Document:

evri_Ex10_1 v2 29 16

		
			Exhibit 10.1
		

		
			 
		

		
			EMPLOYMENT AGREEMENT
		

		
			 
		

		
			This Employment Agreement (this “Agreement”), by and between Everi Holdings Inc., a Delaware corporation (together with its successors and assigns, “Holdings”), Everi Payments Inc., a Delaware corporation (together with its successors and assigns, the “Company”, and together with Holdings being collectively the “Companies”), and Michael Rumbolz (“Executive”), is made as of February 13, 2016 (the “Effective Date”).
		

		
			 
		

		
			R E C I T A L S
		

		
			 
		

		
			A.      The Companies desire assurance of the association and services of Executive in order to retain Executive’s experience, skills, abilities, background and knowledge, and are willing to engage Executive’s services on the terms and conditions set forth in this Agreement.
		

		
			 
		

		
			B.       The Companies have commenced a search process to identify, recruit and hire a President and Chief Executive Officer of the Companies, but desire to employ Executive on an interim basis during the pendency of such search process, it being understood by all Parties hereto that Executive’s employment hereunder shall terminate upon the successful conclusion of such search process as evidenced by the commencement of employment by the Companies of a successor President and Chief Executive Officer on a non-interim basis.
		

		
			 
		

		
			C.      Executive desires to be in the employ of the Companies, and is willing to accept such employment on the terms and conditions set forth in this Agreement.
		

		
			 
		

		
			D.      The Companies and Executive (together, the “Parties”) wish to enter into an employment relationship with a written employment agreement intended to supersede all other written and oral representations regarding Executive’s employment with the Companies.
		

		
			 
		

		
			AGREEMENT
		

		
			 
		

		
			NOW, THEREFORE, based on the foregoing recitals and in consideration of the commitments set forth below, the Parties agree as follows:
		

		
			 
		

		
			1.      Position, Duties, Responsibilities
		

		
			 
		

		
			1.1.      Position.   The Companies hereby employ Executive to render services to the Companies as Interim President and Chief Executive Officer of each of the Companies, reporting solely and directly to the Board of Directors of Holdings (the “Holdings Board”) and the Board of Directors of the Company (the “Company Board”, and together with the Holdings Board, the “Boards”), as of the Effective Date.  The duties of these positions shall include participating in, supporting and taking such actions as are requested by the Holdings Board in furtherance of the search for a successor President and Chief Executive Officer as well as all such duties and responsibilities customarily exercised by an individual serving in those positions at entities of the size and nature of Holdings and the Company, and such additional duties and responsibilities, consistent with the foregoing positions, as are reasonably assigned to Executive by the Boards.  Executive also agrees to serve in a similar capacity for the benefit of any of the Companies’ direct or indirect, wholly-owned or partially-owned subsidiaries.  Additionally, Executive shall serve in such other capacity or capacities, consistent with the foregoing positions, as the Boards may from 
		

		
			

		 

		

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time to time reasonably and lawfully prescribe.  However, Executive shall be assigned no duties or responsibilities that are materially inconsistent with, or that materially impair his ability to discharge, his duties as Interim President and Chief Executive Officer of the Companies.  During his employment by the Companies, Executive shall, subject to Section 1.2, devote substantially all of his business time and efforts to the proper and efficient performance of his duties under this Agreement.
		

		
			 
		

		
			1.2.      Other Activities.  Except upon the prior written consent of the Holdings Board or the Chairman of the Holdings Board, Executive will not, while he is employed under this Agreement, (i) continue or commence any other full- or part-time employment or consultancy, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Executive in a conflicting position to that of, the Companies.  Notwithstanding the foregoing, Executive shall be permitted to (i) manage his personal investments and affairs, and (ii) engage in occasional charitable or professional activities (including Executive’s continued service as an expert witness for one or more business entities) and community affairs outside the scope of his employment with the Company, so long as such activities do not, either individually or in the aggregate, (A) conflict with the actual or proposed business of the Companies or any of their subsidiaries or affiliates, or (B) interfere with the performance of his duties hereunder.  In addition, subject to the prior written consent of the Holdings Board or the Chairman of the Holdings Board (not to be unreasonably withheld or delayed) and subject to Executive’s fiduciary duties to the Companies, Executive shall be permitted to serve on the boards of business entities (including but not limited to Employers Holdings, Inc., Seminole Hard Rock Holdings, LLC and Open Wager, Inc.), trade associations and charitable organizations, provided that their activities are not competitive with the actual or proposed business of the Companies or any of their subsidiaries or affiliates and provided further that Executive’s service on such boards does not, either individually or in the aggregate, interfere with his performance of his duties hereunder.  Any such prior written consent may be subsequently revoked in the event that either of the Boards determines, in good faith, that Executive’s position on such a board has developed into a conflict of interest.
		

		
			 
		

		
			1.3.      Location.  Executive’s principal place of employment shall be at the Company’s corporate headquarters in Las Vegas, Nevada.
		

		
			 
		

		
			1.4.      Proprietary Information.  Executive recognizes that his employment with the Companies will involve contact with information of substantial value to the Companies, which is not generally known in the trade, and which gives the Companies an advantage over its competitors who do not know or use it.  As a condition precedent to Executive’s employment by the Companies, Executive agrees to execute and deliver to the Company, concurrent with his execution and delivery of this Agreement, a copy of the “Employee Proprietary Information and Inventions Agreement” attached hereto as Exhibit A.  
		

		
			 
		

		
			1.5.      Regulatory Approval.  Due to the nature of the Companies’ business and Executive’s position with the Companies, Executive may also be required to complete applications required by various gaming regulatory, tribal, state or other international governments in whose jurisdiction the Companies and their affiliates conduct business, as well as other applications that may be required by such regulatory authorities with jurisdiction over the Companies and their affiliates. Such applications are generally in addition to normal credit, 
		

		
			
		

		
			

		 

		

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			reference and background checks for employment that the Companies have already completed to their satisfaction. Such applications may require complete disclosure of personal and financial information, criminal convictions or arrests (expunged or not) and business associations.  As an ongoing condition of Executive’s employment, Executive must be able to satisfy the licensing process and obtain appropriate gaming and other regulatory licenses within a reasonable period of time, provided the Companies provide all reasonable and necessary assistance to Executive.
		

		
			 
		

		
			2.      Compensation of Executive
		

		
			 
		

		
			2.1.      Monthly Base Salary.  In consideration of the services to be rendered under this Agreement, while Executive is employed under this Agreement, Company shall pay Executive a base monthly salary of at least fifty thousand dollars ($50,000) per month (“Base Salary”), less authorized deductions and required tax withholdings, payable in regular periodic payments in accordance with Company payroll policy (but no less frequently than monthly).  Base Salary shall be prorated for any partial month of employment on the basis of a 30-day fiscal month.  Base Salary shall not be decreased for any purpose without the prior written consent of Executive.  In the event that Executive’s employment hereunder extends to January 1, 2017,  such Base Salary and shall be reviewed for increase, in the discretion of the Company Board, commencing on January 1, 2017.  
		

		
			 
		

		
			2.2.      Bonus.    Executive shall receive a one-time bonus in the amount of one hundred thousand dollars ($100,000) upon the commencement of employment by the Companies of a successor President and Chief Executive Officer on a non-interim basis, such bonus to be payable within thirty (30) days following such commencement of employment.   
		

		
			 
		

		
			2.3.      Stock Option.  The Holdings Board shall grant to Executive, as of the Effective Date, non-qualified options to purchase 465,116 shares of Holdings’ common stock at an exercise price of $2.78 per share pursuant to its 2014 Equity Incentive Plan (the “Plan”) and Notice of Grant of Stock Option and Stock Option Agreement to be entered into by and between Executive and Holdings in substantially the form attached hereto as Exhibit B (the “Stock Option Agreement”).
		

		
			 
		

		
			2.4.      Benefits.  Executive shall be entitled to participate in the Company’s group medical, dental, life insurance, 401(k), deferred compensation or other benefit plans and programs on no less favorable terms and conditions than those applying to other members of the Company’s senior executive management, based upon the eligibility dates described in the benefit plan documents. Executive shall be provided such perquisites of employment, including paid time off, as are provided to other members of the Company’s senior executive management.  Executive shall be entitled to reimbursement of all reasonable expenses incurred by Executive in the performance of his duties hereunder, in accordance with the policies and procedures established by the Company from time to time, and as may be amended from time to time.  
		

		
			 
		

		
			2.5.      Attorney Fees.  In addition to the benefits described above, the Company shall pay (or promptly reimburse Executive for) any and all expenses (including, without limitation, attorneys’ fees and other charges of counsel) reasonably incurred by him in connection with the negotiation, documentation and implementation of these employment arrangements, in each case no later than fifteen (15) days after submission of appropriate supporting documentation.
		

		
			
		

		
			

		 

		

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3.      Employment At Will.  
		

		
			 
		

		
			Any of the Parties may terminate Executive’s employment under this Agreement with the Companies at any time for any reason, including no reason at all, notwithstanding anything to the contrary contained in or arising from any statements, policies, or practices of the Companies relating to the employment, discipline, or termination of their employees.  This at-will employment relationship cannot be changed except in a writing executed on behalf of the Parties.  Executive’s last day of employment shall be the “Termination Date” under this Agreement.
		

		
			 
		

		
			4.      Termination of Employment
		

		
			 
		

		
			4.1.      Termination by Executive or by the Company.  In the event that Executive or either of the Companies terminates Executive’s employment, the Company shall pay Executive all Base Salary due and owing, and all other accrued but unpaid benefits (e.g., accrued vacation) through the Termination Date, and Executive shall also receive any other benefits then or thereafter due in accordance with the then-applicable terms of any applicable plan, program, agreement of the Companies or any of their affiliates to which Executive is subject and by which the Companies are bound (collectively, “Company Arrangements”); for the avoidance of doubt, no Company Arrangement shall be deemed to arise solely from any course of dealing, practice or custom followed by the Companies with respect to other employees.
		

		
			 
		

		
			4.2.      Termination for Incapacity.  In the event that Executive suffers an Incapacity during his employment hereunder, either of the Companies may elect to terminate Executive’s employment.  In such event, the Company shall pay Executive all Base Salary due and owing, all other accrued but unpaid benefits (e.g., accrued vacation) through the Termination Date, and any other benefits then or thereafter due in accordance with the then-applicable terms of any applicable Company Arrangement.  In addition, the Company will provide Executive, through the earliest of (x) the month in which he dies, (y) the month in which he attains age 65, and (z) the first month following the Termination Date in which he is able to work in a senior executive capacity (with or without reasonable accommodation), and no less frequently than monthly, periodic disability payments at an annual rate equal to 60% of twelve (12) times his Base Salary as of the Termination Date, in each case offset by the amount of periodic disability benefits provided (other than benefits attributable to his own contributions) under any disability insurance plan or program of the Companies or their affiliates. For the purposes of this Agreement, “Incapacity” shall mean that Executive, due to illness or mental or physical incapacity, has been unable to substantially perform the duties and responsibilities required to be performed by him on behalf of the Companies for a period of at least 180 days.
		

		
			 
		

		
			4.3.      Termination upon Death.  In the event that Executive dies during his employment hereunder, Executive’s employment shall be deemed to have terminated upon the date of death.  In such event, the Company shall pay Executive’s estate or beneficiary all Base Salary due and owing, all other accrued but unpaid benefits (e.g., accrued vacation) through the date of death, and any other benefits then or thereafter due in accordance with the then-applicable terms of any Company Arrangement (including, without limitation, Executive’s estate’s or beneficiaries’ rights to payments or other benefits under any life insurance plan or policy in which Executive participates or with respect to which Executive has designated a beneficiary, if any).    
		

		
			
		

		
			

		 

		

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4.4.      Compliance with Section 409A of the Code.  This Agreement, and the Company Arrangements referred to in it, are intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (or any regulations or rulings thereunder), and shall be construed and interpreted in accordance with such intent.  Notwithstanding anything to the contrary in this Agreement or elsewhere, the Companies, in the exercise of their sole discretion and without the consent of Executive, shall have the authority to delay the payment of any amounts or the provision of any benefits under this Agreement to the extent they reasonably deem necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “key employees” of certain publicly-traded companies) as amplified by any Internal Revenue Service or U.S. Treasury Department guidance as the Company deems appropriate or advisable.  Any such delayed amounts or benefits to which Executive would otherwise be entitled during the six (6) month period following the Termination Date will be paid on the earlier of (i) the first business day following the expiration of such six (6) month period, or (ii) the date of Executive’s death.  Any provision of this Agreement that would cause the payment of any benefit to fail to satisfy Section 409A of the Code shall be amended in the least restrictive manner necessary to comply with Code Section 409A (which amendment may be retroactive to the extent permitted by the Code or any regulations or rulings thereunder).  Each payment under this Agreement is hereby designated as a “separate payment” for purposes of Section 409A of the Code.
		

		
			 
		

		
			4.5.      No Mitigation; No Offset.  In the event of any termination of Executive’s employment, Executive shall be under no obligation to seek other employment or otherwise mitigate the obligations of either of the Companies under this Agreement, and there shall be no offset against amounts or benefits due Executive under this Agreement or otherwise on account of any remuneration or other benefit earned or received by Executive after his termination of employment.  
		

		
			 
		

		
			5.      Termination Obligations
		

		
			 
		

		
			5.1.      Return of Company’s Property.  Without in any way limiting Executive’s obligations and the Company’s rights under the Employee Proprietary Information and Inventions Agreement described in Section 1.4, Executive hereby acknowledges and agrees that all books, manuals, records, reports, notes, contracts, lists, spreadsheets and other documents or materials, or copies thereof, and equipment furnished to or prepared by Executive in the course of or incident to Executive’s employment, belong to Company and shall be promptly returned to Company upon termination of Executive’s employment.  However, notwithstanding anything in this Agreement or elsewhere to the contrary, Executive will be permitted to retain, and utilize appropriately, his rolodex (and electronic equivalents) and copies of documents relating to his personal entitlements, obligations and tax liabilities.
		

		
			 
		

		
			5.2.      Cooperation in Pending Work.  Following any termination of Executive’s employment, Executive shall, at the reasonable request or either of the Companies, reasonably cooperate with the Companies in all matters relating to the winding up of pending work on behalf of the Companies and the orderly transfer of work to other employees of the Companies.  Executive shall also reasonably cooperate, at either of the Companies’ reasonable request, in the defense of any action brought by any third party against the Companies that relates in any way to Executive’s acts or omissions while employed by the Companies.  However, Executive shall in no 
		

		
			
		

		
			

		 

		

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event have any duties or responsibilities after the Termination Date that are inconsistent with his having a “separation from service” as of the Termination Date for purposes of Section 409A of the Code.  In consideration of Executive’s cooperation under this Section 5.2, the Company shall reimburse Executive for his out-of-pocket costs (including, without limitation, any attorney fees and other professional expenses) reasonably incurred to cooperate and the Company shall pay Executive an hourly consulting fee equal to the hourly rate that results from dividing (x) his Base Salary at the time of termination of his employment, by (y) 160.
		

		
			 
		

		
			5.3.      Resignation.  Upon the termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all positions as an employee, officer, director (other than as a member of the Holdings Board or the Company Board) or manager then held with the Companies or any of their respective subsidiaries; for the avoidance of doubt, such automatic resignation shall not apply to Executive’s service as a member of the Holdings Board or as a member of the Company Board to the extent he is then so serving at the time of his termination of employment hereunder.  Executive agrees to execute and delivery such documents or instruments as are reasonably requested by the Companies or any such subsidiary to evidence such resignations.
		

		
			 
		

		
			5.4.      Survival.  For avoidance of doubt, the representations and warranties contained herein and Executive’s and the Companies’ obligations under Sections 3 through 8, and Sections 10 through 19, and under the Employee Proprietary Information and Inventions Agreement and the Stock Option Agreement, shall survive any termination of Executive’s employment.
		

		
			 
		

		
			6.      Restrictions on Competition after Termination.
		

		
			 
		

		
			6.1.      Reasons for Restrictions.  Executive acknowledges that the nature of the Companies’ business is such that it would be extremely difficult for Executive to honor and comply with Executive's obligation under the Employee Proprietary and Inventions Agreement described in Section 1.4 to keep secret and confidential the Companies’ trade secrets if Executive were to become employed by or substantially interested in the business of a competitor of the Companies soon following the termination of Executive's employment with the Companies, and it would also be extremely difficult to determine in any reasonably available forum the extent to which Executive was or was not complying with Executive's obligations under such circumstances.
		

		
			 
		

		
			6.2.      Duration of Restriction.  In consideration for the Companies’ undertakings and obligations under this Agreement, Executive agrees that, during the Noncompete Term, Executive will not directly or indirectly engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any person, firm, corporation or business that competes materially with any of the primary businesses of the Companies on the Termination Date in the United States, Canada, the United Kingdom or such other countries in which the Company conducts business at the time of such termination (“Restricted Territory”).  For purposes of this Agreement, the “Noncompete Term” shall be the period of two (2) years after the Termination Date; provided, however, that the Noncompete Term shall immediately expire in the event that either of the Companies, or any of their affiliates, shall have materially breached, on or after the 
		

		
			
		

		
			

		 

		

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Termination Date, any of their material obligations to Executive under this Agreement or under any other Company Arrangement, which breach shall have continued for 30 days after Executive has given written notice requesting cure.  The parties agree that ownership of no more than 1% of the outstanding voting stock of a publicly-traded corporation or other entity shall not constitute a violation of this provision.  The parties intend that the covenants contained in this section shall be construed as a series of separate covenants, one for each county, city, state and other political subdivision of the Restricted Territory.  Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in this section.  If, in any judicial proceeding, a court shall refuse to enforce any of the separate covenants (or any part thereof) deemed included in this section, then such unenforceable covenant (or such part) shall be deemed eliminated from this Agreement for the purpose of those proceedings to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced by such court.  It is the intent of the parties that the covenants set forth herein be enforced to the maximum degree permitted by applicable law.
		

		
			 
		

		
			7.      Restrictions on Solicitation after Termination.
		

		
			 
		

		
			For a period of two (2) years following the Termination Date, Executive shall not, without the prior written consent of the Company, directly or indirectly, as a sole proprietor, member of a partnership, stockholder or investor, officer or director of a corporation, or as an executive, associate, consultant, independent contractor or agent of any person, partnership, corporation or other business organization or entity other than the Companies, solicit or endeavor to entice away from the Company any person or entity who is, or, during the then most recent three-month period, was, employed by, or had served as an agent or key consultant of the Company; provided, however, that Executive shall not be prohibited from receiving and responding to unsolicited requests for employment or career advice from the Company’s employees.
		

		
			 
		

		
			8.      Arbitration.
		

		
			 
		

		
			8.1.      Agreement to Arbitrate Claims.  The Parties hereby agree that, to the fullest extent permitted by law, any and all claims or controversies relating in any manner to the employment or the termination of employment of Executive (each, a “Claim”) shall be resolved by final and binding arbitration.  Except as specifically provided herein, any arbitration proceeding shall be conducted in accordance with the Commercial Arbitration Rules (and not National Rules for the Resolution of Employment Disputes) of the American Arbitration Association (the “AAA Rules”) and this Section 8.  Claims subject to arbitration shall include contract claims, tort claims, claims relating to compensation and stock options, as well as claims based on any federal, state, or local law, statute, or regulation, including but not limited to any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act and the Americans with Disabilities Act.  However, claims for unemployment compensation, workers’ compensation, and claims under the National Labor Relations Act shall not be subject to arbitration.
		

		
			 
		

		
			8.2.      Arbitrator.  A neutral and impartial arbitrator shall be chosen by mutual agreement of the parties to the arbitration; however, if Executive and the other parties to the arbitration are unable to agree upon an arbitrator within a reasonable period of time, then a neutral and impartial arbitrator shall be appointed in accordance with the arbitrator nomination and selection procedure set forth in the AAA Rules.  The arbitrator shall prepare a written decision 
		

		
			 
		

		
			
		

		
			

		 

		

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containing the essential findings and conclusions on which the award is based so as to ensure meaningful judicial review of the decision.  The arbitrator shall apply the same substantive law, with the same statutes of limitations and the same remedies, that would apply if the Claims were brought in a court of law.  The arbitrator shall have the authority to consider and decide pre-hearing motions, including dispositive motions, and each party to the arbitration will be entitled to conduct discovery to the same extent that it would have been if the Claims had been brought in a court of law.  Pending resolution of any Claim, Executive shall continue to receive all payments and benefits due under this Agreement under any other Company Arrangement, except to the extent that an arbitrator selected under this Section 8.2 otherwise provides.  All arbitration hearings under this Agreement shall be conducted in Las Vegas, Nevada.
		

		
			 
		

		
			8.3.      Enforcement Actions.  An action may be brought in court to compel arbitration under this Agreement and to enforce an arbitration award. Except as otherwise provided in this Agreement, no Party shall initiate or prosecute any lawsuit in any way related to any arbitrable claim, including without limitation any claim as to the making, existence, validity, or enforceability of the agreement to arbitrate.    
		

		
			 
		

		
			8.4.      Exceptions.  Nothing in this Agreement or elsewhere shall preclude any person from filing an administrative charge before an agency that has jurisdiction over any Claim.  In addition, any Party may, at its option, seek injunctive relief in a court of competent jurisdiction for any claim or controversy arising out of or related to the unauthorized use, disclosure, or misappropriation of the confidential and/or proprietary information.  By way of example, the Company may choose to use the court system to seek injunctive relief to prevent disclosure of its proprietary information or trade secrets; similarly, Executive may elect to use the court system to seek injunctive relief to protect Executive’s own inventions or trade secrets.
		

		
			 
		

		
			8.5.      Governing Law.  The agreement to arbitrate under this Section 8 shall be governed by the Uniform Arbitration Act of 2000 (Nevada Revised Statutes 38.206 et seq).   In ruling on procedural and substantive issues raised in the arbitration itself, the Arbitrator shall in all cases apply the substantive law of the State of Nevada.
		

		
			 
		

		
			8.6.      Expenses.  The costs and fees of any arbitrator selected under Section 8.2 shall be borne equally by Executive and the Company.  Each Party shall bear its own costs and expenses (including without limitation attorneys' fees and other professional fees and charges) incurred by him or it in connection with any Claim; provided,  however, that (a) to the extent that it is determined through arbitration that the Executive’s position in respect of a Claim was frivolous or without any merit, Executive shall promptly reimburse the Company for all costs and expenses incurred by the Company in respect of such Claim, and (b) to the extent that it is determined through arbitration that Executive substantially prevailed against the Company in respect of a Claim, the Company shall promptly reimburse Executive for all costs and expenses incurred by Executive in respect of such Claim.
		

		
			 
		

		
			8.7.      Survival.  For avoidance of doubt, the Parties’ obligations under this Section 8 shall survive any termination of Executive’s employment under this Agreement.
		

		
			 
		

		
			8.8.      Acknowledgements.  THE PARTIES UNDERSTAND AND AGREE THAT THIS SECTION 8 CONSTITUTES A WAIVER OF THEIR RIGHT TO A TRIAL BY 
		

		
			
		

		
			

		 

		

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JURY OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS SECTION 8.  THE PARTIES AGREE THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL BE RESOLVED BY A JURY TRIAL.  THE PARTIES FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS SECTION 8 WITH THEIR LEGAL COUNSEL AND HAVE AVAILED THEMSELVES OF THAT OPPORTUNITY TO THE EXTENT THEY WISH TO DO SO.    
		

		
			 
		

		
			9.      Duration
		

		
			 
		

		
			The terms of this Agreement are intended by the Parties to govern Executive’s employment under this Agreement, as well as the rights of the Parties following any termination of employment.  
		

		
			 
		

		
			10.      Entire Agreement
		

		
			 
		

		
			The terms of this Agreement (including its Exhibits and an indemnification agreement) are (i) intended by the Parties to be the final and exclusive expression of their agreement with respect to the employment of Executive by the Companies and (ii) may not be contradicted by evidence of any prior or contemporaneous statements or agreements. The Parties further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever concerning such terms may be introduced in any judicial, administrative, or other legal proceeding involving this Agreement.   To the extent any provision in this Agreement is inconsistent with any provision of the Exhibits or any other Company Arrangement, the provisions of this Agreement shall, to the extent more favorable to Executive, control.
		

		
			 
		

		
			11.      Amendments, Waivers
		

		
			 
		

		
			This Agreement may not be modified, amended, or terminated except by an instrument in writing that (in the case of modifications and any amendments) expressly identifies the provision(s) being modified or amended, and that is signed by Executive and by a duly authorized representative of each of the Companies (other than Executive).  No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity.  To be effective, any waiver must be set forth in a writing signed by the waiving Party and must specifically refer to the condition(s) or provision(s) of this Agreement being waived.
		

		
			 
		

		
			12.      Assignment; Successors and Assigns
		

		
			 
		

		
			Executive shall be entitled, to the extent permitted under applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit under this Agreement following Executive’s death by giving written notice thereof.  In the event of Executive’s death or a judicial determination of his incompetence, references in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiaries, estate, executor(s), or other legal representative(s).  Except as provided herein, Executive agrees that Executive may not assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, or by operation of law, any rights or obligations under this Agreement, nor shall Executive’s rights be subject to encumbrance or the claims of creditors.  Any purported assignment, transfer, or delegation in 
		

		
			
		

		
			

		 

		

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violation of this Agreement shall be null and void.  Nothing in this Agreement shall prevent the consolidation of the Company with, or its merger into, any other corporation, or the sale by the Company of all or substantially all of its properties or assets.  However, no rights or obligations of either of the Companies under this Agreement may be assigned or transferred by either of the Companies (each a “Transferor”) except that such rights and obligations may be assigned or transferred pursuant to a merger, consolidation or other combination in which the Transferor is not the continuing entity, or a sale or liquidation of all or substantially all of the business and assets of the Transferor, provided that the assignee or transferee is the successor to all or substantially all of the business and assets of the Transferor and such assignee or transferee expressly assumes the liabilities, obligations and duties of the Transferor as set forth in this Agreement.  In the event of any merger, consolidation, other combination, sale of business and assets, or liquidation as described in the preceding sentence, the Transferor shall use its best reasonable efforts to cause such assignee or transferee to promptly and expressly assume the liabilities, obligations and duties of the Transferor under this Agreement.
		

		
			 
		

		
			13.      Severability; Enforcement
		

		
			 
		

		
			If any provision of this Agreement, or the application thereof to any person, place, or circumstance, shall be held by a court or arbitrator of competent jurisdiction to be invalid, unenforceable, or void, the remainder of this Agreement and such provisions as applied to other persons, places, and circumstances shall remain in full force and effect.  Such court or arbitrator shall have the authority to modify or replace the invalid or unenforceable term or provision with one which most accurately represents the parties’ intention with respect to the invalid or unenforceable term or provision.
		

		
			 
		

		
			14.      Governing Law
		

		
			 
		

		
			The validity, interpretation, enforceability, and performance of this Agreement shall be governed by and construed in accordance with its express terms, and otherwise in accordance with the laws of the State of Nevada.
		

		
			 
		

		
			15.      Acknowledgment
		

		
			 
		

		
			The Parties acknowledge (a) that they have consulted with or have had the opportunity to consult with independent counsel of their own choice concerning this Agreement, and (b) that they have read and understand the Agreement, are fully aware of its legal effect, and have entered into it freely based on their own judgment and not on any representations or promises other than those contained in this Agreement.
		

		
			 
		

		
			16.      Notices    
		

		
			 
		

		
			All notices or demands of any kind required or permitted to be given by the Companies or Executive under this Agreement or any of the documents attached hereto as Exhibits shall be given in writing and shall be personally delivered (and receipted for) or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows:
		

		
			
		

		
			

		 

		

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						If to Company or 

					
					
						 

					
					
						Everi Holdings Inc.

				
	
					
						Holdings:

					
					
						 

					
					
						Attn:  Chairman of the Board of Directors

				
	
					
						 

					
					
						 

					
					
						7250 S. Tenaya Way, Suite 100

				
	
					
						 

					
					
						 

					
					
						Las Vegas, NV  89113

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						If to Executive:

					
					
						 

					
					
						To him at his principal residence as reflected in 

				
	
					
						 

					
					
						 

					
					
						the records of the Company with a copy (while 

				
	
					
						 

					
					
						 

					
					
						he is employed hereunder) to him at his

				
	
					
						 

					
					
						 

					
					
						principal office at the Company

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						and a copy to 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			Any such written notice shall be deemed received when personally delivered or five (5) days after its deposit in the United States mail as specified above.  Any Party may change its address for notices by giving notice to the other Party in the name specified in this section.
		

		
			 
		

		
			17.      Representations and Warranties.
		

		
			 
		

		
			17.1.      Executive represents and warrants that he is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that his execution and performance of this Agreement will not violate or breach any other agreements between Executive and any other person or entity.
		

		
			 
		

		
			17.2.      Each of the Companies represents and warrants that (i) it is fully authorized by action of its Board (and of any other person or body whose action is required) to enter into this Agreement and to perform its obligations under it, (ii) the execution, delivery and performance of this Agreement by it does not violate any applicable law, regulation, order, judgment or decree or any agreement, arrangement, plan or corporate governance document (x) to which it is a party or (y) by which it is bound, and (iii) upon the execution and delivery of this Agreement by the Parties, this Agreement shall be its valid and binding obligation, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
		

		
			 
		

		
			18.      Joint and Several Obligations
		

		
			 
		

		
			All obligations of the Companies under this Agreement shall be joint and several.  Each of the Companies unconditionally guarantees prompt performance by the other of all of its obligations to Executive, whether under this Agreement or otherwise.
		

		
			 
		

		
			19.      Counterparts
		

		
			 
		

		
			This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, all of which together shall contribute one and the same instrument.  Signatures delivered by facsimile (including, without limitation, by “pdf”) shall be effective for all purposes.
		

		
			
		

		
			

		 

		

			11

		

 

IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as of the date first set forth above.
		

		
			 
		

			
					
						EVERI HOLDINGS INC.

					
					
						    

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ E. Miles Kilburn

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						EVERI PAYMENTS INC.

					
					
						 

					
					
						EXECUTIVE

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ E. Miles Kilburn

					
					
						 

					
					
						/s/ Michael D. Rumbolz

				
	
					
						 

					
					
						Miles Kilburn

					
					
						 

					
					
						Michael D. Rumbolz

				
	
					
						 

					
					
						Chairman of the Board of Directors

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			

		 

		

			12

		

 

EXHIBIT A
		

		
			 
		

		
			EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
		

		
			 
		

		
			EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
		

		
			 
		

		
			In consideration of my employment by Everi Payments Inc. (formerly known as Global Cash Access, Inc.), a Delaware corporation (the “Company”), I hereby agree to certain restrictions placed by the Company on my use and development of information and technology of the Company, as more fully set out below.   
		

		
			 
		

		
			1. Proprietary Information.  
		

		
			 
		

		
			(a) Confidential Restrictions.  I understand that, in the course of my work as an employee of the Company, I may have access to Proprietary Information (as defined below) concerning the Company.  I acknowledge that the Company has developed, compiled, and otherwise obtained, often at great expense, this information, which has great value to the Company’s business.  I agree to hold in strict confidence and in trust for the sole benefit of the Company all Proprietary Information and will not disclose any Proprietary Information, directly or indirectly, to anyone outside of the Company, or use, copy, publish, summarize, or remove from Company premises such information (or remove from the premises any other property of the Company) except:  (i) during my employment to the extent necessary to carry out my responsibilities as an employee of the Company or (ii) after termination of my employment, as specifically authorized in writing by a duly authorized officer of the Company.  I further understand that the publication of any Proprietary Information through literature or speeches must be approved in advance in writing by a duly authorized officer of the Company.   
		

		
			 
		

		
			(b) Proprietary Information Defined.  I understand that the term “Proprietary Information” in this Agreement means all information and any idea in whatever form, tangible or intangible, whether disclosed to or learned or developed by me, pertaining in any manner to the business of the Company or to the Company’s affiliates, consultants, or business associates, unless:  (i) the information is or becomes publicly known through lawful means; (ii) the information was rightfully in my possession or part of my general knowledge prior to my employment by the Company; or (iii) the information is disclosed to me without confidential or proprietary restrictions by a third party who rightfully possesses the information (without confidential or proprietary restrictions) and did not learn of it, directly or indirectly, from the Company.  I further understand that the Company considers the following information to be included, without limitation, in the definition of Proprietary Information:  (A) schematics, techniques, employee suggestions, development tools and processes, computer printouts, computer programs, design drawings and manuals, electronic codes, formulas and improvements; (B) information about costs, profits, markets, sales, customers, prospective customers, customer contracts (including without limitation the terms and conditions of such customer contracts) and bids; (C) plans for business, marketing, future development and new product concepts; (D) 
		

		
			
		

		
			

		 

		

			 

		

 

customer lists, and distributor and representative lists; (E) all documents, books, papers, drawings, models, sketches, and other data of any kind and description, including electronic data recorded or retrieved by any means, that have been or will be given to me by the Company (or any affiliate of it), as well as written or verbal instructions or comments; (F) any information or material not described in (A)-(E) above which relate to the Company’s inventions, technological developments, “know how”, purchasing, accounts, merchandising, or licensing; (G) employee personnel files and information about employee compensation and benefits; and (H) any information of the type described in (A)-(G) above which the Company has a legal obligation to treat as confidential, or which the Company treats as proprietary or designates as confidential, whether or not owned or developed by the Company. 
		

		
			 
		

		
			(c) Information Use.  I agree that I will maintain at my work area or in other places under my control only such Proprietary Information that I have a current “need to know,” and that I will return to the appropriate person or location or otherwise properly dispose of Proprietary Information once my need to know no longer exists.  I agree that I will not make copies of information unless I have a legitimate need for such copies in connection with my work.   
		

		
			 
		

		
			 (d) Third Party Information.  I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes.  I agree that I owe the Company and such third parties, during the term of my employment and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm, or corporation (except as necessary in carrying out my work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than for the Company or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of a duly authorized officer of the Company.  
		

		
			 
		

		
			2. Inventions.
		

		
			 
		

		
			(a) Defined; Statutory Notice.  I understand that during the term of my employment, there are certain restrictions on my development of technology, ideas, and inventions, referred to in this Agreement as “Invention Ideas.”  The term “Invention Ideas” means all ideas, processes, inventions, technology, programs, original works of authorship, designs, formulas, discoveries, patents, copyrights, trademarks, and service marks, and all improvements, rights, and claims related to the foregoing, that are conceived, developed, or reduced to practice by me alone or with others during the period of my employment with the Company, except for (1) Invention Ideas excluded in Schedule A, (2) Invention Ideas that I develop entirely on my own time without the Company’s equipment, supplies, facilities or trade secret information except for those Invention Ideas that either relate at the time of conception or reduction to practice of the Invention Idea to the Company’s business or actual or demonstrably anticipated research or development or result from any work performed by me for the Company, and (3) to the extent that any law applicable to my employment lawfully prohibits the assignment.  
		

		
			 
		

		
			(b) Disclosure.  I agree to maintain adequate and current written records on the development of all Invention Ideas and to disclose promptly to the Company all 
		

		
			
		

		
			

		 

		

			 

		

 

Invention Ideas and relevant records, which records will remain the sole property of the Company.  I further agree that all information and records pertaining to any idea, process, invention, technology, program, original work of authorship, design, formula, discovery, patent, copyright, trademark, or service mark, that I do not believe to be an Invention Idea, but is conceived, developed, or reduced to practice by me (alone or with others) during my period of employment or during the one-year period following termination of my employment, shall be promptly disclosed to the Company (such disclosure to be received in confidence).  The Company shall examine such information to determine if in fact it is an Invention Idea subject to this Agreement.   
		

		
			 
		

		
			(c) Assignment.  I agree to assign and hereby do assign to the Company, without further consideration, my entire right, title, and interest (throughout the United States and in all foreign countries), free and clear of all liens and encumbrances, in and to each Invention Idea, which shall be the sole property of the Company, whether or not copyrightable or patentable.  
		

		
			 
		

		
			(d) Assist with Registration.  In the event any Invention Idea shall be deemed by the Company to be copyrightable or patentable or otherwise registrable, I will assist the Company (at its expense) in obtaining and maintaining letters patent or other applicable registrations and I will execute all documents and do all other things (including testifying at the Company’s expense) necessary or proper to accomplish such registrations thereon and to vest the Company with full title thereto.  Should the Company be unable to secure my signature on any document necessary to apply for, prosecute, obtain, or enforce any patent, copyright, or other right or protection relating to any Invention Idea, whether due to my mental or physical incapacity or any other cause, I hereby irrevocably designate and appoint the Company and each of its duly authorized officers and agents as my agent and attorney-in-fact, to act for and on my behalf and stead, to execute and file any such document, and to do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of patents, copyrights, or other rights or protections with the same force and effect as if executed and delivered by me.  I agree to maintain adequate and current records on the development of all Invention Ideas, which shall also remain the sole property of the Company. 
		

		
			 
		

		
			(e) License for Other Inventions.  If, in the course of my employment with the Company, I incorporate into Company property an invention owned by me or in which I have an interest, the Company is granted a nonexclusive, royalty-free, irrevocable, perpetual, world-wide license to make, modify, use and sell any invention as part of and in connection with the Company property. 
		

		
			 
		

		
			(f) Exclusions.  Except as disclosed in Schedule A attached hereto and incorporated herein, there are no ideas, processes, inventions, technology, writings, programs, designs, formulas, discoveries, patents, copyrights, or trademarks, or improvements to the foregoing, that I wish to exclude from the operation of this Agreement.  To the best of my knowledge, there is no existing contract in conflict with this Agreement or any other contract to assign ideas, processes, inventions, technology, writings, programs, designs, formulas, discoveries, patents, copyrights, or trademarks, or improvements thereon, that is now in existence between me and any other person or entity.   
		

		
			 
		

		
			(g) Disclosure.  I agree to disclose promptly to the Company all 
		

		
			
		

		
			

		 

		

			 

		

 

“Invention Ideas” and relevant records as defined in paragraph 2(a), above.  I further agree to promptly disclose to the Company any idea that I do not believe to be an invention, but which is conceived, developed, or reduced to practice by me (alone or with others) while I am employed by the Company or during the one-year period following the termination of my employment.  I will disclose the idea, along with all information and records pertaining to the idea, and the Company will examine the disclosure in confidence to determine if in fact it is an Invention Idea subject to this Agreement. 
		

		
			 
		

		
			(h) Post-Termination Period.  I agree that any idea, invention, writing, discovery, patent, copyright, trademark or similar item or improvement shall be presumed to be an Invention Idea if it is conceived, developed, use, sold, exploited, or reduced to practice by me or with my aid within one (1) year after my termination of employment with the Company.  I can rebut this presumption if I prove that the idea, invention, writing, discovery, patent, copyright, trademark or similar item or improvement is not an Invention Idea covered by this Agreement. 
		

		
			 
		

		
			3. Former or Conflicting Agreements.  During my employment with the Company, I will not disclose to the Company, or use, or induce the Company to use, any proprietary information or trade secrets of others.  I represent and warrant that I have returned all property and confidential information belonging to all prior employers, individuals and entities who have provided such property and confidential information to me, if any, as required by such prior employers, individuals and entities.  I further represent and warrant that my performance of the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company.  I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith.  I have listed in Schedule B all other agreements concerning proprietary information or agreements to which I am a party and have attached copies of any agreements in my possession. 
		

		
			 
		

		
			4. Government Contracts.  I understand that the Company has or may enter into contracts with the government under which certain intellectual property rights will be required to be protected, assigned, licensed, or otherwise transferred and I hereby agree to execute such other documents and agreements as are necessary to enable the Company to meet its obligations under any such government contracts.   
		

		
			 
		

		
			5. Termination.  I hereby acknowledge and agree that all property, including, without limitation, all source code listings, books, manuals, records, models, drawings, reports, notes, contracts, lists, blueprints, and other documents or materials or copies thereof, all equipment furnished to or prepared by me in the course of or incident to my employment, and all Proprietary Information belonging to the Company and will be promptly returned to the Company upon termination of my employment with the Company.  Following my termination, I will not retain any written or other tangible material containing any Proprietary Information or information pertaining to any Invention Idea.  I understand that my obligations contained in this Agreement will survive the termination of my employment and I will continue to make all disclosures required of me by paragraph 2(b).  In the event of the termination of my employment, I agree, if requested by the Company, to sign and deliver the Termination Certificate attached as Schedule C hereto and incorporated herein.  I ACKNOWLEDGE THAT THE COMPANY IS AN “AT-WILL” EMPLOYER AND NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED TO IMPLY THAT THE TERM OF MY EMPLOYMENT IS OF ANY DEFINITE DURATION.  NO ONE 
		

		
			
		

		
			

		 

		

			 

		

 

OTHER THAN AN AUTHORIZED OFFICER OF THE COMPANY HAS THE AUTHORITY TO ALTER THIS ARRANGEMENT, TO ENTER INTO AN AGREEMENT FOR EMPLOYMENT FOR A SPECIFIED PERIOD OF TIME, OR TO MAKE ANY AGREEMENT CONTRARY TO THIS POLICY, AND ANY SUCH AGREEMENT MUST BE IN WRITING AND MUST BE SIGNED BY AN AUTHORIZED OFFICER OF THE COMPANY AND BY THE AFFECTED EMPLOYEE. 
		

		
			 
		

		
			6. Remedies.  I recognize that nothing in this Agreement is intended to limit any remedy of the Company under the California Uniform Trade Secrets Act or other federal or state law and that I could face possible criminal and civil actions, resulting in imprisonment and substantial monetary liability, if I misappropriate the Company’s trade secrets.  In addition, I recognize that my violation of this Agreement could cause the Company irreparable harm, the amount of which may be extremely difficult to estimate, thus, making any remedy at law or in damages inadequate.  Therefore, I agree that the Company shall have the right to apply to any court of competent jurisdiction for an order restraining any breach or threatened breach of this Agreement and for any other relief the Company deems appropriate.  This right shall be in addition to any other remedy available to the Company in law or equity.   
		

		
			 
		

		
			7. Miscellaneous Provisions.   
		

		
			 
		

		
			(a) Assignment.  I agree that the Company may assign to another person or entity any of its rights under this Agreement.   
		

		
			 
		

		
			(b) Governing Law; Severability.  The validity, interpretation, enforceability, and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without giving effect to any conflicts or choice of law provisions that would result in the application of the laws of any jurisdiction other than the internal laws of the State of Nevada.  If any provision of this Agreement, or application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable, or void, the remainder of this Agreement and such provisions as applied to other persons, places, and circumstances shall remain in full force and effect.   
		

		
			 
		

		
			(c) Entire Agreement.  The terms of this Agreement are the final expression of the parties’ agreement with respect to the subject matter hereof and may not be contradicted by evidence of any prior or contemporaneous agreement.  This Agreement shall constitute the complete and exclusive statement of its terms and no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding involving this Agreement.   
		

		
			 
		

		
			(d) Amendments; Waivers.  This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by me and by a duly authorized representative of the Company.  No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, or power provided herein or by law or in equity. 
		

		
			 
		

		
			(e) Successors and Assigns.  This Agreement shall be binding upon 
		

		
			
		

		
			

		 

		

			 

		

 

me and my heirs, executors, administrators, and successors, and shall inure to the benefit of the Company’s successors and assigns.   
		

		
			 
		

		
			(f) Application of this Agreement.  I hereby agree that my obligations set forth in Sections 1 and 2 hereof and the definitions of Proprietary Information and Invention Ideas contained therein shall be equally applicable to Proprietary Information and Invention Ideas relating to any work performed by me for the Company prior to the execution of this Agreement.  
		

		
			 
		

		
			(Remainder of this page intentionally left blank; signatures begin on the next page.)
		

		
			
		

		
			

		 

		

			 

		

 

ACKNOWLEDGEMENT & AGREEMENT
		

		
			 
		

		
			I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS.  I HAVE COMPLETELY NOTED ON SCHEDULE A TO THIS AGREEMENT ANY PROPRIETARY INFORMATION, IDEAS, PROCESSES, INVENTIONS, TECHNOLOGY, WRITINGS, PROGRAMS, DESIGNS, FORMULAS, DISCOVERIES, PATENTS, COPYRIGHTS, OR TRADEMARKS, OR IMPROVEMENTS, RIGHTS, OR CLAIMS RELATING TO THE FOREGOING, THAT I DESIRE TO EXCLUDE FROM THIS AGREEMENT.   
		

		
			 
		

			
					
						Date:

					
					
						2/24/16

					
					
						    

					
					
						Employee Name:

					
					
						Michael D. Rumbolz

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						/s/ Michael D. Rumbolz

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Employee Signature

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			 

		

 

SCHEDULE A
		

		
			 
		

		
			EMPLOYEE’S DISCLOSURE 
		

		
			 
		

		
			OF PRIOR INVENTIONS 
		

		
			 
		

			
					
						 

					
					
						1. Prior Inventions.  Except as set forth below, there are no ideas, processes, inventions, technology, writings, programs, designs, formulas, discoveries, patents, copyrights, or trademarks, or any claims, rights, or improvements to the foregoing, that I wish to exclude from the operation of this Agreement:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				

		
			 
		

		
			 
		

			
					
						Date:

					
					
						2/24/16

					
					
						    

					
					
						Employee Name:

					
					
						Michael D. Rumbolz

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						/s/ Michael D. Rumbolz

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Employee Signature

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			 

		

 

SCHEDULE B 
		

		
			 
		

		
			EMPLOYEE’S DISCLOSURE 
		

		
			 
		

		
			OF PRIOR AGREEMENTS 
		

		
			 
		

			
					
						 

					
					
						1. Prior Agreements.  Except as set forth below, I am aware of no prior agreements between me and any other person or entity concerning proprietary information or inventions (attach copies of all agreements in your possession):

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				

		
			 
		

		
			 
		

			
					
						Date:

					
					
						2/24/16

					
					
						    

					
					
						Employee Name:

					
					
						Michael D. Rumbolz

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						/s/ Michael D. Rumbolz

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Employee Signature

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			 

		

 

SCHEDULE C 
		

		
			 
		

		
			TERMINATION CERTIFICATE CONCERNING 
		

		
			EVERI PAYMENTS INC. (FORMERLY KNOWN AS GLOBAL CASH ACCESS, INC.) 
		

		
			PROPRIETARY INFORMATION AND INVENTIONS 
		

		
			 
		

		
			This is to certify that I have returned all property of Everi Payments Inc. (formerly known as Global Cash Access, Inc.), a Delaware limited liability company (the “Company”), including, without limitation, all source code listings, books, manuals, records, models, drawings, reports, notes, contracts, lists, blueprints, and other documents and materials, Proprietary Information, and equipment furnished to or prepared by me in the course of or incident to my employment with the Company, and that I did not make or distribute any copies of the foregoing.
		

		
			 
		

		
			I further certify that I have reviewed the Employee Proprietary Information and Inventions Agreement signed by me and that I have complied with and will continue to comply with all of its terms, including, without limitation, (i) the reporting of any idea, process, invention, technology, writing, program, design, formula, discovery, patent, copyright, or trademark, or any improvement, rights, or claims related to the foregoing, conceived or developed by me and covered by the Agreement and (ii) the preservation as confidential of all Proprietary Information pertaining to the Company.  This certificate in no way limits my responsibilities or the Company’s rights under the Agreement.
		

		
			 
		

		
			On termination of my employment with the Company, I will be employed by ____________________ [Name of New Employer] [in the ______________ division] and I will be working in connection with the following projects:
		

		
			 
		

		
			[generally describe the projects] 
		

		
			 
		

			
					
						 

				
	
					
						 

				
	
					
						 

				
	
					
						 

				

		
			 
		

		
			 
		

			
					
						Date:

					
					
						 

					
					
						 

				
	
					
						Employee Name:

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						Employee Signature

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			 

		

 

EXHIBIT B
		

		
			 
		

		
			STOCK OPTION AGREEMENT
		

		
			 
		

		
			Incorporated by reference to the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 16, 2016.csgs-ex1052_6.htm

Exhibit 10.52

EMPLOYMENT AGREEMENT

 

This Employment Agreement is made and entered into as of the 15th day of February, 2016, among CSG SYSTEMS INTERNATIONAL, INC. ("CSGS"), a Delaware corporation, CSG SYSTEMS, INC. ("Systems"), a Delaware corporation, and BRIAN SHEPHERD (the "Executive"). CSGS and Systems collectively are referred to in this Employment Agreement as the "Companies".

 

* * *

 

WHEREAS, Systems is a wholly-owned subsidiary of CSGS; and 

 

WHEREAS, the Companies desire to employ the Executive as an executive officer and to agree upon the terms of such employment; 

 

NOW, THEREFORE, the Companies and the Executive agree that the terms of Executive's employment by the Companies are as follows: 

 

1.   Employment and Duties.  Each of the Companies hereby employs the Executive as an Executive Vice President and as President of the broadband, cable, and satellite business of Systems reporting to the Chief Executive Officer of CSGS throughout the term of this agreement and agrees to cause the Executive from time to time to be elected or appointed to such corporate office.  The duties and responsibilities of the Executive shall include (a) the duties and responsibilities of the Executive's corporate office which are set forth in the respective bylaws of the Companies from time to time, (b) general management and supervision of the broadband, cable, and satellite business of Systems, and (c) such other duties and authorities consistent with the Executive's corporate office, management position, and this agreement which the Board of Directors of CSGS (the "Board") or the Chief Executive Officer of CSGS from time to time may assign to the Executive.  If the Executive is elected or appointed as a director of CSGS or Systems or as an officer or director of any of the respective subsidiaries of the Companies during the term of this agreement, then he also shall serve in such capacity or capacities but without additional compensation.

 

2.   Term of Employment.  The employment of the Executive by the Companies will begin on February 15, 2016, but this agreement will become effective as of March 1, 2016, only upon the approval of this agreement by the Board, and shall continue until the first to occur of (a) the Executive's death, (b) the effective date of the Executive's voluntary resignation as an employee of the Companies, (c) the effective date of the termination of the Executive's employment by the Companies by reason of the Executive's disability pursuant to Paragraph 10(b) of this agreement, (d) the effective date of the termination of the Executive's employment by the Companies for cause pursuant to Paragraph 10(c) of this agreement, (e) the effective date of the termination of the Executive's employment by the Companies for any reason other than cause or the Executive's death or disability pursuant to Paragraph 10(d) or Paragraph 10(e) of this agreement, or (f) the effective date of the termination of the Executive's employment pursuant to Paragraph 10(f) of this agreement.  Upon the termination of the employment of the Executive under this agreement, the applicable provisions of Paragraph 10 of this agreement 

 

 

 

shall become effective; and the Companies and the Executive thereupon and thereafter shall comply with the applicable provisions of Paragraph 10 of this agreement.   

 

3.   Place of Employment.  Regardless of the location of the executive offices of the Companies during the term of this agreement, the Companies shall maintain a suitably staffed office for the Executive in the Denver, Colorado, metropolitan area during the term of this agreement; and the Executive will not be required without his consent to relocate or transfer his executive office or principal residence from the immediate vicinity of the Denver, Colorado, metropolitan area.  

 

4.   Base Salary.  For all services to be rendered by the Executive pursuant to this Agreement, the Companies agree to pay the Executive during the term of this agreement a base salary (the "Base Salary") for each calendar year at an annual rate which is not less than the annual rate of the Executive's Base Salary in effect on December 31 of the immediately preceding calendar year.  The Executive's annual incentive bonus provided for in Paragraph 5 and all other compensation and benefits to which the Executive is or may become entitled pursuant to this agreement or under any plans or programs of the Companies shall be in addition to the Base Salary.  The Executive's Base Salary for 2016, beginning as of February 15, 2016, will be at an annual rate of $400,000.00, payable in accordance with the Companies' normal payroll practices. 

 

5.  Annual Incentive Bonus.  The Compensation Committee of the Board shall provide an incentive bonus program for the Executive for each calendar year during the term of this agreement, beginning with 2016.  The Executive and the Companies understand and acknowledge that, among other things, such incentive bonus program will involve achievement by the Companies of various financial objectives, which may include but are not limited to revenues and earnings, and also may include achievement by the Companies or the Executive of various mutually agreed-upon non-financial objectives.  Such incentive bonus program for each calendar year shall provide the opportunity for the Executive to earn an incentive bonus of not less than one hundred percent (100%) of his Base Salary for such calendar year if the agreed upon objectives are fully achieved.  The Board from time to time also may establish incentive compensation programs for the Executive covering periods of more than one (1) year, and any such programs shall be in addition to the annual incentive bonus program required by this Paragraph 5. 

 

6.   Expenses.  During the term of this agreement, the Executive shall be entitled to prompt reimbursement by the Companies of all reasonable ordinary and necessary travel, entertainment, and other expenses incurred by the Executive (in accordance with the policies and procedures established by the Companies for their respective senior executive officers) in the performance of his duties and responsibilities under this agreement; provided, that the Executive shall properly account for such expenses in accordance with the policies and procedures of the Companies, which may include but are not limited to itemized accountings. 

 

7.   Other Benefits.  During the term of this agreement, the Companies shall provide to the Executive and his eligible dependents at the expense of the Companies individual or group medical, hospital, dental, and long-term disability insurance coverages and group life insurance coverage, in each case at least as favorable as those coverages which are provided to other senior 

 

 

2

 

executive officers of the Companies.  During the term of this agreement, the Executive also shall be entitled to participate in such other benefit plans or programs which the Companies from time to time may make available to their employees generally (except, if applicable, any programs in which executive officers of CSGS are not eligible to participate because of securities law reasons).  

 

8.   Vacations and Holidays.  During the term of this agreement, the Executive shall be entitled to paid vacations and holidays in accordance with the policies of the Companies in effect from time to time for their respective senior executive officers, but in no event shall the Executive be entitled to less than four (4) weeks of vacation during each calendar year. 

 

9.   Full-Time Efforts and Other Activities.  During the term of this agreement, to the best of his ability and using all of his skills, the Executive shall devote substantially all of his working time and efforts during the normal business hours of the Companies to the business and affairs of the Companies and to the diligent and faithful performance of the duties and responsibilities assigned to him pursuant to this agreement, except for vacations, holidays, and sick days.  However, the Executive may devote a reasonable amount of his time to civic, community, or charitable activities, to service on the governing bodies or committees of trade associations or similar organizations of which either or both of the Companies are members, and, with the prior approval of the Board or the Chief Executive Officer of CSGS, to service as a director of other corporations and to other types of activities not expressly mentioned in this paragraph, so long as the activities referred to in this sentence do not materially interfere with the proper performance of the Executive's duties and responsibilities under this agreement.  The Executive also shall be free to manage and invest his assets in such manner as will not require any substantial services by the Executive in the conduct of the businesses or affairs of the entities or in the management of the properties in which such investments are made, so long as such activities do not materially interfere with the proper performance of the Executive's duties and responsibilities under this agreement.  At all times during the term of this agreement, the Executive shall comply with the then current Code of Ethics and Business Conduct of CSGS.

 

10.  Termination of Employment.  

 

(a)  Termination Because of Death.  The Executive's employment by the Companies under this agreement shall terminate upon his death.  If the Executive's employment under this agreement terminates because of his death, then the Executive's estate or his beneficiaries (as further described in subparagraph 10(k)) will be entitled to receive the following compensation and benefits from the Companies: 

 

	
 
	
(i)A lump sum payment equal to the sum of the following, to the extent accrued and unpaid up to and including the date of termination of the Executive’s employment (the "Termination Date"): (A) the Executive’s Base Salary, and (B) the balance of the Executive’s earned and unused vacation pay, in each case payable within fourteen (14) days after the Termination Date (collectively, the "Accrued Benefits");  
	
 

 

 

 

3

 

	

	
(ii)A lump sum payment under the terms of the then-existing annual incentive bonus plan for senior executives of the Companies, on a pro rata basis, equal to the product of (A) the Executive's annual incentive bonus for the calendar year in which the Termination Date occurs (computed as if the Executive were employed by the Companies throughout such calendar year) and (B) a fraction, the numerator of which is the number of days during the calendar year in which the Termination Date occurs that the Executive was employed by the Companies and the denominator of which is 365, payable on the date bonuses are paid under the annual incentive bonus plan to then-current senior executives of the Companies (the "Pro Rata Bonus");  
	
 

 

	

	
(iii)Any other amounts earned, accrued, or owed to the Executive under this agreement but not paid as of the Termination Date; and 
	
 

 

	

	
(iv)Any other benefits payable by reason of the Executive's death, or to which the Executive otherwise may be entitled, under any benefit plans or programs of the Companies in effect on the Termination Date. 
	
 

 

(b)  Termination Because of Disability.  If the Executive becomes incapable by reason of physical injury, disease, or mental illness of substantially performing his duties and responsibilities under this agreement with or without a reasonable accommodation for a continuous period of six (6) months or more or for more than one hundred eighty (180) days in the aggregate (whether or not consecutive) during any 12-month period, then at any time after the elapse of such six-month period or such 180 days, as the case may be, the Board may terminate the Executive's employment by the Companies under this agreement.  If the Executive's employment under this agreement is terminated by the Board because of such disability on the part of the Executive, then the Executive will be entitled to receive the following compensation and benefits from the Companies: 

 

	

	
(i)The Accrued Benefits, payable within fourteen (14) days after the Termination Date;  
	
 

 

	

	
(ii)The Pro Rata Bonus, payable on the date bonuses are paid under the annual incentive bonus plan to then-current employees;   
	
 

 

	

	
(iii)Any other amounts earned, accrued, or owed to the Executive under this agreement but not paid as of the Termination Date; 
	
 

 

	

	
(iv)Continued participation at the Companies' expense in the group medical, dental, life, and long-term disability insurance benefit plans or programs of the Companies which may be in effect from time to time and in which the Executive was participating 
	
 

 

 

4

 

		
as of the Termination Date, to the extent that such continued participation by the Executive is permitted under the terms and conditions of such plans (unless such continued participation is restricted or prohibited by applicable governmental regulations governing such plans), until the first to occur of the cessation of such disability, the Executive's death, the Executive's attainment of age sixty-five (65), or (separately with respect to the termination of each benefit) the provision of a substantially equivalent benefit to the Executive by another employer of the Executive; and  
	
 

 

	

	
(v)Any other benefits payable by reason of the Executive's disability, or to which the Executive otherwise may be entitled, under any benefit plans or programs of the Companies in effect on the Termination Date. 
	
 

 

For purposes of this subparagraph (b), decisions with respect to the Executive's disability shall be made by the Board, using its reasonable good faith judgment; and, in making any such decision, the Board shall consider and rely upon the opinions of (i) a duly licensed and qualified physician selected by a majority of the members of the Board who are not employees of either of the Companies or any of their respective subsidiaries and (ii) the Executive's personal physician. 

 

(c)  Termination for Cause.  The Board may terminate the Executive's employment by the Companies under this agreement for cause; however, for purposes of this agreement "cause" shall mean only (i) the Executive's confession or conviction of theft, fraud, embezzlement, or other crime involving dishonesty, (ii) the Executive's certification of materially inaccurate financial or other information pertaining to the Companies (or either of them) or any of the respective subsidiaries of the Companies with actual knowledge of such inaccuracies on the part of the Executive, (iii) the Executive's refusal or willful failure to cooperate with an investigation by a governmental agency pertaining to the financial or other business affairs of the Companies (or either of them) or any of the respective subsidiaries of the Companies unless such refusal or willful failure is based upon a written directive of the Board or the written advice of counsel, (iv) the Executive's excessive absenteeism (other than by reason of physical injury, disease, or mental illness) without a reasonable justification and failure on the part of the Executive to cure such absenteeism within twenty (20) days after the Executive's receipt of a written notice from the Board or the Chief Executive Officer of CSGS setting forth the particulars of such absenteeism, (v) material violation by the Executive of the provisions of Paragraph 11, (vi) habitual and material negligence by the Executive in the performance of his duties and responsibilities under or pursuant to this agreement and failure on the part of the Executive to cure such negligence within twenty (20) days after his receipt of a written notice from the Board or the Chief Executive Officer of CSGS setting forth in reasonable detail the particulars of such negligence, (vii) material non-compliance by the Executive with his obligations under Paragraph 9 and failure to correct such non-compliance within twenty (20) days after the Executive's receipt of a written notice from the Board or the Chief Executive Officer of CSGS setting forth in reasonable detail the particulars of such non-compliance, (viii) material failure by the Executive to comply with a lawful directive of the Board or the Chief Executive Officer of CSGS and failure to cure such non-compliance within twenty (20) days after the Executive's receipt of a written notice 

 

 

5

 

from the Board or the Chief Executive Officer of CSGS setting forth in reasonable detail the particulars of such non-compliance, (ix) a material breach by the Executive of any of his fiduciary duties to the Companies (or either of them) or any of the respective subsidiaries of the Companies and, if such breach is curable, the Executive's failure to cure such breach within ten (10) days after the Executive's receipt of a written notice from the Board or the Chief Executive Officer of CSGS setting forth in reasonable detail the particulars of such breach, or (x) willful misconduct or fraud on the part of the Executive in the performance of the Executive's duties under this agreement as determined in good faith by the Board.  In no event shall the results of operations of the Companies or any business judgment made in good faith by the Executive constitute an independent basis for termination for cause of the Executive's employment under this agreement.  Any termination of the Executive's employment for cause must be authorized by a majority vote of the Board taken not later than six (6) months after a majority of the members of the Board (other than the Executive if he is a member of the Board) have actual knowledge of the occurrence of the event or conduct constituting the cause for such termination.  If the Executive's employment under this agreement is terminated by the Board for cause, then the Executive will be entitled to receive the following compensation and benefits from the Companies:  

 

	

	
(i)The Accrued Benefits, payable within fourteen (14) days after the Termination Date; 
	
 

 

	

	
(ii)Any other amounts earned, accrued, or owed to the Executive under this agreement but not paid as of the Termination Date; and
	
 

 

	

	
(iii)Any other benefits payable to the Executive upon his termination for cause, or to which the Executive otherwise may be entitled, under any benefit plans or programs of the Companies in effect on the Termination Date. 
	
 

 

(d)  Termination Without Cause Prior to a Change of Control.  If, prior to the occurrence of a Change of Control, the Companies terminate the Executive's employment under this agreement for any reason other than cause or the Executive's death or disability, then the Executive will be entitled to receive the compensation, benefits, and other payments from the Companies provided in the following clauses (i), (iii), and (v) of this subparagraph (d) and, if the Executive (A) executes a release of all claims in a form reasonably acceptable to the Companies and the Executive (the "Release") and the applicable revocation period with respect to the Release expires within 45 days (or such longer period as required by law) following the Termination Date and (B) continues to comply with (1) the Executive’s fiduciary obligations to the Companies, (2) the Executive’s covenants under Paragraphs 18 and 19 of this agreement, and (3) any other material ongoing obligations relating to the Companies to which the Executive is subject, also will be entitled to receive the applicable payments and benefits provided in the following clauses (ii) and (iv) of this subparagraph (d):  

 

	

	
(i)The Accrued Benefits, payable within fourteen (14) days after the Termination Date;
	
 

 

 

 

6

 

	

	
(ii)(1) If the Termination Date occurs during 2016 or 2017, an aggregate amount equal to (I) the Executive's Base Salary in effect on the Termination Date and (II) any annual incentive bonus which the Executive actually would have been entitled to receive for the calendar year during which the Termination Date occurs if his employment had not been terminated, with the Base Salary amount being payable in substantially equal installments in accordance with the Companies' normal payroll practices for the twelve (12) months following the Termination Date and with any incentive bonus amount being payable in accordance with the Companies' regular practices for the payment of annual incentive bonuses to their senior executive officers; provided, that (A) such payments shall commence on the first regularly scheduled payroll date that is at least sixty (60) days following the Termination Date (or on such later date as is applicable with respect to the payment of any incentive bonus amount) upon the conditions that the Executive has delivered the signed Release to the Companies and the Release has become irrevocable (the "Payment Commencement Date") and (B) the first such payment shall include all payments that otherwise would have been paid to the Executive pursuant to this clause (1) between the Termination Date and the Payment Commencement Date if such payments had commenced as of the Termination Date, or  
	
 

 

	

	
(2) if the Termination Date occurs after December 31, 2017, an amount equal to one hundred percent (100%) of the average of the Executive's compensation shown in Box 1 ("Wages, tips, other compensation") of the Executive's Internal Revenue Service Form W-2 for the three (or fewer) calendar years (excluding 2016) ended prior to the Termination Date during which the Executive was employed by the Companies, payable in substantially equal installments in accordance with the Companies' normal payroll practices for the twelve (12) months following the Termination Date; provided, that (A) such payments shall commence on the Payment Commencement Date and (B) the first such payment shall include all payments that otherwise would have been paid to the Executive pursuant to this clause (2) between the Termination Date and the Payment Commencement Date if such payments had commenced as of the Termination Date;    
	
 

 

	

	
(iii)Any other amounts earned, accrued, or owed to the Executive under this agreement but not paid as of the Termination Date; 
	
 

 

	

	
(iv)Continued participation at the Companies' expense in the group medical, dental, life, and long-term disability insurance benefit 
	
 

 

 

7

 

		
plans or programs of the Companies which may be in effect from time to time and in which the Executive was participating as of the Termination Date, to the extent that such continued participation by the Executive is permitted under the terms and conditions of such plans (unless such continued participation is restricted or prohibited by applicable governmental regulations governing such plans), until the first to occur of one (1) year after the Termination Date or (separately with respect to the termination of each benefit) the provision of a substantially equivalent benefit to the Executive by another employer of the Executive; and  
	
 

 

	

	
(v)Any other benefits payable to the Executive upon his termination without cause, or to which the Executive otherwise may be entitled, under any benefit plans or programs of the Companies in effect on the Termination Date. 
	
 

 

(e)  Termination Without Cause After a Change of Control.  If, within eighteen (18) months after the occurrence of a Change of Control (as determined under Paragraph 15 of this agreement), the Companies or any Permitted Assignee terminates the Executive's employment under this agreement for any reason other than cause or the Executive's death or disability, then the Executive shall be entitled to receive the compensation, benefits, and other payments from the Companies provided in the following clauses (i), (ii), (iv), and (vi) of this subparagraph (e) and, if the Executive (A) executes a release of all claims in a form reasonably acceptable to the Companies and the Executive (the "Release") and the applicable revocation period with respect to the Release expires within 45 days (or such longer period as required by law) following the Termination Date and (B) continues to comply with (1) the Executive’s fiduciary obligations to the Companies, (2) the Executive’s covenants under Paragraphs 18 and 19 of this agreement, and (3) any other material ongoing obligations relating to the Companies to which the Executive is subject, also will be entitled to receive the payments and benefits provided in the following clauses (iii) and (v) of this subparagraph (e): 

 

	

	
(i)The Accrued Benefits, payable within fourteen (14) days after the Termination Date;
	
 

 

	

	
(ii)The automatic vesting of all unvested Restricted Stock Awards under Restricted Stock Award Agreements between CSGS and the Executive which are in effect on the Termination Date and which provide for automatic vesting of the unvested Award Shares upon the Executive's involuntary (on the part of the Executive) termination of employment without cause after the occurrence of a Change of Control (the "Change of Control Termination");
	
 

 

	

	
(iii)An amount (if any) which is (A) $1.00 less than the amount that, if paid by the Companies to the Executive, would result in the imposition of a tax under Section 4999 of the Internal 
	
 

 

 

8

 

		
Revenue Code of 1986, as amended (the "Code"), on "excess parachute payments" (as defined in Section 280G of the Code) received or receivable by the Executive in connection with or as a result of the Executive's Change of Control Termination minus (B) the fair market value of all other payments or benefits in the nature of compensation for purposes of Section 280G of the Code received or receivable by the Executive in connection with or as a result of the Executive's Change of Control Termination, less any portion of such fair market value which, pursuant to U.S. Treasury Regulations under Section 280G of the Code, is not treated as contingent on the change of ownership or control of CSGS (the "280G Adjustment"), the amount of any payment to be made pursuant to this subparagraph (e)(iii) to be determined either by a nationally recognized firm of registered public accountants or by independent tax counsel selected and paid for by the Companies promptly after the Termination Date and to be paid in a lump sum by the Companies to the Executive no later than thirty (30) days after the determination of such amount; solely by way of illustration of this subparagraph (e)(iii), if (1) the Executive’s "base amount" (as defined in Section 280G of the Code) is $1,000,000, (2) the fair market value of unvested performance-based Award Shares is $2,000,000, (3) the fair market value of unvested time-based Award Shares is $1,000,000 and the 280G Adjustment applicable to the unvested time-based Award Shares is $850,000, for a net of $150,000, and (4) the estimated value of medical insurance benefits is $40,000, then the amount payable to the Executive pursuant to this subparagraph (e)(iii) is $809,999 (3 times $1,000,000 ($3,000,000), minus $2,000,000, minus $150,000 ($1,000,000 - $850,000), minus $40,000, minus $1 = $809,999); and, notwithstanding the foregoing provisions of this subparagraph (e), if a change of control (as defined in Paragraph 15 of this agreement, in a Restricted Stock Award Agreement between the Executive and CSGS, or under any other benefit plan or program of the Companies) occurs which is not a change (i) in the ownership or effective control of CSGS or (ii) in the ownership of a substantial portion of the assets of CSGS for purposes of Section 280G of the Code (a "280G Change of Control"), then the payment (if any) required under this subparagraph (e)(iii) shall be computed and paid in the same manner as if such change of control were a 280G Change of Control;  
	
 

 

	

	
(iv)Any other amounts earned, accrued, or owed to the Executive under this agreement but not paid as of the Termination Date; and 
	
 

 

 

 

9

 

	

	
(v)Continued participation at the Companies' expense in the group medical, dental, life, and long-term disability insurance benefit plans or programs of the Companies which may be in effect from time to time and in which the Executive was participating as of the Termination Date, to the extent that such continued participation by the Executive is permitted under the terms and conditions of such plans (unless such continued participation is restricted or prohibited by applicable governmental regulations governing such plans), until the first to occur of two (2) years after the Termination Date or (separately with respect to the termination of each benefit) the provision of a substantially equivalent benefit to the Executive by another employer of the Executive; and  
	
 

 

	

	
(vi)Any other benefits payable to the Executive upon his termination without cause, or to which the Executive otherwise may be entitled, under any benefit plans or programs of the Companies in effect on the Termination Date.
	
 

 

Notwithstanding the foregoing provisions of this subparagraph (e), with respect to compensation subject to Section 409A of the Code, the lump sum payment provision set forth in clause (iii) of this subparagraph (e) will only apply if the Change of Control event is also a "change in control event" as determined under Treasury Regulation section 1.409A-3(i)(5); otherwise, the payment will be made at the same time and in the same form as set forth in subparagraph 10(d)(ii) of this agreement. 

 

(f)  Constructive Termination.  If at any time during the term of this agreement the Executive terminates his employment on account of a Constructive Termination, then the Executive shall be eligible to receive all of the payments and benefits provided in subparagraph 10(d) of this agreement, which shall be paid in accordance with subparagraph 10(d); however, if the Constructive Termination occurs within eighteen (18) months following a Change of Control, then the Executive instead shall be eligible to receive all of the payments and benefits provided in subparagraph 10(e) of this agreement, which shall be paid in accordance with subparagraph 10(e).  For purposes of this subparagraph (f), "Constructive Termination" means any action by the Board, the Chief Executive Officer of CSGS, or a Permitted Assignee, in each case without the Executive’s prior consent, that materially and adversely alters the authority, duties, or responsibilities of the Executive.  Notwithstanding the foregoing provisions of this subparagraph (f), in no event will the occurrence of any such condition constitute a Constructive Termination unless (i) the Executive provides written notice to the Board or the Permitted Assignee (as applicable) of the existence of the condition giving rise to a Constructive Termination within ninety (90) days following the date the Executive first becomes aware of the existence of such condition and (B) the Board or Permitted Assignee (as applicable) fails to materially cure such condition to the reasonable satisfaction of the Executive within thirty (30) days following the date of such notice, upon which failure to cure the Executive will immediately resign his employment with the Companies.

 

 

 

10

 

(g)  Voluntary Resignation.  If the Executive voluntarily resigns as an employee of the Companies and thereby voluntarily terminates his employment under this agreement and if none of subparagraphs (a) through (f) of this Paragraph 10 is applicable to such termination, then the Executive will be entitled to receive only the following compensation, benefits, and other payments from the Companies:  

 

	

	
  (i)The Accrued Benefits, payable within fourteen (14) days after the Termination Date;
	
 

 

	

	
 (ii)Any other amounts earned, accrued, or owed to the Executive under this agreement but not paid as of the Termination Date; 
	
 

 

	

	
(iii)If (and only if) the Executive's voluntary resignation is effective on December 31 of a particular calendar year, the Executive's annual incentive bonus (if any) for such calendar year, to be paid in accordance with the regular schedule for its payment; and 
	
 

 

	

	
 (iv)Any other benefits payable to the Executive upon his voluntary resignation, or to which the Executive otherwise may be entitled, under any benefit plans or programs of the Companies in effect on the Termination Date. 
	
 

 

The Executive understands and agrees that if this subparagraph (g) is applicable to the termination of the Executive's employment with the Companies, then, unless his voluntary resignation is effective on December 31 of a particular calendar year, the Executive will not be entitled to any annual incentive bonus for the calendar year in which his voluntary resignation becomes effective. 

 

(h)  Liquidated Damages.  The Executive agrees to accept the compensation, benefits, and other payments provided for in subparagraph (d), subparagraph (e), or subparagraph (f) of this Paragraph 10, as the case may be, as full and complete liquidated damages for any breach of this agreement relating to or resulting from the actual or constructive termination of the Executive's employment under this agreement for a reason other than cause or the Executive's death or disability; and the Executive shall not have and hereby waives and relinquishes any other rights or claims in respect of any such breach. 

 

(i)  Notice of Other Benefits.  Whenever relevant for purposes of this Paragraph 10, the Executive promptly shall notify the Companies of his receipt from another employer of any benefits of the types referred to in subparagraphs (b)(iv), (d)(iv), and (e)(v) of this Paragraph 10.  Such information shall be updated by the Executive whenever necessary to keep the Companies informed on a current basis.

 

(j)  Modification of Benefit Plans or Programs.  Nothing contained in this Paragraph 10 shall obligate the Companies to institute, maintain, or refrain from changing, amending, or discontinuing any benefit plan or program referred to in subparagraph (b)(iv), (d)(iv), or (e)(v) of 

 

 

11

 

this Paragraph 10 so long as such actions are similarly applicable to senior executives of the Companies generally.  

 

(k)  Rights of Estate.  The Executive may, by written instrument delivered to the Companies during the Executive's lifetime, designate primary and contingent beneficiaries to receive (at the same time or times that the payments would have been made to the Executive if the Executive were still living) the unpaid portion of any cash payments if the Executive dies prior to his receipt of all of the cash payments to which he may be entitled pursuant to subparagraph (a), (b), (c), (d), (e), (f), or (g) of this Paragraph 10, and the Executive may designate the proportions in which such beneficiaries are to receive such payments.  The Executive may change such beneficiary designations from time to time, and the last written beneficiary designation filed with the Companies prior to the Executive's death will control.  If the Executive fails to designate a beneficiary, or if no designated beneficiary survives the Executive, or if all designated beneficiaries who survive the Executive die before all payments are made, then the remaining payments shall be made to the legal representative of the Executive's estate.

 

11.   Nondisclosure.  During the term of this agreement and thereafter, the Executive shall not, without the prior written consent of the Board or a person (other than the Executive) so authorized by the Board, disclose or use for any purpose (except in the course of his employment under this agreement and in furtherance of the business of the Companies or any of their respective subsidiaries) any confidential information, trade secrets, or proprietary data of the Companies or any of their respective subsidiaries (collectively, for purposes of this agreement, "Confidential Information"); provided, however, that Confidential Information shall not include any information then known generally to the public or ascertainable from public or published information (other than as a result of unauthorized disclosure by the Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by the Companies or their respective subsidiaries, as the case may be.

 

12.   Successors and Assigns.  This agreement and all rights under this agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective personal or legal representatives, executors, administrators, heirs, distributees, devisees, legatees, successors, and assigns.  This agreement is personal in nature, and none of the parties to this agreement shall, without the written consent of the others, assign or transfer this agreement or any right or obligation under this agreement to any other person or entity, except as permitted by Paragraph 14.

 

13.   Notices.  For purposes of this agreement, notices and other communications provided for in this agreement shall be deemed to be properly given if delivered personally or sent either by next-business-day prepaid express delivery by a recognized national express delivery service or by United States certified mail, return receipt requested, postage prepaid, in either case addressed as follows: 

 

If to the Executive: Brian Shepherd

c/o CSG Systems, Inc.

9555 Maroon Circle

 

 

12

 

Englewood, CO  80112 

 

If to the Companies: CSG Systems International, Inc. 

   and CSG Systems, Inc. 

9555 Maroon Circle

Englewood, Colorado  80112

Attn:  Chief Executive Officer,

 

or to such other address as either party may have furnished to the other party in writing in accordance with this paragraph.  Such notices or other communications shall be effective only upon receipt.

 

14.   Merger, Consolidation, Sale of Assets.  In the event of (a) a merger of Systems with another corporation (other than CSGS) in a transaction in which Systems is not the surviving corporation, (b) the consolidation of Systems into a new corporation resulting from such consolidation, (c) the sale or other disposition of all or substantially all of the assets of Systems, the Companies may assign this agreement and all of the rights and obligations of the Companies under this agreement to the surviving, resulting, or acquiring entity (for purposes of this agreement, a "Permitted Assignee"); provided, that such surviving, resulting, or acquiring entity shall in writing assume and agree to perform all of the obligations of the Companies under this agreement; and provided further, that the Companies shall remain jointly and severally liable for the performance of the obligations of the Companies under this agreement in the event of a failure of the Permitted Assignee to perform its obligations under this agreement.

 

15.   Change of Control.  For purposes of this agreement, a "Change of Control" shall be deemed to have occurred upon the happening of any of the following events: 

 

	
 
	
(a)
	
CSGS is merged or consolidated into another corporation, and immediately after such merger or consolidation becomes effective the holders of a majority of the outstanding shares of voting capital stock of CSGS immediately prior to the effectiveness of such merger or consolidation do not own (directly or indirectly) a majority of the outstanding shares of voting capital stock of the surviving or resulting corporation in such merger or consolidation; 

 

	
 
	
(b)
	
any person, entity, or group of persons within the meaning of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934 (the "1934 Act") and the rules promulgated thereunder becomes the beneficial owner (within the meaning of Rule 13d-3 under the 1934 Act) of thirty percent (30%) or more of the outstanding voting capital stock of CSGS; 

 

	
 
	
(c)
	
the Common Stock of CSGS ceases to be publicly traded because of an issuer tender offer or other "going private" transaction (other than a transaction sponsored by the then current management of CSGS);

 

	
 
	
(d)
	
CSGS dissolves or sells or otherwise disposes of all or substantially all of its property and assets (other than to an entity or group of entities which is then under common majority ownership (directly or indirectly) with CSGS); 

 

 

13

 

 

	
 
	
(e)
	
in one or more substantially concurrent transactions or in a series of related transactions, CSGS directly or indirectly disposes of a portion or portions of its business operations (collectively, the "Sold Business") other than by ceasing to conduct the Sold Business without its being acquired by a third party (regardless of the entity or entities through which CSGS conducted the Sold Business and regardless of whether such disposition is accomplished through a sale of assets, the transfer of ownership of an entity or entities, a merger, or in some other manner) and either (i) the fair market value of the consideration received or to be received by CSGS for the Sold Business is equal to at least fifty percent (50%) of the market value of the outstanding Common Stock of CSGS determined by multiplying the average of the closing prices for the Common Stock of CSGS on the thirty (30) trading days immediately preceding the date of the first public announcement of the proposed disposition of the Sold Business by the average of the numbers of outstanding shares of Common Stock on such thirty (30) trading days or (ii) the revenues of the Sold Business during the most recent four (4) calendar quarters ended prior to the first public announcement of the proposed disposition of the Sold Business represented fifty percent (50%) or more of the total consolidated revenues of CSGS during such four (4) calendar quarters; or

 

	
 
	
(f)
	
during any period of two consecutive years or less, individuals who at the beginning of such period constituted the Board of Directors of CSGS cease, for any reason, to constitute at least a majority of the Board of Directors of CSGS, unless the election or nomination for election of each new director of CSGS who took office during such period was approved by a vote of at least seventy-five percent (75%) of the directors of CSGS still in office at the time of such election or nomination for election who were directors of CSGS at the beginning of such period.

 

16.   Miscellaneous.  No provision of this agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and is signed by the Executive and an officer of CSGS (other than the Executive) so authorized by the Board.  No waiver by any party to this agreement at any time of any breach by any other party of, or compliance by any other party with, any condition or provision of this agreement to be performed by such other party shall be deemed to be a waiver of similar or dissimilar provisions or conditions at the same or any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this agreement have been made by any party that are not expressly set forth in this agreement. 

 

17.   Representations of Companies.  The Companies severally represent and warrant to the Executive that they have full legal power and authority to enter into this agreement, that the execution and delivery of this agreement by the Companies have been duly authorized by their respective boards of directors, and that the performance of their respective obligations under this agreement will not violate any agreement between the Companies, or either of them, and any other person, firm, or organization. 

 

 

 

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18.   Non-Solicitation of Employees.  For a period of one (1) year after the effective date of the termination of the Executive's employment under this agreement for any reason, whether voluntarily or involuntarily and with or without cause, without the prior written consent of CSGS the Executive agrees (i) not to directly or indirectly employ, solicit for employment, assist any other person in employing or soliciting for employment, or advise or recommend to any other person that such other person employ or solicit for employment any person who then is an employee of the Companies (or either of them) or any of the respective subsidiaries of the Companies and (ii) not to recommend to any then employee of the Companies (or either of them) or any of the respective subsidiaries of the Companies that such employee leave the employ of such employer.  

 

19.   Post-Termination Noncompetition.  Because the Confidential Information known to or developed by the Executive during his employment by the Companies encompasses at the highest level information concerning the plans, strategies, products, operations, and existing and prospective customers of the Companies and their respective subsidiaries and could not practically be disregarded by the Executive, the Executive acknowledges that his provision of executive services to a competitor of the Companies or either of them or any of the respective subsidiaries of the Companies soon after the termination of the Executive's employment by the Companies would inevitably result in the use of the Confidential Information by the Executive in his performance of such executive services, even if the Executive were to use his best efforts to avoid such use of the Confidential Information.  To prevent such use of the Confidential Information and the resulting unfair competition and wrongful appropriation of the goodwill and other valuable proprietary interests of the Companies and their respective subsidiaries, the Executive agrees that for a period of one (1) year after the termination of his employment by the Companies for any reason, whether voluntarily or involuntarily and with or without cause, the Executive will not, directly or indirectly: 

 

	
 
	
(a)
	
engage, whether as an employee, agent, consultant, independent contractor, owner, partner, member, or otherwise, in a business activity which then competes in a material way with a business activity then being actively engaged in by the Companies or either of them or any of their respective subsidiaries; 
	
 

 

	
 
	
(b)
	
solicit or recommend to any other person that such period solicit any then customer of the Companies or either or them or any of their respective subsidiaries, which customer also was a customer of the Companies or either of them or any of their respective subsidiaries at any time during the one (1) year period prior to the termination of the Executive's employment by the Companies, for the purpose of obtaining the business of such customer in competition with the Companies or either of them or any of their respective subsidiaries; or 
	
 

 

	
 
	
(c)
	
induce or attempt to induce any then customer or prospective customer of the Companies or either of them or any of their respective subsidiaries to terminate or not commence a business relationship with the Companies or either of them or any of their respective subsidiaries. 
	
 

 

 

 

15

 

The Companies and the Executive acknowledge and agree that the restrictions contained in this Paragraph 19 are both reasonable and necessary in view of the Executive's positions with the Companies and that the Executive's compensation and benefits under this agreement are sufficient consideration for the Executive's acceptance of such restrictions.  Nevertheless, if any of the restrictions contained in this Paragraph 19 are found by a court having jurisdiction to be unreasonable, or excessively broad as to geographic area or time, or otherwise unenforceable, then the parties intend that the restrictions contained in this Paragraph 19 be modified by such court so as to be reasonable and enforceable and, as so modified by the court, be fully enforced.  Nothing contained in this paragraph shall be construed to preclude the investment by the Executive of any of his assets in any publicly owned entity so long as the Executive has no direct or indirect involvement in the business of such entity and owns less than 2% of the voting equity securities of such entity.  Nothing contained in this paragraph shall be construed to preclude the Executive from becoming employed by or serving as a consultant to or having dealings with a publicly owned entity one of whose businesses is a competitor of the Companies or either of them or any of the respective subsidiaries of the Companies so long as such employment, consultation, or dealings do not directly or indirectly involve or relate to the business of such entity which is a competitor of the Companies or either of them or any of the respective subsidiaries of the Companies. 

 

20.   Joint and Several Obligations.  All of the obligations of the Companies under this agreement are joint and several; and neither the bankruptcy, insolvency, dissolution, merger, consolidation, or reorganization nor the cessation of business or corporate existence of one of the Companies shall affect, impair, or diminish the obligations under this agreement of the other of the Companies.  The compensation and benefits to which the Executive is entitled under this agreement are aggregate compensation and benefits, and the payment of such compensation or the provision of such benefits by one of the Companies shall to the extent of such payment or provision satisfy the obligations of the other of the Companies.  The Companies may agree between themselves as to which of them will be responsible for some or all of the Executive's compensation and benefits under this agreement, but any such agreement between the Companies shall not diminish to any extent the joint and several liability of the Companies to the Executive for all of such compensation and benefits. 

 

21.   Injunctive Relief.  The Executive acknowledges that his violation of the provisions and restrictions contained in Paragraphs 11, 18, and 19 could cause significant injury to the Companies for which the Companies would have no adequate remedy at law.  Accordingly, the Executive agrees that the Companies will be entitled, in addition to any other rights and remedies that then may be available to the Companies, to seek and obtain injunctive relief to prevent any breach or potential breach of any of the provisions and restrictions contained in Paragraph 11, 18, or 19. 

 

22.   Dispute Resolution.  Subject to the provisions of Paragraph 21, any claim by the Executive or the Companies arising from or in connection with this agreement, whether based on contract, tort, common law, equity, statute, regulation, order, or otherwise (a "Dispute"), shall be resolved as follows: 

 

	

	
(a)Such Dispute shall be submitted to mandatory and binding arbitration at the election of either the Executive or the particular Company involved (the "Disputing Party").  Except as otherwise provided in this Paragraph 22, the 
	
 

 

 

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arbitration shall be pursuant to the Commercial Arbitration Rules of the American Arbitration Association (the "AAA").  
	
 

 

	

	
(b)To initiate the arbitration, the Disputing Party shall notify the other party in writing within 30 days after the occurrence of the event or events which give rise to the Dispute (the "Arbitration Demand"), which notice shall (i) describe in reasonable detail the nature of the Dispute, (ii) state the amount of any claim, (iii) specify the requested relief, and (iv) name an arbitrator who (A) has been licensed to practice law in the U.S. for at least ten years, (B) has no past or present relationship with either the Executive or the Companies, and (C) is experienced in representing clients in connection with employment related disputes (the "Basic Qualifications").  Within fifteen (15) days after the other party's receipt of the Arbitration Demand, such other party shall serve on the Disputing Party a written statement (i) answering the claims set forth in the Arbitration Demand and including any affirmative defenses of such party, (ii) asserting any counterclaim, which statement shall (A) describe in reasonable detail the nature of the Dispute relating to the counterclaim, (B) state the amount of the counterclaim, and (C) specify the requested relief, and (iii) naming a second arbitrator satisfying the Basic Qualifications.  Promptly, but in any event within five (5) days thereafter, the two arbitrators so named shall select a third neutral arbitrator from a list provided by the AAA of potential arbitrators who satisfy the Basic Qualifications and who have no past or present relationship with the parties' counsel, except as otherwise disclosed in writing to and approved by the parties.  The arbitration will be heard by a panel of the three arbitrators so chosen (the "Arbitration Panel"), with the third arbitrator so chosen serving as the chairperson of the Arbitration Panel.  Decisions of a majority of the members of the Arbitration Panel shall be determinative. 
	
 

 

	

	
(c)The arbitration hearing shall be held in Denver, Colorado.  The Arbitration Panel is specifically authorized to render partial or full summary judgment as provided for in the Federal Rules of Civil Procedure.  The Arbitration Panel will have no power or authority, under the Commercial Arbitration Rules of the AAA or otherwise, to relieve the parties from their agreement hereunder to arbitrate or otherwise to amend or disregard any provision of this agreement, including, without limitation, the provisions of this Paragraph 22. 
	
 

 

	

	
(d)If an arbitrator refuses or is unable to proceed with arbitration proceedings as called for by this Paragraph 22, such arbitrator shall be replaced by the party who selected such arbitrator or, if such arbitrator was selected by the two party-appointed arbitrators, by such two party-appointed arbitrators' selecting a new third arbitrator in accordance with Paragraph 22(b), in either case within five (5) days after such declining or withdrawing arbitrator's giving notice of refusal or inability to proceed.  Each such replacement arbitrator shall satisfy the Basic Qualifications.  If an arbitrator is replaced pursuant to this Paragraph 22(d) after the arbitration hearing has commenced, then a 
	
 

 

 

17

 

		
rehearing shall take place in accordance with the provisions of this Paragraph 22(d) and the Commercial Arbitration Rules of the AAA.  
	
 

 

	

	
(e)Within ten (10) days after the closing of the arbitration hearing, the Arbitration Panel shall prepare and distribute to the parties a writing setting forth the Arbitration Panel's finding of facts and conclusions of law relating to the Dispute, including the reason for the giving or denial of any award.  The findings and conclusions and the award, if any, shall be deemed to be confidential information. 
	
 

 

	

	
(f)The Arbitration Panel is instructed to schedule promptly all discovery and other procedural steps and otherwise to assume case management initiative and control to effect an efficient and expeditious resolution of the Dispute.  The Arbitration Panel is authorized to issue monetary sanctions against either party if, upon a showing of good cause, such party is unreasonably delaying the proceeding. 
	
 

 

	

	
(g)Any award rendered by the Arbitration Panel will be final, conclusive, and binding upon the parties, and any judgment on such award may be entered and enforced in any court of competent jurisdiction. 
	
 

 

	

	
(h)Each party will bear a pro rata share of all fees, costs, and expenses of the arbitrators; and each party will bear all of the fees, costs, and expenses of his or its own attorneys, experts, and witnesses.   
	
 

 

	

	
(i)Nothing contained in the preceding provisions of this Paragraph 22 shall be construed to prevent either party from seeking from a court a temporary restraining order or other injunctive relief pending final resolution of a Dispute pursuant to this Paragraph 22. 
	
 

 

23.   No Duty to Seek Employment.  The Executive shall not be under any duty or obligation to seek or accept other employment following the termination of his employment by the Companies; and, except as expressly provided in subparagraphs (b)(iv), (d)(iv), and (e)(v) of Paragraph 10, no amount, payment, or benefit due the Executive under this agreement shall be reduced, suspended, or discontinued if the Executive accepts such other employment.

 

24.   Withholding of Taxes.  The Companies may withhold from any amounts payable to the Executive under this agreement all federal, state, and local taxes which are required to be so withheld by any applicable law or governmental regulation or ruling. 

 

25.   Validity.  The invalidity or unenforceability of any provision or provisions of this agreement shall not affect the validity or enforceability of any other provision of this agreement, which other provision shall remain in full force and effect; nor shall the invalidity or unenforceability of a portion of any provision of this agreement affect the validity or enforceability of the balance of such provision. 

 

 

 

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26.   Counterparts.  This document may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute a single agreement.  

 

27.   Headings.  The headings of the paragraphs contained in this document are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this agreement.

 

28.   Applicable Law.  This agreement shall be governed by and construed in accordance with the internal substantive laws, and not the choice of law rules, of the State of Colorado. 

 

29.   Section 409A.  The intent of the Companies and the Executive is that all payments and benefits under this agreement comply with Section 409A of the Code ("Section 409A"), to the extent subject thereto; and, accordingly, to the maximum extent permitted, this agreement shall be interpreted and administered so as to be in compliance with Section 409A. Notwithstanding anything contained in this agreement to the contrary, the Executive shall not be considered to have terminated employment with the Companies for purposes of any payments under this agreement which are subject to Section 409A until the Executive would be considered to have incurred a "separation from service" within the meaning of Section 409A. Each amount to be paid or benefit to be provided under this agreement shall be construed as a separate identified payment for purposes of Section 409A. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided to the Executive during the six-month period immediately following the Executive’s separation from service shall instead be paid on the first business day after the date that is six months following the Executive’s separation from service (or, if earlier, the Executive’s date of death). To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to the Executive under this agreement shall be paid to the Executive on or before the last day of the year following the year in which the expense was incurred, and the amount of expenses eligible for reimbursement (and in kind benefits provided to the Executive) during one year may not affect amounts reimbursable or provided in any subsequent year. The Companies make no representation to the Executive to the Executive that any or all of the payments described in this agreement will be exempt from or comply with Section 409A and make no undertaking to preclude Section 409A from applying to any such payment.

 

30.   Clawback Rights.  The Executive understands that the Companies have adopted a "clawback" policy that authorizes the Companies, in certain cases, to reduce or cancel, or require the recovery of, an executive officer's annual bonus or long-term incentive compensation award, or portions thereof, if the Board determines that such bonus or award should be adjusted, cancelled, or recovered because the executive officer has engaged in intentional misconduct that has led to a material restatement of the financial statements of the Companies.  If the Board (or a committee thereof to which such matter has been delegated) proposes to impose such a clawback with respect to any of the Executive's compensation, then the Executive shall be entitled to be present and represented by his own legal counsel at any meeting of the Board (or of such committee) at which such proposed clawback is proposed to be acted upon.  The Companies agree to pay the reasonable attorney's fees of the Executive's legal counsel (a) for representing 

 

 

19

 

the Executive at any such meeting of the Board (or of such committee) and (b) for representing the Executive in contesting, whether through judicial proceedings, arbitration, or otherwise, any clawback of any of the Executive's compensation that the Board (or such committee) has approved and imposed. 

 

31.   Restricted Stock Award Adjustments.  If automatic vesting of all unvested Restricted Stock Awards under then effective Restricted Stock Award Agreements between CSGS and the Executive would occur upon a Change of Control Termination of the Executive and such vesting would result in the imposition of a tax under Section 4999 of the Code on "excess parachute payments" (as defined in Section 280G of the Code), then the Compensation Committee of the Board will have the right in its sole discretion to reduce the aggregate number of shares of CSGS stock which will automatically vest in the Executive upon such event to an aggregate number of shares whose aggregate fair market value, net of any 280G adjustment, is $1.00 less than (i) the amount which would result in the imposition of such tax minus (ii) the fair market value, net of any 280G adjustment, of all other payments or benefits in the nature of compensation for purposes of Section 280G of the Code received or receivable by the Executive in connection with or as a result of the Executive's Change of Control Termination; provided, however, that such reduction shall be applied to Award Shares covered by time-based Restricted Stock Awards and Award Shares covered by performance-based Restricted Stock Awards in the order that will result in the Executive’s receipt of the greatest number of Award Shares after such reduction has occurred.  CSGS and the Executive agree that the provisions of this Paragraph 31 are applicable both to all Restricted Stock Award Agreements between CSGS and the Executive which are in effect on the date of this agreement and to all Restricted Stock Award Agreements between CSGS and the Executive which become effective after the date of this agreement and that all of such Restricted Stock Award Agreements are subject to and modified by this Paragraph 31.  The provisions of subparagraph 10(e) of this agreement also are subject to the provisions of this Paragraph 31. 

 

 

 

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IN WITNESS WHEREOF, the Companies and the Executive have executed this Employment Agreement as of the day and year first above written.  

 

		
	
 
	
CSG SYSTEMS INTERNATIONAL, INC., 

a Delaware corporation

 

	
 
	
By: /s/ Bret C. Griess     President & CEO

	
 
	
(Title)

	
 
	
 

	
 
	
CSG SYSTEMS, INC., a Delaware corporation

	
 
	
By: /s/ Bret C. Griess     President & CEO

	
 
	
(Title)

	
 
	
 

	
 
	
/s/ Brian Shepherd

	
 
	
Brian Shepherd

 

  

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

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