PROPHET 21, INC.
CHANGE IN CONTROL SEVERANCE PAY AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE PAY AGREEMENT (the "Agreement") is made as
of the 28TH day of March, 2002, by and between Prophet 21, Inc., a Delaware
corporation with its principal place of business at 00 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxx, XX 00000 (the "Company"), and Xxxxxxx X. Xxxxx, III an employee of the
Company (the "Employee").
RECITALS:
1. The Company is a Delaware corporation. The Employee is currently
employed by the Company as President & CEO.
2. The Company and the Employee desire to provide for the payment, in
certain instances, of severance pay to the Employee in the event of
the termination of his or her employment following a change of control
of the Company, on the terms and conditions set forth in this
Agreement.
AGREEMENT:
In consideration of the premises and the mutual covenants and conditions
set forth herein, the Company and the Employee agree as follows:
SECTION 1. OPERATION OF AGREEMENT. This Agreement shall be effective
immediately upon its execution, but the provisions hereof shall not be operative
unless and until a "Change in Control" (as such term is defined in Section 2
hereof) has occurred. The provisions of this Agreement shall not be operative
and shall NOT APPLY to any termination of employment, for any reason, which
occurs before the period beginning three months and one day prior to a Change of
Control or which occurs after the period beginning the year and one day after a
Change in Control.
SECTION 2. CHANGE IN CONTROL. The term "Change in Control" as used in this
Agreement shall mean the date upon which (a) any person (other than the
Employee), group of associated persons acting in concert (none of whom is the
Employee) or corporation becomes a direct or indirect beneficial owner of shares
of stock of the Company representing an aggregate of more than fifty percent
(50%) of the votes then entitled to be cast at an election of directors of the
Company; or (b) all or substantially all of the Company's assets are sold or
transferred to a third party (other than an affiliate of the Company).
SECTION 3. SEVERANCE PAY UPON TERMINATION BY COMPANY WITHOUT CAUSE OR BY
EMPLOYEE FOR GOOD REASON. If, during the three-month period immediately
preceding a Change in Control or during the one year period immediately
following a Change in Control, the Employee's employment with the Company is
terminated:
(a) By the Company for no reason or for any reason other than "Cause" as
defined in (i) through (iv) immediately below:
(i.) As a result of the Employee's death;
(ii.) As a result of the Employee's disability (in the event that the
Employee shall be unable to perform his or her duties for a period of
ninety (90) consecutive calendar days or for a period of 120 calendar
days in any twelve month period by reason of disability as a result of
illness, accident or other physical or mental incapacity or
disability;
(iii.) As a result of the Employee's misappropriation of funds or
property of the Company, attempting to willfully obtain any personal
profit from any transaction in which the Employee has an interest
which is adverse to the interests of the Company, and/or any other act
of fraud or embezzlement; or
(iv.) As a result of the Employee's conviction of a felony, or a
plea of "guilty" or "no contest" to, a felony or a crime involving
moral turpitude or commission of the acts constituting such a crime;
or
(b) By the Employee for "Good Reason" as a result of, or within 30 days
of, any of the following:
(i.) Failure to maintain the Employee in his current position or in
a position commensurate therewith in the event of a merger of the
Company;
(ii.) The assignment to the Employee of any duties inconsistent with
the Employee's position, authority, duties or responsibilities, or any
other action by the Company which results in a diminution of such
position, authority, duties or responsibilities, excluding for this
purpose any isolated action not taken in bad faith and which is
promptly remedied by the Company after receipt of notice thereof given
by the Employee;
(iii.) The failure to elect the Employee if currently a Board member
to the Board of Directors of the Company, unless there is a merger of
the Company, in which event the failure to elect the Employee to the
board shall not be Good Reason; or
(iv.) Reduction by the Company of the Employee's Base Salary as in
effect on the Effective Date, or as the same shall be increased from
time to time;
then, the Company shall provide the Employee the following Severance Benefits
(hereinafter defined):
(a) an amount equal to two times the base salary (at the highest rate in
effect
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in the twelve months immediately preceding and including the termination
date), plus an amount equal to twice the target bonus set for the account
year in which the change of control occurs to be paid in one lump sum
payment within 30 days of the occurrence of the Change in Control or in the
event such termination occurred during the one year period following the
occurrence of the Change in Control, the Company shall pay the Employee the
Severance Amount, within thirty (30) days after the effective date of the
Employee's termination;
(b) continuation of all health care benefits the Employee and/or his
dependents were receiving at the time of such termination for 12 months
following the date of the Employee's termination; and
(c) all of the Employee's outstanding restricted stock will immediately
become vested and distributed and all of the Employee's outstanding stock
options shall become fully vested and exercisable, subject to the terms of
applicable Stock Option Agreement executed by the Company and the Employee,
except that the Employee shall have until the remainder of any term of any stock
option grant to exercise any such option.
The Company may withhold from any such severance compensation any federal,
state, city, county or other taxes. In addition, notwithstanding any contrary
provision of this Agreement, the Company shall not be required to make any
payment or property transfer to, or for the Employee's benefit (under this
Agreement or otherwise) that would subject Employee to the excise tax described
in section 4999 of the Code. If the Severance Benefits under this Agreement,
when combined with any other payments that Employee has the right to receive,
exceed the "parachute amount" described in Code Section 280G (generally a
present value of three times annual compensation), then the Severance Benefits
will be reduced so that the present value of the total amount received by the
Employee is $1.00 less that the parachute amount. All determination under this
Paragraph shall be made by independent auditors retained by the Company on
information supplied by the Company and the Employee, and shall be binding on
the Company and the Employee. All fees and expenses of the Auditors shall be
paid the Company.
SECTION 4. NO SEVERANCE PAY UPON ANY OTHER TERMINATION. Upon any
termination of the Employee's employment with the Company other than as set
forth in Section 3, the sole obligation hereunder of the Company shall be to pay
the Employee's regular compensation up to the effective date of termination. The
severance pay provisions hereunder do not, however, impact in any way the rights
of the Employee or the obligations of the Company under any employment agreement
or any other agreement (a "Separate Agreement") for the payment of employment
compensation between the Employee and the Company, whether such agreement(s) are
in existence now or come into existence, hereafter; except, however, (i) that if
such Separate Agreement provides for severance pay which would be applicable
under circumstances that would also obligate the Company to make similar
payments under this Agreement, then this Agreement shall not be deemed as
additive but shall be construed so that the obligations hereunder when applied
in conjunction with the Separate Agreement, do not require the
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Company to make such payments in excess of the amount or time set forth herein,
and (ii) with regard to the acceleration of options, the Employee may elect to
substitute the acceleration provision of this Agreement in place of any
provision dealing specifically with acceleration in the Separate Agreement, and,
if such election is made, the treatment so elected shall be honored.
SECTION 5. ENTIRE OBLIGATION. Payment to the Employee pursuant to Sections
3 or 4 of this Agreement shall constitute the entire obligation of the Company
to the Employee and full settlement of any claim under law or equity that the
Employee might otherwise assert against the Company, or any of its employees,
officers or directors on account of the Employee's termination.
SECTION 6. NO OBLIGATION TO CONTINUE EMPLOYMENT. This Agreement does not
create any obligation on the part of the Company to continue to employ the
Employee following a Change in Control or in the absence of a Change in Control.
SECTION 7. TERM OF AGREEMENT. This Agreement shall terminate and no longer
be in effect on the earlier of: (i) the termination date of employment agreement
between the Company and the Employee, if any; (ii) the date upon which the
Employee ceases to be an employee of the Company; unless a Change in Control
occurs within three months after such termination date; or (iii) if a Change in
Control occurs while the Employee is employed by the Company, until the date one
year following the Change in Control.
SECTION 8. SEVERABILITY. Should any clause, portion or section of this
Agreement be unenforceable or invalid for any reason, such unenforceability or
invalidity shall not affect the enforceability of validity of the remainder of
the Agreement.
SECTION 9. ASSIGNMENT: SUCCESSORS IN INTEREST. This Agreement, being
personal to the Employee, may not be assigned by the Employee. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, and the heirs, executors and personal
representatives of the Employee.
SECTION 10. WAIVER. Failure to insist upon strict compliance with any of
the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
SECTION 11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable in the case or agreements made and to be performed entirely within
such State.
SECTION 12. ARBITRATION. Any controversy or claim arising out of or in
connection with this Agreement shall be settled by arbitration in accordance wit
the rules of the American Arbitration Association then in effect in the
Commonwealth of Pennsylvania and judgment upon such award rendered by the
arbitrator maybe entered in any court having jurisdiction thereof. The
arbitration shall be held in the Commonwealth
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of Pennsylvania. The arbitration award shall include attorneys' fees and costs
to the prevailing party.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned as of
the date first above written.
Prophet 21, Inc.
By:
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Xxxx Xxxxxxx
Chairman of the Board
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Xxxxxxx X. Xxxxx, III
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