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EXHIBIT 10.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Employment Agreement

EXHIBIT 10.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT | Document Parties: AGILYSYS INC | ARTHUR RHEIN You are currently viewing:
This Employment Agreement involves

AGILYSYS INC | ARTHUR RHEIN

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Title: EXHIBIT 10.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Date: 12/30/2005
Industry: Electronic Instr. and Controls     Sector: Technology

EXHIBIT 10.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT, Parties: agilysys inc , arthur rhein
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 Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

BETWEEN

AGILYSYS, INC.

AND

ARTHUR RHEIN

Amendment and Restatement Effective Date: January 1, 2006
or Date of Execution if Other than January 1, 2006

 


 

Table of Contents

 

 

 

 

 

 

 

Page

 

DEFINITIONS

 

 

2

 

 

 

 

 

 

TERMINATION OF PRIOR AGREEMENT

 

 

5

 

 

 

 

 

 

EMPLOYMENT TERM

 

 

5

 

 

 

 

 

 

POSITION, DUTIES, AND RESPONSIBILITIES

 

 

5

 

 

 

 

 

 

SALARY, BONUS AND BENEFITS

 

 

6

 

 

 

 

 

 

TERMINATION OF EMPLOYMENT

 

 

7

 

 

 

 

 

 

SEVERANCE COMPENSATION

 

 

8

 

 

 

 

 

 

CHANGE OF CONTROL

 

 

13

 

 

 

 

 

 

SEVERANCE PLAN

 

 

14

 

 

 

 

 

 

PLAN AMENDMENTS

 

 

14

 

 

 

 

 

 

NON-COMPETITION, CONFIDENTIAL INFORMATION AND NON-INTERFERENCE

 

 

15

 

 

 

 

 

 

ARBITRATION

 

 

16

 

 

 

 

 

 

NOTICES

 

 

17

 

 

 

 

 

 

ASSIGNMENT; BINDING EFFECT

 

 

18

 

 

 

 

 

 

INVALID PROVISIONS

 

 

18

 

 

 

 

 

 

ALTERNATIVE SATISFACTION OF COMPANY’S OBLIGATIONS

 

 

18

 

 

 

 

 

 

ENTIRE AGREEMENT, MODIFICATION

 

 

19

 

 

 

 

 

 

NON-EXCLUSIVITY OF RIGHTS

 

 

19

 

 

 

 

 

 

WAIVER OF BREACH

 

 

19

 

 

 

 

 

 

GOVERNING LAW

 

 

19

 

 

 

 

 

 

WITHHOLDING

 

 

19

 

 

 

 

 

 

EXPENSES

 

 

19

 

 

 

 

 

 

REPRESENTATION

 

 

20

 

 

 

 

 

 

SUBSIDIARIES AND AFFILIATES

 

 

20

 

 

 

 

 

 

NO MITIGATION OR OFFSET

 

 

20

 

 

 

 

 

 

SOLE REMEDY

 

 

20

 

 


 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

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

W I T N E S S E T H:

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

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

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

 

(a)

 

Agreement . The term “Agreement” shall mean this Amended and Restated Employment Agreement, as it may be amended from time to time.

 

 

 

 

 

(b)

 

Annual Incentive Plan . The term “Annual Incentive Plan” shall mean the Agilysys, Inc. Executive Officer Annual Incentive Plan or individual annual incentive arrangement which is approved by the Compensation Committee.

 

 

 

 

 

(c)

 

Base Salary . The term “Base Salary” shall mean the salary provided for in Section 5 or any increased salary granted to Rhein in accordance with Section 5.

 

 

 

 

 

(d)

 

Board . The term “Board” shall mean the Board of Directors of the Company.

 

 

 

 

 

(e)

 

Cause . The term “Cause” shall mean:

 

(i)

 

Commission by Rhein (evidenced by a conviction or written, voluntary and freely given confession) of a criminal act constituting a felony involving fraud or moral turpitude;

 

 

 

 

 

(ii)

 

Commission by Rhein of a material breach or material default of any of Rhein’s agreements or obligations under any provision of this Agreement, including, without limitation, Rhein’s agreements and obligations under Subsections 4(a) through 4(e) or Section 11 of this Agreement, which is not substantially cured within ninety (90) days after the Board gives written notice thereof to Rhein;

 

 

 

 

 

(iii)

 

Commission by Rhein, when carrying out Rhein’s duties under this Agreement, of acts or the omission of any act, which constitutes willful misconduct or which constitutes gross negligence and results in material

(2)


 

 

 

 

economic harm to the Company or has a materially adverse effect on the Company’s operations, properties or business relationships; or

 

 

 

 

 

(iv)

 

A substantial and continued failure or refusal by Rhein to perform under this Agreement which Rhein shall have failed to remedy within ninety (90) days after his receipt of written notice from the Board.

 

(f)

 

Change in Control. The term “Change in Control” shall mean a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 as in effect on the date of this Agreement, regardless of whether the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred if and when (a) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), excluding any employee benefit plan of the Company, any trust established under any employee benefit plan of the Company, or any trustee of any trust established under any employee benefit plan of the Company, becomes a beneficial owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company’s then outstanding securities, or (b) during any period of twelve (12) consecutive months, commencing before or after the date of this Agreement, individuals who, at the beginning of such twelve (12) month period were directors of the Company for whom Rhein, as a shareholder, shall have voted, cease for any reason to constitute at least a majority of the Board; provided, however, that in no event shall a Change in Control be deemed to have occurred for purposes of this Agreement if such Change in Control occurs as a part of the Company’s strategic plan unless the Change in Control occurs as a part of a change to the Company’s strategic plan initiated by the Board of Directors. A Change in Control resulting from an unsolicited offer by a third party shall not be considered to be part of the Company’s strategic plan and, therefore, would be considered a Change in Control for purposes of this Agreement. A Change in Control resulting from an offer by a third party solicited by the Company would not be considered a Change in Control for purposes of this Agreement unless the solicitation is authorized in advance by the Board of Directors.

 

 

 

 

 

(g)

 

Company . The term “Company” shall mean Agilysys, Inc., formerly known as Pioneer-Standard Electronics, Inc., an Ohio corporation, and its successors and assigns to the extent permitted under this Agreement.

 

 

 

 

 

(h)

 

Compensation Committee . The term “Compensation Committee” shall mean the Compensation Committee of the Board or its successor.

 

 

 

 

 

(i)

 

Disability . The term “Disability” shall mean a condition resulting from illness or accident which has prevented Rhein from performing his duties under this Agreement for a period of six (6) consecutive months. The Employment Term shall be deemed to have ended as of the close of business on a day designated by the Company, which shall not be earlier than (x) the last day of such period

(3)


 

 

 

 

of six (6) consecutive months and (y) the day on which the Company provides written notice pursuant to Subsection 6(b) of this Agreement.

 

 

 

 

 

(j)

 

Effective Date . The term “Effective Date” shall mean the effective date of this amended and restated Agreement, which shall be January 1, 2006, or, if other, the date of execution hereof.

 

 

 

 

 

(k)

 

Employment Term . The term “Employment Term” shall have the meaning set forth in Subsection 3(b) of this Agreement.

 

 

 

 

 

(l)

 

Good Reason . The term “Good Reason” shall mean the occurrence of any of the following:

 

(i)

 

there is any reduction in Rhein’s title or position or change in his reporting relationship;

 

 

 

 

 

(ii)

 

there is a material reduction in Rhein’s duties or responsibilities;

 

 

 

 

 

(iii)

 

Rhein’s compensation is reduced or his participation in any benefit plan, program or arrangement is eliminated, or benefits payable to Rhein under any such plan, program or arrangement or Rhein’s perquisites are materially reduced or restricted, except where either (A) such reduction, restriction, elimination or other change is both generally applicable to all members of senior management and does not reduce either Rhein’s annual salary or Target Annual Bonus, or (B) such reduction, restriction, elimination or other change is merely the result of application of a formula measuring individual or corporate performance or both, or (C) such reduction, restriction, elimination or other change is merely the result of carrying out the terms of this Agreement (e.g., it is intended that Rhein’s grants in Fiscal Year 2007 under the Company’s long term incentive plan will be his last grants thereunder, and it is expected that his Base Salary will remain at the level set forth herein from April 1, 2006, through the end of the Employment Term, neither of which circumstances shall constitute a Good Reason);

 

 

 

 

 

(iv)

 

there is a material breach or material default by the Company or its successor of any of its agreements or obligations under any provision of this Agreement, unless such breach or default is substantially cured within a reasonable period of time (hereby defined as ten (10) days for simple non-payment of an agreed amount without any related issues and ninety (90) days in all other cases) after written notice advising the Company or its successor of the acts or omissions constituting such breach or default has been received by the Company; or

 

 

 

 

 

(v)

 

the failure of the Company to obtain an agreement from any successor to the Company to assume this Agreement as contemplated by Section 14 of this Agreement.

 

 

(m)

 

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

(4)


 

 

(n)

 

Pro Rata . The term “Pro Rata” shall mean, when used with respect to the Company’s Annual Incentive Plan, a fraction, the numerator of which is the number of days that Rhein was employed by the Company in the applicable performance period (typically one fiscal year of the Company) and the denominator of which shall be the number of days in the applicable performance period.

 

 

 

 

 

(o)

 

Retirement . The term “Retirement” shall have the definition ascribed to such term in the Company’s Supplemental Executive Retirement Plan as in effect on April 1, 2003.

 

 

 

 

 

(p)

 

Severance Benefit Plan . The term “Severance Benefit Plan” shall mean any plan, policy or arrangement providing severance benefits for executive officers (and any other employees) of the Company.

 

 

 

 

 

(q)

 

Target Annual Bonus . The term “Target Annual Bonus” shall mean Rhein’s target annual incentive opportunity under the Annual Incentive Plan.

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

     3.  EMPLOYMENT TERM .

 

(a)

 

During the Employment Term, the Company shall employ Rhein, and Rhein shall serve the Company, as President and Chief Executive Officer, based on the terms and subject to the conditions set forth herein.

 

 

 

 

 

(b)

 

The Employment Term shall commence on the Effective Date and shall end on March 31, 2009, provided that the Employment Term may terminate prior to the date specified above in this Subsection 3(b) as provided in Section 6 hereof.

 

 

 

 

 

(c)

 

This Agreement will terminate March 31, 2009, unless the Parties shall agree otherwise in accordance with Section 17 hereof. If this Agreement terminates without a new employment agreement having been executed by the Company and Rhein by the date of such termination, Rhein’s employment with the Company thereafter shall be at will.

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

 

(a)

 

Hold the position of President and Chief Executive Officer of the Company reporting to the Board;

 

 

 

 

 

(b)

 

Have those duties and responsibilities, and the authority, customarily possessed by the Chief Executive Officer of a major corporation and such additional duties

(5)


 

 

 

 

as may be assigned to Rhein from time to time by the Board which are consistent with the position of Chief Executive Officer of a major corporation;

 

 

 

 

 

(c)

 

For so long as Rhein shall serve as Chief Executive Officer of the Company, be nominated by the Board for election as a Director at such time as the nominees for the class of Directors of which Rhein is a member (as of the Effective Date, Class C) are being proposed for election at the annual meeting of shareholders of the Company;

 

 

 

 

 

(d)

 

Adhere to such reasonable written policies and directives as may be promulgated from time to time by the Board and which are applicable to executive officers of the Company; and

 

 

 

 

 

(e)

 

Devote Rhein’s entire business time, energy, and talent (subject to vacation time in accordance with the Company’s policy applicable to executive officers, illness or injury) to the business, and to the furtherance of the purposes and objectives, of the Company, and neither directly nor indirectly act as an employee of or render any business, commercial, or professional services to any other person, firm or organization for compensation, without the prior written approval of the Board.

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

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

 

(a)

 

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

 

(i)

 

The rate then in effect from the Effective Date through March 31, 2006; and

 

 

 

 

 

(ii)

 

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

(6)


 

 

 

(b)

 

Rhein shall participate in the Annual Incentive Plan. Rhein’s Target Annual Bonus will be one hundred percent (100%) of his annual Base Salary, with a range of zero percent (0%) to two hundred fifty percent (250%) of his annual Base Salary.

 

 

 

 

 

(c)

 

Rhein shall be eligible for participation in such other benefit plans, including, but not limited to, the Company’s Retirement Plan, Severance Benefit Plan, 2000 Stock Incentive Plan, Supplemental Executive Retirement Plan, Benefit Equalization Plan, Short-Term and Long Term Disability Plans, Group Term Life Insurance Plan, Medical Plan, and Dental Plan, as the Company may adopt from time to time and in which the Company’s executive officers, or employees in general, are eligible to participate. This Subsection 5(c) shall not be deemed to prevent participation in any special plan or arrangement providing special benefits to Rhein which are not available to other employees. Such participation shall be subject to the terms and conditions set forth in the applicable plan documents. As is more fully set forth in Section 9 hereof, Rhein shall not be entitled to duplicative payments under this Agreement and any Severance Benefit Plan.

 

 

 

 

 

(d)

 

Without limiting the generality of Subsection 5(c) above, as soon as reasonably possible following the Effective Date, and thereafter throughout the Employment Term, Rhein shall be provided with life insurance protection, at the Company’s expense, in an aggregate amount of not less than two hundred percent (200%) of his earnings from the Company as reported on IRS Form W-2 for the preceding calendar year.

 

 

 

 

 

(e)

 

Without limiting the generality of Subsection 5(c) above, Rhein shall be entitled to an automobile allowance in accordance with the Company’s automobile policy for its executive officers (but not less than Twelve Thousand Dollars ($12,000.00) per year), an allowance for estate, financial and tax planning of Ten Thousand Dollars ($10,000.00) per year, and reimbursement for reasonable club dues and membership fees consistent with the Company’s past practice.

 

 

 

 

 

(f)

 

Without limiting the generality of Subsection 5(c) above, Rhein shall be entitled to director’s and officer’s liability insurance coverage with respect to claims against Rhein arising in connection with his activities performed on behalf of or in connection with his service as an officer or Director of the Company or any affiliate.

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

 

(a)

 

Death . Rhein’s employment hereunder will terminate without further notice upon the death of Rhein.

 

 

 

 

 

(b)

 

Disability . The Company may terminate Rhein’s employment hereunder effective immediately upon giving written notice of such termination for “Disability.”

(7)


 

 

(c)

 

Termination for Cause . The Company may terminate Rhein’s employment hereunder effective immediately upon giving written notice of such termination for “Cause.” In order for Rhein’s termination to be deemed to be for Cause, the Company shall, within sixty (60) days following the later of the event constituting Cause or the Company’s actual knowledge thereof, give written notice to Rhein on or before the date of termination of employment for Cause stating that the Company is terminating Rhein’s employment with the Company and specifying in detail the reasons for such termination. If Rhein does not object to such notice by notifying the Company in writing within ten (10) business days following the date of Rhein’s receipt of the Company’s notice of termination, Rhein shall be deemed to have agreed that such termination was for Cause. If the Company fails to give such timely notice of termination for Cause, its right to terminate Rhein’s employment for Cause with respect to such event shall be permanently waived. Non-notification by the Company with respect to a specific event constituting Cause does not preclude the Company from filing a notice with respect to a subsequent event constituting Cause.

 

 

 

 

 

(d)

 

Termination Not for Cause . The Company may terminate Rhein’s employment hereunder without Cause at any time upon thirty (30) days written notice.

 

 

 

 

 

(e)

 

Resignation for Good Reason . Rhein may terminate his employment hereunder effective immediately upon giving written notice of such termination for “Good Reason.” In order for Rhein’s termination to be deemed to be for Good Reason, Rhein shall, within sixty (60) days following the later of the event constituting Good Reason or his actual knowledge thereof, give written notice to the Company on or before the date of termination of employment for Good Reason stating that Rhein is terminating employment with the Company and specifying in detail the reasons for such termination. If the Company does not object to such notice by notifying Rhein in writing within ten (10) business days following the date of the Company’s receipt of Rhein’s notice of termination, the Company shall be deemed to have agreed that such termination was for Good Reason. If Rhein fails to give such timely notice of termination for Good Reason, his right to resign for Good Reason with respect to such event shall be permanently waived. Non-notification by Rhein with respect to a specific event constituting Good Reason does not preclude Rhein from filing a notice with respect to a subsequent event constituting Good Reason.

 

 

 

 

 

(f)

 

Resignation Not for Good Reason . Rhein may terminate his employment hereunder without Good Reason at any time upon thirty (30) days written notice.

 

 

 

 

 

(g)

 

Retirement . Rhein may terminate his employment due to his Retirement.

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

 

(a)

 

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

(8)


 

 

 

(i)

 

Base Salary through the end of the month of his death;

 

 

 

 

 

(ii)

 

Pro Rata award under the Annual Incentive Plan for the year of his death, payable when such awards are payable to other officers;

 

 

 

 

 

(iii)

 

All of Rhein’s then outstanding stock options, whether or not then exercisable, shall become exercisable in full, and then outstanding stock options which were granted to Rhein after April 1, 2003, shall not terminate prior to the end of their respective terms;

 

 

 

 

 

(iv)

 

Restrictions on Rhein’s restricted stock shall lapse;

 

 

 

 

 

(v)

 

Director’s and officer’s liability insurance coverage as described in Subsection 5(f) for the two (2) year period following the date of his death; and

 

 

 

 

 

(vi)

 

Such other benefits shall be payable as shall be provided under the relevant plans and arrangements of the Company.

 

 

(b)

 

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

 

(i)

 

Base Salary through the end of the month of the termination of his employment;

 

 

 

 

 

(ii)

 

Pro Rata award under the Annual Incentive Plan for the year of his termination of employment, payable when such awards are payable to other officers;

 

 

 

 

 

(iii)

 

All of Rhein’s then outstanding stock options, whether or not then exercisable, shall become exercisable in full, and then outstanding stock options which were granted to Rhein after April 1, 2003, shall not terminate prior to the end of their respective terms;

 

 

 

 

 

(iv)

 

Restrictions on Rhein’s restricted stock shall lapse;

 

 

 

 

 

(v)

 

Director’s and officer’s liability insurance coverage as described in Subsection 5(f) until the later of the date on which Rhein attains age sixty-five (65) or the date which is two (2) years from the date of such termination of employment;

 

 

 

 

 

(vi)

 

Such other benefits shall be payable as shall be provided under the relevant plans and arrangements of the Company; and

 

 

 

 

 

(vii)

 

Rhein’s life insurance provided under Subsection 5(d) and medical insurance coverage substantially equivalent to the coverage to Rhein, his spouse and dependents provided under the Company’s Medical Plan at the time of such termination due to Rhein’s Disability shall continue in effect until Rhein attains age sixty-five (65).

(9)


 

 

 

(c)

 

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

 

 

(i)

 

Base Salary through the end of the month of the termination of his employment;

 

 

 

 

 

(ii)

 

Pro Rata award under the Annual Incentive Plan for the year of his termination of employment, payable when such awards are payable to other officers;

 

 

 

 

 

(iii)

 

All of Rhein’s then outstanding stock options, whether or not then exercisable, shall become exercisable in full, except for options granted on or after the Effective Date of this Agreement (which options shall not become exercisable to any greater extent after such termination even in the event of his death or disability following such termination of employment) but then outstanding stock options which were granted to Rhein after April 1, 2003, shall not terminate prior to the end of their respective terms;

 

 

 

 

 

(iv)

 

Director’s and officer’s liability insurance coverage as described in Subsection 5(f) until the later of the date on which Rhein attains age sixty-five (65) or the date which is two (2) years from the date


 
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