-Up Payment to Executive within five business days after
receipt of such determination and calculations with respect to any Payment to
Executive. If the National Firm determines that no Excise Tax is payable by
Executive with respect to any material benefit or amount (or portion thereof),
it will, at the same time as it makes such determination, furnish the Company
and Executive with an opinion that Executive has substantial authority not to
report any Excise Tax on Executive’s federal, state or local income or other
tax return with respect to such benefit or amount. As a result of the uncertainty
in the application of Section 4999 of the Code and the possibility of
similar uncertainty regarding applicable state or local tax law at the time of
any determination by the National Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by the Company should have been made (an “Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Paragraph
5 and Executive thereafter is required to make a payment of any Excise Tax,
Executive will direct the National Firm to determine the amount of the
Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and Executive as promptly as
possible. Any such Underpayment will be promptly paid by the Company to, or for
the benefit of, Executive within five business days after receipt of such
determination and calculations.

 

(2)                                  The Company and
Executive will each provide the National Firm access to and copies of any
books, records and documents in the possession of the Company or Executive, as
the case may be, reasonably requested by the National Firm, and otherwise
cooperate with the National Firm in connection with the preparation and
issuance of the determinations and calculations contemplated by Paragraph 1.
Any determination by the National Firm as to the amount of the Gross-Up Payment
will be binding upon the Company and Executive.

 

(3)                                  The federal, state
and local income or other tax returns filed by Executive will be prepared and
filed on a consistent basis with the determination of the National Firm with 

 

A-1

 

respect to the Excise Tax payable by Executive. Executive will report
and make proper payment of the amount of any Excise Tax, and at the request of
the Company, provide to the Company true and correct copies (with any
amendments) of Executive’s federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if relevant, as
filed with the applicable taxing authority, and such other documents reasonably
requested by the Company, evidencing such payment. If prior to the filing of
Executive’s federal income tax return, or corresponding state or local tax
return, if relevant, the National Firm determines that the amount of the
Gross-Up Payment should be reduced, Executive will within five business days
pay to the Company the amount of such reduction.

 

(4)                                  The fees and expenses
of the National Firm for its services in connection with the determinations and
calculations contemplated by Paragraph 1 will be borne by the Company. If such
fees and expenses are initially paid by Executive, the Company will reimburse
Executive the full amount of such fees and expenses within five business days
after receipt from Executive of a statement therefor and reasonable evidence of
Executive’s payment thereof.

 

(5)                                  Executive will notify
the Company in writing of any claim by the Internal Revenue Service or any
other taxing authority that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification will be given as promptly as
practicable but no later than 10 business days after Executive actually
receives notice of such claim and Executive will further apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid (in each case, to the extent known by Executive). Executive will not pay
such claim prior to the expiration of the 30-calendar-day period following the
date on which Executive gives such notice to the Company or, if earlier, the
date that any payment of amount with respect to such claim is due. If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive will:

 

(a)          provide the Company with any written records
or documents in Executive’s possession relating to such claim reasonably
requested by the Company;

 

(b)         take such action in connection with contesting
such claim as the Company reasonably requests in writing from time to time,
including without limitation accepting legal representation with respect to
such claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;

 

(c)          cooperate with the Company in good faith in
order effectively to contest such claim; and

 

(d)         permit the Company to participate in any
proceedings relating to such claim;

 

A-2

 

provided, however, that the Company will bear
and pay directly all costs and expenses (including interest and penalties)
incurred in connection with such contest and will indemnify and hold harmless
Executive, on an after-tax basis, for and against any Excise Tax or income or
other tax, including interest and penalties with respect thereto, imposed as a
result of such representation and payment of costs and expenses. Without
limiting the foregoing provisions of this Paragraph 5, the Company will control
all proceedings taken in connection with the contest of any claim contemplated
by this Paragraph 5 and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided, however, that Executive
may participate therein at Executive’s own cost and expense) and may, at its
option, either direct Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the Company
determines; provided, however, that if the Company directs Executive to
pay the tax claimed and sue for a refund, the Company will advance the amount
of such payment to Executive on an interest-free basis and will indemnify and
hold Executive harmless, on an after-tax basis, from any Excise Tax or income
or other tax, including interest or penalties with respect thereto, imposed
with respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which the contested amount is claimed
to be due is limited solely to such contested amount. Furthermore, the Company’s
control of any such contested claim will be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and Executive will be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

 

(6)                                  If, after the receipt
by Executive of an amount advanced by the Company pursuant to Paragraph 5,
Executive receives any refund with respect to such claim, Executive will
(subject to the Company’s complying with the requirements of Paragraph 5)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company pursuant to
Paragraph 5, a determination is made that Executive is not entitled to any
refund with respect to such claim and the Company does not notify Executive in
writing of its intent to contest such denial or refund prior to the expiration
of 30 calendar days after such determination, then such advance will be
forgiven and will not be required to be repaid and the amount of any such
advance will offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to Executive pursuant to Section 9 and
this Annex A.

 

A-3Exhibit 10.2

 

CHANGE
IN CONTROL EMPLOYMENT AGREEMENT

 

This
CHANGE IN CONTROL EMPLOYMENT AGREEMENT (this “Agreement”),
by and between ACI Worldwide, Inc., a Delaware corporation (the “Company”), and the executive of the Company
designated on the signature page to this Agreement (the “Signature Page”) as the Executive (the “Executive”) is entered into effective as of the
date (the “Contract Date”) set forth on
the Signature Page.

 

WHEREAS,
the Board of Directors of the Company (the “Board”),
has determined that it is in the best interests of the Company and its
stockholders  to assure that the Company will
have the continued dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change in Control (as defined herein).  The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change in Control
and to encourage the Executive’s full attention and dedication to the Company
in the event of any threatened or pending Change in Control, and to provide the
Executive with compensation and benefits arrangements upon a Change in Control
that ensure that the compensation and benefits expectations of the Executive
will be satisfied and that provide the Executive with compensation and benefits
arrangements that are competitive with those of other corporations.  Therefore, in order to accomplish these
objectives, the Board has authorized the Company to enter into this Agreement.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

Section 1.  Certain Definitions.

 

(a)                                      “Effective Date” means the first date during the
Change in Control Period (as defined herein) on which a Change in Control
occurs.  Notwithstanding anything in this
Agreement to the contrary, if a Change in Control occurs and if the Executive’s
employment with the Company is terminated within six months prior to the date
on which the Change in Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (1) was at the request
of a third party that has taken steps reasonably calculated to effect a Change
in Control or (2) otherwise arose in connection with or anticipation of a
Change in Control, then “Effective Date” means the date immediately prior to
the date of such termination of employment.

 

(b)                                     “Change in Control Period” means the period
commencing on the date hereof and ending on the second anniversary of the date
hereof; provided, however, that, commencing on the date one year
after the date hereof, and on each annual anniversary of such date (such date
and each annual anniversary thereof, the “Renewal
Date”), unless previously terminated, the Change in Control Period
shall be automatically extended so as to terminate two years from such Renewal
Date, unless, at least 60 days prior to the Renewal Date, the Company shall
give notice to the Executive that the Change in Control Period shall not be so
extended.

 

(c)                                      “Affiliated Company” means any company
controlled by, controlling or under common control with the Company.

 

 

(d)                                     “Change in Control” means:

 

(1)           Any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) becomes
the beneficial owner (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either (A) the then-outstanding shares
of common stock of the Company (the “Outstanding
Company Common Stock”) or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company
Voting Securities”); provided, however, that, for purposes of this Section 1(d), the
following acquisitions shall not constitute a Change in Control:  (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any Affiliated Company, (iv) any acquisition by any Person
pursuant to a transaction that complies with Sections 1(d)(3)(A) and
1(d)(3)(B); or (v) any acquisition of beneficial ownership of not more
than 25% of the Outstanding Company Voting Securities by any Person that is entitled
to and does report such beneficial ownership on Schedule 13G under the Exchange
Act (a “13G Filer”), provided,
however, that this clause (v) shall
cease to apply when a Person who is a Schedule 13G Filer becomes required to
file a Schedule 13D under the Exchange Act with respect to beneficial ownership
of 20% or more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities.  Notwithstanding any
other provision hereof, if a Business Combination (as defined below) is
completed during the Change in Control Period and the Outstanding Company
Voting Securities are converted into voting securities of the Combined Company
(as defined below), but such Business Combination does not constitute a “Change
in Control” under Section 1(d)(3), “Outstanding Company Voting Securities”
shall thereafter mean voting securities of the Combined Company entitled to
vote generally in the election of the members of the Combined Company Board.

 

(2)           Any time at which
individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board other than as a result of a
Business Combination that does not constitute a “Change in Control” under
Sections 1(d)(1) or 1(d)(3)(A); provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board (an “Election Contest”);

 

(3)           Consummation of a
reorganization, merger, statutory share exchange or consolidation or similar
transaction involving the Company or any of its subsidiaries, a sale or other
disposition of all or substantially all of the assets of the Company, or the
acquisition of assets or stock of another entity by the Company or any of its
subsidiaries (each, a “Business Combination”),
in each case unless, following such Business Combination, (A) no Person
(excluding any corporation resulting from such 

 

2

 

Business Combination
or any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination (the “Combined Company”))) beneficially owns,
directly or indirectly, such number of the then-Outstanding Company Voting
Securities as would constitute a “Change in Control” under Section 1(d)(1),
and at least one-half of the members of the board of directors (or, for a
non-corporate entity, equivalent governing body) of the entity resulting from
such Business Combination (the “Combined Company
Board”) were members of the Incumbent Board at the time of the execution
of the initial agreement or of the action of the Board providing for such
Business Combination (the “Business Combination
Agreement”), or (B) the Executive and the Company, each acting
in his, her or its respective sole discretion, enter into an amendment to this
Agreement providing for the Executive’s continued employment for not less than
two years at levels of compensation and benefits that in the aggregate are not
substantially less favorable to the Executive than those to which he or she was
entitled prior to such Business Combination; or

 

(4)           Approval by the
stockholders  of the Company of a complete
liquidation or dissolution of the Company.

 

Section 2. 
Employment Period.  The
Company hereby agrees to continue the Executive in its employ, subject to the
terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the second anniversary of the Effective Date (the “Employment Period”), provided, however,
that commencing on each annual anniversary of the Effective Date (such date and
each annual anniversary thereof, the “Employment
Period Renewal Date”), unless previously terminated, the Employment
Period shall be automatically extended so as to terminate two years from such
Employment Period Renewal Date, unless, at least 60 days prior to the
Employment Period Renewal Date, the Company shall give notice to the Executive
that the Employment Period shall not be so extended.  The Employment Period shall terminate upon
the Executive’s termination of employment for any reason.

 

Section 3.  Terms of Employment.

 

(a)                                      Position
and Duties. 
(1)  During the Employment Period, (A) the Executive’s
position (including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the Effective Date and (B) the
Executive’s services shall be performed at the office where the Executive was
employed immediately preceding the Effective Date or at any other location less
than 50 miles from such office.

 

(2)           During the
Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable attention
and time during normal business hours to the business and affairs of the
Company and, to the extent necessary to discharge the responsibilities assigned
to the Executive hereunder, to use the Executive’s reasonable best efforts to
perform faithfully and efficiently such responsibilities.  During the Employment Period, it shall not be
a violation of this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive’s 

 

3

 

responsibilities
as an employee of the Company in accordance with this Agreement.  It is expressly understood and agreed that,
to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive’s responsibilities to the Company.

 

(b)                                     Compensation.

 

(1)           Base Salary.  During the Employment
Period, the Executive shall receive an annual base salary (the “Annual Base Salary”) at an annual rate at least
equal to the highest annual rate of base salary paid or payable, including any
base salary that has been earned but deferred, to the Executive by the Company
and the Affiliated Companies in respect of the 12-month period immediately
preceding the month in which the Effective Date occurs.  The Annual Base Salary shall be paid at such
intervals as the Company pays executive salaries generally.  During the Employment Period, the Annual Base
Salary shall be reviewed at least annually, beginning no more than 12 months
after the last salary increase awarded to the Executive prior to the Effective
Date.  Any increase in the Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement.  The Annual Base
Salary shall not be reduced after any such increase and the term “Annual Base
Salary” shall refer to the Annual Base Salary as so increased.

 

(2)           Annual Bonus.  In addition to the
Annual Base Salary, the Executive shall be awarded, for each fiscal year ending
during the Employment Period, total annual and quarterly bonus opportunities in
cash at least equal to the aggregate of the Executive’s target annual and
quarterly bonus opportunities for the year in which the Effective Date occurs
(the “Target Annual Bonus”) (if the
Executive has not been eligible to earn such a bonus for any period prior to
the Effective Date or no such Target Annual Bonus has been established for the
fiscal year or quarters (as applicable) in which the Effective Date occurs, the
“Target Annual Bonus” shall mean the Executive’s most recent target annual and
quarterly bonus opportunities as in effect for the year prior to the year in
which the Effective Date occurs); provided,
however, that (i) the performance
measures applicable to such target bonus opportunities shall be comparable in terms
of difficulty of achievement to the measures in effect with respect to the
Target Annual Bonus prior to the Effective Date and (ii) in the
determination of such bonuses, the Executive shall be treated as favorably as
similarly situated executives of any acquiror of the Company.  Each such annual bonus shall be paid no later
than two and a half months after the end of the fiscal year for which the
annual bonus is awarded, unless the Executive shall elect to defer the receipt
of such annual bonus pursuant to an arrangement that meets the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”).  For purposes of this Agreement, references to
Section 409A of the Code shall include any proposed, temporary or final
regulation, or any other formal guidance, promulgated with respect to such
section by the U.S. Department of Treasury or the Internal Revenue Service.

 

(3)           Incentive,
Savings and Retirement Plans.  During the Employment Period, the
Executive shall be entitled to participate in all cash incentive, equity
incentive, savings and retirement plans, practices, policies and programs
applicable 

 

4

 

generally to other
peer executives of the Company and the Affiliated Companies, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in
each case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and the Affiliated Companies for the Executive under
such plans, practices, policies and programs as in effect at any time during
the 120-day period immediately preceding the Effective Date or, if more favorable
to the Executive, those provided generally at any time after the Effective Date
to other peer executives of the Company and the Affiliated Companies.

 

(4)           Welfare Benefit
Plans.  During
the Employment Period, the Executive and/or the Executive’s family, as the case
may be, shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs provided by the
Company and the Affiliated Companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and the Affiliated Companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits that are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company
and the Affiliated Companies.

 

(5)           Expenses.  During the
Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the Company and
the Affiliated Companies in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and the Affiliated Companies.

 

(6)           Office and
Support Staff.  During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with furnishings
and other appointments, and to exclusive personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and the Affiliated Companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated Companies.

 

(7)           Vacation.  During the
Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of
the Company and the Affiliated Companies as in effect for the Executive at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and the Affiliated
Companies.

 

5

 

Section 4.  Termination of Employment.

 

(a)                                  Death
or Disability. 
The Executive’s employment shall terminate automatically if the
Executive dies during the Employment Period. 
If the Company determines in good faith that the Disability (as defined
herein) of the Executive has occurred during the Employment Period (pursuant to
the definition of “Disability”), it may
give to the Executive written notice in accordance with Section 11(b) of
its intention to terminate the Executive’s employment.  In such event, the Executive’s employment
with the Company shall terminate effective on the 30th day after receipt of
such notice by the Executive (the “Disability
Effective Date”), provided that,
within the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties.  “Disability” means the absence of the
Executive from the Executive’s duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to mental or physical
illness that is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive’s
legal representative.

 

(b)                                 Cause.  The Company may
terminate the Executive’s employment during the Employment Period with or
without Cause.  “Cause” means:

 

(1)           the Executive’s
conviction of, or entry of a plea of guilty or no contest to, a felony or any
lesser crime of which fraud or dishonesty is an element,

 

(2)           the Executive’s
willful misconduct or willful omission of duties (other than any such
misconduct or omission resulting from the Executive’s incapacity due to
physical or mental illness or following the Executive’s delivery of a Notice of
Termination for Good Reason) that is or could reasonably be expected to be
injurious to the Company other than in an immaterial manner, or

 

(3)           the Executive’s
violation of any provision of (A) the Company’s Code of Business Conduct
and Ethics, as the same may be amended from time to time, or (B) the
Company’s Code of Ethics for the Chief Executive Officer and Senior Financial Officers,
as the same may be amended from time to time (the “Code
of Ethics”) that is, in each case, materially and demonstrably
injurious to the Company.  For purposes
of the foregoing sentence, the Executive shall be deemed to be subject to the
provisions of the Code of Ethics regardless of whether the Executive is a
Senior Officer as defined in the Code of Ethics or otherwise subject to the
Code of Ethics.

 

For purposes of this Section 4(b), no act, or failure to act, on
the part of the Executive shall be considered “willful” unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon
authority (A) given pursuant to a resolution duly adopted by the Board, or
if the Company is not the ultimate parent corporation of the Affiliated
Companies and is not publicly-traded, the board of directors of the ultimate
parent of the Company (the “Applicable Board”),
(B) upon the instructions of the Chief Executive Officer of the Company, or (C) based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company.  The cessation of employment of the Executive
shall not be deemed to be for Cause unless (i) “Cause” as defined herein
exists and (ii) there shall have been delivered to the Executive a copy of
a resolution duly adopted by the affirmative vote of not less than 

 

6

 

three-quarters of the entire membership of the Applicable Board
(excluding the Executive, if the Executive is a member of the Applicable Board)
at a meeting of the Applicable Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an opportunity,
together with counsel for the Executive, to be heard before the Applicable
Board), finding that, in the good faith opinion of the board, the Executive is
guilty of the conduct described in Section 4(b)(1), 4(b)(2) or
4(b)(3), and specifying the particulars thereof in detail.

 

(c)                                  Good
Reason.  The
Executive’s employment may be terminated by the Executive for Good Reason or by
the Executive voluntarily without Good Reason. 
“Good Reason” means:

 

(1)           the assignment to
the Executive of any duties inconsistent in any respect with the Executive’s
position (including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 3(a), or any other
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;

 

(2)           any failure by the
Company to comply with any of the provisions of Section 3(b), other than
an isolated, insubstantial and inadvertent failure not occurring in bad faith
and that is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

 

(3)           the Company’s
requiring the Executive (i) to be based at any office or location other
than as provided in Section 3(a)(1)(B), (ii) to be based at a
location other than the principal executive offices of the Company if the
Executive was employed at such location immediately preceding the Effective
Date, or (iii) to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;

 

(4)           any purported
termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement; or

 

(5)           any failure by the
Company to comply with and satisfy Section 10(c).

 

The
Executive’s mental or physical incapacity following the occurrence of an event
described above in clauses (1) through (5) shall not affect the
Executive’s ability to terminate employment for Good Reason.  A termination by the Executive with Good
Reason shall be effective only if, within 180 days of the Executive’s first
becoming aware of the circumstances giving rise to Good Reason, the Executive
delivers a Notice of Termination for Good Reason by Executive to the Company,
and, to the extent such circumstances are curable, the Company within 30 days
following its receipt of such notification has failed to cure the circumstances
giving rise to Good Reason.

 

(d)                                 Notice
of Termination.  Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b).  “Notice of Termination” means a written 

 

7

 

notice that (1) indicates the specific
termination provision in this Agreement relied upon, (2) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated, and (3) if the Date of Termination (as defined
herein) is other than the date of receipt of such notice, specifies the Date of
Termination (which Date of Termination shall be not more than 30 days after the
giving of such notice).  The failure by
the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive’s or the Company’s respective rights
hereunder.

 

(e)                                  Date
of Termination.  “Date of Termination”
means (1) if the Executive’s employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of the Notice
of Termination or any later date specified in the Notice of Termination, (which
date shall not be more than 30 days after the giving of such notice), as the
case may be, (2) if the Executive’s employment is terminated by the
Company other than for Cause or Disability, the date on which the Company
notifies the Executive of such termination, (3) if the Executive resigns
without Good Reason, the date on which the Executive notifies the Company of
such termination, and (4) if the Executive’s employment is terminated by
reason of death or Disability, the date of death of the Executive or the
Disability Effective Date, as the case may be.

 

Section 5.  Obligations of the Company upon
Termination.

 

(a)                                  Good
Reason; Other Than for Cause, Death or Disability.  If the Company terminates the Executive’s
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason during the Employment Period:

 

(1)           the Company shall
pay to the Executive, in a lump sum in cash within 30 days after the Date of
Termination, the aggregate of the following amounts:

 

(A)          the sum of (i) the
Executive’s Annual Base Salary through the Date of Termination to the extent
not theretofore paid, (ii) the product of (x) the Target Annual Bonus
and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination and the denominator of
which is 365 (the “Pro-Rata Bonus”), and (iii) any
accrued vacation pay to the extent not theretofore paid (the sum of the amounts
described in subclauses (i), (ii) and (iii), the “Accrued
Obligations”); and

 

(B)           the amount equal to
the product of (i) two [or in the case of Philip G. Heasley, the Company’s Chief Executive
Officer, only, three times] and (ii) the sum of (x) the
Executive’s Annual Base Salary and (y) the Target Annual Bonus;

 

(2)           for two years [or in the case of Philip G. Heasley, the Company’s
Chief Executive Officer, only, three years] after the Executive’s Date
of Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy (the “Benefit
Continuation Period”), the Company shall continue benefits to the 

 

8

 

Executive and/or
the Executive’s family at least equal to, and at the same after-tax cost to the
Executive and/or the Executive’s family, as those that would have been provided
to them in accordance with the plans, programs, practices and policies
described in Section 3(b)(4) (such benefits, the “Welfare Benefits”) if the Executive’s
employment had not been terminated or, if more favorable to the Executive, as
in effect generally at any time thereafter with respect to other peer
executives of the Company and the Affiliated Companies and their families; provided, however, that,
the medical, dental, prescription drug and vision benefits provided during the
Benefit Continuation Period shall be provided in such a manner that such
benefits (and the costs and premiums thereof) are excluded from the Executive’s
income for federal income tax purposes (if the Company reasonably determines
that providing continued coverage under one or more of its welfare plans
contemplated herein could be taxable to the Executive, the Company shall
provide such benefits at the level required hereby through the purchase of
individual coverage); and, provided, further, that
if the Executive becomes reemployed with another employer and is eligible to
receive such benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan  during such
applicable period of eligibility.  For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until the end of the Benefit Continuation Period and to have
retired on the last day of such period;

 

(3)           the Company shall,
at its sole expense as incurred, provide the Executive with outplacement
services the scope and provider of which shall be selected by the Executive in
the Executive’s sole discretion, provided that
the cost of such outplacement shall not exceed $50,000; and provided, further, that such outplacement benefits shall end
not later than the last day of the second calendar year that begins after the
Date of Termination; and

 

(4)           to the extent not
theretofore paid or provided, the Company shall timely pay or provide to the
Executive any Other Benefits (as defined in Section 6) in accordance with
the terms of the underlying plans or agreements.

 

(b)                                 Death.  If the Executive’s employment is terminated
by reason of the Executive’s death during the Employment Period, the Company
shall provide the Executive’s estate or beneficiaries with the Accrued
Obligations and the timely payment or delivery of the Other Benefits, and shall
have no other severance obligations under this Agreement.  The Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination.  With
respect to the provision of the Other Benefits, the term “Other Benefits” as
utilized in this Section 5(b) shall include, without limitation, and
the Executive’s estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the Company
and the Affiliated Companies to the estates and beneficiaries of peer
executives of the Company and the Affiliated Companies under such plans,
programs, practices and policies relating to death benefits, if any, as in effect
with respect to other peer executives and their beneficiaries at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in
effect on the date of the Executive’s 

 

9

 

death with respect to other peer executives of the
Company and the Affiliated Companies and their beneficiaries.

 

(c)                                  Disability.  If the Executive’s
employment is terminated by reason of the Executive’s Disability during the
Employment Period, the Company shall provide the Executive with the Accrued
Obligations and the timely payment or delivery of the Other Benefits, and shall
have no other severance obligations under this Agreement.  The Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.  With respect to the provision of the Other
Benefits, the term “Other Benefits” as utilized in this Section 5(c) shall
include, and the Executive shall be entitled after the Disability Effective
Date to receive, disability and other benefits at least equal to the most favorable
of those generally provided by the Company and the Affiliated Companies to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive’s family, as in effect at any
time thereafter generally with respect to other peer executives of the Company
and the Affiliated Companies and their families.

 

(d)                                 Cause;
Other Than for Good Reason.  If the Executive’s employment is
terminated for Cause during the Employment Period, the Company shall provide
the Executive with the Executive’s Annual Base Salary through the Date of
Termination, and the timely payment or delivery of the Other Benefits, and
shall have no other severance obligations under this Agreement.  If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, the Company shall provide to the Executive the Accrued Obligations and
the timely payment or delivery of the Other Benefits, and shall have no other
severance obligations under this Agreement. 
In such case, all the Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.

 

(e)                                  Other.  Without limiting the applicability of Section 5,
if the Company terminates the Executive’s employment without Cause or
Disability and a notice of termination is given or such termination is
effective within 15 months after the election of one or more individuals to the
Board who were first nominated or recommended for election to the Board by any
Person other than the Board or its Nominating and Corporate Governance
Committee (or any Board committee performing similar functions (together with the
Board, the “N&G Committee”)) and such
nomination was not recommended by the N&G Committee before such nomination
or recommendation was first publicly announced by such Person or following the
institution of an Election Contest proposing the election of one or more
directors to the Board who, at the time such proposal is first publicly
announced, were not recommended for election to the Board by the Board or the
N&G Committee, then the Effective Date shall mean the date immediately
preceding such termination and such termination shall be deemed to have
occurred during the Employment Period for purposes of this Agreement.  For the avoidance of doubt, this Section 5(e) will
not apply if the Executive’s employment is terminated by the Executive (whether
or not Good Reason exists) or the Executive terminates employment for death or
Disability.

 

(f)                                    409A
Compliance.  Notwithstanding the
provisions of Sections 5(a), 5(c) and 5(d), in the event that the Executive
is a “specified employee” within the meaning of Section 409A of the Code
(as determined in accordance with the methodology established by the Company as
in effect on the Date of Termination) and if any portion of the payments or
benefits

 

10

 

 

to be received by the Executive under this Agreement
upon his or her separation from service, including Sections 5(a), 5(c) or
5(d) would be considered deferred compensation under Section 409A of
the Code, amounts that would otherwise be payable under Sections 5(a), 5(c) or
5(d) during the six-month period immediately following the Date of
Termination (other than the amounts set forth in Sections 5(a)(1)(i) and
5(a)(1)(iii)) shall instead be paid, with interest on any delayed payment at
the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code (“Interest”), on the earlier of (i) the
first business day after the date that is six months following the Executive’s “separation
from service” within the meaning of Section 409A of the Code and (ii) the
Executive’s death (the applicable date, the “Delayed
Payment Date”).  Each payment
and benefit to be made or provided to the Executive under this Agreement shall
be considered to be a separate payment and not one of a series of payments for
purposes of Section 409A of the Code. 
A termination of employment shall not be deemed to have occurred for
purposes of any provision of this Agreement providing for the payment of any
amounts or benefits subject to Section 409A of the Code upon or following
a termination of employment unless such termination is also a “separation from
service” within the meaning of Section 409A of the Code.  Notwithstanding any other provision to the contrary in this Section 5,
the Welfare Benefits provided pursuant to Section 5(a)(2) that are
not non-taxable medical benefits, “disability pay” or “death benefit plans”
within the meaning of Treasury Regulation Section 1.409A-1(a)(5), and the
reimbursement or in-kind benefits provided pursuant to Sections 7 and 8, shall
be treated as follows (the “Reimbursement
Rules”):  (i) the amount of such benefits provided
during one taxable year shall not affect the amount of such benefits provided
in any other taxable year, except that to the extent such benefits consist of
the reimbursement of expenses referred to in Section 105(b) of the
Code, a limitation may be imposed on the amount of such reimbursements over
some or all of the Benefit Continuation Period, as described in Treasury
Regulation Section 1.409A-3(i)(1)(iv)(B), (ii) to the extent that any
such benefits consist of reimbursement of eligible expenses, such reimbursement
must be made on or before the last day of the calendar year following the
calendar year in which the expense was incurred, and (iii) no such benefit
may be liquidated or exchanged for another benefit.

 

Section 6. 
Non-exclusivity of Rights. 
Nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any plan, program, policy or practice provided
by the Company or the Affiliated Companies and for which the Executive may
qualify, nor, subject to Section 11(f), shall anything herein limit or
otherwise affect such rights as the Executive may have under any other contract
or agreement with the Company or the Affiliated Companies.  Amounts that are vested benefits or that the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any other contract or agreement with the Company or the
Affiliated Companies at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance
with such plan, policy, practice or program or contract or agreement, except as
explicitly modified by this Agreement. 
Without limiting the generality of the foregoing, the Executive’s
resignation under this Agreement with or without Good Reason, shall in no way
affect the Executive’s ability to terminate employment by reason of the
Executive’s “retirement” under any compensation and benefits plans, programs or
arrangements of the Affiliated Companies, including without limitation any retirement
or pension plans or arrangements or to be eligible to receive benefits under
any compensation or benefit plans, programs or arrangements of the Affiliated
Companies, including without limitation any retirement or pension plan or
arrangement of the Affiliated Companies or substitute plans adopted by the
Company or its successors, and any termination which otherwise qualifies as
Good Reason shall be treated as such even if it is also a “retirement” for
purposes of any such 

 

11

 

plan. 
Notwithstanding the foregoing, if the Executive receives payments and
benefits pursuant to Section 5(a) of this Agreement, the Executive
shall not be entitled to any severance pay or benefits under any severance
plan, program or policy of the Company and the Affiliated Companies, unless
otherwise specifically provided therein in a specific reference to this Agreement.

 

Section 7. 
Full Settlement.  The
Company’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action that
the Company may have against the Executive or others.  In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement,
and such amounts shall not be reduced whether or not the Executive obtains
other employment.  The Company agrees to
pay as incurred (within 10 days following the Company’s receipt of an invoice
from the Executive), at any time from the date of this Agreement through the
Executive’s remaining lifetime or, if longer, through the 20th
anniversary of the Effective Date, to the full extent permitted by law, all
reasonable legal fees and expenses that the Executive may incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by the Executive about the amount of any payment
pursuant to this Agreement), plus, in each case, Interest; provided that
(a) the Executive shall have submitted an invoice for such fees and expenses
at least 10 days before the end of the calendar year next following the
calendar year in which such fees and expenses were incurred and (b) such
reimbursements or in-kind benefits comply with the Reimbursement Rules.

 

Section 8.  Certain Additional Payments by the Company.

 

(a)                                  Anything
in this Agreement or any other agreement by and between the Executive and the
Company to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any Payment would be subject to the Excise
Tax, then the Executive shall be entitled to receive an additional payment (the
“Gross-Up Payment”) in an amount such
that, after payment by the Executive of all taxes (and any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, but excluding any income
taxes and penalties imposed pursuant to Section 409A of the Code, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.  Notwithstanding the
foregoing provisions of this Section 8(a), if it shall be determined that
the Executive is entitled to the Gross-Up Payment, but that the Parachute Value
of all Payments does not exceed 110% of the Safe Harbor Amount, then no
Gross-Up Payment shall be made to the Executive and the amounts payable under
this Agreement shall be reduced so that the Parachute Value of all Payments, in
the aggregate, equals the Safe Harbor Amount. 
The reduction of the amounts payable hereunder, if applicable, shall be
made by first reducing the payments under Section 5(a)(1)(B), and then by
reducing the cash value of the benefits contemplated by Sections 5(a)(2) and
5(a)(3), and in any event shall be made in such a manner as to maximize the
Value of all Payments actually made to the Executive.  For purposes of reducing the Payments to the
Safe Harbor Amount, only amounts payable under this Agreement (and no other
Payments) shall be reduced.  If the
reduction of the amount payable under this Agreement would not result in a
reduction of the Parachute Value of all 

 

12

 

Payments to the Safe Harbor Amount, no amounts payable
under the Agreement shall be reduced pursuant to this Section 8(a).  The Company’s obligation to make Gross-Up
Payments under this Section 8 shall not be conditioned upon the Executive’s
termination of employment.

 

(b)                                 Subject
to the provisions of Section 8(c), all determinations required to be made
under this Section 8, including whether and when a Gross-Up Payment is
required, the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm (or a professional services firm
with experience in making such determinations), as may be designated by the Executive
(the “Accounting Firm”).  The Accounting Firm shall provide detailed
supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment or such earlier time as is requested by the Company.  In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, the Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any determination by the Accounting Firm shall be binding upon the
Company and the Executive.  As a result
of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by the Company
should have been made (the “Underpayment”),
consistent with the calculations required to be made hereunder.  In the event the Company exhausts its
remedies pursuant to Section 8(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

 

(c)                                  The
Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the
Gross-Up Payment.  Such notification
shall be given as soon as practicable, but no later than 10 business days after
the Executive is informed in writing of such claim.  The Executive shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid.  The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
the Executive gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to
contest such claim, the Executive shall:

 

(1)                                  give
the Company any information reasonably requested by the Company relating to
such claim,

 

(2)                                  take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,

 

(3)                                  cooperate
with the Company in good faith in order effectively to contest such claim, and

 

13

 

(4)                                  permit
the Company to participate in any proceedings relating to such claim;

 

provided, however,
that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest,
and shall indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties) imposed as a
result of such representation and payment of costs and expenses.  Without limitation on the foregoing
provisions of this Section 8(c), the Company shall control all proceedings
taken in connection with such contest, and, at its sole discretion, may pursue
or forgo any and all administrative appeals, proceedings, hearings and
conferences with the applicable taxing authority in respect of such claim and
may, at its sole discretion, either pay the tax claimed to the appropriate
taxing authority on behalf of the Executive and direct the Executive to sue for
a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that, if the Company pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided, further, that
any extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which the Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority. 
Reimbursements under this Section 8(c) shall be subject to Section 8(e).

 

(d)                                 If,
after the receipt by the Executive of a Gross-Up Payment or payment by the
Company of an amount on the Executive’s behalf pursuant to Section 8(c),
the Executive becomes entitled to receive any refund with respect to the Excise
Tax to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 8(c),
if applicable) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable
thereto).  If, after payment by the
Company of an amount on the Executive’s behalf pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then the amount of such payment shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid by the Company to the Executive pursuant to this Section 8; provided, however,
that no offset shall apply to any amount subject to Section 409A of the
Code.

 

(e)                                  Any
Gross-Up Payment, as determined pursuant to this Section 8, shall be paid
by the Company within five days of the receipt of the Accounting Firm’s
determination; provided that, the Gross-Up Payment shall in all events be paid
no later than the end of the Executive’s taxable year next following the
Executive’s taxable year in which the Excise Tax (and any income or other
related taxes or interest or penalties thereon) on a Payment are remitted to
the Internal Revenue Service or any other applicable taxing authority or, in the
case of amounts relating to a claim described in Section 8(c) that
does not result in the remittance of any 

 

14

 

federal, state, local and foreign income, excise,
social security and other taxes, the calendar year in which the claim is
finally settled or otherwise resolved. 
The Gross-Up Payment shall be paid to the Executive; provided that, the Company, in its sole discretion, may
withhold and pay over to the Internal Revenue Service or any other applicable
taxing authority, for the benefit of the Executive, all or any portion of any
Gross-Up Payment, and the Executive hereby consents to such withholding.

 

(f)                                    Definitions.  The following terms shall have the following
meanings for purposes of this Section 8.

 

(i)                                     “Excise Tax” shall mean the excise tax imposed
by Section 4999 of the Code, together with any interest or penalties
imposed with respect to such excise tax.

 

(ii)                                  “Parachute Value” of a Payment shall mean the
present value as of the date of the change of control for purposes of Section 280G
of the Code of the portion of such Payment that constitutes a “parachute
payment” under Section 280G(b)(2), as determined by the Accounting Firm
for purposes of determining whether and to what extent the Excise Tax will
apply to such Payment.

 

(iii)                               A
“Payment” shall mean any payment or
distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of
the Code) to or for the benefit of the Executive, whether paid or payable
pursuant to this Agreement or otherwise.

 

(iv)                              The
“Safe Harbor Amount” means 2.99 times the
Executive’s “base amount,” within the meaning of Section 280G(b)(3) of
the Code.

 

(v)                                 “Value” of a Payment shall mean the economic
present value of a Payment as of the date of the change of control for purposes
of Section 280G of the Code, as determined by the Accounting Firm using
the discount rate required by Section 280G(d)(4) of the Code.

 

Section 9.  Confidential Information; Other
Restrictive Covenants.

 

(a)                                  Confidential Information.  The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or the Affiliated Companies, and
their respective businesses, which information, knowledge or data shall have
been obtained by the Executive during the Executive’s employment by the Company
or the Affiliated Companies and which information, knowledge or data shall not
be or become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement).  After termination of the Executive’s
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those persons designated by the Company.  In no event shall an asserted violation of
the provisions of

 

15

 

this Section 9 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this Agreement.

 

(b)                                 Covenants Following Termination of Employment.  For a period of one (1) year following
the termination of the Executive’s employment during the Employment Period, the
Executive will not:

 

(1)                                  enter
into or engage in any business that competes with the Company’s Business within
the Restricted Territory (as defined in Section 9(c));

 

(2)                                  solicit
customers with whom the Executive had any contact or for which the Executive
had any responsibility (either direct or supervisory) at the Date of
Termination or at any time during the one (1) year prior to such Date of
Termination, whether within or outside of the Restricted Territory, or solicit
business, patronage or orders for, or sell, any products and services in
competition with, or for any business that competes with the Company’s Business
within the Restricted Territory;

 

(3)                                  divert,
entice or otherwise take away any customers, business, patronage or orders of
the Company within the Restricted Territory, or attempt to do so;

 

(4)                                  promote
or assist, financially or otherwise, any person, firm, association,
partnership, corporation or other entity engaged in any business that competes
with the Company’s Business within the Restricted Territory; or

 

(5)                                  solicit
or induce or attempt to solicit or induce any employee(s), sales
representative(s), agent(s) or consultant(s) of the Company and/or
its affiliated companies to terminate their employment, representation or other
association with the Company and/or its affiliated companies, provided that the foregoing shall not
apply to general advertising not specifically targeted at employees, sales
representatives, agents or consultants of the Company and/or its affiliated
companies.

 

Notwithstanding
the foregoing, it shall not be a violation of this Section 9(b) for
the Executive to join a division or
business line of a commercial enterprise with multiple divisions or business
lines if such division or business line is not competitive with the Company’s
Business, provided that the
Executive performs services solely for such non-competitive division or business
line, and performs no functions on behalf of (and has no involvement with or
direct or indirect responsibilities with respect to) businesses competitive
with the Company’s Business.  Nothing
in this Section 9(b) shall prohibit the Executive from being a
passive owner of not more than 4.9% of the outstanding equity interest in any
entity which is publicly traded, so long as the Executive has no active
participation in the business of such corporation.

 

(c)                                  Restricted
Territory.  For the purposes of Section 9(b),
the Restricted Territory shall be defined as and limited to the geographic area(s) within
a 100 mile radius of any and all areas in which the Company was located
immediately prior to the Effective Date in, to, or for which Executive worked,
to which Executive was assigned or had any responsibility (either direct or
supervisory) at the Date of Termination and at any time during the one (1) year
prior to the Date of Termination.

 

16

 

(d)                                 Company’s
Business.  For purposes of Section 9(b),
the Company’s Business is defined to be the development and sale of software
products that facilitate electronic payments, as further described in any and
all manufacturing, marketing and sales manuals and materials of the Company in
effect immediately prior to the Effective Date, or of any other products or
services substantially similar to or readily suitable for any such described
products.

 

Section 10.  Successors.

 

(a)                                  This
Agreement is personal to the Executive, and, without the prior written consent
of the Company, shall not be assignable by the Executive other than by will or
the laws of descent and distribution. 
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives.

 

(b)                                 This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.  Except as
provided in Section 10(c), without the prior written consent of the
Executive, this Agreement shall not be assignable by the Company.

 

(c)                                  The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  “Company” means the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid that
assumes and agrees to perform this Agreement by operation of law or otherwise.

 

Section 11.  Miscellaneous.

 

(a)                                  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without reference to principles of conflict of laws.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified
other than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

 

(b)                                 All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

 

If to
the Executive:

 

At the most recent address on file at the Company.

 

if to
the Company:

 

ACI Worldwide, Inc.

6060 Coventry Drive

Elkhorn, NE 68022 

Attention:                       General
Counsel

 

17

 

or to such other address as either party shall have furnished to the
other in writing in accordance herewith. 
Notice and communications shall be effective when actually received by
the addressee.

 

(c)                                  In
the event of a Change in Control, all stock-based awards shall vest in full, in
each case immediately prior to the occurrence of such Change in Control, and
any applicable performance-based vesting goals with respect to such stock-based
awards granted to the Executive shall be deemed satisfied at the target level; provided, however,
that (i) any LTIP Performance Shares awarded under the Company’s 2005
Equity and Performance Incentive Plan and (ii) any stock options which
vest upon the attainment of a certain per-share transaction price in connection
with a Change in Control granted under the Company’s 2005 Equity and
Performance Incentive Plan, shall, in each case, vest pursuant to the terms of
the applicable award agreement, notwithstanding the provision of any award
agreement requiring that market conditions exist for a specified duration of
time.  For purpose of this Section 11(c),
stock-based awards shall include stock options, restricted shares, restricted
units and any other equity-based compensation awards.  In the event that the Change in Control does
not constitute a “change in control event” within the meaning of Section 409A
of the Code, the delivery of shares of common stock or cash (as applicable) in
settlement of any such stock-based awards that constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code
shall be made on upon the first permissible payment event under Section 409A
of the Code on which the shares or cash would otherwise be delivered or
paid.  Notwithstanding the definition of “change
in control” or “change of control” in any agreement, plan or arrangement
governing such stock-based awards, the definition of Change in Control in this
Agreement shall supersede such definitions in all respects with respect to such
stock-based awards.

 

(d)                                 The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

 

(e)                                  The
Company may withhold from any amounts payable under this Agreement such United
States federal, state or local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 

(f)                                    The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Sections 4(c)(1) through
4(c)(5), shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.

 

(g)                                 The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the employment
of the Executive by the Company is “at will” and, subject to Sections 1 and 5,
prior to the Effective Date, the Executive’s employment may be terminated by
either the Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this
Agreement.  Except as specifically
provided herein, this Agreement shall supersede any other agreement between the
parties with respect to the subject matter hereof; including, without
limitation, any agreement set forth on Appendix A attached hereto and
incorporated herein by this reference.

 

18

 

(h)                                 No
later than 10 days prior to the Effective Date, the Company shall deliver cash,
in an amount equal to the sum of (A) the aggregate of the cash amounts
that could be payable under Section 5(a) (plus any estimated
Interest), (B) the estimated Gross-Up Payment, if any, as determined by
the Accounting Firm and (C) the aggregate of the cash value of any amounts
deferred by the Executive under any “nonqualified deferred compensation plan”
within the meaning of Section 409A of the Code, to a “rabbi trust” (the “Trust”)
to be established by the Company prior to such delivery of cash with a
nationally recognized financial institution as trustee (the “Trustee”) to be
held by the Trustee pursuant to the terms of the trust agreement entered into
between the Company and the Trustee prior to the Effective Date; provided, however,
that the Trust shall not be funded if the funding thereof would result in taxable
income to the Executive by reason of Section 409A(b) of the
Code.  The Company shall be responsible for
any fees and expenses of the Trustee.

 

(i)                                     To
the extent applicable, it is intended that this Agreement comply with the
provisions of Section 409A of the Code. 
This Agreement shall be administered in a manner consistent with this
intent.

 

(j)                                     Executive
acknowledges and agrees that no change in control, as defined under this
Agreement or any other prior agreement, has occurred prior to the Contract
Date.

 

Next page is the Signature Page

 

19

 

IN
WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from the Board, the Company has caused these presents
to be executed in its name on its behalf, all effective as of December 31,
2008.

 

 

	
  ACI
  Worldwide, Inc.

  	
   

  	
  Executive

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Printed Name:

  	
   

  
						

 

20

 

APPENDIX
A

 

Prior
Agreements

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