Contents:
Employment Agreement – EDWARD NAFUS
First Amendment to Employment Agreement
Second Amendment to Employment Agreement
 
 
 
                             EMPLOYMENT AGREEMENT
                             --------------------
 
     This Employment Agreement is made and entered into on the 17th day of
                                                               ----       
November, 1998, among CSG SYSTEMS INTERNATIONAL, INC. ("CSGS"), a Delaware
corporation, CSG SYSTEMS, INC. ("Systems"), a Delaware corporation, and EDWARD
NAFUS (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 Executive currently is employed by Systems and serves as an
Executive Vice President of both of the Companies; and
 
     WHEREAS, the Companies desire to provide for the continued employment of
the Executive as an Executive Vice President; and
 
     WHEREAS, the Executive desires to accept such continued employment upon the
terms set forth in this agreement;
 
     NOW, THEREFORE, in consideration of the foregoing recitals and the
respective covenants and agreements of the parties contained in this document,
the Companies and the Executive agree as follows:
 
     1.   Employment and Duties.  Each of the Companies hereby employs the
          ---------------------                                           
Executive as an Executive Vice President 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 or position.  The duties and responsibilities of the
Executive shall include the duties and responsibilities of the Executive's
corporate office and position referred to in the preceding sentence which are
set forth in the respective bylaws of the Companies from time to time and such
other duties and responsibilities consistent with the Executive's corporate
office and position referred to in the preceding sentence and this agreement
which the Board of Directors of CSGS (the "Board"), the Chief Executive Officer
of CSGS, or the Chief Operating 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.  The term of this agreement shall begin on the date of this
          ----                                                             
agreement and shall continue thereafter through December 31, 1999, unless the
Executive's employment under this agreement is sooner terminated in accordance
with this agreement.  On December 31 of each year during the term of this
agreement, as extended from time to time pursuant to this sentence, beginning
December 31, 1998, the term of this agreement automatically and without further
action being required shall be extended by one (1) year unless, not later than
one (1) year prior to a particular December 31, either CSGS notifies the
Executive and Systems in writing or the Executive notifies the Companies in
writing that such extension shall not occur on such December 31, in which latter
case this agreement shall terminate upon the expiration of its then current
term, unless the Executive's employment under this agreement is sooner
terminated in accordance with this agreement.  References in this agreement to
the "current term" of this agreement shall include both the original term of
this agreement and any automatic extensions of such term which actually have
occurred pursuant to this Paragraph 2.
 
     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") at an annual rate of
$250,000 through December 31, 1998, and at an annual rate of not less than
$262,500 after December 31, 1998; provided, that the Base Salary as then in
effect shall be increased as of January 1 of each calendar year after 1999
during the term of this agreement by at least the same percentage that the
United States Department of Labor Consumer Price Index (All Items) for All Urban
Consumers, 1982-84=100 ("CPI-U") for the November immediately preceding such
January 1 increased over the CPI-U for the November one year earlier.  The Board
shall review the Base Salary at least annually for the purpose of determining
whether a Base Salary increase greater than such CPI-U increase should be
granted to the Executive for a particular 12-month period.  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.
 
     5.   Annual Incentive Bonus.  As soon as practicable after the execution of
          ----------------------                                                
this agreement, the Board shall establish an incentive bonus program for the
Executive for 1999.  Such incentive bonus program shall be reflected either in a
written supplement to this agreement signed by the Companies and the Executive
or in such other form as the Companies and the Executive may agree upon.  The
same procedure shall be followed for subsequent calendar years during the term
of this agreement, so that an annual incentive bonus program for the Executive
will be in effect throughout the term of this agreement.  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 of various 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
fifty-five percent (55%) 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.  For 1998 the annual
incentive bonus program previously established by the Companies for the
Executive shall remain in effect.
 
     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 vice
presidents 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 such programs, such as the 1996 Employee Stock Purchase Plan
of CSGS, 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.
 
     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 the case may be) shall be
entitled to receive the following compensation and benefits from the Companies:
 
 
               (i)       The Base Salary through the date of the Executive's
                         death;
                         
               (ii)      A pro rata portion of the Executive's annual incentive
                         bonus for the calendar year in which his death occurs
                         (computed as if the Executive were employed by the
                         Companies throughout such calendar year), based upon
                         the number of days in such calendar year elapsed
                         through the date of the Executive's death as a
                         proportion of 365, to be paid at the same time that
                         such incentive bonus would have been paid had the
                         Executive's death not occurred;
 
               (iii)     Any other amounts earned, accrued, or owed to the
                         Executive under this agreement but not paid as of the
                         date of the Executive's death; 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 date of the Executive's
                         death.
 
     (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 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 shall be entitled to receive the following compensation and
benefits from the Companies:
 
               (i)       The Base Salary through the effective date of such
                         termination;
 
               (ii)      A pro rata portion of the Executive's annual incentive
                         bonus for the calendar year in which such termination
                         occurs (computed as if the Executive were employed by
                         the Companies throughout such calendar year), based
                         upon the number of days in such calendar year elapsed
                         through the effective date of such termination as a
                         proportion of 365, to be paid at the same time that
                         such incentive bonus would have been paid if such
                         termination had not occurred;
 
               (iii)     Any other amounts earned, accrued, or owed to the
                         Executive under this agreement but not paid as of the
                         effective date of such termination;
 
               (iv)      Continued participation in the following 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 effective date of such
                         termination, 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:
 
                              (1)  Group medical and hospital insurance,
                              (2)  Group dental insurance,
                              (3)  Group life insurance, and
                              (4)  Group long-term disability insurance;
 
                         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 effective date of such
                         termination.
 
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 be entitled to rely upon the
opinion of 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.
 
     (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 excessive absenteeism (other than by reason of
physical injury, disease, or mental illness) without a reasonable justification,
(iii) material violation by the Executive of the provisions of Paragraph 11,
(iv) 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, (v)
material non-compliance by the Executive with his obligations under Paragraph 9
and failure to correct such non-compliance 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 non-compliance,
(vi) 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 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 non-compliance, (vii) a material breach by the
Executive of any of his fiduciary duties to the Companies and, if such breach is
curable, the Executive's failure to cure such breach within ten (10) 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 breach, or
(viii) willful misconduct or fraud on the part of the Executive in the
performance of his duties under this agreement.  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 nine (9) months after a majority of the members of the Board
(other than the Executive) 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 shall be entitled to receive the following compensation and benefits
from the Companies:
 
               (i)       The Base Salary through the effective date of such
                         termination;
 
               (ii)      Any other amounts earned, accrued, or owed to the
                         Executive under this agreement but not paid as of the
                         effective date of such termination; 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 effective
                         date of such termination.
 
     (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 shall be entitled to receive
the following compensation, benefits, and other payments from the Companies:
 
               (i)       The Base Salary through that date which is one (1) year
                         after the effective date of such termination (the
                         "Ending Date"), to be paid at the same times that the
                         Base Salary would have been paid if such termination
                         had not occurred; provided, that if the Executive
                         commences employment with another employer, whether as
                         an employee or as a consultant, prior to the Ending
                         Date (for purposes of this Paragraph 10, the "Other
                         Employment"), then such payments of the Base Salary
                         shall be reduced from time to time by the aggregate
                         amount of salary, cash bonus, and consulting fees
                         received or receivable by the Executive from the Other
                         Employment for services performed by him during the
                         period from the commencement of the Other Employment
                         through the Ending Date;
 
               (ii)      The Executive's annual incentive bonus for the calendar
                         year in which such termination occurs (computed as if
                         the Executive were employed by the Companies throughout
                         such calendar year), to be paid at the same time that
                         such incentive bonus would have been paid if such
                         termination had not occurred and to be no less than the
                         Executive's annual incentive bonus for the calendar
                         year immediately preceding the calendar year in which
                         such termination occurs;
 
               (iii)     An amount equal to fifty-five percent (55%) of the Base
                         Salary in effect on the effective date of such
                         termination, such amount to be paid, without interest,
                         one year after the effective date of such termination.
 
               (iv)      Any other amounts earned, accrued, or owed to the
                         Executive under this agreement but not paid as of the
                         effective date of such termination; 
 
               (v)       Continued participation in the following 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 effective date of such
                         termination, 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 Ending 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:
 
                              (1)  Group medical and hospital insurance,
                              (2)  Group dental insurance,
                              (3)  Group life insurance, and
                              (4)  Group long-term disability insurance;
 
                         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 effective
                         date of such termination.
 
     (e)  Termination Without Cause After a Change of Control.  If, after the
          ---------------------------------------------------                
occurrence of a Change of Control, 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 from the Companies and the Permitted Assignee, if any (all
of whom shall be jointly and severally liable therefor), all of the
compensation, benefits, and other payments from the Companies which are
described and provided for in subparagraph (d) of this Paragraph 10 (as modified
by this subparagraph (e)); provided, however, that (i) for purposes of this
subparagraph (e) the Ending Date shall be two (2) years after the effective date
of such termination, and the aggregate Base Salary payable under subparagraph
(d)(i) (as modified by this subparagraph (e)) for all periods through the Ending
Date shall be paid to the Executive in a lump sum without regard to Other
Employment not later than thirty (30) days after the effective date of such
termination, (ii) the minimum annual incentive bonus payable under subparagraph
(d)(ii) shall be paid to the Executive not later than thirty (30) days after the
effective date of such termination (with any balance of such annual incentive
bonus being payable as provided in such subparagraph (d)(ii)), and (iii) the
amount payable under subparagraph (d)(iii) (as modified by this subparagraph
(e)) shall be one hundred ten percent (110%) of the Base Salary in effect on the
effective date of such termination and shall be paid to the Executive in a lump
sum not later than thirty (30) days after the effective date of such
termination.
 
     (f)  Constructive Termination.  If at any time during the term of this
          ------------------------                                         
agreement the Board, the Chief Executive Officer of CSGS, the Chief Operating
Officer of CSGS, or a Permitted Assignee materially alters the duties and
responsibilities of the Executive provided for in Paragraph 1 or assigns to the
Executive duties and responsibilities materially inappropriate to an executive
vice president of the Companies without the Executive's written consent, then,
at the election of the Executive (such election to be made by written notice
from the Executive to the Board or the Permitted Assignee, as may be appropriate
in the circumstances), (i) such action by the Board, the Chief Executive Officer
of CSGS, the Chief Operating Officer of CSGS, or such Permitted Assignee shall
constitute a constructive termination of the Executive's employment by the
Companies for a reason other than cause (the "Constructive Termination"), (ii)
the Executive thereupon may resign from his offices and positions with the
Companies and shall not be obligated to perform any further services of any kind
to or for the Companies, and (iii) the Executive shall be entitled to receive
from the Companies (and the Permitted Assignee, if applicable) at the applicable
times all of the compensation, benefits, and other payments described in
subparagraph (d) or subparagraph (e) of this Paragraph 10 (whichever may be
applicable), as if the effective date of the Executive's resignation were the
effective date of his termination of employment for purposes of determining such
compensation, benefits, and other payments.  Notwithstanding the foregoing
provisions of this subparagraph (f), before exercising any of his rights
pursuant to the preceding sentence, the Executive shall give written notice to
the Chief Executive Officer of CSGS setting forth the Executive's intent to
exercise such rights and specifying the Constructive Termination which the
Executive claims to be the basis for such intended exercise; and the Companies
shall have twenty (20) days after the Chief Executive Officer has received such
notice to take such actions, if any, as the Companies may deem appropriate to
eliminate such claimed Constructive Termination (without thereby admitting that
a Constructive Termination had occurred).  If the Companies so act to eliminate
such claimed Constructive Termination, then the Executive shall not have any
rights under this subparagraph (f) with respect to such claimed Constructive
Termination.
 
     (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 shall be
entitled to receive only the following compensation, benefits, and other
payments from the Companies:
 
               (i)  The Base Salary through the effective date of such voluntary
                    resignation;
 
               (ii) Any other amounts earned, accrued, or owed to the Executive
                    under this agreement but not paid as of the effective date
                    of such voluntary resignation;
 
               (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 effective
                         date of such voluntary resignation.
 
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 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 such breach.
 
     (i)  Notice of Other Employment and of Benefits.  The Executive promptly
          ------------------------------------------                         
shall notify the Companies in writing of (i) his acceptance of the Other
Employment referred to in subparagraph (d) of this Paragraph 10, (ii) the
effective date of such Other Employment, and (iii) the amount of salary, cash
bonus, and consulting fees which the Executive receives or is entitled to
receive from the Other Employment for services performed by him during the
period from the commencement of the Other Employment through the Ending Date.
Whenever relevant for purposes of this Paragraph 10, the Executive also promptly
shall notify the Companies of his receipt from another employer of any benefits
of the types referred to in subparagraphs (b)(iv) and (d)(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) or (d)(v) of this Paragraph 10 so long as such
actions are similarly applicable to senior executives of the Companies
generally.
 
     (k)  Rights of Estate.  If the Executive dies prior to his receipt of all
          ----------------                                                    
of the cash payments to which he may be entitled pursuant to subparagraph (b),
(c), (d), (e), (f), or (g) of this Paragraph 10 if any such subparagraph becomes
applicable, then the unpaid portion of such cash payments shall be paid by the
Companies to the personal representative of the Executive's estate at the same
time or times that the payments would have been made to the Executive if he
still were living.
 
     (l)  Excess Parachute Payments.  If any of the payments required to be made
          -------------------------                                             
to the Executive pursuant to subparagraph (d), (e), or (f) of this Paragraph 10
constitute "excess parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended, and any regulations thereunder, and
the Executive becomes liable for any excise tax on such "excess parachute
payments" and any interest or penalties thereon (such excise tax, interest, and
penalties, collectively, the "Tax Penalties"), then the Companies (and the
Permitted Assignee, if applicable) promptly shall make a cash payment (the
"Additional Payment") to the Executive in an amount equal to the Tax Penalties.
The Companies also promptly shall make an additional cash payment to the
Executive in an amount rounded to the nearest $100.00 which is equal to any
additional income, excise, and other taxes (using the individual tax rates
applicable to the Executive for the year for which such Tax Penalties are owed)
for which the Executive will be liable as a result of the Executive's receipt of
the Additional Payment (the additional cash payment provided for in this
sentence being referred to as a "Gross-Up Payment").  In addition, the Executive
shall be entitled to promptly receive from the Companies (and the Permitted
Assignee, if applicable) a further Gross-Up Payment in respect of each 
 
prior Gross-Up Payment until the amount of the last Gross-Up Payment is less
than $100.00.
 
     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:          Edward Nafus
                                   c/o CSG Systems, Inc.
                                   7887 East Belleview Avenue, Suite 1000
                                   Englewood, Colorado  80111
 
     If to the Companies:          CSG Systems International, Inc.
                                   and CSG Systems, Inc.
                                   7887 East Belleview Avenue, Suite 1000
                                   Englewood, Colorado  80111,
 
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)       CSGS ceases to own (directly or indirectly) a majority of the
               outstanding shares of voting capital stock of Systems (unless
               such event results from the merger of Systems into CSGS, with no
               change in the ownership of the voting capital stock of CSGS, or
               from the dissolution of Systems and the continuation of its
               business by CSGS),
 
     (c)       Systems is merged or consolidated into a corporation other than
               CSGS, and at any time after such merger or consolidation becomes
               effective CSGS does 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,
 
     (d)       the stockholders of Systems vote (or act by written consent) to
               dissolve Systems (unless the business of Systems will be
               continued by CSGS) or to sell or otherwise dispose of all or
               substantially all of the property and assets of Systems (other
               than to an entity or group of entities which is then under common
               ownership (directly or indirectly) with Systems),
 
     (e)       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, 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.
 
     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 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 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, 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;
 
     (b)       solicit or recommend to any other person that such period solicit
               any then customer of the Companies or either or them, which
               customer also was a customer of the Companies or either of them
               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
 
     (c)       induce or attempt to induce any then customer or prospective
               customer of the Companies or either of them to terminate or not
               commence a business relationship with the Companies or either of
               them.
 
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 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.
 
     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 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 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, notwithstanding any law to the
               contrary, each party will bear all of the fees, costs, and
               expenses of his or its own attorneys, experts, and witnesses.
               However, in connection with any judicial proceeding to compel
               arbitration pursuant to this agreement or to enforce any award
               rendered by the Arbitration Panel, the prevailing party in such a
               proceeding will be entitled to recover reasonable attorneys' fees
               and expenses incurred in connection with such proceedings, in
               addition to any other relief to which such party may be entitled.
 
     (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)(i), and (d)(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.
 
     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.
 
     IN WITNESS WHEREOF, the Companies and the Executive have executed this
agreement on the day and year first above written.
 
 
                                    CSG SYSTEMS INTERNATIONAL, INC.,
                                    a Delaware corporation
 
                                    By:  /s/ Neal C. Hansen
                                         --------------------------------------
                                             Neal C. Hansen, Chairman of the
                                             Board and Chief Executive Officer
 
 
 
                                    CSG SYSTEMS, INC., a Delaware
                                    corporation
 
                                    By: /s/ Neal C. Hansen
                                        ------------------------------------
                                            Neal C. Hansen, Chairman of the
                                            Board and Chief Executive Officer
 
 
                                    /s/ Edward C. Nafus
                                    -------------------------------------
                                        Edward Nafus
 
                                      60
 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES TO
 THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE
                          THEIR RESPECTIVE COMPANIES

 

 

 

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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

This First Amendment to Employment Agreement is made and entered into on the 11 day of January, 2005, among CSG SYSTEMS INTERNATIONAL, INC. (“CSGS”), a Delaware corporation, CSG SYSTEMS, INC. (“Systems”), a Delaware corporation, and EDWARD NAFUS (the “Executive”). CSGS and Systems collectively are referred to in this First Amendment and the Employment Agreement as the “Companies”.

 

* * *

 

WHEREAS, the Companies and the Executive entered into an Employment Agreement dated November 17, 1998 (the “Employment Agreement”); and

 

WHEREAS, the Companies desire to amend the Employment Agreement as herein set forth;

 

NOW, THEREFORE, in consideration of the foregoing recitals and the agreements of the parties contained in this document, the Companies and the Executive agree as follows:

 

1. Paragraph 10 of the Employment Agreement hereby is amended by adding thereto at the end thereof a new subparagraph (m) reading as follows:

 

 

“(m)

If the Executive’s employment by the Companies under this agreement terminates for any reason other than pursuant to subparagraph (c) of this Paragraph 10, then, notwithstanding any other provision of this agreement which would provide for a shorter period for the Executive’s continued participation in the group medical and hospital insurance and group dental insurance programs of the Companies after the termination of the Executive’s employment with the Companies, the Companies at their expense agree to continue the Executive’s participation in the group medical and hospital insurance and group dental insurance programs of the Companies which may be in effect from time to time and in which the Executive was participating at the effective date of the termination of his employment with the Companies (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) for a period of one (1) year after the effective date of such termination of the Executive’s employment with the Companies.”

 

2. Upon the execution of this First Amendment by the parties, any subsequent reference to the Employment Agreement between the parties shall mean the Employment Agreement as amended by this First Amendment. As amended by this First Amendment, the Employment Agreement shall remain in full force and effect according to its terms.


IN WITNESS WHEREOF, each of the parties has caused this First Amendment to Employment Agreement to be executed as of the date first set forth above.

 

 

 

 

CSG SYSTEMS INTERNATIONAL, INC.,

a Delaware corporation

 

 

By:

 

/s/ Neal C. Hansen


 

 

Neal C. Hansen, Chairman of the Board and

 

 

Chief Executive Officer

 

CSG SYSTEMS, INC., a Delaware corporation

 

 

By:

 

/s/ Neal C. Hansen


 

 

Neal C. Hansen, Chairman of the Board and

 

 

Chief Executive Officer

 

 

 

 

/s/ Edward Nafus


 

 

Edward Nafus

 

2

 

 

 

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SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Second Amendment to Employment Agreement is made and entered into on the 8th day of March, 2005, among CSG SYSTEMS INTERNATIONAL, INC. (“CSGS”), a Delaware corporation, CSG SYSTEMS, INC. (“Systems”), a Delaware corporation, and EDWARD NAFUS (the “Executive”). CSGS and Systems collectively are referred to in this Second Amendment and the Employment Agreement referred to below as the “Companies”.

 

* * *

 

WHEREAS, the Companies and the Executive entered into an Employment Agreement dated November 17, 1998 (the “Employment Agreement”); and

 

WHEREAS, the Companies and the Executive entered into a First Amendment to the Employment Agreement dated January 11, 2005 (the “First Amendment”); and

 

WHEREAS, the Companies desire to further amend the Employment Agreement as herein set forth;

 

NOW, THEREFORE, in consideration of the foregoing recitals and the agreements of the parties contained in this document, the Companies and the Executive agree as follows:

 

1. Effective as of the commencement of business on April 1, 2005, Paragraph 1 of the Employment Agreement hereby is amended in its entirety so as to read as follows:

 

“1. Employment and Duties. Each of the Companies hereby employs the Executive as its Chief Executive Officer and President throughout the term of this agreement and agrees to cause the Executive from time to time to be elected or appointed to such corporate offices or positions. The duties and responsibilities of the Executive shall include the duties and responsibilities of the Executive’s corporate offices and positions referred to in the preceding sentence which are set forth in the respective bylaws of the Companies from time to time, overall responsibility for the development and implementation of the business plans and strategies of the Companies, and such other duties and authorities consistent with the Executive’s corporate offices and positions referred to in the preceding sentence and this agreement which the Board of Directors of CSGS (the “Board”) 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. Effective as of the commencement of business on April 1, 2005, Paragraph 4 of the Employment Agreement hereby is amended in its entirety so as to read as follows:

 

“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”) at an annual rate of not less than Five Hundred Fifty Thousand Dollars ($550,000.00). 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.”

 

3. Effective as of the commencement of business on April 1, 2005, the fifth sentence of Paragraph 5 of the Employment Agreement hereby is amended in its entirety so as to read as follows:

 

“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 for the particular calendar year are fully achieved.”

 

4. Effective as of the commencement of business on April 1, 2005, Paragraph 7 of the Employment Agreement hereby is amended in its entirety so as to read as follows:

 

“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 the other senior executives of the Companies. During the term of this agreement, the Executive shall be entitled to receive a monthly automobile allowance from the Companies in the amount of Eight Hundred Dollars ($800.00) and to financial and tax planning services in accordance with the current policies and practices of the Companies for its senior executives. 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 such programs, such as the 1996 Employee Stock Purchase Plan of CSGS, in which executive officers of CSGS are not eligible to participate because of securities law restrictions). The Stock Incentive Plans of CSGS are administered by the Compensation Committee of the Board, and such Committee has sole authority to make grants to the Executive under such Plans. The Companies agree that (i) if the Executive is employed by the Companies on July 1, 2005, the Compensation Committee of the Board shall grant to the Executive a restricted stock award under a Stock Incentive Plan of CSGS covering 50,000 shares of the Common Stock of CSGS and (ii) if the Executive is employed by the Companies on January 1, 2006, the Compensation Committee of the Board shall grant to the

 

2


Executive an additional restricted stock award under a Stock Incentive Plan of CSGS covering 50,000 shares of the Common Stock of CSGS. The vesting of the shares covered by such restricted stock awards will be at the rate of 25% of the shares covered by an award on each of the first four anniversaries of the award date if the Executive is then employed by the Companies but with the immediate vesting of any unvested shares covered by such restricted stock awards (i) upon a Change of Control or (ii) upon the termination of the Executive’s employment with the Companies after March 31, 2008, solely as a result of the Executive’s voluntary retirement from the employ of the Companies; however, such grants and their respective vesting schedules will not in any way obligate the Companies to continue the employment of the Executive in any capacity or for any particular period of time or be deemed to extend the term of this agreement.”

 

5. Effective as of the commencement of business on April 1, 2005, Paragraph 15 of the Employment Agreement hereby is amended in its entirety so as to read as follows:

 

“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);

 

 

(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

 

3


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.”

 

6. Upon the execution of this Second Amendment to Employment Agreement by the parties, any subsequent reference to the Employment Agreement shall mean the Employment Agreement as amended by the First Amendment and by this Second Amendment. As amended by this Second Amendment to Employment Agreement, the Employment Agreement, as amended by the First Amendment, shall remain in full force and effect according to its terms.

 

4


IN WITNESS WHEREOF, each of the parties has caused this Second Amendment to Employment Agreement to be executed as of the date first set forth above.

 

 

 

 

CSG SYSTEMS INTERNATIONAL, INC.,

a Delaware corporation

 

 

By:

 

/S/ NEAL C. HANSEN


 

 

Neal C. Hansen, Chairman of the

 

 

Board and Chief Executive Officer

 

CSG SYSTEMS, INC., a Delaware

corporation

 

 

By:

 

/S/ NEAL C. HANSEN


 

 

Neal C. Hansen, Chairman of the

 

 

Board and Chief Executive Officer

 

 

 

 

/S/ EDWARD C. NAFUS


 

 

Edward Nafus

 

5

 

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