Document:

Exhibit 10.22

  

    

 EXECUTION
  

 Exhibit
  10.22  

 THIS NOTE HAS NOT BEEN
  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE MAY NOT BE
  SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
  REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL
  SATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. 

 SAGENT
  TECHNOLOGY, INC. 

  SECURED PROMISSORY NOTE

	US$2,000,000
    	May
        16, 2003

	 	Mountain
        View, California 

            FOR
  VALUE RECEIVED Sagent Technology, Inc., a Delaware corporation (“Company”),
  promises to pay to Group 1 Software, Inc., a Delaware corporation (“Lender”),
  or its registered assigns, in lawful money of the United States of America the
  principal sum TWO MILLION DOLLARS ($2,000,000), or such lesser amount as shall
  equal the outstanding principal amount hereof, together with interest from the
  date of this Note on the unpaid principal balance at a rate equal to 12 percent
  (12.00%) per annum, computed on the basis of the actual number of days elapsed
  and a year of 365 days. All unpaid principal, together with any then unpaid
  and accrued interest and other amounts payable hereunder, shall be due and payable
  on the earlier of (i) July 31, 2003 (the “Maturity Date”),
  or (ii) when, upon or after the occurrence of a Change of Control (as defined
  below) or an Event of Default (as defined below), such amounts are declared
  due and payable by Lender or made automatically due and payable in accordance
  with the terms hereof. This Note is one of the Notes issued pursuant to that
  certain Note Purchase Agreement dated April 15, 2003 (as amended, modified or
  supplemented, the “Note Purchase Agreement”) by and between Company
  and Lender. Capitalized terms used but not otherwise defined herein shall have
  the meaning ascribed thereto in the Note Purchase Agreement. 

             THE
  OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT DATED APRIL
  15, 2003 (THE “SECURITY AGREEMENT”) AND A PLEDGE AGREEMENT
  DATED APRIL 15, 2003 (THE “PLEDGE AGREEMENT”), EACH OF WHICH
  IS EXECUTED BY COMPANY FOR THE BENEFIT OF LENDER. ADDITIONAL RIGHTS OF LENDER
  ARE SET FORTH IN THE SECURITY AGREEMENT.

             The
  following is a statement of the rights of Lender and the conditions to which
  this Note is subject, and to which Lender, by the acceptance of this Note, agrees:
  

             1.
  Definitions. As used in this Note, the following capitalized terms
  have the following meanings: 

            (a)
  “Act” shall mean the Securities Act of 1933, as amended.

            (b)
  “Affiliate” shall have the meaning set forth in Rule 12b-2
  promulgated under the Securities Exchange Act of 1934, as amended. 

  

    

            (c)
  “Collateral” has the meaning given to it in the Security
  Agreement.

            (d)
  “Change of Control” shall mean (i) any consolidation or merger
  involving the Company pursuant to which the Company’s stockholders immediately
  prior to such consolidation or merger own less than fifty percent (50%) of the
  voting securities of the surviving entity or (ii) the sale of all or substantially
  all of the assets of Company. 

            (e)
  “Company” includes the corporation initially executing this
  Note and any Person which shall succeed to or assume the obligations of Company
  under this Note. 

            (f)
  “Event of Default” has the meaning given to it in Section
  7 hereof.

             (g)
  “GAAP” shall mean generally accepted accounting principles
  as applied in the United States. 

             (h)
  “Lender” shall mean the Person specified in the introductory
  paragraph of this Note or any Person who shall at the time be the registered
  Lender of this Note. 

             (i)
  “Lender Expenses” shall mean all reasonable cost and expenses
  (including reasonable attorney fees and expenses) incurred in connection with
  the preparation, negotiation and enforcement of the Transaction Documents, and
  Lender’s reasonable attorneys fees and expenses incurred in amending, enforcing
  or defending the Transaction Documents during and after an Event of Default
  (as set forth in Section 7 hereof) whether or not a suit is brought.
  

            (j)
  “Lien” has the meaning given to it in the Note Purchase Agreement.

            (k)
  “Note Purchase Agreement” has the meaning given to it in
  the introductory paragraph hereof. 

             (l)
  “Obligations” shall mean and include all loans, advances,
  debts, liabilities and obligations, howsoever arising, owed by Company to Lender
  of every kind and description (whether or not evidenced by any note or instrument
  and whether or not for the payment of money), now existing or hereafter arising
  under or pursuant to the terms of this Note or any of the other Transaction
  Documents, including, all interest, fees, charges, expenses, attorneys’
  fees and costs and accountants’ fees and costs chargeable to and payable
  by Company hereunder and thereunder, in each case, whether direct or indirect,
  absolute or contingent, due or to become due, and whether or not arising after
  the commencement of a proceeding under Title 11 of the United States Code (11
  U.S.C. Section 101 et seq.), as amended from time to time (including
  post-petition interest) and whether or not allowed or allowable as a claim in
  any such proceeding. 

             (m)
  “Permitted Liens” has the meaning given to it in the Note
  Purchase Agreement. 

 -2- 

  

    

             (n)
  “Person” shall mean and include an individual, a partnership,
  a corporation (including a business trust), a joint stock company, a limited
  liability company, an unincorporated association, a joint venture or other entity
  or a governmental authority. 

             (o)
  “Pledge Agreement” has the meaning given to it in the second
  paragraph hereof. 

             (p)
  “Security Agreement” has the meaning given to it in the second
  paragraph hereof. 

             (q)
  “Transaction Documents” shall mean this Note, each of the
  other Notes issued under the Note Purchase Agreement, the Note Purchase Agreement,
  the Security Agreement and the Pledge Agreement together with any other document
  or agreement executed and delivered in connection herewith or therewith. 

             (r)
  “Material Adverse Effect” has the meaning given to it in
  the Note Purchase Agreement. 

            2.
  Interest.

            (a)
  Interest Rate. Accrued interest on this Note shall be payable on the
  last business day of each calendar quarter until the outstanding principal amount
  hereof shall be paid in full at maturity, with the first such payment due on
  June 30, 2003. 

             (b)
  Default Rate. All unpaid principal, together with any unpaid and accrued
  interest and other amounts payable hereunder shall bear interest, from and after
  the occurrence and during the continuance of an Event of Default, at a rate
  equal to two and one-half percentage points (2 1/2%) above the interest rate
  applicable immediately prior to the occurrence of such Event of Default or the
  maximum rate permissible by law, whichever is less. 

             3.
  Prepayment. The Company may at anytime, upon five (5) days prior written
  notice to Lender, prepay this Note in whole; provided, however, that: (i) the
  outstanding principal of this Note for purposes of such prepayment shall be
  determined by multiplying the actual outstanding principal as of the date of
  the written notice by 120% (the “Deemed Outstanding Principal”)
  and (ii) any such prepayment will be applied first to the payment of expenses
  due under this Note and the other Transaction Documents, second to interest
  accrued on this Note and third, if the amount of prepayment exceeds the amount
  of all such expenses and accrued interest, to the payment of the Deemed Outstanding
  Principal. 

             4.
  Change of Control. Upon a Change of Control, all unpaid principal,
  together with any then unpaid and accrued interest and other amounts payable
  hereunder shall become immediately due and payable. 

 -3- 

  

    

             5.
  Affirmative Covenants. Until such time as all unpaid principal, together
  with any unpaid and accrued interest and other amounts payable hereunder have
  been indefeasibly paid in full, Company shall: 

             (a)
  Conduct of Business and Maintenance of Existence and Assets. (i) Conduct
  continuously and operate actively its business according to good business practices
  and maintain all of its properties useful or necessary in its business in good
  working order and condition (reasonable wear and tear excepted and except as
  may be disposed of in accordance with the terms of this Note), including, without
  limitation, all intellectual property of Company and take all actions necessary
  to enforce and protect the validity of any such intellectual property; (ii)
  keep in full force and effect its existence and comply in all material respects
  with the laws, rules and regulations governing the conduct of its business where
  the failure to do so could reasonably be expected to have a Material Adverse
  Effect; and (iii) make all such reports and pay all such franchise and other
  taxes and license fees and do all such other acts and things as may be lawfully
  required to maintain its rights, licenses, leases, powers and franchises under
  the laws of the United States or any political subdivision thereof where the
  failure to do so could reasonably be expected to have a Material Adverse Effect
  on Company; 

             (b)
  Violations. Promptly notify Lender in writing of any violation by the
  Company of any law, statute, rule, regulation, or ordinance of any governmental
  body, or of any agency thereof, applicable to Company which could reasonably
  be expected to have a Material Adverse Effect; 

             (c)
  Taxes. Make, and cause each Subsidiary to make, due and timely payment
  or deposit of all material federal, state, and local taxes, assessments, or
  contributions required of it by law, and will execute and deliver to the Lender,
  promptly following the Lender’s request therefore, appropriate certificates
  attesting to the payment thereof; and 

             (d)
  Operational Agreements. Upon the request of Lender, the Company and
  Lender shall enter into a mutually acceptable OEM agreement and/or distributor
  agreement with most favored nation status. Company and Lender also agree to
  negotiate in good faith an agreement whereby Company will provide Lender with
  the right of refusal with respect to any of its future outsourcing of research
  and development operations and any related training. 

             6.
  Negative Covenants. Until such time as all unpaid principal, together
  with any unpaid and accrued interest and other amounts payable hereunder have
  been paid in full, Company shall not: 

             (a)
  Indebtedness. Incur any Indebtedness, except (i) to Lender, (ii) in
  connection with capital lease arrangements or purchase money indebtedness incurred
  in the ordinary course of business, (iii) other Indebtedness incurred in the
  ordinary course of business in an aggregate outstanding principal amount not
  in excess of US$500,000 at any time or (iv) Indebtedness listed on the Company
  Disclosure Letter; 

 -4- 

  

    

             (b)
  Loans. Make advances, loans or extensions of credit to any Person,
  including without limitation, any Subsidiary or Affiliate except for extensions
  of credit in the nature of accounts receivable, prepaid expenses or notes receivable
  arising from the sale, lease or license of goods or services in the ordinary
  course of business. 

             (c)
  Guarantees. Become liable upon the obligations or liabilities of any
  Person by assumption, endorsement or guaranty thereof or otherwise, except the
  endorsement of checks in the ordinary course of business or guaranties of Indebtedness
  of a Subsidiary permitted by Section 6(a)(ii) or 6(a)(iii);
  

             (d)
  Dividends. Pay any dividends or make any other distribution or payment
  on account of or in redemption, retirement or purchase of any capital stock,
  or permit any of its Subsidiaries to do so, except that (i) Company may repurchase
  the stock of former employees pursuant to stock repurchase agreements as long
  as an Event of Default does not exist prior to such repurchase or would not
  exist after giving effect to such repurchase or (ii) any Subsidiary may make
  dividends or distributions to Company; 

             (e)
  Nature of Business. Substantially change the nature of the business
  in which it is presently engaged, nor purchase or invest, directly or indirectly,
  in any assets or property other than in the ordinary course of business for
  assets or property which are useful in, necessary for and are to be used in
  its business as presently conducted; 

             (f)
  Transactions with Affiliates. Directly or indirectly, purchase, acquire
  or lease any property from, or sell, transfer or lease any property to, or otherwise
  enter into any transaction or deal with, any Affiliate other than in the ordinary
  course of business, on an arm’slength basis on terms and conditions no
  less favorable than terms and conditions which would have been obtainable from
  a Person other than an Affiliate; 

             (g)
  Acquisitions. Acquire all or a substantial portion of the assets or
  voting securities of any Person (or of any Subsidiary, division or operating
  unit of any Person); 

             (h)
  Partnerships. Enter into any partnership, joint venture or similar
  arrangement whereby Company is obligated to make any payments or other contributions
  in connection with such arrangements in excess of $75,000, individually or in
  the aggregate; 

             (i)
  Retention Payments. Without prior approval by Company’s board
  of directors or compensation committee thereof, make any retention or bonus
  payment to any individual in an amount in excess of $100,000 individually or
  $250,000 in the aggregate; or 

             (j)
  Transfers to Subsidiaries. Transfer to Foreign Subsidiaries cash or
  other assets in an aggregate Net Amount outstanding on any date in excess of
  20% of the Company’s market capitalization as of the close of the preceding
  business day; provided, that: 

             (i)
  such transfers shall be made in the ordinary course of business, 

 -5- 

  

    

  

	      	       (ii)
        a reduction in Company’s market capitalization after making any transfers
        that were permitted by this Section 6(j) shall not render such
        transfers in violation of this
        Section 6(j);
        and

	 	 
	      	       (iii)
      in the event Company requests a waiver of this covenant, Lender shall not
      unreasonably withhold its consent thereto. As used in this Section 6(j)

	 	 
	                  	      (1)
      “Foreign Subsidiary” shall mean any Subsidiary of Company
      that was not incorporated or organized in the United States, and 

	 	 
	                  	      (2)
      “Net Amounts” shall mean the aggregate outstanding amount
      of all transfers of cash or other assets to Foreign Subsidiaries, giving
      effect to (x) any previous or concurrent transfers of cash or other assets
      to Company from Foreign Subsidiaries and (y) any amounts previously or concurrently
      collected by Company in respect of accounts receivable that were invoiced
      directly by Company as a result of sales by Foreign Subsidiaries. 

            7.
  Events of Default. The occurrence of any of the following shall constitute
  an “Event of Default” under this Note: 

             (a)
  Failure to Pay. Company shall fail to pay (i) when due any principal
  or interest payment on the due date hereunder or (ii) any other payment required
  under the terms of this Note or any other Transaction Documents on the date
  due and such payment shall not have been made within three (3) business days
  of Company’s receipt of Lender’s written notice to Company of such
  failure to pay; 

             (b)
  Voluntary Bankruptcy or Insolvency Proceedings. Company shall (i) apply
  for or consent to the appointment of a receiver, trustee, liquidator or custodian
  of itself or of all or a substantial part of its property, (ii) be unable, or
  admit in writing its inability, to pay its debts generally as they mature, (iii)
  make a general assignment for the benefit of its or any of its creditors, (iv)
  be dissolved or liquidated, (v) commence a voluntary case or other proceeding
  seeking liquidation, reorganization or other relief with respect to itself or
  its debts under any bankruptcy, insolvency or other similar law now or hereafter
  in effect or consent to any such relief or to the appointment of or taking possession
  of its property by any official in an involuntary case or other proceeding commenced
  against it, or (vi) take any action for the purpose of effecting any of the
  foregoing; 

             (c)
  Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
  appointment of a receiver, trustee, liquidator or custodian of Company or of
  all or a substantial part of the property thereof, or an involuntary case or
  other proceedings seeking liquidation, reorganization or other relief with respect
  to Company or the debts thereof under any bankruptcy, insolvency or other similar
  law now or hereafter in effect shall be commenced and an order for relief entered
  or such proceeding shall not be dismissed or discharged within thirty (30) days
  of commencement;

 -6- 

  

    

            (d)
  Insolvency. Company shall admit in writing or in a judicial proceeding
  it inability to pay its debts as they come due or cease operations of its present
  business; 

             (e)
  Judgments. Any judgment or judgments are rendered or judgment liens
  filed against Company for an aggregate amount in excess of US$500,000, not otherwise
  covered by insurance, which within forty-five (45) days of such rendering or
  filing is neither fully satisfied, stayed nor discharged of record; except that
  this Section 7(e) shall not apply to any matters related to or arising
  out of matters listed under Section 3(i) of the Company Disclosure
  Letter; 

             (f)
  Representations and Warranties. Any representation or warranty made
  by Company in this Note, any Transaction Document or in any certificate, furnished
  at any time in connection herewith or therewith shall not have been true and
  correct in all material respects when made; 

             (g)
  Covenants. Company shall be in breach of any covenant made hereunder
  or in any Transaction Document and such breach shall remain uncured for thirty
  (30) consecutive days. 

             (h)
  Liens. Any Lien in favor of Lender created under the Security Agreement
  or the Pledge Agreement with respect to any material portion of the Collateral
  for any reason ceases to be or is not a valid and perfected Lien; 

             (i)
  Seizure. Any material portion of the Collateral shall be seized or
  taken by a governmental body, or Company or the title and rights of Company
  or any original owner which is the owner of any material portion of the Collateral
  shall have become the subject matter of claim, litigation, suit or other proceeding
  which could, in the opinion of Lender, upon final determination, result in impairment
  or loss of the security provided by this Note or the Transaction Documents,
  and such action shall not have been stayed or dismissed within forty-five (45)
  days; 

             (j)
  Key Employee. Andre Boisvert shall cease to be employed by the Company
  or Michael Shannahan shall cease to be retained as a contractor by the Company
  for any reason whatsoever and a suitable replacement to the Lender’s reasonable
  satisfaction shall not have assumed their respective positions within a period
  of forty-five (45) days after such position has first become vacated; provided,
  however, that in the event that Michael Shannahan ceases to be retained
  as a contractor by the Company, Lender hereby agrees that the continued employment
  of Patty Szoka with the Company as the chief accounting officer shall satisfy
  the foregoing replacement requirement with respect to the position held by Michael
  Shannahan;

 -7- 

  

    

             (k)
  Value of Collateral. Company shall have acknowledged in writing with
  the Securities and Exchange Commission that the value of a material portion
  of its Intellectual Property has suffered a material diminution in value. In
  no event shall any reduction solely in Company’s goodwill be deemed a default
  under this Section 7(k); or 

             (l)
  Defaults. A default shall have occurred under any other Indebtedness
  in an outstanding principal amount of $200,000 or more, which default permits
  the holder thereof to accelerate the maturity of such Indebtedness. 

             8.
  Rights of Lender upon Default. Upon the occurrence or existence of
  any Event of Default (other than an Event of Default, referred to in Sections
  7(b) and 7(c)) and at any time thereafter during the continuance
  of such Event of Default, Lender may, by written notice to Company, declare
  all outstanding Obligations payable by Company hereunder to be immediately due
  and payable without presentment, demand, protest or any other notice of any
  kind, all of which are hereby expressly waived. Upon the occurrence or existence
  of any Event of Default described in Sections 7(b) and 7(c),
  immediately and without notice, all outstanding Obligations payable by Company
  hereunder shall automatically become immediately due and payable, without presentment,
  demand, protest or any other notice of any kind, all of which are hereby expressly
  waived. In addition to the foregoing remedies, upon the occurrence or existence
  of any Event of Default, Lender may exercise any other right power or remedy
  or otherwise permitted to it by law, either by suit in equity or by action at
  law, or both. 

             9.
  Expenses. Company shall reimburse and indemnify Lender for Lender Expenses
  which shall include, without limitation, reasonable attorneys’ fees (including
  the allocated costs of in-house counsel) and disbursements incurred by Lender
  (a) in all efforts made to enforce payment of any Obligation or effect collection
  of any Collateral or (b) in instituting, maintaining, preserving, enforcing
  and foreclosing on Lender’s security interest in or Lien on any of the
  Collateral or maintaining, preserving or enforcing any of Lender’s rights
  hereunder, in any case, whether through judicial proceedings or otherwise. 

             10.
  Indemnity. Company shall indemnify Lender and its officers, directors,
  Affiliates, attorneys, employees and agents (each, a “Indemnified Party”)
  from and against any and all liabilities, obligations, losses, damages, penalties,
  actions, judgments, suits, costs, expenses and disbursements of any kind or
  nature whatsoever (including, without limitation, fees and disbursements of
  counsel) which may be imposed on, incurred by, or asserted against Indemnified
  Party in any claim, litigation, proceeding or investigation instituted or conducted
  by any governmental agency or instrumentality or any other Person (other than
  another Indemnified Party or Company) relating to or arising out of this Note
  or any other Transaction Document, whether or not Indemnified Party is a party
  thereto, except to the extent that any of the foregoing arises out of the negligence,
  gross negligence or misconduct of the Indemnified Party. 

             11.
  Successors and Assigns. Subject to the restrictions on transfer described
  in Sections 14 and 15 below, the rights and obligations of
  Company and Lender of this Note shall be binding upon
  and benefit the successors, assigns, heirs, administrators and transferees of
  the parties.

 -8- 

  

    

             12.
  Entire Agreement. This Note together with the other Transaction Documents
  constitute and contain the entire agreement among Company and Lender and supersede
  any and all prior agreements, negotiations, correspondence, understandings and
  communications among the parties, whether written or oral, respecting the subject
  matter hereof. 

             13.
  Waiver and Amendment. Any provision of this Note may be amended, waived
  or modified upon the written consent of Company and Lender. 

             14.
  Transfer of this Note. With respect to any offer, sale or other disposition
  of this Note, Lender will give written notice to Company prior thereto, describing
  briefly the manner thereof, together with a written opinion of Lender’s
  counsel, or other evidence if reasonably satisfactory to Company, to the effect
  that such offer, sale or other distribution may be effected without registration
  or qualification (under any federal or state law then in effect). Upon receiving
  such written notice and reasonably satisfactory opinion, if so requested, or
  other evidence, Company, as promptly as practicable, shall notify Lender that
  Lender may sell or otherwise dispose of this Note, all in accordance with the
  terms of the notice delivered to Company. If a determination has been made pursuant
  to this Section 14 that the opinion of counsel for Lender, or other
  evidence, is not reasonably satisfactory to Company, Company shall so notify
  Lender promptly after such determination has been made. Each Note thus transferred
  and each certificate representing the securities thus transferred shall bear
  a legend as to the applicable restrictions on transferability in order to ensure
  compliance with the Securities Act, unless in the opinion of counsel for Company
  such legend is not required in order to ensure compliance with the Securities
  Act. Company may issue stop transfer instructions to its transfer agent in connection
  with such restrictions. Subject to the foregoing, transfers of this Note shall
  be registered upon registration books maintained for such purpose by or on behalf
  of Company. Prior to presentation of this Note for registration of transfer,
  Company shall treat the registered Lender hereof as the owner and Lender of
  this Note for the purpose of receiving all payments of principal and interest
  hereon and for all other purposes whatsoever, whether or not this Note shall
  be overdue and Company shall not be affected by notice to the contrary. 

             15.
  Assignment by Company. Neither this Note nor any of the rights, interests
  or obligations hereunder may be assigned, by operation of law or otherwise,
  in whole or in part, by Company without the prior written consent of Lender.
  

             16.
  Notices. All notices, requests, demands, consents, instructions or
  other communications required or permitted hereunder shall be in writing and
  faxed or delivered by courier to each party at the respective addresses of the
  parties as set forth in the Note Purchase Agreement, or at such other address
  or facsimile number as Company shall have furnished to Lender in writing. All
  such notices and communications shall be effective (a) when sent by Federal
  Express or other overnight service of recognized standing, on the second business
  day following the deposit with such service; and (b) when faxed, upon confirmation
  of receipt. 

 -9- 

  

    

      17.
  Usury. In the event any interest is paid on this Note that is deemed
  to be in excess of the then legal maximum rate, then that portion of the interest
  payment representing an amount in excess of the then legal maximum rate shall
  be deemed a payment of principal and applied against the principal of this Note.
  

      18.
  Waivers. Company hereby waives notice of default, presentment or demand
  for payment, protest or notice of nonpayment or dishonor and all other notices
  or demands relative to this instrument. 

      19.
  Governing Law. This Note and all actions arising out of or in connection
  with this Note shall be governed by and construed in accordance with the laws
  of the State of California, without regard to the conflicts of law provisions
  of the State of California, or of any other jurisdiction. EACH OF LENDER AND
  COMPANY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY
  WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION,
  PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE. 

 [Remainder
  of page intentionally left blank.] 

 -10- 

  

    

             IN
  WITNESS WHEREOF, Company has caused this Note to be issued as of the date first
  written above.

	 	SAGENT TECHNOLOGY, INC., a Delaware
      corporation 
	 	 
	 	By:  	/s/
	    	 	 

	 	 	Name: 
	 	 	Title:

Acknowledged and Accepted:
  

 GROUP 1 SOFTWARE, INC.
  a Delaware corporation 

	By:  	/s/
	  	

	 	Name:
      
	 	Title:

[Signature
  page to Secured Promissory Note]Exhibit 10.23

 
 Exhibit
  10.23  

 CHANGE
  IN CONTROL SEVERANCE AGREEMENT 

             THIS
  AGREEMENT is entered into as of the _________ day of ______, 2003 by and between
  Group 1 Software, Inc., a Delaware corporation (the “Company ”), and
  _______________ (“Executive”). 

 W I T N
  E S S E T H 

             WHEREAS,
  the Company considers the establishment and maintenance of a sound and vital
  management to be essential to protecting and enhancing the best interests of
  the Company and its stockholders; and 

             WHEREAS,
  the Board (as defined in Section 1) has determined that it is in the best interests
  of the Company and its stockholders to secure Executive’s continued services
  and to ensure Executive’s continued and undivided dedication to his duties
  in the event of any threat or occurrence of a Change in Control (as defined
  in Section 1) of the Company; and 

             WHEREAS,
  the Board has authorized the Company to enter into this Agreement. 

             NOW,
  THEREFORE, for and in consideration of the premises and the mutual covenants
  and agreements herein contained, the Company and Executive hereby agree as follows:
  

             1.
  Definitions. As used in this Agreement, the following terms shall have
  the respective meanings set forth below: 

                  (a)
  “Board” means
  the Board of Directors of the Company.

                  (b)
  “Bonus Amount” means the Executive’s target bonus for the fiscal
  year of the Company which includes the Executive’s Date of Termination

                   (c)
  “Cause” means (i) the willful and continued failure of Executive to
  perform substantially his duties with the Company (other than any such failure
  resulting from Executive’s incapacity due to physical or mental illness
  or any such failure subsequent to Executive being delivered a Notice of Termination
  without Cause by the Company or delivering a Notice of Termination for Good
  Reason to the Company) after a written demand for substantial performance is
  delivered to Executive by the Board which specifically identifies the manner
  in which the Board believes that Executive has not substantially performed Executive’s
  duties and Executive has not cured to the satisfaction of the Board any such
  failure that is capable of being cured in all material respects within ten (10)
  days of receiving such written demand, or (ii) the willful engaging by Executive
  in illegal conduct or gross misconduct which is demonstrably and materially
  injurious to the Company or its affiliates. For purpose of the preceding sentence,
  no act or failure to act by Executive shall be considered “willful”
  unless done or omitted to be done by Executive in bad faith and without reasonable
  belief that Executive’s action or omission was in the best interests of
  the Company. Any act, or failure to act, based upon authority given pursuant to a resolution
  duly adopted by the Board, based upon the advice of counsel for the Company
  or upon the instructions of the Company’s chief executive officer or another
  senior officer of the Company shall be conclusively presumed to be done, or
  omitted to be done, by Executive in good faith and in the best interests of
  the Company. The Company must notify Executive of any event constituting Cause
  within ninety (90) days following the Company’s knowledge of its existence
  or such event shall not constitute Cause under this Agreement. 

 

                   (d)
  “Change in Control” means the occurrence of any one of the following
  events: 

	                        (i)      	individuals
      who, on the date of this Agreement, constitute the Board (the “Incumbent
      Directors”) cease for any reason to constitute at least a majority
      of the Board, provided that any person becoming a director subsequent to
      the date of this Agreement, whose election or nomination for election was
      approved by a vote of at least two-thirds of the Incumbent Directors then
      on the Board (either by a specific vote or by approval of the proxy statement
      of the Company in which such person is named as a nominee for director,
      without written objection to such nomination) shall be an Incumbent Director;
      provided, however, that no individual initially elected or nominated
      as a director of the Company as a result of an actual or threatened election
      contest with respect to directors or as a result of any other actual or
      threatened solicitation of proxies (or consents) by or on behalf of any
      person other than the Board shall be deemed to be an Incumbent Director;
      
	 	 
	                        (ii)

        	any “Person”
      (as such term is defined in Section 3(a)(9) of the Securities Exchange Act
      of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3)
      and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner”
      (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
      of securities of the Company representing 25% or more of the combined voting
      power of the Company’s then outstanding securities eligible to vote
      for the election of the Board (the “Company Voting Securities”);
      provided, however, that the event described in this paragraph (ii)
      shall not be deemed to be a Change in Control by virtue of any of the following
      acquisitions: (A) by the Company or any Subsidiary, (B) by any employee
      benefit plan (or related trust) sponsored or maintained by the Company or
      any Subsidiary, (C) by any underwriter temporarily holding securities pursuant
      to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction
      (as defined in paragraph (iii)), or (E) pursuant to any acquisition by Executive
      or any group of persons including
      Executive (or any entity controlled by Executive or any group of persons
      including Executive);

 - 2 -

  

  

  

	                        (iii)      

        	the consummation
      of a merger, consolidation, statutory share exchange or similar form of
      corporate transaction involving the Company or any of its Subsidiaries that
      requires the approval of the Company’s stockholders, whether for such
      transaction or the issuance of securities in the transaction (a “Business
      Combination”), unless immediately following such Business Combination:
      (A) more than 50% of the total voting power of (x) the corporation resulting
      from such Business Combination (the “Surviving Corporation”),
      or (y) if applicable, the ultimate parent corporation that directly or indirectly
      has beneficial ownership of 100% of the voting securities eligible to elect
      directors of the Surviving Corporation (the “Parent Corporation”),
      is represented by Company Voting Securities that were outstanding immediately
      prior to such Business Combination (or, if applicable, is represented by
      shares into which such Company Voting Securities were converted pursuant
      to such Business Combination), and such voting power among the holders thereof
      is in substantially the same proportion as the voting power of such Company
      Voting Securities among the holders thereof immediately prior to the Business
      Combination, (B) no person (other than any employee benefit plan (or related
      trust) sponsored or maintained by the Surviving Corporation or the Parent
      Corporation), is or becomes the beneficial owner, directly or indirectly,
      of 25% or more of the total voting power of the outstanding voting securities
      eligible to elect directors of the Parent Corporation (or, if there is no
      Parent Corporation, the Surviving Corporation) and (C) at least a majority
      of the members of the board of directors of the Parent Corporation (or,
      if there is no Parent Corporation, the Surviving Corporation) following
      the consummation of the Business Combination were Incumbent Directors at
      the time of the Board’s approval of the execution of the initial agreement
      providing for such Business Combination (any Business Combination which
      satisfies all of the criteria specified in (A), (B) and (C) above shall
      be deemed to be a “Non-Qualifying Transaction); or
	 	 
	                        (iv)	the stockholders
      of the Company approve a plan of complete liquidation or dissolution of
      the Company or a sale of all or substantially all of the Company’s
      assets.

             Notwithstanding
  the foregoing, a Change in Control of the Company shall not be deemed to occur
  solely because any person acquires beneficial ownership of more than 25% of the Company Voting Securities
  as a result of the acquisition of Company Voting Securities by the Company which
  reduces the number of Company Voting Securities outstanding; provided, that
  if after such acquisition by the Company such person becomes the beneficial
  owner of additional Company Voting Securities that increases the percentage
  of outstanding Company Voting Securities beneficially owned by such person,
  a Change in Control of the Company shall then occur.

 - 3 - 

 
                   (e)
  “Date of Termination” means (1) the effective date on which Executive’s
  employment by the Company terminates as specified in a prior written notice
  by the Company or Executive, as the case may be, to the other, delivered pursuant
  to Section 12 or (2) if Executive’s employment with the Company terminates
  by reason of death, the date of death of Executive. 

                   (f)
  “Disability” means termination of Executive’s employment by the
  Company due to Executive’s absence from Executive’s duties with the
  Company on a full-time basis for at least one hundred eighty (180) consecutive
  days as a result of Executive’s incapacity due to physical or mental illness;
  provided, that, the Company may not terminate the Executive’s employment
  as a result of Disability unless it has first given the Executive notice of
  such termination and, within thirty (30) days after such notice is given, the
  Executive has not returned to the full-time performance of the Executive’s
  duties. 

                   (g)
  “Good Reason” means, without Executive’s express written consent,
  the occurrence of any of the following events after a Change in Control: 

	                        (i)      	(A) any
      change in the duties or responsibilities (including reporting responsibilities)
      of Executive that is inconsistent in any material and adverse respect with
      Executive’s position(s), duties, responsibilities or status with the
      Company immediately prior to such Change in Control (including any material
      and adverse diminution of such duties or responsibilities) or (B) a material
      and adverse change in Executive’s titles or offices, including membership
      on the Board, with the Company as in effect immediately prior to such Change
      in Control;
	 	 
	                        (ii)

        	a reduction
      by the Company in Executive’s rate of annual base salary or annual
      target bonus opportunity (including any material and adverse change in the
      formula for such annual bonus target) as in effect immediately prior to
      such Change in Control or as the same may be increased from time to time
      thereafter;
	 	 
	                        (iii)

        	any requirement
      of the Company that Executive (A) be based anywhere more than thirty-five
      (35) miles from the office where Executive is located at the time of the
      Change in Control, if such relocation increases Executive’s commute
      by more than twenty (20) miles, or (B) travel on Company business to an
      extent substantially greater than the travel obligations
      of Executive immediately prior to such Change in Control;

 - 4 -

  

  

  

	                        (iv)      

        	the failure
      of the Company to (A) continue in effect any employee benefit plan, compensation
      plan, welfare benefit plan or material fringe benefit plan in which Executive
      is participating immediately prior to such Change in Control or the taking
      of any action by the Company which would adversely affect Executive’s
      participation in or reduce Executive’s benefits under any such plan,
      unless Executive is permitted to participate in other plans providing Executive
      with substantially equivalent benefits in the aggregate (at substantially
      equivalent cost with respect to welfare benefit plans), or (B) provide Executive
      with paid vacation in accordance with the most favorable vacation policies
      of the Company and its affiliated companies as in effect for Executive immediately
      prior to such Change in Control, including the crediting of all service
      for which Executive had been credited under such vacation policies prior
      to the Change in Control;
	 	 
	                        (v)	any refusal
      by the Company to continue to permit Executive to engage in activities not
      directly related to the business of the Company which Executive was permitted
      to engage in prior to the Change in Control; 
	 	 
	                        (vi)	any purported
      termination of Executive’s employment which is not effectuated pursuant
      to Section 12(b) (and which will not constitute a termination hereunder);
      or 
	 	 
	                        (vii)	the
        failure of the Company to obtain the agreement from any successor (and
        Parent Corporation) as contemplated in Section 11(b); or

	 	 
	                        (viii)
      	any material
      breach of the terms of this Agreement by the Company. 

            An
  isolated, insubstantial and inadvertent action taken in good faith and which
  is remedied by the Company within ten (10) days after receipt of notice thereof
  given by Executive shall not constitute Good Reason. Executive’s right
  to terminate employment for Good Reason shall not be affected by Executive’s
  incapacity due to mental or physical illness and Executive’s continued
  employment shall not constitute consent to, or a waiver of rights with respect
  to, any event or condition constituting Good Reason; provided, however,
  that Executive must provide notice of termination of employment within ninety
  (90) days following Executive’s knowledge of an event constituting Good
  Reason or such event shall not constitute Good Reason under this Agreement.
  

 - 5 - 

 
             For
  purposes of any determination regarding the existence of Good Reason, any claim
  by the Executive that Good Reason exists shall be presumed to be correct unless
  the Company establishes to the Board by clear and convincing evidence that Good
  Reason does not exist. 

                   (h)
  “Qualifying Termination” means a termination of Executive’s employment
  (i) by the Company other than for Cause or (ii) by Executive for Good Reason.
  Termination of Executive’s employment on account of death, Disability or
  Retirement shall not be treated as a Qualifying Termination. 

                   (i)
  “Retirement” means Executive’s retirement (not including any
  mandatory early retirement) in accordance with the Company’s retirement
  policy generally applicable to its salaried employees, as in effect immediately
  prior to the Change in Control, or in accordance with any retirement arrangement
  established with respect to Executive with Executive’s written consent.
  

                   (j)
  “Subsidiary” means any corporation or other entity in which the Company
  has a direct or indirect ownership interest of 50% or more of the total combined
  voting power of the then outstanding securities or interests of such corporation
  or other entity entitled to vote generally in the election of directors or in
  which the Company has the right to receive 50% or more of the distribution of
  profits or 50% of the assets upon liquidation or dissolution. 

                   (k)
  “Termination Period” means the period of time beginning with a Change
  in Control and ending three (3) years following such Change in Control. Notwithstanding
  anything in this Agreement to the contrary, if (i) Executive’s employment
  is terminated prior to a Change in Control for reasons that would have constituted
  a Qualifying Termination if they had occurred following a Change in Control;
  (ii) Executive reasonably demonstrates that such termination (or Good Reason
  event) was at the request of a third party who had indicated an intention or
  taken steps reasonably calculated to effect a Change in Control; and (iii) a
  Change in Control involving such third party (or a party competing with such
  third party to effectuate a Change in Control) does occur, then for purposes
  of this Agreement, the date immediately prior to the date of such termination
  of employment or event constituting Good Reason shall be treated as a Change
  in Control, and the date of the actual Change in Control shall be treated as
  Executive’s Date of Termination under Section l for purposes of determining
  the timing of payments and benefits to Executive under Section 4. 

             2.
  Obligation of Executive. In the event of a tender or exchange offer,
  proxy contest, or the execution of any agreement which, if consummated, would
  constitute a Change in Control, Executive agrees not to voluntarily leave the
  employ of the Company, other than as a result of Disability, or an event which
  would constitute Good Reason if a Change in Control had occurred, until the
  Change in Control occurs or, if earlier, such tender or exchange offer, proxy
  contest, or agreement is terminated or abandoned. 

             3.
  Term of Agreement. This Agreement shall be effective on the date hereof
  and shall continue in effect for a period of two (2) years after a Change in
  Control. Notwithstanding anything in this Section 3 to the contrary, this Agreement
  shall terminate if Executive or the Company terminates Executive’s employment
  prior to a Change in Control except as provided in Section l(k). 

 - 6 - 

  

   

            4.
  Payments Upon Termination of Employment.

                  (a)
  Qualifying Termination - Severance. If during the Termination Period
  the employment of Executive shall terminate pursuant to a Qualifying Termination,
  then the Company shall provide to Executive:

	                        	(i) any compensation
      previously earned by Executive, including any deferred compensation (other
      than pursuant to a tax-qualified plan) together with any interest and earnings
      thereon and any accrued vacation pay, in each case to the extent not theretofore
      paid; plus  
	 	 
	 	(ii) within ten (10)
      days following the Date of Termination, a lump-sum cash amount equal to
      two (2) times the sum of (i) Executive’s highest annual rate of base
      salary during the 12-month period immediately prior to Executive’s
      Date of Termination, plus (ii) Executive’s Bonus Amount. 

                  (b)
  Qualifying Termination - Benefits. If during the Termination Period
  the employment of Executive shall terminate pursuant to a Qualifying Termination,
  the Company shall continue to provide, for a period of two (2) years following
  Executive’s Date of Termination, Executive (and Executive’s dependents,
  if applicable) with the same level of medical, dental, accident, disability
  and life insurance benefits upon substantially the same terms and conditions
  (including contributions required by Executive for such benefits) as existed
  immediately prior to Executive’s Date of Termination (or, if more favorable
  to Executive, as such benefits and terms and conditions existed immediately
  prior to the Change in Control); provided, that, if Executive
  cannot continue to participate in the Company plans providing such benefits,
  the Company shall otherwise provide such benefits on the same after-tax basis
  as if continued participation had been permitted. Notwithstanding the foregoing,
  in the event Executive becomes re-employed with another employer and becomes
  eligible to receive welfare benefits from such employer, the welfare benefits
  described herein shall be secondary to such benefits during the period of Executive’s
  eligibility, but only to the extent that the Company reimburses Executive for
  any increased cost and provides any additional benefits necessary to give Executive
  the benefits provided hereunder. 

                   (c)
  Qualifying Termination – Incentive Compensation. Notwithstanding
  any provision of any annual or long-term incentive compensation plan to the
  contrary, if during the Termination Period the employment of Executive shall
  terminate pursuant to a Qualifying Termination, the Company shall pay to the
  Executive within ten (10) days following the Date of Termination a lump sum
  amount, in cash, equal to the sum of (i) any unpaid incentive compensation which
  has been allocated or awarded to the Executive for a completed fiscal year or
  other measuring period proceeding the Date of Termination under any such plan
  and which, as of the Date of Termination, is contingent only upon the continued
  employment of the Executive to a subsequent date, and (ii) the aggregate value
  of all contingent incentive compensation awards, including, without limitation,
  the Bonus Amount, allocated or awarded to the Executive for all then uncompleted
  periods under any such plan that the Executive would have earned on the last
  day of the performance award period, assuming the achievement, at the target
  level, of the individual and corporate
  performance goals established with respect to such award; provided that awards
  for uncompleted periods shall be prorated based upon the number of days the
  Executive is employed by the Company during the relevant performance period. 

 - 7 - 

 
                   (d)
  Qualifying Termination - 401(k) Plan Contributions. If during the Termination
  Period the employment of Executive shall terminate pursuant to a Qualifying
  Termination, all unvested 401(k) contributions in the Executive’s 401(k)
  account shall immediately vest or the Company shall pay the Executive an amount
  equal to any such unvested amounts that are forfeited by reason of said Qualifying
  Termination. 

                   (e)
  Qualifying Termination - Outplacement Services. If during the Termination
  Period the employment of Executive shall terminate pursuant to a Qualifying
  Termination, the Company shall provide the Executive with outplacement services
  suitable to the Executive’s position for a period of two (2) years or,
  if earlier, until the first acceptance by the Executive of an offer of employment.
  The cost of such outplacement services shall not exceed 20% of the Executive’s
  base salary. 

                   (f)
  Nonqualifying Termination. If during the Termination Period the employment
  of Executive shall terminate other than by reason of a Qualifying Termination,
  then the Company shall pay to Executive within thirty (30) days following the
  Date of Termination, a lump-sum cash amount equal to the sum of (1) Executive’s
  base salary through the Date of Termination and any bonus amounts which have
  become payable, to the extent not theretofore paid or deferred, and (2) any
  compensation previously deferred by Executive other than pursuant to a tax-qualified
  plan (together with any interest and earnings thereon) and any accrued vacation
  pay, in each case to the extent not theretofore paid. The Company may make such
  additional payments, and provide such additional benefits, to Executive as the
  Company may determine or as the Company and Executive may agree in writing.
  

                   (g)
  Stock Options. In the event of a Change in Control, all options to
  purchase Company stock held by Executive (“Options”) which are not
  fully vested and exercisable shall become fully vested and exercisable as of
  a time established by the Board, which shall be no later than a time preceding
  the Change in Control which allows Executive to exercise the Options and cause
  the stock acquired thereby to participate in the Change in Control transaction.

                   (h)
  Restricted Stock. All unvested restricted shares of Company stock held
  by the Executive shall vest and all restrictions thereon shall lapse upon a
  Change in Control.

            5.
  Certain Additional Payments by the Company.

                  (a)
  Anything in this Agreement to the contrary notwithstanding, in the event it
  shall be determined that any payment, award, benefit or distribution (or any
  acceleration of any payment, award, benefit or distribution) by the Company
  (or any of its affiliated entities) or any entity which effectuates a Change
  in Control (or any of its affiliated entities) to or for the benefit of Executive
  (whether pursuant to the terms of this Agreement or otherwise, but determined
  without regard to any additional payments required under this Section 5) (the
  “Payments”) would be subject to the excise tax imposed by Section
  4999 of the Internal Revenue Code of 1986, as amended
  (the “Code”), or any interest or penalties are incurred by Executive
  with respect to such excise tax (such excise tax, together with any such interest
  and penalties, are hereinafter collectively referred to as the “Excise
  Tax”), then the Company shall pay to Executive an additional payment (a
  “Gross-Up Payment”) in an amount such that after payment by Executive
  of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, Executive
  retains an amount of the Gross-Up Payment equal to the sum of (x) the Excise
  Tax imposed upon the Payments and (y) the product of any deductions disallowed
  because of the inclusion of the Gross-Up Payment in Executive’s adjusted
  gross income and the highest applicable marginal rate of federal income taxation
  for the calendar year in which the Gross-Up Payment is to be made. For purposes
  of determining the amount of the Gross-Up Payment, the Executive shall be deemed
  to (i) pay federal income taxes at the highest marginal rates of federal income
  taxation for the calendar year in which the Gross-Up Payment is to be made,
  (ii) pay applicable state and local income taxes at the highest marginal rate
  of taxation for the calendar year in which the Gross-Up Payment is to be made,
  net of the maximum reduction in federal income taxes which could be obtained
  from deduction of such state and local taxes (and (iii) have otherwise allowable
  deductions for federal income tax purposes at least equal to those which could
  be disallowed because of the inclusion of the Gross-Up Payment in the Executive’s
  adjusted gross income.

 - 8 - 

 
                   (b)
  Subject to the provisions of Section 5(a), all determinations required to be
  made under this Section 5, 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 the public accounting firm
  that is retained by the Company as of the date immediately prior to the Change
  in Control (the “Accounting Firm”) which shall provide detailed supporting
  calculations both to the Company and Executive within fifteen (15) business
  days of the receipt of notice from the Company or the Executive that there has
  been a Payment, or such earlier time as is requested by the Company (collectively,
  the “Determination”). In the event that the Accounting Firm is serving
  as accountant or auditor for the individual, entity or group effecting the Change
  in Control, Executive may appoint another nationally recognized public 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 and the Company
  shall enter into any agreement requested by the Accounting Firm in connection
  with the performance of the services hereunder. The Gross-Up Payment under this
  Section 5 with respect to any Payments shall be made no later than thirty (30)
  days following such Payment. If the Accounting Firm determines that no Excise
  Tax is payable by Executive, it shall furnish Executive with a written opinion
  to such effect, and to the effect that failure to report the Excise Tax, if
  any, on Executive’s applicable federal income tax return will not result
  in the imposition of a negligence or similar penalty. The Determination by the
  Accounting Firm shall be binding upon the Company and Executive. As a result
  of the uncertainty in the application of Section 4999 of the Code at the time
  of the Determination, it is possible that Gross-Up Payments which will not have
  been made by the Company should have been made (“Underpayment”) or
  Gross-Up Payments are made by the Company which should not have been made (“Overpayment”),
  consistent with the calculations required to be made hereunder. In the event
  that the Executive thereafter is required to make payment of any Excise Tax
  or additional Excise Tax, the Accounting Firm shall determine the amount of
  the Underpayment that has occurred and any such Underpayment (together with
  interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company
  to or for the benefit of Executive. In the event the amount of the Gross-Up
  Payment exceeds the amount necessary to reimburse the Executive for his Excise
  Tax, the Accounting Firm shall determine the amount of the Overpayment that
  has been made and any such Overpayment (together with interest at the rate provided
  in Section 1274(b)(2) of the Code) shall be promptly paid by Executive (to the
  extent he has received a refund if the applicable Excise Tax has been paid to
  the Internal Revenue Service) to or for the benefit of the Company. Executive
  shall cooperate, to the extent his expenses are reimbursed by the Company, with
  any reasonable requests by the Company in connection with any contests or disputes
  with the Internal Revenue Service in connection with the Excise Tax. 

 - 9 - 

 
             6.
  Withholding Taxes. The Company may withhold from all payments due to
  Executive (or his beneficiary or estate) hereunder all taxes which, by applicable
  federal, state, local or other law, the Company is required to withhold therefrom.
  

             7.
  Reimbursement of Expenses. If any contest or dispute shall arise under
  this Agreement involving termination of Executive’s employment with the
  Company or involving the failure or refusal of the Company to perform fully
  in accordance with the terms hereof, the Company shall reimburse Executive,
  on a current basis, for all reasonable legal fees and expenses, if any, incurred
  by Executive in connection with such contest or dispute (regardless of the result
  thereof), together with interest in an amount equal to the prime rate from time
  to time in effect, but in no event higher than the maximum legal rate permissible
  under applicable law, such interest to accrue from the date the Company receives
  Executive’s statement for such fees and expenses through the date of payment
  thereof, regardless of whether or not Executive’s claim is upheld by a
  court of competent jurisdiction or arbitration panel; provided, however,
  Executive shall be required to repay any such amounts to the Company to
  the extent that a court issues a final order from which no appeal can be taken,
  or with respect to which the time period to appeal has expired, setting forth
  the determination that the position taken by Executive was frivolous or advanced
  by Executive in bad faith. 

            8.
  Non Compete Covenant.

                  (a)
  During the Term of this Agreement, and for a period of 12 months following termination
  or expiration of the Executive’s employment , the Executive shall not:

	                        	(i) directly or indirectly
      own, manage, operate, join, control, participate in, invest in, or otherwise
      be connected with, in any manner, whether as an officer, director, employee,
      partner, investor or otherwise, any business entity that is engaged in the
      design, development, or operation of (A) application software that performs
      name and address data hygiene functions, or (B) electronic document design,
      presentment, archiving and retrieval, and payment with respect to any such
      documents created and presented (each, a "Competing Business"), (1) in all
      locations in which the Company is doing business, and (2) in all locations
      in respect of which at the time of such termination the Company is actively
      planning for and/or actually pursuing a business opportunity; 

 

 - 10 -
  

 
 

	                        	(ii) for himself or
      on behalf of any other person, partnership, corporation or entity, call
      on any customer of the Company for the purpose of soliciting, diverting
      or taking away any customer from the Company; or induce, influence or seek
      to induce or influence any person engaged as an employee, representative,
      agent or independent contractor by the Company to terminate his or her relationship
      with the Company. 

Nothing herein contained
  shall be deemed to prohibit the Executive from (i) owning a passive investment
  in securities of an issuer if the securities of such issuer are listed for trading
  on a national securities exchange or are traded in the over-the-counter market
  and the Executive's holdings therein represent less than one percent of the
  total number of shares or principal amount of the securities of such issuer
  outstanding, (ii) owning a passive investment in securities of a private company
  if the Executive’s holdings therein represent less than one percent of
  the total number of shares or principal amount of the securities of such issuer
  outstanding, or (iii) owning securities, regardless of amount, of the Company.
  

                   (b)
  Confidential Information. During the Term and at all times thereafter,
  the Executive shall keep secret and retain in strictest confidence, and shall
  not use for the benefit of himself or others, except in the course of performing
  his duties for the Company, all proprietary and/or confidential information,
  knowledge and data of the Company relating to its operations, sales, business
  or affairs (the “Confidential Information”), provided,
  however, the Executive shall not be restricted with respect to use of such information
  that (i) is or becomes public knowledge through no action or default on the
  part of the Executive; (ii) is approved by the Company in writing for disclosure
  to specified third parties; or (iii) is required to be disclosed by the Executive
  pursuant to a court order or applicable rules and regulations. 

                   (c)
  Rights and Remedies Upon Breach. In the event of any breach or threatened
  breach by Executive of the covenants of this Section 8, the Company shall be
  entitled to such equitable and injunctive relief as may be available to restrain
  Executive and any business, firm, partnership, individual, corporation or entity
  participating in such breach or threatened breach from the violation of the
  provisions hereof. Nothing herein shall be construed as prohibiting the Company
  from pursuing any other remedies available at law or in equity for such breach
  or threatened breach. 

                   (d)
  Severability of Covenants. If any court determines that any of the
  covenants of this Section 8, or any part thereof, is invalid or unenforceable,
  the remainder of the covenants shall not thereby be affected and shall be given
  full effect, without regard to the invalid portions. 

                   (e)
  Blue-Penciling. If any court determines that any of the covenants of
  this Section 8, or any part thereof, is unenforceable because of the duration
  or scope of such provision, such court shall have the power to reduce the duration
  or scope of such provision, as the case may be, and, in its reduced form, such
  provision shall then be enforceable and shall be enforced. 

 - 11 -
  

 
                   (f)
  The Executive acknowledges and agrees that the covenants of this Agreement pertaining
  to competition, non-solicitation and confidentiality are reasonable and commensurate
  with the protection of the Confidential Information and the legitimate business
  of the Company and will not interfere with Executive’s ability to earn
  a livelihood. 

             9.
  Scope of Agreement. Nothing in this Agreement shall be deemed to entitle
  Executive to continued employment with the Company or its Subsidiaries, and
  if Executive’s employment with the Company shall terminate prior to a Change
  in Control, Executive shall have no further rights under this Agreement (except
  as otherwise provided hereunder); provided, however, that any termination of
  Executive’s employment during the Termination Period shall be subject to
  all of the provisions of this Agreement. 

             10.
  No Mitigation. In no event shall Executive be obligated to seek other
  employment or take other action by way of mitigation of the amounts payable
  to Executive under any of the provisions of this Agreement and, except as provided
  in Section 4(b), such amounts shall not be reduced whether or not Executive
  obtains other employment. 

             11.
  Indemnification. The Company shall indemnify and hold Executive harmless
  for acts and omissions in his capacity as an officer, director or employee of
  the Company to the maximum extent permitted under applicable law. The Company
  shall maintain a Director’s and Officer’s Liability Insurance Policy,
  which shall provide liability coverage for Executive’s benefit, and the
  Executive shall remain covered under such policy for a period of at least six
  (6) years following the earlier of termination of employment or the occurrence
  of a Change in Control. 

            12.
  Successors; Binding Agreement.

                  (a)
  This Agreement shall not be terminated by any Business Combination. In the event
  of any Business Combination, the provisions of this Agreement shall be binding
  upon the Surviving Corporation, and such Surviving Corporation shall be treated
  as the Company hereunder. 

                   (b)
  The Company agrees that in connection with any Business Combination, it will
  cause any successor entity to the Company unconditionally to assume, by written
  instrument delivered to Executive (or his beneficiary or estate), all of the
  obligations of the Company hereunder. Failure of the Company to obtain such
  assumption prior to the effectiveness of any such Business Combination that
  constitutes a Change in Control, shall be a breach of this Agreement and shall
  constitute Good Reason hereunder and shall entitle Executive to compensation
  and other benefits from the Company in the same amount and on the same terms
  as Executive would be entitled hereunder if Executive’s employment were
  terminated following a Change in Control by reason of a Qualifying Termination.
  For purposes of implementing the foregoing, the date on which any such Business
  Combination becomes effective shall be deemed the date Good Reason occurs, and
  shall be the Date of Termination if requested by Executive. 

                   (c)
  This Agreement shall inure to the benefit of and be enforceable by Executive’s
  personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees
  and legatees. If Executive shall die while any amounts would be payable to Executive
  hereunder had Executive continued to live, all such amounts, unless otherwise
  provided herein, shall be paid in accordance with the terms of this Agreement
  to such person or persons appointed in writing by Executive to receive such
  amounts or, if no person is so appointed, to Executive’s estate.

 - 12 -
  

 
             13.
  Notice. (a) For purposes of this Agreement, all notices and other communications
  required or permitted hereunder shall be in writing and shall be deemed to have
  been duly given when delivered or five (5) days after deposit in the United
  States mail, certified and return receipt requested, postage prepaid, addressed
  to the Executive at the Executive’s address on file with the Company and
  to the Company at the address of its headquarters office to the attention of
  the Chief Executive Officer or to such other address as either party may have
  furnished to the other in writing in accordance herewith, except that notices
  of change of address shall be effective only upon receipt. 

                   (b)
  A written notice of Executive’s Date of Termination by the Company or Executive,
  as the case may be, to the other, shall (i) indicate the specific termination
  provision in this Agreement relied upon, (ii) to the extent applicable, set
  forth in reasonable detail the facts and circumstances claimed to provide a
  basis for termination of Executive’s employment under the provision so
  indicated and (iii) specify the termination date (which date shall be not less
  than fifteen (15) (thirty (30), if termination is by the Company for Disability)
  nor more than sixty (60) days after the giving of such notice). The failure
  by Executive or the Company to set forth in such notice any fact or circumstance
  which contributes to a showing of Good Reason or Cause shall not waive any right
  of Executive or the Company hereunder or preclude Executive or the Company from
  asserting such fact or circumstance in enforcing Executive’s or the Company’
  s rights hereunder. 

             14.
  Full Settlement. The Company’s obligation to make any payments
  provided for in this Agreement and otherwise to perform its obligations hereunder
  shall be in lieu and in full settlement of all other severance payments to Executive
  under any other severance or employment agreement between Executive and the
  Company, and any severance plan of the Company. The Company’s obligations
  hereunder shall not be affected by any set-off, counterclaim, recoupment, defense
  or other claim, right or action which the Company may have against Executive
  or others. 

             15.
  Resolution of Disputes. All claims by the Executive for benefits under
  this Agreement shall be directed to and determined by the Board and shall be
  in writing. Any denial by the Board of a claim for benefits under this Agreement
  shall be delivered to the Executive in writing and shall set forth the specific
  reasons for the denial and the specific provisions of this Agreement relied
  upon. The Board shall afford a reasonable opportunity to the Executive for a
  review of the decision denying a claim and shall further allow the Executive
  to appeal to the Board a decision by the Board within sixty (60) days after
  notification by the Board that the Executive’s claim has been denied. 

 Any further dispute or
  controversy arising under or in connection with this Agreement, (including,
  without limitation, any claims by the Executive for benefits under this Agreement
  following a denial of such benefits by the Board pursuant to the first paragraph
  of this Section 15) shall be settled exclusively
  by arbitration at a location determined by the Executive by three arbitrators
  in accordance with the rules of the American Arbitration Association then in
  effect. Judgment may be entered on the arbitrators’ award in any court
  having jurisdiction. The Company shall bear all costs and expenses arising in
  connection with any arbitration proceeding pursuant to this Section 15 in accordance
  with the provisions of Section 7 hereof.

 - 13 -
  

 
             16.
  Employment with Subsidiaries. Employment with the Company for purposes
  of this Agreement shall include employment with any Subsidiary. 

             17.
  Survival. The respective obligations and benefits afforded to the Company
  and Executive under this Agreement shall survive the termination of this Agreement
  to the extent necessary to give effect thereto. 

             18.
  GOVERNING LAW; VALIDITY.
  THE INTERPRETATION, CONSTRUCTION
  AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
  IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
  TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, OF SUCH PRINCIPLES OF ANY OTHER
  JURISDICTION WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
  OTHER THAN THE STATE OF DELAWARE. THE INVALIDITY OR UNENFORCEABILITY OF ANY
  PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY
  OF ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN
  IN FULL FORCE AND EFFECT. 

             19.
  Counterparts. This Agreement may be executed in counterparts, each
  of which shall be deemed to be an original and all of which together shall constitute
  one and the same instrument. 

             20.
  Miscellaneous. This Agreement constitutes the entire understanding
  of the parties with respect to the subject matter hereof and supersedes any
  prior agreements, whether written or oral, with respect thereto. No provision
  of this Agreement may be modified or waived unless such modification or waiver
  is agreed to in writing and signed by Executive and by a duly authorized officer
  of the Company. No waiver by either party hereto at any time of any breach by
  the other party hereto of, or compliance with, any condition or provision of
  this Agreement to be performed by such other party shall be deemed a waiver
  of similar or dissimilar provisions or conditions at the same or at any prior
  or subsequent time. Failure by Executive or the Company to insist upon strict
  compliance with any provision of this Agreement or to assert any right Executive
  or the Company may have hereunder, including, without limitation, the right
  of Executive to terminate employment for Good Reason, shall not be deemed to
  be a waiver of such provision or right or any other provision or right of this
  Agreement. Except as otherwise specifically provided herein, the rights of,
  and benefits payable to, Executive, his estate or his beneficiaries pursuant
  to this Agreement are in addition to any rights of, or benefits payable to,
  Executive, his estate or his beneficiaries under any other employee benefit
  plan or compensation program of the Company. 

 - 14 -
  

 
             IN
  WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly
  authorized officer of the Company and Executive has executed this Agreement
  as of the day and year first above written. 

	 	GROUP
      1 SOFTWARE, INC. 
	 	 
	 	By:  	/s/
	    	 	 

	 	Title:	 
	 	 	

	 	 	 
	 	 	 
	 	EXECUTIVE

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