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EXHIBIT 10.3
EMPLOYMENT, NONCOMPETITION, DEVELOPMENT AND CONFIDENTIALITY AGREEMENT
This employment, noncompetition, development and confidentiality
agreement (the "Agreement") is entered effective as of April 10, 1997 and
between POWERCERV CORPORATION, a Florida corporation (the "Company"), and XXX
X. XXXXXXX, III ("Employee").
RECITALS
A. Company's business activities include software products of
benefit to a significant market, both nationwide and in an expanding
international arena. Among Company's business activities is the development
and marketing of client/server accounting software intended to be used by
businesses in a variety of situations. Due to the nature of Company's business
and the market for its business, it is very vulnerable to competition assisted
by parties that are or may have been employed by Company. In addition, in the
course of its business, Company develops, acquires and uses valuable
confidential information, trade secrets and other items. Due to the nature of
Company's business and the market for its business, its efforts and success are
significantly impacted by competition and innovation. Consequently, disclosure
of confidential information, trade secrets and other items of Company could
materially adversely affect it.
B. Employee is a long-time key executive of Company, but is
currently not subject to an employment agreement requiring him to continue to
work for Company. Employee executed a noncompetition, nondisclosure and
development agreement in favor of Company dated as of May 12, 1995 (the
"Existing Agreement"). Company considers the continued employment of Employee
pursuant to an employment agreement to be in the best interest of Company in
order to assist in, and provide continuity for, the management of Company and
its future.
C. The parties hereto desire to enter into an agreement setting
forth the terms and conditions of an employment relationship of between
Employee and Company and to replace and supersede Existing Agreement, all
pursuant to the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the employment by Company of
Employee and other good and valuable consideration, the receipt and sufficiency
of which is acknowledged by Employee, Company and Employee agree:
1. Definitions.
a. An "Affiliate" of a Person means any entity that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such Person.
b. "Board" means the board of directors of Company.
c. A "Change of Control" means each time one of the
following events first occurs: (i) any Person and such Person's Affiliates and
associates (other than Xxxx Xxxxxxxx, Xxx X. Xxxxxxx, III, Xxxxxx Xxxx, their
estates, their wives, their parents, their lineal descendants, any Affiliates
of such party or any trust created for the benefit of one or more of such
parties during their lifetimes or any combination of the foregoing (such
parties collectively, the "Management Investors") becomes a "beneficial owner"
(as defined in Rule 13d-3 or any successor rule or regulation promulgated under
the Securities Exchange Act of 1934, as amended) of thirty three percent (33%)
or more of the total voting power of the Company's common stock and the
Management Investors are not the "beneficial owners" of at least thirty three
percent or more of the total voting of the Company's common stock; (ii) the
effective date of any reorganization, merger, or consolidation, in each case,
with respect to which the Management Investors do not, immediately thereafter,
"beneficially own" at least thirty-three percent of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated company's (or any successor entity's)
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then outstanding securities at any Person, Persons, Affiliates and Associates;
or (iii) a liquidation or dissolution of Company or the sale of all or at least
eighty percent of Company's assets.
d. "Compete" means engaging in or actively preparing to
engage in the same or any similar business as Company or any of its Affiliates
in any manner whatsoever, including, as a proprietor, partner, investor,
shareholder, director, officer, employee, consultant, independent contractor or
otherwise.
e. "Confidential Business Information" means all
software, source code, object code, manuals, flow charts, algorithms,
documents, lists, files, records, data, documentation of or relating to
computer programs and other information, items and materials developed, used or
acquired by Company or an Affiliate (including all information developed and
acquired by Employee while in the employment of Company), as it may exist from
time to time, including: (i) all information, items and other matters that now
constitute or may in the future constitute "trade secrets" under Florida
Statutes 688.002(4) or 812.081 as in effect on the date hereof or as defined
under any other current or future applicable law; (ii) all technology, internal
manuals, training materials, technical specifications, product information,
contracts, correspondence and other and similar items of Company or its
Affiliates; (iii) all "Copyrights" and "Inventions" (as such terms are defined
herein) of Company or its Affiliates; (iv) all electronic data processing, word
processing, and/or computer programs, runs and other electronic programs,
products and records generated by Company or its Affiliates; (v) all
information acquired by Company or its Affiliates relating to existing and
reasonably anticipated business transactions and arrangements; (vi) all market
analyses and/or demographic information or studies on the current and/or
potential markets of interest to Company or its Affiliates; (vii) all documents
describing procedures or methods employed by Company or its Affiliates in
soliciting, procuring and handling business, including shipping and billing
procedures; (viii) all personnel files of Company or its Affiliates; (ix) all
general correspondence concerning Company or its Affiliates; (x) all documents
concerning or referring to the financial aspects of Company or its Affiliates;
(xi) all business agreements and understandings between or among Company or its
Affiliates and any other Person; (xii) all documents provided to Company or its
Affiliates in confidence by third parties; (xiii) all legal documents and
correspondence concerning Company or its Affiliates; (xiv) all opinions,
decisions, rulings and audits of governmental agencies relating to Company or
its Affiliates; (xv) all customer and client lists of Company or its
Affiliates; (xvi) all files concerning customers and clients of Company or its
Affiliates and the contents of such files; (xvii) all office production and
experimental records and other data records of Company or its Affiliates; and
(xviii) all other information reasonably deemed to be "Confidential" by Company
from time to time.
f. "Conflicting Product" means any product, computer
program, process or service of any Person other than Company or its Affiliates,
now or in the future in existence or under development, that significantly
resembles or that Competes with Company's or its Affiliates' products or
products that Company or its Affiliates has plans to develop and/or market
while Employee is employed by Company.
g. "Conflicting Organization" means any Person engaged
in or considering being engaged in the research of or development, production,
marketing or selling of a Conflicting Product or that Competes in any manner
with Company or its Affiliates during Employee's employment by Company or its
Affiliates or within a one (1) year period thereafter.
h. "Copyright" shall mean herein any and all worldwide
vested or inchoate rights in and to any and all original works of authorship
which relate to or describe any computational methods, documentation,
apparatus, software, algorithms or computer programs, whether they are in
machine-readable form, in English or any programming language. The meaning of
such term shall not be limited to items that have fulfilled the requirement of
any notice requirements under applicable law, but shall include all items in
their published or unpublished form under the Copyright Statutes of the United
States, The Universal Copyright Convention, The Berne Convention and/or any
other convention or treaty to which the United States is a party.
i. "Customer" means any and all Persons to whom Company
or any of its Affiliates has sold or shall sell or otherwise distribute any
product or service, whether or not for compensation, whether prior to the
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employment of Employee, during Employee's employment or for a period of one (1)
year after the termination of Employee's employment with Company or its
Affiliates.
j. "Good Reason" shall mean a material breach by Company
of this Agreement, which breach is not remedied within thirty (30) days after
Employee's delivery of written notice thereof to an executive officer of
Company.
k. "Invention" shall mean herein any designs, computer
programs (as defined in 17 U.S.C. 101), or configurations of any kind,
discovered, conceived, developed, written or produced, or any modifications or
any improvements to same, and shall not be limited to any definition of
"invention" contained in any United States patent law or other applicable law.
l. "Just Cause" shall include the following: (1) a
conviction of or a plea of guilty or nolo contendere by Employee to a felony or
misdemeanor involving fraud, embezzlement, theft, or dishonesty or other
criminal conduct against Company, (2) habitual neglect of Employee's duties or
failure by Employee to perform or observe any substantial lawful obligation of
such employment that is not remedied within thirty (30) days after written
notice thereof from Company, or (3) any material breach by Employee of this
Agreement.
m. "Person" means an individual, partnership,
corporation, association, joint stock company, a trust, joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency or political subdivision thereof).
2. Employment, termination.
a. Company hereby agrees to the continued employment of
Employee in the capacity of Executive Vice President and Chief Technology
Officer, and Employee hereby accepts such continued employment, all on the
terms and conditions hereafter set forth.
b. Employee's employment by Company may be terminated as
set forth below, but this Agreement and all of its terms and conditions, other
than the requirements for Employee to perform duties under Section 3 hereof and
Company to pay Employee a salary and any other benefits under Section 4 hereof,
shall remain in full force and effect after said employment is terminated:
(i) By Employee's death.
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(ii) By Company if Employee is "Totally Disabled."
For the purposes of this Agreement, Employee will be Totally Disabled if he (1)
has been declared legally incompetent by a final court decree (the date of such
decree being deemed to be the date on which the disability occurred), (2)
receives disability insurance benefits from any disability income insurance
policy maintained by Company for a period of six (6) consecutive months, or (3)
has been found to be disabled pursuant to a Disability Determination. A
Disability Determination means a finding that Employee, because of a medically
determinable disease, injury, or other mental or physical disability, is unable
to perform substantially all of his regular duties to Company and that such
disability is determined or reasonably expected to last at least three (3)
months. The Disability Determination shall be based on the written opinion of
the physician regularly attending Employee whose disability is in question. If
Company disagrees with the opinion of this physician (the "First Physician"),
it may engage at its own expense another physician (the "Second Physician") to
examine Employee. If the First and Second Physicians agree in writing that
Employee is or is not disabled, their written opinion shall, except as
otherwise set forth in this subsection, be conclusive on the issue of
disability. If the First and Second Physicians disagree on the disability of
Employee, they shall choose a third consulting physician (whose expense shall
be borne by Company), and the written opinion of a majority of these three
physicians shall, except as otherwise provided in this subsection, be
conclusive as to Employee's disability. The date of any written opinion
conclusively finding Employee to be disabled is the date of which the
disability will be deemed to have occurred. If there is a conclusive finding
that Employee is not Totally Disabled, Company shall have the right to request
additional Disability Determinations provided it agrees to pay all the expenses
of the Disability Determinations and does not request an additional Disability
Determination more frequently than once every three (3) months. In conjunction
with a Disability Determination, Employee hereby consents to any required
medical examination, and agrees to furnish any medical information requested by
any examining physician and to waive any applicable physician-patient privilege
that may arise because of such examination. All physicians except the First
Physician must be board-certified in the specialty most closely related to the
nature of the disability alleged to exist.
(iii) By mutual agreement of Employee and Company.
(iv) By Company for Just Cause.
(v) By Employee for Good Reason.
(vi) By Employee upon the occurrence of any Change
of Control.
(vii) By Company upon two months advance written
notice to Employee.
(viii) By Employee or Company at the end of twelve
(12) months from the general effective date hereof.
(ix) If this Agreement continues beyond the
initial twelve (12) month term hereof pursuant to the last sentence of this
subparagraph, by Employee upon a one (1) month advance written notice to
Company.
The effective date of any such termination shall be referred to herein as the
"Termination Date." Notwithstanding the foregoing, if this Agreement is not
terminated as provided herein on or before the expiration of such twelve month
initial term, this Agreement will be automatically renewed for successive one
year periods on the same terms and conditions set forth herein unless, at least
60 days prior to the expiration of the initial term or any subsequent one-year
renewal term, either party has given written notice to the other of its
intention not to renew this Agreement beyond the end of such term.
c. In the event of termination of this Agreement other
than for death, Employee hereby agrees to resign from all positions held in
Company, including, without limitations, any position as a director, officer,
agent, trustee or consultant of Company or any Affiliate of Company. If
Employee's employment is terminated (i) pursuant to
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subsections (b)(iii) or (b)(viii) above; (ii) by Company pursuant to it
exercising its discretion under subsections (b)(ii) or (b)(vii) above; or (iii)
by Employee pursuant to subsections (b)(v), (vi) or (ix) above, Employee shall
be entitled to the following in lieu of any right Employee may otherwise have
for compensation, benefits and similar items: (i) $300,000, payable in
twenty-four (24) separate $12,500 payments made on or about the 15th and last
day of each month until paid in full, commencing two (2) weeks after the
Termination Date, (ii) continued participation in Company's health insurance
plan at the Company's expense for twelve (12) months from the Termination Date,
and (iii) receipt of that portion of any bonus payable to Employee pursuant to
Section 4 below that Employee has earned, but not been paid, as of such
Termination Date, as provided in Section 4(b) below. Company's obligations
under the preceding sentence are contingent upon Employee's continued
fulfillment of his obligations hereunder that survive his termination of
employment. If this Agreement is terminated for any other reason, Employee
shall cease to have any right to any additional compensation or benefits
hereunder, other than Employee's registration rights and indemnification rights
provided in Sections 5 and 6 hereof.
3. Duties. Employee shall perform all functions and duties
consistent with his position as Executive Vice President and Chief Technology
Officer in a professional manner as reasonably required by the Board. Employee
agrees to comply with all reasonable policies and procedures of Company
generally applicable to substantially all of its executives and the terms and
conditions of this Agreement. Employee shall be principally based at
Company's corporate offices in Tampa, Florida and shall travel as reasonably
required in connection with the performance of his duties hereunder. Employee
shall not be required to primarily work out of any facility not located in the
general Tampa, Florida area. During the term of this Agreement, except as
approved by the Board from time to time, Employee shall devote substantially
all of his working time and efforts to the business and affairs of Company.
Employee shall, upon request of Company, perform services for any parent or
subsidiary of Company without any compensation other than that provided for
herein.
4. Compensation and benefits. As his entire compensation
for all services rendered to Company during the term of this Agreement,
Employee shall receive the compensation provided for in this Section, subject
to withholding and other applicable employment taxes:
a. Base Salary. Company will pay Employee an annual
base salary (the "Base Salary") of $180,000.00. The
Base Salary shall be retroactive to be effective as
of January 1, 1997, notwithstanding the general
effective date of this Agreement, and a payment shall
be paid to Employee promptly after the execution of
this Agreement to reflect such retroactive
effectiveness. The rate of the Base Salary shall be
subject to review on an annual basis, commencing
January 1, 1998, and Employee will be eligible for
salary increases at the discretion of the Board.
Employee's Base Salary (including any approved
increase in the amount thereof) shall not be subject
to reduction without Employee's consent. The Base
Salary shall be paid in 24 separate, equal payments
or otherwise as is consistent with the normal salary
payment cycle and procedure of Company generally
applicable to its employees. If the term of this
Agreement is renewed pursuant to section 2 hereof and
the Base Salary is increased for any such renewal
term, Employee and Company shall memorialize such
change by a written instrument executed by each such
party.
b. Target Annual Bonus. Employee will be eligible to
potentially earn an annual bonus of at least
$120,000.00 (the "Target Annual Bonus"). The Target
Annual Bonus will be paid in one (1) lump sum,
subject to Company and/or Employee, as applicable,
achieving certain criteria as hereinafter set forth.
References below to target revenues and target
operating income relate to Company's projections
approved by the Board no less frequently than
annually in advance of the period for which the
targets are being determined. The amount of the
potential Target Annual Bonus will be subject to
review on an annual basis, commencing January 1,
1998. Actual revenues and actual operating
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income shall be computed on a basis consistent with a
method by which target revenues and target operating
income for the related year were computed.
Eligibility for payments of the Target Annual Bonus
to Employee shall be for each calendar year during
the term of this Agreement beginning with the
calendar year commencing January 1, 1997
(notwithstanding that such date predates the general
effective date of this Agreement) and shall be
computed as follows:
(i) $42,000 will be earned upon Company achieving
target revenues for each calendar year;
(ii) $42,000 will be earned upon Company achieving
target operating income for each calendar
year; and
(iii) up to $36,000 will be earned upon approval of
the Board after its review of Employee's
presentation of strategic business
accomplishments of the Company for each
calendar year.
If a target referenced in subclause (i) or (ii) above
is not met in a particular calendar year, Employee
shall not receive for such calendar year the part of
the Target Annual Bonus tied to such target.
However, notwithstanding anything to the contrary in
this subsection 4(b), if in any calendar year Company
exceeds the target revenues or target operating
income for such year, Employee shall be paid an
additional bonus computed as follows: for each 1%
that actual revenues for the calendar year exceed the
target revenues for such calendar year, and for each
1% that the actual operating income for such calendar
year exceeds the targeted operating income for such
year, Employee shall be paid an additional $630.00.
For example, if Company's target revenues for a
calendar year were $40,000,000 and actual revenues
for such year computed as provided for herein were
$50,000,000, then, as actual revenues would have
exceeded projected revenues by 25%, Employee would be
entitled to an additional Target Annual Bonus related
to target revenues in the amount of $15,750.00 (i.e.,
25 x $630.00). The presentation by Employee of
Company's strategic business accomplishments for a
calendar year shall be promptly evaluated by the
Board and the potential related bonus shall be
determined by the Board in its reasonable discretion.
Employee shall be eligible to earn all or a portion
of such potential bonus as so determined by the
Board. All amounts payable pursuant to this
subsection 4(b) shall be paid to Employee promptly
after the amount payable is determined.
If the Termination Date occurs prior to the end of a
first calendar quarter during the term of this
Agreement, Employee shall not be entitled to any
Target Annual Bonus for such year. If such a
Termination Date occurs after the end of a first
calendar quarter during the term of this Agreement,
Employee shall be entitled to a portion of the Target
Annual Bonus, determined as follows:
(y) Actual revenues and actual operating income
for the calendar quarters for such year that
have already ended prior to the Termination
Date shall be computed and compared to the
Company's targets for such periods referenced
above in this subparagraph. If such actual
revenues equal the Company's targets,
Employee shall be entitled to the Target
Annual Bonus on the basis of $10,500.00 for
each such calendar quarter that has been
completed for such year. If such actual
operating income equals the Company's
targets, Employee shall be entitled to the
Target Annual Bonus on the basis of
$10,500.00 for each such calendar quarter
that has been completed for such year.
Similarly, Employee shall be entitled to a
pro rata portion of the potential additional
bonus referenced above in this
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paragraph to the extent actual revenues or
operating income exceed target revenues and
target operating income for such quarters;
provided, however, that Employee shall only
be entitled to $157.50 for each one percent
that such actual items exceed target items
for each such completed quarter.
(z) Employee shall be entitled to the bonus
referenced in subclause (iii) above to the
extent approved by the Board after its review
of a presentation by Employee of the
strategic business accomplishments of the
Company for such year through the Termination
date.
If Employee was otherwise entitled to receive an
Annual Bonus for the calendar year prior to the
calendar year in which the Termination Date occurs,
and such earned Annual Bonus has not been paid to
Employee by the Termination Date, each earned Annual
Bonus shall promptly be paid to Employee in the
ordinary course of business.
c. Automobile allowance. Company will pay Employee
each month a $1,000.00 monthly allowance for an
automobile owned or leased by Employee for use in
connection with the performance of Employee's duties
under his Agreement. Employee shall not have to
account to Company how such allowance is spent.
Payment of such allowance for a month shall be made
in installments on the dates in such month on which
the installments of Employee's Base Salary are made.
Employee shall be responsible for all maintenance,
insurance, gasoline and other similar costs
associated with any automobile owned or leased by
Employee that is used in connection with his
performance of his duties under this Agreement.
d. Working facilities. Company shall provide
Employee in the general Tampa, Florida area, or as
another facility of Company chosen from time to time
by Employee, with office space, equipment,
facilities, staffing and services which are suitable
to the position of Executive Vice President and Chief
Technology Officer and adequate for the performance
of Employee's duties hereunder.
e. Expenses. Company shall reimburse Employee for
all reasonable travel and other business expenses
incurred by him in furtherance of Company's business
in accordance with Company's standard written
policies and procedures.
f. Vacation and holidays. Employee shall be entitled
to such vacation with pay and holidays with pay
during each fiscal year of Company as shall be
approved by Company. The amount of vacation and
holidays provided to Employee shall be no less than
the amount given the senior executive employees of
Company.
g. Health, welfare and insurance plans. Subject to
eligibility requirements, Employee will be entitled
to participate in any plans, insurance policies or
contracts generally maintained by Company relating to
insurance, retirement, health, disability and other
related benefits. Employee's rights with respect to
any such benefits shall be subject to the provisions
of the relevant plans, policies or contracts
providing such benefits. Nothing contained herein
shall be deemed to impose any obligation on Company
to adopt or maintain any such plan, policy or
contract. As of the date of this Agreement, Company
does not provide certain types or levels of health,
welfare and insurance plans or benefit coverage to
its executive employees, and, there is no present
intention by Company to change its existing benefit
policies. However, if Company changes its policies
relative to benefits, the health, welfare and
insurance plan and benefit coverage made available to
Employee will be no less than provided for the senior
executive employees of Company.
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5. Registration Rights. Employee shall have the rights and
obligations set forth in addendum A hereto with respect to the registration of
shares of common stock of Company for sale and the other matters addressed
therein.
6. Indemnification. Employee shall be, and hereby is,
indemnified by Company, to the fullest extent permitted by applicable law, for
all costs, claims, expenses (including reasonable attorney's fees and other
litigation costs), damages and losses incurred by Employee by reason of being
employed, or serving in any capacity, as an employee or officer of Company or
any Affiliate thereof.
7. Covenants against competition. Employee acknowledges that the
services Employee is to render are of a special and unusual character with
unique value to Company, the loss of which cannot be adequately compensated by
damages in action or in law. In view of the unique value to Company of the
services of Employee, because of the confidentiality of the information to be
obtained by or disclosed to Employee during Employee's employment by Company
and for other various reasons, as a material inducement to Company to enter
into this Agreement and to employ and pay Employee the compensation set forth
herein, Employee covenants and agrees that during Employee's employment and for
a period of one (1) year after Employee ceases to be employed by Company or its
Affiliates for any reason, other than the termination of this Agreement by
Employee for Good Reason, Employee shall not: (i) Compete with Company or any
Affiliate; (ii) solicit Company's Customers or the Customers of an Affiliate of
Company; (iii) directly or indirectly solicit for employment any employees of
Company or its Affiliates; and (iv) directly or indirectly work for or assist
any Conflicting Organization or any party or organization developing or
marketing any Conflicting Product; provided, however, if Employee's employment
is terminated by Employee pursuant to subsections 2(v), 2(vi) or 2(vii) herein,
the foregoing restrictions shall not prohibit Employee from supplying employee
services to or otherwise dealing with or having an arrangement with a third
party if Employee does not use any Confidential Information in connection
therewith.
8. Certain representations, agreements, etc. Employee represents
and warrants to Company that he is not a party to any other agreement (or
subject to any fiduciary obligation) which will materially interfere with
Employee's full compliance with this Agreement and that he has not entered into
any agreement or understanding, either written or oral, in conflict with the
provisions of this Agreement. Employee acknowledges and agrees that Company is
entering into this Agreement based upon its understanding that Employee will be
fully capable, without restriction, of performing his obligations under this
Agreement for Company, and that Company is relying upon the representations set
forth herein in connection with its entering into this Agreement with Employee.
Employee acknowledges and agrees that the Confidential Business Information is
confidential and a valuable, special and unique asset of Company's business
that gives Company advantage over its actual and potential, current and future
competitors, and Employee further admits, represents and agrees that: (a)
Company has implemented reasonable practices and measures to preserve and to
protect the confidentiality of all Confidential Business Information; (b)
notwithstanding the measures taken to protect the confidentiality of all
Confidential Business Information, due to the tasks Employee shall perform, the
pervasiveness of Confidential Business Information within Company and other
factors, Employee has or shall have access to, become exposed to and learn
Confidential Business Information; (c) Employee has been instructed about, and
knows and understands the value and importance to Company of, Confidential
Business Information; (d) Employee owes Company and its Affiliates a fiduciary
duty to preserve and protect all Confidential Business Information from all
unauthorized disclosure or unauthorized use; (e) Confidential Business
Information constitutes "trade secrets" under Sections 688.002(4) and 812.081,
Florida Statutes; (f) unauthorized disclosure or unauthorized use of such
Confidential Business Information would irreparably injure Company or its
Affiliates; (g) Sections 812.081 and 815.04, Florida Statutes, specifically
prohibits, or makes a criminal offense, unauthorized use or disclosure of
Confidential Business Information by Employee and/or by any person acting in
concert with Employee; (h) Employee shall not disclose to Company or its
Affiliates or induce Company to use any Inventions, Copyrights or confidential
information or trade secrets belonging to any third party; and (i) Employee has
no continuing obligation with respect to any confidentiality of or assignment
of any Inventions, Copyrights, confidential information or trade secrets
belonging to any previous employer or other Person.
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9. Proprietary interest; prohibited acts. Employee understands
and agrees that all Confidential Business Information is and shall remain, at
all times, the sole property of Company and its Affiliates; that Employee
obtains no proprietary interest in any Confidential Business Information
developed or acquired in the course of Employee's employment with Company or
its Affiliates; and that it shall be no defense to an action brought to enforce
this Agreement that Employee developed or acquired, in whole or in part, the
Confidential Business Information disclosed or used without authorization.
Employee understands and agrees that all Confidential Business Information is
to be preserved and protected, is not to be disclosed or made available,
directly or indirectly, to any third Persons, whether by private communication
or by public address or publication, without prior written authorization of an
executive officer of Company, and is not to be used, directly or indirectly,
for any purpose unrelated to the business objectives of Company or its
Affiliates without prior written authorization of another executive officer of
Company.
10. Assignment of interest and assistance. Employee does hereby
assign, and agrees in the future to assign, to Company, without any separate
remuneration or compensation other than the salary received or compensation
paid to Employee from time to time in the course of Employee's employment by
Company or its Affiliates, all of Employee's right, title and interest in and
to all Confidential Business Information conceived of or made by Employee,
together with all United States and foreign patent, copyright and other legal
protection in and with respect to any and all such Confidential Business
Information, whether copyrightable, patentable or otherwise protectable or not.
Employee acknowledges that any works of authorship that are made by Employee
(solely or jointly with others) during the term of this Agreement that are
protectable by copyright are "works made for hire," as that term is defined in
17 U.S.C. 101. At Company's reasonable request, during or after Employee's
employment with Company or its Affiliates, Employee shall assist Company in
preparing all patent, copyright and other requested applications for
Confidential Business Information and execute said applications and all other
documents required to obtain patents, copyrights and/or other protections for
such Confidential Business Information and/or vest title thereto in Company, at
Company's expense, but for no additional consideration to Employee. During or
after Employee's employment with Company or its Affiliates, upon reasonable
request by Company, Employee agrees to execute and deliver all appropriate
patent, copyright and other applications or filings and documents necessary or
desirable for securing all United States and foreign copyright, patent and
other protections on all Confidential Business Information, and to do, execute
and deliver any and all acts and instruments that may be necessary or desirable
to vest all such Confidential Business Information in Company or its written
designee, and to enable Company or its such written designee to obtain all such
letters of patent and other protections. Company shall be responsible for all
third-party costs reasonably required to be incurred in connection with the
foregoing. Employee agrees to render to Company or its written designee all
such assistance as may be required in the prosecution of all such patent,
copyright and other applications and applications for the re-issue of any such
items and in the prosecution or defense of all interferences that may be
declared involving any of said items. Employee further agrees to not contest
the validity of any patent, copyright or other application, United States or
foreign, that is issued to, or requested to be issued to, Company or its
written designee, in which Employee made any contribution, or in which Employee
participated in any way, and not to assist any other party in any way in
contesting the validity of any such items.
11. Actions upon termination of employment. Upon Employee's
termination of employment with Company, for any reason, Employee shall return
to Company all originals and copies of all documents, data and information
containing Confidential Business Information and all other confidential
proprietary work in Employee's possession or control or generated within the
scope of Employee's employment, which shall include any and all devices,
records, sketches, data, notes, memoranda, reports, proposals, lists, software
programs, equipment and other items (in whatever medium recorded or retained).
Employee shall not deliver, reproduce or in any way allow any such items to be
delivered to or used by any third parties without prior written consent by a
duly authorized representative of Company. During or after the termination of
employment, Employee shall not publish, release or otherwise make available to
any third parties any information describing any Confidential Business
Information without the prior written approval by a duly authorized
representative of Company. Company can notify any new employer of Employee of
Employee's rights and obligations under this Agreement. Employee understands
and agrees that Employee's obligations under this Agreement (other than to
continue to provide employee services to Company),
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including the obligations to preserve and protect and not to disclose (or make
available to any Person) or use for purposes unrelated to the business
objectives of Company or its Affiliates, without prior written authorization of
an executive officer of Company, Confidential Business Information, continue
indefinitely and do not, under any circumstances or for any reason
(specifically including wrongful discharge), cease upon termination of
employment; and that, in the event of termination of Employee's employment for
any reason (specifically including wrongful discharge), such Confidential
Business Information shall remain the sole property of Company and its
Affiliates and shall be left in its entirety in the undisputed possession and
control of Company and its Affiliates after such termination.
12. Protected whether information of Company or Affiliate.
Employee recognizes, acknowledges and agrees that this Agreement is
specifically and expressly intended to protect, and does specifically and
expressly protect, all Confidential Business Information of Company, whether in
the possession, custody or control of Company or any Affiliate of Company.
13. Remedies. If an action should have to be brought by Company
or its Affiliates against Employee to enforce the provisions of this Agreement,
Employee recognizes, acknowledges and agrees that Company and its Affiliates
shall be entitled to all of the civil remedies provided by applicable Florida
Statutes. Nothing in this Agreement shall be construed as prohibiting Company
or its Affiliates from pursuing any other legal or equitable remedies available
to it for breach or threatened breach of the provisions of this Agreement. In
the event litigation arises in connection with this Agreement, the prevailing
party in such litigation shall be entitled to recover all reasonable attorneys'
fees, costs and expenses incurred in such litigation.
14. Arbitration; Consent to jurisdiction and venue. All
controversies, claims, disputes, and matters in question arising out of, or
related to, this Agreement or the breach of this Agreement, or the relations
between the signatories to this Agreement, shall be decided by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The parties agree that the arbitration shall take place
exclusively in Tampa, Florida, and shall be governed by the substantive law of
the state of Florida. Any award rendered by the arbitrator shall be final, and
final judgment may be entered upon the parties in accordance with applicable
law in any court having jurisdiction thereof, including a federal district
court, pursuant to the Federal Arbitration Act. The arbitrator may grant
Company injunctive relief, including mandatory injunctive relief, to protect
the rights of Company, but the arbitrator shall not be limited to such relief.
This arbitration provision shall not preclude Company from seeking temporary or
preliminary injunctive relief in a court of law to protect its rights, nor
shall the filing of such an action constitute any waiver by Company of its
right to arbitrate. In connection with the arbitration of any dispute between
the signatories to this Agreement, each signatory may utilize all methods of
discovery authorized by the Federal and Florida Rules of Civil Procedure.
Employee hereby consents to personal jurisdiction and venue, for any action
brought by Company or its Affiliates arising out of a breach or threatened
breach of this Agreement, in the United States District Court for the Middle
District of Florida, Tampa Division, or in the Circuit Court in and for
Hillsborough County, Florida; Employee agrees that any action arising under
this Agreement or out of the relationship established by this Agreement shall
be brought only and exclusively in the United States District Court for the
Middle District of Florida, Tampa Division, or in the Circuit Court in and for
Hillsborough County, Florida.
15. Acknowledgment. Employee hereby acknowledges that Employee
has been provided with a copy of this Agreement for review prior to signing it,
that Employee has been given the opportunity to have the Agreement reviewed by
Employee's own attorney prior to signing it, that Employee understands the
purposes and effects of the Agreement, and that Employee has been given a
signed copy of the Agreement for Employee's own records. Employee agrees that
the restrictions set forth in this Agreement, including, but not limited to,
the time period of restriction and areas of restriction, are fair and
reasonable and are reasonably required for the protection of the interest of
Company and its Affiliates.
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16. Miscellaneous.
a. Entire agreement. This Agreement constitutes the
entire agreement between Company and Employee pertaining to the subject matters
hereof, and it supersedes all negotiations, preliminary agreements, and all
prior and contemporaneous discussions and understandings of the signatories in
connection with the subject matters hereof, including, not limited to, the
Existing Agreement, which is hereby terminated and no longer binding and
enforceable against any party thereto. Except as otherwise provided, no
covenant, representation or condition not expressed in either this Agreement or
an amendment hereto made and executed in accordance with the provisions of
subsection (b) of this section shall be binding upon the signatories hereto or
shall affect or be effective to interpret, change, restrict or terminate the
provisions of this Agreement.
b. Amendments. No change, modification or termination
of any of the terms, provisions or conditions of this Agreement shall be
effective unless made in writing and signed or initialed by all signatories to
this Agreement.
c. Waiver of breach. The waiver by Company of a breach
or threatened breach of any provision of this Agreement by Employee shall not
be construed as a waiver of any subsequent breach of Employee.
d. Governing law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the state of Florida
without giving effect to any choice or conflict of law provision or rule
(whether of the state of Florida or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the state of
Florida.
e. Separability. If any section, subsection or
provision of this Agreement, or the application of such section, subsection or
provision, is held invalid, the remainder of the Agreement and the application
of such section, subsection or provision to Persons or circumstances other than
those with respect to which it is held invalid, shall not be affected thereby.
If any of the provisions of this Agreement relating to the time period and/or
areas of activity restricted and/or related aspects hereof shall be declared by
a court of competent jurisdiction to exceed the maximum restrictiveness such
court deems reasonable and enforceable, the time period and/or areas of
activity restricted and/or related aspects deemed reasonable and enforceable by
the court shall become and thereafter be the maximum restriction in such
regard, and the restriction shall remain enforceable in such jurisdiction to
the fullest extent deemed reasonable by such court. Such court's determination
shall not affect the validity and enforceability of this Agreement in any other
jurisdiction.
f. Headings and captions. The titles or captions of
sections and subsections contained in this Agreement are provided for
convenience of reference only, and they shall not be considered a part of this
Agreement; such titles or captions are not intended to define, limit, extend,
explain or describe the scope or extent of this Agreement or any of its terms,
provisions, representations, warranties, conditions, etc. in any manner or way
whatsoever.
g. Gender and number. All pronouns and variations
thereof shall be deemed to refer to the masculine, feminine or neuter, to the
singular or plural, as the identity of the person or entity or persons or
entities may require.
h. Continuance of agreement. The rights,
responsibilities and duties of Company and Employee, and the covenants and
agreements contained in this Agreement, shall survive the execution of this
Agreement, shall continue to bind the parties to this Agreement, shall continue
in full force and effect until each and every obligation of the parties
pursuant to this Agreement shall have been performed, and shall be binding upon
and inure to the benefit of the successors and assigns of the parties.
Notwithstanding the foregoing, Employee shall not assign Employee's duties,
rights or obligations under this Agreement to any party without the prior
written consent of Company. This Agreement shall not confer any rights or
remedies upon any Person other than Company and its Affiliates, and their
successors and assigns, and Employee.
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i. Construction. Company and Employee have participated
jointly in the negotiation and/or drafting of this Agreement. If an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by Company and Employee, and no presumption or
burden of proof shall arise favoring or disfavoring either party by virtue of
the authorship of any of the provisions of this Agreement. The words "include"
and "included" shall mean include, without limitation, and including, without
limitation, respectively.
IN WITNESS WHEREOF, Company and Employee have executed and delivered
this Agreement to be effective as of the day and year provided above, except as
specifically provided in Section 4(a) hereof.
WITNESSES: COMPANY:
POWERCERV CORPORATION
/s/ Xxxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------- -----------------------------
Print Name: Xxxxx X. Xxxxxxxxx Print Name: Xxxxxxx X. Xxxxxx
------------------------ ---------------------
Title: Chief Counsel
--------------------------
/s/ Xxxxxx X. Xxxx
-----------------------------------
Print Name: Xxxxxx X. Xxxx
------------------------
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxx X. Xxxxxxx, III
----------------------------------- --------------------------------
Print Name: Xxxxx X. Xxxxxxxxx Xxx X. Xxxxxxx, III
------------------------
/s/ Xxxxxx X. Xxxx
-----------------------------------
Print Name: Xxxxxx X. Xxxx
------------------------
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STATE OF FLORIDA)
COUNTY OF HILLSBOROUGH)
The foregoing instrument was acknowledged before me this 17th day of
April, 1997 by Xxxxxxx X. Xxxxxx as Chief Counsel of POWERCERV CORPORATION, a
Florida corporation, on behalf of the corporation. Such person is personally
known to me or has presented N/A as identification.
/s/ Xxxxx Xxxxxx
----------------------------------
Notary Public
Print Name: Xxxxx Xxxxxx
-----------------------
(SEAL)
My Commission Expires: March 31, 2000
Commission No.: XX000000
XXXXX XX XXXXXXX)
XXXXXX XX XXXXXXXXXXXX)
The foregoing instrument was acknowledged before me this 17th day of
April, 1997 by Xxx X. Xxxxxxx, III. Such person is personally known to me or
has presented N/A as identification.
/s/ Xxxxx Xxxxxx
----------------------------------
Notary Public
Print Name: Xxxxx Xxxxxx
-----------------------
(SEAL)
My Commission Expires: March 31, 2000
Commission No.: CC543881
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ADDENDUM A
REGISTRATION RIGHTS PROVISIONS
SECTION 1. DEFINITIONS. As used in this Addendum A, the following
terms have the meanings specified below and include the plural as well as the
singular:
"ABS" means ABS Capital Partners, L.P.
"ABS Registrable Shares" means (i) all Common Stock issued directly or
indirectly in respect of any Convertible Shares issued to ABS or its successors
or assigns, (ii) all Common Stock issued with respect to any securities
referred to in clause (i) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation, reorganization or otherwise, and (iii) all other Common Stock
held from time to time by any holder of Common Stock described in clause (i) or
(ii) above.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling, controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing; provided, that, for purposes of Section 5, any
"Person" or "group" (each as defined in Section 13(d)(3) or 14(d)(2) of the
Exchange Act) that is the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of more than 10% of the capital stock having ordinary voting
power in the election of directors of such Person (if a corporation) or more
than lot of the partnership or other ownership interests of such Person (if
other than a corporation) shall be deemed to control such Person.
"Board" means the board of directors of Company.
A "Class" of Registrable Shares means any of the Senior Registrable
Shares and the Parity Registrable Shares. Registrable Shares that are part of
any Class (the "Transferred Class") that are transferred to or otherwise become
held by any holder of Registrable Shares of any other Class (the "Other Class")
shall cease to be Registrable Shares of the Transferred Class and thereafter be
Registrable Shares of the Other Class (unless and until they are subsequently
transferred to or otherwise become held by any holder of Registrable Shares of
another Class or cease to be Registrable Shares).
"Common Stock" means Company's common stock, par value $.001 per
share, and all securities of any issuer issued, in exchange for, or as a
dividend or other distribution on, outstanding shares of the Common Stock.
"Company" means PowerCerv Corporation, a Florida corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Executive" means Xxx X. Xxxxxxx, III, a current executive employee of
Company.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any court, panel, judge, board, bureau,
commission, agency or other entity, body or other Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
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"Holder" means any holder of Registrable Shares.
"Management Investors" means Xxxxxx Xxxx, Xxxx Xxxxxxxx and Xxx X.
Xxxxxxx, III.
"Management Registrable Shares" means all Common Stock held from time
to time by any Management Investor and their respective successors and assigns.
"NASD" means the National Association of Securities Dealers, Inc.
"Other Senior Registrable Shares" means (i) all Common Stock and all
Common Stock issuable with respect to any Rights designated from time to time
by Company as "Other Senior Registrable Shares," (ii) all Common Stock issued
upon conversion of any Common Stock referred to in clause (i) above, (iii) all
Common Stock issued with respect to any securities referred to in clause (i) or
(ii) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, reorganization
or otherwise, and (iv) all other Common Stock held from time to time by any
holder of Common Stock described in clause (i), (ii) or (iii) above.
"Parity Holder" means each of the Management Investors (inclining
Executive) and any other party designated from time to time by Company as a
"Parity Holder" who shall have registration rights with respect to Parity
Registrable Shares having priority on Piggy Back Registration generally on
parity in all material respects pursuant to paragraph 2(e) hereof.
"Parity Registrable Shares" means all Common Stock held from time to
time by a Parity Holder that is designated from time to time by Company as
"Parity Registrable Shares;" provided, however, that the shares issuable to a
Management Investor shall be deemed to be Parity Registrable Shares only so as
long as such stock is held by each such respective party or any Affiliate or
family member of such party.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Registrable Shares" means the Senior Registrable Shares and the
Registrable Shares. As to any particular Registrable Shares, such securities
shall cease to be Registrable Shares (and shall cease to be Parity Registrable
Shares, ABS Registrable Shares, Summit Investors Registrable Shares, Summit
Ventures Registrable Shares, Management Registrable Shares, and the Other
Senior Registrable Shares, as the case may be) when they have been distributed
to the public pursuant to an offering registered under the Securities Act, sold
to the public through a broker, dealer or market maker in compliance with Rule
144 under the Securities Act (or any similar rule then in force) or repurchased
by Company. For purposes of this Addendum, a Person shall be deemed to be a
Holder of Registrable Shares, and the Registrable Shares shall be deemed to be
in existence, whenever such Person has the right to acquire directly or
indirectly such Registrable Shares upon conversion or exercise of other
securities, disregarding any restrictions or limitations upon such conversion
or exercise, whether or not such acquisition has actually been effected (it
being understood that Company shall not be required to include in any
registration hereunder any securities other than Common Stock ).
"Registration Expenses" means all expenses incident to Company's
performance of or compliance with this Addendum A, including, without
limitation, all SEC and stock exchange or NASD registration and filing fees and
expenses, fees and expenses of compliance with securities or blue sky laws
(including, without limitation, reasonable fees and disbursements of counsel
for the underwriters in connection with blue sky qualifications of the
Registrable Shares), printing expenses, messenger and delivery expenses, the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange or national market system on which
similar
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securities issued by Company are then listed, fees and disbursements of counsel
for Company and all independent certified public accountants (including the
expenses of any annual audit, special audit, if necessary, and "cold comfort"
letters required by or incident to such performance and compliance), the fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities, the fees and expenses of any special experts retained by Company in
connection with such registration, and fees and expenses of other persons
retained by Company; provided that Company shall not be responsible for any
underwriting discounts or commissions, fees and expenses of counsel to
Executive, or transfer taxes, if any, attributable to the sale of Executive's
Parity Registrable Shares.
"Rights" shall mean, with respect to any Person, any subscription,
option, warrant, right, convertible security or other agreement, instrument or
commitment of any character obligating (contingently or absolutely) such Person
to issue or sell any capital stock or other securities.
"SEC" means the Securities and Exchange Commission or any successor
thereof.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Selling Holder" means a Holder of the Registrable Shares intended
consistent with the terms hereof to covered by a registration statement.
"Senior Registrable Shares" means the ABS Registrable Shares, the
Summit Investors Registrable Shares, the Summit Ventures Registrable Shares and
the Other Senior Registrable Shares.
"Summit Investors" means Summit Investors II, L.P.
"Summit Investors Registrable Shares" means (i) all Common Stock
issued directly or indirectly in respect of any Convertible Shares issued to
Summit Investors or its successors or assigns, (ii) all Common Stock issued
with respect to any securities referred to in clause (i) above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, reorganization or otherwise, and (iii)
all other Common Stock held from time to time by any holder of Common Stock or
any described in clause (i) or (ii) above.
"Summit Ventures" means Summit Ventures III, L.P.
"Summit Ventures Registrable Shares" means (i) all Common Stock issued
directly or indirectly in respect of any Convertible Shares issued to Summit
Ventures or its successors or assigns, (ii) all Common Stock issued with
respect to any securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, reorganization or otherwise, and (iii)
all other Common Stock held from time to time by any holder of Common Stock
described in clause (i) or (ii) above.
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SECTION 2. PIGGYBACK REGISTRATION RIGHTS.
(a) Right to Company Piggyback. If Executive owns Parity Registrable
Shares then representing in excess of two percent (2%) of the outstanding
shares of Common Stock of Company and Company proposes to file a registration
statement under the Securities Act with respect to its Common Stock (a
"Registration Statement"), other than a registration statement on Form X-0,
Xxxx X-0 or any successor forms, and pursuant to which Common Stock is proposed
to be sold (a "Proposed Registration"), and the registration form to be used
may be used for the registration of Registrable Shares (a "Piggyback
Registration"), then Company shall give written notice to Executive no less
than twenty (20) days before the initial filing date with the SEC. Such notice
shall: (i) subject to the provisions of this Section 2, offer Executive the
opportunity to include in such filing such number of Executive's Parity
Registrable Shares as Executive may request; and (ii) specify the kind and
number of securities proposed to be registered and the proposed distribution
arrangements.
(b) Requests to Piggyback. If Executive holds Parity Registrable
Shares and desires to have any such Parity Registrable Shares registered under
this Section 2, it shall advise Company in writing (a "Piggyback Registration
Request") within ten (10) days after the date Company sends the notice pursuant
to subsection 2(a) hereof (the "Piggyback Notice"). Such notice shall set forth
the amount of Executive's Parity Registrable Shares that Executive desires to
have registered. Executive shall be permitted to withdraw all or any part of
its Registrable Shares from a Piggyback Registration at any time prior to the
effective date of the related registration statement upon giving five (5) days
prior written notice of such withdrawal to Company.
(c) Distribution Methods. Subject to subsection 2(d) below, if
Executive delivers a Piggyback Registration Request in accordance with
subsection 2(b) hereof, it may select any method or methods of distribution of
the Executive's Parity Registrable Shares that it has requested to be included
in the Piggyback Registration.
(d) Change in Distribution Method. If the Proposed Registration is for
(or includes) an underwritten public offering of securities and Executive has
selected any other method of distribution for any of Executive's Parity
Registrable Shares that it has requested be included in the Piggyback
Registration and if the managing underwriter of such offering (the "Managing
Underwriter") advises Company in writing that, in its opinion, the distribution
of such Executive's Parity Registrable Shares by such method shall materially
adversely affect the success of such offering of securities, then Executive
shall not be entitled to include in such Piggyback Registration such number of
such Registrable Shares that the Managing Underwriter determines shall
materially adversely affect the success of such offering (the
"Non-Participating Shares"), unless Executive elects, by written notice to
Company within five (5) days after receipt of such written advice, to include,
subject to subsection 2(e) hereof, in such underwritten public offering either
all the Executive's Parity Registrable Shares requested to be registered by it
or the Non-Participating Shares. If the Proposed Registration is not (and does
not include) an underwritten public offering and such Proposed Registration
includes securities to be sold for the account of Company or the Holder of any
Senior Registrable Shares, and if Executive has selected any method of
distribution of any of the Executive's Parity Registrable Shares that is
materially different from the method selected by Company or the Holder of any
Senior Registrable Shares for the distribution of such securities to be sold
for its account, and if the Board shall reasonably determine (and shall notify
Executive in writing of such determination) that the distribution of such
Parity Registrable Shares by such method shall materially adversely affect the
success of such sale of all such securities, then Executive may select, by
written notice to Company within five (5) days, any other method of
distribution that in the reasonable judgment of the Board shall not have such
effect.
(e) Priority on Piggyback Registrations. If the Proposed Registration
is for (or includes) an underwritten offering, Company shall permit Executive
to include all of his Parity Registrable Shares in such offering on the same
terms and conditions as any similar securities included therein. If, in the
case of a Proposed Registration that is for (or
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that includes) an underwritten offering, the Managing Underwriter advises
Executive in writing that in its opinion, or, in the case of a Proposed
Registration that is not for (and does not include) an underwritten offering of
securities to be distributed for the account of Company or the Holder of any
Senior Registrable Shares, the Board shall reasonably determine (and notify
Executive in writing of such determination) that the amount or kind of
securities proposed to be included in such offering (including, but not limited
to, Registrable Shares to be included in accordance with subsections 2(c) and
2(d) above) shall materially adversely affect the success of the offering of
all securities proposed to be distributed for the account of Company or the
Holder of any Senior Registrable Shares, then Company shall include in such
offering the amount of securities, if any, that, in the opinion of the Managing
Underwriter or the reasonable judgment of the Board (as the case may be) can be
sold as follows:
(1) first, the securities Company propose(s) to sell for its
own account and any Senior Registrable Shares allocated amongst such parties as
Company determines;
(2) second, the Parity Registrable Shares requested to be
included in such offering by Executive or Parity Holders who have delivered
Piggyback Registration Requests; and
(3) third, the securities held by Persons other than the
Holders of Senior Registrable Shares and Parity Holders requested to be
included in such offering.
To the extent that Company has been advised or has determined (as the case may
be) that the number of the Executive's Parity Registrable Shares and other
securities requested to be included in such offering exceeds the number that
can be sold in such offering without having a materially adverse effect on the
success of such offering, Company shall include in such registration, prior to
the inclusion of any securities that are not Registrable Shares, the number of
Registrable Shares requested to be included that, in the opinion of the
Managing Underwriter or the reasonable judgement of the Board (as the case may
be), can be sold in such offering without having such a materially adverse
effect (the "Available Shares"), allocated first among Company and Holders of
Senior Registrable Shares (as Company may determine), second among the Holders
of Parity Registrable Shares who have delivered Piggy Back Registration
Requests pro rata amongst such Holders on the basis of the number of securities
requested to be included in such offering by such Holders. If after giving
effect to clause (1) and (2) above, there are additional Available Shares, then
such Available Shares shall be allocated pro rata among the Persons requesting
securities to be registered in such offering pursuant to clause (3) above on
the basis of the number of securities requested to be included in such offering
by such Persons (or as otherwise determined by Company).
(f) Selection of Underwriters. If any Piggyback Registration is for an
underwritten offering, Company shall engage, on terms and conditions customary
for such purposes, an investment banking firm to serve as Managing Underwriter
for such offering.
(g) Abandonment. Company shall have the right, upon prompt written
notice to Executive delivering a Piggyback Registration Request, to abandon a
Piggyback Registration.
SECTION 3. EXPENSES. Company shall pay all Registration Expenses in
connection with each registration pursuant to Section 2 hereof, whether or not
such registration becomes effective under the Securities Act; provided,
however, that Executive shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale of Executive's Parity
Registrable Shares pursuant to any such registration; provided, further, that
Executive shall pay its pro rata share of the incremental registration filing
fees attributable to the inclusion of his Parity Registrable Shares in any such
registration pursuant to Section 2 hereof and shall pay all fees and
disbursements of its counsel incurred in connection therewith.
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SECTION 4. REGISTRATION PROCEDURES.
(a) With respect to any Piggyback Registration, Company, subject to
subsections 2(e) above, respectively, shall use reasonable efforts to effect
the registration of all Executive's Parity Registrable Shares that Executive
has requested to be included therein in accordance, subject to subsections
2(d), with the intended method(s) of distribution thereof reasonably promptly,
and in connection with any such request, Company shall do the following:
(1) prepare and file with the SEC a registration statement on
any form for which Company then qualifies and that is available for the
registration of the Registrable Shares requested to be registered in accordance
with the intended method(s) of distribution thereof, include (subject to
subsections 2(d) and 2(e) above) in the registration on such form all
Registrable Shares requested to be included, and use reasonable efforts to
cause such registration statement to become effective;
(2) prepare and file with the SEC such amendments and
post-effective amendments and supplements to the registration statement or any
prospectus as may be necessary to keep the registration statement effective for
a period that shall terminate on the earlier of forty-five (45) days after the
registration statement is officially declared effective by the SEC or when all
Executive's Parity Registrable Shares covered by such registration statement
have been disposed of; and comply with all applicable rules and regulations of
the SEC and with the provisions of the Securities Act applicable to Company
with respect to the disposition of all Executive's Parity Registrable Shares
covered by such registration statement during such period in accordance with
the intended methods of disposition by Executive set forth in such registration
statement (as it may be amended) or any supplement to any such prospectus;
(3) notify Executive, at any time when a prospectus relating
to Executive's Parity Registrable Shares covered by the registration statement
is required to be delivered under the Securities Act, of the occurrence of any
event as a result of which the preliminary prospectus or prospectus included in
such registration statement or any prospectus supplement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein in light of the circumstances under which they were
made, not misleading, and Company shall, as promptly as reasonably practicable
thereafter, prepare and file with the SEC and furnish to Executive a supplement
or amendment to such preliminary prospectus, prospectus or prospectus
supplement so that, as thereafter delivered to the prospective purchasers of
Executive' Parity Registrable Shares being distributed by Executive, such
preliminary prospectus, prospectus or prospectus supplement shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(4) if requested by Executive, Company shall cooperate and
shall promptly incorporate in a prospectus supplement or post-effective
amendment to the registration statement at Executive's cost and expense such
information concerning Executive and its intended method of distribution as it
reasonably requests to be included therein (and which is not inappropriate, in
the reasonable judgment of Company, after consultation with its outside legal
counsel), including, without limitation, with respect to any change in the
intended method of distribution, the amount or kind of Parity Registrable
Shares being offered by Executive, the offering price for such Parity
Registrable Shares or any other terms of the offering or distribution of the
Registrable Shares and make all required filings of such prospectus supplement
or post-effective amendment as soon as possible after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(5) on or prior to the date on which the registration
statement is declared effective, use
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reasonable efforts to register or qualify, and cooperate with Executive and its
counsel, in connection with the registration or qualification of the
Executive's Parity Registrable Shares covered by the registration statement
for offer and sale under the securities or "blue sky" laws of each state and
other U.S. jurisdiction as Executive reasonably (in light of the intended plan
of distribution) requests in writing, use reasonable efforts to keep each such
registration or qualification effective, including through new filings,
amendments or renewals, during the period the registration statement is
required to be kept effective and do other acts or things reasonably necessary
or advisable to permit the disposition in all such jurisdictions of the
Executive's Parity Registrable Shares; however, Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to so qualify, (ii) take any action that would subject it
to general service of process in any jurisdiction where it would not otherwise
be subject to such general service of process or (iii) subject itself to
general taxation in any jurisdiction where it would not otherwise be subject;
(6) cooperate with Executive, its legal counsel and any other
interested party (including any interested broker-dealer) in making any filings
or submissions required to be made, and the furnishing of appropriate
information in connection therewith, with the NASD;
(7) use reasonable efforts to cause all Executive's Parity
Registrable Shares included in such registration statement to be listed, by the
date of the first sale of Registrable Shares pursuant to such registration
statement, on each securities exchange or interdealer quotation system on which
similar securities issued by Company then are listed or proposed to be listed,
if any;
(8) take other steps reasonably necessary to effect the
registration and qualification of the Executive's Parity Registrable Shares
included in such Piggyback Registration and to facilitate the disposition
thereof in accordance with the respective plans of distribution of Executive
permitted hereunder.
(b) Each Selling Holder, upon receipt of any notice from Company of
the occurrence of any event of the kind described in clause 3 of subsection
4(a) above, shall forthwith discontinue disposition of the Executive's Parity
Registrable Shares pursuant to the registration statement covering such
Executive's Parity Registrable Shares until Executive's receipt of the copies
of the supplemented or amended preliminary prospectus or prospectus
contemplated by such subsection and, if so directed by Company, Executive shall
deliver to Company (at the expense of Company) all copies, other than permanent
file copies then in Executive's possession, of the most recent preliminary
prospectus or prospectus covering such Executive's Parity Registrable Shares at
the time of receipt of such notice. Executive, upon receipt of any notice from
Company of the issuance of any stop order or blue sky order shall forthwith, in
the case of any stop order, discontinue disposition of Executive's Parity
Registrable Shares pursuant to the registration statement covering such
Executive's Parity Registrable Shares or, in the case of any blue sky order,
discontinue disposition of the Executive's Parity Registrable Shares in the
applicable jurisdiction, until advised in writing of the lifting or withdrawal
of such order. In the event Company shall give any notice pursuant to this
subsection 4(b), Company shall extend the period during which such registration
statement shall be maintained effective (including the period referred to in
subsection 4(a)(2) above) by the number of days during the period from and
including the date of the giving of such notice to and including (i) in the
case of a notice pursuant to the first sentence of this subsection, the date
when Executive shall have received the copies of the supplemented or amended
preliminary prospectus or prospectus contemplated by clause (4) of subsection
4(a) above or (ii) in the case of a notice pursuant to the second sentence of
this subsection, the lifting or withdrawal of such stop order or blue sky
order, as the case may be.
(c) Not less than eight (8) days before the expected filing date of
each registration statement pursuant to this Addendum A, Company shall notify
Executive of the information reasonably required from Executive (the "Requested
Information") if Executive has timely delivered a Piggyback Registration
Request to Company. If Company has not received, on or prior to the fifth (5th)
day before the expected filing date, the Requested Information from Executive,
Company may file the registration statement without including Executive's
Parity Registrable Shares of
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Executive. The failure to include in any registration statement Executive's
Parity Registrable Shares of Executive (with regard to that registration
statement) shall not in and of itself result in any liability on the part of
Company to Executive. In addition, Executive shall take all such other acts,
deliver such other information and execute and deliver such documents and
instruments in connection with the matters referenced herein (including, but
not limited to, a custody agreement, power of attorney, lock-up letter and
underwriting agreement), as the Company may request.
SECTION 5. INDEMNIFICATION.
(a) Indemnification by Company. Company shall indemnify and hold
harmless Executive, each Affiliate of Executive and their respective directors,
officers, stockholders and partners and each other Person, if any, who controls
Executive within the meaning of the Securities Act, against any and all losses,
claims, damages or liabilities, joint or several, and expenses (including the
costs of investigation and the fees and disbursements of counsel) to which any
of them may become subject under the Securities Act, the Exchange Act or other
federal or state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement as originally filed or in any amendment thereof, or in any
preliminary, final or summary prospectus, or in any amendment thereof or
supplement thereto, or (ii) any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any violation by Company of any federal or
state law, rule or regulation or common law applicable to Company and relating
to action required of or inaction by Company in connection with any such
registration, and Company shall reimburse any such indemnified party for any
legal or any other expenses reasonably incurred by it in connection with
investigating or, subject to subsection 5(c) below, defending any such loss,
claim, damage, liability, action or proceeding; however, Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense (x) arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
registration statement or in any amendment thereof or in any preliminary, final
or summary prospectus or in any amendment thereof or supplement thereto in
reliance upon and in conformity with written information furnished to Company
by or on behalf of Executive specifically for use in the registration statement
or prospectus (or an amendment thereof or supplement thereto) or (y) results
from the fact that Executive sold Parity Registrable Shares to a Person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus or of the final prospectus as then amended
or supplemented, whichever is most recent, if Company had previously furnished
copies hereof to Executive and such final prospectus, as then amended or
supplemented, corrected such misstatement or omission.
(b) Indemnification by Holders. Executive shall indemnify and hold
harmless (in the same manner and to the same extent as set forth in subsection
5(a), including, without limitation, clause (y) of the proviso set forth
therein) Company and its directors, officers and controlling persons and each
underwriter, dealer manager or similar securities industry professional
participating in the distribution of Executive's Parity Registrable Shares and
such securities industry professional's respective directors, officers,
partners and controlling persons, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein, or any
amendment or supplement, if such statement or alleged statement or omission or
alleged omission (i) was made in reliance upon and in conformity with written
information furnished to Company by or on behalf of Executive specifically for
use in such registration statement or prospectus (or amendment thereof or
supplement thereto) or (ii) (solely in the case of an offering in which no
underwriter, selling broker, dealer manager or similar industry professional
participates) results from the fact that Executive sold Parity Registrable
Shares to a Person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus or of the
final prospectus as then amended or supplemented, whichever is most recent, if
Company had previously furnished copies thereof to such Holder and such final
prospectus, as then amended or supplemented, corrected such misstatements or
omission.
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(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party under subsection 5(a) or (b) of notice of any claim or the commencement
of any action or proceeding subject to indemnification thereunder, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under either of such subsections, promptly notify the
indemnifying party in writing of the claim or the commencement of the action or
proceeding; provided that the failure to so notify the indemnifying party shall
not relieve the indemnifying party from any liability which it may have to an
indemnified party under subsection 5(a) or (b) or otherwise, except to the
extent the indemnifying party shall have been materially prejudiced by such
failure to give notice. If any such claim, action or proceeding shall be
brought against an indemnified party, and it shall timely notify the
indemnifying party, the indemnifying party shall be entitled to participate in,
and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim,
action or proceeding, the indemnifying party shall not be liable to the
indemnified party under, subsection 5(a) or (b) for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; however, such indemnified
party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expense of such indemnified party unless (1) the indemnifying
party has agreed to pay such fees and expenses, (2) the indemnifying party
shall have failed to assume the defense of such claim, action or proceeding or
has failed to employ counsel reasonably satisfactory to such indemnified party
in any such claim, action or proceeding or (3) the named parties to any such
action or proceeding (including any impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to such indemnified party which are inconsistent or in conflict with
those available to the indemnifying party (in which case, if such indemnified
party notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of such indemnified party), it being understood, however,
that the indemnifying party shall not, in connection with any one such action
or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for such indemnified party
and any other indemnified parties similarly situated, which firm shall be
designated in writing by such indemnified parties. The indemnifying party shall
not be liable for any settlement of any such action or proceeding effected
without its written consent (which consent shall not be unreasonably withheld),
but if settled with its written consent, or if there be a final judgment for
the plaintiff in any such action or proceeding, the indemnifying party agrees
to indemnify and hold harmless such indemnified parties from and against any
loss or liability by reason of such settlement or judgment.
(d) Contribution. If the indemnification provided for in subsection
5(a) or (b) is unavailable or insufficient to hold harmless an indemnified
party, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages
or, liabilities (or actions or proceedings in respect thereof) or expenses
referred to in subsection 5(a) or (b), (i) in such proportion as is appropriate
to reflect the relative benefits received by Company on the one hand and
Executive on other hand from the sale of the Executive's Parity Registrable
Shares, or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of Company on the one hand and Executive on the other hand in connection with
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by Company on the one hand and Executive on the other hand shall be deemed to
be in the same proportion as the total net proceeds from the issuance and sale
of such Registrable Shares (before deducting expenses) received by Company bear
to the total compensation or profit (before deducting expenses) received or
realized by Executive from the resale of such Registrable Shares. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of
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a material fact or the omission or alleged omission to state a material fact
relates to information supplied by Company or Executive and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. Company and Executive agree that it
would not be just and equitable if contributions pursuant to this subsection
5(d) were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first sentence of this subsection 5(d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) or expenses referred to in the first
sentence of this subsection 5(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any claim, action or proceeding (which shall be
limited as provided in subsection 5(c) above if the indemnifying party has
assumed the defense of any such action in accordance with the provisions
thereof) which is the subject of this subsection 5(d). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
against such party in respect of which a claim for contribution may be made
against' an indemnifying party under this subsection 5(d), such indemnified
party shall notify the indemnifying party in writing of the commencement
thereof if the notice specified in subsection 5(c) above has not been given
with respect to such action or proceeding; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party under this subsection 5(d) or otherwise, except to the
extent the indemnifying party shall have been materially prejudiced by such
failure to give notice.
SECTION 6. MISCELLANEOUS.
(a) Amendments and Waivers.
(1) Company's Consent. No waiver, amendment, modification or
supplement of any provision of this Addendum A, including this subsection 6(a),
that adversely affects Company shall be effective against Company unless it is
approved in writing by Company.
(2) Executive's Consent. No waiver, amendment, modification
or supplement of any provision of this Addendum A, including this subsection
6(a), that adversely affects Executive shall be effective against Executive
unless it is approved in writing by Executive.
(b) Termination. The provisions of this Addendum A shall terminate
with respect to a Parity Registrable Share owned by Executive, other than the
provisions of Section 5 hereof, which shall survive any such termination, when
Executive ceases to own such Parity Registrable Share.
[END OF ADDENDUM]
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