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. Xxxxxxx an employee
of the Company (the "Employee").
RECITALS:
1. The Company is a Delaware corporation. The Employee is
currently employed by the Company as Vice President of
Development.
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
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
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
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: __________________________
Xxxx Xxxxxxx
Chairman of the Board
---------------------------------
Xxxxxxx X. Xxxxxxx
