<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 8, 1996.
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
PHOENIX INTERNATIONAL LTD., INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
FLORIDA 5734 59-3171810
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
900 WINDERLEY PLACE, SUITE 140, MAITLAND, FLORIDA 32751
(407) 667-0033
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
BAHRAM YUSEFZADEH
CHIEF EXECUTIVE OFFICER
PHOENIX INTERNATIONAL LTD., INC.
900 WINDERLEY PLACE, SUITE 140
MAITLAND, FLORIDA 32751
(407) 667-0033
(407) 667-0133 (FAX)
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
GLENN W. STURM, ESQ. M. HILL JEFFRIES, ESQ.
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P. W. THOMAS CARTER III, ESQ.
400 COLONY SQUARE DANIEL M. LEBEY, ESQ.
1201 PEACHTREE STREET ALSTON & BIRD
ATLANTA, GEORGIA 30361 ONE ATLANTIC CENTER
(404) 817-6000 1201 WEST PEACHTREE STREET
(404) 817-6050 (FAX) ATLANTA, GEORGIA 30309-3424
(404) 881-7000
(404) 881-7777 (FAX)
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value...... 1,207,500 $13.00 $15,697,500 $5,413
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</TABLE>
(1) Includes 157,500 shares which the Underwriters have the option to purchase
from certain Selling Shareholders to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(a) under the Securities Act of 1933.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION LOCATION OF CAPTION IN PROSPECTUS
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............. Prospectus Summary; Risk Factors
4. Use of Proceeds............................ Prospectus Summary; Use of Proceeds
5. Determination of Offering Price............ Outside Front Cover Page; Underwriting
6. Dilution................................... Risk Factors; Dilution
7. Selling Security Holders................... Principal and Selling Shareholders
8. Plan of Distribution....................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered............................... Prospectus Summary; Capitalization;
Description of Capital Stock
10. Interests of Named Experts and Counsel..... Legal Matters
11. Information with Respect to the
Registrant............................... Prospectus Summary; Risk Factors; Use of
Proceeds; Divided Policy; Capitalization;
Dilution; Selected Consolidated Financial
Data; Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions;
Principal and Selling Shareholders;
Description of Capital Stock; Shares
Eligible for Future Sale; Consolidated
Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 8, 1996
PROSPECTUS
1,050,000 SHARES
PHOENIX
INTERNATIONAL
LTD., INC.
COMMON STOCK
Of the 1,050,000 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), offered hereby, 670,000 shares are being sold by Phoenix
International Ltd., Inc. ("Phoenix" or the "Company") and 380,000 shares are
being sold by certain shareholders of the Company (the "Selling Shareholders").
See "Principal and Selling Shareholders." The Company will not receive any
proceeds from the sale of shares by the Selling Shareholders other than the
receipt of $1,319,000 in payment of stock subscriptions receivable plus accrued
interest thereon of $131,000 from the sale of shares by Mr. Yusefzadeh.
Prior to this offering (the "Offering"), there has been no public market
for the Common Stock. It is currently anticipated that the initial public
offering price will be between $11.00 and $13.00 per share. See "Underwriting"
for the factors to be considered in determining the initial public offering
price. The Company has filed an application for the Common Stock to be quoted
and traded on the Nasdaq Stock Market's National Market (the "Nasdaq National
Market") under the symbol "PHXX."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
====================================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) SHAREHOLDERS
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<S> <C> <C> <C> <C>
Per Share......................... $ $ $ $
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Total............................. $ $ $ $
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</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $795,000 payable by the Company.
(3) Certain of the Selling Shareholders have granted the Underwriters a 30-day
over-allotment option to purchase up to 157,500 additional shares of Common
Stock on the same terms and conditions as set forth above. If all such
shares are purchased by the Underwriters, the total Price to Public will be
$ , the total Underwriting Discount will be $ , the total
Proceeds to the Company will be $ and the total Proceeds to the
Selling Shareholders will be $ . See "Principal and Selling
Shareholders" and "Underwriting."
---------------------
The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale and to the Underwriters' right to reject
orders in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that certificates for the shares of Common Stock will be
available for delivery on or about , 1996.
---------------------
[J.C. BRADFORD & CO. LOGO] [ADVEST, INC. LOGO]
, 1996
<PAGE> 4
[INSERT ARTWORK AS DETERMINED BY COMPANY AND UNDERWRITERS]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------
FOLLOWING CONSUMMATION OF THE OFFERING, THE COMPANY INTENDS TO FURNISH ITS
SHAREHOLDERS WITH ANNUAL REPORTS CONTAINING AUDITED FINANCIAL STATEMENTS AND AN
OPINION THEREON EXPRESSED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS AND WITH
QUARTERLY REPORTS CONTAINING UNAUDITED FINANCIAL INFORMATION FOR THE FIRST THREE
QUARTERS OF EACH FISCAL YEAR.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the consolidated financial statements and notes thereto
appearing elsewhere in this Prospectus. Prospective investors should carefully
consider the matters set forth under "Risk Factors" herein. Unless the context
otherwise indicates, (i) the information in this Prospectus assumes no exercise
of the Underwriters' over-allotment option and (ii) all share and per share data
has been restated to reflect (a) a 2.3231-for-one stock split in the form of a
132% stock dividend on all shares of capital stock outstanding on May 6, 1996
and (b) a recapitalization on the effectiveness of this Registration Statement
(the "Effective Date") in which all outstanding shares of the Company's five
classes of common stock (designated as A through E) will be converted into
Common Stock on a share for share basis. All references to "Phoenix" or the
"Company" include Phoenix International Ltd., Inc. and its subsidiary.
THE COMPANY
Phoenix International Ltd., Inc. ("Phoenix" or the "Company") designs,
develops, markets and supports highly adaptable, enterprise-wide client/server
application software for the financial services industry, with a primary focus
on middle market banks. Phoenix combined (i) its management's extensive
experience with banking and banking software systems, (ii) input from a
consortium of financial institutions concerning bank operational and flexibility
needs and (iii) the most recent advances in client/server technology to design
and develop an innovative new banking software system. The Phoenix Retail
Banking System (the "Phoenix System"), through its client/server technology,
addresses many of the deficiencies of the mainframe- and minicomputer-based
legacy systems on which most banks currently operate by allowing financial
institutions to integrate data into a comprehensive management information
network. Like legacy systems, the Phoenix System supports all core areas of bank
data processing, including system administration, account processing, nightly
processing, teller functions, holding company accounting and budgeting. Unlike
legacy systems, the Phoenix System is a fully integrated system that provides
significant advantages in three critical areas: (i) customer relationship
management; (ii) management decision support; and (iii) bank product creation
and support.
Since its formation in January 1993, the Company has entered into ongoing
contracts with 23 banks or bank holding companies for installation of the
Phoenix System supporting 26 United States and 7 international financial
institutions. As of April 30, 1996, the Phoenix System has been fully
implemented and is operating in 17 of these 33 financial institutions. The
Company had total revenues of approximately $5.0 million and net income of
approximately $554,000 for the fiscal year ended December 31, 1995 and total
revenues of approximately $1.8 million and net income of approximately $142,000
for the quarter ended March 31, 1996.
The Company's Chief Executive Officer, Bahram Yusefzadeh, has over 27 years
of experience in the banking software industry. In addition, the Company has
assembled a senior management team with over 120 years of experience in the
banking and software industries. In the 1970s, Mr. Yusefzadeh developed one of
the first legacy systems, the Liberty Banking System, which at one time was used
by over 260 banks. Mr. Yusefzadeh founded Phoenix for the purpose of developing
and marketing a new generation of integrated banking software applications using
client/server technology that would replace less flexible and technologically
dated legacy systems. The Phoenix System's development was the result of a joint
effort among the Company's management, Hewlett-Packard Company
("Hewlett-Packard") and a consortium of banks and bank holding companies (the
"U.S. Bank Partners"). In addition, the U.S. Bank Partners provided a
substantial portion of the Company's initial capital.
The Company's primary market consists of middle market banks, which the
Company defines as commercial banks and savings institutions with asset sizes
ranging between $100 million and $1 billion. These banks are highly regulated,
and they historically have provided a limited range of products and faced
limited competition. These banks typically used legacy computer systems that
generally only processed transactions and provided a general ledger. Today, the
competitive landscape has changed dramatically as diversified financial service
providers compete directly with middle market banks. As a result, these banks
need detailed information about their institutions and customers in order to
develop and market profitable new products and services and to expand customer
relationships.
3
<PAGE> 6
The Phoenix System addresses this increasing need for detailed information
by allowing financial institutions to integrate data into a comprehensive
management information network that is readily accessible throughout the entire
financial institution, flexible with shared information and easily interfaced.
The Company believes that the Phoenix System is easy to use and simple to learn,
which enables a bank to provide higher quality customer service with reduced
operating and training costs. As a result of these benefits, the Company
believes that its customers' competitive positions are enhanced. Phoenix
believes that very few middle market banks have fully realized the potential
benefits offered by client/server technology due to the small number of true
client/server applications currently available to banks.
The Company's primary business objective is to become a leading supplier of
enterprise-wide client/ server application software for the financial services
industry by pursuing the following strategies:
- Maintain Technology Leadership and Enhance Product Functionality.
Phoenix believes the Phoenix System is the most advanced client/server
computing solution for banks because it incorporates new open
technologies and standards, such as client/server architectures,
relational databases, graphical user interfaces and advanced application
development tools. Phoenix intends to maintain its leadership position by
integrating new technologies, adding new applications, enhancing existing
applications and increasing functionality.
- Focus on United States Middle Market Banks. The Company intends to
continue its marketing focus in the United States on the approximately
3,800 middle market banks with asset sizes ranging from $100 million to $1
billion. The Company believes that most middle market banks are
technologically sophisticated, seek banking software applications that
support strategic objectives and have the capital and human resources to
finance and use effectively advanced technological solutions.
- Expand International Market. Phoenix believes that many international
financial institutions are seeking technology as a means to offer a
broader array of financial products and services to meet the increasing
demand for retail banking services in the international market. Phoenix
has designed its software products to incorporate numerous international
features and intends to continue enhancing functionality.
- Increase Worldwide Distribution. The Company plans to continue expanding
its distribution both in the United States and internationally by
increasing its sales and implementation forces and seeking additional
strategic alliances. In March 1996, Phoenix and Unisys Corporation
("Unisys") entered into a software license agreement (the "Unisys
Agreement") whereby Unisys exclusively markets the Phoenix System to banks
in Central and South America, Mexico, the Caribbean and Bermuda.
- Maximize Recurring Revenues. Phoenix signs customers to long-term
licensing agreements and charges annual service fees which are generally
15-20% of the base license fee. As the asset size of a bank increases or
as branches are added, customers pay additional incremental license fees
and increased service fees over the life of the license agreement.
Additionally, the Company's disaster recovery service is a separate
five-year contract which has an initial implementation fee and annual
service fees. Phoenix plans to continue to build this base of recurring
revenue and to develop additional sources of recurring revenue.
- Leverage Existing Customer Base and Broaden Primary Market. The Company
intends to expand its current bank customer relationships by providing
additional products and services and by licensing to additional bank
subsidiaries of existing clients. In addition, the Company intends to use
its implemented customer base as an important source of references, which
are vital in marketing to the financial services industry. The Company
also intends to expand the market for the Phoenix System to include banks
with asset sizes greater than $1 billion and less than $100 million by
increasing product functionality and flexibility for larger banks and by
delivering a version of the Phoenix System on a Microsoft Windows NT
platform (the "NT Version") for smaller banks.
- Pursue Complementary Acquisitions. Phoenix intends to leverage its
position as a provider of client/ server technology to financial
institutions by pursuing strategic acquisitions of providers of
complementary technologies, products and services. Phoenix believes such
strategic acquisitions will permit Phoenix to enter new markets, provide
outsourcing alternatives and acquire additional products and applications.
The Company was incorporated in Florida in January 1993. The Company's
principal offices are located at 900 Winderley Place, Suite 140, Maitland,
Florida 32751, and its telephone number is (407) 667-0033.
4
<PAGE> 7
THE OFFERING
Common Stock offered by the Company... 670,000 shares
Common Stock offered by the Selling
Shareholders........................ 380,000 shares
Common Stock to be outstanding after
the Offering........................ 3,673,946 shares(1)
Use of Proceeds....................... To fund product development; to
expand sales and marketing
resources; and for general
corporate purposes. See "Use of
Proceeds."
Nasdaq National Market symbol......... PHXX
- ---------------
(1) Excludes 637,608 shares of Common Stock issuable upon exercise of stock
options outstanding as of March 31, 1996, of which 139,485 will be
exercised or expire prior to the Effective Date, at exercise prices ranging
from $1.08 to $6.46 per share.
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider carefully a number of factors that could
affect the Company's operations and financial results. Such factors include,
among others, the Company's limited operating history, ability to realize
growth, dependence on new products, expansion of distribution channels,
dependence on a single product line, concentration of stock ownership and
certain anti-takeover defenses. See "Risk Factors" beginning on page 7 for a
discussion of certain factors that should be considered by prospective
purchasers of the Common Stock offered hereby.
5
<PAGE> 8
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
ELEVEN
FISCAL YEARS ENDED MONTHS THREE MONTHS ENDED
-------------------------- ENDED ------------------------
JANUARY 31, JANUARY 31, DECEMBER 31, MARCH 31, MARCH 31,
1994 1995 1995(1) 1995 1996
----------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
License fees and other............... $ 30,000 $ 57,776 $ 3,467,547 $ -- $1,127,607
Implementation, customer and software
support and other service fees..... -- 369,711 1,556,164 90,745 653,723
----------- ----------- ------------ ---------- ----------
Total revenues................ 30,000 427,487 5,023,711 90,745 1,781,330
Expenses:
Cost of license fees and other....... -- -- 375,783 -- 131,029
Cost of implementation, customer and
software support and other service
fees............................... 104,818 637,427 1,246,886 222,822 457,196
Sales and marketing.................. 96,911 358,948 983,290 224,839 268,818
General and administrative........... 225,458 981,930 1,058,190 287,072 358,260
Product development.................. 621,373 1,362,780 654,797 60,272 299,067
----------- ----------- ------------ ---------- ----------
Total expenses................ 1,048,560 3,341,085 4,318,946 795,005 1,514,370
Other income (expense):
Interest income...................... 3,603 26,610 121,815 29,607 28,647
Interest expense..................... -- (19,366) (12,060) (6,590) (1,081)
Other income (expense)............... 1,815 75,989 (4,252) 75,270 --
----------- ----------- ------------ ---------- ----------
Income (loss) before income taxes...... (1,013,142) (2,830,365) 810,268 (605,973) 294,526
Income tax expense..................... -- -- 255,999 -- 153,000
----------- ----------- ------------ ---------- ----------
Net income (loss)...................... $(1,013,142) $(2,830,365) $ 554,269 $ (605,973) $ 141,526
============ ============ ============ ========== ==========
PER SHARE DATA:
Net income (loss) per share(2)......... $ (0.51) $ (1.11) $ 0.17 $ (0.20) $ 0.04
Weighted average shares
outstanding(2)....................... 1,971,573 2,560,151 3,235,532 3,076,813 3,298,444
OTHER DATA:
Total product development
expenditures(3)...................... $ 621,373 $ 1,455,781 $ 1,788,172 $ 364,935 $ 612,346
Total personnel(4)..................... 23 48 87 52 93
Implemented customers(5)............... 0 2 12 2 14
</TABLE>
<TABLE>
<CAPTION>
AT
--------------------------- AT MARCH 31, 1996
JANUARY 31, DECEMBER 31, -----------------------------
1995 1995 ACTUAL AS ADJUSTED(6)
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (excluding deferred revenue and
related deferred tax assets)................... $ 144,012 $ 423,286 $ 375,484 $ 8,376,208
Total assets..................................... 1,726,511 3,228,289 3,495,641 11,496,365
Long-term obligations............................ -- -- -- --
Accumulated deficit.............................. (3,843,507) (3,289,238) (3,147,712) (3,147,712)
Total shareholders' equity (deficit)............. (1,619,412) (568,102) (376,576) 7,624,148
</TABLE>
- ---------------
(1) During 1995, the Company changed its fiscal year end from January 31 to
December 31. Accordingly, the consolidated financial statements for the
period ended December 31, 1995 include only eleven months of operations.
However, the information presented for the quarter ended March 31, 1995
consists of three months, including January 1995.
(2) See Note 1 of Notes to Consolidated Financial Statements.
(3) The total of capitalized software development costs and product development
expenses.
(4) All personnel, including contract workers and part-time employees.
(5) Customers using the Phoenix System to support daily operations.
(6) Adjusted to reflect the sale of 670,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $12.00 per
share, the receipt of approximately $1,319,000 from Mr. Yusefzadeh for
payment of stock subscriptions receivable and the application of the
estimated net proceeds therefrom as described under "Use of Proceeds."
6
<PAGE> 9
RISK FACTORS
In addition to the other information in this Prospectus, prospective
investors should carefully consider the following risk factors in evaluating an
investment in the Common Stock offered hereby.
HISTORY OF RECENT LOSSES; LIMITED OPERATING HISTORY
Phoenix was incorporated in January 1993 but did not begin shipping
nondevelopment versions of its products until June 1995, and it incurred
substantial losses for the quarters ended March 31, September 30, and December
31, 1995. As of April 30, 1996, the Company had only 17 fully implemented
customers. The Company's limited operating history makes it difficult to predict
future operating results. The Company's expense levels are based, in part, on
its expectations as to future revenues. If revenue levels are below expectations
or if the Company is unable or unwilling to reduce expenses proportionately,
operating results will be adversely affected. Therefore, there can be no
assurance that Phoenix will be profitable on a quarterly or annual basis. The
Company's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stages of
development, particularly companies in new and rapidly evolving markets.
ABILITY TO CONTINUE AND MANAGE GROWTH
Phoenix has experienced significant growth in its operations. The Company's
success will depend upon its ability to continue product development; upgrade
its technologies and commercialize products and services utilizing such
technologies; respond to competitive developments; expand its sales, marketing
and implementation forces; enter into sales agency and reseller agreements for
both United States and international markets; and attract, train, motivate and
retain management and technical personnel on a timely basis. The Company's
growth will also require the Company to continue to improve its financial and
management controls and its reporting systems and procedures. The Company's
failure to do so could have a material adverse affect upon the Company's
business, operating results and financial condition.
DEPENDENCE ON NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE; RISK OF PRODUCT
ERRORS
The client/server application software market is characterized by rapid
technological change, frequent new product introductions and evolving industry
standards. The introduction of products embodying new technologies and the
emergence of new industry standards can render existing products obsolete and
unmarketable in short periods of time. The Company expects new products and
services, and enhancements to existing products and services, to be developed
and introduced by others, which will compete with the products and services
offered by the Company. The life cycles of the Company's products are difficult
to estimate. The Company's future success will depend upon its ability to
enhance its current products and to develop and introduce new products that keep
pace with technological developments and emerging industry standards and address
the increasingly sophisticated needs of its customers. There can be no assurance
that Phoenix will be successful in developing and marketing new products or
product enhancements that meet these changing demands, that Phoenix will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these products or that its new products and
product enhancements will adequately meet the demands of the marketplace and
achieve market acceptance. Historically, the Company's product development
efforts have been limited due to the Company's limited financial resources.
Phoenix plans to introduce and market several new products which will be subject
to significant technical risks. In the past, Phoenix has experienced delays in
the commencement of commercial shipments of new products and enhancements. If
Phoenix is unable to develop and introduce new products or product enhancements
in a timely manner, or if a new release of the Phoenix System or a new product
does not achieve market acceptance, the Company's business, operating results
and financial condition will be materially adversely affected.
Software products as complex as those offered by Phoenix may contain
undetected errors or failures when first introduced or when new versions are
released. Phoenix previously has discovered software errors in certain of its
new products and enhancements after their introduction and has experienced
delays and lost revenues
7
<PAGE> 10
during the periods required to correct these errors. There can be no assurance
that errors will not be found in new products or releases after commencement of
commercial shipments, resulting in loss or delay in market acceptance, which
could have a material adverse affect upon the Company's business, operating
results and financial condition. See "Business -- Product Development and New
Products."
INTENSE COMPETITION
The financial institutions software market is intensely competitive,
rapidly evolving and subject to rapid technological change. Competitors vary in
size and in the scope and breadth of the products and services offered. Phoenix
encounters competition from a number of sources, including companies that market
legacy and modified legacy systems or that market other client/server software
products to the financial institutions industry and other industries. In
addition, Phoenix expects additional competition from other established and
emerging companies as the client/server application software market continues to
develop and expand. Phoenix also expects that competition will increase as a
result of software industry consolidations. Some of the Company's current, and
many of the Company's potential, competitors have longer operating histories,
greater name recognition, larger customer bases and significantly greater
financial, personnel, engineering, technical, marketing and other resources than
the Company. As a result, they may be able to respond more quickly to new or
emerging technologies and changes in customer requirements or to devote greater
resources to the development, promotion and sale of their products than the
Company. In addition, current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties to
increase the ability of their products to address the needs of the Company's
prospective customers. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. The Company expects that the financial institutions software market will
continue to attract new competitors and new technologies, possibly involving
alternative technologies that are more sophisticated and cost effective than the
Company's technology. There can be no assurance that Phoenix will be able to
compete successfully against current or future competitors or that competitive
pressures faced by Phoenix will not materially adversely affect its business,
operating results and financial condition. See "Business -- Competition."
EXPANSION OF SALES FORCE, IMPLEMENTATION FORCE AND INDIRECT DISTRIBUTION
CHANNELS
Phoenix will be required to hire additional sales and implementation
personnel in 1996 and beyond if Phoenix is to achieve significant revenue growth
in the future. Competition for such personnel is intense, and there can be no
assurance that Phoenix will be able to retain its existing sales and
implementation personnel or to attract, assimilate or retain additional highly
qualified sales or implementation personnel in the future. If Phoenix is unable
to hire such personnel on a timely basis, the Company's business, operating
results and financial condition could be materially adversely affected.
An integral part of the Company's strategy is to develop the marketing
channel of value added resellers ("VARs"), agents and original equipment
manufacturers ("OEMs") and to increase the proportion of the Company's customers
licensed through these channels, which will enable the Company to offer its
services to a larger customer base than the Company could otherwise reach
through its direct marketing efforts. Consequently, the Company's success
depends in part on the ultimate success of these sales relationships and on the
ability of these VARs, agents and OEMs to market effectively the Company's
products. Although all of the Company's revenues in 1995 came from direct sales
channels, the Company is currently investing, and intends to continue to invest,
significant resources to develop indirect distribution channels. There can be no
assurances that Phoenix will be able to attract or retain VARs, agents and OEMs
that will be able to market the Company's products effectively and that will be
qualified to provide timely and cost-effective customer support and service. In
addition, the Company's current agreements with VARs, agents and OEMs are not
exclusive in most cases and, in many cases, may be terminated by either party
without cause, and many of the Company's VARs, agents and OEMs offer competing
product lines. Therefore, there can be no assurance that any VAR, agent or OEM
will continue to represent the Company's products or to represent the Company's
products effectively. The inability to recruit or retain important VARs, agents
or OEMs could adversely affect the Company's business, operating results and
financial condition. See "Business -- Sales and Marketing."
8
<PAGE> 11
EXPANSION OF INTERNATIONAL SALES
International sales represented approximately 70% of the Company's revenues
for the 11 months ended December 31, 1995. Phoenix believes that its continued
growth and profitability will require expansion of its international operations.
Accordingly, Phoenix intends to continue to expand its international activities,
including its strategic alliances, and to enter additional foreign markets,
which will require significant management attention and financial resources. To
date, the Company has only limited experience in marketing and distributing its
products and services internationally. In order to successfully expand
international sales in 1996 and subsequent periods, Phoenix must successfully
implement its recent strategic alliance with Unisys, hire additional sales and
implementation personnel and recruit additional international resellers. To the
extent that Phoenix is unable to do so, the Company's growth in international
sales will be limited, and the Company's business, operating results and
financial condition could be materially adversely affected. In addition, there
can be no assurance that Phoenix will be able to maintain or increase
international market demand for the Company's products.
The Company's international sales are currently denominated in United
States dollars. An increase in the value of the United States dollar relative to
foreign currencies could make the Company's products more expensive and,
therefore, potentially less competitive in those markets. Additionally, risks
inherent in the Company's international business activities generally include
unexpected changes in regulatory requirements, tariffs and other trade barriers,
costs of localizing products for foreign countries, lack of acceptance of
localized products in foreign countries, longer accounts receivable payment
cycles, difficulties in managing international operations, political
instability, potentially adverse tax consequences, restrictions on the
repatriation of earnings and the burdens of complying with a wide variety of
foreign laws and regulations. There can be no assurance that such factors will
not have a material adverse affect on the Company's future international sales
and, consequently, the Company's business, operating results and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Sales and Marketing."
DEPENDENCE ON SINGLE PRODUCT LINE
The Company's revenues are derived from two primary sources: (i) license
fees for software products; and (ii) fees for a full range of services
complementing its products, including implementation services, interface
services and customer and software support services. All of these fees are
derived from the licensing of the Company's principal product, the Phoenix
System. Broad acceptance of the Phoenix System by middle market banks is
critical to the Company's future success. In addition, the Company's future
financial performance will depend in part on the successful development,
introduction and customer acceptance of new and enhanced versions of the Phoenix
System and other products. A decline in demand for, or failure to achieve broad
market acceptance of, the Phoenix System or any enhanced version as a result of
competition, technological change or otherwise, will have a material adverse
affect on the business, operating results and financial condition of the
Company. See "Business -- The Phoenix System," "-- Product Development and New
Products" and "-- Competition."
DEPENDENCE UPON KEY PERSONNEL
The Company's future performance depends in significant part upon the
continued service of its executive and senior management and key technical,
implementation and sales personnel. The loss of the services of Mr. Yusefzadeh
or Mr. Reichard or one or more of the Company's other senior officers or key
technical, implementation or sales personnel could have a material adverse
affect on the Company's business, operating results and financial condition. The
Company's future success also depends on its continuing ability to attract and
retain highly qualified managerial, technical, implementation and sales
personnel. Competition for such personnel is intense, and there can be no
assurance that Phoenix will be able to retain its key managerial, technical,
implementation and sales employees or to attract, assimilate or retain other
highly qualified managerial, technical, implementation and sales personnel in
the future. The Company has entered into employment agreements with all of its
executive and senior management, and the Company maintains
9
<PAGE> 12
$1.0 million in key man life insurance on Mr. Yusefzadeh. See "Business -- Sales
and Marketing" and "Management -- Employment Agreements."
DEPENDENCE ON THIRD-PARTY TECHNOLOGY
The Phoenix System incorporates technology developed and owned by third
parties. Consequently, Phoenix must rely upon third parties to develop and
introduce technologies that enhance the Company's current products and enable
Phoenix, in turn, to develop its own products on a timely and cost-effective
basis to meet changing customer needs and technological trends in the financial
services software industry. The Phoenix System uses a relational database
technology known as Sybase that the Company licenses from Sybase, Inc. Sybase,
Inc. is currently the sole provider of this database software, and Phoenix
currently would not be able to license the Phoenix System to its customers
without using this software. Furthermore, the license between Sybase, Inc. and
the Company is nonexclusive, and this technology has been licensed to numerous
other companies. Any impairment or termination of the Company's relationship
with any licensor of third-party technology would force Phoenix to find other
developers on a timely basis or develop its own technology. There can be no
assurance that Phoenix will be able to obtain the third-party technology
necessary to continue to develop and introduce new and enhanced products, that
Phoenix will obtain third-party technology on commercially reasonable terms or
that Phoenix will be able to replace third-party technology in the event such
technology becomes unavailable, obsolete or incompatible with future versions of
the Company's products. See "Business -- Technology."
DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT
The Company's success is heavily dependent upon the Phoenix System's
architecture and design. Phoenix relies primarily on a combination of copyright
and trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect its proprietary rights. Phoenix seeks to protect its
software, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. Phoenix presently has no
patents or patent applications pending. Despite the Company's efforts to protect
its proprietary rights, unauthorized parties may attempt to copy aspects of the
Company's products or to obtain and use information that Phoenix regards as
proprietary. Policing unauthorized use of the Company's products is difficult,
and while Phoenix is unable to determine the extent to which piracy of its
software products occurs, such piracy can be expected to be a persistent
problem. In addition, the laws of some foreign countries do not protect the
Company's proprietary rights to as great an extent as do the laws of the United
States. There can be no assurance that the Company's means of protecting its
proprietary rights will be adequate or that the Company's competitors will not
develop similar technology independently.
Phoenix is not aware that any of its products infringe the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim infringement by Phoenix with respect to current or future
products. Phoenix expects that software product developers will increasingly be
subject to infringement claims. Any such claims, with or without merit, could be
time-consuming, result in costly litigation, cause product shipment delays or
require Phoenix to enter into royalty or licensing agreements or cause the
Company to discontinue the use of the challenged tradename, service mark or
technology at potentially significant expense to the Company associated with the
marketing of a new name or the development or purchase of replacement
technology, all of which could have a material adverse affect on the Company.
Such royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company, or at all, which could have a material adverse effect
upon the Company's business, operating results and financial condition. See
"Business -- Intellectual Property and Other Proprietary Rights."
DEPENDENCE ON GROWTH IN THE CLIENT/SERVER MARKET
Substantially all of the Company's revenues have been attributable to
licenses of the Phoenix System, which is utilized in client/server computing
environments. This product is currently expected to account for substantially
all of the Company's future revenues. Although the use of client/server
technology has grown in recent years, the client/server market is still an
emerging market. The Company's future financial performance will depend in large
part on continued growth in the number of financial institutions installing
10
<PAGE> 13
client/server technology. If the client/server market fails to grow or grows
more slowly than Phoenix currently anticipates, the Company's business,
operating results and financial condition will be materially adversely affected.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly operating results have varied significantly in the
past and may vary significantly in the future. Special factors that may cause
the Company's future operating results to vary include, without limitation, the
size and timing of significant orders; the mix of direct and indirect sales; the
mix and timing of foreign and domestic sales; the timing of new product
announcements and changes in pricing policies by the Company and its
competitors; market acceptance of new and enhanced versions of the Company's
products; increased competition; changes in operating expenses, including
expenses related to acquisitions; changes in Company strategy; personnel
changes; changes in legislation and regulation; foreign currency exchange rates
and general economic factors. Product revenues are also difficult to forecast
because the market for client/server application software products is rapidly
evolving, and the Company's sales cycle, from initial review to purchase and the
provision of support services, varies substantially from customer to customer.
As a result, Phoenix believes that quarter to quarter comparisons of its results
of operations are not necessarily meaningful and should not be relied upon as
indications of future performance. The Company's results of operations will be
adversely affected by an increase in its projected effective tax rate if
legislation reenacting certain research and development tax credits is not
passed by the United States Congress. In addition, the Company currently has a
net operating loss carryforward of approximately $2.8 million. Once the net
operating loss is utilized or expires, the Company's tax rate will increase. Due
to all of the foregoing factors, it is likely that in some future quarter the
Company's operating results will be below the expectations of public market
analysts and investors. In such an event, the price of the Common Stock would
likely be materially adversely affected. See "Selected Consolidated Financial
and Operating Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
RISKS ASSOCIATED WITH ACQUISITIONS
As part of its business strategy, Phoenix intends to acquire complementary
technologies, products and services. Any such future acquisition would be
accompanied by risks commonly encountered in acquisitions of companies. Such
risks include, among other things, the difficulty of assimilating the operations
and personnel of the acquired companies; potential disruption of Phoenix's
ongoing business; inability to incorporate successfully acquired technologies
and rights into Phoenix's products; maintenance of uniform standards, controls,
procedures and policies; risks of entering markets in which Phoenix has little
or no direct prior experience; and impairments of relationships with employees
and subscribers of the acquired business as a result of changes in management.
There can be no assurance that Phoenix would be successful in overcoming these
risks or any other problems encountered in connection with such acquisitions. In
addition, any such acquisitions could materially adversely affect the Company's
operating results due to dilutive issuances of equity securities, the incurrence
of additional debt, and the amortization of expenses related to goodwill and
other intangible assets, if any. The Company is not currently engaged in any
negotiations with respect to specific acquisitions. See "Business -- Strategy."
PRODUCT LIABILITY
The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. Although Phoenix has not experienced any product liability
claims to date, the sale and support of products by Phoenix may entail the risk
of such claims. A successful product liability claim brought against the Company
could have a material adverse affect upon the Company's business, operating
results and financial condition.
CONCENTRATION OF STOCK OWNERSHIP
Upon completion of the Offering, the present directors, executive officers
and their respective affiliates will beneficially own 2,284,651 shares
(approximately 58.1%) of the outstanding Common Stock. In addition
11
<PAGE> 14
to the shares and options included in the calculation of beneficial ownership,
the present directors, executive officers and their respective affiliates hold
options to acquire an additional 196,049 shares of Common Stock not exercisable
within 60 days of the date of this Prospectus, which together with shares
currently beneficially owned would represent 60.1% of the Common Stock
outstanding after consummation of the Offering, after giving effect to the
exercise of those options. As a result, these shareholders will be able to
exercise significant influence over all matters requiring shareholder approval,
including the election of directors and approval of significant corporate
transactions. Such concentration of ownership may also have the effect of
delaying or preventing a change in control of the Company. See "Principal and
Selling Shareholders" and "Description of Capital Stock."
TRANSACTIONS WITH RELATED PARTIES
The Company has in the past entered into agreements and arrangements with
certain officers, directors and shareholders of the Company involving loans of
funds, grants of options and discounts on certain license, implementation and
customer and software support fees. Certain of these transactions have been made
on terms more favorable to officers, directors or shareholders than could have
been obtained from an unaffiliated party. See "Management -- Compensation
Committee Interlocks and Insider Participation" and "Certain Transactions."
ANTI-TAKEOVER EFFECTS OF THE ARTICLES OF INCORPORATION, THE BYLAWS AND THE
FLORIDA ACT; EMPLOYMENT AGREEMENTS
The Board of Directors has the authority to issue up to 10,000,000 shares
of preferred stock and to determine the price, rights, preferences, privileges
and restrictions, including voting rights, of those shares, without any further
vote or action by the shareholders. The rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any preferred stock that may be issued in the future. The issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisition and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. The Company has no current plans to
issue shares of preferred stock. Further, certain provisions of the Amended and
Restated Articles of Incorporation (the "Articles of Incorporation"), the
Amended and Restated Bylaws (the "Bylaws") and the Florida Business Corporation
Act (the "Florida Act") could delay or make more difficult a merger, tender
offer or proxy contest involving the Company. For example, the Articles of
Incorporation and Bylaws contain provisions that limit the rights of
shareholders to call special shareholder meetings and require shareholders to
follow an advance notification procedure for director nominations. See
"Description of Capital Stock." In addition, all of the Company's executive and
senior management have entered into employment agreements with the Company which
contain change in control provisions. See "Management -- Employment Agreements."
ABSENCE OF PRIOR PUBLIC MARKET; OFFERING PRICE DETERMINED BY AGREEMENT;
VOLATILITY OF MARKET PRICE
Prior to the Offering, there has been no public market for the Common
Stock. Although an application has been filed to list the Common Stock on the
Nasdaq National Market, there can be no assurance that an active trading market
will develop or be sustained after the Offering or that the market price of the
Common Stock will not decline below the public offering price. The initial
public offering price of the Common Stock will be determined solely by
negotiations among the Company, the Selling Shareholders and the representatives
of the Underwriters and is not necessarily related to the Company's book value,
net worth or any other established criteria of value and may not be indicative
of the market price for shares of Common Stock after the Offering. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price for the Common Stock. From time to time after
the Offering, there may be significant volatility in the market price for the
Common Stock. The stock market has from time to time experienced significant
price and volume fluctuations, which have particularly affected the market
prices of the stocks of high technology companies, and which may be unrelated to
the operating performance of particular companies. Factors such as quarterly
variations in actual or anticipated operating results, growth rates, changes in
estimates by analysts, market conditions in the industry, announcements by
competitors, regulatory
12
<PAGE> 15
actions and general economic conditions may have a significant effect on the
market price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Future sales of substantial amounts of the Common Stock could adversely
affect the market price of the Common Stock. Several of the Company's principal
shareholders hold a significant portion of the outstanding Common Stock, and a
decision by one or more of these shareholders to sell their shares could
adversely affect the market price of the Common Stock. The shares of Common
Stock offered hereby (plus any shares issued upon exercise of the Underwriters'
over-allotment option) will be freely tradeable without restriction. The
Company, all existing shareholders of the Company and the Company's directors
and executive officers have agreed to enter into contractual agreements with the
Underwriters (the "Lock-up Agreements") generally providing that they will not
offer, sell or otherwise dispose of, directly or indirectly, any shares of
Common Stock, any securities exercisable for or convertible into the Common
Stock or any options to acquire Common Stock owned by them for a period of 180
days from the Effective Date without the prior written consent of J.C. Bradford
& Co. As a result, notwithstanding possible earlier eligibility for sale under
the provisions of Rule 144 and Rule 701 under the Securities Act, shares subject
to the Lock-up Agreements generally will not be eligible for sale until the
Lock-up Agreements expire or their terms are waived by J.C. Bradford & Co.
Assuming J.C. Bradford & Co. does not release the shareholders from the Lock-up
Agreements, the following shares will be eligible for sale in the public market
at the following times: beginning on the Effective Date, only the shares sold in
the Offering will be immediately available for sale in the public market; and
beginning 180 days after the Effective Date, approximately shares will be
eligible for sale pursuant to Rule 701 and approximately shares will be
eligible for sale pursuant to Rule 144. See "Shares Eligible for Future Sale"
and "Underwriting."
In addition, the Company intends to register on Form S-8, approximately 30
days after the Effective Date, a total of shares of Common Stock subject to
outstanding options or reserved for issuance under the Company's stock option
plans. Upon expiration of the Lock-up Agreements and if his employment is
terminated for any reason, Mr. Yusefzadeh, who holds approximately shares
of Common Stock, will be entitled to certain demand registration rights with
respect to such shares. If Mr. Yusefzadeh, by exercising his demand registration
rights, causes a large number of shares to be registered and sold in the public
market, such sales could have a material adverse affect on the market price for
the Common Stock. See "Shares Eligible for Future Sale -- Registration Rights."
DILUTION
Investors participating in the Offering will incur immediate and
substantial dilution in the net tangible book value per share of Common Stock of
$10.30 per share assuming an initial public offering price of $12.00 per share.
To the extent outstanding options to purchase the Common Stock are exercised,
there will be further dilution. See "Dilution."
13
<PAGE> 16
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 670,000 shares of
Common Stock offered by the Company hereby are estimated to be $8,132,000, after
deducting underwriting discounts and commissions and estimated offering expenses
and adding the receipt of approximately $1,319,000 from Mr. Yusefzadeh for
payment of a stock subscriptions receivable plus accrued interest of $131,000.
See "Management -- Compensation Committee Interlocks and Insider Participation."
The Company plans to use approximately $4.5 million to fund product development
and approximately $2.2 million to expand its sales and marketing resources. The
remainder of the net proceeds will be used for general corporate purposes.
Pending any such expenditures, the Company plans to invest the net proceeds in
investment grade, interest-bearing securities.
DIVIDEND POLICY
Phoenix has never paid any cash dividends on its capital stock and does not
expect to pay cash dividends in the foreseeable future.
14
<PAGE> 17
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1996 after giving effect to (i) a 2.3231-for-one stock split in the
form of a stock dividend on all shares of capital stock outstanding on May 6,
1996 and (ii) a recapitalization on the Effective Date in which all outstanding
shares of Class A Common Stock, Class B Common Stock, Class C Common Stock,
Class D Common Stock and Class E Common Stock will be converted into Common
Stock on a share for share basis, and on an as adjusted basis to reflect (a) the
receipt of the proceeds from the sale by the Company of 670,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $12.00 per
share, (b) the receipt of approximately $1,319,000 from Mr. Yusefzadeh for
payment of a stock subscriptions receivable and (c) the application of the
estimated net proceeds therefrom. See "Use of Proceeds." This table should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and Notes thereto appearing elsewhere in this Prospectus. Par values have been
rounded in the table below.
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------
ACTUAL AS ADJUSTED(1)
----------- --------------
<S> <C> <C>
Long-term debt..................................................... $ -- $ --
========== ===========
Shareholders' equity (deficit):
Preferred Stock, $1.00 par value, 10,000,000 shares authorized,
no shares outstanding......................................... $ -- $ --
Common Stock, $0.01 par value, 20,000,000 shares authorized, no
shares outstanding, actual, 3,673,946 shares issued and
outstanding, as adjusted(1)................................... -- 36,739
Class A Common Stock, $0.0043 par value, 1,500,000 shares
authorized (2), 1,393,859 shares issued and outstanding,
actual, no shares outstanding, as adjusted.................... 6,000 --
Class B Common Stock, $0.43 par value, 10,000,000 shares
authorized, 511,082 shares issued and outstanding, actual, no
shares outstanding, as adjusted............................... 220,000 --
Class C Common Stock, $2.15 par value, 200,000 shares authorized,
185,848 shares issued and outstanding, actual, no shares
outstanding, as adjusted...................................... 400,000 --
Class D Common Stock, $4.30 par value, 50,000 shares authorized,
23,231 shares issued and outstanding, actual, no shares
outstanding, as adjusted...................................... 100,000 --
Class E Common Stock, $1.08 par value, 1,000,000 shares
authorized, 889,926 shares issued and outstanding, actual, no
shares outstanding, as adjusted............................... 957,690 --
Additional paid-in capital....................................... 2,405,970 10,735,121
Stock subscriptions receivable(3)................................ (1,318,524) --
Accumulated deficit.............................................. (3,147,712) (3,147,712)
----------- --------------
Total shareholders' equity (deficit).......................... (376,576) 7,624,148
----------- --------------
Total capitalization.......................................... $ (376,576) $ 7,624,148
========== ===========
</TABLE>
- ---------------
(1) Excludes (i) 637,608 shares of Common Stock issuable upon exercise of stock
options outstanding as of March 31, 1996, of which 139,485 will be
exercised or expire prior to the Effective Date, at exercise prices ranging
from $1.08 to $6.46 per share and (ii) 2,273,917 shares of Common Stock
reserved for grant of future options or direct issuances as of March 31,
1996 under the Company's stock options plans. See "Management -- Stock
Option Plans" and Note 5 of Notes to Consolidated Financial Statements.
(2) The Company intends to file an amendment to the Articles of Incorporation on
or before May 10, 1996 which will be effective upon filing and will
increase the number of authorized shares of Class A Common Stock from
1,000,000 to 1,500,000.
(3) Represents stock subscriptions receivable from Mr. Yusefzadeh which are due
and payable upon completion of the Offering. See "Management --
Compensation Committee Interlocks and Insider Participation."
15
<PAGE> 18
DILUTION
The net tangible book value of the Company as of March 31, 1996 was
$(1,743,422), or approximately $(0.58) per share. Net tangible book value per
share represents the amount of the Company's shareholders' deficit, less
intangible assets, divided by a total of 3,003,946 shares of capital stock
outstanding immediately prior to the Offering.
Dilution per share represents the difference between the amount per share
paid by purchasers of shares of Common Stock in the Offering and the pro forma
net tangible book value per share of Common Stock immediately after completion
of the Offering. After giving effect to (i) the sale of 670,000 shares of Common
Stock in the Offering at an assumed initial offering price of $12.00, (ii) the
receipt of approximately $1,319,000 from Mr. Yusefzadeh for payment of a stock
subscriptions receivable and (iii) the application of the estimated net proceeds
therefrom, the pro forma net tangible book value of the Company as of March 31,
1996 would have been $6,257,302, or $1.70 per share. This represents an
immediate increase in net tangible book value of $2.28 per share to existing
shareholders and an immediate dilution in net tangible book value of $10.30 per
share to purchasers of Common Stock in the Offering. Investors participating in
the Offering will incur immediate and substantial dilution. This is illustrated
in the following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................. $ 12.00
Net tangible book value per share before the Offering.......... $ (0.58)
Increase per share attributable to payment of stock
subscriptions receivable.................................... .44
--------
Pro forma net tangible book value attributable to existing
shareholders................................................ (.14)
Increase per share attributable to new investors............... 1.84
--------
Pro forma net tangible book value per share after the Offering... 1.70
--------
Dilution per share to new investors.............................. $ 10.30
========
</TABLE>
The following table sets forth, as of March 31, 1996 and after giving
effect to the conversion of all outstanding shares of Class A Common Stock,
Class B Common Stock, Class C Common Stock, Class D Common Stock and Class E
Common Stock into Common Stock upon completion of the Offering, the difference
between the existing shareholders and the purchasers of shares in the Offering
with respect to the number of shares purchased from the Company, the total
consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders............... 3,003,946 81.76% $ 4,139,974 33.99% $ 1.38
New investors....................... 670,000 18.24 8,040,000 66.01 12.00
--------- ------- ----------- -------
Total..................... 3,673,946 100% $12,179,974 100%
======== ===== ========== =====
</TABLE>
As of March 31, 1996, there were options outstanding to purchase a total of
637,608 shares of Common Stock at a weighted average exercise price of $3.89 per
share under the Company's stock option plans, of which 139,485 will be exercised
or expire prior to the Effective Date. If all options outstanding as of March
31, 1996 are exercised, the pro forma net tangible book value per share
immediately after completion of the Offering would be $2.03. This represents an
immediate increase in net tangible book value of $0.33 per share to purchasers
of Common Stock in the Offering. See "Management -- Stock Option Plans" and Note
5 of Notes to Consolidated Financial Statements.
16
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table sets forth selected consolidated financial and
operating data for the periods indicated. The statements of operations and per
share data for the fiscal years ended January 31, 1994 and 1995 and for the
eleven months ended December 31, 1995 and the balance sheet data as of January
31 and December 31, 1995 were derived from the consolidated financial statements
of the Company, which have been audited by Ernst & Young LLP. The statements of
operations and per share data for the three months ended March 31, 1995 and 1996
and the balance sheet data as of March 31, 1996 were derived from unaudited
consolidated financial statements which, in the opinion of management, include
all adjustments, consisting only of normal recurring accruals, necessary for a
fair presentation of financial condition and results of operations. Operating
results for the three months ended March 31, 1996 are not necessarily indicative
of the results that may be expected for the fiscal year ended December 31, 1996.
Other data for all periods presented were derived from the Company's records.
The following data should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and the Notes thereto appearing elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED ELEVEN MONTHS THREE MONTHS ENDED
------------------------- ENDED ----------------------
JANUARY 31, JANUARY 31, DECEMBER 31, MARCH 31, MARCH 31,
1994 1995 1995(1) 1995 1996
----------- ----------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
License fees and other...................................... $ 30,000 $ 57,776 $ 3,467,547 $ -- $1,127,607
Implementation, customer and software support and other
service fees.............................................. -- 369,711 1,556,164 90,745 653,723
----------- ----------- ------------- --------- ----------
Total revenues........................................ 30,000 427,487 5,023,711 90,745 1,781,330
Expenses:
Cost of license fees and other.............................. -- -- 375,783 -- 131,029
Cost of implementation, customer and software support and
other service fees........................................ 104,818 637,427 1,246,886 222,822 457,196
Sales and marketing......................................... 96,911 358,948 983,290 224,839 268,818
General and administrative.................................. 225,458 981,930 1,058,190 287,072 358,260
Product development......................................... 621,373 1,362,780 654,797 60,272 299,067
----------- ----------- ------------- --------- ----------
Total expenses........................................ 1,048,560 3,341,085 4,318,946 795,005 1,514,370
Other income (expense):
Interest income............................................. 3,603 26,610 121,815 29,607 28,647
Interest expense............................................ -- (19,366) (12,060) (6,590) (1,081)
Other income (expense)...................................... 1,815 75,989 (4,252) 75,270 --
----------- ----------- ------------- --------- ----------
Income (loss) before income taxes............................. (1,013,142) (2,830,365) 810,268 (605,973) 294,526
Income tax expense............................................ -- -- 255,999 -- 153,000
----------- ----------- ------------- --------- ----------
Net income (loss)..................................... $(1,013,142) $(2,830,365) $ 554,269 $(605,973) $ 141,526
========== ========== ============= ========= =========
PER SHARE DATA:
Net income (loss) per share(2)................................ $ (0.51) $ (1.11) $ 0.17 $ (0.20) $ 0.04
Weighted average shares outstanding(2)........................ 1,971,573 2,560,151 3,235,532 3,076,813 3,298,444
OTHER DATA:
Total product development expenditures(3)..................... $ 621,373 $ 1,455,781 $ 1,788,172 $364,935 $ 612,346
Total personnel(4)............................................ 23 48 87 52 93
Implemented customers(5)...................................... 0 2 12 2 14
</TABLE>
<TABLE>
<CAPTION>
AT
-------------------------- AT MARCH 31, 1996
JANUARY 31, DECEMBER 31, ----------------------------
1995 1995 ACTUAL AS ADJUSTED(6)
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (excluding deferred revenue and related deferred tax
assets)............................................................. $ 144,012 $ 423,286 $ 375,484 $ 8,376,208
Total assets.......................................................... 1,726,511 3,228,289 3,495,641 11,496,365
Long-term obligations -- -- -- --
Accumulated deficit................................................... (3,843,507) (3,289,238) (3,147,712) (3,147,712)
Total shareholders' equity (deficit).................................. (1,619,412) (568,102) (376,576) 7,624,148
</TABLE>
- ---------------
(1) During 1995, the Company changed its fiscal year end from January 31 to
December 31. Accordingly, the consolidated financial statements for the
period ended December 31, 1995 include only eleven months of operations.
However, the information presented for the quarter ended March 31, 1995
consists of three months, including January 1995.
(2) See Note 1 of Notes to Consolidated Financial Statements.
(3) The total of capitalized software development costs and product development
expenses.
(4) All personnel, including contract workers and part-time employees.
(5) Customers using the Phoenix System to support daily operations.
(6) Adjusted to reflect the sale of 670,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $12.00 per
share, the receipt of approximately $1,319,000 from Mr. Yusefzadeh for
payment of stock subscriptions receivable and the application of the
estimated net proceeds therefrom as described under "Use of Proceeds."
17
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in connection with the Consolidated
Financial Statements and the Notes thereto included elsewhere in this
Prospectus. Effective December 31, 1995, Phoenix changed its fiscal year end
from January 31 to December 31. For purposes hereof, the Company defines the
fiscal year ended January 31, 1994 as "Fiscal 1993," the fiscal year ended
January 31, 1995 as "Fiscal 1994," and the eleven months ended December 31, 1995
as "Fiscal 1995." Dollar amounts are rounded.
OVERVIEW
Phoenix designs, develops, markets and supports highly adaptable,
enterprise-wide client/server application software for the financial services
industry, with a primary focus on middle market banks. Phoenix combined (i) its
management's extensive experience with banking and banking software systems;
(ii) the U.S. Bank Partners' input on bank and banking software systems and
(iii) the most recent advances in client/server technology to design and develop
an innovative new banking software system. The Phoenix System, through its
client/server technology, addresses many of the deficiencies of the mainframe-
and minicomputer-based legacy systems on which most banks currently operate by
allowing financial institutions to integrate data into a comprehensive
information network. The Phoenix System, like legacy systems, supports all core
areas of bank data processing, including system administration, account
processing, nightly processing, teller functions, holding company accounting,
and budgeting. Unlike legacy systems, the Phoenix System is a fully integrated
system that provides significant advantages in three critical areas: (i)
customer relationship management; (ii) management decision support; and (iii)
bank product creation and support. Phoenix was founded in January 1993 and made
its initial nondevelopment stage product shipments in June 1995. During its
development stage, the Company's business focused primarily on the development
of its software and marketing of the Phoenix System to certain development stage
customers.
The Company's revenues are derived from two primary sources: (i) license
fees for software products and other revenues and commissions from the sale and
delivery of software and hardware products of third party vendors; and (ii) fees
for a full range of services complementing its products, including
implementation, conversion and installation services, training, interface
services for tying the Phoenix System to third-party application software, and
customer and software support services. License fees for the Company's software
products are charged separately from fees for the Company's services and are
recognized upon delivery, when no significant vendor obligations remain and
collection of the resulting receivables is deemed probable. As of April 30,
1996, there have been no returns or cancellations of the Company's sales.
Revenues for implementation, conversion, installation, training and interface
services are recognized when the services are performed. Service revenues for
ongoing customer and software support and product updates are recognized ratably
over each year of the license agreement, the term of which is typically five
years. Payments for license fees and services are predominately received in
advance of, or at the time of, revenue recognition.
Since its inception, Phoenix primarily has used a direct sales force to
market the Phoenix System. However, in March 1996, Phoenix and Unisys entered
into the Unisys Agreement whereby Unisys exclusively markets the Phoenix System
in Central and South America, Mexico, the Caribbean and Bermuda. Phoenix
believes that, in the future, revenues from strategic alliances and other
indirect channels may become an increasingly significant source of the Company's
total revenues. Gross margins and composition of revenue and expenses will vary
depending on whether a sale was made directly by the Company or by a VAR, agent
or OEM. See "Business -- Target Markets -- The International Market" and
" -- Sales and Marketing."
The Company expects increased competition and intends to invest
significantly in product development and other aspects of its business. Future
operating results will depend on many factors, including, without limitation,
the demand for the Company's products, the level of product and price
competition, the Company's success in expanding its direct sales force and
indirect distribution channels, and the ability of the Company to develop and
market new products and to control costs.
18
<PAGE> 21
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 1995 to Three Months Ended March 31,
1996
General. The Company changed its fiscal year end to December 31 during
1995. However, the three months ended March 31, 1995 includes operating results
for the month of January 1995 which were included in Fiscal 1994 financial
statements. The Company defines the three months ended March 31, 1995 as the
"1995 Period" and the three months ended March 31, 1996 as the "1996 Period."
Revenues. Total revenues were $91,000 and $1.8 million in the 1995 Period
and the 1996 Period, respectively, due to increased license fees and a related
increase in implementation fees in the 1996 Period.
License fees and other revenues during the 1995 Period were $0 because
Phoenix was in the process of developing its products and, as a result, did not
recognize any revenues from the licensing of its software. During the 1996
Period, Phoenix recognized $1.1 million in license fees. These revenues include
$153,000 in foreign withholding taxes which are contractually paid by foreign
customers and such amount is also recorded as an income tax expense. The
completion of a commercially viable version of the Phoenix System and acceptance
of the Phoenix System in both the United States and international markets were
major factors in the increase in license fees during the 1996 Period.
Implementation, customer and software support and other service fee
revenues were $91,000 and $654,000 during the 1995 Period and the 1996 Period,
respectively. This growth was primarily due to increased implementation fees,
which resulted from increased licensing activity.
Expenses. The Company's total expenses were $795,000 and $1.5 million in
the 1995 Period and the 1996 Period, respectively. The growth in expenses
occurred primarily due to increases in personnel related costs resulting from
higher staffing levels.
Cost of license fees and other consists of the amortization of capitalized
software development costs and software royalties paid to third parties. Cost of
license fees and other was $0 and $131,000 in the 1995 Period and the 1996
Period, respectively. These costs consisted of amortization of capitalized
software development costs after general release of the Phoenix System during
the second quarter of Fiscal 1995 and third party software royalties which
relate to software which is sold and installed with the Company's products.
Cost of implementation, customer and software support and other service
fees consists primarily of personnel related costs incurred in providing
implementation, conversion and installation services, training and customer
support. Cost of implementation, customer and software support and other service
fees was $223,000 and $457,000 in the 1995 Period and the 1996 Period,
respectively. Increases in these costs in the 1996 Period were due to increased
implementation costs related to the Company's installation of the Phoenix System
and the release of its software and increased personnel related costs.
Sales and marketing expenses were $225,000 and $269,000 in the 1995 Period
and the 1996 Period, respectively. The increase in sales and marketing expenses
was primarily due to the expansion of sales and marketing staffing and increased
marketing activities, including advertising and trade shows.
General and administrative expenses were $287,000 and $358,000 in the 1995
Period and the 1996 Period, respectively. The increase was primarily the result
of increased staffing and associated equipment expenses necessary to manage and
support the Company's growth.
Product development expenses were $60,000 and $299,000 in the 1995 Period
and the 1996 Period, respectively. The increase in product development expenses
was primarily due to the continued development of the Phoenix System. The total
of capitalized software development costs and product development expenses
("Product Development Expenditures") increased from $365,000 during the 1995
Period to $612,000 during the 1996 Period. The Company anticipates that Product
Development Expenditures will continue to be significant during the remainder of
1996 as the Company continues to expand and enhance the Company's product line.
Other income, consisting primarily of interest accrued on a related party
stock subscriptions receivable, was $30,000 and $29,000 in the 1995 Period and
the 1996 Period, respectively. Other income of $75,000 in the
19
<PAGE> 22
1995 Period consisted principally of the fair market value of computer equipment
given to Phoenix by a computer company to enable Phoenix to develop and test the
Phoenix System on such company's equipment.
Income tax expense of $153,000 in the 1996 Period represents foreign
withholding taxes which relates to the license of Company products to a foreign
customer and which were paid by that customer. There was no United States income
tax expense in the 1995 Period or the 1996 Period. The Company has a net
operating loss carry forward and tax credits that should limit the Company's
United States income tax liability during the remainder of 1996.
Comparison of Fiscal 1993, Fiscal 1994 and Fiscal 1995
Revenues. Total revenues were $30,000, $427,000 and $5.0 million in Fiscal
1993, Fiscal 1994 and Fiscal 1995, respectively. In Fiscal 1993, Fiscal 1994 and
Fiscal 1995, international sales accounted for approximately 0%, 33% and 70%,
respectively, of total revenues.
License fees and other revenues during Fiscal 1993 and Fiscal 1994 were $0
because Phoenix was in the process of developing its products and, as a result,
did not recognize any revenue from the licensing of its software. However,
Phoenix did recognize $30,000 and $58,000 in Fiscal 1993 and Fiscal 1994,
respectively, from commissions earned from the sale and delivery of third party
products. During Fiscal 1995, Phoenix recognized $3.5 million in license fees.
Revenues during Fiscal 1995 include $256,000 in foreign tax withholdings which
are contractually paid by foreign customers and such amount is also recorded as
an income tax expense. The completion of a commercially viable version of the
Phoenix System and acceptance of the Phoenix System in both the United States
and international markets were major factors in the increase in license fees
during Fiscal 1995. Phoenix has increased the price of its products since the
conclusion of Fiscal 1995. During Fiscal 1995, approximately 70% of the
Company's revenues were derived from its foreign sales activities, of which over
half of such revenue was from one customer. In the future, the Company does not
expect that any one customer will account for such a high percentage of total
annual revenues or for foreign sales to comprise such a high percentage of total
annual revenues.
Implementation, customer and software support and other service fees were
$0, $370,000 and $1.6 million during Fiscal 1993, Fiscal 1994 and Fiscal 1995,
respectively. This growth was primarily due to increased implementation fees,
which resulted from increased licensing activity.
Expenses. The Company's total expenses were $1.0 million, $3.3 million and
$4.3 million in Fiscal 1993, Fiscal 1994 and Fiscal 1995, respectively. The
growth in expenses has occurred primarily due to increases in personnel related
costs resulting from higher staffing levels.
Cost of license fees and other of $376,000 in Fiscal 1995, consisting
primarily of amortization of capitalized software development costs and software
royalties to third parties, was recognized after general release of the Phoenix
System.
Cost of implementation, customer and software support and other service
fees was $105,000, $637,000 and $1.2 million in Fiscal 1993, Fiscal 1994 and
Fiscal 1995, respectively. The establishment of formal implementation and
customer and software support services within the Company occurred in Fiscal
1993. The increases in these costs in Fiscal 1994 and Fiscal 1995 were due to
increased implementation costs related to the Company's initial installation of
the Phoenix System and the release of its software and increased personnel
related costs, as the Company continued to build its implementation and customer
and software support services.
Sales and marketing expenses were $97,000, $359,000 and $983,000 in Fiscal
1993, Fiscal 1994 and Fiscal 1995, respectively. The increases in sales and
marketing expenses were primarily due to the expansion of sales and marketing
staffing and increased marketing activities, including advertising and trade
shows.
General and administrative expenses were $225,000, $982,000 and $1.1
million in Fiscal 1993, Fiscal 1994 and Fiscal 1995, respectively. The increases
were primarily the result of increased staffing and associated expenses
necessary to manage and support the Company's growth.
20
<PAGE> 23
Product development expenses were $621,000, $1.4 million and $655,000 in
Fiscal 1993, Fiscal 1994 and Fiscal 1995, respectively. The increase in product
development expenses from Fiscal 1993 to Fiscal 1994 was primarily due to the
continued development of the Phoenix System. Technological feasibility of the
Phoenix System was established during Fiscal 1994, and, therefore, as required
by Statement of Financial Standards No. 86, "Accounting for the Costs of
Computer Software to Be Sold, Leased or Otherwise Marketed," certain
expenditures were capitalized during Fiscal 1994 and Fiscal 1995. Product
development expenses decreased during Fiscal 1995 due to the capitalization of
certain software development costs. Capitalized software development costs
increased from $93,000 at the end of Fiscal 1994 to $1.1 million at the end of
Fiscal 1995. Product Development Expenditures, therefore, were $621,000, $1.5
million and $1.8 million for Fiscal 1993, Fiscal 1994 and Fiscal 1995,
respectively. The increase in Product Development Expenditures was primarily
attributable to increased staffing required to expand and enhance the Company's
product line.
Other income was $4,000, $27,000 and $122,000 for Fiscal 1993, Fiscal 1994
and Fiscal 1995, respectively. Other income increased from Fiscal 1994 to Fiscal
1995 as a result of interest accrued on a related party stock subscriptions
receivable. Interest expense decreased from $19,000 in Fiscal 1994 to $12,000 in
Fiscal 1995 as a result of repayment of a note payable during Fiscal 1995. Other
income of $76,000 in Fiscal 1994 consisted principally of the fair market value
of computer equipment given to Phoenix by a computer company to enable Phoenix
to develop and test the Phoenix System on such company's equipment.
Income tax expense for federal income tax was $0 in Fiscal 1993, Fiscal
1994 and Fiscal 1995 due to the large net operating losses incurred in Fiscal
1993 and Fiscal 1994. Income tax expense in Fiscal 1995 of $256,000 represents
foreign withholding taxes related to revenue from customers in certain foreign
countries.
As a result of the Company's start-up losses, the Company has a net
operating loss carryforward. At December 31, 1995, Phoenix had available net
operating loss carryforwards of $2,800,000 that expire in years 2008 through
2010 to offset future taxable income for federal income tax purposes. In
addition, Phoenix has available research and development tax credit
carryforwards of $111,000 that expire in years 2008 through 2010 and foreign tax
credit carryforwards of $514,000 that expire in years 2000 through 2001. The
utilization of the carryforwards to reduce future income taxes will depend on
the Company's ability to generate sufficient taxable income prior to the
expiration of the net operating loss, research and development and foreign tax
credit carryforwards. Annual utilization of net operating loss carryforwards to
offset future taxable income may be limited due to ownership changes of the
Company. See Note 7 to the Notes to Consolidated Financial Statements.
BACKLOG
Backlog, defined as the contract value of executed agreements minus revenue
recognized from these contracts, totaled $212,000, $3.1 million, $7.3 million
and $7.1 million at the end of Fiscal 1993, Fiscal 1994, Fiscal 1995 and the
1996 Period, respectively.
21
<PAGE> 24
QUARTERLY OPERATING RESULTS
The following table sets forth consolidated statements of operations data
for each of the five quarters in the period beginning January 1, 1995 and ended
March 31, 1996. This information has been derived from the Company's unaudited
consolidated financial statements. The unaudited consolidated financial
statements have been prepared on substantially the same basis as the audited
consolidated financial statements and, in management's opinion, include all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation of such information when read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1995(1) 1995 1995 1995 1996
--------- ---------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenues:
License fees and other.................. $ -- $2,802,782(2) $ 316,002 $ 349,064 $1,127,607
Implementation, customer and software
support and other service fees........ 90,745 397,070 472,765 601,918 653,723
--------- ---------- ------------- ------------ ----------
Total revenues................... 90,745 3,199,852 788,767 950,982 1,781,330
Expenses:
Cost of license fees and other.......... -- 176,122 111,553 88,107 131,029
Cost of implementation, customer and
software support and other service
fees.................................. 222,822 276,259 365,455 457,510 457,196
Sales and marketing..................... 224,839 237,263 266,707 289,939 268,818
General and administrative.............. 287,072 305,731 262,130 324,466 358,260
Product development..................... 60,272 149,438 192,152 267,345 299,067
--------- ---------- ------------- ------------ ----------
Total expenses................... 795,005 1,144,813 1,197,997 1,427,367 1,514,370
Other income (expense):
Interest income......................... 29,607 32,958 35,091 33,504 28,647
Interest expense........................ (6,590) (5,533) (1,082) (1,125) (1,081)
Other income (expense).................. 75,270 -- (2,216) (1,316) --
--------- ---------- ------------- ------------ ----------
Income (loss) before income taxes......... (605,973) 2,082,464 (377,437) (445,322) 294,526
Income tax expense........................ -- 255,999 -- -- 153,000
--------- ---------- ------------- ------------ ----------
Net income (loss)......................... $(605,973) $1,826,465 $(377,437) $ (445,322) $ 141,526
========== ========== ============ ============ ==========
Net income (loss) per share............... $ (0.20) $ 0.57 $ (0.12) $ (0.14) $ 0.04
Weighted average shares outstanding(3).... 3,076,813 3,231,943 3,146,234 3,262,362 3,298,444
</TABLE>
- ---------------
(1) In 1995, Phoenix changed its fiscal year end from January 31 to December 31.
However, the information presented above for the quarter ended March 31,
1995 consists of three months, including the month of January 1995.
(2) License fees and other was $2.8 million for the quarter ended June 30, 1995
in large part due to license fees of $1.8 million from a single foreign
customer and from the recognition of revenue from the backlog of customers
with whom Phoenix had signed contracts while the Phoenix System was under
development.
(3) See Note 1 of Notes to Consolidated Financial Statements.
The Company's quarterly operating results have varied significantly in the
past and may vary significantly in the future. Special factors that may cause
the Company's future operating results to vary include, without limitation, the
size and timing of significant orders; the mix of direct and indirect sales; the
mix and timing of foreign and domestic sales; the timing of new product
announcements and changes in pricing policies by the Company and its
competitors; market acceptance of new and enhanced versions of the Company's
products; increased competition; changes in operating expenses, including
expenses related to acquisitions; changes in Company strategy; personnel
changes; changes in legislation and regulation; foreign currency exchange rates
and general economic factors. Product revenues are also difficult to forecast
because the market for client/server application software products is rapidly
evolving, and the Company's sales cycle, from initial review to purchase and the
provision of support services, varies substantially from customer to customer.
As a result, Phoenix believes that quarter to quarter comparisons of its results
of operations are not necessarily meaningful and should not be relied upon as
indications of future performance.
22
<PAGE> 25
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, Phoenix has financed its operations primarily from
private sales of capital stock and from cash payments from customers prior to
implementation of the Phoenix System.
Operating activities used $672,000 in cash in Fiscal 1993 and $474,000 in
cash in Fiscal 1994 and provided $1.0 million in cash in Fiscal 1995 and
$250,000 in the 1996 Period. Contributing to cash use were net losses of $1.0
million and $2.8 million in Fiscal 1993 and Fiscal 1994, respectively. Cash
payments from customers as provided by contracts in advance of revenue
recognition equalling deferred revenues plus deferred taxes provided cash of
$149,000, $2.2 million, $386,000 and $28,000 in Fiscal 1993, Fiscal 1994, Fiscal
1995 and the 1996 Period, respectively.
In Fiscal 1993, Fiscal 1994, Fiscal 1995 and the 1996 Period, the Company's
investing activities consisted entirely of purchases of property and equipment
and development of the Phoenix System. Purchases of property and equipment,
consisting primarily of computer equipment, were $173,000, $342,000, $253,000
and $62,000 in Fiscal 1993, Fiscal 1994, Fiscal 1995 and the 1996 Period,
respectively. Capitalized software development costs used $93,000, $1.1 million
and $313,000 in cash in Fiscal 1994, Fiscal 1995 and the 1996 Period,
respectively.
Financing activities provided $975,000, $1.4 million, $187,000 and $50,000
in cash in Fiscal 1993, Fiscal 1994, Fiscal 1995, and the 1996 Period,
respectively. Short-term debt provided $194,000 and $291,000 in cash in Fiscal
1993 and Fiscal 1994, respectively, and repayment of short-term debt used
$310,000 in cash in Fiscal 1995. Net proceeds from issuance of capital stock and
cash payments for stock subscription receivables provided $781,000, $1.1
million, $497,000 and $50,000 in cash in Fiscal 1993, Fiscal 1994, Fiscal 1995,
and the 1996 Period, respectively.
At March 31, 1996, the Company had cash and cash equivalents of $351,000
and had an adjusted working capital, excluding deferred revenue and related
deferred tax assets, of $375,000 as of March 31, 1996.
The Company believes that the net proceeds from the sale of the Common
Stock offered by the Company hereby, together with its current cash balances and
cash flow from operations, will be sufficient to meet its working capital,
capital expenditure and capitalized software development requirements for the
next 12 months. Cash flows from operating activities are dependent on continued
advance payments from customers, and there is no assurance that the Company will
continue to receive these payments from customers or that it will continue to
receive these payments in advance on the same terms as it has in the past. The
Company anticipates that its operating and investing activities may use cash in
the future, particularly from growth in operations and development activities.
Consequently, any such future growth may require the Company to obtain
additional equity or debt financing.
23
<PAGE> 26
BUSINESS
Phoenix designs, develops, markets and supports highly adaptable,
enterprise-wide client/server application software for the financial services
industry, with a primary focus on middle market banks. Phoenix combined (i) its
management's extensive experience with banking and banking software systems,
(ii) the U.S. Bank Partners' input on bank operational and flexibility needs and
(iii) the most recent advances in client/server technology to design and develop
an innovative new banking software system. The Phoenix System, through its
client/server technology, addresses many of the deficiencies of the mainframe
and mini computer-based legacy systems on which most banks currently operate by
allowing financial institutions to integrate data into a comprehensive
management information network. The Phoenix System, like legacy systems,
supports all core areas of bank data processing, including system
administration, account processing, nightly processing, teller functions,
holding company accounting and budgeting. Unlike legacy systems, the Phoenix
System is a fully integrated system that provides significant advantages in
three critical areas: (i) customer relationship management; (ii) management
decision support; and (iii) bank product creation and support. Phoenix combines
its technological expertise with specific knowledge of the financial services
industry to provide information solutions to complex banking issues, such as
total data integration, customer management, customer profitability analysis and
management information requirements.
Since its formation in January 1993, the Company has entered into ongoing
contracts with 23 banks or bank holding companies for installation of the
Phoenix System supporting 26 United States and 7 international financial
institutions. As of April 30, 1996, the Phoenix System has been fully
implemented and is operating in 17 of these 33 financial institutions. The
Company had total revenues of approximately $5.0 million and net income of
approximately $554,000 for the fiscal year ended December 31, 1995 and total
revenues of approximately $1.8 million and net income of approximately $142,000
for the quarter ended March 31, 1996.
The Company's Chief Executive Officer, Bahram Yusefzadeh, has over 27 years
of experience in the banking software industry. In addition, the Company has
assembled a senior management team with over 120 years of experience in the
banking and software industries. In the 1970s, Mr. Yusefzadeh developed one of
the first legacy systems, the Liberty Banking System, which at one time was used
by over 260 banks. Mr. Yusefzadeh founded Phoenix for the purpose of developing
and marketing a new generation of integrated banking software applications using
client/server technology that would replace less flexible and technologically
dated legacy systems. The Phoenix System's development was the result of a joint
effort among the Company's management, Hewlett-Packard and the U.S. Bank
Partners. In addition, the U.S. Bank Partners provided a substantial portion of
the Company's initial capital.
INDUSTRY BACKGROUND
The Company's primary market consists of middle market banks, which the
Company defines as commercial banks and savings institutions with asset sizes
ranging between $100 million and $1 billion. These banks are highly regulated,
and they historically have provided a limited range of products and faced
limited competition. These banks used legacy computer systems that generally
only processed transactions and provided a general ledger. Today, the
competitive landscape has changed dramatically as diversified financial service
providers compete directly with middle market banks. As a result, these banks
need detailed information about their institutions and customers in order to
develop and market profitable new products and services and to expand customer
relationships.
In response to this changing environment, the industry developed
modifications to the legacy data structures that took data extracts from legacy
systems and transported these extracts to personal computer application systems.
However, modified legacy systems generally are written for mainframes and
minicomputers, are difficult and expensive to maintain and support, require
substantial training costs and, because they often use proprietary operating
systems and data structures, are limited in their ability to interact with other
information resources and systems used in a bank. Although modified legacy
systems may offer a graphical user interface for ease of use, and some have
introduced database technologies to provide increased data storage and more
flexible access to data, these systems are generally limited because they are
still based on
24
<PAGE> 27
decades-old architecture which does not permit full integration of data. Without
full integration of data, the information provided by these modified legacy
systems generally is neither complete nor readily accessible, and, thus, Phoenix
believes that banks using legacy systems are at a competitive disadvantage.
In the 1990s, the emergence of client/server computing made possible the
development of powerful applications which are capable of addressing
enterprise-wide business problems in a flexible and cost-effective manner. The
client/server model consists of personal computer workstation "clients"
connected on enterprise-wide networks to "servers" that provide data storage and
update capabilities. The client/server architecture allocates the processing of
application software between the client and the server to allow the clients to
handle the user interface and local data manipulation and to allow the server to
perform computing intensive functions. Because of this partitioning, a
client/server system is scalable such that responsiveness and capacity can be
increased by upgrading the server or replacing it with a more powerful model.
Furthermore the client/server architecture design minimizes network traffic.
Client/server systems also offer the level of data integrity and security that
banks require because access to information can be controlled by server-based
relational database management systems. Phoenix believes that very few middle
market banks have fully realized the potential benefits offered by client/server
technology due to the small number of true client/server applications currently
available to banks.
THE PHOENIX SOLUTION
The Phoenix System allows institutions to integrate data into a
comprehensive management information network that is readily accessible
throughout the entire financial institution, flexible with shared information
and easily interfaced. The Phoenix System gives bank personnel immediate access
to a broad range of customer information including balances, transactions,
financial statements, contact history, related accounts and demographic data.
The Company believes that the Phoenix System is easy to use and simple to learn,
which enables a bank to provide higher quality customer service with reduced
operating and training costs. Like legacy systems, the Phoenix System supports
all core areas of bank data processing, including system administration, account
processing, nightly processing, teller functions, holding company accounting,
and budgeting. Unlike legacy systems, the Phoenix System is a fully integrated
system that provides significant advantages in three critical areas: (i)
customer relationship management; (ii) management decision support; and (iii)
bank product creation and support.
- Customer Relationship Management. The Relationship Information
Management ("RIM") module integrates a customer's account data,
transactional activity, financial data from third party financial
institutions, marketing information, relationships with other customers
and other accounts, financial statements and other types of information
required to view a customer's total relationship record. The RIM module
allows a bank to determine the profitability of each account and customer.
Banks can use information generated by the Phoenix System to determine
which products or services should be offered at a particular point in a
customer relationship in order to maximize profitability.
- Management Decision Support. Through its Executive Information System
("EIS"), the Phoenix System allows bank managers to track bank performance
and model the effects of business strategies and changes in market
conditions on such performance. EIS provides modeling tools which permit a
bank's management team to use real-time data to perform trend analysis and
to conduct extensive modeling activities, such as customer profitability
and overall bank profitability. In addition, the EIS provides a bank with
both statistical measures of product penetration and performance.
- Bank Product Creation and Support. The Phoenix System gives banks the
capability to quickly develop, deliver and process bank products and
services that can be as simple or as sophisticated as a bank's customers
and competition demand. New bank products can be developed rapidly and do
not require programming or the support of technical personnel.
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STRATEGY
The Company's primary business objective is to become a leading supplier of
enterprise-wide client/ server application software for the financial services
industry by pursuing the following strategies:
Maintain Technology Leadership and Enhance Product Functionality. Phoenix
believes the Phoenix System is the most advanced client/server computing
solution for banks because it incorporates new open technologies and standards,
such as client/server architectures, relational databases, graphical user
interfaces and advanced application development tools. Phoenix intends to
maintain its leadership position by integrating new technologies, adding new
applications, enhancing existing applications and increasing functionality. The
Phoenix System can run on any central server that will support a SQL-standard
relational database, such as hardware from Hewlett-Packard, International
Business Machines Corp. ("IBM"), AT&T Corp., Motorola, Inc., Sun Microsystems,
Inc. and all other UNIX compliant hardware.
Focus on United States Middle Market Banks. The Company intends to
continue its marketing focus in the United States on the approximately 3,800
middle market banks with asset sizes ranging between $100 million and $1
billion. The Company believes that most middle market banks are technologically
sophisticated, seek banking software applications that support strategic
objectives and have the capital and human resources to finance and use
effectively advanced technological solutions.
Expand International Market. Phoenix believes that many international
financial institutions are seeking technology as a means to offer a broader
array of financial products and services to meet the increasing demand for
retail banking services in the international market. The Company believes that
international institutions generally are less risk averse than United States
banks, are willing to skip technology generations and are looking for
technological solutions that will last at least 10 to 15 years. The Company
designed its software products to incorporate numerous international features,
such as support for different languages; the ability to process simultaneously
all currencies formatted in accordance with standards established by the
International Organization of Standards; numeric, date and address formatting to
fit individual country standards; accounting for local tax computations,
including value-added taxation, and reporting to satisfy different regulatory
requirements.
Increase Worldwide Distribution. The Company plans to continue expanding
its distribution both in the United States and internationally by increasing its
sales and implementation force and seeking additional strategic alliances.
- Direct Sales and Implementation. Phoenix generates a majority of its
revenues through its direct sales force of three people serving the United
States market and one person serving the international market. The Company
currently does not have an office outside the United States; however, it
plans to open an international sales office in late 1996 or early 1997. As
of April 30, 1996, the Company had 29 personnel in implementation and
training. Phoenix intends to increase substantially the number of sales
staff and implementation staff in 1996 and 1997.
- Strategic Alliances. Phoenix has established and intends to continue
expanding alternate channels of distribution through VARs, agents and
OEMs. In particular, Phoenix recently established a strategic alliance
with Unisys, whereby Unisys exclusively markets the Phoenix System in
Central and South America, Mexico, the Caribbean and Bermuda. See
"-- Target Markets."
Maximize Recurring Revenues. Phoenix signs customers to long-term
licensing agreements and charges annual service fees which are generally 15-20%
of the base license fee. As the asset size of a bank increases or as branches
are added, customers pay additional incremental license fees and increased
service fees over the life of the license agreement. Additionally, the Company's
disaster recovery service is a separate five-year contract which has an initial
implementation fee and annual service fees. Phoenix plans to continue to build
this base of recurring revenue and to develop additional sources of recurring
revenue by providing such services as networking support to its customers.
Leverage Existing Customer Base and Broaden Primary Market. The Company
intends to expand its current bank customer relationships by providing
additional products and services and licensing additional
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bank subsidiaries of existing client bank holding companies. In addition, the
Company believes its implemented customer base represents an important source of
references, which are vital in marketing to the financial services industry. The
Company also intends to expand the market for the Phoenix System to include
banks with asset sizes greater than $1 billion and less than $100 million by
increasing product functionality and flexibility for larger banks and by
delivering the NT Version for smaller banks. Although the license fees for the
NT Version will be comparable to the license fees for its existing system the
Company believes that the NT Version will be more acceptable to smaller banks
because these banks will incur lower overall acquisition costs related to
operating in a Microsoft Windows NT ("Windows NT") environment.
Pursue Complementary Acquisitions. Phoenix intends to leverage its
position as a provider of client/server technology to financial institutions by
pursuing strategic acquisitions of providers of complementary technologies,
products and services. Phoenix believes such strategic acquisitions will permit
Phoenix to enter new markets, provide outsourcing alternatives and acquire
additional products and applications.
THE PHOENIX SYSTEM
The Phoenix System is a fully integrated, enterprise-wide client/server
application software system for the financial services industry. The Phoenix
System gives bank personnel at all levels the tools and information needed to
enhance and speed their decision-making. In addition, the Phoenix System is
designed to fit the evolving needs of a growing bank. The following are some of
the important capabilities included in the Phoenix System:
Customer Relationship Management. The Phoenix System places a structural
emphasis on managing customer relationships, which allows a bank to pursue a
more personalized and profitable approach to its products and services. The RIM
module integrates a customer's account data, transactional activity, financial
data from third party financial institutions, marketing information,
relationships with other customers and other accounts, financial statements and
other types of information required to view a customer's total relationship
record. The primary customer relationship management features include:
- Marketing and Other Personal Information. For purposes of marketing and
creditworthiness assessments, the RIM module tracks a range of personal
information, such as employment history, home ownership status, other
credit providers and other bank accounts.
- On-line Financial Statements and Portfolios. To facilitate improved
management of customer relationships, enhanced analysis of a customer's
financial condition and improved tracking of customer profitability, the
RIM module maintains information regarding a customer's assets,
liabilities, income and expense in a unified file.
- Extensive Customer Relationship Tracking. To facilitate marketing and
management decision-making, based not only on a bank's overall
relationship with individual customers but also on its overall
relationship with related groups of customers, the RIM module can track
relationships between customers, groups of customers and between customers
(or groups of customers) and accounts.
- Customer-Based Statements. Combined customer statements can contain an
unlimited number of accounts, including related accounts owned by other
customers, and each account included on a statement can be configured to
show only summary information or both summary information and transaction
detail. Copies of account statements and other correspondence can be
automatically sent to an unlimited number of additional addresses,
including temporary and seasonal addresses.
- Integrated Signature, Photograph and Document Imaging. The RIM module
maintains an on-line signature card with a photograph for each customer
and can store and display photographs of loan collateral and other
customer assets, Social Security cards and drivers' licenses.
- Flexible Inquiry Capability. The Phoenix System enables users to
progress through increasingly detailed levels of display data on all
inquiry screens. This capability allows customer service representatives
and platform officers to research questions thoroughly and quickly,
without having to enter arcane codes or wade through stacks of printed
reports.
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Management Decision Support. Using EIS, senior bank executives can track
performance and model the effect of business strategies and changes in market
conditions. The Phoenix System draws upon real-time data to present financial
institutions with graphical displays that highlight important business trends
and facilitate rapid interpretation and analysis. Unlike the reporting
facilities of legacy systems, information presented to a bank's manager by the
Phoenix EIS is not static. EIS takes into account both the relationship of a
particular indicator to other related categories of information, as well as the
trends for that indicator over time. At its core, the Phoenix System is focused
on providing bank decision-makers with the following real-time capabilities: (i)
a fully integrated general ledger; (ii) a broad suite of standard reports
augmented by a flexible ad hoc reporting capability; (iii) an integrated set of
budgeting templates; and (iv) customer and account profitability analysis. In
addition, the EIS provides a bank with both statistical measures of product
penetration and performance.
Bank Product Creation and Support. The Phoenix System provides the
capability to quickly develop, deliver and process bank products and services
that can be as simple or as sophisticated as a bank's customers and competition
demand. Because all bank product development is parameter-driven, banks can
design products and services by simply selecting product features from a variety
of options. New bank products can be developed rapidly and do not require
programming or the support of technical personnel. Some of the Phoenix System's
tools for bank product creation and support include:
- Parameterized Customization Controls. The Phoenix System was designed
around parameterization and reflects an appreciation for the continuously
changing demand for banking products and services. This design gives banks
the ability to respond by enabling bankers to create new bank products and
services quickly and easily.
- "What If" Analysis. The Phoenix System provides a unique "what if"
analysis feature that enables banks to perform complex calculations by
simply entering a few fields of information. This facility can be used to
model the effects on a bank's profitability of new products and services.
- Cost Tracking. To facilitate cost and profitability tracking at all
operation levels, the Phoenix System ties transactional activity and other
account information to the integrated general ledger at the product-class
level. Thus, for each loan and deposit product a bank offers, it can
direct financial data on balance components, interest, loan loss, escrow,
dealer reserves, participations, insurance and charges and fees to a
specific set of general ledger accounts.
- Integrated Profitability Analysis. The Phoenix System allows banks to
analyze the profitability of individual loans and customer relationships,
as well as of broad categories of customers.
- Flexible Rate Controls. Within the Phoenix System, rate calculations for
all products and accounts are managed through a centralized table of rate
indexes. The Phoenix System allows banks to create an unlimited number of
rate indexes and maintains a life-to-date on-line history of all rate
changes for all rate indexes. It also permits banks to schedule rate
changes in advance or backdate them.
Complete Integration of Core Applications. The Phoenix System provides the
same core bank data processing capabilities as are found in older legacy systems
but does so within an integrated "open systems" environment that uses a
graphical user interface, modern relational database technology and
nonproprietary hardware and software components. The Phoenix System divides core
processing functions among seven discrete, but fully integrated, software
modules: (i) system administration; (ii) account processing; (iii) nightly
processing; (iv) teller system; (v) holding company financial statements; (vi)
EIS; and (vii) budgeting. The following are some of the core applications of the
Phoenix System:
- Deposit and Loan Processing. In addition to supporting the processing
requirements of traditional deposit and loan products, the Company built
the deposit and loan processing modules around a framework of extremely
flexible controls that allow a bank to customize and implement an
analysis-based approach tailored to the bank's products and services.
- General Ledger. Phoenix provides a self-balancing general ledger system
that supports both batch and on-line, real-time transaction processing
functions. Real-time posting of on-line transactions
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ensures that banks can correct errors anytime during the day, without
having to wait for the next overnight posting to run.
- On-line Transaction Processing. The Phoenix System's core account
processing module, through which customers and accounts are added to the
Phoenix System and maintained over time, provides a full on-line
transaction processing capability. Through this module's transaction
processing facility, users can post on-line transactions to any account in
the Phoenix System.
- System Security. Phoenix provides a comprehensive set of controls for
restricting employees' access to different levels of bank, customer and
account information, as well as for limiting the transactional amounts
that employees are permitted to post to accounts. In case an internal
problem occurs, the Phoenix System maintains detailed on-line audit trails
for all records that track actions resulting in a record being viewed,
created or modified.
- Integrated On-line Help System. All areas of the Phoenix System provide
integrated connections to an interactive on-line help system.
TECHNOLOGY
Phoenix has partnered with leading hardware manufacturers, tools
manufacturers and relational database vendors in the client/server community,
such as Hewlett-Packard, Gupta Corporation ("Gupta") and Sybase, Inc., to
produce software based on leading-edge technological developments. Using these
tools, the Company has created a product that enables the Company's customers to
utilize what the Company believes is the most current technology in the
financial institutions industry.
Centralized Relational Database Management System ("RDBMS"). The Phoenix
System uses a relational database technology known as Sybase, currently provided
by Sybase, Inc. Phoenix chose Sybase System 10 as its structured query language
("SQL") database. The Phoenix System can run on hardware platforms from
Hewlett-Packard, IBM and Unisys, and all others which are UNIX compliant.
Phoenix is currently involved in the integration of Sybase, Inc.'s new
relational database System 11 into the Phoenix System. System 11 is expected to
provide substantial performance gains for existing and future customers and to
improve processing times.
An advantage of the Phoenix System as compared to legacy or modified legacy
systems is that the Phoenix System stores data in a relational database rather
than in a proprietary file format. Consequently, the data can be integrated by
using hundreds of different third-party query and report writing tools. In
addition, with a relational database, it is very easy to expand and change the
structures of parameter tables and data. This "open" approach to data storage
also provides the ability to move the Phoenix System to other relational
database management systems. The Company plans to adapt the Phoenix System for
Microsoft Corporation's ("Microsoft") SQL Server 6.5 on Windows NT to create the
NT Version for use by smaller banks. The release of the NT Version is scheduled
for mid-1997.
Replication and Distributed Data Processing. Phoenix has leveraged the
open interfaces of the Phoenix System to implement an advanced distributed
database for support of its off-line teller system. The off-line teller system
uses a local database at each branch computer to perform replicated transactions
in the event of hardware or network failure at the central server. Off-line
branches are supported using Gupta's SQLBase for either Novell NetWare or
Windows NT.
Open Protocols for Data Communication. Phoenix uses the industry standard
TCP/IP protocol for communicating with the relational database server and
IPX/SPX for customers implementing a network using NetWare instead of Windows
NT. This allows the Company's customers to implement a broad array of local area
network and wide area network topologies and configurations. In addition,
customers that have an existing network infrastructure in place that supports
TCP/IP do not have to reinvest in new technology simply to run the Company's
product.
32-bit Application Support. The Company is currently engaged in an effort
that will enable the Company's customers to use the latest client operating
systems from Microsoft (Windows 95 and Windows
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NT Workstation) with native 32-bit applications. These applications offer the
Company's customers substantial benefits in the areas of fault tolerance,
ability to support more complex transaction processing, enhanced performance and
advanced security.
TARGET MARKETS
Since the release of its product in June 1995, the Company has entered into
ongoing contracts with 23 banks and bank holding companies for installation of
the Phoenix System supporting 26 United States and 7 international financial
institutions. As of April 30, 1996, the Phoenix System has been fully
implemented and is operating in 17 of these 33 financial institutions. Phoenix
believes that customers in both the United States market and the international
market are increasingly accepting of client/server technology.
The United States Market. Phoenix currently divides commercial banks and
savings institutions in the United States market into three groups based on
asset size(1):
[3-tier triangle graphic dividing the United States market as follows:
(i) above $1 billion (approximately 600 institutions);
(ii) and $100 million to $1 billion (approximately 3,800 institutions)
(iii) Under $100 million (approximately 7,600 institutions)]
- ---------------
(1) Numbers in the graphic are derived from The FDIC Quarterly Banking Profile,
Fourth Quarter, 1995.
The Company primarily focuses its marketing and sales efforts on middle
market banks with total assets ranging between $100 million and $1 billion. In
the bank data processing services industry, service contracts for banks
typically have an initial term of five years, and, therefore, the Company
estimates that each year approximately 20% of banks evaluate data processing
alternatives because their current contracts expire. Management believes that
recently an increasing number of banks have renewed their service contracts for
shorter periods in order to maintain the flexibility to change software
companies due to rapid developments in banking software technology which may
result in increased demand. Moreover, a number of banks are evaluating data
processing alternatives due to the acquisition of their software providers and
servicers by other software companies and the age of their current software and
hardware solutions.
Phoenix is also marketing the Phoenix System to financial institutions with
assets greater than $1 billion and has licensed and implemented the Phoenix
System in seven banks with assets under $100 million. The Company intends to
continue to license to financial institutions and other businesses outside of
its primary market on an opportunistic basis; for example, one of the Company's
customers is a church. As a means to increase its target market, the Company
intends to release its NT Version targeted at smaller banks in mid-1997. The
Company also believes that larger banks will become target banks for the Phoenix
System in late 1997 as new product features and enhancements increase the
Phoenix System's functionality for larger banks.
The International Market. At this time, Phoenix and its strategic sales
partners are actively marketing the Company's products and services in Central
and South America, Mexico, the Caribbean, Australia and
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Africa, and Phoenix is pursuing inquiries from a variety of other areas in
Western Europe, Eastern Europe and the Middle East. In the international market,
the Company has primarily focused on technology-minded financial institutions
operating in countries where the primary language is either Spanish or English.
The Company believes the international market offers significant opportunity
because economic expansion and other market factors have increased the demand
for sophisticated retail banking services. Sophisticated international banks
offer a broad array of financial products and services and demand technology,
like the Phoenix System, that can integrate numerous applications, like trade
finance. Furthermore, management believes that a significant number of
international banks have accepted, to a greater degree than United States banks,
that technology should be used as a competitive tool and not just as a service
delivery vehicle. International banks are searching for hardware and software
platforms that are open, powerful and economical. The Company also believes that
these institutions are looking for technology solutions that will last at least
10 to 15 years. The Company currently does not have an office outside the United
States; however, it plans to open an international sales office in late 1996 or
early 1997.
PRODUCT PRICING
The Company prices its product in two components: (i) license fees for
software products and other revenues and commissions from the sale and delivery
of software and hardware products of third party vendors; and (ii) fees for a
full range of services complementing its products, including implementation,
conversion training and installation services, interface services for tying the
Phoenix System to third-party software applications and customer and software
support services. License fees are paid at the beginning of the license
agreement and are recognized as revenue upon delivery, when no significant
vendor obligations remain and collection of the resulting receivables is deemed
probable. When a customer enters into a license agreement with the Company, the
license agreement includes a service agreement for the same term.
Implementation, conversion training and installation fees and interface fees are
paid at the beginning of the license agreement or when the service is performed.
Customer and software support fees are paid in advance over the life of the
license agreement. The service portion of the license agreement is recurring
revenue which is paid in advance over the term of the agreement. In the event
that a customer fails to pay its service fees, the license reverts to the
Company. Otherwise, the license is perpetual, and the service fees are recurring
revenue. Phoenix has increased the price of its products since the conclusion of
Fiscal 1995.
In the United States, license fees are based on the asset size of the bank.
Internationally, each bank is charged a base license fee and an incremental
license fee based on the number of branches for such bank. Implementation,
conversion, training and interface fees vary based on the complexity of a
particular project. In the United States, the customer and software support fees
are generally 15-20% of the license fee per year. Internationally, the customer
and software support fees are 20% of the base license fees and branch fees. As
the asset size of the bank increases or as branches are added, customers pay an
additional incremental license fee and increased service fees over the life of
the license agreement. The Company's VARs, agents and OEMs license the Company's
products at a discount for relicensing.
SALES AND MARKETING
The Company markets its software and services directly through its sales
and marketing personnel and through VARs, agents and OEMs that are involved in
providing products and services to the financial services industry. As of April
30, 1996, the Company's sales and marketing department, including administrative
staff, consisted of three individuals located at the Company's offices in
Maitland, Florida and three sales persons located in Oklahoma City, Oklahoma,
Des Moines, Iowa and Philadelphia, Pennsylvania. The Company currently does not
have an office outside of the United States; however, the Company plans to open
an international sales office in late 1996 or early 1997. In addition, the
Company has limited marketing relationships with representatives in Panama,
Mexico, Columbia and Nigeria.
The Company's direct sales personnel are experienced in the sales process
for banking software products. The Company's marketing personnel generate leads
for the sales force through a program of direct mail, networking, telemarketing,
seminars and trade shows, and contacts with independent consultants. The
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marketing personnel also assist in the sales process by providing sales support
literature, Phoenix user group meetings and ongoing customer communications.
The Company's direct sales and marketing force is complemented by a growing
network of indirect distribution channels, including VARs, agents and OEMs. Some
VARs, agents and OEMs may also provide training, support and other services to
the end-user. In all cases, the Phoenix System software remains the sole
property of the Company, and if the Company terminates its relationship with any
VAR, agent or OEM, customers sold by that VAR, agent or OEM will to pay support
fees to the Company. The Company intends to expand its network for indirect
distribution and anticipates that the percentage of its total revenues derived
from indirect sales will increase in the future. In particular, the Company
recently signed the Unisys Agreement whereby Unisys exclusively markets the
Phoenix System in Central and South America, Mexico, the Caribbean and Bermuda.
Unisys has guaranteed a certain level of annual sales to retain its exclusive
rights in these territories.
IMPLEMENTATION SERVICES
The Company provides comprehensive implementation services to customers
converting to the Phoenix System. Phoenix assigns each customer an
implementation team of experts who work with the customer through all phases of
the project, including project management, data mapping and conversion, software
installation and network certification, education and consulting. Each
implementation team can work on multiple projects at the same time. As of April
30, 1996, the Company had 29 people assigned to the implementation department.
The Company intends to hire additional people and add resources as necessary.
Project Management and Coordination. Phoenix provides extensive project
planning and coordination as part of the implementation process. Phoenix assigns
a full-time project manager to guide the customer through the installation
process and to coordinate all conversion and implementation activities.
Data Conversion. Application analysts and conversion programmers map and
convert a bank's current account data to the Phoenix System. Data conversion
activities include data mapping, program development, extensive testing,
detailed data auditing and a complete trial conversion prior to the final
implementation date.
Software Installation and Network Certification. Phoenix provides network
engineers to install software and certify the customer's network prior to
installation of the Phoenix System. This on-site service ensures that all
hardware and software is installed correctly and that the proper network
security is in place.
Education. Phoenix offers a comprehensive education and training program
to customers. The Company offers training classes for product set-up at the
Company's headquarters in Maitland, Florida. Phoenix also provides hands-on
application training services at the customer site prior to installation.
Additional on-site training for ancillary products is available upon request.
Consulting. The Company's consultants are available to work closely with
customers. These consulting services generally consist of assisting customers
who are planning large implementations, who are engaged in operational
reorganizations or who wish to customize the Phoenix System to their unique
needs.
Fees for project management and coordination, data conversion, and software
installation and network certification are included in the cost of
implementation. Generally, fees for education and consulting are charged
separately from the Company's software products.
CUSTOMER SERVICE AND SUPPORT
The Company believes that maintaining a high level of support and service
is critical to customer satisfaction because of the critical nature of the
Phoenix System to a bank's day-to-day operations. The Company's customer service
and support personnel assist banks in the use of the Phoenix System and with the
maintenance of their network and technology infrastructures. As of April 30,
1996, the Company had ten people in its product development group that primarily
provide customer service and support. Customer service and support personnel
provide service 24 hours a day, seven days a week, and have beepers, cellular
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phones and laptop computers which enable them to answer a customer's question
from any location via a modem connection to the Company's computers.
Product Support. Phoenix delivers product support services through all
traditional avenues, including telephone, Internet, electronic mail and
facsimile. Due to the unique nature of client/server computing systems, many
critical customer support activities can also be performed through high speed
telecommunication lines directly to a customer's location. Phoenix support
personnel have the ability to connect quickly to a server at a customer site and
to perform work as if they were physically at the customer's site. Using this
approach, Phoenix is able to offer effective and direct support to its customers
without the traditional expense associated with on-site visits.
Networking Support. Phoenix offers a full range of networking support
services upon request. Phoenix performs on-site network certification for all
customers during their initial software installation, and network engineers are
available for ongoing support by telephone. Networking support and on-site
consulting are available upon request for an additional fee.
Disaster Recovery Service. Phoenix also offers a disaster recovery service
that ensures a customer will be back on-line within 24 hours if a disaster
occurs. The disaster recovery service is a separate five-year contract which has
an initial implementation fee and annual service fees. This added-cost service
satisfies the United States bank regulatory obligation to maintain and annually
test a disaster recovery plan and allows Phoenix to generate additional
recurring revenue from its implemented customer base.
PRODUCT DEVELOPMENT AND NEW PRODUCTS
Phoenix was founded in January 1993 for the purpose of developing and
marketing a new generation of integrated banking software applications that
would replace less flexible and technologically dated legacy systems. From the
Company's inception through Fiscal 1995, product development represented
approximately 40% of the Company's aggregate expenditures. Hewlett-Packard
provided developmental-stage assistance to the Company by supplying computer
hardware to the Company for development and testing of the Company's products.
Early in the Company's history, each of the U.S. Bank Partners participated in
the Company's joint application development program under which end-users were
involved in product development and testing. The joint application development
program helped reduce the development cycle by increasing the efficiency with
which design problems were identified and corrected.
Phoenix believes that its future success will depend in large part on its
ability to maintain and enhance its current product and service offerings and to
develop and introduce new products and features that will keep pace with
technological advances and satisfy evolving customer requirements. As of April
30, 1996, the product development group consisted of 34 individuals in addition
to 10 customer service and support personnel. Phoenix develops and adjusts
product direction in response to two core trend areas: (i) developments within
the financial industry and (ii) changes within the technology arena.
Product Development Cycle. Phoenix develops plans for new products and
enhancements following extensive discussions with the Phoenix user group
("PUG"), which consists of all current users of the Phoenix System. The U.S.
Bank Partners continue to participate in the development of the Company's
products by their participation in the PUG. The PUG meets at least twice a year
with the Company to offer recommendations and to help prioritize product
development and enhancement projects. In addition, the Company's product
development personnel continually develop new product ideas and enhancements.
Once a product idea has been formalized, the Company uses an internal review
process to determine: (i) whether to develop the enhancement; (ii) a development
schedule; and (iii) a budget for the enhancement.
Development Methodology. Development tools, such as 4GL programming tools,
enable rapid prototyping and have dramatically reduced development cycles.
Enhancements developed in a client/server environment take significantly less
time to complete than in a legacy system environment. Phoenix believes that the
efficiencies of its product architecture and development methodology allow it to
move products from planning to delivery more quickly than its legacy
system-based competitors.
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Product Plans. The Company's product development efforts are currently
focused on enhancing the functionality of the Phoenix System so that it will be
attractive to a broader range of customers. Phoenix believes that it will be
able to improve its competitive position by successfully completing the
following new products, among others:
- Multi-language enhancements. Phoenix is presently completing the first
of several important system features that are designed to improve the
Company's competitive position in the international market. Phoenix has
designed a unique language independence engine that will allow the
Company's core product to be rapidly localized into any single-byte
character set language. This engine is currently being used to implement a
Spanish version of the Phoenix System which the Company plans to release
in late 1996.
- Multi-currency enhancements. Phoenix has designed and plans to implement
its multi-currency enhancement in late 1996. With the multi-currency
enhancement, the Phoenix System will support the world currencies
formatted in accordance with standards established by the International
Organization of Standards.
- Secondary marketing and other enhancements. Significant enhancements for
the United States market are focused on the loan processing area, such as
investor reporting for secondary mortgage marketing including reports
required by the Federal Home Loan Mortgage Corporation and Federal
National Mortgage Association. Phoenix is also developing a module that
permits the processing of dealer loans and accounting for non-accrual
loans. Phoenix believes that such enhancements will broaden the appeal of
the Phoenix System for larger banks.
- NT Version of the Phoenix System. The NT Version will employ Windows NT
as the network operating system and Microsoft SQL Server as the RDBMS and
will support both Windows 95 and Windows NT on the client. The Company
intends to release its NT Version during mid-1997. This enhancement will
improve the cost-competitiveness of the Phoenix System within the smaller
bank market (i.e., banks with assets under $100 million).
- Internet-banking enhancement. Phoenix plans to deliver an enhancement to
the Phoenix System that will allow the Company's customers to provide
on-line banking services through the Internet. The Company's client/server
architecture is built upon the same industry standards utilized on the
Internet. Phoenix believes that the delivery of an its Internet banking
capability will give the Phoenix System a competitive advantage over many
existing products. The Company intends to charge an additional fee for
this enhancement.
These potential new enhancements and products are subject to significant
technical risks, including delay in the development, introduction or production
of the new enhancements or products, failure to achieve market acceptance and
undetected errors or failures. See "Risk Factors -- Dependence on New Products
and Rapid Technological Change; Risk of Product Errors" and "-- Dependence on
Single Product Line."
COMPETITION
The financial institution software market is intensely competitive and
subject to rapid change. Competitors vary in size and in the scope and breadth
of the products and services offered. Phoenix encounters competition from a
number of sources, including companies that market legacy systems or modified
legacy systems or that market other client/server software products to the
financial institutions industry and other industries. See "Risk
Factors -- Intense Competition." In general, Phoenix competes on the basis of:
(i) product architecture, including distributed computing capability, access to
commercial SQL databases and ease of customization and integrations with other
applications; (ii) functionality, including the breadth and depth of features
and functions and ease of use; (iii) service and support, including the range
and quality of technical support, training, implementation and consulting
services and the capability to provide these on a global basis; (iv) management
expertise, including management's banking software experience and financial
services industry knowledge; and (v) product pricing in relation to performance.
34
<PAGE> 37
Financial institutions have two fundamental alternatives for obtaining data
processing capabilities: (i) in house applications, either those that are
developed internally or those that are purchased from third party vendors; and
(ii) outsourcing, either as a part of a total outsourcing solution or where a
third party acts as a service bureau. Until the introduction of client/server
technology, the only in-house processing systems offered were proprietary legacy
systems running on mainframe or mid-range computer hardware. In the United
States market, client/server application software has only recently been made
available to banks, but it is gaining market acceptance and market share. In the
international market, there are a number of client/ server alternatives
available, as well as traditional legacy systems. Management believes the
Company is the leading provider of client/server core processing application
software solutions to the banking industry.
The Company believes that none of its current competitors offers
application software that has features similar to the Company's customer
relationship management, customer profitability analysis or executive
information components. The Company expects additional competition from other
established and emerging companies as the client/server market continues to
develop and expand. The Company also expects that competition will increase as a
result of consolidation in the banking software industry. See "Risk Factors --
Intense Competition."
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
Phoenix relies primarily on a combination of copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to protect
its proprietary rights. Phoenix seeks to protect its software, documentation and
other written materials under trade secret and copyright laws, which afford only
limited protection. Phoenix presently has no patents or patent applications
pending and has no trademark or copyright registrations. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Company's products or to obtain and use information that the
Company regards as proprietary. Policing unauthorized use of the Company's
products is difficult, and while the Company is unable to determine the extent
to which piracy of its software products exists, software piracy can be expected
to be a persistent problem. In addition, the laws of some foreign countries do
not protect the Company's proprietary rights to as great an extent as do the
laws of the United States. Nevertheless, the Company believes that due to the
rapid pace of technological change in the information technology and software
industries, factors such as the technological and creative skills of its
employees, new product developments, frequent product enhancements and the
timeliness and quality of support services are more important to establishing
and maintaining a competitive advantage in the industry.
Phoenix does not believe that any of its products infringes the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim infringement by the Company with respect to current or future
products. The Company expects that software product developers will be
increasingly subject to infringement claims as the number of products and
competitors in the Company's industry segment grows and the functionality of
products in different industry segments overlaps. Any such claims, with or
without merit, could be time-consuming, result in costly litigation, cause
product shipment delays or require Phoenix to enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable to the Company or at all, which could have a
material adverse effect upon the Company's business, operating results and
financial conditions. See "Risk Factors -- Dependence on Proprietary Technology;
Risks of Infringement."
EMPLOYEES
As of April 30, 1996, Phoenix had a total of 91 employees, of which 44 were
engaged in product development and support, 29 were in implementation and
training, 6 were in sales and marketing, 9 were in finance and administration
and 3 were in executive management. All of the Company's senior and executive
officers have entered into employment agreements with the Company. See
"Management -- Employment Agreements." None of the Company's employees is
represented by a labor union. The Company has not experienced any work stoppages
and considers its relations with its employees to be satisfactory.
35
<PAGE> 38
FACILITIES
Phoenix's principal administrative, sales, marketing, support and product
development facility is located in approximately 18,500 square feet of space in
a commercial building in Maitland, Florida. This facility is leased to the
Company pursuant to a main lease which terminates on January 31, 1998 and two
subleases which terminate on December 31, 1996 and March 31, 1997, respectively.
The Company believes that suitable additional or alternative space will be
available in the future on commercially reasonable terms as needed.
36
<PAGE> 39
MANAGEMENT
OFFICERS AND DIRECTORS
The executive officers, directors and significant employees of the Company,
and their ages as of March 31, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Executive Officers and Directors
Bahram Yusefzadeh(1).................. 50 Chairman of the Board, Chief Executive
Officer and Director
Ralph H. Reichard..................... 53 President, Chief Operating Officer and
Director
Clay E. Scarborough................... 41 Senior Vice President and Chief Financial
Officer
Michael R. Newes...................... 50 Senior Vice President of International
Sales and Director
Gerald P. Nissen...................... 47 Senior Vice President of Technology
Services
Twanna C. Soifer...................... 47 Senior Vice President of Implementation
Services
Ronald E. Fenton(1)(2)................ 67 Director
William E. Hess....................... 59 Director
James C. Holly(1)(2).................. 55 Director
Paul A. Jones......................... 41 Director
J. Michael Murphy..................... 55 Director
O. Jay Tomson......................... 59 Director
Significant Employee
Ruthann M. Rackawack.................. 39 Treasurer
</TABLE>
- ---------------
(1) Member of Compensation Committee. Mr. Holly is the Chairman of the
Compensation Committee, and Mr. Yusefzadeh is a non-voting member of the
Compensation Committee.
(2) Member of Audit Committee. Mr. Fenton is the Chairman of the Audit
Committee.
Executive Officers and Directors
Bahram Yusefzadeh. Mr. Yusefzadeh, the founder, Chairman of the Board and
Chief Executive Officer of Phoenix, has over 27 years of experience in the
banking software industry. In 1969, he co-founded Nu-Comp Systems ("Nu-Comp"),
where he developed the Liberty Banking System and served as Nu-Comp's president
and chief executive officer. Mr. Yusefzadeh became chairman of the board of
Broadway & Seymour, Inc. ("Broadway & Seymour") upon its acquisition of Nu-Comp
in June 1986 and remained in that position until November 1986. From 1986 to
1992, he worked for The Kirchman Corporation ("Kirchman"), first as president of
the product and marketing strategic division, and later as president of both the
independent banking group and the outsourcing division. Mr. Yusefzadeh currently
serves as a member of the Executive Committee and as a non-voting member of the
Compensation Committee.
Ralph H. Reichard. Mr. Reichard joined Phoenix as a consultant and advisor
in 1994. He officially joined the Company in January 1995 as Chief Operating
Officer and President. He also serves as a director and as a member of the
Executive Committee. From 1990 to 1994, Mr. Reichard was the president of the
banking business unit of Newtrend, L.P. ("Newtrend"), a software and outsourcing
services provider to banks, thrifts and credit unions. He served on Newtrend's
executive management committee and was responsible for the day-to-day operation
and management of the banking software and outsourcing business. From 1989 to
1990, Mr. Reichard served as president and chief operating officer for the
professional services division of Credit Card Software, Inc. He was president of
research and development for Kirchman from 1987 to 1989. From 1983 to 1987, he
was senior vice president and regional professional services manager for
Broadway and Seymour.
Clay E. Scarborough. Mr. Scarborough joined the Company in March 1996 as a
Senior Vice President and Chief Financial Officer. From 1995 to 1996, he served
as chief financial officer and senior vice president of
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<PAGE> 40
Medifax, Inc., a health industry services company. From 1992 to 1995, he was
chief financial officer and vice president of administration for A.D.A.M.
Software, Inc., a multimedia software publishing company. In 1991, Mr.
Scarborough served as vice president of finance at Gerber Alley Healthcare, a
hospital information systems software company. From 1986 to 1991, Mr.
Scarborough was employed by Digital Communication Associates, a publicly traded
data communications technology company where he last served as director of
finance. Mr. Scarborough holds a M.B.A. from the Harvard Graduate School of
Business Administration and is a certified public accountant.
Michael R. Newes. Mr. Newes joined the Company in 1993 and serves as
Senior Vice President of International Sales and as a director. From 1990 to
1993, he was a senior vice president for OKRA Marketing Corporation ("OKRA"), a
financial institutions data base software marketing company. He worked with Mr.
Yusefzadeh at both Nu-Comp and Kirchman and has nearly 25 years of experience in
marketing, sales and customer support for technology companies.
Gerald P. Nissen. Since February 1995, Mr. Nissen has served as Senior
Vice President of Technology Services for Phoenix and has responsibility for
product development, customer support, documentation, quality assurance,
networking services and disaster recovery services components of the Phoenix
System. From 1992 to 1995, Mr. Nissen worked at Newtrend in the banking business
unit where he served as senior vice president of product services and was
responsible for product development, product support and consulting services.
Twanna C. Soifer. Ms. Soifer joined the Company in 1993 as Senior Vice
President of Client Services and is responsible for training and implementation
of Phoenix System users. Prior to joining Phoenix, Ms. Soifer managed
documentation for the Horizon Product for Systematics, Inc. from 1991 to 1993.
From 1990 to 1991, she was a consultant for Prophet Management Information
Services and for OKRA. Prior to 1990, Ms. Soifer held management positions at
Kirchman and Broadway & Seymour.
Ronald E. Fenton. Mr. Fenton has been a director of Phoenix since 1993,
currently serves as a member of the Compensation Committee and Executive
Committee and is the Chairman of the Audit Committee. He has served as the
president, the chief executive officer and a director of BancSecurity
Corporation since 1982 and the president, chief executive officer and director
of Security Bank since 1976. Mr. Fenton is the chairman of the board of Story
County Bank & Trust, Story City, Iowa and is the chairman of the board of
Security Bank Jasper-Poweshiek, Kellogg, Iowa. He is also a director, executive
committee member and former chairman of the board of Shazam, Inc. ("Shazam"), a
regional electronic funds transfer network.
William E. Hess. Mr. Hess has been a director of the Company since 1993.
Since 1984, he has been the president of Iowa Savings Bank, and since 1981, he
has been chairman of the board of Sac City State Bank. He is also a director of
Audubon State Bank, Iowa Savings Bank, Perry State Bank, Raccoon Valley State
Bank and Home State Bank. Mr. Hess is a past director of Shazam, a past director
of the Iowa Bankers Mortgage Association and Iowa Bankers Association and a past
member of the member of the board of directors of the Iowa Department of
Banking.
James C. Holly. Mr. Holly has been a director of Phoenix since 1993,
currently serves as a member of the Audit Committee and the Executive Committee
and is Chairman of the Compensation Committee. For the past 19 years, he has
served as president, chief executive officer and director of Bank of the Sierra.
He is also the current president of the California Independent Bankers
Association. Mr. Holly holds an M.B.A. from the University of Wisconsin and was
a commissioned officer in the United States Army (Armor).
Paul A. Jones. Mr. Jones has been director of the Company since 1995. He
is the president, chief executive officer and a director of Glenview State Bank
and was the president of such bank from 1986 to 1996. Mr. Jones is a director of
Cummins-American Corp. and Cummins-Allison Corp.
J. Michael Murphy. Mr. Murphy has been a director of Phoenix since 1993.
Since 1977, he has served as president of Drum Service Co. of Florida, a large
steel drum reconditioning and recycling company. In 1995, he became the chairman
of the board of Lochaven Federal Savings and Loan Association, Orlando Florida.
He is the past president of the National Trade Association of Drum
Reconditioners and was chairman
38
<PAGE> 41
of the board of the International Federation of Drum Reconditioners from 1990 to
1993. Mr. Murphy holds a M.B.A. from the Harvard Graduate School of Business
Administration.
O. Jay Tomson. Mr. Tomson has been a member of the Company's board of
Directors since 1993 and was Chairman of the Board of the Company from August
1993 to February 1994. Since 1974, he has served as chairman and chief executive
officer of First Citizens National Bank, and since 1977, he has been chairman of
the board of First Citizens Financial Corporation. He is a director of Seilon,
Inc., a reporting company under the Exchange Act. Mr. Tomson was a member of the
Federal Reserve Bank of Chicago from 1980 to 1986. He is a former director and
president of Shazam.
Significant Employee
Ruthann M. Rackawack. Ms. Rackawack has been the controller and treasurer
of the Company since 1994. From 1989 to 1994, she worked for Transportation
Consulting Group, Inc. ("TCG"), where she handled compliance audits and
established a fully automated job cost system. Ms. Rackawack was promoted from
business manager to controller and an associate of TCG in 1993.
DIRECTOR COMPENSATION
The Company has issued to each director (or to certain affiliates of
directors) options to purchase shares of the Common Stock for their services as
directors of the Company in Fiscal 1993, Fiscal 1994 and Fiscal 1995. See
"-- Stock Option Plans -- Director Stock Option Plans." In addition, the Company
has paid all travel expenses and reimbursed the directors for their
out-of-pocket expenses related to their services as directors. Directors do not
receive cash fees for their services as directors of the Company.
39
<PAGE> 42
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation earned
by the Chief Executive Officer and the other executive officers whose salary and
bonus for the calendar year ended December 31, 1995 were in excess of $100,000
(collectively, the "Named Executive Officers") for services rendered in all
capacities to the Company and its subsidiary for that year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ---------------
COMPENSATION SECURITIES
------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(#) COMPENSATION
- ----------------------------------------- ---- -------- ------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Bahram Yusefzadeh........................ 1995 $194,795 $19,000(1) 78,985 $7,538(2)
Chairman of the Board and Chief
Executive Officer
Ralph H. Reichard........................ 1995 140,000 -- 148,679 --
Chief Operating Officer and President
Michael R. Newes......................... 1995 107,436 40,474(3) 18,584 --
Senior Vice President of International
Sales
Gerald P. Nissen......................... 1995 100,833 -- 43,094 --
Senior Vice President of Technology
Services
</TABLE>
- ---------------
(1) Represents a bonus earned in Fiscal 1994 but paid in Fiscal 1995.
(2) Includes $2,887 for long-term disability premiums paid by the Company,
$1,824 for term life insurance premiums paid by the Company and $2,827 for
health insurance premiums paid by the Company for the Named Executive
Officers' dependents.
(3) Reflects a commission of $36,474 paid pursuant to a commission plan
established for Fiscal 1995 by the Chief Executive Officer and a bonus of
$4,000 earned in Fiscal 1994 but paid in Fiscal 1995.
40
<PAGE> 43
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers in Fiscal 1995. No stock
appreciation rights were granted to these individuals during such year.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANT VALUE AT
------------------------------------------------------ ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OR OPTION TERM(2)
GRANTED IN BASE EXPIRATION -------------------
(#) FISCAL YEAR PRICE ($)(1) DATE 5% ($) 10% ($)
---------- ----------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bahram Yusefzadeh.............. 9,292(3) 1.87% $ 4.74 2005 $ 21,036 $ 59,589
69,693(4) 14.05 4.74 2005 157,774 446,935
Ralph H. Reichard.............. 9,292(3) 1.87 4.30 2005 25,124 63,677
23,231(5) 4.68 4.30 1995 -- --
58,078(4) 11.71 4.30 2005 157,034 398,003
58,078(6) 11.71 4.30 2005 157,034 398,003
Michael R. Newes............... 9,292(3) 1.87 4.30 2005 25,124 63,677
9,292(4) 1.87 4.30 2005 25,124 63,677
Gerald P. Nissen............... 116(7) * 4.30 2005 314 795
2,323(5) * 4.30 1995 -- --
11,616(4) 2.34 4.30 2005 31,408 79,603
29,039(8) 5.86 4.30 2005 78,517 199,002
</TABLE>
- ---------------
* Indicates amount less than 1%.
(1) All options, except for those granted to Mr. Yusefzadeh, were granted at the
fair market value on the date of grant as determined by the Board of
Directors. For Mr. Yusefzadeh, options were granted at 110% of the fair
market value on the date of grant as determined by the Board of Directors.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the SEC. There can be no assurance provided to any
executive officer or any other holder of the Company's securities that the
actual stock price appreciation over the term will be at the assumed 5% and
10% levels or at any other defined level. Unless the market price of the
Common Stock appreciates over the option term, no value will be realized
from the option grants made to the executive officers.
(3) Represents director stock options that are fully vested.
(4) Represents incentive stock options that vest ratably on each of February 1,
1996, 1997, 1998 and 1999.
(5) Represents options granted on June 22, 1995, which vested and were exercised
in 1995. See "-- Aggregate Option Exercises in Last Fiscal Year and Option
Values as of December 31, 1995."
(6) These options were granted as an employment inducement. 23,231 shares vested
on each of January 1, 1995 and 1996. The remaining 11,616 shares will vest
on December 31, 1996.
(7) Represents options granted on July 7, 1995, which vest on July 7, 1996 and
expire on July 6, 2005.
(8) These options were granted as an employment inducement and vest ratably on
each of March 18, 1995, 1996, 1997 and 1998.
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<PAGE> 44
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AS OF DECEMBER
31, 1995
The following table sets forth information concerning option exercises and
option holdings for Fiscal 1995 with respect to each of the Named Executive
Officers. No stock appreciation rights were exercised during such year or were
outstanding at the end of that year.
<TABLE>
<CAPTION>
NUMBER NUMBER OF VALUE OF
OF SECURITIES UNDERLYING UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY
ACQUIRED AT DEC. 31, 1995 OPTIONS AT DEC. 31, 1995(1)
ON VALUE --------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bahram Yusefzadeh............. -- $ -- 9,292 69,693 $ 67,460 $ 505,971
Ralph H. Reichard............. 23,231 100,000 32,523 92,925 250,427 715,515
Michael R. Newes.............. -- -- 55,089 9,292 424,193 71,548
Gerald P. Nissen.............. 2,323 10,000 7,260 33,511 55,900 258,033
</TABLE>
- ---------------
(1) There was no public market for the Common Stock at December 31, 1995.
Accordingly, these values have been calculated based on an assumed initial
offering price of $12.00, less the applicable exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors was formed on March
18, 1995. The members of the Compensation Committee are Messrs. Fenton and
Holly, and Mr. Yusefzadeh is a non-voting member. Mr. Holly is chairman of the
Compensation Committee. Neither Mr. Fenton nor Mr. Holly was at any time during
the fiscal year ended December 31, 1995, or at any time, an officer or employee
of the Company.
Transactions with Ronald E. Fenton and Affiliates. Mr. Ronald E. Fenton,
the president, chief executive officer and a director of BancSecurity
Corporation ("BancSecurity"), is a director of the Company, Chairman of the
Audit Committee and a member of the Compensation Committee and Executive
Committee. From November 1994 through January 1995, the Company sold a total of
628,610 shares of Class E Common Stock to existing shareholders, employees,
officers and directors at a price of $4.30 per share pursuant to a rights
offering and certain preemptive rights (the "Rights Offering").
Pursuant to the Rights Offering, BancSecurity purchased 35,404 shares of
Class E Common Stock at a price of $4.30 per share in December 1994. In October
1993 and pursuant to the Company's Private Placement Memorandum, dated August
31, 1993 (the "August PPM"), BancSecurity purchased 92,924 shares of Class E
Common Stock at a price of $1.08 per share. In April 1993 and pursuant to the
Company's Private Placement Memorandum, dated April 5, 1993 (the "April PPM"),
BancSecurity purchased 92,924 shares of Class B Common Stock at a price of $1.08
per share.
In July 1995, Mr. Fenton exercised options to purchase 9,292 shares of
Class E Common Stock at a price of $4.30 per share. Pursuant to the Rights
Offering, Mr. Fenton purchased 5,929 shares of Class E Common Stock at a price
of $4.30 per share in December 1994. In November 1994, Mr. Fenton exercised
options to purchase 9,292 shares of Class E Common Stock at a price of $1.08 per
share and options to purchase 3,982 shares of Class E Common Stock at a price of
$4.30 per share. In September 1994, Mr. Fenton exercised options to purchase
9,293 shares of Class E Common Stock at a price of $1.08 per share. Pursuant to
the April PPM, Mr. Fenton purchased 4,646 shares of Class B Common Stock at a
price of $1.08 per share. As of April 30, 1996, Mr. Fenton did not own any
options to purchase capital stock of the Company.
In February 1996, the Company licensed the Phoenix System to BancSecurity.
Pursuant to the U.S. Bank Partners' Discount Program (as defined hereafter),
BancSecurity was given a discount on the license and service fees with an
aggregate value of $299,315. See "Certain Transactions."
In May 1994, the Company borrowed $250,000 from BancSecurity, Iowa Savings
Bank, First Citizens National Bank and Bank of the Sierra for the purpose of
purchasing furniture and equipment. The loan
42
<PAGE> 45
matured in May 1995, was secured by such furniture and equipment and bore
interest at a rate of 9.0% per annum. The Company repaid the note in full in May
1995.
Transactions with James C. Holly and Affiliates. Mr. James C. Holly, the
president, chief executive officer and director of Bank of the Sierra, is a
director of the Company, Chairman of the Compensation Committee and a member of
the Audit Committee and Executive Committee. Pursuant to the Rights Offering,
Bank of the Sierra purchased 38,044 shares of Class E Common Stock at a price of
$4.30 per share. In November 1994, Bank of the Sierra exercised 18,585 options
to purchase Class E Common Stock at an exercise price of $1.08 per share and
options to purchase 3,982 shares of Class E Common Stock at an exercise price of
$4.30 per share. These options were transferred from Mr. Holly, who was granted
these options for his service as a director of the Company during Fiscal 1993
and Fiscal 1994. Pursuant to the August PPM, Bank of the Sierra purchased 23,231
shares of Class C Common Stock at a price of $2.15 per share and 46,462 shares
of Class E Common Stock at a price of $1.08 per share. Pursuant to the April
PPM, Bank of the Sierra purchased 46,462 shares of Class B Common Stock at a
price of $1.08 per share. As of April 30, 1996, Bank of the Sierra has
outstanding options to purchase 9,292 shares of Class E Common Stock at an
exercise price of $4.30 per share. These options were granted to Mr. Holly for
his service as a director of the Company during Fiscal 1995. See
"Management -- Stock Option Plans."
Pursuant to the Rights Offering, Mr. Holly purchased 1,770 shares of Class
E Common Stock at a price of $4.30 per share in December, 1994. In March 1994,
Mr. Holly purchased, on his own behalf, 9,292 shares of Class E Common Stock at
a price of $1.08 per share. As of April 30, 1996, Mr. Holly did not own any
options to purchase capital stock of the Company.
In March 1994, the Company licensed the Phoenix System to Bank of the
Sierra. Pursuant to the U.S. Bank Partners' Discount Program and because Bank of
the Sierra was the second commercial installation site for the Phoenix System,
Bank of the Sierra was given a discount on the customer and software support
fees with an aggregate value of $353,840. See "Certain Transactions."
Transactions with Bahram Yusefzadeh. Pursuant to the Rights Offering, in
January 1995 the Company issued the Yusefzadeh Family Limited Partnership, of
which Mr. Yusefzadeh is the general partner (the "Yusefzadeh Partnership"),
80,091 shares of Class E Common Stock at a price of $4.30 per share. In
exchange, Mr. Yusefzadeh gave the Company a promissory note for $344,760 which
bears interest at a rate of 7.92% per year and is unsecured. Pursuant to the
Rights Offering, in December 1994 the Company issued the Yusefzadeh Partnership
216,724 shares of Class E Common Stock at a price of $4.30 per share. In
exchange, Mr. Yusefzadeh gave the Company a promissory note for $932,910 which
bears interest at a rate of 7.92% per year and is unsecured. In November 1994,
Mr. Yusefzadeh exercised options granted to him as a director of the Company to
purchase 18,585 shares of Class E Common Stock at an exercise price of $1.18 per
share and 3,982 shares of Class E Common Stock at an exercise price of $4.74.
The Company issued Mr. Yusefzadeh 22,567 shares of Class E Common Stock in
exchange for a promissory note for $40,854 from Mr. Yusefzadeh which bears
interest at a rate of 7.92% per year and is unsecured. The principal and
interest on the notes are due and payable upon the consummation of the Offering.
As of April 30, 1996, Mr. Yusefzadeh owed $378,873, $1,033,720 and $45,550 under
the notes, respectively. Mr. Yusefzadeh intends to repay all amounts due under
the promissory notes with the proceeds realized by him from this Offering.
As part of the Company's initial capitalization in April 1993, Mr.
Yusefzadeh purchased 1,115,088 shares of Class A Common Stock. The Company
recorded a compensation expense of $6,000. In addition, Mr. Yusefzadeh has
outstanding options to acquire 78,985 shares of Common Stock at an exercise
price of $4.74 per share. See "Management -- Executive Compensation" and
"-- Stock Option Plans." In Fiscal 1993, the Company paid Mr. Yusefzadeh a
salary of $20,000. In Fiscal 1994, the Company paid Mr. Yusefzadeh a salary of
$160,000 and a bonus of $30,000. The bonus was a reimbursement of certain costs
incurred by Mr. Yusefzadeh with respect to the Company.
In Fiscal 1994 and Fiscal 1995, the Company used Mr. Yusefzadeh's personal
American Express card for purchasing equipment and for other general business
expenses, including travel expenses for directors and office supplies. The
Company paid approximately $205,000 in Fiscal 1994 and approximately $175,000 in
Fiscal 1995 to American Express directly in full reimbursement for the purchases
by Mr. Yusefzadeh. In
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<PAGE> 46
January 1994, Mr. Yusefzadeh loaned an aggregate of $35,203 to the Company to
finance the Company's purchase of certain office equipment. The loan is secured
by such office equipment and is payable on demand with interest payable at 12%
per annum. As of April 30, 1996, the Company owed $44,714 under the loan. The
Company intends to repay this loan with the net proceeds realized by the Company
from this Offering. In addition, Mr. Yusefzadeh has personally guaranteed the
office lease for the Company's headquarters in Maitland, Florida and certain
other leases for general office equipment.
EMPLOYMENT AGREEMENTS
Yusefzadeh Agreement. On December 28, 1995, Mr. Yusefzadeh and the Company
entered into an employment agreement (the "Yusefzadeh Agreement") pursuant to
which he will serve as the Chief Executive Officer of the Company. The
Yusefzadeh Agreement provides that Mr. Yusefzadeh will receive a base salary of
not less than $200,000 per year, an annual bonus prior to the Offering and a
quarterly bonus after the Offering as determined by the Compensation Committee
based upon achievement of targeted levels of performance and such other criteria
as the Compensation Committee shall establish from time to time, and an
additional annual bonus as determined by the Compensation Committee. In
addition, he may participate in the Phoenix International Limited, Inc. Stock
Option Plan dated October 21, 1995 (the "October 1995 Plan") and will receive
health insurance for himself and his dependents, long-term disability insurance,
civic and social club dues, use of an automobile owned or leased by the Company
and other benefits of similarly situated employees. Mr. Yusefzadeh's base salary
may be increased upon a periodic review by the Board of Directors or a committee
thereof. The Yusefzadeh Agreement has a term of three years and renews daily
until either party fixes the remaining term at three years by giving written
notice. The Company can terminate Mr. Yusefzadeh's employment upon his death or
disability or for cause, and Mr. Yusefzadeh can terminate his employment for any
reason within a 90-day period beginning on the 30th day after any occurrence of
a change in control or within a 90-day period beginning on the one-year
anniversary of the occurrence of any change in control. If Mr. Yusefzadeh's
employment is terminated by the Company in breach of the Yusefzadeh Agreement or
if Mr. Yusefzadeh terminates the Yusefzadeh Agreement for any reason after a
change in control, the Company must pay Mr. Yusefzadeh one-twelfth of his annual
base salary and bonus for each of 36 consecutive 30-day periods following the
termination and must continue Mr. Yusefzadeh's life and health insurance until
he reaches age 65, and Mr. Yusefzadeh's outstanding options to purchase Common
Stock would vest and become immediately exercisable.
In the Yusefzadeh Agreement, the Company also granted Mr. Yusefzadeh, with
respect to his shares of Common Stock, piggyback and, after any termination of
employment, demand registration rights. See "Shares Eligible for Future Sale."
Under the Yusefzadeh Agreement, Mr. Yusefzadeh agrees to maintain the
confidentiality of the Company's trade secrets. Mr. Yusefzadeh agrees that for a
period of two years, if he is terminated for cause, not to compete with or
solicit employees or customers of the Company within the United States.
Reichard Agreement. On December 28, 1995, Mr. Reichard and the Company
entered into an employment agreement (the "Reichard Agreement") pursuant to
which he will serve as the Chief Operating Officer and President of the Company.
The Reichard Agreement provides that Mr. Reichard will receive a base salary of
not less than $140,000 per year, an annual bonus prior to the Offering and a
quarterly bonus after the Offering as determined by the Compensation Committee
based upon achievement of targeted levels of performance and such other criteria
as the Compensation Committee shall establish from time to time, and an
additional annual bonus as determined by the Compensation Committee. In
addition, he may participate in the October 1995 Plan and will receive health
insurance for himself and his dependents, civic and social club dues, use of an
automobile owned or leased by the Company and other benefits of similarly
situated employees. Mr. Reichard's base salary may be increased upon a periodic
review by the Board of Directors or a committee thereof. The Reichard Agreement
has a term of three years and renews daily until either party fixes the
remaining term at three years by giving written notice. The Company can
terminate Mr. Reichard's employment upon his death or disability or for cause,
and Mr. Reichard can terminate his employment for any reason within a 90-day
period beginning on the 30th day after any occurrence of a change in control or
within a 90-day period beginning on the one-year anniversary of the occurrence
of any change in control. If
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<PAGE> 47
Mr. Reichard's employment is terminated by the Company in breach of the Reichard
Agreement or if Mr. Reichard terminates the Reichard Agreement for any reason
after a change in control, the Company must pay Mr. Reichard one-twelfth of his
annual base salary and bonus for each of 36 consecutive 30-day periods following
the termination and must continue Mr. Reichard's life and health insurance until
he reaches age 65, and Mr. Reichard's outstanding options to purchase Common
Stock would vest and become immediately exercisable. Under the Reichard
Agreement, Mr. Reichard agrees to maintain the confidentiality of the Company's
trade secrets. Mr. Reichard also agrees for a period of two years if he is
terminated for cause, not to compete with or solicit employees or customers of
the Company within the United States.
Other Employment Agreements. On April 12, 1996, the Company entered into
employment agreements with each of Messrs. Newes and Nissen and Ms. Soifer, and
the Company intends to enter into an employment agreement with Mr. Scarborough
(collectively, the "Other Agreements"). The Other Agreements provide for a
minimum base salary per year, an annual bonus prior to the Offering and a
quarterly bonus after the Offering as determined by the Chief Executive Officer
and President based upon achievement of targeted levels of performance and such
other criteria as the they shall establish from time to time, and an additional
annual bonus as determined by them. The agreement for Mr. Newes contains
provisions for commission compensation paid in accordance with a commission plan
established each year by the Chief Executive Officer and President. In addition,
each employee may participate in the October 1995 Plan and will receive
insurance and other benefits of similarly situated employees. Each of the Other
Agreements, except for Mr. Scarborough's, have a term of one year and renews
daily until either party fixes the remaining term at one year by giving written
notice. The term of Mr. Scarborough's agreement is 18 months. The Company can
terminate each of the employees upon death or disability or for cause, and the
employee can terminate his employment for any reason within one year of a change
in control with adequate justification. If the employee's employment is
terminated by the Company for any reason within one year after a change in
control or if the employee terminates the agreement with adequate justification,
the Company must pay the employee one-twelfth of his base salary and bonus for
each of 12 consecutive 30-day periods following the termination and must
continue the employee's life and health insurance until he reaches age 65, and
the employee's outstanding options to purchase Common Stock would vest and
become immediately exercisable. For Mr. Scarborough, the Company would pay his
base salary and bonus for each of 18 consecutive 30-day periods following the
termination. Under the Other Agreements, each employee agrees to maintain the
confidentiality of the Company's trade secrets. The Employee also agrees for a
period of one year if he is terminated for cause or resigns without adequate
justification, not to compete with or solicit employees or customers of the
Company within the United States. Mr. Scarborough's non-compete and non-solicit
period is 18 months.
STOCK OPTION PLANS
Assuming (i) no grants of stock options, (ii) the exercise or expiration of
options to purchase 139,485 shares of Common Stock which options expire the day
prior to the Offering and (iii) no additional exercise, of stock options by the
holders thereof, the Company will have outstanding options to acquire 473,034
shares of Common Stock under the Company's stock option plans on the Effective
Date. The Company will terminate its right to issue options under all stock
option plans other than the October 1995 Plan on the Effective Date. As of the
Effective Date, the Company will have the right to issue options to purchase 54,
651 shares of Common Stock under the October 1995 Plan.
From February 1994 through November 1995, the Board of Directors adopted 13
stock option plans (the "Stock Option Plans") which permitted options to be
granted to various classes of employees, officers, directors and service
providers of the Company. As of April 30, 1996, options to purchase a total of
612,519 shares of Common Stock were outstanding with exercise prices ranging
from $1.08 to $6.46. In addition, 2,273,336 shares of Common Stock are reserved
for grant of future options or direct issuances as of April 30, 1996 under the
Stock Option Plans.
Plans for Officers and Heads of Departments. From February 1994 to January
1995, the Board of Directors adopted four plans to grant options to officers and
heads of departments of the Company, as selected by the President. The Board of
Directors adopted Incentive Stock Option Plan Number 1, under which
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<PAGE> 48
58,078 shares of Common Stock were authorized; Incentive Stock Option Plan
Number 8, under which 11,616 shares were authorized; and Incentive Stock Option
Plan Number 11, under which 58,078 shares were authorized. The exercise price
for options granted under these plans was $1.08 per share. Such options are
nontransferable except upon death of the grantee and terminate upon the
cessation, for any reason, of the grantee's employment. In addition, options
must be exercised prior to the earlier of the last business day prior to a
public offering of the Company's capital stock or the fifth anniversary of the
date of grant.
Plans for Non-Officer Staff Service Providers. From February 1994 to
October 1994, the Board of Directors adopted four plans to grant options to
employees of the Company who provided staff services, as selected by the
President. The Board of Directors adopted Incentive Stock Option Plan Number 2,
under which 48,785 shares of Common Stock were authorized; Incentive Stock
Option Plan Number 5, under which 6,969 shares were authorized; Incentive Stock
Option Plan Number 6, under which 33,685 shares were authorized; Incentive Stock
Option Plan Number 7, under which 22,069 shares were authorized; and Incentive
Stock Option Plan Number 10, under which 1,162 shares were authorized. In
addition, in February 1994, the Board of Directors adopted Incentive Stock
Option Plan Number 4, under which 232,310 shares of Common Stock were available
to be granted to any employee, officer, director or service providers of the
Company, as selected by the President. The exercise price for options granted
under all of these plans was $1.08 per share. Such options are nontransferable
except upon death of the grantee and terminate upon the cessation, for any
reason, of the grantee's employment. In addition, options granted must be
exercised prior to the earlier of the last business day prior to a public
offering of the Company's capital stock or the fifth anniversary of the date of
grant.
March 1995 Plan. In March 1995, the Board of Directors adopted, and the
Company's shareholders approved, the Phoenix International Ltd., Inc. 1995 Stock
Option Plan (the "March 1995 Plan"), the primary focus of which was to provide
an incentive to employees, officers and directors who are in a position to make
significant contributions to the Company. Under the March 1995 Plan, a two
director stock option committee of the Board of Directors has discretion to
award an aggregate of 2,323,100 stock options to employees. Such options may be
either incentive stock options ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), which permits the
deferral of taxable income related to the exercise of such options, or
nonqualified options not entitled to such deferral. Subject to the provisions of
the March 1995 Plan, this committee, in its discretion, selects the recipients
of awards and the number of shares or options granted thereunder and determines
other matters such as (i) vesting schedules, (ii) the exercise price of options
(which cannot be less than the fair market value of the Common Stock on the date
of grant for ISOs) and (iii) the duration of awards (which cannot exceed ten
years). The March 1995 Plan terminates on March 18, 2005 unless sooner ended by
the Board of Directors.
October 1995 Plan. Effective October 21, 1995, the Board of Directors
adopted and the Company's shareholders approved the October 1995 Plan, the
primary focus of which is to provide an incentive to key employees who are in a
position to serve the best interests of the Company. Subject to amendment of the
October 1995 Plan, a total of 116,155 shares of Common Stock is available for
issuance pursuant to the exercise of options or the grant of restricted stock
awards. Options may be either ISOs or nonqualified options. The October 1995
Plan is administered by a stock option committee consisting of two directors
appointed by the Board of Directors. Subject to the provisions of the October
1995 Plan, this committee, in its discretion, selects the recipients of awards
and the number of shares or options granted thereunder and determines other
matters such as (i) vesting schedules, (ii) the exercise price of options (which
cannot be less than 100% of the fair market value of the Common Stock on the
date of grant for ISOs) and (iii) the duration of awards (which cannot exceed
ten years from the date of grant or modification of the option).
Director Stock Option Plans. In February 1994, the Board of Directors
adopted Incentive Stock Option Plan Number 3 and Incentive Stock Option Plan
Number 12 (collectively, the "Director Plans"). Under each of the Director
Plans, 83,632 shares of Common Stock were authorized to be granted to directors
of the Company. In February 1994, the Board of Directors granted options to
purchase 18,585 shares of Common Stock as compensation for Fiscal 1993 and
Fiscal 1994, which options vested on the date of grant, to each of the Company's
nine directors or affiliates of directors. The exercise price for options
granted under the Director Plans was $1.08 per share. During Fiscal 1994, two
directors resigned from the Board of Directors,
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<PAGE> 49
and options to purchase 27,874 shares of Common Stock held by them were
reallocated to the seven remaining directors or affiliates of directors. Six of
the directors or affiliates of directors received options to purchase 3,982
shares of Common Stock at an exercise price of $4.30 per share, and Mr.
Yusefzadeh received options to purchase 3,982 shares of Common Stock at an
exercise price of $4.74 per share. Options for all 167,264 shares authorized
under the Director Plans have been granted, and all of the options expire on the
earlier of the last business day prior to an initial public offering or five
years from the date of grant. Pursuant to the March 1995 Plan and as
compensation for serving as a director in Fiscal 1994, in March 1995, each
director or his affiliate, except for Mr. Yusefzadeh, received options to
purchase 9,292 shares of Common Stock at an exercise price of $4.30 per share.
Mr. Yusefzadeh received options to purchase 9,292 shares of Common Stock at an
exercise price of $4.74 per share. The options vested upon grant and expire in
the year 2005.
PROFIT SHARING PLAN
The Company maintains a tax-qualified profit sharing plan for eligible
employees that includes a 401(k) component (the "Profit Sharing Plan"). All
full-time employees are eligible to participate in the Profit Sharing Plan upon
the attainment of age 21 and completion of six months of service. Under the
Profit Sharing Plan, an employee may elect to defer a portion of his
compensation by reducing his compensation by up to 20% and directing the Company
to contribute such reduction to the Profit Sharing Plan. Each year, the Company
will determine whether to make a discretionary matching contribution equal to a
percentage, determined by the Company, not to exceed 100% of the employee's
deferred compensation contribution. An employee must meet certain employment
requirements to be eligible to participate in any such matching contribution
made by the Company. The Company did not make any matching contributions in
Fiscal 1995. All contributions to the Profit Sharing Plan by or on behalf of
employees are subject to annual limits prescribed by the Code.
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<PAGE> 50
CERTAIN TRANSACTIONS
In June 1995, Mr. Reichard exercised options to purchase 23,231 shares of
Class E Common Stock at an exercise price of $4.30 per share. In addition, Mr.
Reichard has outstanding options to purchase 125,448 shares of Common Stock. See
"Management -- Executive Compensation" and "-- Stock Option Plans." In December
1995, the Company and Mr. Reichard entered into an employment agreement. See
"Management -- Employment Agreements -- Reichard Agreement."
As an incentive to provide initial capital for the Company pursuant to the
April PPM and the August PPM, the Company agreed to give certain pricing
discounts to the U.S. Bank Partners if they licensed the Phoenix System for use
in their banks (the "U.S. Bank Partners' Discount Program"). The following are a
list of transactions where discounts have been given pursuant to the U.S. Bank
Partners' Discount Program. See "Management -- Compensation Committee Interlocks
and Insider Participation" for a discussion of the transactions with
BancSecurity and Bank of the Sierra. Two additional U.S. Bank Partners' are
eligible for the Discount Program.
In February 1994, the Company licensed the Phoenix System to First Citizens
Financial Corporation ("FCFC"). Pursuant to the U.S. Bank Partners' Discount
Program and because FCFC agreed for one of its banks to serve as the first
commercial installation site of the Phoenix System, FCFC was given pricing
concessions on license fees, implementation fees and customer and software
support fees with an aggregate value of $477,000. Mr. O. Jay Tomson, the
chairman of the board and chief executive officer of First Citizens National
Bank, is a director of the Company. In January 1995, the Company licensed the
Phoenix System to Glenview State Bank. Pursuant to the U.S. Bank Partners'
Discount Program, Glenview State Bank was given a discount on the initial
license fee with an aggregate value of $164,200. Mr. Paul A. Jones, the
president of Glenview State Bank, is a director of the Company. In December
1995, the Company licensed the Phoenix System to Iowa Savings Bank. Pursuant to
the U.S. Bank Partners' Discount Program, Iowa Savings Bank was given a discount
on the initial license fee with an aggregate value of $122,680. Mr. William
Hess, the president of Iowa Savings Bank, is a director of the Company.
The transactions under the U.S. Bank Partners' Discount Program are on
terms more favorable to officers, directors and principal shareholders of the
Company than they could obtain in a transaction with an unaffiliated third
party. Each of the transactions under the U.S. Bank Partners' Discount Program
was approved by a majority of the independent directors of the Company, and any
additional contracts under that program will be approved by a majority of the
independent directors of the Company. All future transactions, except for
contracts pursuant to the U.S. Bank Partners' Discount Program, between the
Company and its officers, directors, principal shareholders and their affiliates
will be approved by a majority of independent directors of the Company and will
be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
OTHER AGREEMENTS
The Company and certain shareholders have entered into an Amended and
Restated Stockholders Agreement, effective as of August 31, 1993 (as amended,
the "Stockholders Agreement"), whereby each party agreed to certain restrictions
on the transfer or other disposition of the shares of capital stock of the
Company. The Company has certain options to repurchase shares of capital stock
from individual shareholders if such shares have been transferred to
non-permitted transferees other than by reason of such shareholder's death. If
the Company does not exercise this option, the remaining shareholders that are
parties to the Stockholders Agreement have the right to purchase the shares. In
addition, the Stockholders Agreement states that the Company and the other
shareholders shall have the option to purchase all shares of the Company from
any shareholder corporation that is involved in any transaction which results in
a change in control of such shareholder corporation or if such shareholder
corporation does not use any products developed, produced or marketed by the
Company. Certain provisions of the Stockholders Agreement require the
affirmative vote of at least seven of the nine members of the Board of Directors
for corporate transactions. The Stockholders Agreement also provides Mr.
Yusefzadeh with a call option to purchase all shares of Class B Common Stock,
Class C Common Stock, Class D Common Stock and Class E Common Stock upon
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<PAGE> 51
the occurrence of certain events. Under the Florida Act, the terms and
provisions of the Stockholders Agreement cease to be effective upon the close of
the public offering of the Company's capital stock pursuant to a registration
statement declared effective by the Securities and Exchange Commission.
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<PAGE> 52
PRINCIPAL AND SELLING SHAREHOLDERS
The table below sets forth certain information regarding beneficial
ownership of the Common Stock, as of April 30, 1996, and as adjusted to reflect
the sale of shares offered hereby by (i) each person known to the Company to own
beneficially more than 5% of the Common Stock, (ii) each director and Named
Executive Officer, (iii) all directors and executive officers of the Company as
a group and (iv) each Selling Shareholder. Unless otherwise indicated, the
persons listed below have sole voting and investment power over the shares of
Common Stock indicated.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1) OFFERING(1)(2)
------------------- SHARES -------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------------------------------------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Bahram Yusefzadeh(3)............................. 1,740,188 57.41% 292,500 1,075,992 29.08%
Ronald E. Fenton(4).............................. 246,030 8.19 -- 246,030 6.70
BancSecurity Corporation(5)...................... 221,252 7.36 -- 221,252 6.02
James C. Holly(6)................................ 197,120 6.54 -- 197,120 5.35
Bank of the Sierra(7)............................ 186,058 6.17 -- 186,058 5.05
William E. Hess(8)............................... 160,157 5.31 -- 160,157 4.35
Ralph H. Reichard(9)............................. 122,829 3.99 -- 122,829 3.28
O. Jay Tomson(10)................................ 121,299 4.02 -- 121,299 3.29
Michael R. Newes(11)............................. 83,431 2.72 43,750 155,836 4.18
Paul A. Jones(12)................................ 67,943 2.25 -- 67,943 1.84
J. Michael Murphy(13)............................ 31,859 1.06 -- 31,859 *
Gerald P. Nissen(14)............................. 20,908 * -- 20,908 *
William Toole(15)................................ 10,789 * 43,750 83,194 2.26
All directors and executive officers as a group
(12 persons)................................... 2,853,211 87.50 2,284,651 58.13
</TABLE>
- ---------------
* Less than 1%
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares that such person or group has the
right to acquire within 60 days after April 30, 1996 or with respect to
which such person otherwise has or shares voting or investment power. For
purposes of computing beneficial ownership and the percentages of
outstanding shares held by each person or group or persons on a given date,
shares which such person or group has the right to acquire within 60 days
after such date are shares for which such person has beneficial ownership
and are deemed to be outstanding for purposes of computing the percentage
for such person but are not deemed to be outstanding for the purpose of
computing the percentage of any other person.
(2) Assumes no exercise of the Underwriters' over-allotment option.
(3) Mr. Yusefzadeh's address is Phoenix International Ltd., Inc., 900 Winderley
Place, Suite 140, Maitland, Florida 32751. Includes (i) 979,684 shares held
in his name; (ii) 361,861 shares held by the Yusefzadeh Family Limited
Partnership of which Mr. Yusefzadeh is the general partner; (iii) 371,696
shares for which Mr. Yusefzadeh, in his capacity as trustee, holds legal
title pursuant to the Voting Trust Agreement (as defined below); (iv)
options to acquire 26,715 shares that are currently exercisable; and (v)
232 shares held by his daughter. Pursuant to a Voting Trust Agreement,
dated April 4, 1993 (the "Voting Trust Agreement"), among Bahram
Yusefzadeh, as trustee, and certain holders of Class A Common Stock, Mr.
Yusefzadeh holds legal title to an additional 371,696 shares of Class A
Common Stock with the power to vote such shares of Class A Common Stock in
his discretion in the best interests of the Company. The Voting Trust
Agreement provides that (i) the shareholders will not sell or otherwise
transfer their Class A Common Stock before March 1, 2003 and (ii) the
agreement will terminate on the earlier of March 1, 2003 or the effective
date of a public offering.
(4) Mr. Fenton's address is c/o Security Bank, 11 North First Avenue,
Marshalltown, Iowa 50158. Includes (i) 20,940 shares held in his name; (ii)
3,838 shares held by his individual retirement account; and (iii) 221,252
shares held in the name of BancSecurity Corporation. Mr. Fenton is the
president, chief executive officer and a director of BancSecurity
Corporation. Mr. Fenton disclaims beneficial ownership
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<PAGE> 53
of the shares of Common Stock held by BancSecurity Corporation and 17,656
shares held in the name of his children.
(5) BancSecurity Corporation's address is 11 North First Avenue, Marshalltown,
Iowa 50158. An aggregate of 24,778 additional shares are beneficially owned
by Mr. Fenton. BancSecurity Corporation does not share any voting or
investment power and disclaims beneficial ownership with respect to Mr.
Fenton's shares.
(6) Mr. Holly's address is 86 North Main Street, Porterville, California 93258.
Includes (i) 11,062 shares held in his name; (ii) 176,766 shares held in
the name of Bank of the Sierra; (iii) options to acquire 9,292 shares of
Common Stock held by the Bank of Sierra which are currently exercisable.
Mr. Holly is the president, chief executive officer and director of Bank of
the Sierra. Mr. Holly disclaims beneficial ownership of the shares of
Common Stock held by Bank of the Sierra.
(7) Bank of the Sierra's address is 86 North Main Street, Porterville,
California 93258. Includes (i) 176,766 shares held in its name and (ii)
options to acquire 9,292 shares of Common Stock held by Bank of Sierra
which are currently exercisable. An aggregate of 11,062 additional shares
are beneficially owned by Mr. Holly. Bank of the Sierra does not share any
voting or investment power and disclaims beneficial ownership with respect
to Mr. Holly's shares.
(8) Includes (i) 25,196 shares held in Mr. Hess's name; (ii) 5,111 shares held
by his individual retirement account; (iii) options to acquire 9,292 shares
of Common Stock held in his name which are currently exercisable; (iv)
3,253 shares held by his children; (v) 2,950 shares held in the name of
Audubon Investment Company, in which he is only a director; (vi) 102,555
shares held in the name of Community Grain Corporation, in which he is
secretary and treasurer; (vii) 2,950 shares held in the name of Dallas
Investment Company, in which he is president and director; (viii) 2,950
shares held in the name of Greene Investment Company, in which he is
secretary; (ix) 2,950 shares held in the name of Perry Investment Company,
in which he is president, director and chairman; and (x) 2,950 shares held
in the name of Sac City Limited, in which he is director, president,
secretary and treasurer. Mr. Hess is the president of Iowa Savings Bank and
chairman of the board of Sac City State Bank. Mr. Hess disclaims beneficial
ownership of the shares of Common stock held by such entities.
(9) Includes (i) 6,969 shares held in his name; (ii) 16,262 shares held by his
individual retirement account; (iii) options to acquire 70,273 shares held
by him which are currently exercisable; and (iv) 29,325 shares held by his
wife. Mr. Reichard does not share any voting or investment power and
disclaims any beneficial ownership with respect to his wife's shares.
(10) Includes (i) 6,969 shares held in Mr. Tomson's name; (ii) options to
acquire 13,274 shares of Common Stock held in his name which are currently
exercisable; (iii) 46,462 shares held in the name of First Citizens
Financial Corporation; (iv) 46,462 shares held in the name of Kanabec
Credit Corporation; (v) 3,486 shares held in the name of his children; and
(vi) 4,646 shares held in the name of Action Acres, Inc. of which he owns
55%. Mr. Tomson is chairman of the board and chief executive officer of
First Citizens National Bank and chairman of the board of First Citizens
Financial Corporation. In addition, Mr. Tomson owns controlling interest in
Kanabec Credit Corporation. Mr. Tomson disclaims beneficial ownership of
the shares of Common Stock held by each of First Citizens Financial
Corporation, Kanabec Credit Corporation and Action Acres, Inc.
(11) Includes (i) 26,019 shares held in Mr. Newes' name and (ii) options to
acquire 57,412 shares of Common Stock held by him which are currently
exercisable. Excludes 116,155 shares subject to the Voting Trust Agreement
which are not beneficially owned by Mr. Newes. See Footnote 3 above.
(12) Includes (i) options to acquire 9,292 shares of Common Stock held by Mr.
Jones which are currently exercisable and (ii) 58,651 shares held in the
name of Cummins-American Corporation. Mr. Jones is the president, chief
executive officer and a director of Glenview State Bank. He is also a
director of Cummins-American Corp. and Cummins-Allison Corp., and he and
his immediate family control 94% of the voting power of Cummins-American
Corporation. Mr. Jones disclaims beneficial ownership of the shares of
Common Stock held by such entities.
(13) Includes (i) 18,585 shares held in Mr. Murphy's name and (ii) options to
acquire 13,274 shares of Common Stock held by him which are currently
exercisable.
(14) Includes (i) 2,323 shares held in Mr. Nissen's name and (ii) options to
acquire 18,585 shares of Common Stock held by him which are currently
exercisable.
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<PAGE> 54
(15) Includes (i) 2,323 shares held in Mr. Toole's name and (ii) options to
acquire 8,466 shares of Common Stock held by him which are currently
exercisable. Excludes 116,155 shares subject to the Voting Trust Agreement
which are not beneficially owned by Mr. Toole. See Footnote 3 above.
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<PAGE> 55
DESCRIPTION OF CAPITAL STOCK
The following summary description of the capital stock of the Company does
not purport to be complete and is subject to the provisions of the Articles of
Incorporation and Bylaws, which are included as exhibits to the Registration
Statement of which this Prospectus forms a part, and the provisions of
applicable law.
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
Pursuant to the Articles of Incorporation and prior to the Offering, the
Company has authority to issue shares of capital stock, consisting of: 1,500,000
shares of Class A Common Stock, par value $0.0043 per share; 10,000,000 shares
of Class B Common Stock, par value $0.43 per share; 200,000 shares of Class C
Common Stock, par value $2.15 per share; 50,000 shares of Class D Common Stock,
par value $4.30 per share; 1,000,000 Class E Common Stock, par value $1.08 per
share; and 10,000,000 shares of preferred stock, par value $1.00 per share,
which will have such rights and preferences as shall be determined by the Board
of Directors. The Company will file an amendment to the Articles of
Incorporation on or before May 10, 1996 to increase the number of authorized
shares of Class A Common Stock from 1,000,000 shares to 1,500,000. As of April
30, 1996, the capital stock of the Company was held by 104 holders of record.
As of April 30, 1996, 1,393,859 shares of Class A Common Stock, 511,082
shares of Class B Common Stock, 185,848 shares of Class C Common Stock, 23,231
shares of Class D Common Stock and 889,926 shares of Class E Common Stock were
issued and outstanding. All shares of Class A Common Stock, Class B Common
Stock, Class C Common Stock, Class D Common Stock and Class E Common Stock
currently issued and outstanding by their terms will be converted automatically
on a one-for-one basis into shares of Common Stock on the Effective Date.
Accordingly, no information regarding the currently outstanding shares of such
classes of capital stock is set forth below.
On the Effective Date, officers of the Company will cause to be filed and
to take effect in Florida Amended and Restated Articles of Incorporation (the
"Restated Articles"). Under the Restated Articles, the Board of Directors will
have authority to issue 20,000,000 shares of Common Stock, par value $0.01 per
share, and 10,000,000 shares of preferred stock, par value $1.00 per share, in
one or more classes or series and, within certain limitations, to determine the
voting rights (including the right to vote as a series on particular matters),
preferences as to dividends and in liquidation, and conversion and other rights
of such series. The Company has no current plans to issue any shares of
preferred stock. The rights of the holders of the Common Stock discussed below
are subject to such rights as the Board of Directors may hereafter confer on the
holders of preferred stock; accordingly, such rights conferred on holders of
preferred stock that may be issued in the future under the Restated Articles may
adversely affect the rights of holders of the Common Stock.
COMMON STOCK
Under the Restated Articles, holders of Common Stock are entitled to
receive such dividends as may be legally declared by the Board of Directors.
Each shareholder is entitled to one vote per share on all matters to be voted
upon and will not be entitled to cumulate votes for the election of directors.
Holders of Common Stock will not have preemptive, redemption or conversion
rights and, upon liquidation, dissolution or winding up of the Company, will be
entitled to share ratably in the net assets of the Company available for
distribution to common shareholders. All outstanding shares prior to the
Offering will be, and all shares to be outstanding upon completion of the
Offering will be, validly issued, fully paid and non-assessable. The rights,
preferences and privileges of holders of Common Stock will be subject to any
classes or series of preferred stock that the Company may issue in the future.
PREFERRED STOCK
The Restated Articles will provide that the Board of Directors shall be
authorized, without further action by the holders of the Common Stock, to
provide for the issuance of shares of the preferred stock in one or more classes
or series and to fix the designations, powers, preferences and relative,
participating, optional and other rights, qualifications, limitations and
restrictions thereof, including the dividend rate, conversion rights, voting
rights, redemption price and liquidation preference, and to fix the number of
shares to be included in any such classes or series. Any preferred stock so
issued may rank senior to the Common Stock with respect to the payment of
dividends or amounts upon liquidation, dissolution or winding-up, or both. In
addition, any
53
<PAGE> 56
such shares of preferred stock may have class or series voting rights. Upon
completion of the Offering, the Company will not have any shares of preferred
stock outstanding. Issuances of preferred stock, while providing the Company
with flexibility in connection with general corporate purposes, may, among other
things, have an adverse effect on the rights of holders of Common Stock and, in
certain circumstances, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the Company
or the effect of decreasing the market price of the Common Stock. The Company
has no present plan to issue any shares of preferred stock.
CLASSIFIED BOARD OF DIRECTORS
The Restated Articles will divide the Board of Directors into three classes
of directors serving staggered three-year terms. As a result, approximately
one-third of the Board of Directors will be elected at each annual meeting of
shareholders. The classification of directors, together with other provisions in
the Restated Articles and Bylaws that limit the ability of shareholders to
remove directors and that permit the remaining directors to fill any vacancies
on the Board of Directors, will have the effect of making it more difficult for
shareholders to change the composition of the Board of Directors. As a result,
at least two annual meetings of shareholders may be required for the
shareholders to change a majority of the directors, whether or not such a change
in the Board of Directors would be beneficial to the Company and its
shareholders and whether or not a majority of the Company's shareholders
believes that such a change would be desirable.
REMOVAL OF DIRECTORS AND FILLING VACANCIES
The Restated Articles will provide for a staggered board of directors and
that a director may be removed by shareholders only for cause. The Restated
Articles will provide that this removal requires the approval of the holders of
66.67% of the total voting power of all outstanding securities of the Company
then entitled to vote generally in all matters submitted to shareholders (the
"Voting Stock"), voting together as a single class, subject to the rights of the
holders of any class of preferred stock then outstanding to remove directors
elected by such holders under specified circumstances or to vote separately as a
class. Moreover, the Florida Act and the Restated Articles will also provide
that, subject to any rights of holders of any class of preferred stock then
outstanding, all vacancies on the Board of Directors, including those resulting
from an increase in the number of directors, may be filled solely by a majority
of the remaining directors, even if they do not constitute a quorum. When a
director resigns from the Board of Directors effective at a future date, a
majority of directors then in office, including the directors who are to resign,
may vote on filling the vacancy.
ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER NOMINATIONS AND SHAREHOLDER PROPOSALS
The Bylaws establish an advance notice procedure for shareholders to make
nominations of candidates for election as directors or to bring other business
before any meeting of shareholders of the Company. Any shareholder nomination or
proposal for action at an upcoming shareholder meeting must be delivered to the
Company no later than the deadline for submitting shareholder proposals pursuant
to Rule 14a-8 under the Exchange Act. The presiding officer at any shareholder
meeting is not required to recognize any proposal or nomination which did not
comply with such deadline.
The purpose of requiring shareholders to give the Company advance notice of
nominations and other business is to afford the Board of Directors a meaningful
opportunity to consider the qualifications of the proposed nominees or the
advisability of the other proposed business and, to the extent deemed necessary
or desirable by the Board of Directors, to inform shareholders and make
recommendations about such qualifications or business, as well as to provide a
more orderly procedure for conducting meetings of shareholders. Although the
Bylaws do not give the Board of Directors any power to disapprove timely
shareholder nominations for the election of directors or proposals for action,
they may have the effect of precluding a contest for the election of directors
or the consideration of shareholder proposals if the proper procedures are not
followed and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal.
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<PAGE> 57
ANTI-TAKEOVER PROVISIONS UNDER THE FLORIDA ACT
The Company is subject to several anti-takeover provisions under the
Florida Act that apply to a public corporation organized under the Florida Act
unless the corporation has elected to opt out of such provisions in its articles
of incorporation or (depending on the provision in question) its bylaws. The
Company has not elected to opt out of these provisions. The Florida Act contains
a provision that prohibits the voting of shares in a publicly-held Florida
corporation which are acquired in a "control share acquisition" unless the
holders of a majority of the corporation's voting shares (exclusive of shares
held by officers of the corporation, inside directors or the acquiring party)
approve the granting of voting rights as to the shares acquired in the control
share acquisition. A "control share acquisition" is defined as an acquisition
that immediately thereafter entitles the acquiring party to vote in the election
of directors within each of the following ranges of voting power: (i) one-fifth
or more but less than one-third of such voting power, (ii) one-third or more but
less than a majority of such voting power and (iii) more than a majority of such
voting power.
The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless: (i) the transaction is approved by a majority
of disinterested directors before the person becomes an interested shareholder,
(ii) the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years, or (iii) the transaction is
approved by the holders of two-thirds of the corporation's voting shares other
than those owned by the interested shareholder. An "interested shareholder" is
defined as a person who, together with affiliates and associates, beneficially
owns more than 10% of the corporation's outstanding voting shares.
LIMITATION OF LIABILITY; INDEMNIFICATION MATTERS
Article 9 of the Bylaws requires the Company, to the fullest extent
permitted or required by the Florida Act, to (i) indemnify its directors against
any and all liabilities and (ii) advance any and all reasonable expenses,
incurred in any proceeding to which any such director is a party or in which
such director is deposed or called to testify as a witness because he or she is
or was a director of the Company. Generally, the Florida Act permits
indemnification of a director upon a determination that he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The right to indemnification granted in the Bylaws is not exclusive of
any other rights to indemnification against liabilities or the advancement of
expenses to which a director may be entitled under any written agreement, Board
resolution, vote of shareholders, the Florida Act or otherwise.
The Company intends to enter into agreements with each of its current
directors and executive officers pursuant to which it is obligated to indemnify
those persons to the fullest extent authorized by law and to advance payments to
cover defense costs against an unsecured obligation to repay such advances if it
is ultimately determined that the recipient of the advance is not entitled to
indemnification. The indemnification agreements will provide that no
indemnification or advancement of expenses shall be made (a) if a final
adjudication establishes that his actions or omissions to act were material to
the cause of action so adjudicated and constitute: (i) a violation of criminal
law (unless the indemnitee had reasonable cause to believe that his actions were
lawful); (ii) a transaction from which the indemnitee derived an improper
personal benefit; (iii) an unlawful distribution or dividend under the Florida
Act; or (iv) willful misconduct or a conscious disregard for the just interests
of the Company in a derivative or shareholder action; (b) for liability under
Section 16(b) of the Exchange Act, or (c) if a final decision by a court having
jurisdiction in the matter determines that indemnification is not lawful.
At present, the Company is not aware of any pending or threatened
litigation or proceeding involving a director, officer, employee or agent of the
Company in which indemnification would be required or permitted under the Bylaws
or the Florida Act.
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<PAGE> 58
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
3,673,946 shares of Common Stock. Of these shares, the 1,050,000 (1,205,000
shares if the Underwriters' over-allotment option is exercised in full) shares
sold in the Offering will be freely tradeable without restriction or further
registration under the Securities Act, except for shares purchased by
"affiliates" of the Company as that term is defined in Rule 144 under the
Securities Act (which may generally be sold only in compliance with Rule 144).
The remaining shares of Common Stock are deemed "Restricted Shares"
under Rule 144 in that they were originally issued and sold by the Company in
private transactions in reliance upon exemptions from registration provisions of
the Securities Act. Upon the expiration of the Lock-up Agreements described
below, to which substantially all of the Restricted Shares are subject,
approximately shares will be eligible for sale in the public market
pursuant to Rule 144(k) as promulgated under the Securities Act. Approximately
additional Restricted Shares will be eligible for sale in the public market
subject to the volume limitations and other conditions of Rule 144 upon the
expiration of the Lock-up Agreements. The holders of approximately Restricted
Shares will not be eligible to sell such shares pursuant to Rule 144 until
the expiration of two years from the date such Restricted Shares were acquired.
In addition to the Restricted Shares described in the preceding paragraph,
substantially all of the approximately shares of Common Stock which may be
acquired 180 days after the Effective Date upon the exercise of currently vested
stock options (collectively, the "Option Shares") are subject to the Lock-up
Agreements but may be eligible for resale following the expiration of the
Lock-up Agreements (subject, in the case of affiliates, to certain limitations)
pursuant to Rule 701 under the Securities Act. See "Management -- Stock Option
Plans." Additional options will continue to vest and may be exercised and sold
from time to time by option holders following the expiration of the Lock-up
Agreements.
The Company's executive officers, directors and each holder of shares of
Common Stock have agreed to enter into Lock-up Agreements providing that for a
period of 180 days after the date of the final prospectus relating to the
Offering, they will not, without the prior written consent of J.C. Bradford &
Co., directly or indirectly, offer for sale, sell, transfer or otherwise dispose
of any shares of Common Stock held by them, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for any shares of Common Stock. The Company will agree that, for a period of 180
days after the date of the final prospectus relating to the Offering, it will
not, without the prior written consent of J.C. Bradford & Co., issue, offer,
sell grant options to purchase or otherwise dispose of any of its equity
securities or any other securities convertible into or exchangeable for its
Common Stock or other equity security, except that the Company may grant stock
options and sell shares of its Common Stock reserved for issuance under the
Stock Option Plans, or issue shares upon the exercise of options previously
granted.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including persons deed to be affiliates, whose
Restricted Shares have been fully paid for and held for at least two years from
the date of issuance by the Company may sell such securities in brokers'
transactions or directly to market makers, provided the number of shares sold in
any three-month period does not exceed the greater of 1% of the then outstanding
shares of Common Stock ( shares based on the number of shares to be
outstanding after the Offering) or the average weekly trading volume in the
public market during the four calendar weeks preceding the filing of the
seller's Form 144. Sales under Rule 144 are also subject to certain notice
requirements and the availability of current public information concerning the
Company. After three years have elapsed from the issuance of Restricted Shares
by the Company, such shares generally may be sold without limitation by persons
who have not been affiliates of the Company for at least three months. Rule 144
also provides that affiliates who are selling shares which are Restricted Shares
must nonetheless comply with the same restrictions applicable to Restricted
Shares with the exception of the holding period requirements.
The Company intends to file a registration statement on Form S-8 to
register all shares of Common Stock issuable under the Stock Options Plans,
shares of Common Stock previously issued under the Stock Option Plans and shares
issued pursuant to Rule 701. This registration statement is expected to be filed
as soon as practicable after the Effective Date and is expected to become
effective immediately upon filing. Shares
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<PAGE> 59
covered by this registration statement will be eligible for sale in the public
market after the effective date of such registration statement, subject to Rule
144 limitations applicable to affiliates of the Company. See
"Management -- Stock Option Plans."
Prior to the Offering, there has been no established trading market for the
Common Stock, and no predictions can be made as to the effect that sales of
Common Stock under Rule 144, pursuant to a registration statement or otherwise,
or the availability of shares of Common Stock for sale, will have on the market
price prevailing from time to time. Sales of substantial amounts of Common Stock
in the public market, or the perception that such sales could occur, could
depress the prevailing market price. Such sales may also make it more difficult
for the Company to sell equity securities or equity-related securities in the
future at a time and price that it deems appropriate.
REGISTRATION RIGHTS
Under the Yusefzadeh Agreement, upon the termination of Mr. Yusefzadeh's
employment for any reason, he may request registration for sale under the
Securities Act of all or part of the Common Stock then held by him. However, the
Company shall not be required to effect a demand registration under the
Securities Act if: (i) the aggregate market value of the shares of Common Stock
proposed to be registered does not equal or exceed $12,000,000 prior to an
initial public offering or $2,000,000 after an initial public offering; (ii)
within 12 months prior to any such request for registration, a registration of
securities of the Company has been effected in which Mr. Yusefzadeh had the
right to participate; (iii) the Company receives such request for registration
within 180 days preceding the anticipated effective date of a proposed
underwritten public offering of securities of the Company approved by the Board
of Directors prior to the Company's receipt of such request; or (iv) the Board
of Directors reasonably determines in good faith that effecting such a demand
registration at such time would have a material adverse effect upon a proposed
sale of all (or substantially all) of the assets of the Company, or a merger,
reorganization, recapitalization, or similar transaction materially affecting
the capital structure or equity ownership of the Company which is actively being
negotiated with another party whose identity is disclosed to Mr. Yusefzadeh;
provided, however, that the Company may only delay a demand registration for a
period not exceeding six months (or until such earlier time as such transaction
is consummated or no longer proposed).
In addition, under the Yusefzadeh Agreement, Mr. Yusefzadeh has unlimited
piggyback registration rights if the Company proposes to make a registered
public offering, including an initial public offering, of any of its securities
under the Securities Act, other than an offering pursuant to a demand
registration or an offering registered on Form S-8, Form S-4 or comparable
forms. At the written request of Mr. Yusefzadeh, the Company shall include in
such registration and offering, and in any underwriting of such offering, all
shares of Common Stock as may have been designated at his request.
Mr. Yusefzadeh's registration rights are subject to reduction in certain
circumstances and after reasonable negotiations among the managing underwriters,
the Company and Mr. Yusefzadeh. Mr. Yusefzadeh is required to pay all transfer
taxes, if any relating to the sale of his shares, the fees and expenses of his
own counsel and his pro rata portion of any underwriting discount, fee or
commission or the equivalent thereof. All other expenses shall be borne by the
Company. The Company is also obligated to indemnify Mr. Yusefzadeh in any of the
Company's registrations against certain losses and liabilities, including
liabilities under the Securities Act and state securities laws.
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<PAGE> 60
UNDERWRITING
Pursuant to the Underwriting Agreement, and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co. and Advest, Inc., as representatives of the several underwriters (the
"Representatives"), have agreed, severally, to purchase from the Company and the
Selling Shareholders the number of shares of Common Stock set forth below
opposite their names.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
------------------------------------------------------------------------------ ---------
<S> <C>
J.C. Bradford & Co. ..........................................................
Advest, Inc. .................................................................
---------
Total............................................................... 1,050,000
========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.
The Company and the Selling Shareholders have been advised by the
Representatives that the Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $ per share. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share to certain other
dealers. After the initial public offering, the public offering price and such
concessions may be changed. The Representatives have informed the Company that
the Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.
The offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.
Certain of the Selling Shareholders have granted the Underwriters an
option, exercisable not later than 30 days from the date of this Prospectus, to
purchase up to an aggregate of additional 157,500 shares of Common Stock from
the Selling Shareholders to cover over-allotments, if any. To the extent the
Underwriters exercise the option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage thereof which the
number of shares of Common Stock to be purchased by it shown in the table above
bears to the total number of shares in such table, and the Selling Shareholders
will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the shares of Common Stock
offered hereby. If purchased, the Underwriters will sell these additional shares
on the same terms as those on which the 1,050,000 shares are being offered.
Upon the purchase by the Underwriters of the shares being offered hereby,
the Company has agreed to sell to J.C. Bradford & Co., for an aggregate of $500,
warrants (the "Bradford Warrants") to purchase up to 1/2 of 1% of the shares of
Common Stock outstanding on the Effective Date at an exercise price per share
equal to 110% of the initial public offering price. The warrant exercise price
has been determined by negotiation between the Company and J.C. Bradford & Co.
as to be within the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and various state authorities. The Bradford Warrants
may not be sold, transferred, assigned or hypothecated for a period of three
years from the Effective Date, except to the officers
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<PAGE> 61
and partners of J.C. Bradford & Co., and are exercisable during the two-year
period commencing one year from the Effective Date (the "Warrant Exercise Term")
or, at the holders' option, are exchangeable for their value in Common Stock at
its then market price. During the Warrant Exercise Term, J.C. Bradford & Co. is
given, at nominal cost, the opportunity to profit from a rise in the market
price of the Company's Common Stock. To the extent that the Bradford Warrants
are exercised, dilution to the interests of the Company's shareholders will
occur. Further, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected since J.C. Bradford & Co.
can be expected to exercise or exchange them at a time when the Company would,
in all likelihood, be able to obtain any needed capital on terms more favorable
to the Company than those provided in the Bradford Warrants. Any profit realized
by J.C. Bradford & Co. on the sale of the Bradford Warrants or the underlying
shares of Common Stock may be deemed additional underwriting compensation.
Prior to this Offering, there has been no public market for the Common
Stock. The offering price has been determined by negotiation among the Company,
the Selling Shareholders and the Representatives. In determining such price,
consideration was given to, among other things, the financial and operating
history and trends of the Company, the experience of its management, the
position of the Company in its industry, the Company's prospects and the
Company's financial results. Additionally, consideration was given to the status
of the securities markets, market conditions for new offerings of securities and
the prices of similar securities of comparable companies.
The Company (other than pursuant to existing employee benefit plans and
agreements), all existing shareholders of the Company and the Company's
executive officers and directors have agreed not to offer, sell or otherwise
dispose of any shares of Common Stock or options to acquire Common Stock owned
by them prior to the expiration for a period of 180 days from the Effective
Date, without the prior written consent of the Representatives. After such
180-day period, such persons will be entitled to sell, distribute or otherwise
dispose of the Common Stock, subject to the provisions of applicable securities
laws. See "Shares Eligible for Future Sale."
The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters and controlling persons, if any,
against certain civil liabilities, including labilities under the Securities
Act, or will contribute to payments that the Underwriters or any such
controlling persons may be required to make in respect thereof.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia. Glenn
W. Sturm, a partner of Nelson Mullins Riley & Scarborough, L.L.P., beneficially
owns 11,616 shares of Common Stock and serves as Secretary of the Company.
Certain legal matters in connection with the Offering will be passed upon for
the Underwriters by Alston & Bird, Atlanta, Georgia.
EXPERTS
The consolidated financial statements of the Company at January 31, 1995,
December 31, 1995 and for the years ended January 31, 1994 and 1995 and the
eleven months ended December 31, 1995, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
59
<PAGE> 62
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules to the Registration
Statement. For further information with respect to the Company and such Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules filed as a part of the Registration Statement. Statements
contained in this Prospectus concerning the contents of any contract or any
other document referred to are only summaries; reference is made in each
instance to the copy of such contract or document filed as an exhibit to the
Registration Statement. Each such statement is qualified in all respects by such
reference to such exhibit. The Registration Statement, including exhibits and
schedules thereto, may be inspected without charge at the public reference
facility maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at Seven World Trade Center, New York, New York 10048, and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
60
<PAGE> 63
PHOENIX INTERNATIONAL LTD., INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Balance Sheets as of January 31, 1995, December 31, 1995 and March 31,
1996 (Unaudited).................................................................... F-3
Consolidated Statements of Operations for Years Ended January 31, 1994 and 1995,
Eleven Months Ended December 31, 1995 and the Unaudited Three-Month Periods Ended
March 31, 1995 and 1996............................................................. F-4
Consolidated Statements of Shareholders' Deficit for Years Ended January 31, 1994 and
1995, Eleven Months Ended December 31, 1995 and Unaudited Three-Month Period Ended
March 31, 1996...................................................................... F-5
Consolidated Statements of Cash Flows for Years Ended January 31, 1994 and 1995,
Eleven Months Ended December 31, 1995 and the Unaudited Three-Month Periods Ended
March 31, 1995 and 1996............................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 64
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Phoenix International Ltd., Inc.
We have audited the accompanying consolidated balance sheets of Phoenix
International Ltd., Inc. as of January 31, 1995 and December 31, 1995, and the
related consolidated statements of operations, shareholders' deficit and cash
flows for each of the two years in the period ended January 31, 1995 and the
eleven months ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Phoenix International Ltd., Inc. at January 31, 1995 and December 31, 1995, and
the consolidated results of its operations and its cash flows for each of the
two years in the period ended January 31, 1995 and the eleven months ended
December 31, 1995 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Atlanta, Georgia
March 1, 1996, except for Note 12,
as to which the date is May 8, 1996
F-2
<PAGE> 65
PHOENIX INTERNATIONAL LTD., INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
1996
JANUARY 31, DECEMBER 31, -----------
1995 1995
----------- ------------ (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 615,290 $ 425,931 $ 350,981
Accounts receivable, net of allowance for doubtful accounts of
$10,000 at December 31, 1995 and March 31, 1996.............. 260,530 328,693 466,996
Unbilled accounts receivable................................... 8,412 108,320 146,881
Interest receivable, related party............................. 9,444 105,001 131,009
Prepaid expenses and other current assets...................... 94,989 174,339 199,908
Deferred tax asset............................................. 200,444 390,769 237,769
---------- ---------- ----------
Total current assets.................................... 1,189,109 1,533,053 1,533,544
Property and equipment:
Computer equipment and purchased software...................... 325,764 522,571 584,924
Furniture, office equipment and leasehold improvements......... 189,566 245,762 245,762
---------- ---------- ----------
515,330 768,333 830,686
Accumulated depreciation and amortization...................... (70,929) (191,826 ) (235,435)
---------- ---------- ----------
444,401 576,507 595,251
Capitalized software development costs, net of accumulated
amortization of $107,647 and $172,809 at December 31, 1995 and
March 31, 1996, respectively................................... 93,001 1,118,729 1,366,846
---------- ---------- ----------
Total assets............................................ $ 1,726,511 $ 3,228,289 $ 3,495,641
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable............................................... $ 136,661 $ 264,274 $ 389,129
Accrued expenses............................................... 222,789 279,521 355,959
Note payable................................................... 250,000 -- --
Note payable, related party.................................... 35,203 35,203 35,203
Payable to vendor.............................................. 200,000 140,000 140,000
Deferred revenue............................................... 2,501,270 3,077,393 2,951,926
---------- ---------- ----------
Total current liabilities............................... 3,345,923 3,796,391 3,872,217
Shareholders' deficit:
Preferred stock, $1.00 par value:
10,000,000 shares authorized, none issued and outstanding.... -- -- --
Class A common stock, $0.0043 par value:
1,500,000 shares authorized, 1,393,859 shares issued and
outstanding................................................ 6,000 6,000 6,000
Class B common stock, $0.43 par value:
10,000,000 shares authorized, 511,082 shares issued and
outstanding................................................ 220,000 220,000 220,000
Class C common stock, $2.15 par value:
200,000 shares authorized, 185,848 shares issued and
outstanding................................................ 400,000 400,000 400,000
Class D, non-voting common stock, $4.30 par value:
50,000 shares authorized, 23,231 shares issued and
outstanding at December 31, 1995 and March 31, 1996........ -- 100,000 100,000
Class E, non-voting common stock, $1.08 par value:
1,000,000 shares authorized, 790,894, 878,310 and 889,926
shares issued and outstanding at January 31, 1995, December
31, 1995 and March 31, 1996, respectively.................. 851,117 945,190 957,690
Additional paid-in capital..................................... 2,097,502 2,368,470 2,405,970
Stock subscriptions receivable................................. (1,350,524) (1,318,524 ) (1,318,524)
Accumulated deficit............................................ (3,843,507) (3,289,238 ) (3,147,712)
---------- ---------- ----------
Total shareholders' deficit............................. (1,619,412) (568,102 ) (376,576)
---------- ---------- ----------
Total liabilities and shareholders' deficit............. $ 1,726,511 $ 3,228,289 $ 3,495,641
========== ========== ==========
</TABLE>
See accompanying notes.
F-3
<PAGE> 66
PHOENIX INTERNATIONAL LTD., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
ELEVEN
MONTHS ENDED THREE MONTHS ENDED
YEAR ENDED JANUARY 31, DECEMBER 31, MARCH 31,
------------------------- ------------ ----------------------
1994 1995 1995 1995 1996
----------- ----------- ------------ --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
License fees and other................ $ 30,000 $ 57,776 $3,467,547 $ -- $1,127,607
Implementation, customer and software
support and other service fees..... -- 369,711 1,556,164 90,745 653,723
----------- ----------- ------------ --------- ----------
Total revenues................ 30,000 427,487 5,023,711 90,745 1,781,330
Expenses:
Costs of license fees and other....... -- -- 375,783 -- 131,029
Costs of implementation, customer and
software support and other service
fees............................... 104,818 637,427 1,246,886 222,822 457,196
Sales and marketing................... 96,911 358,948 983,290 224,839 268,818
General and administrative............ 225,458 981,930 1,058,190 287,072 358,260
Product development................... 621,373 1,362,780 654,797 60,272 299,067
----------- ----------- ------------ --------- ----------
Total expenses................ 1,048,560 3,341,085 4,318,946 795,005 1,514,370
Other income (expense):
Interest income....................... 3,603 26,610 121,815 29,607 28,647
Interest expense...................... -- (19,366) (12,060) (6,590) (1,081)
Other income (expense)................ 1,815 75,989 (4,252) 75,270 --
----------- ----------- ------------ --------- ----------
Income (loss) before income taxes....... (1,013,142) (2,830,365) 810,268 (605,973) 294,526
Income tax expense...................... -- -- 255,999 -- 153,000
----------- ----------- ------------ --------- ----------
Net income (loss)....................... $(1,013,142) $(2,830,365) $ 554,269 $(605,973) $ 141,526
========== ========== ========== ========= =========
Net income (loss) per share............. $ (0.51) $ (1.11) $ 0.17 $ (0.20) $ 0.04
========== ========== ========== ========= =========
Weighted average shares outstanding..... 1,971,573 2,560,151 3,235,532 3,076,813 3,298,444
========== ========== ========== ========= =========
</TABLE>
See accompanying notes.
F-4
<PAGE> 67
PHOENIX INTERNATIONAL LTD., INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
COMMON STOCK,
ALL CLASSES ADDITIONAL STOCK TOTAL
----------------------- PAID-IN SUBSCRIPTION ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT DEFICIT
---------- ---------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at inception...................... -- $ -- $ -- $ -- $ -- $ --
Issuance of 1,393,859 shares of Class A
common stock as compensation for
services.............................. 1,393,859 6,000 -- -- -- 6,000
Issuance of 511,082 shares of Class B
common stock, net of issuance costs of
$44,314............................... 511,082 220,000 285,686 -- -- 505,686
Issuance of 46,462 shares of Class C
common stock.......................... 46,462 100,000 -- -- -- 100,000
Issuance of 185,848 shares of Class E
common stock.......................... 185,848 200,000 -- (25,000 ) -- 175,000
Net loss................................ -- -- -- -- (1,013,142 ) (1,013,142)
---------- ---------- ---------- ------------ ----------- -------------
Balance, January 31, 1994................. 2,137,251 526,000 285,686 (25,000 ) (1,013,142 ) (226,456)
Issuance of 139,386 shares of Class C
common stock.......................... 139,386 300,000 -- -- -- 300,000
Issuance of 605,046 shares of Class E
common stock, net of issuance costs of
$6,000................................ 605,046 651,117 1,478,566 (1,350,524 ) -- 779,159
Payment on stock subscription
receivable............................ -- -- -- 25,000 -- 25,000
Issuance of stock and stock options as
compensation for services............. -- -- 333,250 -- -- 333,250
Net loss................................ -- -- -- -- (2,830,365 ) (2,830,365)
---------- ---------- ---------- ------------ ----------- -------------
Balance, January 31, 1995................. 2,881,683 1,477,117 2,097,502 (1,350,524 ) (3,843,507 ) (1,619,412)
Issuance of 23,231 shares of Class D
common stock.......................... 23,231 100,000 -- -- -- 100,000
Issuance of 87,416 shares of Class E
common stock.......................... 87,416 94,073 270,968 -- -- 365,041
Payment on stock subscription
receivable............................ -- -- -- 32,000 -- 32,000
Net income.............................. -- -- -- -- 554,269 554,269
---------- ---------- ---------- ------------ ----------- -------------
Balance, December 31, 1995................ 2,992,330 1,671,190 2,368,470 (1,318,524 ) (3,289,238 ) (568,102)
Issuance of 11,616 shares of Class E
common stock (Unaudited).............. 11,616 12,500 37,500 -- -- 50,000
Net income (Unaudited).................. -- -- -- -- 141,526 141,526
---------- ---------- ---------- ------------ ----------- -------------
Balance, March 31, 1996 (Unaudited)....... 3,003,946 $1,683,690 $2,405,970 $(1,318,524 ) $(3,147,712) $ (376,576)
========= ========= ========= =========== =========== ============
</TABLE>
See accompanying notes.
F-5
<PAGE> 68
PHOENIX INTERNATIONAL LTD., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
ELEVEN THREE
MONTHS ENDED MONTHS ENDED
YEAR ENDED JANUARY 31, DECEMBER 31, MARCH 31,
------------------------- ------------- ----------------------
1994 1995 1995 1995 1996
----------- ----------- ------------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).......................... $(1,013,142) $(2,830,365) $ 554,269 $(605,973) $ 141,526
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization.......... 6,397 64,534 228,544 24,875 108,360
Stock and stock options issued for
compensation......................... 6,000 333,250 -- -- --
Provision for doubtful accounts........ -- -- 10,000 -- --
Deferred taxes......................... -- (200,444) (190,325) -- 153,000
Changes in operating assets and
liabilities:
Accounts receivable.................. -- (260,530) (78,163) 98,903 (138,303)
Unbilled accounts receivable......... (1,815) (6,597) (99,908) (781,564) (38,561)
Interest receivable, related party... -- (9,444) (95,557) (23,504) (26,008)
Prepaid expenses and other current
assets............................ (13,417) (81,572) (79,350) (186,207) (25,569)
Accounts payable..................... 91,157 45,504 127,613 300,612 124,855
Accrued expenses..................... 103,238 119,552 56,732 46,641 76,438
Deferred revenue..................... 149,435 2,351,833 576,123 949,686 (125,467)
----------- ----------- ------------- --------- ----------
Net cash provided by (used in) operating
activities............................... (672,147) (474,279) 1,009,978 (176,531) 250,271
INVESTING ACTIVITIES
Purchases of property and equipment........ (173,283) (342,047) (253,003) (110,673) (61,943)
Capitalized software development costs..... -- (93,001) (1,133,375) (304,663) (313,278)
----------- ----------- ------------- --------- ----------
Net cash used in investing activities...... (173,283) (435,048) (1,386,378) (415,336) (375,221)
FINANCING ACTIVITIES
Proceeds from short-term debt.............. 193,949 291,254 -- -- --
Net proceeds from issuance of common
stock.................................... 780,685 1,079,159 465,041 97,510 50,000
Payment on short-term debt................. -- -- (310,000) -- --
Cash payments for stock subscription
receivable............................... -- 25,000 32,000 31,290 --
----------- ----------- ------------- --------- ----------
Net cash provided by financing
activities............................... 974,634 1,395,413 187,041 128,800 50,000
Net increase (decrease) in cash and cash
equivalents.............................. 129,204 486,086 (189,359) (463,067) (74,950)
Cash and cash equivalents at beginning of
period................................... -- 129,204 615,290 605,309 425,931
----------- ----------- ------------- --------- ----------
Cash and cash equivalents at end of
period................................... $ 129,204 $ 615,290 $ 425,931 $ 142,242 $ 350,981
============ ============ ============= ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest................................. $ -- $ 14,942 $ 12,060 $ 6,590 $ 1,081
============ ============ ============= ========== ==========
Income taxes............................. $ -- $ 200,444 $ 313,984 $ 200,444 $ --
============ ============ ============= ========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Equipment provided by vendor............... $ -- $ 78,644 $ -- $ -- $ --
============ ============ ============= ========== ==========
Stock subscription receivable from sale of
Class E stock............................ $ 25,000 $ 1,350,524 $ -- $ -- $ --
============ ============ ============= ========== ==========
</TABLE>
See accompanying notes.
F-6
<PAGE> 69
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Phoenix International Ltd., Inc. (the Company), formed on January 11, 1993,
designs, develops, markets and supports highly adaptable, enterprise-wide
client/server application software for the financial services industry, with a
primary focus on middle market banks. The Company has one wholly-owned
subsidiary that is a foreign sales corporation. There was no activity in the
period January 11, 1993 to January 31, 1993.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany balances and
transactions have been eliminated.
FISCAL YEAR
Fiscal 1993, fiscal 1994, and fiscal 1995 correspond with the years ended
January 31, 1994 and 1995, and the eleven months ended December 31, 1995,
respectively.
During 1995 the Company changed its fiscal year end from January 31 to
December 31. Accordingly, the financial statements for the period ended December
31, 1995 include only eleven months of operations.
Comparative unaudited results of operations for the eleven months ended
December 31, 1994 are as follows:
<TABLE>
<S> <C>
License fees and other.................................................. $ 57,475
Implementation, customer and software support and other service fees.... 363,377
-----------
Total revenues................................................ 420,852
Costs of license fees and other......................................... --
Costs of implementation, customer and software support and other service
fees.................................................................. 569,651
Sales and marketing..................................................... 341,915
General and administrative.............................................. 881,471
Product development..................................................... 1,325,506
-----------
Total expenses................................................ 3,118,543
Interest income......................................................... 17,266
Interest expense........................................................ (17,096)
Other income (expense).................................................. --
-----------
Net loss before income taxes............................................ (2,697,521)
Income tax expense...................................................... --
-----------
Net loss...................................................... $(2,697,521)
==========
</TABLE>
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results inevitably will differ from those estimates,
and such differences may be material to the financial statements.
F-7
<PAGE> 70
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is based on the weighted average number of
common shares outstanding and dilutive common stock equivalents outstanding
during the periods presented. Pursuant to Securities and Exchange Commission
Staff Accounting Bulletin No. 83, common stock issued for consideration below
the public offering price and stock options issued with exercise prices below
the public offering price during the twelve-month period preceding the initial
filing of the Registration Statement have been included in the calculation of
weighted average shares outstanding, using the treasury stock method, as if they
were outstanding for all periods presented.
REVENUE RECOGNITION
Revenues are recorded in accordance with AICPA Statement of Position 91-1,
"Software Revenue Recognition." Revenue is derived principally from the
licensing of internally produced software and implementation and support
services. When the Company receives payment in advance of delivering the
products or providing services, these payments are deferred until earned.
Software license revenue is recognized upon delivery and when no significant
obligations remain as to the software system requirements. Implementation
service revenue is recognized as earned over the service period. Support
services are prebilled in advance, and revenue is recognized over the related
period.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets (generally five years for computer
equipment and purchased software and four to seven years for furniture and
office equipment). Leasehold improvements are amortized over the related lease
term.
CAPITALIZED SOFTWARE DEVELOPMENT COSTS
The Company capitalizes certain software development costs in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed." Costs
incurred internally to develop a computer software product are charged to
product development expense when incurred until technological feasibility has
been established for the product. Thereafter, all software production costs are
capitalized and recorded at the lower of unamortized cost or net realizable
value. Capitalization ceases upon general release to customers. After general
release, capitalized costs are amortized over five years, the estimated useful
life of the related product. Amortization for fiscal 1995 was $107,647 and is
included in costs of license fees and other.
Technological feasibility of the Phoenix System was established in December
1994. The Phoenix System was available for general release in June 1995.
ADVERTISING EXPENSE
Advertising costs are expensed as incurred. The Company incurred $10,477,
$12,625, and $116,196 in advertising costs during fiscal 1993, 1994 and 1995,
respectively.
F-8
<PAGE> 71
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK BASED COMPENSATION
The Company grants stock options generally for a fixed number of shares to
certain employees with an exercise price equal to or greater than the fair value
of the shares at the date of grant. The Company accounts for stock option grants
in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and, accordingly, recognizes no compensation expense for stock
option grants for which the terms are fixed. Compensation expense is recognized
for increases in the estimated fair value of common stock for stock options with
variable terms. In October 1995, the FASB issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," which
provides an alternative to APB Opinion No. 25 in accounting for stock-based
compensation issued to employees. However, the Company plans to continue to
account for stock-based compensation in accordance with APB Opinion No. 25.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the FASB issued Statement of Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less that
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company will adopt
Statement 121 in the first quarter of 1996 and, based on current circumstances,
does not believe the effect of adoption will be material.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The unaudited interim financial statements include all adjustments,
consisting only of normal recurring accruals, which the Company considers
necessary for a fair presentation of the financial position of the Company as of
March 31, 1996 and the results of operations for the quarters ended March 31,
1995 and 1996, as presented in the accompanying unaudited interim financial
statements.
2. FINANCIAL INSTRUMENTS
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents
and trade accounts receivable.
The Company's cash and cash equivalents at December 31, 1995 are deposited
in two separate financial institutions in the amounts of $370,330 and $55,301.
Credit risk is subject to the financial security of each institution.
Accounts receivable related to license fees are unsecured, due under stated
terms, and for relatively large amounts from a small number of customers, all of
which are in the banking business. Credit risk with respect to trade accounts
receivable is limited due to the license agreements generally requiring
substantial prepayments. The remaining receivables are short-term in nature and
are generally related to implementation and support fees and reimbursable
expenses. There have been no accounts receivable written off to date.
F-9
<PAGE> 72
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments.
Cash and Cash Equivalents
The carrying amount reported in the balance sheet approximates the fair
value of cash and cash equivalents.
Accounts Receivable and Accounts Payable
The carrying amounts reported in the balance sheet for accounts receivable
and accounts payable approximate their fair value.
Short-Term Debt
The carrying amounts of the Company's borrowings are payable within the
next fiscal year and approximate their fair value.
3. SHORT-TERM OBLIGATIONS
<TABLE>
<CAPTION>
JANUARY 31, DECEMBER 31,
1995 1995
----------- ------------
<S> <C> <C>
Note payable -- Commercial loan agreement with a bank, collateralized
by equipment, with interest payable monthly at 9% per annum, paid in
May of 1995......................................................... $ 250,000 $ --
Note Payable, related party -- Note payable to a shareholder,
collateralized by certain office equipment, due on demand with
interest payable at 12% per annum................................... 35,203 35,203
Payable to vendor -- Payable to vendor represents non-interest bearing
funds received from a major hardware manufacturer. Repayment of
$100,000 of the funds received is to be made in $10,000 installments
as the Company sells the Phoenix System to customers for use on the
manufacturer's hardware. Six installments were paid in fiscal 1995.
Repayment of the additional $100,000 of funds received is due on
demand.............................................................. 200,000 140,000
</TABLE>
4. LEASE COMMITMENTS
The Company leases office space, equipment and furniture under
noncancellable operating leases. Total rent expense for all operating leases was
$33,736, $143,468 and $181,868 in fiscal 1993, 1994, and 1995, respectively.
Future minimum lease payments under noncancellable operating leases with terms
of one year or more consisted of the following at December 31, 1995:
<TABLE>
<S> <C>
Years ending December 31,
1996...................................................... $169,066
1997...................................................... 162,952
1998...................................................... 13,282
--------
$345,300
========
</TABLE>
A major shareholder in the Company has signed a personal guaranty of
approximately $62,000 related to the lease of the Company's primary office.
F-10
<PAGE> 73
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. CAPITALIZATION
Under the Company's Articles of Incorporation, amended October 21, 1995,
each holder of Class A common stock is entitled to ten votes per share. Each
holder of Class B and Class C common stock is entitled to one vote per share,
and holders of Class D and Class E common stock have no voting rights. All
classes of common stock share ratably in dividends and other distributions,
including distributions upon liquidation. Each share of Class C, Class D, and
Class E common stock is convertible into one share of Class B common stock on
the effective date of a firm commitment initial public offering where the
proceeds total at least $12,000,000. See Note 12. Prior to an initial public
offering, as defined, each holder of Class A, Class B, and Class C common stock
has preemptive rights to purchase shares of any class of shares which the
Company may issue.
In addition, prior to an initial public offering, the holders of Class A
common stock have the right to elect five members of the board of directors. The
remaining four directors are elected by the holders of Class B and Class C
common stock. Upon the completion of an initial public offering, the directors
shall be elected by the holders of Class A and Class B common stock voting as a
single class.
All shareholders of the Company are subject to an agreement which
stipulates the terms under which their shares can be sold, transferred or
pledged. Terms include, but are not limited to, a call option in favor of the
chief executive officer ("CEO") to purchase all outstanding shares of Class B,
Class C, Class D and Class E common stock if the Board of Directors should vote
in favor to liquidate the Company or sell substantially all of its assets.
The employment agreements for certain key founding employees include a
provision whereby the Company issued to them an aggregate of 255,541 shares of
Class A common stock in consideration of each employee's agreement to provide
his services to the Company for a period of five years. Such shares issued to
these employees are forfeited if the employee terminates employment for any
reason within five years and prior to any public offering of the Company's
common stock prior to March 1, 1998. One of these employees was terminated in
fiscal 1994, and upon majority vote by the Board of Directors, the Company
allowed the employee to retain ownership of the shares, subject to the voting
trust described below. The Company recognized $124,500 of compensation expense
related to the change in measurement date for this restricted stock as a result
of the Board's action and the increase in the estimated fair value of the
Company's common stock since the prior measurement date. There are 371,696
shares that were issued to employers and a consultant held in a Voting Trust,
with the Company's CEO as trustee, for a period of ten years or until any public
offering of the Company's stock.
The Board of Directors is authorized to issue up to 10,000,000 shares of
preferred stock, par value $1.00 per share. The terms of preferred stock have
not been designated and no shares have been issued.
The Company has reserved 3,960,699 shares of Class B common stock for
future issuance upon conversion of Class C, Class D and Class E common stock
into Class B common stock and conversion of outstanding options into options to
purchase Class B common stock. The Company has reserved 2,873,310 shares of
Class E common stock for future issuance upon exercise of options to purchase
Class E common stock.
STOCK OPTIONS
The Company has various stock option plans which authorize the Board of
Directors to grant employees, officers, and directors qualified and unqualified
options to purchase shares of the non-voting Class E common stock. Exercise
prices of stock options are determined by the Board of Directors and have been
the estimated fair market value at the date of the grant for options granted to
employees and 110% of estimated fair market value for options granted to the
CEO.
F-11
<PAGE> 74
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of option activity from inception to December 31, 1995 is as
follows:
<TABLE>
<CAPTION>
PRICE PER
OPTIONS SHARE
-------- --------------
<S> <C> <C> <C>
Outstanding at February 1, 1994............................ -- --
Granted.................................................. 660,921 $1.08 - $4.30
Exercised................................................ (162,284) $1.08 - $4.30
Canceled................................................. (360,078) $ 1.08
--------
Outstanding at January 31, 1995............................ 138,559 $1.08 - $4.30
Granted.................................................. 563,233 $4.30 - $4.74
Exercised................................................ (86,835) $1.08 - $4.30
Canceled................................................. (15,564) $1.08 - $4.30
--------
Outstanding at December 31, 1995........................... 599,393 $1.08 - $4.74
========
</TABLE>
At December 31, 1995, of the 599,393 options outstanding, options to
purchase 350,882 shares are exercisable at prices ranging from $1.08 to $4.74
per share. The remaining 248,511 options outstanding vest over periods ranging
from four to five years from the date of grant. At December 31, 1995, the
Company had 2,273,917 shares available for future grant under the Company's
stock option plans.
6. RELATED PARTY TRANSACTIONS
The CEO has outstanding promissory notes due him of $35,203. (See Note 3).
Accrued interest on these notes totaled $83, $4,242 and $8,110 at January 31,
1994 and 1995, and December 31, 1995, respectively. The $1,318,524 stock
subscriptions receivable are due from the CEO and relate to the issuance of
319,382 shares of non-voting Class E common stock. Interest of $9,444 and
$105,001 is receivable on these stock subscriptions at January 31, 1995 and
December 31, 1995, respectively.
To encourage certain bank shareholders' initial investment in the Company,
the Company offered a discount, equal to the shareholders' initial investment,
to be applied toward the license fee if and when the shareholders licensed the
Phoenix System for use in their normal course of operations. Discounts offered
since inception total $855,000. Discounts of $300,000 were used in fiscal 1995,
leaving a balance of $555,000 of available discounts at December 31, 1995.
License fee revenue of $326,700, net of discounts used, was recorded in fiscal
1995 under license agreements with shareholders. Implementation and support
revenues of $116,300 and $254,200 recorded in fiscal 1994 and 1995,
respectively, were from shareholder banks.
7. INCOME TAXES
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
-------- --------- ---------
<S> <C> <C> <C>
Current foreign expense.............................. $ -- $ 200,444 $ 446,324
Deferred foreign benefit............................. -- (200,444) (190,325)
-------- --------- ---------
Total taxes.......................................... $ -- $ -- $ 255,999
======== ========= =========
</TABLE>
F-12
<PAGE> 75
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes reflect the net effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred income tax assets and liabilities as of January 31, 1995
and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
JANUARY 31, DECEMBER 31,
1995 1995
----------- ------------
<S> <C> <C>
Deferred income tax liabilities:
Tax over book depreciation................................ $ (18,348) $ (1,664)
Capitalized software...................................... (36,177) (435,186)
----------- ------------
Total tax liabilities............................. (54,525) (436,850)
Deferred income tax assets:
Deferred revenue.......................................... 846,906 801,744
Foreign tax credit carryforwards.......................... 200,444 514,428
Research and development credit carryforwards............. 78,759 111,346
Net operating loss carryforwards.......................... 765,021 1,058,461
Other..................................................... 1,324 4,772
----------- ------------
Total tax assets.................................. 1,892,454 2,490,751
Valuation allowance for deferred income tax assets.......... (1,637,485) (1,663,132)
----------- ------------
Net deferred income tax assets.............................. $ 200,444 $ 390,769
========== ==========
</TABLE>
The net deferred income tax assets at January 31, 1995 and December 31,
1995 represent foreign withholding taxes paid upon remittance of cash by the
Company's customers but prior to recognition of revenue by the Company and
therefore relate to deferred revenue.
The reconciliation of income tax computed at the United States federal
statutory tax rates to income tax expense is:
<TABLE>
<CAPTION>
FISCAL 1993 FISCAL 1994 FISCAL 1995
----------- ----------- -----------
<S> <C> <C> <C>
Tax at United States statutory rates................ $ (344,468) $ (962,324) $ 275,491
Foreign withholding taxes........................... -- -- 255,999
State taxes......................................... (39,513) (110,384) 31,600
Tax credits......................................... (15,800) (263,402) (346,571)
Non-deductible compensation expense................. -- 129,634 --
Other............................................... (9,168) (22,060) 13,833
Change in valuation allowance....................... 408,949 1,228,536 25,647
----------- ----------- -----------
Total tax expense......................... $ -- $ -- $ 255,999
========= ========= =========
</TABLE>
At December 31, 1995, the Company has net operating loss carryforwards of
approximately $2,800,000 for income tax purposes that expire in years 2008
through 2010. The Company also has research and development tax credit
carryforwards of approximately $111,000 that expire in years 2008 through 2010
and foreign tax credit carryforwards of approximately $514,000 that expire in
years 2000 through 2001. For financial reporting purposes, a valuation allowance
has been recognized to reduce the net assets to reflect limitations on the
Company's ability to utilize net operating loss and tax credit carryforwards and
other tax benefits. The annual utilization of net operating loss carryforwards
to offset future taxable income may be limited due to changes in the ownership
of the Company.
F-13
<PAGE> 76
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. EMPLOYEE BENEFITS
The Company maintains a 401(k) plan that covers substantially all
employees. The Company may, at its discretion, contribute by matching employee
deferrals. Defined contributions are limited to the maximum amount deductible
under the Internal Revenue Code. The Company did not make contributions to the
plan in fiscal 1993, 1994 or 1995.
9. MAJOR CUSTOMERS AND EXPORT SALES
In fiscal 1994, the Company had two major customers representing 16% and
15% of total revenues. The Company had two major customers representing 43% and
19% of total revenues in fiscal 1995. Export sales from the United States were
33% and 70% in fiscal 1994 and 1995, respectively.
10. EMPLOYMENT AGREEMENTS
On December 28, 1995, the Company entered into employment agreements with
its CEO and President. Each agreement commits the Company, for three years, to
various obligations if the employee is terminated without cause or if there is a
change in the control of the Company. The major obligations are for salaries and
bonus, healthcare premiums and the vesting of previously granted stock options.
In addition, the CEO has certain demand and piggyback registration rights
related to common stock of the Company.
11. BACKLOG
At December 31, 1995 the backlog of committed revenues under existing
contracts consisted of $1,788,000 for software license fees, $1,250,000 for
implementation, and $4,218,000 for five-year customer support service
agreements.
12. SUBSEQUENT EVENTS
On March 21, 1996, the Company entered into a marketing agreement with a
leading banking hardware and software vendor. Under this agreement, the vendor
will receive exclusive rights to market the Phoenix System in Central and South
America, Mexico, the Caribbean and Bermuda for a period of three years. As
consideration for the exclusive agreement, the Company will receive $400,000 of
nonrefundable payments due $200,000 upon entering into the agreement and
$200,000 due in four equal monthly installments of $50,000. In addition, the
Company will receive license fees from the sale of the Phoenix System by the
vendor and 2% of the vendor's professional service fees related to installation
and implementation of the Phoenix System. The agreement is cancellable after 12
months if specified annual unit sales levels are not achieved by the vendor.
On May 6, 1996, the board of directors approved a 2.3231-for-1 share split
of the Company's common stock. In addition, the Company amended its articles of
incorporation effective May 8, 1996 to reduce the par value of each of the
Company's five classes of common stock (Classes A through E) in accordance with
the stock split and to increase the authorized shares of Class A common stock to
1,500,000. All share and per share amounts related to common stock have been
retroactively restated to reflect the stock split for all periods presented.
Also, on May 6, 1996, the board of directors approved a recapitalization
plan in which all outstanding shares of the Company's five classes of common
stock (Classes A through E) will be converted into Common Stock on a share for
share basis upon the effective date of the Offering. This recapitalization will
not change total stockholders' deficit and is not reflected in the accompanying
financial statements.
F-14
<PAGE> 77
[Insert Artwork To Be Determined]
<PAGE> 78
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SHARES OF COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
COMMON STOCK ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1996 (FOR 25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 14
Dividend Policy....................... 14
Capitalization........................ 15
Dilution.............................. 16
Selected Consolidated Financial and
Operating Data...................... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 18
Business.............................. 24
Management............................ 37
Certain Transactions.................. 48
Principal and Selling Shareholders.... 49
Description of Capital Stock.......... 52
Shares Eligible for Future Sale....... 55
Underwriting.......................... 57
Legal Matters......................... 58
Experts............................... 58
Additional Information................ 59
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1,050,000 SHARES
PHOENIX
INTERNATIONAL
LTD., INC.
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
J.C. BRADFORD & CO.
ADVEST, INC.
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 79
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting discounts and commissions) payable by the
Registrant in connection with the issuance and distribution of the securities
registered hereby. No portion of such expenses will be borne by the Selling
Shareholders.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $ 5,413
NASD filing fee................................................................... 2,070
Nasdaq National Market issuance fee............................................... 12,000
Printing and engraving............................................................ 125,000
Accountants' fees and expenses.................................................... 200,000
Blue sky fees and expenses........................................................ 10,000
Counsel fees and expenses......................................................... 400,000
Transfer Agent's fees............................................................. 5,000
Miscellaneous..................................................................... 35,517
--------
Total................................................................... $795,000
========
</TABLE>
- ---------------
*Estimate
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article 607.0850 of the Florida Business Corporation Act (the "Florida
Act") and Article 9 of the Company's Amended and Restated Bylaws (the "Bylaws")
permit the Company to indemnify a present or former director of the Company for
liabilities, including legal expenses, arising by reason of service in such
capacity if such person shall have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and in any criminal proceeding if such person had no reasonable cause
to believe his conduct was unlawful. However, no indemnification may be made
with respect to any matter as to which the actions of such director shall have
been adjudged to constitute: (i) a violation of criminal law, unless the
individual had reasonable cause to believe his conduct was lawful or had no
reason to believe his conduct was unlawful; (ii) a transaction from which the
individual derived an improper personal benefit; (iii) a circumstance under
which the liability provisions of Section 607.0834 of the Florida Act, which
relates to unlawful distribution of Company assets, are applicable; or (iv)
willful misconduct or conscious disregard of the best interests of the Company
in a proceeding by or in the right of the Company to procure a judgment in its
favor or in a proceeding by or in the right of a shareholder. Moreover, in the
case of actions brought by or in the right of the Company, indemnification may
be made if the person acted in good faith, and in a manner that such person
reasonably believed to be in, or not opposed to, the best interests of the
Company; provided, however, that no indemnification may be made for any claim,
issue or matter as to which such person shall have been adjudged to be liable,
unless, and only to the extent that, the court in which the judgment was made or
another court of competent jurisdiction determines that such person is entitled
to indemnification.
The Company intends to enter into agreements with each of its current
directors and executive officers pursuant to which it is obligated to indemnify
those persons to the fullest extent authorized by law and to advance payments to
cover defense costs against an unsecured obligation to repay such advances if it
is ultimately determined that the recipient of the advance is not entitled to
indemnification. The indemnification agreements will provide that no
indemnification or advancement of expenses shall be made (a) if a final
adjudication establishes that his actions or omissions to act were material to
the cause of action so adjudicated and constitute: (i) a violation of criminal
law (unless the indemnitee had reasonable cause to believe that his actions were
lawful); (ii) a transaction from which the indemnitee derived an improper
personal benefit; (iii) an unlawful distribution or dividend under the Florida
Act; or (iv) willful misconduct or a conscious
II-1
<PAGE> 80
disregard for the joint interests of the Company in a derivative or shareholder
action; (b) for liability under Section 16(b) of the Securities Exchange Act of
1934 (the "Exchange Act"); or (c) if a final decision by a court having
jurisdiction in the matter determines that indemnification is not lawful.
The Company intends to purchase a standard policy of directors' and
officers' liability insurance covering directors and officers of the Company
with respect to liabilities incurred as a result of their service in such
capacities and has purchased a rider to that policy covering liabilities under
federal and state securities laws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The share numbers presented below are provided with respect to the shares
of Class A Common, Class B Common, Class C Common, Class D Common and Class E
Common which are subject to the recapitalization on a share for share basis into
Common Stock, and reflect the 2.3231-for-one stock split to occur on the
Effective Date on all shares of capital stock of the Company outstanding prior
to the offering.
Class A Common Stock
In April 1993, the Company issued a total of 1,393,859 shares of Class A
Common Stock to five officers of the Company at $0.0043 per share. The Company
recorded a compensation expense of $6,000.
Class B Common Stock
Pursuant to a Private Placement Memorandum, dated April 5, 1993, the
Company offered 929,240 and sold 511,082 shares of Class B Common Stock to
investors for $1.08 per share. The aggregate consideration paid to the Company
for these shares of Class B Common was $550,000. Each of the investors was
either an accredited investor or known personally by officers of the Company
prior to the transaction. By its terms, this offering expired in October 1993.
Class C Common Stock and Class D Common Stock
Pursuant to a Private Placement Memorandum, dated August 31, 1993, the
Company offered 464,620 shares of Class C Common Stock and 116,155 shares of
Class D Common Stock for sale to investors. The offering prices were $2.15 per
share of Class C Common Stock and $4.30 per share of Class D Common Stock. The
investors purchased 185,848 shares of Class C Common Stock and 23,231 shares of
Class D Common Stock. The aggregate consideration paid to the Company was
$400,000 for shares of Class C Common Stock and $100,000 for shares of Class D
Common Stock. All purchasers of the Class C Common Stock were banks as defined
by the Securities Act. Each of the investors was either an accredited investor
or known personally by officers of the Company prior to the transaction. This
offering expired in February 1994.
Class E Common Stock
From February 1994 through March 1996, the Company sold a total of 261,316
shares of Class E Common Stock to employees, officers, directors and service
providers of the Company. These sales were made pursuant to the exercise of
options granted by the Company under its Stock Option Plans to these employees,
officers, directors and service providers. The option exercise prices range from
$1.08 per share to $4.74 per share. The aggregate consideration received by the
Company for these shares of Class E Common Stock was $638,794.
From November 1994 through January 1995, the Company sold a total of
628,610 shares of Class E Common Stock to existing shareholders, employees,
officers and directors of the Company at a price of $4.30 per share pursuant to
a rights offering and certain preemptive rights associated therewith. Each of
the investors was either an accredited investor or known personally by officers
of the Company prior to the transaction. The aggregate consideration paid by the
investors for these shares of Class E Common Stock was $2,105,930.
Each issuance of securities described above was made in reliance on one or
more of the exemptions from registration provided by Sections 3(a)(11), 4(2) and
4(6) of the Securities Act, Regulation D and Rule 701,
II-2
<PAGE> 81
as promulgated by the SEC pursuant to the Securities Act. Recipients of
securities in these transactions represented their intention to acquire the
securities for investment purposes only and not with a view to or for the sale
in connection with any distribution thereof, and appropriate legends were
affixed to the share certificates issued in such transactions. All recipients of
these securities had adequate access, through their relationships with the
Company, to information about the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<C> <C> <S>
1.1 -- Underwriting Agreement.*
3.1 -- Amended and Restated Articles of Incorporation.*
3.2 -- Amended and Restated Bylaws.*
4.1 -- See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws defining the rights of the holders of
Common Stock of the Registrant.*
4.2 -- Specimen Common Stock Certificate.*
4.3 -- Amended and Restated Phoenix International Ltd., Inc. Stockholders Agreement, dated
as of August 31, 1993, among Company, Bahram Yusefzadeh, Michael Newes, Terry
Soifer, George Taylor, William Toole and other shareholders, as amended.
4.4 -- Form of Investment Intent and Non-Distribution Letter.
5.1 -- Opinion of Nelson Mullins Riley & Scarborough, L.L.P., counsel to the Registrant, as
to the legality of the shares being registered.*
9.1 -- Voting Trust Agreement, dated April 4, 1993.
10.1 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 1, effective as of
February 19, 1994.
10.2 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 2, effective as of
February 19, 1994.
10.3 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 3, effective as of
February 19, 1994.
10.4 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 4, effective as of
February 19, 1994.
10.5 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 5, effective as of
February 19, 1994.
10.6 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 6, effective as of
September 1, 1994.
10.7 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 7, effective as of
September 1, 1994.
10.8 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 8, effective as of
September 1, 1994.
10.9 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 10, effective as of
October 31, 1994.
10.10 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 11, effective as of
September 1, 1994.
10.11 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 12, effective as of
February 19, 1994.
10.12 -- Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan, effective as of
March 18, 1995.
10.13 -- Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan, effective as of
October 21, 1995.
10.14 -- Employment Agreement by and between Company and Bahram Yusefzadeh, dated December
28, 1995.
10.15 -- First Amendment to Employment Agreement by and between Company and Bahram
Yusefzadeh, dated May , 1996.*
</TABLE>
II-3
<PAGE> 82
<TABLE>
<C> <C> <S>
10.16 -- Employment Agreement by and between Company and Ralph Reichard, dated December 28,
1995.
10.17 -- First Amendment to Employment Agreement by and between Company and Ralph Reichard,
dated May , 1996.*
10.18 -- Employment Agreement by and between Company and Clay E. Scarborough, dated May ,
1996.*
10.19 -- Employment Agreement by and between Company and Michael R. Newes, dated April 12,
1996.
10.20 -- Employment Agreement by and between Company and Gerald P. Nissen, dated April 12,
1996.
10.21 -- Employment Agreement by and between Company and Twanna C. Soifer, dated April 12,
1996.
10.22 -- Form of Employee Confidentiality Agreement.
10.23 -- Promissory Note, dated November 17, 1994, from Bahram Yusefzadeh to Company in the
amount of $40,854.
10.24 -- Promissory Note, dated December 19, 1994, from Bahram Yusefzadeh to Company in the
amount of $932,910.
10.25 -- Promissory Note, dated January 30, 1995, from Bahram Yusefzadeh to Company in the
amount of $344,760.
10.26 -- OEM Software License Agreement, dated June 30, 1995, between Company and Gupta
Corporation.+
10.27 -- Value Added Remarketer Agreement, dated October 13, 1993, between Company and
Sybase, Inc.+
10.28 -- Software License Agreement between Unisys Corporation and Company, dated March 16,
1996.+
10.29 -- General Agreement for Strategic Relationship between Company and Hewlett-Packard
Company, dated April 30, 1993.+
10.30 -- Form of Software License Agreement.+
10.31 -- Form of International Software License Agreement.+
10.32 -- Form of Disaster Recovery Service Agreement.+
10.33 -- Form of Software Deposit Agreement.+
10.34 -- Form of Confidentiality and Non-Disclosure Agreement.
10.35 -- Form of Confidentiality Agreement.
10.36 -- Form of Mutual Non-Disclosure Agreement.
10.37 -- Form of Confidentiality/Non-Disclosure Agreement Remitting Access to System
Documentation and Data Files for Data Conversion.
10.38 -- Form of Phoenix International Ltd., Inc. Confidentiality Agreement.
10.39 -- Standard Commercial Lease, dated December 8, 1993, between Company and ABR Spectrum,
Ltd. with respect to Suite 140, 900 Winderley Place, Maitland, Florida premises, as
modified January 24, 1994.
10.40 -- Sublease Agreement, dated September 28, 1995, between Company and CCS Technology
Group, Inc. with respect to Suite 120, 900 Winderley Place, Maitland, Florida
premises.
10.41 -- The Principal Financial Group Prototype for Savings Plans (401k), as amended, and
the Group Annuity Contract for the Company.
11.1 -- Statement re: Computation of Per Share Earnings.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Nelson Mullins Riley & Scarborough, L.L.P. (included as part of Exhibit
5.1).*
24.1 -- Power of Attorney (contained on the signature page of this filing).
</TABLE>
- ---------------
+ Confidential treatment requested.
* To be filed by amendment.
(B) FINANCIAL STATEMENT SCHEDULES. All information required by the
financial statement schedules is included in the Consolidated Financial
Statements and the accompanying Notes.
II-4
<PAGE> 83
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the
Representatives at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Representatives to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that,
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4 ) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 84
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Atlanta, State of
Georgia, on May 8, 1996.
PHOENIX INTERNATIONAL LTD., INC.
By: /s/ BAHRAM YUSEFZADEH
------------------------------------
Bahram Yusefzadeh
Chairman of the Board and
Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Bahram Yusefzadeh and Ralph Reichard, and
each of them, as true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any related Registration
Statement pursuant to Rule 462 under the Securities Act of 1933, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all which said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- -------------------------------- -------------
<C> <S> <C>
/s/ BAHRAM YUSEFZADEH Chairman of the Board and Chief May 8, 1996
- --------------------------------------------- Executive Officer (principal
Bahram Yusefzadeh executive officer)
/s/ RALPH H. REICHARD Chief Operating Officer, May 8, 1996
- --------------------------------------------- President and Director
Ralph H. Reichard
/s/ CLAY E. SCARBOROUGH Chief Financial Officer May 8, 1996
- --------------------------------------------- (principal financial and
Clay E. Scarborough accounting officer)
/s/ MICHAEL R. NEWES Senior Vice President, Director May 8, 1996
- ---------------------------------------------
Michael R. Newes
/s/ RONALD E. FENTON Director May 8, 1996
- ---------------------------------------------
Ronald E. Fenton
/s/ WILLIAM E. HESS Director May 8, 1996
- ---------------------------------------------
William E. Hess
/s/ JAMES C. HOLLY Director May 8, 1996
- ---------------------------------------------
James C. Holly
</TABLE>
II-6
<PAGE> 85
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- --------------- -------------
<C> <S> <C>
/s/ PAUL JONES Director May 8, 1996
- ---------------------------------------------
Paul Jones
/s/ J. MICHAEL MURPHY Director May 8, 1996
- ---------------------------------------------
J. Michael Murphy
/s/ O. JAY TOMSON Director May 8, 1996
- ---------------------------------------------
O. Jay Tomson
</TABLE>
II-7
<PAGE> 1
EXHIBIT 4.3
AMENDED AND RESTATED
PHOENIX INTERNATIONAL LTD., INC.
STOCKHOLDERS AGREEMENT
THIS AGREEMENT, effective as of the 31st day of August, 1993, by, between
and among PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (hereinafter
referred to as the "Corporation") and the stockholders named herein who execute
this Agreement (individually referred to herein as "Stockholder" and
collectively as "Stockholders")
W I T N E S S E T H
WHEREAS, the Corporation is authorized to issue Ten Million (10,000,000)
shares of Class A Voting Common Stock, par value .01 per share, One Million
(1,000,000) shares of Class B Voting Common Stock, par value One Dollar ($1.00)
per share, Two Hundred Thousand (200,000) shares of Class C Voting Common
Stock, par value Five Dollars ($5.00) per share, Fifty Thousand (50,000) shares
of Class D Non-Voting Common Stock, par value Ten Dollars ($10.00) per share,
and One Million (1,000,000) shares of Class E Non-Voting Common Stock, par
value Two Dollars and 50/100 ($2.50) per share (all classes hereinafter
collectively referred to as "Stock"), of which shares of the various classes of
stock are issued and outstanding as indicated opposite the name of each
Stockholder indicated on Exhibit A, attached hereto, and the signature page or
counterpart signature page.
WHEREAS, the Stockholders and the Corporation desire to enter into an
agreement which imposes certain restrictions and obligations on themselves and
on the shares of the Corporation's common stock in order to provide for the
continuity of the Corporation's management and to promote a harmonious
relationship among the Stockholders.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. Parties Subject to Agreement. This Agreement will be binding upon the
Stockholders who are parties to this Agreement, the Corporation and each and
every person, firm or corporation claiming by, through or under them, or any
of them.
2. Notice on Stock Certificates & Restrictions on Transfer Agents. No
officer, director, transfer agent or employee of the Corporation will cause or
permit any certificate representing Stock
<PAGE> 2
("Certificate") to be issued without proof of compliance with the terms of this
Agreement. Every Certificate now or hereafter owned by a Stockholder or anyone
claiming by, through or under any of them (whether owned by such Stockholder
individually or collectively with any other person, firm or corporation) will
bear a legend, in addition to any other legend on the certificate required to
secure an offering exemption under the Securities Act of 1933, which will give
notice of the terms of this Agreement to all others in form and content
substantially as follows:
NOTICE IS HEREBY GIVEN that the transfer of the securities represented
by this Certificate is restricted by the issuer, and all rights, powers,
restrictions, limitations, redemption, and repurchase privileges reserved
by the Corporation and its Stockholders are hereby incorporated into and
made a part hereof as embodied in that certain Stockholders Agreement
dated the 31st day of August, 1993, as amended. The Agreement is on file
in the principal office of the Corporation.
3. REVOCATION OF PRIOR AGREEMENTS. Any and all prior agreements relative
to the purchase and sale of the Stockholders' shares of Stock in the
Corporation are hereby revoked, and the provisions of this Agreement alone
shall be determinative of the terms and conditions of the purchase and sale of
their respective shares of Stock. The purpose of this Agreement is to control
the purchase and sale of the Corporation's Stock after it has been acquired by
a Stockholder and to provide for the management of the Corporation in an
harmonious manner.
4. RESTRICTIONS ON DISPOSITION. The Stock of the Corporation is
restricted and may not be disposed of by a Stockholder in the absence of an
effective registration statement under the Securities Act of 1933 or an opinion
of counsel satisfactory to the Corporation that registration is not required.
For purposes of this paragraph 4, the terms "dispose" or "disposed of"
includes, but is not limited to, the acts of selling, assigning, transferring,
giving, and any other form of voluntary conveyance. Under no circumstances may
a Stockholder's shares of Stock in the Corporation be pledged or otherwise
encumbered without the prior written consent of the Corporation.
5. OFFICERS AND DIRECTORS.
(a) Officers. Bahram Yusefzadeh shall serve as President of the
Corporation until his resignation, death or physical or mental incapacity,
provided he owns or controls fifty-one (51%) percent or more of the voting stock
of the Corporation. The Stockholders agree that no action shall be taken or
permitted, either by the Stockholders or the Board of Directors which will cause
Bahram Yusefzadeh to be removed as President without his consent. Any
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<PAGE> 3
other corporate officers shall be elected and removed by the Board of Directors
pursuant to the By-laws adopted by the Stockholders. The Corporation shall
cause to be executed an employment agreement with Bahram Yusefzadeh in the
form attached as Exhibit C.
(b) Directors. The Board of Directors of the Corporation shall
consist of nine (9) members. Four (4) of the directors shall be
elected by the Stockholders owning Class B Voting Common Stock and Class C
Voting Common Stock. Five (5) of the directors shall be elected by the
Stockholders owning Class A Voting Common Stock. A director may only be
removed, with or without cause, by a majority vote in favor of same of the
Stockholders who are eligible to elect the director. The Stockholders agree to
do or cause to be done all acts necessary to effect this provision, including
the amendment of the Corporation's Articles of Incorporation, pursuant to
Section 607.0804, Florida Statutes.
6. ACTIONS REQUIRING MAJORITY AND SUPER MAJORITY VOTE OF BOARD OF
DIRECTORS.
(a) Except as provided in subparagraph (b) of this paragraph 6, actions
by the Board of Directors shall require a majority vote in favor of the proposed
corporate action.
(b) Subject to paragraph 7, the following corporate action shall require a
favorable vote of at least seven (7) of the nine (9) members of the Board of
Directors:
(i) the sale of substantially all of the assets of the Corporation;
(ii) the offer, sale, or issuance of Stock of the Corporation to one or
more third parties.
(iii) the liquidation of the Corporation;
(iv) the merger, consolidation or reorganization of the corporation
with any other corporation or legal entity;
(v) filing of a petition under the Bankruptcy Act.
7. CALL OPTION IN FAVOR OF BAHRAM YUSEFZADEH.
(a) Sale of Assets/Stock. In the event the Corporation receives a bona
fide offer from a third party to purchase either substantially all of the assets
of the Corporation or the Stock of the Corporation, and at least seven (7)
members of the Board of Directors, other than Bahram Yusefzadeh, vote in favor
of accepting said offer, Bahram Yusefzadeh shall have the option to purchase all
of the Class B Voting Common Stock, Class C Voting Common Stock, Class D
Non-Voting Common Stock and Class E Non-Voting Common Stock of the Corporation.
Bahram Yusefzadeh shall have the option to
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<PAGE> 4
purchase said Stockholders' Stock in an amount equal to a proportionate share
of the purchase price set forth in the offer based upon the ownership interest
in the Corporation of Class B Voting Common Stock, Class C Voting Common Stock,
Class D Non-Voting Common Stock and Class E Non-Voting Common Stock. Subject
to paragraph (c) of this Agreement, Bahram Yusefzadeh shall purchase the Stock
of the Corporation on the same terms and conditions as set forth in the offer.
If the transaction involves a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended, then the language "the same terms
and conditions" shall mean that the purchase price must be increased by the
effective rate of federal and state income tax otherwise payable by said
Stockholders in a transaction with respect to which Section 368 would not
apply. Paragraphs 11 and 12 hereof shall not apply to the purchase pursuant to
this paragraph 7(a). This paragraph shall not apply to any public offering of
the Stock of the Corporation.
(b) Liquidation. If at least seven (7) members of the Board of Directors,
other than Bahram Yusefzadeh, vote in favor of the liquidation of the
Corporation, Bahram Yusefzadeh shall have the option to purchase all of the
Class B Voting Common Stock, Class C Voting Common Stock, Class D Non-Voting
Common Stock and Class E Non-Voting Common Stock in an amount equal to the pro
rata share of the fair market value of the Corporation determined as follows:
1. The Stockholders shall establish a value of the Corporation, taking
into account such factors as they shall deem appropriate.
2. If the Stockholders fail to agree upon the fair market value of the
Corporation within thirty (30) days following the proposed action by
the Board of Directors to liquidate the Corporation, then the
Stockholders owning Class B Voting Common Stock and Class C Voting
Common Stock will select an appraisal firm to value the Corporation
and Bahram Yusefzadeh will select an appraisal firm to value the
Corporation. If the valuations do not differ by more than fifteen
percent (15%), the average of the two appraisals will be the fair
market value of the Corporation. If the valuations differ by more than
fifteen percent (15%), a third appraisal firm will be selected by the
Stockholders owning Class B Voting Common Stock, Class C Voting Common
Stock, and Bahram Yusefzadeh. The average of the three valuations
will be the value of the Corporation.
If the parties cannot agree upon a third appraisal firm, the parties
agree to submit the issue of the selection of an appraisal firm to the
Arbitration Committee of the Orange County Bar Association, Orange County,
Florida. The decision
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<PAGE> 5
of the arbitration committee as to a third appraisal firm shall be
binding upon the parties.
Unless the parties otherwise agree, except for the third appraisal,
the cost of which will be paid by the Corporation, each party shall pay the
fees to the appraisal firm selected by that party. Paragraphs 11 and 12
hereof shall not apply to the purchase pursuant to this paragraph 7(b).
c. Term of option. Bahram Yusefzadeh shall have six (6) months from the
date of the meeting at which the corporate action described in this paragraph 7
was taken within which to exercise his option and close the purchase of Stock.
8. OPTION UPON INVOLUNTARY TRANSFER.
(a) If other than by reason of an individual Stockholder's death
shares of Stock are transferred by operation of law to any person (such as, but
not limited to, a Stockholder's trustee in bankruptcy, purchaser at any
creditor's or court sale or the guardian or conservator of an incompetent
Stockholder), the Corporation, within sixty (60) days of its receipt of actual
notice of transfer, may exercise an option to purchase all or a portion of the
shares so transferred at the price determined in accordance with paragraph 11.2
hereof, payable in accordance with paragraph 12(b) hereof. If the Corporation
fails to exercise the option, the other Stockholders shall have the right to
exercise the option on their own behalf for ten (10) additional days in the
manner and under terms set forth herein.
The other Stockholders shall have the option to purchase all or the
balance of the offered Stock for the purchase price and terms set forth in
paragraphs 11.2 and 12, respectively. Each of the other Stockholders shall
have the option to purchase that proportion of the selling Stockholder's Stock
as the number of shares owned by him or it bears to the total number of shares
owned by all non-selling Stockholders. If a non-selling Stockholder refuses to
exercise his or its option to purchase his or its full proportionate shares,
the other non-selling Stockholders who have exercised their options may
purchase the remaining unpurchased Stock in proportion to their interest in the
Corporation.
(b) If a Stockholder which is a corporation is involved in any
transaction pursuant to which voting control is transferred to other individuals
or to an unrelated entity, or if a Stockholder which is a corporation does not
use any products developed, produced or marketed by Corporation, the Corporation
and the other Stockholders shall have the option to purchase all of the Stock of
the Corporation owned by such Stockholder exercised in the manner set forth in
this paragraph 8. A Stockholder shall be deemed to use a product of the
Corporation if it or any of its affiliates
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<PAGE> 6
utilizes the Corporation's products in the normal course of its operations.
(c) If neither the Corporation nor the other Stockholders exercise
their options to this paragraph 8, said selling Stockholder's stock may be
transferred by operation of law, provided the purchaser of said Stock becomes a
party to this Agreement.
9. TERMINATION OF STOCKHOLDER'S EMPLOYMENT.
(a) If any Stockholder's employment with the Corporation is
terminated for any reason (other than by death or disability) on or before March
1, 1998, such Stockholder shall on the date of termination of employment
transfer to the Corporation all of his Stock of the Corporation for Ten Dollars
($10.00). This provision shall not apply to Bahram Yusefzadeh or Terry J.
Soifer, nor to Stockholders holding Class B Voting Common Stock, Class C Voting
Common Stock, Class D Non-Voting Common Stock or Class E Non-Voting Common
Stock.
Each such Stockholder expressly acknowledges and agrees that the Stock
issued in his name, or held in a Voting Trust on his behalf was issued by the
Corporation upon the express condition that his employment continue until the
earlier of (i) the date of a public offering of Stock of the Corporation, or
(ii) March 1, 1998. In the event any Stock issued in said Stockholder's name
is held in a Voting Trust, the Stockholder agrees to deliver to the Trustee
under the Voting Trust Agreement a blank Stock Power with authority given to
the Trustee to transfer said Stock to the Corporation pursuant to the terms of
this Agreement, and specifically, this paragraph 9.
(b) If a Stockholder's employment with the Corporation is terminated due to
death or disability, the Stockholder, his estate or his guardian shall not be
required to sell all of his Stock of the Corporation, but shall have the option
to offer to sell the Stock to the Corporation and/or the other Stockholders for
the purchase price and terms set forth in paragraphs 11.2 and 12(b). If the
offer to sell is not accepted by the Corporation and/or the other Stockholders
the deceased or disabled Stockholder shall have the right to sell the Stock to
a third party, provided that the Corporation and/or Stockholders shall have the
right of first refusal if the terms and conditions of the purchase by a third
party are more favorable to the purchaser than those set forth in paragraphs
11.2 and 12(b).
10. DEATH OR DISABILITY OF BAHRAM YUSEFZADEH.
(a) Option. In the event of Bahram Yusefzadeh's death or disability,
Bahram Yusefzadeh, his estate or his guardian, as the case may be, shall not be
required to sell all of his Stock of the
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<PAGE> 7
Corporation. Rather, Bahram Yusefzadeh (or the personal representative of his
estate or his legal guardian) shall have the option to offer to sell his Stock
to the Corporation or the remaining Stockholders for the purchase price and on
the terms set forth in accordance with paragraph 11.2 and 12(b) hereof. The
Corporation and the Stockholders shall have the option to purchase said Stock
owned by Bahram Yusefzadeh pursuant to such terms. If the offer to sell is not
accepted by the Corporation and/or the Stockholders, Bahram Yusefzadeh shall
have the right to sell the Stock to a third party, provided that the
Corporation and/or Stockholders shall have the right of first refusal if the
terms and conditions of the purchase by a third party are more favorable to the
third party purchaser than those set forth in paragraphs 11.2 and 12(b).
The offer to sell shall be exercised by Bahram Yusefzadeh, (or the
personal representative of his estate or his legal guardian) giving notice of
his offer to sell within one hundred twenty (120) days following the applicable
Valuation Date defined in paragraph 11.1.
(b) Voting Trust. In the event Bahram Yusefzadeh (or his personal
representative or legal guardian) elects not to exercise the Option granted in
paragraph 10(a) above, then upon Bahram Yusefzadeh's death or disability, the
Stock owned by Bahram Yusefzadeh at the time of his death or disability shall
be transferred to a Voting Trust in the form attached hereto as Exhibit B. The
Trustees of said Voting Trust shall be Bradley J. Davis, O. Jay Tomson and
Terry J. Soifer. The term of the Voting Trust shall not exceed ten (10) years.
In the event the Corporation issues Stock in a public offering during the term
of the Voting Trust, said Voting Trust shall terminate on the effective date of
the public offering.
(c) Life Insurance. The Corporation agrees to acquire and maintain in
effect, at its sole expense, an insurance policy insuring the life of Bahram
Yusefzadeh in the amount of One Million Dollars ($1,000,000). In the
event of Bahram Yusefzadeh's death prior to any public offering of the Stock of
the Corporation, the proceeds shall be paid to the beneficiary(ies) designated
by Bahram Yusefzadeh from time to time.
11. PRICE. The purchase price payable by the Corporation or Stockholder
("Purchaser") to the owner of Stock ("Selling Stockholder") purchased by the
Purchaser pursuant to the applicable provisions of this Agreement is provided
in this paragraph.
11.1 VALUATION DATE. The Purchase Price for the Stock purchased and sold
pursuant to the terms hereof shall be at the fair market value thereof,
determined as of the last day of the calendar month immediately preceding the
event precipitating the
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<PAGE> 8
sale ("Valuation Date"). The Valuation Date shall mean the applicable date
among the following:
(a) in the case of disability, (as defined in paragraph 11.4) the last
day of the calendar month preceding the earlier to occur of the
completion of the applicable one (1) year period of disability or the
determination of disability by the applicable insurer; or
(b) in the case of death, the last day of the calendar month preceding
the date of death; or
(c) in the case of termination of employment, the last day of the
calendar month preceding the date of termination of employment.
The purchase price shall be determined as of the Valuation Date.
11.2 PURCHASE PRICE. The purchase price of the Stock will be the amount
agreed upon by the Purchaser and the Selling Stockholder, or, in the absence of
any such agreement, a proportionate part of the fair market value of all of
the Stock of the Corporation as of the Valuation Date based upon the
Stockholder's Stock ownership. Absent a mutual agreement of the parties, the
fair market value will be determined by reference to the procedure described in
paragraph 11.3 hereof.
11.3 PROCEDURE FOR APPRAISAL. The fair market value of the Corporation for
purposes of this Agreement shall be its fair market value determined by
appraisers as set forth in this paragraph. One appraiser shall be selected by
the terminating Stockholder or his personal representative and one appraiser
selected by the Corporation. The fair market value of the Corporation shall be
the average of the two appraisals if the valuations do not differ by more than
fifteen percent (15%). If the valuations differ by more than fifteen percent
(15%), and the parties do not otherwise reach an agreement as to the valuation,
then a third appraiser shall be selected by the other two appraisers. The fair
market value of the Corporation shall be the average of the three appraisals so
made. If the two appraisers cannot agree upon the third appraiser, then the
issue shall be submitted to the Arbitration Committee of the Orange County Bar
Association, Orange County, Florida. The Arbitration Committee's decision as to
the third appraiser shall be binding upon the parties.
11.4 DEFINITION OF DISABILITY. For purposes of this Agreement,
"Disability" shall mean a Stockholder's continuous disability for a period of
one (1) year resulting in his inability to perform the usual and customary
duties of his employment as an employee of the Corporation.
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<PAGE> 9
12. TERMS OF PAYMENT.
(a) If a disabled Stockholder dies prior to completion of the disability
payments, the Corporation shall nonetheless remain obligated to pay his estate
the full amount of the "disability" buy-out purchase price.
(b) The purchase price shall be payable in sixty (60) successive equal
monthly installments (including interest), the first installment due on the
first (1st) day of the first calendar month following the Closing Date and
continuing monthly thereafter. Unpaid balances of the purchase price shall
bear interest at the prime rate being charged on the Valuation Date by the
Corporation's principal bank, and interest shall be paid concurrently with
payment of each installment of principal. A non-negotiable promissory note
evidencing the deferred portion of the purchase price and interest thereon
shall be executed by the Purchaser and delivered to the Seller. The purchaser
shall have the right to prepay all or any portion of the obligation represented
by the note together with interest to the date of prepayment at any time
without premium or penalty; however, any prepayment shall first be applied to
the last installment due. The promissory note shall provide the holder with
the option to accrued interest due and make such principal and interest
immediately due and payable upon the default of any payment of principal or
interest, which default is not cured within thirty (30) days after written
notice.
13. CLOSING DATE. The purchase and sale of any Stock hereunder, shall
take place at a mutually agreeable time ("Closing Date") within ninety (90)
days after the Valuation Date (as defined in paragraph 11.1 herein) at the
offices of the Corporation or some other mutually agreeable location. At
closing, all Certificates for the Stock shall be delivered to the Purchaser,
duly endorsed for transfer, with documentary stamps affixed, and the promissory
note shall be delivered to the Selling Stockholder or his representative.
14. INDEBTEDNESS OF SELLING STOCKHOLDER OR CORPORATION. Upon the purchase
of Stock by the Corporation, any indebtedness then owing by the Selling
Stockholder to the Corporation shall be deducted from the purchase price
payable for the Stock. Upon the purchase of Stock by the non-selling
Stockholders, any indebtedness of the Selling Stockholder to the Corporation
shall be liquidated by the application to such indebtedness of such portion of
purchase price as necessary. Any indebtedness of the Corporation to the
Selling Stockholder shall be paid by the Corporation to him together with the
proceeds of the redemption in accordance with the payment terms contained in
paragraph 12(b).
15. INSUFFICIENT CORPORATE SURPLUS. If at any time the Corporation
desires to purchase the Stock of a Stockholder hereunder but does not have
sufficient surplus or retained earnings
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<PAGE> 10
(under the laws of the State of Florida existing at the time of purchase) to
permit it to lawfully purchase such Stock, the Corporation and the other
Stockholders shall promptly take such action as is necessary and appropriate,
including revaluation of assets, to enable the Corporation to lawfully purchase
and pay for such Stock. In the event the Corporation's surplus shall
nevertheless prove to be insufficient to legally allow the Corporation to
purchase all of the shares of Stock, then, and only then, may the remaining
Stockholders purchase such shares, at the purchase price and upon the terms and
conditions fixed by this Agreement for the purchase of said shares by the
Corporation.
16. RESIGNATION OF SELLING STOCKHOLDER. At the closing, the Selling
Stockholder (and in the case of a corporate Stockholder, its corporate
representative) shall, unless otherwise instructed by the Corporation, deliver
to the Corporation his resignation as an officer, director, employee of the
Corporation, and trustee of any trusts under any qualified deferred
compensation plan or other plans of the Corporation, if applicable. Each
Stockholder hereby gives the Secretary of the Corporation an irrevocable power
of attorney to sign such resignations on behalf of such Stockholder if he shall
fail to do so in accordance with this section.
17. POST-TRANSFER RESTRICTIONS ON STOCK. From and after the date of the
sale or other transfer of any shares of Stock, including a transfer by
operation of law pursuant to paragraph 8 hereof, the transferee Stockholders
shall be subject to all the limitations, terms, conditions, and provisions of
this Agreement as if they were original parties. Any transferee who acquires
Stock by any method except in accordance with the terms hereof, including but
not limited to, the execution of this Agreement within five (5) business days
following the date of transfer, shall be deemed to have made an immediate offer
of sale of said Stock to the Corporation for the sum of $10.00. The Secretary
of the Corporation is hereby given an irrevocable power of attorney to transfer
said shares of Stock to the Corporation extinguishing any and all interest of
said transferee in the Corporation.
18. EQUITABLE REMEDIES. The parties hereto declare that it is
impossible to measure in money the damages which may accrue to a party hereto
or to the estate or personal representative of a decedent, by reason of a
failure to perform any of the obligations of this Agreement. Therefore, if any
party hereto or the personal representative of a decedent shall institute any
action or proceeding to enforce the provisions hereof, any other party against
whom such action or proceeding is brought shall have no right to make the claim
or defense therein, that such party or such personal representative has an
adequate remedy at law. The parties further agree that the shares of Stock are
unique chattels and that the equitable remedy of specific performance shall be
available to enforce the terms of this Agreement.
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<PAGE> 11
19. NOTICES. Any notices required or permitted under this Agreement shall
be given promptly, in writing, and addressed by registered or certified mail,
return receipt requested, postage prepaid, to the Corporation and Stockholders
at the offices of the Corporation or such other addresses of which they may
give notice in writing. The date of each such notice shall be the date on the
notice provided such date is not earlier than the date on which the notice was
deposited in the U.S. mail to the addressee.
20. FURTHER ASSURANCE. The parties will execute and deliver all documents
and instruments which are reasonably necessary to carry out the terms,
conditions and purposes of this Agreement. Paragraphs 8, 9 and 10 provide that
the Corporation shall have an option to purchase a Stockholder's stock upon the
occurrence of certain events. The Selling Stockholder agrees that he shall not
have a vote as a director in the Corporation's determination as to whether or
not the Corporation shall exercise the option. However, the Selling
Stockholder represents, warrants and agrees that if, pursuant to the
Corporation's Articles of Incorporation or By-Laws then in effect, the Selling
Stockholder's presence and voting power are necessary at a Board of Director's
meeting to constitute a quorum and to obtain a majority vote of those directors
present, the Selling Stockholder shall attend the meeting and cause his vote
(as a director) to be recorded in such a manner as may be necessary to carry
out the desire of the Stockholders (excluding the Selling Stockholder) then
owning a majority in number of the Corporation's shares of Stock (excluding the
Selling Stockholder's shares).
21. TRANSFER OF LICENSES. Bahram Yusefzadeh agrees to cause The Pinnacle
Group Ltd., to transfer to Phoenix International Ltd., Inc. effective March
1, 1994, any and all licenses with third parties relating to products and
services. On and after March 1, 1994, all income derived from such licenses
shall belong to the Corporation. From March 1, 1993, through February 28,
1994, the income from said licenses will be used by The Pinnacle Group in part
to compensate Bahram Yusefzadeh for the compensation from the Corporation he
has agreed to forego during said period. The licenses are described in Exhibit
D attached hereto.
22. MISCELLANEOUS.
22.1 This is the entire understanding and agreement of the parties and
shall not be changed orally; however, this Agreement may be modified, amended or
terminated by mutual agreement of the parties in writing.
22.2 This Agreement shall inure to the benefit of and be legally binding
upon the parties hereto and their heirs, personal representatives, successors
and assigns, even if it should be judicially declared, at any time for any
reason, that this Agreement, or any part hereof, is inapplicable to or invalid
as to any or all transferees or other holders of the Stock. The
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invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of the remaining provisions.
22.3 Each individual Stockholder agrees to insert in his Will or to execute
a codicil thereto, a direction to his personal representative to fulfill and
comply with the provisions hereof and to sell and transfer his shares in
accordance herewith, the form of which is attached hereto as Exhibit E, but
failure to do so shall not release the Stock owned by the decedent from the
restriction of this Agreement or the personal representative from being bound by
and acting in accordance with the terms thereof.
22.4 This Agreement shall be construed and enforced in accordance with
the laws of the State of Florida. Where appropriate herein, the references to
the masculine gender shall include the feminine and neuter, the singular shall
include the plural and the plural, the singular, in each case as the context
may require. The parties agree that proper venue for any action between the
parties consent to be subject to the personal jurisdiction, of the Courts of
Orange County, Florida.
22.5 Any provision preceding the text of the several paragraphs hereof are
inserted solely for the convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
22.6 The parties hereto agree that in the event it becomes necessary for a
party to seek judicial remedies for the breach or threatened breach of this
Agreement, the prevailing party shall be entitled, in addition to all other
remedies, to recover from the non-prevailing party all costs of such judicial
action, including reasonable attorney's fees, both at the trial court and
appellate court level. In addition, a Stockholder who sells, transfers or
otherwise disposes of Stock of the Corporation shall pay all fees and costs
incurred by the Corporation in connection with its counsel providing the legal
opinion described in paragraph 4 hereof.
22.7 This Agreement may be executed as multiple counterparts, each of which
shall be deemed an original and all of which when taken together shall
constitute one agreement, and the signatures of any party to any counterpart
shall be deemed to be a signature to, and may be appended to, any other
counterpart.
22.8 Except with respect to the enforcement of the provisions of this
Agreement, each Stockholder agrees not to file any legal action against the
Corporation or any other Stockholder(s) relating to any matter involving the
ownership of Stock of the Corporation or its management.
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The parties hereto have executed this Agreement effective on the date
first above written.
ATTEST: CORPORATION:
PHOENIX INTERNATIONAL LTD. INC.
/s/ Bradley J. Davis By: /s/ Bahram Yusefzadeh
- ---------------------------- ----------------------------
Bradley J. Davis Bahram Yusefzadeh
Its Secretary Its President
SIGNED IN THE PRESENCE OF: STOCKHOLDERS - CLASS A VOTING
COMMON STOCK:
/s/ Bahram Yusefzadeh
- ---------------------------- -------------------------------
Bahram Yusefzadeh
- ---------------------------- 480,000 Shares
As to Bahram Yusefzadeh
/s/ Michael R. Newes
- ---------------------------- -------------------------------
As to Michael R. Newes Michael R. Newes
10,000 Shares
/s/ Terry J. Soifer
- ---------------------------- -------------------------------
Terry J. Soifer
- ---------------------------- 10,000 Shares
As to Terry J. Soifer
/s/ George W.B. Taylor
- ---------------------------- -------------------------------
George W.B. Taylor
- ---------------------------- 50,000 Shares
As to George W.B. Taylor
/s/ William M. Toole
- ---------------------------- -------------------------------
William M. Toole
50,000 Shares
- ----------------------------
As to William M. Toole
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<PAGE> 14
PHOENIX INTERNATIONAL LTD., INC.
STOCKHOLDERS AGREEMENT
Counterpart Signature Page
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ Bradley J. Davis By: /s/ Bahram Yusefzadeh
------------------------- -------------------------------
Bradley J.Davis Bahram Yusefzadeh, President
Secretary
Signed in the presence of: STOCKHOLDER:
Name of Stockholder:
/s/ /s/
- ---------------------------------- -----------------------------------
By: /s/
- ---------------------------------- -------------------------------
Name: /s/
-----------------------------
Title: President
----------------------------
14
<PAGE> 1
EXHIBIT 4.4
INVESTMENT INTENT
AND
NON-DISTRIBUTION LETTER
Phoenix International Ltd., Inc.
900 Winderley Place
Suite 140
Maitland, FL 32751
Re: Purchase of ___________ shares of Class E Common Stock-Non
Voting of Phoenix International Ltd., Inc.
This letter is to acknowledge that the undersigned, individually or as a
duly authorized officer of a corporate investor, ("Purchaser"), has been
advised by you and understands that neither the above shares nor any other
shares of Phoenix International Ltd., Inc. ("Corporation") of the same class
are being registered under the Securities Act of 1933, as amended, (Act) it
being the intent of the Corporation to issue such shares under Regulation D,
Section 4(2) and/or Section 3(a)(11), as applicable, of the Act and any
applicable state securities act relating to the limited offer and sale of
securities.
Purchaser has been advised and understands that, as a purchaser of
unregistered securities, Purchaser bears the economic risk of its investment
for an indefinite period of time because the securities cannot be sold unless
they are subsequently registered or sold pursuant to an exemption from
registration. Purchaser further acknowledges that Purchaser has both the
knowledge and experience in financial matters sufficient to evaluate such
purchase and that Purchaser is able to bear the economic risk of the purchase.
Purchaser acknowledges and understands that the certificate or
certificates evidencing the above-enumerated shares will bear a legend stating
that such shares have not been registered under the Act and setting forth or
referring to the restrictions on transferability listed here. Purchaser
further understands that the Corporation will issue stock-transfer instructions
to its transfer agent, if any, or, if the Corporation transfers its own shares,
it will make a notation as to the transfer in its records.
Purchaser has been advised and understands that the Corporation's reliance
on the above exemption from registration is dependent on its execution of the
statement that it will not sell the securities without registration under the
Securities Act of 1933, or without exemption therefrom, and the Corporation's
reliance on the exemption is dependent upon this agreement and upon the truth
of the representation set forth herein.
With such understanding Purchaser hereby represents, warrants and agrees
that:
1. It is acquiring these shares for investment for its own account only,
and not with the view to reselling them. It does not intend to divide its
participation with others or to resell or otherwise dispose of all or any part
of the shares unless and until Purchaser determines at some future undetermined
date, on the basis of information not currently at its disposal or upon
conditions not currently existing, that such resale or disposition is
advisable.
<PAGE> 2
2. In no event will Purchaser sell such shares without prior registration
under the Securities Act of 1933, as amended, unless such sale is pursuant to a
valid exemption, including without limitation that exemption established in Rule
144 adopted by the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
3. During the course of the transaction and prior to purchase of the
securities, Purchaser has been provided regular communications regarding the
operations of the Corporation. Purchaser has been afforded the opportunity to
ask questions of, and did receive satisfactory answers from Bahram Yusefzadeh,
President of the Corporation, concerning the terms and conditions of the
offering and has received such additional financial information as Purchaser
deemed necessary to make the decision to purchase the shares to verify the
accuracy of such information.
4. Purchaser hereby agrees to indemnify and hold harmless the Corporation,
its officers, directors, agents, including Corporation's counsel, Pleus, Adams,
Davis & Spears, P.A., representatives, and other shareholders from and against
any and all loss, cost, expense (including attorneys' fees), damages, fees or
liabilities (contingent or absolute, known or unknown) arising out of any breach
of any representation, warranty or agreement made herein. Purchaser agrees that
this indemnity shall survive its sale, transfer or disposal of the shares of
Common Stock.
5. Purchaser warrants that it will pay the purchase price for the shares of
Common Stock from its current funds and will not obtain or borrow such funds
from any other person or entity.
6. Purchaser will execute the Stockholders' Agreement.
7. Purchaser is a current shareholder of the Corporation, or,
alternatively, Purchaser is an officer or shareholder of the corporate
shareholder.
If the Corporation files a registration statement under the Securities Act
of 1933, or any successor statute then in effect, covering a sale or issuance
by the Corporation or any stockholder of the Corporation of shares of the
common stock of the Corporation, the Corporation will mail to each shareholder
who is a party to this agreement, at its address as then contained in the stock
transfer records of the Corporation, written notice of intent to file a
registration statement. Within forty-five (45) days after the mailing of such
notice, any shareholder may deliver a written request to the Corporation
setting forth the number of common shares it would like to dispose of and the
Corporation shall use its best efforts to include such shares in the
registration statement and related underwriting arrangements. However, no such
effort need be made if, in the opinion of counsel for the Corporation and such
shareholders, the disposition of such shares is exempt from registration at
that time. If the offering by the Corporation is underwritten, any shares
disposed of pursuant to this provision will be underwritten by the same
underwriter or underwriters on the same basis as other shares included in the
offering. In the event the managing underwriter or underwriters should refuse
to include all of the shares offered for disposition hereunder, the Corporation
may limit the number of shares which may be offered by shareholders hereunder
to a percent, as established by the Corporation, of the total of shares being
registered and offered in the underwriting, and may allocate on a pro rata
basis the number of shares that may be offered by each stockholder hereunder.
If the offering is not completed within one hundred eighty (180) days after the
<PAGE> 3
effective date of the registration statement, the Corporation may deregister
any unsold portion thereof.
The Corporation shall have complete control of any registration subject to
this provision, including the contents of the registration statement and any
underwriting or other agreements related to it, and shall bear all expenses and
fees, other than registration fees, incurred in connection with its obligations
hereunder. Each shareholder agrees to cooperate with the Corporation in the
preparation and filing of any registration statement, and shall make the
customary agreements, representations, warranties, and indemnifications to the
underwriters with respect to any shares included in an underwriting under this
agreement.
Nothing contained here shall be seemed to prevent the inclusion in any
registration or offering of shares of the Corporation held by shareholders who
are not parties to this agreement.
Purchaser authorizes the Corporation and its counsel to rely upon the
above representations, warranties and agreements for all purposes relating to
the shares of Common Stock.
Dated:______________, 1994 Purchaser:
Name of Entity: (If Applicable)
-----------------------------------
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 1
EXHIBIT 9.1
VOTING TRUST AGREEMENT
Voting Trust Agreement made this 4th day of April, 1993, between certain
shareholders of PHOENIX INTERNATIONAL LTD., INC, a Florida corporation having
its registered office at 475 Montgomery Place, Suite 200, Altamonte Springs,
Florida 32714, hereinafter called "Shareholders," and BAHRAM YUSEFZADEH,
hereinafter called the "Trustee".
The names and addresses of the Shareholders subject to this Agreement and
the number of shares owned by each are as follows:
Number of
Name Address Shares Owned
- ---- ------- ------------
Michael R. Newes 210 West Ridgewood Ct. 10,000 Class A
Longwood, FL 32779 Voting Common
Stock
Terry J. Soifer The Versailles Office Park 10,000 Class A
539 Versailles Drive Voting Common
Suite 205 Stock
Maitland, FL 32751
George W.B. Taylor 245 Bradley Drive 50,000 Class A
Wilmington, NC 28409 Voting Common
Stock
William M. Toole 319 South Sixth Street 50,000 Class A
Wilmington, NC 28401 Voting Common
Stock
RECITALS
A. Each of the Shareholders represent that he is the owner of the number
of shares of Class A Common Stock - voting of PHOENIX INTERNATIONAL LTD., INC.
("Corporation"), set forth opposite his name above.
B. In order to provide for the smooth and efficient operation of the
Corporation, to prevent conflicts, and to avoid deadlocks, the Shareholders
deem it to be in the best interest of the Corporation and the Shareholders who
are party to this Agreement that this Agreement be executed.
For the above reasons, the Shareholders, in consideration of their mutual
promises, hereby agree with each other and with the Trustee, and the Trustee
agrees with the Shareholders, as follows:
Initials: MRN MN
-----
TJS TJS
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BY BY
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<PAGE> 2
Section 1. Transfer of Stock to Trustee. Each Shareholder shall deposit
with the Trustee the number of shares of capital stock set forth opposite his
name above and the certificates therefor, together with sufficient instruments
duly executed for the transfer thereof to the Trustee, and shall receive in
exchange therefor certificates hereafter referred to. On the making of such
deposit, all shares represented by the stock certificates so deposited shall be
transferred on the books of the Corporation to the name of the Trustee, who is
hereby authorized and empowered to cause such transfers to be made, and also to
cause any further transfers to be made that may become necessary due to a
change in the identity of any Trustee as hereafter provided.
Section 2. Trustee's Control Over Stock. During the period this Agreement
remains in force, the Trustee shall possess legal title to the shares
deposited, and shall be entitled to exercise all rights whatsoever, including
the right to vote in person or by proxy, in respect of any and all deposited
shares. However, each holder of a trust certificate issued by the Trustee
shall be entitled to receive payments equal to any and all dividends collected
by the Trustee with respect to shares of stock deposited by him.
Section 3. Voting Trust Certificate. On deposit by any Shareholder of a
certificate or certificates for shares of stock hereunder, accompanied by
instruments of transfer, the Trustee shall deliver or cause to be delivered to
such Shareholder, a voting trust certificate or certificates for the same
number of shares of stock as that represented by the certificate or
certificates deposited. Such voting trust certificates shall be in
substantially the following form:
VOTING TRUST CERTIFICATE
PHOENIX INTERNATIONAL LTD., INC.
No. _________ _________ Shares
This certifies that ________________ has deposited _______ shares
of the Class A voting common stock of PHOENIX INTERNATIONAL LTD., INC. with the
undersigned as Trustee under a Voting Trust Agreement dated the ____ day of
______, 1993, between holders of Class A voting common stock of PHOENIX
INTERNATIONAL LTD., INC., and BAHRAM YUSEFZADEH, and his successors, as trustee.
This certificate and the interest represented hereby is not transferable. The
holder of this certificate takes it subject to all the terms and conditions of
the aforesaid voting trust agreement, and becomes a party to such Agreement, and
is entitled to the benefits thereof.
Executed by the undersigned as Trustee on ___________, 1993.
Initials: MRN MN
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2
<PAGE> 3
Trustee:
----------------------------
BAHRAM YUSEFZADEH
Section 4. Additional Stock. After this Agreement has taken effect, the
Trustee may, from time to time, receive any additional fully paid shares of the
capital stock of the Corporation on the same terms and conditions as are set
forth in this Agreement, and in respect of all shares so received, the Trustee
shall issue and deliver certificates substantially of the form set out above,
entitling the holder to all the rights above specified.
Section 5. Dividends. All dividends that may accrue on the stock deposited
hereunder shall upon receipt by Trustee be distributed pro rata among the
holders of the voting trust certificates in the proportion they are entitled
thereto.
Section 6. Sale of Stock and Certificates by Shareholders. During the
period from the date hereof to and including March 1, 2003, the Shareholders
agree, and the Trustee accepts this trust only on the condition, that the
Shareholders will not sell or otherwise transfer, by gift, testamentary bequest
or otherwise, their respective shares. The shares held by the Trustee are
subject to the restrictions set forth in the endorsements on the certificates.
Section 7. Rights of Trustee. During the period this Agreement remains in
effect, the Trustee shall possess and shall be entitled to exercise, in person
or by proxy, all rights and powers of absolute owners in respect of all the
stock of the Corporation deposited with him, including the right to vote on, to
take part in, and consent to, any corporate or shareholders' action of any kind
whatsoever, and to receive dividends and distributions on the stock. The
Trustee's right to vote shall include the right to vote for the election of
directors and in favor of or in opposition to any resolution or proposed action
of any character whatsoever that may require the consent of shareholders.
Section 8. Election of Directors. For so long as this Agreement shall
remain in effect, the Trustee hereunder shall vote the stock deposited
hereunder to effect the election of and to continue in office a board of
directors which the Trustee, in his sole discretion, deems appropriate.
Section 9. Termination of Voting Trust. On the earlier of (i) March 1,
2003, or (ii) the effective date of any public offering of the stock of the
Corporation, unless the Trustee exercises his right, which is hereby expressly
granted to him, to
Initials: MRN MN
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3
<PAGE> 4
terminate this Agreement at any time prior to that date, the Trustee shall
distribute the stock of the Corporation held by him to the holders of the
voting trust certificates in proportion to their respective holdings on
surrender of their certificates to the Trustee, and this Agreement shall
thereupon terminate.
Section 10. Compensation of Trustee. The Trustee shall not be entitled
to any compensation for his services as such.
Section 11. Trustee's Liability for Negligence. In voting the shares of
stock held by him or doing any other act with respect to the control or
management of the Corporation as holders of the stock deposited hereunder, the
Trustee shall exercise his best judgment in the interest of the Corporation, to
the end that its affairs be properly managed. However, Trustee shall not be
liable for any error of judgment or mistake of law or fact or for any error or
omission whatsover except only his willful misconduct or gross negligence.
Section 12. Death or Disability of Bahram Yusefzadeh. In the event of
Bahram Yusefzadeh's death or disability, the Trustees of the Voting Trust
holding his stock of Phoenix International Ltd., Inc. shall serve as successor
trustees of this Voting Trust Agreement.
Section 13. Amendment of Voting Trust. This Agreement may not be amended
or terminated without the written consent of Trustee.
Section 14. Acceptance of Trust by Trustee. The Trustee hereby accepts
this trust subject to all the terms and conditions hereof, and agrees that he
will exercise his powers and perform his duties as herein set forth. However,
nothing contained herein shall be construed to prevent the Trustee from
resigning as Trustee.
Section 15. Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, including Section 607.0730,
Florida Statutes.
In witness whereof the parties hereto have executed this Agreement on the
dates set forth below their respective signatures.
TRUSTEE: SHAREHOLDER:
/s/ Bahram Yusefzadeh /s/ Michael R. Newes
- ------------------------- ----------------------
BAHRAM YUSEFZADEH MICHAEL R. NEWES
Dated: April 8, 1993 Dated: April 10, 1993
Initials: MRN MN
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BY BY
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4
<PAGE> 5
SHAREHOLDER:
/s/ Terry J. Soifer
-----------------------
TERRY J. SOIFER
Dated: April 9, 1993
SHAREHOLDER:
/s/ George W.B. Taylor
-----------------------
GEORGE W.B. TAYLOR
Dated: April 10, 1993
SHAREHOLDER:
/s/ William M. Toole
-----------------------
WILLIAM M. TOOLE
Dated: April , 1993
5
<PAGE> 1
EXHIBIT 10.1
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 1
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise of
options to be granted from time to time under the Plan ("Options"), an
aggregate of 25,000 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 25,000 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options that may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted in
each Plan Year to each employee of the Corporation who shall be selected by the
President from the class of employees made up of those who are officers of the
Corporation and those who are heads of departments of the Corporation, whether
or not in any case the grantee shall have received one or more Options
hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years from
the date of the grant thereof be granted to any person who, immediately after
such Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or
of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES. The
number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 10,000.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the President shall take into account the duties of
the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares that shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
8. TERMS OF OPTIONS.
Incentive Stock Option Plan -- No. 1
February 19, 1994
1
<PAGE> 2
(a) Subject to paragraph 8(b) each Option must be exercised upon the
earlier of (i) five years from the date of the grant thereof; or (2) the last
business day prior to the initial public offering of capital stock of the
Corporation. The Option term may be subject to termination prior to the
expiration of the period mentioned above, as provided hereinafter.
(b) No Option shall be granted prior to the date upon which the product
described in Exhibit B has been installed and the bank is in balance for five
(5) consecutive days, which date is expected to be August 5, 1994.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from time to
time, as to any part of or all the shares that shall be covered thereby;
provided, however, that an Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the Option
to the date of its exercise. The holder of an Option shall not have any of the
rights of a shareholder with respect to the shares covered by his Option, except
to the extent that one or more certificates for such shares shall be delivered
to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an Option
shall, as one of the terms of the option agreement hereinafter referred to,
agree that he will, during such employment, devote his full business time,
energy, and skill to the service of the Corporation, subject to vacations, sick
leaves, and military absences. Such employment, subject to the provisions of
any contract between the Corporation and such employee, shall be at the pleasure
of the Corporation and at such compensation as the Corporation shall reasonably
determine. Any termination of such employee's employment during the period that
he has agreed pursuant to the foregoing provisions of this paragraph 11 to
remain in employment that is either (a) for cause or (b) voluntary on the part
of the employee and without the consent of the Corporation shall be deemed a
violation by the employee of his agreement. In the event of such violation, any
Option or Options held by him, to the extent not previously exercised, shall
immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any employee
to whom an Option shall have been granted shall be terminated (otherwise than by
reason of death or disability), such Option shall terminate. So long as the
holder of any Option shall continue to be an employee of the Corporation, his
Option shall not be affected by any change in his duties or position. Nothing
in the Plan or in any option agreement shall confer upon any employee any right
to continue in the employ of the Corporation, or interfere in any way with the
right of the Corporation to terminate his employment at any time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by the
Corporation such Option may be exercised (to the extent that the employee shall
have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more
than five years after the date on which such Option shall have been granted).
In the case of an employee's disability, the employee shall
Incentive Stock Option Plan -- No. 1
February 19, 1994
2
<PAGE> 3
exercise said Option within one (1) year following his termination of
employment due to disability (within the meaning of the term as defined in
Section 22(e) of the Internal Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
the outstanding Common Shares of the Corporation by reason of share dividends,
split-ups, recapitalizations, mergers, consolidations, combination or exchange
of shares, separations, reorganizations, or liquidations, the number and class
of shares available under the Plan in the aggregate and in any Plan Year and
the maximum number of shares as to which Options may be granted to any employee
shall be correspondingly adjusted by the President. Notwithstanding the
foregoing, no adjustment shall be made in the minimum number of shares that may
be purchased at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as
the Board of Directors shall determine, but only after:
(a) the shareholders of the Corporation shall, by the affirmative
vote of a majority in interest of all shareholders owning capital
stock with voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have been
duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be granted
shall be granted Options to purchase Common Shares that are exercisable during
any one calendar year, to the extent that the fair market value of such shares
(determined at the time of the grant of the Option) exceeds $100,000. No
employee shall be given the opportunity to exercise options granted hereunder
with respect to shares valued in excess of $100,000 in any calendar year,
except and to the extent that the Options shall have accumulated over a period
in excess of one year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January
31, 1999, and an Option shall not be granted under the Plan after that date.
The Plan (including the form of option agreement that is attached hereto and
marked Exhibit "A") may at any time or from time to time be terminated,
modified, or amended by the affirmative vote of a majority in interest of all
of the shares of the Corporation entitled to vote. The Board of Directors may
at any time and from time to time modify or amend the Plan (including such form
of option agreement) in such respects as it shall deem advisable in order that
the Options shall continue to be "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended, or to conform to
any change in the law, or in any other respect that shall not change:
(a) the maximum number of shares for which Options may be granted
under the Plan either in the aggregate or in any Plan Year or to any
individual employee;
(b) the option prices other than to change the manner of determining
the fair market value of the Common Shares for the purposes of
paragraph 7 hereof to conform with any then applicable provisions of
the Internal Revenue Code or regulations thereunder;
Incentive Stock Option Plan -- No. 1
February 19, 1994
3
<PAGE> 4
(c) the periods during which Options may be granted or exercised;
(d) the provisions relating to the determination of employees to whom
Option shall be granted and the numbers of shares to be covered by such
Options; or
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination of any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an Option previously
granted to him.
19 REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit A shall constitute an addendum and
joinder to said Stockholders Agreement. To the extent the terms and
conditions of the Stockholders Agreement are not inconsistent with the
terms and conditions set forth in the Plan and the Agreement attached
as Exhibit A, said terms and conditions shall remain in full force and
effect.
(b) In the event of the termination of employment for any reason,
including death, disability or retirement, the Corporation shall have
the option to purchase the Common Shares from the Employee, his legal
guardian or the personal representative of his estate. The purchase
price shall be equal to the Option Price plus four percent (4%) per
annum measured from the date of exercise. The Corporation shall
exercise its option within sixty (60) days following the termination of
employment. If the Corporation fails to timely exercise said option,
the employee may dispose of said Common Shares subject to the following
conditions:
(1) the Corporation shall have the first right of refusal as
to any subsequent sale or other disposition upon the same
terms and conditions of such sale or other disposition to a
third party; and
(2) no sale or other disposition shall be made unless counsel
for the Corporation renders its opinion that the sale or other
disposition is subject to an exemption under applicable
federal and state securities laws.
20. This incentive Stock Option Plan -- No. 1 was adopted by the
Corporation on February 19, 1994, with an effective date of February 19, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ BY: /s/ Bahram Yusefzadeh
------------------- ----------------------------
Secretary Bahram Yusefzadeh
President
Incentive Stock Option Plan -- No. 1
February 19, 1994
4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 1
February 19, 1994
5
<PAGE> 1
EXHIBIT 10.2
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 2
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the
exercise of options to be granted from time to time under the Plan ("Options"),
an aggregate of 21,000 Class E Non-Voting Common Shares, of the par value of
$2.50 per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 21,000 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options which may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted
in each Plan Year to each employee of the Corporation who shall be selected by
the President from the class of employees made up of those employees who provide
staff services and support to the Corporation and who are not officers or
directors of the Corporation and who are not heads of departments of the
Corporation, whether or not in any case the grantee shall have received one or
more Options hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years
from the date of the grant thereof be granted to any person who, immediately
after such Option is granted, owns (as defined in Section 422 and 424 of the
Internal Revenue Code of 1986) shares possessing more than 10 percent of the
total combined voting power or value of all classes of shares of the
Corporation or of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES.
The number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 2,500.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination
as to employees to whom Options shall be granted and as to the number of shares
to be covered by such Options, the President shall take into account the duties
of the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares which shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
Incentive Stock Option Plan -- No. 2
February 19, 1994
1
<PAGE> 2
8. TERMS OF OPTIONS.
(a) Subject to paragraph 8(b) each Option must be exercised upon
the earlier of (i) five years from the date of the grant thereof', or (2) the
last business day prior to the initial public offering of capital stock of the
Corporation. The Option term may be subject to termination prior to the
expiration of the period mentioned above, as provided hereinafter.
(b) No Option shall be granted prior to the date upon which the
product described in Exhibit A has been installed and the bank is in balance
for five (5) consecutive business days, which date is expected to be May 20,
1994. No Option granted pursuant to this Agreement may be exercised until the
product has been installed in the third bank and is in balance for five (5)
consecutive days, which date is expected to be August 5, 1994.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from
time to time, as to any part of or all the shares which shall be covered
thereby; provided, however, that an Option may not be exercised as to less than
100 shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the
Option to the date of its exercise. The holder of an Option shall not have any
of the rights of a shareholder with respect to the shares covered by his
Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than
by will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an Option
shall, as one of the terms of the option agreement hereinafter referred to,
agree that he will, during such employment, devote his full business time,
energy, and skill to the service of the Corporation, subject to vacations, sick
leaves, and military absences. Such employment, subject to the provisions
paragraph 12 hereof and subject also to the provisions of any contract between
the Corporation and such employee, shall be at the pleasure of the Corporation
and at such compensation as the Corporation shall reasonably determine. Any
termination of such employee's employment during the period which he has agreed
pursuant to the foregoing provisions of this paragraph 11 to remain in
employment that is either (a) for cause or (b) voluntary on the part of the
employee and without the consent of the Corporation shall be deemed a violation
by the employee of his agreement. In the event of such violation, any Option
or Options held by him, to the extent not previously exercised, shall
immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death or disability), such Option shall
terminate. So long as the holder of any Option shall continue to be an
employee of the Corporation, his Option shall not be affected by any change in
his duties or position. Nothing in the Plan or in any option agreement shall
confer upon any employee any right to continue in the employ of the
Corporation, or interfere in any way with the right of the Corporation to
terminate his employment at any time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by
the Corporation such Option may be exercised (to the extent that the employee
shall have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
Incentive Stock Option Plan -- No. 2
February 19, 1994
2
<PAGE> 3
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more than
five years after the date on which such Option shall have been granted). In the
case of an employee's disability, the employee shall exercise said Option
within one (1) year following his termination of employment due to disability
(within the meaning of the term as defined in Section 22(e) of the Internal
Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in the
outstanding Common Shares of the Corporation by reason of share dividends,
split-ups, recapitalizations, mergers, consolidations, combination or exchange
of shares, separations, reorganizations, or liquidations, the number and class
of shares available under the Plan in the aggregate and in any Plan Year and
the maximum number of shares as to which Options may be granted to any employee
shall be correspondingly adjusted by the President. Notwithstanding the
foregoing, no adjustment shall be made in the minimum number of shares that may
be purchased at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date
as the Board of Directors shall determine, but only after:
(a) the shareholders of the Corporation shall, by the affirmative vote
of a majority in interest of all shareholders owning capital stock with
voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "B" shall have been
duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be granted
Options to purchase Common Shares which are exercisable during any one calendar
year, to the extent that the fair market value of such shares (determined at
the time of the grant of the Option) exceeds $100,000. No employee shall be
given the opportunity to exercise options granted hereunder with respect to
shares valued in excess of $100,000 in any calendar year, except and to the
extent that the Options shall have accumulated over a period in excess of one
year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January 31,
1999, and an Option shall not be granted under the Plan after that date. The
Plan (including the form of option agreement that is attached hereto and marked
Exhibit "B") may at any time or from time to time be terminated, modified, or
amended by the affirmative vote of a majority in interest of all of the shares
of the Corporation entitled to vote. The Board of Directors may at any time
and from time to time modify or amend the Plan (including such form of option
agreement) in such respects as it shall deem advisable in order that the
Options shall continue to be "incentive stock options" as defined in Section
422 of the Internal Revenue Code of 1986, as amended, or to conform to any
change in the law, or in any other respect which shall not change:
(a) the maximum number of shares for which Options may be granted
under the Plan either in the aggregate or in any Plan Year or to any
individual employee;
(b) the option prices other than to change the manner of determining
the fair market value of the Common Shares for the purposes of
paragraph 7 hereof to
Incentive Stock Option Plan -- No. 2
February 19, 1994
3
<PAGE> 4
conform with any then applicable provisions of the Internal Revenue
Code or regulations thereunder;
(c) the periods during which Options may be granted or exercised:
(d) the provisions relating to the determination of employees to whom
Options shall be granted and the numbers of shares to be covered
by such Options; or
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination of any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an Option previously
granted to him.
19. REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit B shall constitute an addendum and
joinder to said Stockholders Agreement. To the extent the terms and
conditions of the Stockholders Agreement are not inconsistent with the
terms and conditions set forth in the Plan and the Agreement attached
as Exhibit B, said terms and conditions shall remain in full force and
effect.
(b) In the event of the termination of employment for any reason, including
death, disability or retirement, the Corporation shall have the option to
purchase the Common Shares from the Employee, his legal guardian or the
personal representative of his estate. The purchase price shall be equal to
the Option Price plus four percent (4%) per annum measured from the date of
exercise. The Corporation shall exercise its option within sixty (60) days
following the termination of employment. If the Corporation fails to timely
exercise said option, the employee may dispose of said Common Shares subject
to the following conditions:
(1) the Corporation shall have the first right of refusal as to
any subsequent sale or other disposition upon the same terms and
conditions of such sale or other disposition to a third party; and
(2) no sale or other disposition shall be made unless counsel
for the Corporation renders its opinion that the sale or other
disposition is subject to an exemption under applicable federal and
state securities laws.
20. This incentive Stock Option Plan -- No. 2 was adopted by the
Corporation on February 19, 1994, with an effective date of February 19, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ By: /s/ Bahram Yusefzadeh
--------------------- ---------------------------
Secretary Bahram Yusefzadeh President
Incentive Stock Option Plan -- No. 2
February 19, 1994
4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 2
February 19, 1994
5
<PAGE> 1
EXHIBIT 10.3
PHOENIX INTERNATIONAL LTD., INC.
STOCK OPTION PLAN - NO. 3
[DIRECTOR COMPENSATION]
1. Purpose of Plan. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
"Corporation"), by members of the Corporation's Board of Directors and to
provide additional incentive for them to promote the success of the business.
2. Shares subject to plan. There will be reserved for use upon the
exercise of options to be granted from time to time under the Plan ("Options"),
an aggregate of 36,000 Class E Non-Voting Common Shares, of the par value of
$2.50 per share (the "Common Shares"), of the Corporation, which shares shall
be authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 36,000 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options which may be granted in accordance with
the terms of the Plan.
3. Administration of Plan. Subject to the provisions of the Plan, the
Board of Directors shall have plenary authority in its discretion to interpret
the Plan and to prescribe, amend and rescind rules and regulations relating to
it.
4. Directors to whom Options shall be granted. An option shall be
granted in February, 1994 to each of the following members of the Board of
Directors ("Director"): Bahram Yusefzadeh, George W.B. Taylor, Michael R.
Newes, Raymond A. Perkins, Jr., Michael Murphy, O.Jay Tomson, Ronald E. Fenton,
James C. Holly and William Hess.
5. Number of shares covered by Options granted to individual employees.
The number of shares of the Common Stock covered by the Option that shall be
granted to any individual member of the Board of Directors in February, 1994,
shall be 4,000.
6. Option prices. The purchase price of the Common Shares which shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
<PAGE> 2
7. Terms of Options. Each Option must be exercised at any time between
February 19, 1994, and the last business day prior to the initial public
offering of capital stock of the Corporation.
8. Exercise of Options. Subject to paragraph 7 hereof, an Option may be
exercised, at any time or from time to time, as to any part of or all the
shares which shall be covered thereby; provided, however, that an Option may
not be exercised as to less than 100 shares at any one time (or the remaining
shares then purchasable under the Option, if less than 100 shares). The
purchase price of the shares as to which an Option shall be exercised shall be
paid in full in cash at the time of exercise. The holder of an Option shall
not have any of the rights of a shareholder with respect to the shares covered
by his Option, except to the extent that one or more certificates for such
shares shall be delivered to him upon the due exercise of the Option.
9. Nontransferability. An Option shall not be transferable otherwise
than by will or the laws of descent and distribution, and an Option may be
exercised, during the lifetime of the option holder, only by such individual.
10. Death or Disability of Director. If an individual to whom an Option
shall have been granted shall die or become disabled such Option may be
exercised (to the extent that the option holder shall have been entitled to do
so at the date of his death or disability) by a beneficiary or beneficiaries of
the option holder under his last will or as designated in the Option Agreement,
or by his personal representatives or distributees, at any time after his death
or disability, within the limitations set forth in paragraph 7 hereof.
11. Adjustments upon changes in capitalization. In the event of changes
in the outstanding Common Shares of the Corporation by reason of share
dividends, split-ups, recapitalizations, mergers, consolidations, combination
or exchange of shares, separations, reorganizations, or liquidations, the
number and class of shares available under the Plan in the aggregate and in any
Plan Year and the maximum number of shares as to which Options may be granted
to the Director shall be correspondingly adjusted by the President.
Notwithstanding the foregoing, no adjustment shall be made in the minimum
number of shares which may be purchased at any time.
12. Effectiveness of Plan. The Plan shall become effective on such date
as the Board of Directors shall determine, but only after: (a) the shareholders
of the Corporation shall, by the affirmative vote of a majority in interest of
all shareholders owning capital stock with voting rights have approved the
Plan; and (b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
<PAGE> 3
13. Time of granting Options. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement which is attached hereto and marked Exhibit "A" shall have
been duly executed and delivered by or on behalf of the Corporation and by the
Director to whom such Option shall be granted.
14. Termination and Amendment of Plan. The Plan shall terminate on
January 31, 1999, and an Option shall not be granted under the Plan after the
date.
15. Redemption of Common Shares. The Option holder's execution of the
Agreement in the form attached hereto as Exhibit A shall constitute an addendum
and joinder to the Stockholders Agreement in effect as of the date of the
exercise of the Option. To the extent the terms and conditions of the
Stockholders Agreement are not inconsistent with the terms and conditions set
forth in the Plan and the Agreement attached as Exhibit A, said terms and
conditions shall remain in full force and effect.
16. This Incentive Stock Option Plan - No.3 was adopted by the
Corporation on February 19, 1994, with an effective date of February 19, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ Bradley J. Davis By: /s/ Bahram Yusefzadeh
-------------------- ----------------------------
Bradley J. Davis Bahram Yusefzadeh, President
Secretary
<PAGE> 1
EXHIBIT 10.4
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 4
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise of
options to be granted from time to time under the Plan ("Options"), an
aggregate of 100,000 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 100,000 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options which may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted in
each Plan Year to each employee of the Corporation who shall be selected by the
President from the class of employees made up of those employees who provide
services and support to the Corporation and who may be officers or directors of
the Corporation and who may be heads of departments of the Corporation, whether
or not in any case the grantee shall have received one or more Options
hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years from
the date of the grant thereof be granted to any person who, immediately after
such Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or
of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES. The
number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 50,000.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the President shall take into account the duties of
the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares which shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
Incentive Stock Option Plan -- No. 4
February 19, 1994
Page 1
<PAGE> 2
8. TERMS OF OPTIONS.
(a) Subject to paragraph 8(b) each option must be exercised upon the
earlier of (i) five years from the date of the grant thereof; or (2) the last
business day prior to the initial public offering of capital stock of the
Corporation. The Option term may be subject to termination prior to the
expiration of the period mentioned above, as provided hereinafter.
(b) No Option shall be granted prior to the date upon which the product
described in Exhibit B has been installed and the bank is in balance for five
(5) consecutive business days, which date is expected to be May 20, 1994. No
Option granted pursuant to this Agreement may be exercised until the product
has been installed in the third bank and is in balance for five (5) consecutive
days, which date is expected to be August 5, 1994.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from time
to time, as to any part of or all the shares which shall be covered thereby;
provided, however, that an Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the
Option to the date of its exercise. The holder of an Option shall not have any
of the rights of a shareholder with respect to the shares covered by his
Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an Option shall, as
one of the terms of the option agreement hereinafter referred to, agree that he
will, during such employment, devote his full business time, energy, and skill
to the service of the Corporation, subject to vacations, sick leaves, and
military absences. Such employment, subject to the provisions paragraph 12
hereof and subject also to the provisions of any contract between the
Corporation and such employee, shall be at the pleasure of the Corporation and
at such compensation as the Corporation shall reasonably determine. Any
termination of such employee's employment during the period which he has agreed
pursuant to the foregoing provisions of this paragraph 11 to remain in
employment that is either (a) for cause or (b) voluntary on the part of the
employee and without the consent of the Corporation shall be deemed a violation
by the employee of his agreement. In the event of such violation, any Option
or Options held by him, to the extent not previously exercised, shall
immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death or disability), such Option shall terminate.
So long as the holder of any Option shall continue to be an employee of the
Corporation, his Option shall not be affected by any change in his duties or
position. Nothing in the Plan or in any option agreement shall confer upon any
employee any right to continue in the employ of the Corporation, or interfere
in any way with the right of the Corporation to terminate his employment at any
time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by
the Corporation such Option may be exercised (to the extent that the employee
shall have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
Incentive Stock Option Plan -- No. 4
February 19, 1994
Page 2
<PAGE> 3
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more
than five years after the date on which such Option shall have been granted).
In the case of an employee's disability, the employee shall exercise said
Option within one (1) year following his termination of employment due to
disability (within the meaning of the term as defined in Section 22(e) of the
Internal Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in the
outstanding Common Shares of the Corporation by reason of share dividends,
split-ups, recapitalizations, mergers, consolidations, combination or exchange
of shares, separations, reorganizations, or liquidations, the number and class
of shares available under the Plan in the aggregate and in any Plan Year and
the maximum number of shares as to which Options may be granted to any employee
shall be correspondingly adjusted by the President. Notwithstanding the
foregoing, no adjustment shall be made in the minimum number of shares that may
be purchased at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as the
Board of Directors shall determine, but only after
(a) the shareholders of the Corporation shall, by the affirmative vote
of a majority in interest of all shareholders owning capital stock with
voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have
been duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be granted
Options to purchase Common Shares which are exercisable during any one calendar
year, to the extent that the fair market value of such shares (determined at
the time of the grant of the Option) exceeds $100,000. No employee shall be
given the opportunity to exercise options granted hereunder with respect to
shares valued in excess of $100,000 in any calendar year, except and to the
extent that the Options shall have accumulated over a period in excess of one
year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January 31,
1999, and an Option shall not be granted under the Plan after that date. The
Plan (including the form of option agreement which is attached hereto and
marked Exhibit "A") may at any time or from time to time be terminated,
modified, or amended by the affirmative vote of a majority in interest of all
the shares of the Corporation entitled to vote. The Board of Directors may at
any time and from time to time modify or amend the Plan (including such form of
option agreement) in such respects as it shall deem advisable in order that the
Options shall continue to be "incentive stock options" as defined in Section
422 of the Internal Revenue Code of 1986, as amended, or to conform to any
change in the law, or in any other respect which shall not change:
(a) the maximum number of shares for which Options may be granted under
the Plan either in the aggregate or in any Plan Year or to any individual
employee;
(b) the option prices other than to change the manner of determining the
fair market value of the Common Shares for the purposes of paragraph 7
hereof to
Incentive Stock Option Plan -- No. 4
February 19, 1994
Page 3
<PAGE> 4
conform with any then applicable provisions of the Internal
Revenue Code or regulations thereunder,
(c) the periods during which Options may be granted or exercised;
(d) the provisions relating to the determination of employees to whom
Options shall be granted and the numbers of shares to be covered by such
Options; or
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination or any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an Option previously
granted to him.
19. REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit B shall constitute an addendum and joinder
to said Stockholders Agreement. To the extent the terms and conditions of
the Stockholders Agreement are not inconsistent with the terms and
conditions set forth in this Plan and the Agreement attached as Exhibit A,
said terms and conditions shall remain in full force and effect.
(b) In the event of the termination of employment for any reason,
including death, disability or retirement, the Corporation shall have the
option to purchase the Common Shares from the Employee, his legal guardian
or the personal representative of his estate. The purchase price shall be
equal to the Option Price plus four percent (4%) per annum measured from
the date of exercise. The Corporation shall exercise its option within
sixty (60) days following the termination of employment. If the
Corporation fails to timely exercise said option, the employee may dispose
of said Common Shares subject to the following conditions:
(1) the Corporation shall have the first right of refusal as to any
subsequent sale or other disposition upon the same terms and
conditions of such sale or other disposition to a third party; and
(2) no sale or other disposition shall be made unless counsel for the
Corporation renders its opinion that the sale or other disposition is
subject to an exemption under applicable federal and state securities
laws.
20. This incentive Stock Option Plan - No. 4 was adopted by the Corporation on
February 19, 1994, with an effective date of February 19, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ Bradley J. Davis By: /s/ Bahram Yusefzadeh
--------------------------- ------------------------
Bradley J. Davis, Secretary Bahram Yusefzadeh, President
Incentive Stock Option Plan -- No. 4
February 19, 1994
Page 4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 4
February 19, 1994
Page 5
<PAGE> 1
EXHIBIT 10.5
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 5
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise of
options to be granted from time to time under the Plan ("Options"), an
aggregate of 3,000 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 3,000 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options which may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted in
each Plan Year to each employee of the Corporation who shall be selected by the
President from the class of employees made up of those employees who provide
staff services and support to the Corporation and who are not officers or
directors of the Corporation and who are not heads of departments of the
Corporation, whether or not in any case the grantee shall have received one or
more Options hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years from
the date of the grant thereof be granted to any person who, immediately after
such Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or
of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES. The
number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 2,000.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the President shall take into account the duties of
the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares which shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
Incentive Stock Option Plan -- No. 5
February 19, 1994
Page 1
<PAGE> 2
8. TERMS OF OPTIONS. Each Option must be exercised upon the earlier of
(i) five years from the date of the grant thereof, or (ii) the last business day
prior to the initial public offering of capital stock of the Corporation. The
Option term may be subject to termination prior to the expiration of the period
mentioned above, as provided hereinafter.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from time
to time, as to any part of or all the shares which shall be covered thereby;
provided, however, that an Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the
Option to the date of its exercise. The holder of an Option shall not have any
of the rights of a shareholder with respect to the shares covered by his
Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an Option shall,
as one of the terms of the option agreement hereinafter referred to, agree that
he will, during such employment, devote his full business time, energy, and
skill to the service of the Corporation, subject to vacations, sick leaves, and
military absences. Such employment, subject to the provisions paragraph 12
hereof and subject also to the provisions of any contract between the
Corporation and such employee, shall be at the pleasure of the Corporation and
at such compensation as the Corporation shall reasonably determine. Any
termination of such employee's employment during the period which he has agreed
pursuant to the foregoing provisions of this paragraph 11 to remain in
employment that is either (a) for cause or (b) voluntary on the part of the
employee and without the consent of the Corporation shall be deemed a violation
by the employee of his agreement. In the event of such violation, any Option
or Options held by him, to the extent not previously exercised, shall
immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death or disability), such Option shall terminate.
So long as the holder of any Option shall continue to be an employee of the
Corporation, his Option shall not be affected by any change in his duties or
position. Nothing in the Plan or in any option agreement shall confer upon any
employee any right to continue in the employ of the Corporation, or interfere
in any way with the right of the Corporation to terminate his employment at any
time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by
the Corporation such Option may be exercised (to the extent that the employee
shall have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more
than five years after the date on which such Option shall have been granted).
In the case of an employee's disability, the employee shall exercise said
Option within one (1) year following his termination of employment due to
disability (within the meaning of the term as defined in Section 22(e) of the
Internal Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
the outstanding Common Shares of the Corporation by reason of share dividends,
split-ups,
Incentive Stock Option Plan -- No. 5
February 19, 1994
Page 2
<PAGE> 3
recapitalizations, mergers, consolidations, combination or exchange of shares,
separations, reorganizations, or liquidations, the number and class of shares
available under the Plan in the aggregate and in any Plan Year and the maximum
number of shares as to which Options may be granted to any employee shall be
correspondingly adjusted by the President. Notwithstanding the foregoing, no
adjustment shall be made in the minimum number of shares that may be purchased
at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as
the Board of Directors shall determine, but only after:
(a) the shareholders of the Corporation shall, by the affirmative vote
of a majority in interest of all shareholders owning capital stock with
voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have been
duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be granted
Options to purchase Common Shares which are exercisable during any one calendar
year, to the extent that the fair market value of such shares (determined at
the time of the grant of the Option) exceeds $100,000. No employee shall be
given the opportunity to exercise options granted hereunder with respect to
shares valued in excess of $100,000 in any calendar year, except and to the
extent that the Options shall have accumulated over a period in excess of one
year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January
31, 1999, and an Option shall not be granted under the Plan after that date.
The Plan (including the form of option agreement which is attached hereto and
marked Exhibit "A") may at any time or from time to time be terminated,
modified, or amended by the affirmative vote of a majority in interest of all
the shares of the Corporation entitled to vote. The Board of Directors may at
any time and from time to time modify or amend the Plan (including such form of
option agreement) in such respects as it shall deem advisable in order that the
Options shall continue to be "incentive stock options" as defined in Section
422 of the Internal Revenue Code of 1986, as amended, or to conform to any
change in the law, or in any other respect which shall not change:
(a) the maximum number of shares for which Options may be granted under
the Plan either in the aggregate or in any Plan Year or to any
individual employee;
(b) the option prices other than to change the manner of determining the
fair market value of the Common Shares for the purposes of paragraph 7
hereof to conform with any then applicable provisions of the Internal
Revenue Code or regulations thereunder;
(c) the periods during which Options may be granted or exercised;
(d) the provisions relating to the determination of employees to whom
Options shall be granted and the numbers of shares to be covered by such
Options; or
Incentive Stock Option Plan -- No. 5
February 19, 1994
Page 3
<PAGE> 4
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination or any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an Option previously
granted to him.
19. REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit A shall constitute an addendum and
joinder to said Stockholders Agreement. To the extent the terms and
conditions of the Stockholders Agreement are not inconsistent with the
terms and conditions set forth in this Plan and the Agreement attached
as Exhibit A, said terms and conditions shall remain in full force and
effect.
(b) In the event of the termination of employment for any reason,
including death, disability or retirement, the Corporation shall have
the option to purchase the Common Shares from the Employee, his legal
guardian or the personal representative of his estate. The purchase
price shall be equal to the Option Price plus four percent (4%) per
annum measured from the date of exercise. The Corporation shall
exercise its option within sixty (60) days following the termination of
employment. If the Corporation fails to timely exercise said option,
the employee may dispose of said Common Shares subject to the
following conditions:
(1) the Corporation shall have the first right of refusal as to
any subsequent sale or other disposition upon the same terms and
conditions of such sale or other disposition to a third party; and
(2) no sale or other disposition shall be made unless counsel for
the Corporation renders its opinion that the sale or other
disposition is subject to an exemption under applicable federal
and state securities laws.
20. This incentive Stock Option Plan - No. 5 was adopted by the Corporation
on February 19, 1994, with an effective date of February 19, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ Bradley J. Davis By: /s/ Bahram Yusefzadeh
--------------------------- ----------------------------
Bradley J. Davis, Secretary Bahram Yusefzadeh, President
Incentive Stock Option Plan -- No. 5
February 19, 1994
Page 4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 5
February 19, 1994
Page 5
<PAGE> 1
EXHIBIT 10.6
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 6
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise of
options to be granted from time to time under the Plan ("Options"), an
aggregate of 14,500 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 14,500 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options which may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted in
each Plan Year to each employee of the Corporation who shall be selected by the
President from the class of employees made up of those employees who provide
services and support to the Corporation and who may be officers or directors of
the Corporation and who may be heads of departments of the Corporation, whether
or not in any case the grantee shall have received one or more Options
hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years from
the date of the grant thereof be granted to any person who, immediately after
such Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or
of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES. The
number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 3,000.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the President shall take into account the duties of
the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares which shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
Incentive Stock Option Plan -- No. 6
September 1, 1994
Page 1
<PAGE> 2
8. TERMS OF OPTIONS.
(a) Subject to paragraph 8(b) each Option must be exercised upon the
earlier of (i) five years from the date of the grant thereof; or (ii) the last
business day prior to the initial public offering of capital stock of the
Corporation. The Option term may be subject to termination prior to the
expiration of the period mentioned above, as provided hereinafter.
(b) No Option granted pursuant to this Agreement may be exercised until
the product described in Exhibit B has been installed in the Bank of the
Sierra and is in balance for five (5) consecutive days, which date is
expected to be no later than January 31, 1995.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from time
to time, as to any part of or all the shares which shall be covered thereby;
provided, however, that an Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the
Option to the date of its exercise. The holder of an Option shall not have any
of the rights of a shareholder with respect to the shares covered by his
Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an Option shall,
as one of the terms of the option agreement hereinafter referred to, agree that
he will, during such employment, devote his full business time, energy, and
skill to the service of the Corporation, subject to vacations, sick leaves, and
military absences. Such employment, subject to the provisions paragraph 12
hereof and subject also to the provisions of any contract between the
Corporation and such employee, shall be at the pleasure of the Corporation and
at such compensation as the Corporation shall reasonably determine. Any
termination of such employee's employment during the period which he has agreed
pursuant to the foregoing provisions of this paragraph 11 to remain in
employment that is either (a) for cause or (b) voluntary on the part of the
employee and without the consent of the Corporation shall be deemed a violation
by the employee of his agreement. In the event of such violation, any Option
or Options held by him, to the extent not previously exercised, shall
immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death or disability), such Option shall terminate.
So long as the holder of any Option shall continue to be an employee of the
Corporation, his Option shall not be affected by any change in his duties or
position. Nothing in the Plan or in any option agreement shall confer upon any
employee any right to continue in the employ of the Corporation, or interfere
in any way with the right of the Corporation to terminate his employment at any
time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by
the Corporation such Option may be exercised (to the extent that the employee
shall have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more
than five years after the date on which such
Incentive Stock Option Plan -- No. 6
September 1, 1994
Page 2
<PAGE> 3
Option shall have been granted). In the case of an employee's disability, the
employee shall exercise said Option within one (1) year following his
termination of employment due to disability (within the meaning of the term as
defined in Section 22(e) of the Internal Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in the
outstanding Common Shares of the Corporation by reason of share dividends,
split-ups, recapitalizations, mergers, consolidations, combination or exchange
of shares, separations, reorganizations, or liquidations, the number and class
of shares available under the Plan in the aggregate and in any Plan Year and
the maximum number of shares as to which Options may be granted to any employee
shall be correspondingly adjusted by the President. Notwithstanding the
foregoing, no adjustment shall be made in the minimum number of shares that may
be purchased at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as the
Board of Directors shall determine, but only after
(a) the shareholders of the Corporation shall, by the affirmative vote
of a majority in interest of all shareholders owning capital stock with
voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have been
duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be granted
Options to purchase Common Shares which are exercisable during any one calendar
year, to the extent that the fair market value of such shares (determined at
the time of the grant of the Option) exceeds $100,000. No employee shall be
given the opportunity to exercise options granted hereunder with respect to
shares valued in excess of $100,000 in any calendar year, except and to the
extent that the Options shall have accumulated over a period in excess of one
year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January 31,
1999, and an Option shall not be granted under the Plan after that date. The
Plan (including the form of option agreement which is attached hereto and
marked Exhibit "A") may at any time or from time to time be terminated,
modified, or amended by the affirmative vote of a majority in interest of all
the shares of the Corporation entitled to vote. The Board of Directors may at
any time and from time to time modify or amend the Plan (including such form of
option agreement) in such respects as it shall deem advisable in order that the
Options shall continue to be "incentive stock options" as defined in Section
422 of the Internal Revenue Code of 1986, as amended, or to conform to any
change in the law, or in any other respect which shall not change:
(a) the maximum number of shares for which Options may be granted
under the Plan either in the aggregate or in any Plan Year or to any
individual employee;
(b) the option prices other than to change the manner of determining
the fair market value of the Common Shares for the purposes of
paragraph 7 hereof to conform with any then applicable provisions of
the Internal Revenue Code or regulations thereunder;
Incentive Stock Option Plan -- No. 6
September 1, 1994
Page 3
<PAGE> 4
(c) the periods during which Options may be granted or exercised
(d) the provisions relating to the determination of employees to whom
Options shall be granted and the numbers of shares to be covered by such
Options; or
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination or any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an Option previously
granted to him.
19. REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit A shall constitute an addendum and
joinder to said Stockholders Agreement. To the extent the terms and
conditions of the Stockholders Agreement are not inconsistent with the
terms and conditions set forth in the Plan and the Agreement attached
as Exhibit A, said terms and conditions shall remain in full force and
effect.
(b) In the event of the termination of employment for any reason,
including death, disability or retirement, the Corporation shall have
the option to purchase the Common Shares from the Employee, his legal
guardian or the personal representative of his estate. The purchase
price shall be equal to the Option Price plus four percent (4%) per
annum measured from the date of exercise. The Corporation shall
exercise its option within sixty (60) days following the termination of
employment. If the Corporation fails to timely exercise said option,
the employee may dispose of said Common Shares subject to the following
conditions:
(1) the Corporation shall have the first right of refusal as
to any subsequent sale or other disposition upon the same
terms and conditions of such sale or other disposition to a
third party; and
(2) no sale or other disposition shall be made unless counsel
for the Corporation renders its opinion that the sale or other
disposition is subject to an exemption under applicable
federal and state securities laws.
20. This incentive Stock Option Plan - No. 6 was adopted by the Corporation
on September 1, 1994, with an effective date of September 1, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest
/s/ Bradley J. Davis By /s/ Bahram Yusefzadeh
--------------------------- -----------------------------
Bradley J. Davis, Secretary Bahram Yusefzadeh, President
Incentive Stock Option Plan -- No. 6
September 1, 1994
Page 4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 6
September 1, 1994
Page 5
<PAGE> 1
EXHIBIT 10.7
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 7
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise of
options to be granted from time to time under the Plan ("Options"), an
aggregate of 9,500 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 9,500 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options which may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted in
each Plan Year to each employee of the Corporation who shall be selected by the
President from the class of employees made up of those employees who provide
services and support to the Corporation and who may be officers or directors of
the Corporation and who may be heads of departments of the Corporation, whether
or not in any case the grantee shall have received one or more Options
hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years from
the date of the grant thereof be granted to any person who, immediately after
such Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or
of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES. The
number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 3,000.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the President shall take into account the duties of
the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares which shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted,
Incentive Stock Option Plan -- No. 7
September 1, 1994
Page 1
<PAGE> 2
8. TERMS OF OPTIONS. Each Option must be exercised upon the earlier of (i) five
years from the date of the grant thereof;, or (ii) the last business day prior
to the initial public offering of capital stock of the Corporation. The Option
term may be subject to termination prior to the expiration of the period
mentioned above, as provided hereinafter.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from time to
time, as to any part of or all the shares which shall be covered thereby;
provided, however, that an Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the
Option to the date of its exercise. The holder of an Option shall not have any
of the rights of a shareholder with respect to the shares covered by his
Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an Option shall, as
one of the terms of the option agreement hereinafter referred to, agree that he
will, during such employment, devote his full business time, energy, and skill
to the service of the Corporation, subject to vacations, sick leaves, and
military absences. Such employment, subject to the provisions paragraph 12
hereof and subject also to the provisions of any contract between the
Corporation and such employee, shall be at the pleasure of the Corporation and
at such compensation as the Corporation shall reasonably determine. Any
termination of such employee's employment during the period which he has agreed
pursuant to the foregoing provisions of this paragraph 11 to remain in
employment that is either (a) for cause or (b) voluntary on the part of the
employee and without the consent of the Corporation shall be deemed a violation
by the employee of his agreement. In the event of such violation, any Option
or Options held by him, to the extent not previously exercised, shall
immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death or disability), such Option shall terminate.
So long as the holder of any Option shall continue to be an employee of the
Corporation, his Option shall not be affected by any change in his duties or
position. Nothing in the Plan or in any option agreement shall confer upon any
employee any right to continue in the employ of the Corporation, or interfere in
any way with the right of the Corporation to terminate his employment at any
time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by
the Corporation such Option may be exercised (to the extent that the employee
shall have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more
than five years after the date on which such Option shall have been granted).
In the case of an employee's disability, the employee shall exercise said
Option within one (1) year following his termination of employment due to
disability (within the meaning of the term as defined in Section 22(e) of the
Internal Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
the outstanding Common Shares of the Corporation by reason of share dividends,
split-ups,
Incentive Stock Option Plan -- No. 7
September 1, 1994
Page 2
<PAGE> 3
recapitalizations, mergers, consolidations, combination or exchange of shares,
separations, reorganizations, or liquidations, the number and class of shares
available under the Plan in the aggregate and in any Plan Year and the maximum
number of shares as to which Options may be granted to any employee shall be
correspondingly adjusted by the President. Notwithstanding the foregoing, no
adjustment shall be made in the minimum number of shares that may be purchased
at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as the
Board of Directors shall determine, but only after:
(a) the shareholders of the Corporation shall, by the affirmative vote
of a majority in interest of all shareholders owning capital stock with
voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have
been duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be granted
Options to purchase Common Shares which are exercisable during any one calendar
year, to the extent that the fair market value of such shares (determined at
the time of the grant of the Option) exceeds $100,000. No employee shall be
given the opportunity to exercise options granted hereunder with respect to
shares valued in excess of $100,000 in any calendar year, except and to the
extent that the Options shall have accumulated over a period in excess of one
year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January
31, 1999, and an Option shall not be granted under the Plan after that date.
The Plan (including the form of option agreement which is attached hereto and
marked Exhibit "A") may at any time or from time to time be terminated,
modified, or amended by the affirmative vote of a majority in interest of all
the shares of the Corporation entitled to vote. The Board of Directors may at
any time and from time to time modify or amend the Plan (including such form
of option agreement) in such respects as it shall deem advisable in order that
the Options shall continue to be "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended, or to conform to
any change in the law, or in any other respect which shall not change:
(a) the maximum number of shares for which Options may be granted under
the Plan either in the aggregate or in any Plan Year or to any
individual employee;
(b) the option prices other than to change the manner of determining the
fair market value of the Common Shares for the purposes of paragraph 7
hereof to conform with any then applicable provisions of the Internal
Revenue Code or regulations thereunder;
(c) the periods during which Options may be granted or exercised;
(d) the provisions relating to the determination of employees to whom
Options shall be granted and the numbers of shares to be covered by such
Options; or
Incentive Stock Option Plan -- No. 7
September 1, 1994
Page 3
<PAGE> 4
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination or any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an Option previously
granted to him.
19. REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit A shall constitute an addendum and
joinder to said Stockholders Agreement. To the extent the terms and
conditions of the Stockholders Agreement are not inconsistent with the
terms and conditions set forth in the Plan and the Agreement attached as
Exhibit A, said terms and conditions shall remain in full force and
effect
(b) In the event of the termination of employment for any reason,
including death, disability or retirement, the Corporation shall have the
option to purchase the Common Shares from the Employee, his legal
guardian or the personal representative of his estate. The purchase
price shall be equal to the Option Price plus four percent (4%) per annum
measured from the date of exercise. The Corporation shall exercise its
option within sixty (60) days following the termination of employment.
If the Corporation fails to timely exercise said option, the employee may
dispose of said Common Shares subject to the following conditions:
(1) the Corporation shall have the first right of refusal as to any
subsequent sale or other disposition upon the same terms and
conditions of such sale or other disposition to a third party; and
(2) no sale or other disposition shall be made unless counsel for
the Corporation renders its opinion that the sale or other
disposition is subject to an exemption under applicable federal and
state securities laws.
20. This incentive Stock Option Plan - No. 7 was adopted by the Corporation on
September 1, 1994, with an effective date of September 1, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ Bradley J. Davis By: /s/ Bahram Yusefzadeh
--------------------------- ----------------------------
Bradley J. Davis, Secretary Bahram Yusefzadeh, President
Incentive Stock Option Plan -- No. 7
September 1, 1994
Page 4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 7
September 1, 1994
Page 5
<PAGE> 1
EXHIBIT 10.8
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 8
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise of
options to be granted from time to time under the Plan ("Options"), an
aggregate of 5,000 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 5,000 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options that may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted in
each Plan Year to each employee of the Corporation who shall be selected by the
President from the class of employees made up of those who are officers of the
Corporation and those who are heads of departments of the Corporation, whether
or not in any case the grantee shall have received one or more Options
hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years from
the date of the grant thereof be granted to any person who, immediately after
such Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or
of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES. The
number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 5,000.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the President shall take into account the duties of
the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares that shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
Incentive Stock Option Plan -- No. 8
September 1, 1994
Page 1
<PAGE> 2
8. TERM OF OPTIONS. Each Option must be exercised upon the earlier of (i) five
years from the date of the grant thereof; or (ii) the last business day prior
to the initial public offering of capital stock of the Corporation. The Option
term may be subject to termination prior to the expiration of the period
mentioned above, as provided hereinafter.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from time
to time, as to any part of or all the shares that shall be covered thereby;
provided, however, that an Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the
Option to the date of its exercise. The holder of an Option shall not have any
of the rights of a shareholder with respect to the shares covered by his
Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an Option shall, as
one of the terms of the option agreement hereinafter referred to, agree that he
will, during such employment, devote his full business time, energy, and skill
to the service of the Corporation, subject to vacations, sick leaves, and
military absences. Such employment, subject to the provisions of any contract
between the Corporation and such employee, shall be at the pleasure of the
Corporation and at such compensation as the Corporation shall reasonably
determine. Any termination of such employee's employment during the period
that he has agreed pursuant to the foregoing provisions of this paragraph 11
to remain in employment that is either (a) for cause or (b) voluntary on the
part of the employee and without the consent of the Corporation shall be deemed
a violation by the employee of his agreement. In the event of such violation,
any Option or Options held by him, to the extent not previously exercised,
shall immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death or disability), such Option shall terminate.
So long as the holder of any Option shall continue to be an employee of the
Corporation, his Option shall not be affected by any change in his duties or
position. Nothing in the Plan or in any option agreement shall confer upon any
employee any right to continue in the employ of the Corporation, or interfere
in any way with the right of the Corporation to terminate his employment at any
time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by
the Corporation such Option may be exercised (to the extent that the employee
shall have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more
than five years after the date on which such Option shall have been granted).
In the case of an employee's disability, the employee shall exercise said
Option within one (1) year following his termination of employment due to
disability (within the meaning of the term as defined in Section 22(e) of the
Internal Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in the
outstanding Common Shares of the Corporation by reason of share dividends,
split-ups, recapitalizations, mergers, consolidations, combination or exchange
of shares, separations,
Incentive Stock Option Plan -- No. 8
September 1, 1994
Page 2
<PAGE> 3
reorganizations, or liquidations, the number and class of shares available
under the Plan in the aggregate and in any Plan Year and the maximum number of
shares as to which Options may be granted to any employee shall be
correspondingly adjusted by the President. Notwithstanding the foregoing, no
adjustment shall be made in the minimum number of shares that may be purchased
at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as the
Board of Directors shall determine, but only after.
(a) the shareholders of the Corporation shall, by the affirmative vote
of a majority in interest of all shareholders owning capital stock with
voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have
been duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be granted
Options to purchase Common Shares that are exercisable during any one calendar
year, to the extent that the fair market value of such shares (determined at
the time of the grant of the Option) exceeds $100,000. No employee shall be
given the opportunity to exercise options granted hereunder with respect to
shares valued in excess of $100,000 in any calendar year, except and to the
extent that the Options shall have accumulated over a period in excess of one
year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January
31, 1999, and an Option shall not be granted under the Plan after that date.
The Plan (including the form of option agreement that is attached hereto and
marked Exhibit "A") may at any time or from time to time be terminated,
modified, or amended by the affirmative vote of a majority in interest of all
of the shares of the Corporation entitled to vote. The Board of Directors may
at any time and from time to time modify or amend the Plan (including such form
of option agreement) in such respects as it shall deem advisable in order that
the Options shall continue to be "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended, or to conform to
any change in the law, or in any other respect that shall not change:
(a) the maximum number of shares for which Options may be granted under
the Plan either in the aggregate or in any Plan Year or to any
individual employee;
(b) the option prices other than to change the manner of determining the
fair market value of the Common Shares for the purposes of paragraph 7
hereof to conform with any then applicable provisions of the Internal
Revenue Code or regulations thereunder;
(c) the periods during which Options may be granted or exercised;
(d) the provisions relating to the determination of employees to whom
Option shall be granted and the numbers of shares to be covered by such
Options; or
Incentive Stock Option Plan -- No. 8
September 1, 1994
Page 3
<PAGE> 4
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination of any modification or amendment of the Plan shall not,
without the consent of an employee, affect his rights under an Option
previously granted to him.
19. REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit A shall constitute an addendum and
joinder to said Stockholders Agreement. To the extent the terms and
conditions of the Stockholders Agreement are not inconsistent with the
terms and conditions set forth in the Plan and the Agreement attached as
Exhibit A, said terms and conditions shall remain in full force and
effect.
(b) In the event of the termination of employment for any reason,
including death, disability or retirement, the Corporation shall have
the option to purchase the Common Shares from the Employee, his legal
guardian or the personal representative of his estate. The purchase
price shall be equal to the Option Price plus four percent (4%) per
annum measured from the date of exercise. The Corporation shall
exercise its option within sixty (60) days following the termination of
employment. If the Corporation fails to timely exercise said option,
the employee may dispose of said Common Shares subject to the following
conditions:
(1) the Corporation shall have the first right of refusal as to any
subsequent sale or other disposition upon the same terms and
conditions of such sale or other disposition to a third party; and
(2) no sale or other disposition shall be made unless counsel for
the Corporation renders its opinion that the sale or other
disposition is subject to an exemption under applicable federal and
state securities laws.
20. This incentive Stock Option Plan -- No. 8 was adopted by the Corporation
on September 1, 1994, with an effective date of September 1, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ Bradly J. Davis By: /s/ Bahram Yusefzadeh
-------------------------- ----------------------------
Bradley J. Davis Secretary Bahram Yusefzadeh, President
Incentive Stock Option Plan -- No. 8
September 1, 1994
Page 4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 8
September 1, 1994
Page 5
<PAGE> 1
EXHIBIT 10.9
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 10
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise of
options to be granted from time to time under the Plan ("Options"), an
aggregate of 500 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 500 Common Shares;
provided, however, that, if an Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares covered thereby
shall (unless the Plan shall have been terminated) be added to the shares
otherwise available for Options which may be granted in accordance with the
terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted in
each Plan Year to each employee of the Corporation who shall be selected by the
President from the class of employees made up of those employees who provide
staff services and support to the Corporation and who are not officers or
directors of the Corporation and who are not heads of departments of the
Corporation, whether or not in any case the grantee shall have received one or
more Options hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years from
the date of the grant thereof be granted to any person who, immediately after
such Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or
of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES. The
number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 500.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the President shall take into account the duties of
the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares which shall be
covered by each Option shall be $10.00 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
Incentive Stock Option Plan -- No. 10
October 31, 1994
Page 1
<PAGE> 2
8. TERMS OF OPTIONS. Each Option must be exercised upon the earlier of (i) five
years from the date of the grant thereof; or (ii) the last business day prior to
the initial public offering of capital stock of the Corporation. The Option
term may be subject to termination prior to the expiration of the period
mentioned above, as provided hereinafter.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from time to
time, as to any part of or all the shares which shall be covered thereby;
provided, however, that an Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the
Option to the date of its exercise. The holder of an Option shall not have any
of the rights of a shareholder with respect to the shares covered by his
Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEE'S AGREEMENT TO SERVE. Each employee receiving an Option shall, as
one of the terms of the option agreement hereinafter referred to, agree that he
will, during such employment, devote his full business time, energy, and skill
to the service of the Corporation, subject to vacations, sick leaves, and
military absences. Such employment, subject to the provisions paragraph 12
hereof and subject also to the provisions of any contract between the
Corporation and such employee, shall be at the pleasure of the Corporation and
at such compensation as the Corporation shall reasonably determine. Any
termination of such employee's employment during the period which he has agreed
pursuant to the foregoing provisions of this paragraph 11 to remain in
employment that is either (a) for cause or (b) voluntary on the part of the
employee and without the consent of the Corporation shall be deemed a violation
by the employee of his agreement. In the event of such violation, any Option
or Options held by him, to the extent not previously exercised, shall
immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death or disability), such Option shall terminate.
So long as the holder of any Option shall continue to be an employee of the
Corporation, his Option shall not be affected by any change in his duties or
position. Nothing in the Plan or in any option agreement shall confer upon any
employee any right to continue in the employ of the Corporation, or interfere
in any way with the right of the Corporation to terminate his employment at any
time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by
the Corporation such Option may be exercised (to the extent that the employee
shall have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more
than five years after the date on which such Option shall have been granted).
In the case of an employee's disability, the employee shall exercise said
Option within one (1) year following his termination of employment due to
disability (within the meaning of the term as defined in Section 22(e) of the
Internal Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in the
outstanding Common Shares of the Corporation by reason of share dividends,
split-ups,
Incentive Stock Option Plan -- No. 10
October 31, 1994
Page 2
<PAGE> 3
recapitalizations, mergers, consolidations, combination or exchange of shares,
separations, reorganizations, or liquidations, the number and class of shares
available under the Plan in the aggregate and in any Plan Year and the maximum
number of shares as to which Options may be granted to any employee shall be
correspondingly adjusted by the President. Notwithstanding the foregoing, no
adjustment shall be made in the minimum number of shares that may be purchased
at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as
the Board of Directors shall determine, but only after:
(a) the shareholders of the Corporation shall, by the affirmative vote
of a majority in interest of all shareholders owning capital stock with
voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have
been duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be granted
Options to purchase Common Shares which are exercisable during any one calendar
year, to the extent that the fair market value of such shares (determined at
the time of the grant of the Option) exceeds $100,000. No employee shall be
given the opportunity to exercise options granted hereunder with respect to
shares valued in excess of $100,000 in any calendar year, except and to the
extent that the Options shall have accumulated over a period in excess of one
year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January 31,
1999, and an Option shall not be granted under the Plan after that date. The
Plan (including the form of option agreement which is attached hereto and
marked Exhibit "A") may at any time or from time to time be terminated,
modified, or amended by the affirmative vote of a majority in interest of all
the shares of the Corporation entitled to vote. The Board of Directors may at
any time and from time to time modify or amend the Plan (including such form of
option agreement) in such respects as it shall deem advisable in order that the
Options shall continue to be "incentive stock options" as defined in Section
422 of the Internal Revenue Code of 1986, as amended, or to conform to any
change in the law, or in any other respect which shall not change:
(a) the maximum number of shares for which Options may be granted under
the Plan either in the aggregate or in any Plan Year or to any
individual employee;
(b) the option prices other than to change the manner of determining the
fair market value of the Common Shares for the purposes of paragraph 7
hereof to conform with any then applicable provisions of the Internal
Revenue Code or regulations thereunder;
(c) the periods during which Options may be granted or exercised;
(d) the provisions relating to the determination of employees to whom
Options shall be granted and the numbers of shares to be covered by such
Options; or
Incentive Stock Option Plan -- No. 10
October 31, 1994
Page 3
<PAGE> 4
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination or any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an Option previously
granted to him.
19. REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit A shall constitute an addendum and
joinder to said Stockholders Agreement. To the extent the terms and
conditions of the Stockholders Agreement are not inconsistent with the
terms and conditions set forth in the Plan and the Agreement attached as
Exhibit A, said terms and conditions shall remain in full force and
effect.
(b) In the event of the termination of employment for any reason,
including death, disability or retirement, the Corporation shall have
the option to purchase the Common Shares from the Employee, his legal
guardian or the personal representative of his estate. The purchase
price shall be equal to the Option Price plus four percent (4%) per annum
measured from the date of exercise. The Corporation shall exercise its
option within sixty (60) days following the termination of employment.
If the Corporation fails to timely exercise said option, the employee may
dispose of said Common Shares subject to the following conditions:
(1) the Corporation shall have the first right of refusal as to
any subsequent sale or other disposition upon the same terms and
conditions of such sale or other disposition to a third party; and
(2) no sale or other disposition shall be made unless counsel for
the Corporation renders its opinion that the sale or other
disposition is subject to an exemption under applicable federal
and state securities laws.
20. This incentive Stock Option Plan - No. 10 was adopted by the Corporation
on October 31, 1994, with an effective date of October 31, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ Brad Davis /s/ Bahram Yusefzadeh
----------------------- ----------------------------
Brad Davis, Secretary Bahram Yusefzadeh, President
Incentive Stock Option Plan -- No. 10
October 31, 1994
Page 4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 10
October 31, 1994
Page 5
<PAGE> 1
EXHIBIT 10.10
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 11
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by key employees of the Corporation and to provide additional
incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise
of options to be granted from time to time under the Plan ("Options"), an
aggregate of 25,000 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares")-, of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 25,000 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options that may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION OF PLAN. Subject to the provisions of the Plan, the
President shall have plenary authority in his discretion to determine the
employees of the Corporation to whom Options shall be granted, the number of
shares to be covered by each of the Options, and the time or times at which
Options shall be granted; to interpret the Plan; and to prescribe, amend and
rescind rules and regulations relating to it.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted
in each Plan Year to each employee of the Corporation who shall be selected by
the President from the class of employees made up of those who are officers of
the Corporation and those who are heads of departments of the Corporation,
whether or not in any case the grantee shall have received one or more Options
hereunder in any previous Plan Year or Years.
In no event shall an Option that is exercisable more than five years from the
date of the grant thereof be granted to any person who, immediately after such
Option is granted, owns (as defined in Section 422 and 424 of the Internal
Revenue Code of 1986) shares possessing more than 10 percent of the total
combined voting power or value of all classes of shares of the Corporation or
of its parent or any subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL EMPLOYEES.
The number of shares of the Common Stock covered by the Option that shall be
granted to any individual employee in any Plan Year shall not exceed 5,000.
6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any determination as
to employees to whom Options shall be granted and as to the number of shares to
be covered by such Options, the President shall take into account the duties of
the respective employees, their present and potential contributions to the
success of the Corporation, and such other factors as the President shall deem
relevant in connection with accomplishing the purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares that shall be
covered by each Option shall be $2.50 per share of Common Shares, which
purchase price is the equivalent of the fair market value of the Common Shares
as of the date the Option is granted.
Incentive Stock Option Plan -- No. 11
September 1, 1994
Page 1
<PAGE> 2
8. TERMS OF OPTIONS.
(a) Subject to paragraph 8(b) each Option must be exercised upon the
earlier of (i) five years from the date of the grant thereof; or (2) the last
business day prior to the initial public offering of capital stock of the
Corporation. The Option term may be subject to termination prior to the
expiration of the period mentioned above, as provided hereinafter.
(b) No Option shall be exercised prior to the date upon which the product
described in Exhibit B has been installed at Bank of the Sierra and the bank is
in balance for five (5) consecutive business days, which date is expected to be
January 31, 1995.
9. EXERCISE OF OPTIONS. An Option may be exercised, at any time or from time
to time, as to any part of or all the shares that shall be covered thereby;
provided, however, that an Option may not be exercised as to less than 100
shares at any one time (or the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the shares as to which
an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in paragraphs 12 and 13 hereof, an Option may not
be exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation from the date of the granting of the
Option to the date of its exercise. The holder of an Option shall not have any
of the rights of a shareholder with respect to the shares covered by his
Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the employee, only by such employee.
11. EMPLOYEES AGREEMENT TO SERVE. Each employee receiving an Option shall, as
one of the terms of the option agreement hereinafter referred to, agree that he
will, during such employment, devote his full business time, energy, and skill
to the service of the Corporation, subject to vacations, sick leaves, and
military absences. Such employment, subject to the provisions of any contract
between the Corporation and such employee, shall be at the pleasure of the
Corporation and at such compensation as the Corporation shall reasonably
determine. Any termination of such employee's employment during the period
that he has agreed pursuant to the foregoing provisions of this paragraph 11 to
remain in employment that is either (a) for cause or (b) voluntary on the part
of the employee and without the consent of the Corporation shall be deemed a
violation by the employee of his agreement. In the event of such violation,
any Option or Options held by him, to the extent not previously exercised,
shall immediately terminate.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of any
employee to whom an Option shall have been granted shall be terminated
(otherwise than by reason of death or disability), such Option shall terminate.
So long as the holder of any Option shall continue to be an employee of the
Corporation, his Option shall not be affected by any change in his duties or
position. Nothing in the Plan or in any option agreement shall confer upon any
employee any right to continue in the employ of the Corporation, or interfere
in any way with the right of the Corporation to terminate his employment at any
time.
13. DEATH OR DISABILITY OF EMPLOYEE. If an employee to whom an Option shall
have been granted shall die or become disabled while he shall be employed by
the Corporation such Option may be exercised (to the extent that the employee
shall have been entitled to do so at the date of his death or disability) by a
beneficiary or beneficiaries of the employee under his last will or as
designated in the Option Agreement, or by his personal representatives or
distributees, at any time within three months after his death (but not more
than five years after the date on which such Option shall have been granted).
In the case of an employee's disability, the employee shall
Incentive Stock Option Plan -- No. 11
September 1, 1994
Page 2
<PAGE> 3
exercise said Option within one (1) year following his termination of
employment due to disability (within the meaning of the term as defined in
Section 22(e) of the Internal Revenue Code of 1986).
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
the outstanding Common Shares of the Corporation by reason of share dividends,
split-ups, recapitalizations, mergers, consolidations, combination or exchange
of shares, separations, reorganizations, or liquidations, the number and class
of shares available under the Plan in the aggregate and in any Plan Year and
the maximum number of shares as to which Options may be granted to any employee
shall be correspondingly adjusted by the President. Notwithstanding the
foregoing, no adjustment shall be made in the minimum number of shares that may
be purchased at any time.
15. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as
the Board of Directors shall determine, but only after:
(a) the shareholders of the Corporation shall, by the affirmative
vote of a majority in interest of all shareholders owning capital stock
with voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
16. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have been
duly executed and delivered by or on behalf of the Corporation and by the
employee to whom such Option shall be granted.
17. LIMITATION. No employee eligible to participate herein shall be
granted shall be granted Options to purchase Common Shares that are exercisable
during any one calendar year, to the extent that the fair market value of such
shares (determined at the time of the grant of the Option) exceeds $100,000.
No employee shall be given the opportunity to exercise options granted
hereunder with respect to shares valued in excess of $100,000 in any calendar
year, except and to the extent that the Options shall have accumulated over a
period in excess of one year.
18. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January
31, 1999, and an Option shall not be granted under the Plan after that date.
The Plan (including the form of option agreement that is attached hereto and
marked Exhibit "A") may at any time or from time to time be terminated,
modified, or amended by the affirmative vote of a majority in interest of all
of the shares of the Corporation entitled to vote. The Board of Directors may
at any time and from time to time modify or amend the Plan (including such form
of option agreement) in such respects as it shall deem advisable in order that
the Options shall continue to be "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended, or to conform to
any change in the law, or in any other respect that shall not change:
(a) the maximum number of shares for which Options may be granted
under the Plan either in the aggregate or in any Plan Year or to any
individual employee;
(b) the option prices other than to change the manner of determining
the fair market value of the Common Shares for the purposes of paragraph 7
hereof to conform with any then a applicable provisions of the Internal
Revenue Code or regulations thereunder;
Incentive Stock Option Plan -- No. 11
September 1, 1994
Page 3
<PAGE> 4
(c) the periods during which Options may be granted or exercised;
(d) the provisions relating to the determination of employees to whom
Option shall be granted and the numbers of shares to be covered by such
Options; or
(e) the provisions relating to adjustments to be made upon changes in
capitalization.
The termination of any modification or amendment of the Plan shall not, without
the consent of an employee, affect his rights under an Option previously
granted to him.
19. REDEMPTION OF COMMON SHARES.
(a) Notwithstanding any provisions to the contrary contained in the
Stockholders Agreement in effect as of the date Options are granted
pursuant to this Plan, the terms and conditions set forth herein shall
govern the sale or disposition of Common Shares purchased by exercising
such Option(s). The Option holder's execution of the Agreement in the
form attached hereto as Exhibit A shall constitute an addendum and joinder
to said Stockholders Agreement. To the extent the terms and conditions of
the Stockholders Agreement are not inconsistent with the terms and
conditions set forth in the Plan and the Agreement attached as Exhibit A,
said terms and conditions shall remain in full force and effect.
(b) In the event of the termination of employment for any reason,
including death, disability or retirement, the Corporation shall have the
option to purchase the Common Shares from the Employee, his legal guardian
or the personal representative of his estate. The purchase price shall be
equal to the Option Price plus four percent (4%) per annum measured from
the date of exercise. The Corporation shall exercise its option within
sixty (60) days following the termination of employment. If the
Corporation fails to timely exercise said option, the employee may dispose
of said Common Shares subject to the following conditions:
(1) the Corporation shall have the first right of refusal as to
any subsequent sale or other disposition upon the same terms and
conditions of such sale or other disposition to a third party; and
(2) no sale or other disposition shall be made unless counsel
for the Corporation renders its opinion that the sale or other
disposition is subject to an exemption under applicable federal and
state securities laws.
20. This incentive Stock Option Plan - No. 11 was adopted by the corporation
on September 1, 1994, with an effective date of September 1, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: By: /s/ Bahram Yusefzadeh
------------------------------- -----------------------------
Bradley J. Davis, Secretary Bahram Yusefzadeh, President
Incentive Stock Option Plan -- No. 11
September 1, 1994
Page 4
<PAGE> 5
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual employee's Stock Option Agreement.
Incentive Stock Option Plan -- No. 11
September 1, 1994
Page 5
<PAGE> 1
EXHIBIT 10.11
PHOENIX INTERNATIONAL LTD., INC.
INCENTIVE STOCK OPTION PLAN -- NO. 12
1. PURPOSE OF PLAN. This Stock Option Plan (the "Plan"), is intended to
encourage ownership of shares of Phoenix International Ltd., Inc. (the
Corporation), by members of the Corporation's Board of Directors and to provide
additional incentive for them to promote the success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the exercise
of options to be granted from time to time under the Plan ("Options"), an
aggregate of 36,000 Class E Non-Voting Common Shares, of the par value of $2.50
per share (the "Common Shares"), of the Corporation, which shares shall be
authorized but unissued Common Shares. For purposes of the Plan, the "Plan
Year" shall be the 12-month period ending on each August 31. Options shall not
be granted in any Plan Year for in excess of an aggregate of 36,000 Common
Shares; provided, however, that, if an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall (unless the Plan shall have been terminated) be added to the
shares otherwise available for Options that may be granted in accordance with
the terms of the Plan.
3. ADMINISTRATION PLAN. Subject to the provisions of the Plan, the Board of
Directors shall have plenary authority in its discretion to interpret the Plan;
and to prescribe, amend and rescind rules and regulations relating to it.
4. DIRECTORS OF WHOM OPTIONS SHALL BE GRANTED. An Option shall be granted in
February, 1994 to each of the following members of the Board of Directors
("Director"): Bahram Yusefzadeh, George W.B. Taylor, Michael R. Newes, Raymond
A. Parkins, Jr., Michael Murphy, 0. Jay Tomson, Ronald E. Fenton, James C. Holly
and William Hess.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL DIRECTORS. The
number of shares of the Common Stock covered by the Option that shall be granted
to any individual member of the Board of Directors in February, 1994 shall be
4,000.
6. OPTION PRICES. The purchase price of the Common Shares that shall be
covered by each Option shall be $2.50 per share of Common Shares, which purchase
price is the equivalent of the fair market value of the Common Shares as of the
date the Option is granted.
7. TERMS OF OPTIONS. Each Option must be exercised at any time between
February 19, 1994 and the last business day prior to the initial public
offering of capital stock of the Corporation.
8. EXERCISE OF OPTIONS. Subject to Paragraph 7 hereof, an Option may be
exercised, at any time or from time to time, as to any part of or all the shares
that shall be covered thereby; provided, however, that an Option may not be
exercised as to less than 100 shares at any one time (or the remaining shares
then purchasable under the Option, if less than 100 shares). The purchase price
of the shares as to which an Option shall be exercised shall be paid in full in
cash at the time of exercise. The holder of an Option shall not have any of the
rights of a shareholder with respect to the shares covered by his Option, except
to the extent that one or more certificates for such shares shall be delivered
to him upon the due exercise of the Option.
9. NONTRANSFERABILITY. An Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the option holder, only by such individual.
Incentive Stock Option Plan -- No. 12
February 19, 1994
Page 1
<PAGE> 2
10. DEATH OR DISABILITY OF DIRECTOR. If an individual to whom an Option shall
have been granted shall die or become disabled such Option may be exercised (to
the extent that the option holder shall have been entitled to do so at the date
of his death or disability) by a beneficiary or beneficiaries of the option
holder under his last will or as designated in the Option Agreement, or by his
personal representatives or distributees, at any time after his death or
disability, within the limitations set forth in paragraph 7 hereof.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in the
outstanding Common Shares of the Corporation by reason of share dividends,
split-ups, recapitalizations, mergers, consolidations, combination or exchange
of shares, separations, reorganizations, or liquidations, the number and class
of shares available under the Plan in the aggregate and in any Plan Year and
the maximum number of shares as to which Options may be granted to the Director
shall be correspondingly adjusted by the President. Notwithstanding the
foregoing, no adjustment shall be made in the minimum number of shares that may
be purchased at any time.
12. EFFECTIVENESS OF PLAN. The Plan shall become effective on such date as the
Board of Directors shall determine, but only after.
(a) the shareholders of the Corporation shall, by the affirmative
vote of a majority in interest of all shareholders owning capital stock
with voting rights have approved the Plan; and
(b) the President shall have been advised by counsel that all
applicable legal requirements have been complied with.
13. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the President shall
constitute the granting of any Option. The granting of an Option shall take
place only when a written option agreement substantially in the form of the
Option agreement that is attached hereto and marked Exhibit "A" shall have been
duly executed and delivered by or on behalf of the Corporation and by the
Director to whom such Option shall be granted.
14. TERMINATION AND AMENDMENT OF PLAN. The Plan shall terminate on January 31,
1999, and an Option shall not be granted under the Plan after that date.
15. REDEMPTION OF COMMON SHARES.
The Option holder's execution of the Agreement in the form attached hereto as
Exhibit A shall constitute an addendum and joinder to said Stockholders
Agreement in effect as of the date of the exercise of the option. To the
extent the terms and conditions of the Stockholders Agreement are not
inconsistent with the terms and conditions set forth in the Plan and the
Agreement attached as Exhibit A, said terms and conditions shall remain in full
force and effect
16. This incentive Stock Option Plan - No. 12 was adopted by the Corporation on
February 19, 1994, with an effective date of February 19, 1994.
PHOENIX INTERNATIONAL LTD., INC.
Attest: /s/ Bradley J. Davis By: /s/ Bahram Yusefzadeh
---------------------------- ----------------------------
Bradley J. Davis, secretary Bahram Yusefzadeh, President
Incentive Stock Option Plan -- No. 12
February 19, 1994
Page 2
<PAGE> 3
EXHIBIT A
FORM OF OPTION AGREEMENT
Please see individual's Stock Option Agreement.
Incentive Stock Option Plan -- No. 12
February 19, 1994
Page 3
<PAGE> 1
EXHIBIT 10.12
[LOGO]
PHOENIX INTERNATIONAL LTD., INC.
1995 STOCK OPTION PLAN
<PAGE> 2
THE PLAN. The Phoenix International Ltd., Inc. (the "Company") 1995 Stock
Option Plan is adopted as of March 18, 1995.
1. PURPOSE. The purpose of the Plan is to advance the interest of
the Company by encouraging and enabling the acquisition of a larger
personal financial interest in the Company by those employees upon
whose judgment and efforts the Company is largely dependent for the
successful conduct of its operations. An additional purpose of the
Plan is to provide a means by which employees of the Company and
its Subsidiaries can acquire and maintain Stock ownership, thereby
strengthening their commitment to the success of the Company and
their desire to remain employed by the Company and its
Subsidiaries. It is anticipated that the acquisition of such
financial interest and Stock ownership will stimulate the efforts
of such employees on behalf of the Company, strengthen their desire
to continue in the service of the Company and encourage shareholder
and entrepreneurial perspectives through employee stock ownership.
It is also anticipated that the opportunity to obtain such
financial interest and Stock ownership will prove attractive to
promising new employees and will assist the Company in attracting
such employees.
2. DEFINITIONS.
As used in the Plan, terms defined parenthetically immediately
after their use shall have the respective meanings provided by such
definitions and the terms set forth below shall have the following
meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
(a) "Award" means options granted under the Plan.
(b) "Award Agreement" has the meaning specified in Section
4(b)(v).
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" includes termination based on the commission of any
act or acts involving dishonesty, fraud, illegality or moral
turpitude.
(e) "Code" means the Internal Revenue Code of 1986, as
amended, and regulations and rulings thereunder.
References to a particular section of the Code shall
include references to successor provisions.
(f) "Committee" means the Compensation/Stock Plan Option
Committee of the Board appointed pursuant to Section 4.
(g) "Company" has the meaning set forth in the introductory
paragraph.
2
<PAGE> 3
(h) "Disability" means, as relates to the exercise of an
incentive stock option after termination of employment, a
disability within the meaning of Section 22(e)(3) of the
Code, and for all other purposes, a mental or physical
condition which, in the opinion of the Committee, renders a
Grantee unable or incompetent to carry out the job
responsibilities which such Grantee held or the tasks to
which such Grantee was assigned at the time the disability
was incurred, and which is expected to be permanent or for
an indefinite duration exceeding one year, and which cannot
be assisted satisfactorily by reasonable accommodation as
defined in the Americans with Disabilities Act.
(i) "Effective Date" means March 18, 1995.
(j) "Fair Market Value" of any security of the Company means,
as of any applicable date the closing price, regular way,
of the security as reported on a national exchange, or if
no such reported sale of the security shall have occurred
yet, the last price at which the stock was sold (not
including option exercises).
(k) "Grant Date" means the date on which an Award shall be
duly granted, as determined in accordance with Section
6(a)(i).
(l) "Grantee" means an individual who has been granted an Award.
(m) "including" or "includes" means "including, without
limitation," or "includes, without limitation."
(n) "1934 Act" means the Securities Exchange Act of 1934, as
amended. References to a particular section of, or rule
under, the 1934 Act shall include references to successor
provisions.
(o) "Option Price" means the per share purchase price of
Stock subject to an option.
(p) "Plan" has the meaning set forth in the introductory
paragraph.
(q) "SEC" means the Securities and Exchange Commission.
(r) "Section 16 Grantee" means a person subject to potential
liability under Section 16(b) of the 1934 Act with respect
to transactions involving equity securities of the Company.
(s) "Stock" means the common stock of the Company.
(t) "Subsidiary" means with respect to incentive stock options,
a corporation as defined in Section 424(f) of the Code with
the Company being treated as the employer corporation for
purposes of this definition.
3
<PAGE> 4
(u) "10% Owner" means a person who owns stock (including stock
treated as owned under Section 424(d) of the Code)
possessing more than 10% of the total combined voting power
of all classes of stock of the Company.
3. SCOPE OF THE PLAN.
(a) The aggregate number of shares of Stock which may be
purchased pursuant to options granted under this Plan shall
be 1,000,000 shares of Class E Stock as of the Effective
Date which is hereby made available and is reserved for
delivery on account of the exercise of Awards and payment of
benefits in connection with Awards. Such shares may be
treasury shares or newly issued shares, as may be determined
from time to time by the Board or the Committee.
(b) If and to the extent an Award shall expire or terminate for
any reason without having been exercised in full (including
a cancellation and regrant of an option pursuant to Section
15), or shall be forfeited, without, in either case, the
Grantee having enjoyed any of the benefits of stock
ownership, the shares of Stock associated with such Award
shall become available for other Awards.
4. ADMINISTRATION.
(a) The Plan shall be administered by a committee ("Committee")
which shall consist of not less than two persons who are
directors of the Company. Membership on the Committee shall
be subject to such limitations as the Board deems
appropriate to permit transactions in Stock pursuant to the
Plan to be exempt from liability under Section 16(b) of the
1934 Act pursuant to Rule 16b-3 thereunder, and to permit
compensation earned by individuals pursuant to the Plan to
be exempt from the limitation set forth in Section 162(m) of
the Code.
(b) The Committee shall have full and final authority, in its
discretion, but subject to the express provisions of the
Plan as follows:
(i) to grant Awards;
(ii) to determine (A) when Awards may be granted, and
(B) whether or not specific Awards shall be identified
with other specific Awards, and if so whether they
shall be exercisable cumulatively with or alternatively
to such other specific Awards;
4
<PAGE> 5
(iii) to interpret the Plan and make all
determinations necessary or advisable for the
administration of the Plan;
(iv) to prescribe, amend, and rescind rules and
regulations relating to the Plan, including rules with
respect to the exercisability and nonforfeitability of
Awards upon the termination of employment of a Grantee;
(v) to determine the terms and provisions and any
restrictions or conditions (including specifying such
performance criteria as the Committee deems
appropriate, and imposing restrictions with respect to
stock acquired upon exercise of an option, which
restrictions may continue beyond the Grantee's
termination of employment) of the written agreements by
which all Awards shall be evidenced ("Award
Agreements") which need not be identical and, with the
consent of the Grantee, to modify any such Award
Agreement at any time;
(vi) to cancel, subject to Section 15, outstanding
Awards and to grant new Awards in substitution
therefor;
(vii) to accelerate the exercisability of, and to
accelerate or waive any or all of the restrictions and
conditions applicable to, any Award, or any group of
Awards for any reason;
(viii) subject to Section 6(a)(ii), to extend the time
during which any Award or group of Awards may be
exercised; and
(ix) to impose such additional conditions,
restrictions, and limitations upon the grant,
exercise or retention of Awards as the Committee may,
before or concurrently with the grant thereof, deem
appropriate, including requiring simultaneous exercise
of related identified Awards, and limiting the
percentage of Awards which may from time to time be
exercised by a Grantee.
The determination of the Committee on all matters relating to the Plan or any
Award Agreement shall be conclusive and final. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Award.
5. ELIGIBILITY. Awards may be granted to any employee (including
any officer) of the Company or any of its domestic Subsidiaries.
In selecting the individuals to whom Awards may be granted, as well
as in determining the number of shares of Stock subject to, and the
other terms and conditions applicable to, each Award, the Committee
shall take
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into consideration such factors as it deems relevant in promoting
the purposes of the Plan.
In addition, non-qualified options to purchase 4,000 shares of
Class E stock will be awarded to each director on the date of their
annual election to the Board by the shareholders.
6. CONDITION TO GRANTS.
(a) General conditions.
(i) The Grant Date of an Award shall be the date on
which the Committee grants the Award or such later date
as specified in advance by the Committee.
(ii) The term of each Award (subject to Section 6(c)
with respect to incentive stock options) shall be a
period of not more than 10 years from the Grant Date,
and shall be subject to earlier termination as herein
provided.
(iii) A Grantee may, if otherwise eligible, be granted
additional Awards in any combination.
(iv) No Grantee may receive an Award which, in
combination with all other Awards to such Grantee under
the Plan (regardless of whether it has been exercised
or canceled), aggregates more than 100,000 shares of
Stock in a one-year period.
(b) Grant of options and option price. No later than the
Grant Date of any option, the Committee shall determine the
Option Price of such option. The Option Price of an option
shall be the Fair Market Value of the Stock on the Grant
Date, unless specifically stated to be otherwise. Such price
shall be subject to adjustment as provided in Section 22.
The Award Agreement may provide that the option shall be
exercisable for restricted stock.
(c) Grant of incentive stock options. At the time of the
grant of any option, the Committee may designate that such
option shall be made subject to additional restrictions to
permit it to qualify as an "incentive stock option" under the
requirements of Section 422A of the Code. Any option
designated as an incentive stock option:
(i) shall not be granted to a 10% Owner at an Option
Price less than 110% of the Fair Market Value of the
Stock on the Grant Date;
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(ii) shall be for a period of not more than 10 years
from the Grant Date, (5 years if granted to a 10%
Owner) and shall be subject to earlier termination as
provided herein or in the applicable Award Agreement;
(iii) shall not have an aggregate Fair Market Value
(determined for each incentive stock option at its
Grant Date) of Stock with respect to which incentive
stock options are exercisable for the first time by
such Grantee during any calendar year (under the Plan
and any other employee stock option plan of the
Grantee's employer or any parent or Subsidiary thereof
("Other Plans"), determined in accordance with the
provisions of Section 422 A of the Code, which exceeds
$100,000 (the $100,000 Limit");
(iv) shall, if the aggregate Fair Market Value of Stock
(determined on the Grant Date) with respect to all
incentive stock options previously granted under the
Plan and any Other Plans ("Prior Grants") and any
incentive stock options under such grant (the "Current
Grant") which are exercisable for the first time during
any calendar year would exceed the $100,000 Limit, be
exercisable as follows:
(A) the portion of the Current Grant exercisable
for the first time by the Grantee during any
calendar year which would, when added to any
portions of any Prior Grants, be exercisable for
the first time by the Grantee during such
calendar year with respect to Stock which would
have an aggregate Fair Market Value (determined
as of the respective Grant Date for such options)
in excess of the $100,000 Limit shall,
notwithstanding the terms of the Current Grant,
be exercisable for the first time by the Grantee
in the first subsequent calendar year or years in
which it could be exercisable for the first time
by the Grantee when added to all Prior Grants
without exceeding the $100,000 Limit; and
(B) if, viewed as of the date of the Current
Grant, any portion of a Current Grant could not
be exercised under the provisions of the
immediately preceding sentence during any
calendar year commencing with the calendar year
in which it is first exercisable throughout and
including the last calendar year in which it may
by it terms be exercised, such portion of the
Current Grant shall
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not be an incentive stock option, but shall be
exercisable as a separate option at such a date or
dates as are provided in the Current Grant;
(v) shall be granted within 10 years from the earlier of
the date the Plan is adopted or the date the Plan is
approved by the stockholders of the Company;
(vi) shall require the Grantee to notify the Committee of
any disposition of any Stock issued pursuant to the
exercise of the incentive stock option under the
circumstances described in Section 421 (b) of the Code
(relating to certain disqualifying dispositions), within
10 days of such disposition; and
(vii) shall by its terms not be assignable or transferable
other than by will or the laws of descent and distribution
and may be exercised, during the Grantee's lifetime, only
by the Grantee; provided, however, that the Grantee may,
to the extent provided in the Plan in any manner specified
by the Committee, designate in writing a beneficiary to
exercise his incentive stock option after the Grantee's
death.
Notwithstanding the foregoing and Section 4(b)(v), the Committee may, without
the consent of the Grantee, at any time before the exercise of an option
(whether or not an incentive stock option), take any action necessary to
prevent such option from being treated as an incentive stock option.
7. RIGHTS AS A STOCKHOLDER. A Grantee shall not, by reason of any
Award have any right as a stockholder of the Company with respect
to the shares of Stock which may be deliverable upon exercise
or payment of such Award until such shares have been delivered
to him.
8. NON-TRANSFERABILITY. Each Award granted hereunder shall not be
assignable or transferable other than by will or the laws of
descent and distribution; provided, however, that a Grantee may in
a manner specified by the Committee designate in writing a
beneficiary to exercise his Award after the Grantee's death.
9. EXERCISE.
(a) EXERCISE OF OPTIONS. Subject to such terms and conditions
as the Committee may impose, each option shall be exercisable
in one or more installments commencing not earlier than the
Grant Date of such option.
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Each option shall be exercised by delivery to the Company of written
notice of intent to purchase a specific number of shares of Stock subject
to the option. The Option Price of any shares of Stock or shares of
restricted stock as to which an option shall be exercised shall be paid
in full at the time of the exercise. Payment may, at the election of the
Grantee, be made in any one or any combination of the following:
(i) cash;
(ii) Stock held by the Grantee for at least 6 months prior to
exercise of the option, valued at its Fair Market Value on
the date of exercise;
(iii) with the approval of the Committee, shares of
restricted stock held by the Grantee for at least 6 months
prior to exercise of the option, each valued at the Fair
Market Value of a share of Stock on the date of exercise; or
(iv) through simultaneous sale through a broker of shares
acquired on exercise, as permitted under Regulation T of the
Federal Reserve Board.
In the discretion of the Committee and to the extent permitted by law, payment
may also be made in accordance with Section 10.
If restricted stock ("Tendered Restricted Stock") is used to pay the
Option Price for Stock subject to an option, then the Committee may, but
need not, specify that (i) all the shares of Stock acquired on exercise
of the option shall be subject to the same restrictions as the Tendered
Restricted Stock, determined as of the date of exercise of the option, or
(ii) a number of shares of Stock acquired on exercise of the option equal
to the number of shares of Tendered Restricted Stock shall, unless the
Committee provides otherwise, be subject to the same restrictions as the
Tendered Restricted Stock, determined as of the date of exercise of the
option.
(b) SPECIAL RULES FOR SECTION 16 GRANTEES. No option shall be
exercisable by a Section 16 Grantee during the first six months
after its Grant Date, except as exempted from Section 16 of the
1934 Act under Rule 16a-2(d) under the 1934 Act.
10. LOANS AND GUARANTEES. The Committee may, in its discretion:
(a) allow a Grantee to defer payment to the Company of all or
any portion of (i) the Option price of an option, or (ii) any
taxes associated with a benefit hereunder which is not a
cash benefit at the time such benefit is so taxable, or
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<PAGE> 10
(b) cause the Company to guarantee a loan from a third party to the
Grantee, in an amount equal to all or any portion of such Option
Price, purchase price, or any related taxes.
Any such payment deferral or guarantee by the Company pursuant to this Section
10 shall be on such terms and conditions as the Committee may determine;
provided that the interest rate applicable to any such payment deferral shall
not be more favorable to the Grantee than the terms applicable to funds
borrowed by the Company. Notwithstanding the foregoing, a Grantee shall not be
entitled to defer the payment of such Option Price, purchase price or any
related taxes unless the Grantee (i) enters into a binding obligation to pay
the deferred amount and (ii) except with respect to treasury shares, pays upon
exercise of an option an amount equal to or greater than the Minimum
Consideration thereof. If the Committee has permitted a payment deferral or
caused the Company to guarantee a loan pursuant to this Section 10, then the
Committee may, in its discretion, require the immediate payment of such
deferred amount or the immediate release of such guarantee upon the Grantee's
termination of employment or if the Grantee sells or otherwise transfers the
Grantee's shares of Stock purchase pursuant to such deferral or guarantee.
11. NOTIFICATION UNDER SECTION 83(B). The Committee may, on the Grant
Date or any later date, prohibit a Grantee from making the election
described below. If the Committee has not prohibited such Grantee from
making such election, and the Grantee shall, in connection with the
exercise of any option, make the election permitted under Section 83(b)
of the Code (i.e., an election to include in such Grantee's gross income
in the year of exercise the amounts specified in Section 83(b) of the
Code), such Grantee shall notify the company of such election within 10
days of filing notice of the election with the Internal Revenue Service,
in addition to any filing and notification required pursuant to
regulations issued under the authority of Section 83(b) of the Code.
12. MANDATORY WITHHOLDING TAXES.
(a) Whenever under the plan, cash or shares of Stock are to be
delivered upon exercise or payment of an Award or any other event
with respect to rights and benefits hereunder, the Company shall be
entitled to require as a condition of delivery (i) that the Grantee
remit an amount sufficient to satisfy all federal, state and local
withholding tax requirements related thereto, (ii) the withholding
of such sums from compensation otherwise due to the Grantee or from
any shares of Stock due to the Grantee under the Plan or (iii) any
combination of the foregoing.
(b) If any disqualifying disposition described in Section 6(c)(vi)
is made with respect to shares of Stock acquired under an incentive
stock option granted pursuant to the Plan or any election described
in Section 11 is made, then the person making such disqualifying
disposition or election shall remit to the Company an amount
sufficient to satisfy all federal, state, and local withholding
taxes thereby incurred; provided that, in lieu of or in addition to
the foregoing, the Company shall have the right to
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withhold such sums from compensation otherwise due to the Grantee
or from any Award including any shares of stock due to the Grantee
under the Plan.
13. ELECTIVE SHARE WITHHOLDING.
(a) Subject to Section 13(b), a Grantee may elect the withholding
("Share Withholding") by the Company of a portion of the shares of
Stock otherwise deliverable to such Grantee upon the exercise or
payment of an Award (a "Taxable Event") having a Fair Market Value
equal to:
(i) the minimum amount necessary to satisfy required federal,
state, or local withholding tax liability attributable to the
Taxable Event; or
(ii) with the Committee's prior approval, a greater amount,
not to exceed the estimated total amount of such Grantee's
tax liability with respect to the Taxable Event.
(b) Each Share Withholding election by a Grantee shall be subject
to the following restrictions:
(i) any Grantee's election shall be subject to the
Committee's right to revoke such election of Share
Withholding by such Grantee at any time before the Grantee's
election if the Committee has reserved the right to do so in
the Award Agreement;
(ii) if the Grantee is a Section 16 Grantee, such Grantee's
election shall be subject to the disapproval of the Committee
at any time, whether or not the Committee has reserved the
right to do so;
(iii) the Grantee's election must be made before the date
(the "Tax Date") on which the amount of tax to be withheld is
determined;
(iv) the Grantee's election shall be irrevocable;
(V) a Section 16 Grantee may not elect Share Withholding
within six months after the grant of the related option
(except if the Grantee dies or incurs a Disability before the
end of the six-month period); and
(vi) except to the extent such condition may be waived by the
General Counsel of the Company a Section 16 Grantee must
elect Share Withholding either six months before the Tax Date
or during the ten business day period beginning on the third
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<PAGE> 12
business day after the release of the Company's quarterly or
annual summary statement of sales and earnings.
14. TERMINATION OF EMPLOYMENT.
(a) ON ACCOUNT OF DEATH. If a Grantee has a termination of employment
on account of the Grantee's death, any unexercised option, which is
exercisable on the date of such termination of employment may be
exercised, in whole or in part, at any time within one year after the
Grantee's death, by (A) his personal representative or by the person to
whom the option is transferred by will or the applicable laws of descent
and distribution, or (B) the Grantee's beneficiary designated in
accordance with Sections 6(c)(vii) or 8; and
(b) ON ACCOUNT DISABILITY. If a Grantee has a termination of employment
on account of Disability, any outstanding option which is then
exercisable may be exercised, in whole or in part, at any time within
one year after the Grantee's Disability.
(c) FOR CAUSE. If a Grantee has a termination of employment for cause,
any option to the extent exercisable on the date of the Grantee's
termination of employment, shall terminate on the date of the Grantee's
termination of employment.
(d) ANY OTHER REASON. If a Grantee has a termination of employment for
any reason other than specified in (a), (b) or (c) above, any option
which is then exercisable may be exercised on or before the first
anniversary of the last day of employment. Incentive stock options must
be exercised within three (3) months of the last day of employment or
they convert automatically to non-qualified options, and such Grantee
signs a general release of all claims against the Company, as determined
by the General Counsel for the Company.
(e) EXTENSION OF TERM. In the event of any termination of employment,
the term of any Award which by its terms would otherwise expire on
account of the Grantee's termination of employment but prior to the end
of the period following the Grantee's termination of employment described
in Sections (a), (b), (c) or (d) above for exercise of Awards shall not
be extended beyond the date which is the 10th anniversary of the Grant
Date of such Award (5th anniversary of the Grant Date of such Award, in
the case of an incentive stock option granted to a 10% Owner).
(f) All unvested options terminate on the termination of
employment.
15. SUBSTITUTED AWARDS. IF the Committee cancels any Award (granted under
this Plan or any plan of any entity acquired by the Company or any of its
Subsidiaries), and a new Award is substituted therefor, then the Committee
may, in its discretion, determine the terms and conditions of such new Award;
provided that (a) the Option Price of any new option shall not be less than
100%
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of the Fair Market Value of a share of Stock on the date of the new grant
Award; (b) no Award shall be canceled without the consent of the Grantee if the
terms and conditions of the new Award to be substituted are not at least as
favorable as the terms and conditions of the Award to be canceled (and the
Grant Date of the new Award shall be the date on which such new Award is
granted); (c) no Section 16 Grantee may exercise a substituted option within
six months after the Grant Date (calculated without reference to this Section
15) of such substituted option, unless the Company shall have received an
opinion of counsel for the Company or "no action" or interpretive letter from
the staff of the SEC to the effect that such limitation is not necessary in
order to avoid liability under Section 16(b) of the 1934 Act; and (d) except as
otherwise provided in (a) - (c) above, the terms of this Plan shall apply to
such new Award.
16. SECURITIES LAW MATTERS.
(a) If the Committee deems necessary to comply with the Securities Act of
1933, the Committee may require written investment intent representation
by the Grantee and may require that a restrictive legend be affixed to
certificates for shares of Stock.
(b) If, based upon the opinion of counsel for the Company, the Committee
determines that the exercise or non-forfeitability of, or delivery of
benefits pursuant to, any Award would violate any applicable provision of
(i) federal or state securities laws or (ii) Listing requirements of any
national securities exchange on which are listed any of the Company's
equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as the case may be, but the Company shall
use its best efforts to cause such exercise, nonforfeitability or
delivery to comply with all such provisions at the earliest practicable
date.
17. FUNDING. Benefits payable under the Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund, or
otherwise segregate assets to be used for payment of, benefits under the Plan.
18. NO EMPLOYMENT RIGHTS. Neither the establishment of the Plan, nor the
granting of any Award shall be construed to (a) give any Grantee the right to
remain employed by the Company or any of its Subsidiaries or to any benefits
not specifically provided by the Plan or (b) in any manner modify the right of
the Company or any of its Subsidiaries to modify, amend, or terminate any of
its employee benefit plans.
19. NO ILLEGAL TRANSACTIONS. The Plan and all Awards granted pursuant to it
are subject to all laws and regulations of any governmental authority which may
be applicable thereto; and notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise Awards or receive the
benefits thereof and the Company shall not be obligated to deliver any Stock or
pay any benefits to a Grantee if such exercise, delivery, receipt or payment of
benefits would constitute a violation by the Grantee or the Company of any
provision of any such law or regulation.
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20. NATURE OF PAYMENTS. Any and all grants, payments of cash, or deliveries of
shares of Stock hereunder shall constitute special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary
or compensation of the Grantee for the purposes of determining any pension,
retirement, death or other benefits under (a) any pension, retirement,
profit-sharing, bonus, life insurance or other employee benefit plan of the
Company or any of its Subsidiaries or (b) any agreement between the Company or
any Subsidiary, on the one hand, and the Grantee, on the other hand, except as
such plan or agreement shall otherwise expressly provide.
21. NON-UNIFORM DETERMINATIONS. Neither the Committee's nor the Board's
determinations under the Plan need be uniform and may be made by the Committee
or the Board selectively among persons who receive, or are eligible to receive,
Awards (whether or not such persons are similarly situated). Without limiting
the generality of the foregoing, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations, to enter into
non-uniform and selective Award Agreements as to (a) the identity of the
Grantees, (b) the terms and provisions of Awards, and (c) the treatment, under
Section 14, of termination's of employment. Notwithstanding the foregoing, the
Committee's interpretation of Plan provisions shall be uniform as to similarly
situated Grantees.
22. ADJUSTMENTS. The Committee shall make equitable adjustment of:
(a) the aggregate numbers of shares of Stock, available under Section
3(a);
(b) the number of shares of Stock covered by an Award;
(c) the Option Price; and
(d) the Fair Market Value of Stock to be used to determine the amount of
the benefit payable upon exercise of an Award; to reflect a stock
dividend, stock split, reverse stock split, share combination,
recapitalization, merger, consolidation, acquisition of property or
shares, separation, asset spin-off, reorganization, stock rights
offering, liquidation or similar event, of or by the Company.
Notwithstanding the foregoing, upon the approval by the stockholders of
the Company of a plan of liquidation, sale or merger for the Company, any
unvested options theretofore granted, shall become exercisable one day
prior to such liquidation, sale or merger.
23. AMENDMENT OF THE PLAN. The Board may from time to time in its discretion
amend or modify the Plan without the approval of the stockholders of the
Company, except as such stockholder approval may be required (a) to permit the
grant of Awards under, and transactions in Stock pursuant to, the Plan to be
exempt from liability under Section 16(b) of the 1934 Act or (b) under the
listing
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requirements of any national securities exchange on which are listed any
of the company's equity securities.
24. TERMINATION OF THE Plan. The Plan shall terminate on the tenth
(10th) anniversary of the Effective Date or at such earlier time as the
Board may determine. Any termination, whether in whole or in part, shall
not affect any Award then outstanding under the Plan.
25. CONTROLLING LAW. The law of the State of Florida, except its law
with respect to choice of law, shall be controlling in all matter
relating to the Plan.
26. SEVERABILITY. If all or any part of the Plan is declared by any
court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of
the Plan not declared to be unlawful or invalid. Any Section or part of
a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section
or part of a Section to the fullest extent possible while remaining
lawful and valid.
Executed this 18th day of March , 1995.
-------- ---------------
PHOENIX INTERNATIONAL LTD., INC.
By: /s/ Bahram Yusefzadeh
-----------------------------
Title: Chief Executive Officer
-----------------------------
ATTEST
/s/ David A. Haas
- ----------------------------
Title: Corporate Secretary
---------------------
15
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EXHIBIT 10.13
PHOENIX INTERNATIONAL LTD., INC.
1995 EMPLOYEE STOCK OPTION PLAN
<PAGE> 2
PHOENIX INTERNATIONAL LTD., INC.
1995 EMPLOYEE STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I - THE PLAN . . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Date . . . . . . . . . . . . . . . . . 1
ARTICLE II -PARTICIPANTS . . . . . . . . . . . . . . . . . . 1
ARTICLE III -ADMINISTRATION. . . . . . . . . . . . . . . . . 1
3.1 Duties and Powers of the Committee 1
3.2 Interpretation; Rules . . . . . . . . . . . . . 2
3.3 No Liability . . . . . . . . . . . . . . . . . 2
3.4 Majority Rule . . . . . . . . . . . . . . . . . 2
3.5 Company Assistance. . . . . . . . . . . . . . . 2
ARTICLE IV - SHARES OF STOCK SUBJECT TO PLAN 2
4.1 Limitations . . . . . . . . . . . . . . . . . . 2
4.2 Antidilution. . . . . . . . . . . . . . . . . . 3
ARTICLE V - OPTIONS . . . . . . . . . . . . . . . . . . . . 4
5.1 Types of Options Granted . . . . . . . . . . . 4
5.2 Option Grant and Agreement. . . . . . . . . . . 4
5.3 Optionee Limitations. . . . . . . . . . . . . . 5
5.4 $100,000 Limitation . . . . . . . . . . . . . . 5
5.5 Exercise Price. . . . . . . . . . . . . . . . . 6
5.6 Exercise Period . . . . . . . . . . . . . . . . 6
5.7 Option Exercise . . . . . . . . . . . . . . . . 6
5.8 Reload Options. . . . . . . . . . . . . . . . . 7
5.9 Nontransferability of Option. . . . . . . . . . 7
5.10 Termination of Employment or Service. . . . . . 8
5.11 Employment Rights . . . . . . . . . . . . . . . 8
5.12 Certain Successor Options . . . . . . . . . . . 8
5.13 Effect of Change in Control . . . . . . . . . . 8
ARTICLE VI - RESTRICTED STOCK . . . . . . . . . . . . . . . 8
6.1 Awards of Restricted Stock. . . . . . . . . . . 8
6.2 Non-Transferability . . . . . . . . . . . . . . 9
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6.3 Lapse of Restrictions . . . . . . . . . . . . . 9
6.4 Termination of Employment . . . . . . . . . . . 9
6.5 Treatment of Dividend . . . . . . . . . . . . . 9
6.6 Delivery of Shares. . . . . . . . . . . . . . . 9
ARTICLE VII - STOCK CERTIFICATES . . . . . . . . . . . . . . 9
ARTICLE VIII - TERMINATION AND AMENDMENT OF PLAN . . . . . . 10
ARTICLE IX - RELATIONSHIP TO OTHER COMPENSATION PLANS. . . . 11
ARTICLE X - MISCELLANEOUS . . . . . . . . . . . . . . . . . 11
10.1 Replacement or Amended Grants . . . . . . . . 11
10.2 Forfeiture for Competition. . . . . . . . . . 11
10.3 Plan Binding on Successors. . . . . . . . . . 11
10.4 Singular, Plural; Gender. . . . . . . . . . . 11
10.5 Headings, etc . . . . . . . . . . . . . . . . 11
10.6 Interpretation. . . . . . . . . . . . . . . . 11
ARTICLE XI - DEFINITIONS . . . . . . . . . . . . . . . . . . 12
11.2 "Board" . . . . . . . . . . . . . . . . . . . 12
11.3 "Change in Control" . . . . . . . . . . . . . 12
11.4 "Code" . . . . . . . . . . . . . . . . . . . 13
11.5 "Committee" . . . . . . . . . . . . . . . . . 14
11.6 "Company" . . . . . . . . . . . . . . . . . . 14
11.7 "Director". . . . . . . . . . . . . . . . . . 14
11.8 "Disinterested Person" . . . . . . . . . . . 14
11.9 "Employee". . . . . . . . . . . . . . . . . . 14
11.10 "Employer". . . . . . . . . . . . . . . . . . 14
11.11 "Exchange Act". . . . . . . . . . . . . . . . 14
11.12 "Exercise Price". . . . . . . . . . . . . . . 14
11.13 "Fair Market Value" . . . . . . . . . . . . . 14
11.14 "Grantee" . . . . . . . . . . . . . . . . . . 15
11.15 "Incentive Stock Option". . . . . . . . . . . 15
11.16 "Key Person". . . . . . . . . . . . . . . . . 15
11.17 "Officer" . . . . . . . . . . . . . . . . . . 15
11.18 "Option". . . . . . . . . . . . . . . . . . . 15
11.19 "Optionee" . . . . . . . . . . . . . . . . . 15
11.20 "Parent". . . . . . . . . . . . . . . . . . . 15
11.21 "Plan" . . . . . . . . . . . . . . . . . . . 15
11.22 "Purchasable" . . . . . . . . . . . . . . . . 15
11.23 "Qualified Domestic Relations Order". . . . . 15
ii
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11.24 "Reload Option" . . . . . . . . . . . . . . . 16
11.25 "Restricted Stock". . . . . . . . . . . . . . 16
11.26 "Restriction Agreement" . . . . . . . . . . . 16
11.27 "Section 16 Insider . . . . . . . . . . . . . 16
11.28 "Stock" . . . . . . . . . . . . . . . . . . 16
11.29 "Stock Option Agreement". . . . . . . . . . . 16
11.30 "Subsidiary". . . . . . . . . . . . . . . . . 16
iii
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PHOENIX INTERNATIONAL LTD., INC.
1995 EMPLOYEE STOCK OPTION PLAN
ARTICLE I
THE PLAN
1.1 Name. This plan shall be known as the "Phoenix International Ltd.,
1995 Employee Stock Option Plan."
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its Subsidiaries and its shareholders by affording certain employees
of the Company and its Subsidiaries and other Key Persons an opportunity
to acquire or increase their proprietary interests in the Company.
The objective of the issuance of the Options and Awards is to promote the
growth and profitability of the Company and its Subsidiaries because the
Grantees will be provided with an additional incentive to achieve the Company's
objectives through participation in its success and growth and by encouraging
their continued association with or service to the Company.
1.3 Effective Date. The Plan shall become effective on October 21, 1995;
provided, however, that the Plan shall terminate, and all Options or Awards the
retofore granted or awarded shall become void and may not be exercised, on
October 21, 1996, if the shareholders of the Company shall not by that date
have approved the Plan's adoption.
ARTICLE II
PARTICIPANTS
The class of persons eligible to participate in the Plan shall consist of
all employees of the Company or any Subsidiary and other Key Persons whose
participation in the Plan the Committee determines to be in the best interests
of the Company.
ARTICLE III
ADMINISTRATION
3.1 Duties and Powers of the Committee. The Plan shall be administered by
the Committee. The Committee shall select one of its members as its
Chairman and shall hold its meetings at such times and places as it may
determine. The Committee shall keep minutes of its meetings and shall make
such rules and regulations for the conduct of its business as it may deem
necessary. The Committee shall have the power to act by unanimous written
consent in lieu of a meeting and to meet telephonically. In administering the
Plan, the Committee's actions and determinations shall be binding on all
interested parties. The Committee shall have the full power and authority, in
its discretion, subject to the provisions of the Plan:
(i) to grant Options or Awards in accordance with the
provisions of the Plan and may grant Options and Awards singly, in
combination, or in tandem;
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(ii) to determine those individuals to whom Options or Awards
will be granted and whether such Options shall be accompanied
by the right to receive Reload Options, the number of shares of
Stock subject to each Option or Award, any preemptive rights, such
other matters as are specified herein, and any other terms and
conditions of a Stock Option Agreement or Restriction Agreement;
(iii) to delegate to any Officer its powers to grant Options or
Awards under the Plan to any person who is an employee of the
Company but not an Officer or Director; and
(iv) to the extent not inconsistent with the provisions of the
Plan, to give a Grantee an election to surrender an Option or Award
in exchange for the grant of a new Option or Award, and to amend or
modify an outstanding Stock Option Agreement or Restriction
Agreement, or to waive any provision thereof, provided that the
Grantee consents to such action.
3.2 Interpretation; Rules. Subject to the express provisions of the
Plan, the Committee also shall have complete authority to interpret the Plan,
to prescribe, amend, and rescind rules and regulations relating to it, to
determine the details and provisions of each Stock Option Agreement, and to
make all other determinations necessary or advisable for the administration of
the Plan, including, without limitation, the amending or altering of the Plan
and any Options or Awards granted hereunder as may be required to comply with
or to conform to any federal, state, or local laws or regulations.
3.3 No Liability. Neither any member of the Board nor any member of
the Committee shall be liable to any person for any act or determination made
in good faith with respect to the Plan or any Option or Award granted
hereunder.
3.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of
the Committee.
3.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary
in the performance of its duties.
ARTICLE IV
SHARES OF STOCK SUBJECT TO PLAN
4.1 Limitations. Subject to any antidilution adjustment pursuant to
the provisions of Section 4.2 hereof, the maximum number of shares of Stock
that may be issued hereunder shall be 50,000. Any or all shares of Stock
subject to the Plan may be issued in any combination of Incentive Stock
Options, non-Incentive Stock Options, or Restricted Stock, and the amount of
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<PAGE> 7
Stock subject to the Plan may be increased from time to time in accordance
with Article VIII, provided that the total number of shares of Stock
issuable pursuant to Incentive Stock Options may not be increased to more than
50,000 (other than pursuant to antidilution adjustments) without shareholder
approval. Shares subject to an Option or issued as an Award may be either
authorized and unissued shares or shares issued and later acquired by the
Company. The shares covered by any unexercised portion of an Option that has
terminated for any reason (except as set forth in the following paragraph), or
any forfeited portion of an Award, may again be optioned or awarded under the
Plan, and such shares shall not be considered as having been optioned or issued
in computing the number of shares of Stock remaining available for option or
award hereunder.
In the event of the issuance of Options in respect of options to acquire
stock of any entity acquired, by merger or otherwise, by the Company (or any
Subsidiary of the Company), to the extent that such issuance shall not be
inconsistent with the terms, limitations and conditions of Section 422 of the
Code or Rule 16b-3 under the Exchange Act, the aggregate number of shares of
Stock for which Options may be granted hereunder shall automatically be
increased by the number of shares subject to the Options so issued; provided,
however, that the aggregate number of shares of Stock for which Options may be
granted hereunder shall automatically be decreased by the number of shares
covered by any unexercised portion of an Option so issued that has terminated
for any reason, and the shares subject to any such unexercised portion may not
be optioned to any other person.
4.2 Antidilution.
(a) In the event that the outstanding shares of Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, stock
split or stock dividend, in the event that any spin-off, spin-out or other
distribution of assets materially affects the price of the Company's stock, or
in the event of any assumption and conversion to the Plan by the Company of an
acquired company's outstanding option grants:
(i) the aggregate number and kind of shares of Stock for which
Options or Awards may be granted hereunder shall be adjusted
proportionately by the Committee; and
(ii) the rights of Optionees (concerning the number of shares
subject to Options and the Exercise Price) under outstanding
Options and the rights of the holders of Awards (concerning the
terms and conditions of the lapse of any then-remaining
restrictions), shall be adjusted proportionately by the Committee.
(b) If the Company shall be a party to any reorganization in which
it does not survive, involving merger, consolidation, or acquisition of the
stock or substantially all the assets of the Company, the Committee, in its
discretion, may:
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<PAGE> 8
(i) notwithstanding other provisions hereof, declare that all
Options granted under the Plan shall become exercisable immediately
notwithstanding the provisions of the respective Stock Option
Agreements regarding exercisability, that all such Options shall
terminate 30 days after the Committee gives written notice of the
immediate right to exercise all such Options and of the decision to
terminate all Options not exercised within such 30-day period, and
that all then-remaining restrictions pertaining to Awards under the
Plan shall immediately lapse; and/or
(ii) notify all Grantees that all Options or Awards granted
under the Plan shall be assumed by the successor corporation or
substituted on an equitable basis with options or restricted stock
issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved in connection
with a reorganization described in Section 4.2(b), the provisions of such
section shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall, notwithstanding other
provisions hereof, cause all then-remaining restrictions pertaining to Awards
under the Plan to lapse, and shall cause every Option outstanding under the
Plan to terminate to the extent not exercised prior to the adoption of the plan
of dissolution or liquidation by the shareholders, provided that,
notwithstanding other provisions hereof, the Committee may declare all Options
granted under the Plan to be exercisable at any time on or before the fifth
business day following such adoption notwithstanding the provisions of the
respective Stock Option Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through (c) of
this Section 4.2, and the manner of their application, shall be determined
solely by the Committee, and any such adjustment may provide for the
elimination of fractional share interests; provided, however, that any
adjustment made by the Board or the Committee shall be made in a manner that
will not cause an Incentive Stock Option to be other than an incentive stock
option under applicable statutory and regulatory provisions. The adjustments
required under this Article IV shall apply to any successors of the Company and
shall be made regardless of the number or type of successive events requiring
such adjustments.
ARTICLE V
OPTIONS
5.1 Types of Options Granted. The Committee may, under this Plan,
grant either Incentive Stock Options or Options which do not qualify as
Incentive Stock Options. Within the limitations provided in this Plan, both
types of Options may be granted to the same person at the same time, or at
different times, under different terms and conditions, as long as the terms
and conditions of each Option are consistent with the provisions of the Plan.
Without limitation of the foregoing, Options may be granted subject to
conditions based on the financial performance of the Company or any other
factor the Committee deems relevant.
5.2 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and
by a written Stock Option
4
<PAGE> 9
Agreement executed by the Company and the Optionee. The terms of the Option,
including the Option's duration, time or times of exercise, exercise price,
whether the Option is intended to be an Incentive Stock Option, and whether the
Option is to be accompanied by the right to receive a Reload Option, shall be
stated in the Stock Option Agreement. No Incentive Stock Option may be granted
more than ten years after the earlier to occur of the effective date of the
Plan or the date the Plan is approved by the Company's shareholders.
Separate Stock Option Agreements may be used for Options intended to be
Incentive Stock Options and those not so intended, but any failure to use such
separate agreements shall not invalidate, or otherwise adversely affect the
Optionee's interest in, the Options evidenced thereby. Every Optionee or
Grantee shall be given a copy of the Plan.
5.3 Optionee Limitations. The Committee shall not grant an Incentive
Stock Option to any person who, at the time the Incentive Stock Option is
granted:
(a) is not an employee of the Company or any of its Subsidiaries; or
(b) owns or is considered to own stock possessing at least 10% of
the total combined voting power of all classes of stock of the Company or
any of its Parent or Subsidiary corporations; provided, however, that this
limitation shall not apply if at the time an Incentive Stock Option is granted
the Exercise Price is at least 110% of the Fair Market Value of the Stock
subject to such Option and such Option by its terms would not be exercisable
after five years from the date on which the Option is granted. For the purpose
of this Section 5.3(b), a person shall be considered to own (i) the stock
owned, directly or indirectly, by or for his or her brothers and sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants;
(ii) the stock owned, directly or indirectly, by or for a corporation,
partnership, estate, or trust in proportion to such person's stock interest,
partnership interest or beneficial interest therein; and (iii) the stock which
such person may purchase under any outstanding options of the Employer or of
any Parent or Subsidiary of the Employer.
5.4 $100,000 Limitation. Except as provided below, the Committee shall
not grant an Incentive Stock Option to, or modify the exercise provisions
of outstanding Incentive Stock Options held by, any person who, at the time
the Incentive Stock Option is granted (or modified), would thereby receive
or hold any Incentive Stock Options of the Employer and any Parent or
Subsidiary of the Employer such that the aggregate Fair Market Value
(determined as of the respective dates of grant or modification of each option)
of the stock with respect to which such Incentive Stock Options are exercisable
for the first time during any calendar year is in excess of $100,000 (or such
other limit as may be prescribed by the Code from time to time); provided that
the foregoing restriction on modification of outstanding Incentive Stock
Options shall not preclude the Committee from modifying an outstanding
Incentive Stock Option if, as a result of such modification and with the
consent of the Optionee, such Option no longer constitutes an Incentive Stock
Option; and provided that, if the $100,000 limitation (or such other limitation
prescribed by the Code) described in this Section 5.4 is exceeded, the
Incentive Stock Option the granting or modification of which resulted in the
exceeding of such limit shall be treated as an Incentive Stock Option up to the
limitation and the excess shall be treated as an Option not qualifying as an
Incentive Stock Option.
5
<PAGE> 10
5.5 Exercise Price. The Exercise Price of the Stock subject to each
Option shall be determined by the Committee. Subject to the provisions
of Section 5.3(b) hereof, the Exercise Price of an Incentive Stock Option shall
not be less than the Fair Market Value of the Stock as of the date the Option
is granted (or in the case of an Incentive Stock Option that is subsequently
modified, on the date of such modification).
5.6 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Committee, but the Stock Option
Agreement with respect to each Option intended to be an Incentive Stock Option
shall provide that such Option shall not be exercisable after the expiration of
ten years from the date of grant (or modification) of the Option. In addition,
no Option granted to a Section 16 Insider shall be exercisable prior to the
expiration of six months from the date such Option is granted, other than in
the case of the death or disability of the Optionee, and no Option shall be
exercisable prior to shareholder approval of the Plan.
5.7 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement or
Section 5.6 hereof, an Option may be exercised at any time or from time to time
during the term of the Option as to any or all full shares which have become
Purchasable under the provisions of the Option, but not at any time as to less
than 100 shares unless the remaining shares that have become so Purchasable are
less than 100 shares. The Committee shall have the authority to prescribe in
any Stock Option Agreement that the Option may be exercised only in accordance
with a vesting schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the Company at its
principal office a written notice of exercise with respect to a specified
number of shares of Stock and (ii) payment to the Company at that office of the
full amount of the Exercise Price for such number of shares in accordance with
Section 5.7(c).
(c) The Exercise Price is to be paid in full in cash upon the
exercise of the Option and the Company shall not be required to deliver
certificates for the shares purchased until such payment has been made;
provided, however, that in lieu of cash, all or any portion of the Exercise
Price may be paid by tendering to the Company shares of Stock duly endorsed
for transfer and owned by the Optionee, or by authorization to the Company to
withhold shares of Stock otherwise issuable upon exercise of the Option, in
each case to be credited against the Exercise Price at the Fair Market Value of
such shares on the date of exercise (however, no fractional shares may be so
transferred, and the Company shall not be obligated to make any cash payments
in consideration of any excess of the aggregate Fair Market Value of shares
transferred over the aggregate option price); provided further, that the Board
may provide in a Stock Option Agreement or may otherwise determine in its sole
discretion at the time of exercise that, in lieu of cash or shares, all or a
portion of the Exercise Price may be paid by the Optionee's execution of a
recourse note equal to the Exercise Price or relevant portion thereof, subject
to compliance with applicable state and federal laws, rules and regulations.
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<PAGE> 11
(d) In addition to and at the time of payment of the Exercise Price,
the Optionee shall pay to the Company in cash the full amount of any federal,
state, and local income, employment, or other withholding taxes applicable to
the taxable income of such Optionee resulting from such exercise; provided,
however, that in the discretion of the Committee any Stock Option Agreement may
provide that all or any portion of such tax obligations, together with
additional taxes not exceeding the actual additional taxes to be owed by the
Optionee as a result of such exercise, may, upon the irrevocable election of
the Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid, and
subject to such restrictions as to the approval and timing of any such election
as the Committee may from time to time determine to be necessary or appropriate
to satisfy the conditions of the exemption set forth in Rule 16b-3 under the
Exchange Act, if such rule is applicable.
(e) The holder of an Option shall not have any of the rights of a
shareholder with respect to the shares of Stock subject to the Option until
such shares have been issued and transferred to the Optionee upon the exercise
of the Option.
5.8 Reload Options.
(a) The Committee may specify in a Stock Option Agreement (or may
otherwise determine in its sole discretion) that a Reload Option shall be
granted, without further action of the Committee, (i) to an Optionee who
exercises an Option (including a Reload Option) by surrendering shares of
Stock in payment of amounts specified in Sections 5.7(c) or 5.7(d)
hereof, (ii) for the same number of shares as are surrendered to pay such
amounts, (iii) as of the date of such payment and at an Exercise Price equal to
the Fair Market Value of the Stock on such date, and (iv) otherwise on the same
terms and conditions as the Option whose exercise has occasioned such payment,
except as provided below and subject to such other contingencies, conditions,
or other terms as the Committee shall specify at the time such exercised Option
is granted; provided that the shares surrendered by a Section 16 Insider in
payment as provided above must have been held by the Optionee for at least six
months prior to such surrender.
(b) Unless provided otherwise in the Stock Option Agreement, a Reload
Option may not be exercised by an Optionee (i) prior to the end of a one-year
period from the date that the Reload Option is granted, and (ii) unless the
Optionee retains beneficial ownership of the shares of Stock issued to such
Optionee upon exercise of the Option referred to above in Section for a period
of one year from the date of such exercise.
5.9 Nontransferability of Option. No Option shall be transferable by
an Optionee other than by will or the laws of descent and distribution or, in
the case of non-Incentive Stock Options, pursuant to a Qualified Domestic
Relations Order, and no Option shall be transferable by an Optionee who is a
Section 16 Insider prior to shareholder approval of the Plan. During the
lifetime of an Optionee, Options shall be exercisable only by such Optionee (or
by such Optionee's guardian or legal representative, should one be appointed).
7
<PAGE> 12
5.10 Termination of Employment or Service. The Committee shall have
the power to specify, with respect to the Options granted to a particular
Optionee, the effect upon such Optionee's right to exercise an Option of
termination of such Optionee's employment or service under various
circumstances, which effect may include immediate or deferred termination of
such Optionee's rights under an Option, or acceleration of the date at which an
Option may be exercised in full; provided, however, that in no event may an
Incentive Stock Option be exercised after the expiration of ten years from the
date of grant thereof.
5.11 Employment Rights. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the
right of the Company or any of its Subsidiaries to terminate such person's
employment at any time.
5.12 Certain Successor Options. To the extent not inconsistent with
the terms, limitations and conditions of Section 422 of the Code and any
regulations promulgated with respect thereto, an Option issued in respect of an
option held by an employee to acquire stock of any entity acquired, by merger
or otherwise, by the Company (or any Subsidiary of the Company) may contain
terms that differ from those stated in this Article V, but solely to the extent
necessary to preserve for any such employee the rights and benefits contained
in such predecessor option, or to satisfy the requirements of Section 424(a) of
the Code.
5.13 Effect of Change in Control. The Committee may determine, at
the time of granting an Option or thereafter, that such Option shall become
exercisable on an accelerated basis in the event that a Change in Control
occurs with respect to the Company. If the Committee finds that there is a
reasonable possibility that, within the succeeding six months, a Change in
Control will occur with respect to the Company, then the Committee may
determine that all outstanding Options shall be exercisable on an accelerated
basis.
ARTICLE VI
RESTRICTED STOCK
6.1 Awards of Restricted Stock. The Committee may grant Awards of
Restricted Stock, which shall be governed by a Restriction Agreement between
the Company and the Grantee. Each Restriction Agreement shall contain such
restrictions, terms, and conditions as the Committee may, in its discretion,
determine, and may require that an appropriate legend be placed on the
certificates evidencing the subject Restricted Stock.
Shares of Restricted Stock granted pursuant to an Award hereunder shall be
issued in the name of the Grantee as soon as reasonably practicable after the
Award is granted, provided that the Grantee has executed the Restriction
Agreement governing the Award, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the foregoing documents within any time period
prescribed by the Committee, the Award shall be void. At the discretion of the
Committee, Shares issued in connection with an Award shall be deposited
together with the stock powers with an escrow agent designated by the
Committee. Unless the Committee determines otherwise and as set forth
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<PAGE> 13
in the Restriction Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a shareholder with respect
to such Shares, including the right to vote the Shares and to receive all
dividends or other distributions paid or made with respect to the Shares.
6.2 Non-Transferability. Until any restrictions upon Restricted Stock
awarded to a Grantee shall have lapsed in a manner set forth in Section 6.3,
such shares of Restricted Stock shall not be transferable other than by will or
the laws of descent and distribution, or pursuant to a Qualified Domestic
Relations Order, nor shall they be delivered to the Grantee.
6.3 Lapse of Restrictions. Restrictions upon Restricted Stock awarded
hereunder shall lapse at such time or times (but, with respect to any award to
a Grantee who is also a Section 16 Insider, not less than six months after the
date of the Award) and on such terms and conditions as the Committee may, in
its discretion, determine at the time the Award is granted or thereafter.
6.4 Termination of Employment. The Committee shall have the power to
specify, with respect to each Award granted to any particular Grantee, the
effect upon such Grantee's rights with respect to such Restricted Stock of the
termination of such Grantee's employment under various circumstances, which
effect may include immediate or deferred forfeiture of such Restricted Stock or
acceleration of the date at which any then-remaining restrictions shall lapse.
6.5 Treatment of Dividends. At the time an Award of Restricted Stock
is made the Committee may, in its discretion, determine that the payment to the
Grantee of any dividends, or a specified portion thereof, declared or paid on
such Restricted Stock shall be (i) deferred until the lapsing of the relevant
restrictions and (ii) held by the Company for the account of the Grantee until
such lapsing. In the event of such deferral, there shall be credited at the
end of each year (or portion thereof) interest on the amount of the account at
the beginning of the year at a rate per annum determined by the Committee.
Payment of deferred dividends, together with interest thereon, shall be made
upon the lapsing of restrictions imposed on such Restricted Stock, and any
dividends deferred (together with any interest thereon) in respect of
Restricted Stock shall be forfeited upon any forfeiture of such Restricted
Stock.
6.6 Delivery of Shares. Except as provided otherwise in Article VII
below, within a reasonable period of time following the lapse of the
restrictions on shares of Restricted Stock, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such shares and such
shares shall be free of all restrictions hereunder.
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, or deliver any certificate for shares of Restricted Stock
granted hereunder, prior to fulfillment of all of the following conditions:
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(a) the admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) the completion of any registration or other qualification of such
shares which the Committee shall deem necessary or advisable under any federal
or state law or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body;
(c) the obtaining of any approval or other clearance from any federal or
state governmental agency or body which the Committee shall determine to be
necessary or advisable; and
(d) the lapse of such reasonable period of time following the exercise
of the Option as the Board from time to time may establish for reasons of
administrative convenience.
Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
ARTICLE VIII
TERMINATION AND AMENDMENT OF PLAN
The Board may at any time terminate the Plan, and may at any time and from
time to time and in any respect amend the Plan; provided, however, that the
Board (unless its actions are approved or ratified by the shareholders of the
Company within twelve months of the date that the Board amends the Plan) may
not amend the Plan to:
(a) increase the total number of shares of Stock issuable pursuant to
Incentive Stock Options under the Plan or materially increase the number of
shares of Stock subject to the Plan, in each case except as contemplated in
Section 4.2 hereof;
(b) change the class of employees eligible to receive Incentive Stock
Options that may participate in the Plan or materially change the class of
persons that may participate in the Plan; or
(c) otherwise materially increase the benefits accruing to participants
under the Plan.
No termination, amendment or modification of the Plan shall affect
adversely a Grantee's rights under an Stock Option Agreement or Restriction
Agreement without the consent of the Grantee or his legal representative.
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ARTICLE IX
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for Employees or Directors of the Company or any of its
Subsidiaries.
ARTICLE X
MISCELLANEOUS
10.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or Awards or accept the surrender of outstanding Options or
Awards and grant new Options or Awards in substitution for them. However no
modification of an Option or Award shall adversely affect a Grantee's rights
under an Stock Option Agreement or Restriction Agreement without the consent of
the Grantee or his legal representative.
10.2 Forfeiture for Competition. If a Grantee provides services to a
competitor of the Company or any of its Subsidiaries, whether as an employee,
officer, director, independent contractor, consultant, agent, or otherwise,
such services being of a nature that can reasonably be expected to involve the
skills and experience used or developed by the Grantee while an Employee, then
that Grantee's rights under any Options outstanding hereunder shall be
forfeited and terminated, and any shares of Restricted Stock held by such
Grantee subject to remaining restrictions shall be forfeited, subject in each
case to a determination to the contrary by the Committee.
10.3 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
10.4 Singular, Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender.
10.5 Headings. etc.. Headings of Articles and Sections hereof are
inserted for convenience and reference; they do not constitute part of the
Plan.
10.6 Interpretation. With respect to Section 16 Insiders,
transactions under this Plan, are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan or action by the Plan administrators fails to
so comply, it shall be deemed void to the extent permitted by law and deemed
advisable by the Plan administrators.
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ARTICLE XI
DEFINITIONS
As used herein, the following terms have the following meanings unless the
context clearly indicates to the contrary:
11.1 "Award" shall mean a grant of Restricted Stock.
11.2 "Board" shall mean the Board of Directors of the Company.
11.3 "Change in Control" shall mean the occurrence during the Term of
any of the following events after the Initial Public Offering:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by
any "Person" (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934
(the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 40% or more of the
combined voting power of the Company's then outstanding
Voting Securities; provided, however, that in determining
whether a Change in Control has occurred, Voting Securities
which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition
which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1) an employee
benefit plan (or a trust forming a part thereof) maintained
by (x) the Company or (y) any corporation or other Person of
which a majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by the
Company (a "Subsidiary"), (2) the Company or any Subsidiary,
or (3) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined).
(b) The individuals who, as of the date of the Initial
Public Offering, are members of the Board (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that if the
election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of
at least a majority of the Incumbent Board, such new director
shall, for purposes of this Agreement, be considered as a
member of the Incumbent Board; provided, further, however,
that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office
as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 promulgated under the
1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
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<PAGE> 17
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless
(A) the stockholders of the Company, immediately
before such merger, consolidation or
reorganization, own, directly or indirectly,
immediately following such merger, consolidation
or reorganization, at least a majority of the
combined voting power of the outstanding voting
securities of the corporation resulting from such
merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the
same proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization, and
(B) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for such
merger, consolidation or reorganization
constitute at least a majority of the members of
the board of directors of the Surviving
Corporation.
(A transaction described in clauses (1) and (2)
shall herein be referred to as a "Non-Control
Transaction").
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other disposition of
all or substantially all of the assets of the Company
to any Person (other than a transfer to a Subsidiary).
(d) Notwithstanding anything contained in this Agreement to
the contrary, if the Executive's employment is terminated
prior to a Change in Control and the Executive reasonably
demonstrates that such termination (A) was at the request of
a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who
effectuates a Change in Control (a "Third Party") or (B)
otherwise occurred in connection with, or in anticipation of,
a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control
with respect to the Executive shall mean the date immediately
prior to the date of such termination of the Executive's
employment.
11.4 "Code" shall mean the United States Internal Revenue Code of 1986,
as amended, including effective date and transition rules (whether or not
codified). Any reference herein to a specific section of the Code shall be
deemed to include a reference to any corresponding provision of future law.
13
<PAGE> 18
11.5 "Committee" shall mean a committee of at least two Directors
appointed from time to time by the Board, having the duties and authority set
forth herein in addition to any other authority granted by the Board; provided,
however, that with respect to any Options or Awards granted to an individual
who is also a Section 16 Insider, the Committee shall consist of at least two
Directors (who need not be members of the Committee with respect to Options or
Awards granted to any other individuals) who are Disinterested Persons, and all
authority and discretion shall be exercised by such Disinterested Persons, and
references herein to the "Committee" shall mean such Disinterested Persons
insofar as any actions or determinations of the Committee shall relate to or
affect Options or Awards made to or held by any Section 16 Insider. At any
time that the Board shall not have appointed a committee as described above,
any reference herein to the Committee shall mean a reference to the Board.
11.6 "Company" shall mean Phoenix International Ltd., Inc., a Florida
corporation.
11.7 "Director" shall mean a member of the Board and any person who is
an advisory, honorary or emeritus director of the Company if such person is
considered a director for the purposes of Section 16 of the Exchange Act, as
determined by reference to such Section 16 and to the rules, regulations,
judicial decisions, and interpretative or "no-action" positions with respect
thereto of the Securities and Exchange Commission, as the same may be in effect
or set forth from time to time.
11.8 "Disinterested Person" shall have the meaning set forth in Rule
16b-3 under the Exchange Act, as the same may be in effect from time to time,
or in any successor rule thereto, and shall be determined for all purposes
under the Plan according to interpretative or "no-action" positions with
respect thereto issued by the Securities and Exchange Commission.
11.9 "Employee" shall mean an employee of the Employer.
11.10 "Employer" shall mean the corporation that employs a Grantee.
11.11 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended. Any reference herein to a specific section of the Exchange Act shall
be deemed to include a reference to any corresponding provision of future law.
11.12 "Exercise Price" shall mean the price at which an Optionee may
purchase a share of Stock under a Stock Option Agreement.
11.13 "Fair Market Value" on any date shall mean (i) the closing sales
price of the Stock, regular way, on such date on the national securities
exchange having the greatest volume of trading in the Stock during the
30-day period preceding the day the value is to be determined or, if such
exchange was not open for trading on such date, the next preceding date on
which it was open; (ii) if the Stock is not traded on any national securities
exchange, the average of the closing high bid and low asked prices of the Stock
on the over-the-counter market on the day such value is to be determined, or in
the absence of closing bids on such day, the closing bids on the next preceding
day on which there were bids; or (iii) if the Stock also is not traded on
14
<PAGE> 19
the over-the-counter market, the fair market value as determined in
good faith by the Board or the Committee based on such relevant facts as may be
available to the Board, which may include opinions of independent experts, the
price at which recent sales have been made, the book value of the Stock, and
the Company's current and future earnings.
11.14 "Grantee" shall mean a person who is an Optionee or a person who
has received an Award of Restricted Stock.
11.15 "Incentive Stock Option" shall mean an option to purchase any
stock of the Company which complies with and is subject to the terms,
limitations, and conditions of Section 422 of the Code and any regulations
promulgated with respect thereto.
11.16 "Key Person" shall mean (i) a consultant, advisor, or other
person who has rendered valuable services to the Company, a Subsidiary, or a
Parent, (ii) a person who has incurred, or is willing to incur, financial risk
in the form of guaranteeing or acting as co-obligor with respect to debts or
other obligations of the Company, or (iii) a person who has extended credit to
the Company. Key Persons are not limited to individuals and, subject to the
preceding definition, may include corporations, partnerships, associations, and
other entities.
11.17 "Officer" shall mean a person who constitutes an officer of the
Company for the purposes of Section 16 of the Exchange Act, as determined by
reference to such Section 16 and to the rules, regulations, judicial decisions,
and interpretative or "no-action" positions with respect thereto of the
Securities and Exchange Commission, as the same may be in effect or set forth
from time to time.
11.18 "Option" shall mean an option, whether or not an Incentive Stock
Option, to purchase Stock granted pursuant to the provisions of Article V
hereof.
11.19 "Optionee" shall mean a person to whom an Option has been granted
hereunder.
11.20 "Parent" shall mean any corporation (other than the Employer) in
an unbroken chain of corporations ending with the Employer if, at the time of
the grant (or modification) of the Option, each of the corporations other than
the Employer owns stock possessing 50% or more of the total combined voting
power of the classes of stock in one of the other corporations in such chain.
11.21 "Plan" shall mean the Phoenix International Ltd., Inc. 1995
Employee Stock Option Plan, the terms of which are set forth herein.
11.22 "Purchasable" shall refer to Stock which may be purchased by an
Optionee under the terms of this Plan on or after a certain date specified in
the applicable Stock Option Agreement.
11.23 "Qualified Domestic Relations Order" shall have the meaning set
forth in the Code or in the Employee Retirement Income Security Act of 1974
("ERISA"), or the rules and regulations promulgated under the Code or such
ERISA.
15
<PAGE> 20
11.24 "Reload Option" shall have the meaning set forth in Section 5.8
hereof.
11.25 "Restricted Stock" shall mean Stock issued, subject to
restrictions, to a Grantee pursuant to Article VI hereof.
11.26 "Restriction Agreement " shall mean the agreement setting forth
the terms of an Award and executed by a Grantee as provided in Section 6.1
hereof.
11.27 "Section 16 Insider" shall mean any person who is subject to the
provisions of Section 16 of the Exchange Act, as provided in Rule 16a-2
promulgated pursuant to the Exchange Act.
11.28 "Stock" shall mean the Class E Common Stock, par value $2.50 per
share, of the Company, as adjusted pursuant to Section 4.2 hereof.
11.29 "Stock Option Agreement" shall mean an agreement between the
Company and an Optionee under which the Optionee may purchase Stock hereunder,
sample forms of which are attached hereto as Exhibit A and Exhibit B (which
form may be varied by the Committee in granting an Option).
11.30 "Subsidiary" shall mean any corporation (other than the Employer)
in an unbroken chain of corporations beginning with the Employer if, at the
time of the grant (or modification) of the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
* * * * *
16
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
BAHRAM YUSEFZADEH
DATED: DECEMBER 28, 1995
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Compensation and Benefits . . . . . . . . . . . . . . . . . . . 2
4. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Trade Secrets, Non-Competition, Non-Solicitation,
and Related Matters . . . . . . . . . . . . . . . . . . . . . . 5
6. Successors; Binding Agreement . . . . . . . . . . . . . . . . . 8
7. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 8
8. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9. Settlement of Claims . . . . . . . . . . . . . . . . . . . . . . 8
10. Modification and Waiver . . . . . . . . . . . . . . . . . . . . 8
11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 9
14. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16. Demand Registration Rights . . . . . . . . . . . . . . . . . . . 9
17. Piggyback Registration Rights . . . . . . . . . . . . . . . . . 10
18. Other Registration Issues . . . . . . . . . . . . . . . . . . . 11
19. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 14
<PAGE> 3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
BAHRAM YUSEFZADEH, an individual resident of Florida (the "Executive"), as of
this 28th day of December, 1995.
The Company presently employs the Executive as its Chief Executive
Officer. The Company and the Executive are parties to the Employment
Agreement, dated June 15, 1993 (the "Old Agreement"). The Board of Directors
of the Company (the "Board") recognizes that the Executive's contribution to
the growth and success of the Company is substantial. The Board desires to
provide for the continued employment of the Executive and to make certain
changes in the Executive's employment arrangements which the Board has
determined will reinforce and encourage the continued dedication of the
Executive to the Company and will promote the best interests of the Company and
its stockholders. The Executive is willing to continue to serve the Company on
the terms and conditions herein provided.
Certain provisions and definitions in this document reflect the
agreements of the parties in the Old Agreement and the Stockholders Agreement.
This Agreement will supersede in its entirety the Old Agreement; provided,
however, that all provisions in the Old Agreement with respect to the
Executive's stock options shall remain in full force and effect. Certain terms
used in this Agreement are defined in Section 19.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree (as of the Effective Date) that:
1. Employment. The Company shall continue to employ the
Executive, and the Executive shall continue to serve the Company, as Chief
Executive Officer upon the terms and conditions set forth herein. Prior to the
Initial Public Offering, the Executive shall have such authority and
responsibilities as are consistent with his position and which may be set forth
in this Agreement and the Stockholders Agreement. After the Initial Public
Offering, the Executive shall have such authority and responsibilities as are
consistent with his position and which may be set forth in the Bylaws or
assigned by the Board from time to time. The Executive shall devote his full
business time, attention, skill and efforts to the performance of his duties
hereunder, except during periods of illness or periods of vacation and leaves
of absence consistent with Company policy. The Executive may devote reasonable
periods of time to serve as a director or advisor to other organizations, to
perform charitable and other community activities, and to manage his personal
investments; provided, however, that such activities do not materially
interfere with the performance of his duties hereunder and are not in conflict
or competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein,
the Executive's employment under this Agreement shall be for a continuing term
(the "Term") of three years, which shall be extended automatically (without
further action of the Company or the Executive)
<PAGE> 4
each day for an additional day so that the remaining term shall continue to be
three years; provided, however, that either party may at any time, by written
notice to the other, fix the Term to a finite term of three years, without
further automatic extension, commencing with the date of such notice.
Notwithstanding the foregoing, the Term of employment hereunder will end on the
date that the Executive attains the age of 65.
3. Compensation and Benefits.
a. The Company shall pay the Executive a salary at a
rate of not less than $200,000 per annum in accordance with the salary payment
practices of the Company. The Board (or an appropriate committee of the Board)
shall review the Executive's salary at least annually (on May 1, 1996, for the
first review) and may increase the Executive's base salary if it determines in
its sole discretion that an increase is appropriate. The Company shall also
pay to the Executive directors' fees for his service on the Board of Directors
of the Company or any of its subsidiaries in accordance with the director
compensation practices of the Company.
b. The Executive shall participate in a management
incentive program and, prior to the Initial Public Offering shall be eligible
to receive annual payments, and, upon completion of the Initial Public Offering
shall be eligible to receive quarterly payments, of a bonus in an amount
determined by the Compensation Committee based upon achievement of targeted
levels of performance and such other criteria as the Compensation Committee
shall establish from time to time pursuant to that program. In addition, the
Compensation Committee shall annually consider the Executive's performance and
determine if any additional bonus is appropriate.
c. The Executive shall participate in the Plan and be
eligible for the grant of stock options, restricted stock and other awards
thereunder.
d. The Executive shall continue to participate in all
retirement, welfare, deferred compensation, life and health insurance
(including health insurance for Executive's spouse and his dependents), and
other benefit plans or programs of the Company now or hereafter applicable to
the Executive, including, without limitation, the Paul Revere disability plan
purchased by the Company on behalf of the Executive, or applicable generally to
employees of the Company or to a class of employees that includes senior
executives of the Company; provided, however, that during any period during the
Term that the Executive is subject to a Disability, and during the 180-day
period of physical or mental infirmity leading up to the Executive's
Disability, the amount of the Executive's compensation provided under this
Section 3 shall be reduced by the sum of the amounts, if any, paid to the
Executive for the same period under any disability benefit or pension plan of
the Company or any of its subsidiaries. After the Initial Public Offering, the
Executive and the Company shall implement a formal compensation plan using a
benefits consultant.
e. After the Initial Public Offering, the Company shall
provide to the Executive an automobile owned or leased by the Company of a make
and model appropriate to the Executive's status (in the reasonable opinion of
the Executive) or, in lieu thereof, shall
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<PAGE> 5
provide the Executive with an annual allowance of not less than $15,000 to
partially cover the cost of the business use of an automobile owned or leased
by the Executive.
f. The Company shall reimburse the Executive's
reasonable expenses for dues and capital assessments for country and dining
club memberships currently held by the Executive; provided, however, that if
the Executive during the term of his employment with the Company ceases his
membership in any such clubs and any bonds or other capital payments made by
the Company are repaid to the Executive, the Executive shall pay over such
payments to the Company.
g. The Company shall continue to reimburse the Executive
for travel, seminar, and other expenses related to the Executive's duties which
are incurred and accounted for in accordance with the historic practices of the
Company.
4. Termination.
a. The Executive's employment under this Agreement may
be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) by the Company due to the Disability of the
Executive upon delivery of a Notice of Termination to the
Executive;
(iii) by the Company for Cause upon delivery of a
Notice of Termination to the Executive; and
(iv) by the Executive for any reason upon delivery
of a Notice of Termination to the Company within a 90-day
period beginning on the 30th day after any occurrence of a
Change in Control or within a 90-day period beginning on the
one year anniversary of the occurrence of any Change in
Control.
b. If the Executive's employment with the Company shall
be terminated during the Term (i) by reason of the Executive's death, or (ii)
by the Company for Disability or Cause, the Company shall pay to the Executive
(or in the case of his death, the Executive's estate) within 15 days after the
Termination Date, a lump sum cash payment equal to the Accrued Compensation
and, if such termination is other than by the Company for Cause, the Pro Rata
Bonus.
c. If the Executive's employment with the Company shall
be terminated by the Company in violation of this Agreement or by the Executive
for any reason after a Change in Control, in addition to other rights and
remedies available in law or equity, the Executive shall be entitled to the
following:
3
<PAGE> 6
(i) the Company shall pay the Executive in cash
within 15 days of the Termination Date an amount equal to all
Accrued Compensation and the Pro Rata Bonus;
(ii) the Company shall pay to the Executive in
cash at the end of each of the 36 consecutive 30-day periods
following the Termination Date an amount equal to one-twelfth
of the sum of the Base Amount and the Bonus Amount.
(iii) for the period from the Termination Date
through the date that Executive attains the age of 65 (the
"Continuation Period"), the Company shall at its expense
continue on behalf of the Executive and his dependents and
beneficiaries the life insurance, disability, medical, dental
and hospitalization benefits provided (x) to the Executive at
any time during the 90-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly
situated executives who continue in the employ of the Company
during the Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this Section
4(c)(iii) during the Continuation Period shall be no less
favorable to the Executive and his dependents and
beneficiaries than the most favorable of such coverages and
benefits during any of the periods referred to in clauses (x)
and (y) above. The Company's obligation hereunder with
respect to the foregoing benefits shall be limited to the
extent that the Executive obtains any such benefits pursuant
to a subsequent employer's benefit plans, in which case the
Company may reduce the coverage of any benefits it is required
to provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans is no
less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This subsection
(iii) shall not be interpreted so as to limit any benefits to
which the Executive or his dependents or beneficiaries may be
entitled under any of the Company's employee benefit plans,
programs or practices following the Executive's termination of
employment, including without limitation, retiree medical and
life insurance benefits; and
(iv) the restrictions on any outstanding incentive
awards (including stock options) granted to the Executive
under the Plan or under any other incentive plan or
arrangement shall lapse and such incentive award shall become
100% vested, all stock options and stock appreciation rights
granted to the Executive shall become immediately exercisable
and shall become 100% vested, and all stock options granted to
the Executive shall become 100% vested.
d. In the event that the Executive shall no longer be
the Chief Executive Officer of the Company, other than by voluntary
resignation, the Company shall, within 10 days after termination as Chief
Executive Officer, offer to repurchase all of the Company's common stock owned
by the Executive, at a purchase price equal to the Fair Market Value of the
common stock, as determined in accordance with the provisions below. The
question of the Fair Market Value of the Company's common stock shall be
submitted to three impartial and reputable appraisers. The Executive and the
Company shall each select one appraiser, and such
4
<PAGE> 7
appraisers shall select a third, independent appraiser. The three appraisers
shall thereafter proceed as expeditiously as possible to determine (by
concurrence of a majority of such appraisers) the Fair Market Value of the
common stock, and the appraisers shall deliver an appraisal report to the
Executive and the Company as soon as practicable after it is completed. The
determination of the question of the Fair Market Value of the common stock by
such appraisers shall be final and binding on the Executive and the Company for
purposes of this Agreement. The Company shall pay the reasonable fees and
expenses of such appraisers. For the purposes hereof, "Fair Market Value"
shall mean the relevant percentage of the fair value of the business of the
Company represented by the shares of common stock as to which such
determination is being made, which shall be determined on a going concern basis
and as between a willing seller and a willing buyer, taking into account the
Company's financial condition, performance, market share and other relevant
criteria, but not taking into account the absence of a public market for the
shares or that the shares constitute a minority interest in the Company.
e. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Section 4(c)(iii).
f. In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) to the Executive or for his benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company or a change in ownership or effective control of the Company or of a
substantial portion of its assets (a "Payment" or "Payments"), would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest
or penalties, other than interest and penalties imposed by reason of the
Executive's failure to file timely a tax return or pay taxes shown due on his
return, imposed with respect to such taxes and the Excise Tax), including any
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
g. The severance pay and benefits provided for in this
Section 4 shall be in lieu of any other severance or termination pay to which
the Executive may be entitled under any Company severance or termination plan,
program, practice or arrangement. The Executive's entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans and other applicable programs, policies and practices
then in effect.
5. Trade Secrets, Non-Competition, Non-Solicitation, and
Related Matters.
a. The Executive shall not, at any time, either during
the Term of his employment or after the Termination Date, use or disclose any
Trade Secrets of the Company,
5
<PAGE> 8
except in fulfillment of his duties as the Executive during his employment, for
so long as the pertinent information or data remain Trade Secrets, whether or
not the Trade Secrets are in written or tangible form.
b. The Executive agrees to maintain in strict confidence
and, except as necessary to perform his duties for the Company, not to use or
disclose any Confidential Business Information for so long as the pertinent
data or information remains Confidential Business Information.
c. Upon termination of employment, the Executive shall
leave with the Company all business records relating to the Company and its
affiliates including, without limitation, all contracts, calendars, and other
materials or business records, its business or customers, including all
physical, electronic, and computer copies thereof, whether or not the Executive
prepared such materials or records himself. Upon such termination, the
Executive shall retain no copies of any such materials, provided, however, the
Executive may remove and retain all personal items and materials.
d. The Executive may disclose Trade Secrets or
Confidential Business Information pursuant to any order or legal process
requiring him (in his legal counsel's reasonable opinion) to do so; provided,
however, that the Executive shall first have notified the Company of the
request or order to so disclose the Trade Secrets or Confidential Business
Information in sufficient time to allow the Company to seek an appropriate
protective order.
e. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of two
years following the date of termination, the Executive shall not (without the
prior written consent of the Company) compete with the Company or any of its
affiliates in any way, including, but not limited to, (i) serving as an officer
of, director of, employee of, or consultant to, (ii) directly or indirectly,
forming, or (iii) directly or indirectly, acquiring more than a 5% investment
in, a Competing Business in the Territory.
f. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of two
years following the date of termination, the Executive shall not (except on
behalf of or with the prior written consent of the Company) either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (i) solicit, divert, or appropriate to or for a Competing Business, or
(ii) attempt to solicit, divert, or appropriate to or for a Competing Business,
any person or entity that was a customer or prospective customer of the Company
or any of its affiliates on the date of termination and is located in the
Territory.
g. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of two
years following the date of termination, the Executive will not, either
directly or indirectly, on the Executive's own behalf or in the service or on
behalf of others, (i) solicit, divert, or hire away, or (ii) attempt to
solicit, divert, or hire away, to any business located in the Territory, any
employee of or consultant to the Company or any of its affiliates engaged or
experienced in the Business, regardless of whether the
6
<PAGE> 9
employee or consultant is full-time or temporary, the employment or engagement
is pursuant to written agreement, or the employment is for a determined period
or is at will.
h. The Executive acknowledges and agrees that great loss
and irreparable damage would be suffered by the Company if the Executive should
breach or violate any of the terms or provisions of the covenants and
agreements set forth in this Section 5. The Executive further acknowledges and
agrees that each of these covenants and agreements is reasonably necessary to
protect and preserve the interests of the Company. The parties agree that
money damages for any breach of clauses (a) through (g) of this Section 5 will
be insufficient to compensate for any breaches thereof, and that the Executive
or any of the Executive's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any of the covenants or agreements in this
Agreement; provided, however, that nothing in this Agreement shall be deemed to
deny the Executive the right to defend against this enforcement on the basis
that the Company has no right to its enforcement under the terms of this
Agreement.
i. The Executive acknowledges and agrees that: (i) the
covenants and agreements contained in clauses (a) through (g) of this Section 5
are the essence of this Agreement; (ii) that the Executive has received good,
adequate and valuable consideration for each of these covenants; (iii) each of
these covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company; (iv) the Company is and will be
engaged in and throughout the Territory in the Business; (v) a Competing
Business could be engaged in from any place in the Territory; and (vi) the
Company has a legitimate business interest in restricting the Executive's
activities throughout the Territory. The Executive also acknowledges and
agrees that: (i) irreparable loss and damage will be suffered by the Company
should the Executive breach any of these covenants and agreements; (ii) each of
these covenants and agreements in clauses (a) through (g) of this Section 5 is
separate, distinct and severable not only from the other covenants and
agreements but also from the remaining provisions of this Agreement; and (iii)
the unenforceability of any covenants or agreements shall not affect the
validity or enforceability of any of the other covenants or agreements or any
other provision or provisions of this Agreement. The Executive acknowledges
and agrees that if any of the provisions of clauses (a) through (g) of this
Section 5 shall ever be deemed to exceed the time, activity, or geographic
limitations permitted by applicable law, then such provisions shall be and
hereby are reformed to the maximum time, activity, or geographical limitations
permitted by applicable law.
j. The Executive and the Company hereby agree that they
will negotiate in good faith to amend this Agreement from time to time to
modify the terms of this Section 5, the definition of the term "Territory," and
the definition of the term "Business," to reflect changes in the Company's
business and affairs so that the scope of the limitations placed on the
Executive's activities by this Section 5 accomplishes the parties' intent in
relation to the then current facts and circumstances. Any such amendment shall
be effective only when completed in writing and signed by the Executive and the
Company.
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6. Successors; Binding Agreement.
a. This Agreement shall be binding upon and shall inure
to the benefit of the Company, its Successors and Assigns and the Company shall
require any Successors and Assigns to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal
fees and related expenses (including but not limited to the costs of experts,
accountants and counsel) incurred by the Executive as they become due as a
result of (a) the termination of the Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing any such
termination of employment) and (b) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement; provided, however, that the
circumstances set forth in clauses (a) and (b) above occurred on or after a
Change in Control.
8. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other; provided, however, that all notices to the Company
shall be directed to the attention of the Board with a copy to the Secretary of
the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others. The Company
may, however, withhold from any benefits payable under this Agreement all
federal, state, city, or other taxes as shall be required pursuant to any law
or governmental regulation or ruling.
10. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Executive
and the Company. No waiver by any party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
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<PAGE> 11
11. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Florida
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in State of Florida.
12. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
16. Demand Registration Rights.
a. Rights. Subject to the provisions of this
Section 16(a), upon the termination of the Executive's employment, for any
reason, the Executive may request registration for sale under the Act of all or
part of the Common Stock then held by him (excluding, for purposes of this
Section 16(a), shares subject to the stock options held by the Executive as to
which the vesting provisions shall not have lapsed pursuant to this Agreement
or otherwise). Any such request shall specify the number of shares proposed to
be registered and sold and the name of the managing underwriter of the proposed
offering (who must be acceptable to the Company in its reasonable discretion).
b. Exceptions. The Company shall not be required to
effect a demand registration under the Act pursuant to Section 16(a) above if:
(i) the aggregate market value of the shares of Common Stock proposed to be
registered does not equal or exceed $12,000,000 prior to the Initial Public
Offering or $2,000,000 after the Initial Public Offering; (ii) within 12 months
prior to any such request for registration, a registration of securities of the
Company has been effected in which the Executive had the right to participate
pursuant to this Section 16 or Section 17 hereof; (iii) the Company receives
such request for registration within 180 days preceding the anticipated
effective date of a proposed underwritten public offering of securities of the
Company approved by the Board prior to the Company's receipt of such request;
or (iv) the Board reasonably determines in good faith that effecting such a
demand registration at such time would have a material adverse effect upon a
proposed sale of all (or substantially all) of the assets of the Company, or a
merger, reorganization, recapitalization, or similar transaction materially
affecting the capital structure or equity ownership of the Company which is
actively
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<PAGE> 12
being negotiated with another party whose identity is disclosed to the
Executive; provided, however, that the Company may only delay a demand
registration pursuant to this Section 16(b)(iv) for a period not exceeding six
months (or until such earlier time as such transaction is consummated or no
longer proposed). The Company shall promptly notify in writing the Executive
of any decision not to effect any such request for registration pursuant to
this Section 16(b), which notice shall set forth in reasonable detail the
reason for such decision and shall include an undertaking by the Company
promptly to notify the Executive as soon as a demand registration may be
effected.
c. Reduction. If the managing underwriters, the Company
and the Executive determine, after reasonable negotiations, that the number of
shares of Common Stock held by the Executive which the Executive requested to
be included in such registration exceeds the number which can be sold in such
offering, then the amount of such shares that may be included in such
registration shall be reduced to the number of shares that the managing
underwriters, the Company and the Executive determine is marketable, after
reasonable negotiations.
d. Withdrawal. The Executive may withdraw at any time
before a registration statement filed pursuant to this Section 16 is declared
effective, in which event the Company may withdraw such registration statement.
If the Company withdraws a registration statement under this Section 16(d) in
respect of a registration for which the Company would otherwise be required to
pay some expenses under Sections 18(c), (d) and (e) hereof, then the Executive
shall be liable to the Company for all expenses of such registration specified
in Sections 18(c), (d) and (e) hereof.
17. Piggyback Registration Rights.
a. Rights. Subject to the provision of this Section 17,
if the Company proposes to make a registered public offering, including an
initial public offering, of any of its securities under the Act (whether to be
sold by it or by one or more third parties), other than an offering pursuant to
a demand registration under Section 16 hereof or an offering registered on Form
S-8, Form S-4, or comparable forms, the Company shall, not less than 45 days
prior to the proposed filing date of the registration form, give written notice
of the proposed registration to the Executive, and at the written request of
the Executive delivered to the Company within 15 days after the receipt of such
notice, shall include in such registration and offering, and in any
underwriting of such offering, all shares of Common Stock as may have been
designated in the Executive's request.
b. Primary Offering Reduction. If a registration in
which the Executive has the right to participate pursuant to this Section 17 is
an underwritten primary registration on behalf of the Company, and the managing
underwriters, the Company and the Executive determine, after reasonable
negotiations, that the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, then the
Company shall include in such registration the number of shares of the Common
Stock requested to be sold by the Company, any other person who has
registration rights pursuant to a written agreement with the Company and the
shares requested by Executive in proportion to the number of shares of Common
Stock so requested by each of them to be so included.
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<PAGE> 13
c. Secondary Offering Reduction. If a registration in
which the Executive has the right to participate pursuant to this Section 17 is
an underwritten secondary registration, and the managing underwriters, the
Company and the Executive determine, after reasonable negotiations, that the
number of shares requested to be included in such registration exceeds the
number of shares which can be sold in such offering, then the Company shall
include in such offering the number of shares of Common Stock owned and
proposed to be sold by the Company and by any other participants (including the
Executive) proposing (and entitled) to sell shares pursuant to such
registration which the managing underwriters, the Company and the Executive
determine, after reasonable negotiations, can be sold in the offering, in
proportion to the number of shares of Common Stock so requested by each of them
to be included.
18. Other Registration Issues.
a. The Company shall have no obligation to file a
registration statement pursuant to Section 16 hereof, or to include shares of
Common Stock owned by the Executive in a registration statement pursuant to
Section 17 hereof, unless and until the Executive has furnished the Company
with all information and statements about or pertaining to the Executive in
such reasonable detail as is reasonably deemed by the Company to be necessary
or appropriate with respect to the preparation of the registration statement.
Whenever the Executive has requested that any shares of Common Stock be
registered pursuant to Section 16 or 17 hereof, subject to the provisions of
those Sections, the Company shall, as expeditiously as reasonably possible:
(i) prepare and file with the SEC a registration
statement with respect to such shares and use its best efforts to
cause such registration statement to become effective as soon as
reasonably practicable thereafter (provided that before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish counsel for the Executive with
copies of all such documents proposed to be filed);
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than nine months or until
the underwriters have completed the distribution described in such
registration statement, whichever occurs first;
(iii) furnish to the Executive such number of copies of
such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus), and such other documents as the Executive may
reasonably request;
(iv) use its best efforts to register or qualify such
shares under such other securities or Blue Sky Laws of such
jurisdictions as the Executive reasonably requests (and to maintain
such registrations and qualifications effective for a period of nine
months or until the underwriters have completed the distribution of
such shares, whichever occurs first), and to do any and all other
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<PAGE> 14
acts and things which may be necessary or advisable to enable the
Executive or underwriters to consummate the disposition in such
jurisdictions of such shares; provided, however, that the Company will
not be required to (a) qualify generally to do business in any
jurisdiction where it would not be required but for this Section
18(a)(iv), or (b) subject itself to taxation in any such jurisdiction;
provided, further, however, that, notwithstanding anything to the
contrary in this Agreement with respect to the bearing of expenses, if
any such jurisdiction shall require that expenses incurred in
connection with the qualification of such shares in that jurisdiction
be borne in part or full by the Executive, then the Executive shall
pay such expenses to the extent required by such jurisdiction;
(v) cause all such shares to be listed on securities
exchanges, if any, on which similar securities issued by the Company
are then listed;
(vi) provide a transfer agent and registrar for all such
shares not later than the effective date of such registration
statements;
(vii) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions as the Executive and underwriters reasonably request (and
subject to approval by the Company's counsel) in order to expedite or
facilitate the disposition of such shares; and
(viii) make available for inspection by the Executive, by
any underwriter participating in any distribution pursuant to such
registration statement, and by any attorney, accountant or other agent
retained by the Executive or underwriter, or by any such underwriter,
all financial and other records, pertinent corporate documents, and
properties (other than confidential intellectual property) of the
Company; provided, however, that the Company can condition delivery of
any information, records or corporate documents upon the receipt from
the Executive and the underwriter and their counsel, accountants,
advisors and agents, of a confidentiality agreement in form and
substance acceptable to the Company and its counsel in the exercise of
their exclusive discretion.
b. Holdback Agreement. In the event that the Company
effects an underwritten public offering of any of the Company's equity
securities, the Executive agrees, if requested by the managing underwriters,
not to effect any sale or distribution, including any sale pursuant to Rule 144
under the Act, of any equity securities (except as part of such underwritten
offering) during the 180-day period commencing with the effective date of the
registration statement for such offering.
c. Stockholder Expenses. If, pursuant to Section 16 or
17 hereof, shares of Common Stock owned by the Executive are included in a
registration statement, then the Executive shall pay all transfer taxes, if
any, relating to the sale of its shares, the fees and expenses of his own
counsel, and its pro rata portion of any underwriting discounts, fees or
commissions or the equivalent thereof.
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<PAGE> 15
d. The Company's Expenses. Except for the fees and
expenses specified in Section 18(c) hereof and except as provided below in this
Section 18(d), the Company shall pay all expenses incident to the registration
and to the Company's performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or Blue Sky Laws, underwriting
discounts, fees and commissions (other than the Executive's pro rata portion of
any underwriting discounts or commissions or the equivalent thereof), printing
expenses, messenger and delivery expenses, and fees and expenses of counsel for
the Company and all independent certified public accountants and other persons
retained by the Company. If the Company shall previously have paid, pursuant
to this Section 18(d), the expenses of a registration, then the Executive shall
pay all expenses described in this Section 18(d) (but not expenses described in
Section 18(e) hereof).
e. Other. With respect to any registration pursuant to
Section 16 or 17 hereof, the Company shall pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties) and the expenses and fees for
listing the securities to be registered on exchanges on which similar
securities issued by the Company are then listed.
f. Indemnity. In the event that any shares of Common
Stock owned by the Executive are offered or sold by means of a registration
statement pursuant to Section 16 or 17 hereof, the Company agrees to indemnify
and hold harmless the Executive and each person, if any, who controls or may
control the Executive within the meaning of the Act (the Executive and any such
other persons being hereinafter referred to individually as an "Indemnified
Person" and collectively as "Indemnified Persons") from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs, and expenses, including, without limitation, interest,
penalties, and reasonable attorneys fees and disbursements, asserted against,
resulting to, imposed upon or incurred by such Indemnified Person, jointly or
severally, directly or indirectly (hereinafter referred to in this Section
18(f) in the singular as a "claim" and in the plural as "claims"), based upon,
arising out of, or resulting from any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, any
preliminary or final prospectus contained therein, or any amendment or
supplement thereto, or any document incident to registration or qualification
of any such shares, or any omission or alleged omission to state therein a
material fact necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading, or any violation
by the Company of the Act of any state securities or Blue Sky Laws, except
insofar as such claim is based upon, arises out of or results from information
developed or certified by the Executive for use in connection with the
registration statement or arises out of or results from the omission of
information known to the Executive prior to the violation or alleged violation.
The Executive agrees to indemnify and hold harmless the Company, its officers
and directors, and each person, if any, who controls or may control the Company
within the meaning of the Act (the Company, its officers and directors, and any
such persons also being hereinafter referred to individually in this context as
an "Indemnified Person" and collectively as "Indemnified Persons") from and
against all claims based upon, arising out of, or resulting from any untrue
statement of a material fact contained in the registration statement, or any
omission to state therein a material fact necessary in order to make the
statement made therein, in the light of the circumstances under which they were
made, not misleading, to the extent that such claim
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<PAGE> 16
is based upon, arises out of, or results from information developed or
certified by the Executive for use in connection with the registration
statement or arises out of, or results from an omission of information known to
the Executive prior to the violation or alleged violation. Provided, however,
that the maximum amount of liability in respect of such indemnification shall
be limited, to an amount equal to the net proceeds actually received by the
Company or the Executive from the sale of such shares effected pursuant to such
registration. The indemnifications set forth herein shall be in addition to
any liability the Company or the Executive may otherwise have to the
Indemnified Persons. Promptly after actually receiving definitive notice of
any claim in respect of which an Indemnified Person may seek indemnification
under this Section 18(f), such Indemnified Person shall submit written notice
thereof to either the Company or the Executive, as the case may be (sometimes
being hereinafter referred to as an "Indemnifying Person"). The omission of
the Indemnified Person so to notify the Indemnifying Person of any such claim
shall not relieve the Indemnifying Person from any liability it may have
hereunder except to the extent that (a) such liability was caused or increased
by such omission, or (b) the ability of the Indemnifying Person to reduce such
liability was materially adversely affected by such omission. In addition, the
omission of the Indemnified Person to notify the Indemnifying Person of any
such claim shall not relieve the Indemnifying Person from any liability it may
have otherwise than hereunder. The Indemnifying Person shall have the right to
undertake, by counsel or representatives of its own choosing, the defense,
compromise or settlement (without admitting liability of the Indemnified
Person) of any such claim asserted, such defense, compromise or settlement to
be undertaken at the expense and risk of the Indemnifying Person, and the
Indemnified Person shall have the right to engage separate counsel, at its own
expense, whom counsel for the Indemnifying Person shall keep informed and
consult with in a reasonable manner. In the event the Indemnifying Person
shall elect not to undertake such defense by its own representatives, the
Indemnifying Person shall give prompt written notice of such election to the
Indemnified Person, and the Indemnified Person shall undertake the defense,
compromise or settlement (without admitting liability of the Indemnified
Person) thereof on behalf of and for the account and risk of the Indemnifying
Person by counsel or other representatives designed by the Indemnified Person.
In the event that any claim shall arise out of a transaction or cover any
period or periods wherein the Company and the Executive shall each be liable
hereunder for part of the liability or obligation arising therefrom, then the
parties shall, each choosing its own counsel and bearing its own expenses,
defend such claim, and no settlement or compromise of such claim may be made
without the joint consent or approval of the Company and the Executive.
Notwithstanding the foregoing, no Indemnifying Person shall be obligated
hereunder with respect to amounts paid in settlement or any claim if such
settlement is effected without the consent of such Indemnifying Person (which
consent shall not be unreasonably withheld).
19. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which
shall include all amounts earned or accrued through the Termination Date but
not paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the Executive
on behalf of the Company during the period ending on the Termination Date, and
(iii) bonuses and incentive compensation (other than the Pro Rata Bonus).
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b. "Act" shall mean the Securities Act of 1933, as
amended.
c. "Adequate Justification" shall mean the occurrence
after a Change in Control of any of the following events or conditions: (i) a
material failure of the Company to comply with the terms of this Agreement;
(ii) any relocation of the Executive outside the metropolitan area where the
Company's principal executive office is located that is not approved by members
of the Incumbent Board (as such term is defined under Section 19(j)); or (iii)
other than as provided for herein, the removal of the Executive from the
position of Chief Executive Officer or any other substantial diminution in the
Executive's authority or the Executive's responsibilities that is not approved
by members of the Incumbent Board.
d. "Base Amount" shall mean the greater of the
Executive's annual base salary (i) at the rate in effect on the Termination
Date or (ii) at the highest rate in effect at any time during the 90-day period
prior to the Change in Control, and shall include all amounts of his base
salary that are deferred under the qualified and non-qualified employee
benefit plans of the Company or any other agreement or arrangement.
e. "Board" shall have the meaning set forth in the
recitals.
f. "Bonus Amount" shall mean the greater of (i) the most
recent annual bonus paid or payable to the Executive, or, if greater, the
annual bonus paid or payable for the full fiscal year ended prior to the fiscal
year during which a Change in Control occurred or (ii) the average of the
annual bonuses paid or payable during the three full fiscal years ended prior
to the Termination Date or, if greater, the three full fiscal years ended prior
to the Change in Control (or, in each case, such lesser period for which annual
bonuses were paid or payable to the Executive).
g. "Business" shall mean the development, marketing or
implementation of core retail banking software directly or through a software
service bureau to the banking and financial industry, and any other related
business which the Company or any of its affiliates is engaged in as of the
date of termination of employment.
h. "Bylaws" shall mean the Amended and Restated Bylaws
of the Company, as amended, supplemented or otherwise modified from time to
time.
i. "Cause" shall mean:
(i) prior to the Initial Public Offering, it is a
result of the conviction (from which no appeal may be or is
timely taken) of the Executive of a felony which leads to a
material injury to the Company or results in or was intended
to result in a direct or indirect gain to, or personal
enrichment of, the Executive; or
(ii) after the Initial Public Offering, it is a
result of:
(A) any act that (X) constitutes, on the
part of the Executive, fraud, dishonesty, or gross
malfeasance of duty, and (Y) is demonstrably
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<PAGE> 18
likely to lead to material injury to the Company or
resulted or was intended to result in direct or
indirect gain to or personal enrichment of the
Executive; provided, however, that such conduct shall
not constitute Cause:
(1) unless (w) there shall have
been delivered to the Executive a written
notice setting forth with specificity the
reasons that the Board believes the
Executive's conduct constitutes the criteria
set forth in clause (ii) (A), (x) the
Executive shall have been provided the
opportunity, if such behavior is susceptible
to cure, to cure the specific inappropriate
behavior within 30 days following written
notice, and (y) after such 30-day period, the
Board of Directors determines that the
behavior has not been cured, and (z) the
termination is evidenced by a resolution
adopted in good faith by two-thirds of the
members of the Board (other than the
Executive); or
(2) if such conduct (x) was
believed by the Executive in good faith to
have been in or not opposed to the interests
of the Company, and (y) was not intended to
and did not result in the direct or indirect
gain to or personal enrichment of the
Executive; or
(B) the conviction (from which no appeal
may be or is timely taken) of the Executive of a
felony.
j. A "Change in Control" shall mean the occurrence
during the Term of any of the following events after the Initial Public
Offering:
(i) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934 (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of 20% or more of the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause
a Change in Control. A "Non-Control Acquisition" shall mean
an acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) the Company or (y)
any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is
owned directly or indirectly by the Company (a "Subsidiary"),
(2) the Company or any Subsidiary, or (3) any Person in
connection with a "Non-Control Transaction" (as hereinafter
defined);
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(ii) The individuals who, as of the date of the
Initial Public Offering, are members of the Board (the
"Incumbent Board") cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the
election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director
shall, for purposes of this Agreement, be considered as a
member of the Incumbent Board; provided, further, however,
that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as
a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the 1934 Act)
or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a
"Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or
reorganization involving the
Company, unless
(1) the stockholders of the Company,
immediately before such merger,
consolidation or reorganization,
own, directly or indirectly,
immediately following such merger,
consolidation or reorganization,
at least two-thirds of the
combined voting power of the
outstanding voting securities of
the corporation resulting from
such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the
same proportion as their ownership
of the Voting Securities
immediately before such merger,
consolidation or reorganization,
and
(2) the individuals who were members
of the Incumbent Board immediately
prior to the execution of the
agreement providing for such
merger, consolidation or
reorganization constitute at least
two-thirds of the members of the
board of directors of the
Surviving Corporation.
(A transaction described in clauses (1)
and (2) shall herein be referred to as
a "Non-Control Transaction").
(B) A complete liquidation or dissolution
of the Company; or
(C) An agreement for the sale or other
disposition of all or substantially
all of the assets of the Company to any
Person (other than a transfer to a
Subsidiary).
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<PAGE> 20
(iv) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's employment is
terminated prior to a Change in Control and the Executive
reasonably demonstrates that such termination (A) was at the
request of a third party who has indicated an intention or
taken steps reasonably calculated to effect a Change in
Control and who effectuates a Change in Control (a "Third
Party") or (B) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs,
then for all purposes of this Agreement, the date of a Change
in Control with respect to the Executive shall mean the date
immediately prior to the date of such termination of the
Executive's employment.
k. "Compensation Committee" shall mean the compensation
committee of the Board.
l. "Competing Business" shall mean any business that, in
whole or in part, is the same or substantially the same as the Business.
m. "Confidential Business Information" shall mean any
non-public information of a competitively sensitive or personal nature, other
than Trade Secrets, acquired by the Executive, directly or indirectly, in
connection with the Executive's employment (including his employment with the
Company prior to the date of this Agreement), including (without limitation)
oral and written information concerning the Company or its affiliates relating
to financial position and results of operations (revenues, margins, assets, net
income, etc.), annual and long-range business plans, marketing plans and
methods, account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of
disclosure, directly or indirectly, by the Executive, or was available to the
Executive on a non-confidential basis prior to its disclosure to the Executive.
n. "Continuation Period" shall have the meaning ascribed
to it in Section 4(c)(iii).
o. "Disability" shall mean a physical or mental
infirmity which impairs the Executive's ability to substantially perform his
duties with the Company for a period of 180 consecutive days, as determined by
an independent physician selected with the approval of both the Company and the
Executive.
p. "Effective Date" shall mean December 28, 1995.
q. "Fair Market Value" shall have the meaning ascribed
to it in Section 4(d).
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<PAGE> 21
r. "Initial Public Offering" shall mean the closing of
the first public offering of the Company's common stock registered under the
Act in which aggregate proceeds to the Company, net of all underwriting
discounts and commissions and other expenses of issuance and distribution as
stated in the prospectus relating to such offering, are equal to at least
twelve million dollars ($12,000,000).
s. "Notice of Termination" shall mean a written notice
of termination from the Company or the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
t. "Plan" shall mean the 1995 Phoenix International
Ltd., Inc. Employee Stock Option Plan adopted by the Board on October 21, 1995.
u. "Pro Rata Bonus" shall mean an amount equal to the
Bonus Amount multiplied by a fraction the numerator of which is the number of
days in the fiscal year through the Termination Date and the denominator of
which is 365.
v. "Stockholders Agreement" shall mean the Amended and
Restated Stockholders Agreement, dated August 31, 1995, by and among the
Company and the stockholders named therein, as amended, supplemented or
otherwise modified from time to time.
w. "Successors and Assigns" shall mean a corporation or
other entity acquiring all or substantially all the assets and business of the
Company (including this Agreement), whether by operation of law or otherwise.
x. "Termination Date" shall mean, in the case of the
Executive's death, his date of death, and in all other cases, the date
specified in the Notice of Termination.
y. "Territory" shall mean the United States.
z. "Trade Secrets" shall mean any information, including
but not limited to technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, information on customers, or a
list of actual or potential customers or suppliers, which: (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy, or (ii) is
otherwise defined as a "trade secret" under applicable law.
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<PAGE> 22
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective
as of the date first above written.
PHOENIX INTERNATIONAL LTD., INC.
ATTEST:
By: /s/ Ronald E. Fenton By: /s/ James C. Holly
----------------------------- ---------------------------------
Name: Ronald E. Fenton Name: James C. Holly
Title: Director Title: Director
(CORPORATE SEAL)
EXECUTIVE
/s/ Bahram Yusefzadeh
---------------------------------------
Bahram Yusefzadeh
20
<PAGE> 1
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
RALPH REICHARD
DATED: DECEMBER 28, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Trade Secrets, Non-Competition, Non-Solicitation, and Related Matters . . . . . . . . . . . . . . . . . . . 5
6. Successors; Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9. Settlement of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. Modification and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
13. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
i
<PAGE> 3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
Ralph Reichard, an individual resident of Florida (the "Executive"), as of this
28th day of December 1995.
The Company presently employs the Executive as its President and Chief
Operating Officer. The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success of the
Company is substantial. The Board desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements which the Board has determined will reinforce and
encourage the continued dedication of the Executive to the Company and will
promote the best interests of the Company and its stockholders. The Executive
is willing to continue to serve the Company on the terms and conditions herein
provided.
Certain provisions and definitions in this document reflect the
agreement of the parties in the Stockholders Agreement. This Agreement will
supersede in its entirety any prior understanding of the parties, whether
written or oral. Certain terms used in this Agreement are defined in Section
16.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree (as of the Effective Date) that:
1. Employment. The Company shall continue to employ the
Executive, and the Executive shall continue to serve the Company, as President
and Chief Operating Officer upon the terms and conditions set forth herein.
Prior to the Initial Public Offering, the Executive shall have such authority
and responsibilities as are consistent with his position and which may be set
forth in this Agreement and the Stockholders Agreement. After the Initial
Public Offering, the Executive shall have such authority and responsibilities
as are consistent with his position and which may be set forth in the Bylaws or
assigned by the Board or the Chief Executive Officer from time to time. The
Executive shall devote his full business time, attention, skill and efforts to
the performance of his duties hereunder, except during periods of illness or
periods of vacation and leaves of absence consistent with Company policy. The
Executive may devote reasonable periods of time to serve as a director or
advisor to other organizations, to perform charitable and other community
activities, and to manage his personal investments; provided, however, that
such activities do not materially interfere with the performance of his duties
hereunder and are not in conflict or competitive with, or adverse to, the
interests of the Company.
2. Term. Unless earlier terminated as provided herein,
the Executive's employment under this Agreement shall be for a continuing term
(the "Term") of three years, which shall be extended automatically (without
further action of the Company or the Executive) each day for an additional day
so that the remaining term shall continue to be three years;
<PAGE> 4
provided, however, that either party may at any time, by written notice to the
other, fix the Term to a finite term of three years, without further automatic
extension, commencing with the date of such notice. Notwithstanding the
foregoing, the Term of employment hereunder will end on the date that the
Executive attains the age of 65.
3. Compensation and Benefits.
a. The Company shall pay the Executive a salary at a
rate of not less than $140,000 per annum in accordance with the salary payment
practices of the Company. The Board (or an appropriate committee of the Board)
shall review the Executive's salary at least annually (on May 1, 1996, for the
first review) and may increase the Executive's base salary if it determines in
its sole discretion that an increase is appropriate. The Company shall also
pay to the Executive directors' fees for his service on the Board of Directors
of the Company or any of its subsidiaries in accordance with the director
compensation practices of the Company.
b. The Executive shall participate in a management
incentive program and, prior to the Initial Public Offering shall be eligible
to receive annual payments, and, upon completion of the Initial Public Offering
shall be eligible to receive quarterly payments, of a bonus in an amount
determined by the Compensation Committee based upon achievement of targeted
levels of performance and such other criteria as the Compensation Committee
shall establish from time to time pursuant to that program. In addition, the
Compensation Committee shall annually consider the Executive's performance and
determine if any additional bonus is appropriate.
c. The Executive shall participate in the Plan and be
eligible for the grant of stock options, restricted stock and other awards
thereunder.
d. The Executive shall continue to participate in all
retirement, welfare, deferred compensation, life and health insurance
(including health insurance for Executive's spouse and his dependents), and
other benefit plans or programs of the Company now or hereafter applicable to
the Executive or applicable generally to employees of the Company or to a class
of employees that includes senior executives of the Company; provided, however,
that during any period during the Term that the Executive is subject to a
Disability, and during the 180-day period of physical or mental infirmity
leading up to the Executive's Disability, the amount of the Executive's
compensation provided under this Section 3 shall be reduced by the sum of the
amounts, if any, paid to the Executive for the same period under any disability
benefit or pension plan of the Company or any of its subsidiaries. After the
Initial Public Offering, the Executive and the Company shall implement a formal
compensation plan using a benefits consultant.
e. After the Initial Public Offering, the Company shall
provide to the Executive an automobile owned or leased by the Company of a make
and model appropriate to the Executive's status (in the reasonable opinion of
the Executive) or, in lieu thereof, shall provide the Executive with an annual
allowance of not less than $12,000 to partially cover the cost of the business
use of an automobile owned or leased by the Executive.
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<PAGE> 5
f. The Company shall reimburse the Executive's
reasonable expenses for dues and capital assessments for country and dining
club memberships currently held by the Executive; provided, however, that if
the Executive during the term of his employment with the Company ceases his
membership in any such clubs and any bonds or other capital payments made by
the Company are repaid to the Executive, the Executive shall pay over such
payments to the Company.
g. The Company shall continue to reimburse the Executive
for travel, seminar, and other expenses related to the Executive's duties which
are incurred and accounted for in accordance with the historic practices of the
Company.
4. Termination.
a. The Executive's employment under this Agreement may
be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) by the Company due to the Disability of the
Executive upon delivery of a Notice of
Termination to the Executive;
(iii) by the Company for Cause upon delivery of a
Notice of Termination to the Executive; and
(iv) by the Executive for any reason upon delivery
of a Notice of Termination to the Company
within a 90-day period beginning on the 30th
day after any occurrence of a Change in
Control or within a 90-day period beginning
on the one year anniversary of the occurrence
of a Change in Control.
b. If the Executive's employment with the Company shall
be terminated during the Term (i) by reason of the Executive's death, or (ii)
by the Company for Disability or Cause, the Company shall pay to the Executive
(or in the case of his death, the Executive's estate) within 15 days after the
Termination Date, a lump sum cash payment equal to the Accrued Compensation
and, if such termination is other than by the Company for Cause, the Pro Rata
Bonus.
c. If the Executive's employment with the Company shall
be terminated by the Company in violation of this Agreement or by the Executive
for any reason after a Change in Control, in addition to other rights and
remedies available in law or equity, the Executive shall be entitled to the
following:
(i) the Company shall pay the Executive in cash
within 15 days of the Termination Date an
amount equal to all Accrued Compensation and
the Pro Rata Bonus;
3
<PAGE> 6
(ii) the Company shall pay to the Executive in
cash at the end of each of the 36 consecutive
30-day periods following the Termination Date
an amount equal to one-twelfth of the sum of
the Base Amount and the Bonus Amount.
(iii) for the period from the Termination Date
through the date that Executive attains the
age of 65 (the "Continuation Period"), the
Company shall at its expense continue on
behalf of the Executive and his dependents
and beneficiaries the life insurance,
disability, medical, dental and
hospitalization benefits provided (x) to the
Executive at any time during the 90-day
period prior to the Change in Control or at
any time thereafter or (y) to other similarly
situated executives who continue in the
employ of the Company during the Continuation
Period. The coverage and benefits (including
deductibles and costs) provided in this
Section 4(c)(iii) during the Continuation
Period shall be no less favorable to the
Executive and his dependents and
beneficiaries than the most favorable of such
coverages and benefits during any of the
periods referred to in clauses (x) and (y)
above. The Company's obligation hereunder
with respect to the foregoing benefits shall
be limited to the extent that the Executive
obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which
case the Company may reduce the coverage of
any benefits it is required to provide the
Executive hereunder as long as the aggregate
coverages and benefits of the combined
benefit plans is no less favorable to the
Executive than the coverages and benefits
required to be provided hereunder. This
subsection (iii) shall not be interpreted so
as to limit any benefits to which the
Executive or his dependents or beneficiaries
may be entitled under any of the Company's
employee benefit plans, programs or practices
following the Executive's termination of
employment, including without limitation,
retiree medical and life insurance benefits;
and
(iv) the restrictions on any outstanding incentive
awards (including stock options) granted to
the Executive under the Plan or under any
other incentive plan or arrangement shall
lapse and such incentive award shall become
100% vested, all stock options and stock
appreciation rights granted to the Executive
shall become immediately exercisable and
shall become 100% vested, and all stock
options granted to the Executive shall become
100% vested.
d. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Section 4(c)(iii).
4
<PAGE> 7
e. In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) to the Executive or for his benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company or a change in ownership or effective control of the Company or of a
substantial portion of its assets (a "Payment" or "Payments"), would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest
or penalties, other than interest and penalties imposed by reason of the
Executive's failure to file timely a tax return or pay taxes shown due on his
return, imposed with respect to such taxes and the Excise Tax), including any
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
f. The severance pay and benefits provided for in this
Section 4 shall be in lieu of any other severance or termination pay to which
the Executive may be entitled under any Company severance or termination plan,
program, practice or arrangement. The Executive's entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans and other applicable programs, policies and practices
then in effect.
g. In the event that the Executive's employment
hereunder is terminated for any reason, the Executive shall, and does hereby,
tender his resignation as a director of the Company and its affiliates
effective as of the date of termination.
5. Trade Secrets, Non-Competition, Non-Solicitation, and
Related Matters.
a. The Executive shall not, at any time, either during
the Term of his employment or after the Termination Date, use or disclose any
Trade Secrets of the Company, except in fulfillment of his duties as the
Executive during his employment, for so long as the pertinent information or
data remain Trade Secrets, whether or not the Trade Secrets are in written or
tangible form.
b. The Executive agrees to maintain in strict confidence
and, except as necessary to perform his duties for the Company, not to use or
disclose any Confidential Business Information for so long as the pertinent
data or information remains Confidential Business Information.
c. Upon termination of employment, the Executive shall
leave with the Company all business records relating to the Company and its
affiliates including, without limitation, all contracts, calendars, and other
materials or business records, its business or customers, including all
physical, electronic, and computer copies thereof, whether or not the Executive
prepared such materials or records himself. Upon such termination, the
Executive
5
<PAGE> 8
shall retain no copies of any such materials, provided, however, the Executive
may remove and retain all personal items and materials.
d. The Executive may disclose Trade Secrets or
Confidential Business Information pursuant to any order or legal process
requiring him (in his legal counsel's reasonable opinion) to do so; provided,
however, that the Executive shall first have notified the Company of the
request or order to so disclose the Trade Secrets or Confidential Business
Information in sufficient time to allow the Company to seek an appropriate
protective order.
e. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive shall not (without the prior
written consent of the Company) compete with the Company or any of its
affiliates in any way, including, but not limited to, (i) serving as an officer
of, director of, employee of, or consultant to, (ii) directly or indirectly,
forming, or (iii) directly or indirectly, acquiring more than a 5% investment
in, a Competing Business in the Territory.
f. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive shall not (except on behalf of
or with the prior written consent of the Company) either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (i) solicit, divert, or appropriate to or for a Competing Business, or
(ii) attempt to solicit, divert, or appropriate to or for a Competing Business,
any person or entity that was a customer or prospective customer of the Company
or any of its affiliates on the date of termination and is located in the
Territory.
g. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive will not, either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (i) solicit, divert, or hire away, or (ii) attempt to solicit, divert,
or hire away, to any business located in the Territory, any employee of or
consultant to the Company or any of its affiliates engaged or experienced in
the Business, regardless of whether the employee or consultant is full-time or
temporary, the employment or engagement is pursuant to written agreement, or
the employment is for a determined period or is at will.
h. The Executive acknowledges and agrees that great loss
and irreparable damage would be suffered by the Company if the Executive should
breach or violate any of the terms or provisions of the covenants and
agreements set forth in this Section 5. The Executive further acknowledges and
agrees that each of these covenants and agreements is reasonably necessary to
protect and preserve the interests of the Company. The parties agree that
money damages for any breach of clauses (a) through (g) of this Section 5 will
be insufficient to compensate for any breaches thereof, and that the Executive
or any of the Executive's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement
6
<PAGE> 9
by the Company of any of the covenants or agreements in this Agreement;
provided, however, that nothing in this Agreement shall be deemed to deny the
Executive the right to defend against this enforcement on the basis that the
Company has no right to its enforcement under the terms of this Agreement.
i. The Executive acknowledges and agrees that: (i) the
covenants and agreements contained in clauses (a) through (g) of this Section 5
are the essence of this Agreement; (ii) that the Executive has received good,
adequate and valuable consideration for each of these covenants; (iii) each of
these covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company; (iv) the Company is and will be
engaged in and throughout the Territory in the Business; (v) a Competing
Business could be engaged in from any place in the Territory; and (vi) the
Company has a legitimate business interest in restricting the Executive's
activities throughout the Territory. The Executive also acknowledges and
agrees that: (i) irreparable loss and damage will be suffered by the Company
should the Executive breach any of these covenants and agreements; (ii) each of
these covenants and agreements in clauses (a) through (g) of this Section 5 is
separate, distinct and severable not only from the other covenants and
agreements but also from the remaining provisions of this Agreement; and (iii)
the unenforceability of any covenants or agreements shall not affect the
validity or enforceability of any of the other covenants or agreements or any
other provision or provisions of this Agreement. The Executive acknowledges
and agrees that if any of the provisions of clauses (a) through (g) of this
Section 5 shall ever be deemed to exceed the time, activity, or geographic
limitations permitted by applicable law, then such provisions shall be and
hereby are reformed to the maximum time, activity, or geographical limitations
permitted by applicable law.
j. The Executive and the Company hereby agree that they
will negotiate in good faith to amend this Agreement from time to time to
modify the terms of this Section 5, the definition of the term "Territory," and
the definition of the term "Business," to reflect changes in the Company's
business and affairs so that the scope of the limitations placed on the
Executive's activities by this Section 5 accomplishes the parties' intent in
relation to the then current facts and circumstances. Any such amendment shall
be effective only when completed in writing and signed by the Executive and the
Company.
6. Successors; Binding Agreement.
a. This Agreement shall be binding upon and shall inure
to the benefit of the Company, its Successors and Assigns and the Company shall
require any Successors and Assigns to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7
<PAGE> 10
7. Fees and Expenses. The Company shall pay all legal
fees and related expenses (including but not limited to the costs of experts,
accountants and counsel) incurred by the Executive as they become due as a
result of (a) the termination of the Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing any such
termination of employment) and (b) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement; provided, however, that the
circumstances set forth in clauses (a) and (b) above occurred on or after a
Change in Control.
8. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other; provided, however, that all notices to the Company
shall be directed to the attention of the Board with a copy to the Secretary of
the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others. The Company
may, however, withhold from any benefits payable under this Agreement all
federal, state, city, or other taxes as shall be required pursuant to any law
or governmental regulation or ruling.
10. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Executive
and the Company. No waiver by any party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Florida
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in State of Florida.
12. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.
8
<PAGE> 11
14. Headings. The headings of Sections herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which
shall include all amounts earned or accrued through the Termination Date but
not paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the Executive
on behalf of the Company during the period ending on the Termination Date, and
(iii) bonuses and incentive compensation (other than the Pro Rata Bonus).
b. "Adequate Justification" shall mean the occurrence
after a Change in Control of any of the following events or conditions: (i) a
material failure of the Company to comply with the terms of this Agreement;
(ii) any relocation of the Executive outside the metropolitan area where the
Company's principal executive office is located that is not approved by members
of the Incumbent Board (as such term is defined under Section 16(i)(ii)); or
(iii) other than as provided for herein, the removal of the Executive from the
position of President and Chief Operating Officer or any other substantial
diminution in the Executive's authority or the Executive's responsibilities
that is not approved by members of the Incumbent Board.
c. "Base Amount" shall mean the greater of the
Executive's annual base salary (i) at the rate in effect on the Termination
Date or (ii) at the highest rate in effect at any time during the 90-day period
prior to the Change in Control, and shall include all amounts of his base
salary that are deferred under the qualified and non-qualified employee
benefit plans of the Company or any other agreement or arrangement.
d. "Board" shall have the meaning set forth in the
recitals.
e. "Bonus Amount" shall mean the greater of (i) the most
recent annual bonus paid or payable to the Executive, or, if greater, the
annual bonus paid or payable for the full fiscal year ended prior to the fiscal
year during which a Change in Control occurred or (ii) the average of the
annual bonuses paid or payable during the three full fiscal years ended prior
to the Termination Date or, if greater, the three full fiscal years ended prior
to the Change in Control (or, in each case, such lesser period for which annual
bonuses were paid or payable to the Executive).
f. "Business" shall mean the development, marketing or
implementation of core retail banking software directly or through a software
service bureau to the banking and financial industry, and any other related
business which the Company or any of its affiliates is engaged in as of the
date of termination of employment.
9
<PAGE> 12
g. "Bylaws" shall mean the Amended and Restated Bylaws
of the Company, as amended, supplemented or otherwise modified from time to
time.
h. The termination of the Executive's employment shall
be for "Cause" if it is the result of:
(i) any act that (A) constitutes, on the part of
the Executive, fraud, dishonesty, or gross
malfeasance of duty, or conduct grossly
inappropriate to the Executive's office, and
(B) is demonstrably likely to lead to
material injury to the Company or resulted or
was intended to result in direct or indirect
gain to or personal enrichment of the
Executive; provided, however, that such
conduct shall not constitute Cause:
(A) unless (1) there shall have been
delivered to the Executive a written
notice setting forth with
specificity the reasons that the
Board believes the Executive's
conduct constitutes the criteria set
forth in clause (i), (2) the
Executive shall have been provided
the opportunity, if such behavior is
susceptible to cure, to cure the
specific inappropriate behavior
within 30 days following written
notice, and (3) after such 30-day
period, the Board of Directors
determines that the behavior has not
been cured, and (4) the termination
is evidenced by a resolution adopted
in good faith by two-thirds of the
members of the Board (other than the
Executive); or
(B) if such conduct (1) was believed by
the Executive in good faith to have
been in or not opposed to the
interests of the Company, and (2)
was not intended to and did not
result in the direct or indirect
gain to or personal enrichment of
the Executive; or
(ii) the conviction (from which no appeal may be
or is timely taken) of the Executive of a
felony; or
(iii) the failure of the Executive to perform his
duties hereunder in a manner satisfactory to
the Board of Directors, as recommended by the
Chief Executive Officer and as determined by
the Board of Directors in its sole
discretion; provided, however, that the
Executive shall have 60 days to cure such
failure after receiving notice from the
Company. The Company shall be obligated to
provide only one notice to the Executive
pursuant to this Section 16(h)(iii).
Thereafter, the Company may terminate the
Executive, without the Executive having a
right to cure, if the Executive fails to
perform his duties in a manner satisfactory
to the Board of
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<PAGE> 13
Directors, as recommended by the Chief
Executive Officer and as determined by the
Board of Directors in its sole discretion.
i. A "Change in Control" shall mean the occurrence
during the Term of any of the following events after the Initial Public
Offering:
(i) An acquisition (other than directly from the
Company) of any voting securities of the
Company (the "Voting Securities") by any
"Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "1934
Act")) immediately after which such Person
has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the
1934 Act) of 20% or more of the combined
voting power of the Company's then
outstanding Voting Securities; provided,
however, that in determining whether a Change
in Control has occurred, Voting Securities
which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would
cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1)
an employee benefit plan (or a trust forming
a part thereof) maintained by (x) the Company
or (y) any corporation or other Person of
which a majority of its voting power or its
equity securities or equity interest is owned
directly or indirectly by the Company (a
"Subsidiary"), (2) the Company or any
Subsidiary, or (3) any Person in connection
with a "Non-Control Transaction" (as
hereinafter defined);
(ii) The individuals who, as of the date of the
Initial Public Offering, are members of the
Board (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of
the Board; provided, however, that if the
election, or nomination for election by the
Company's stockholders, of any new director
was approved by a vote of at least two-thirds
of the Incumbent Board, such new director
shall, for purposes of this Agreement, be
considered as a member of the Incumbent
Board; provided, further, however, that no
individual shall be considered a member of
the Incumbent Board if such individual
initially assumed office as a result of
either an actual or threatened "Election
Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies
or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid
or settle any Election Contest or Proxy
Contest; or
(iii) Approval by stockholders of the Company of:
11
<PAGE> 14
(A) A merger, consolidation or
reorganization involving the Company,
unless
(1) the stockholders of the
Company, immediately before such
merger, consolidation or
reorganization, own, directly or
indirectly, immediately following
such merger, consolidation or
reorganization, at least two-thirds
of the combined voting power of the
outstanding voting securities of
the corporation resulting from such
merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the
same proportion as their ownership
of the Voting Securities
immediately before such merger,
consolidation or reorganization,
and
(2) the individuals who were
members of the Incumbent Board
immediately prior to the execution
of the agreement providing for such
merger, consolidation or
reorganization constitute at least
two-thirds of the members of the
board of directors of the
Surviving Corporation.
(A transaction described in clauses (1)
and (2) shall herein be referred to as
a "Non-Control Transaction").
(B) A complete liquidation or dissolution
of the Company; or
(C) An agreement for the sale or other
disposition of all or substantially all
of the assets of the Company to any
Person (other than a transfer to a
Subsidiary).
(iv) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated prior to a Change in
Control and the Executive reasonably
demonstrates that such termination (A) was at
the request of a third party who has
indicated an intention or taken steps
reasonably calculated to effect a Change in
Control and who effectuates a Change in
Control (a "Third Party") or (B) otherwise
occurred in connection with, or in
anticipation of, a Change in Control which
actually occurs, then for all purposes of
this Agreement, the date of a Change in
Control with respect to the Executive shall
mean the date immediately prior to the date
of such termination of the Executive's
employment.
j. "Compensation Committee" shall mean the compensation
committee of the Board.
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<PAGE> 15
k. "Competing Business" shall mean any business that, in
whole or in part, is the same or substantially the same as the Business.
l. "Confidential Business Information" shall mean any
non-public information of a competitively sensitive or personal nature, other
than Trade Secrets, acquired by the Executive, directly or indirectly, in
connection with the Executive's employment (including his employment with the
Company prior to the date of this Agreement), including (without limitation)
oral and written information concerning the Company or its affiliates relating
to financial position and results of operations (revenues, margins, assets, net
income, etc.), annual and long-range business plans, marketing plans and
methods, account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of
disclosure, directly or indirectly, by the Executive, or was available to the
Executive on a non-confidential basis prior to its disclosure to the Executive.
m. "Continuation Period" shall have the meaning ascribed
to it in Section 4(c)(iii).
n. "Disability" shall mean a physical or mental
infirmity which impairs the Executive's ability to substantially perform his
duties with the Company for a period of 180 consecutive days, as determined by
an independent physician selected with the approval of both the Company and the
Executive.
o. "Effective Date" shall mean December 28, 1995.
p. "Initial Public Offering" shall mean the closing of
the first public offering of the Company's common stock registered under the
Securities Act of 1933 in which aggregate proceeds to the Company, net of all
underwriting discounts and commissions and other expenses of issuance and
distribution as stated in the prospectus relating to such offering, are equal
to at least twelve million dollars ($12,000,000).
q. "Notice of Termination" shall mean a written notice
of termination from the Company or the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
r. "Plan" shall mean the 1995 Phoenix International
Ltd., Inc. Employee Stock Option Plan adopted by the Board on October 21, 1995.
13
<PAGE> 16
s. "Pro Rata Bonus" shall mean an amount equal to the
Bonus Amount multiplied by a fraction the numerator of which is the number of
days in the fiscal year through the Termination Date and the denominator of
which is 365.
t. "Stockholders Agreement" shall mean the Amended and
Restated Stockholders Agreement, dated August 31, 1995, by and among the
Company and the stockholders named therein, as amended, supplemented or
otherwise modified from time to time.
u. "Successors and Assigns" shall mean a corporation or
other entity acquiring all or substantially all the assets and business of the
Company (including this Agreement), whether by operation of law or otherwise.
v. "Termination Date" shall mean, in the case of the
Executive's death, his date of death, and in all other cases, the date
specified in the Notice of Termination.
w. "Territory" shall mean the United States.
x. "Trade Secrets" shall mean any information, including
but not limited to technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, information on customers, or a
list of actual or potential customers or suppliers, which: (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy, or (ii) is
otherwise defined as a "trade secret" under applicable law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective
as of the date first above written.
PHOENIX INTERNATIONAL LTD., INC.
ATTEST:
By: /s/ Ronald E. Fenton By: /s/ James C. Holly
----------------------------- ----------------------------------
Name: Ronald E. Fenton Name: James C. Holly
Title: Director Title: Director
(CORPORATE SEAL)
EXECUTIVE
/s/ Ralph Reichard
--------------------------------------
Ralph Reichard
14
<PAGE> 1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
MICHAEL R. NEWES
DATED: April 12, 1996
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
1. Employment........................................................... 1
2. Term................................................................. 1
3. Compensation and Benefits............................................ 2
4. Termination.......................................................... 2
5. Trade Secrets, Non-Competition, Non-Solicitation,
and Related Matters.................................................. 4
6. Successors; Binding Agreement........................................ 7
7. Fees and Expenses.................................................... 7
8. Notice............................................................... 7
9. Settlement of Claims................................................. 7
10. Modification and Waiver.............................................. 8
11. Governing Law........................................................ 8
12. Severability......................................................... 8
13. Entire Agreement..................................................... 8
14. Headings............................................................. 8
15. Counterparts........................................................ 8
16. Definitions......................................................... 8
</TABLE>
i
<PAGE> 3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
MICHAEL R. NEWES, an individual resident of Florida (the "Employee"), as of
this 12th day of April, 1996.
The Company presently employs the Employee as its Senior Vice President of
International Sales. The Company and the Employee are parties to the
Employment Agreement, dated August 15, 1993 (the "Old Agreement"). The Chief
Executive Officer ("CEO") of the Company recognizes that the Employee's
contribution to the growth and success of the Company is substantial. The CEO
desires to provide for the continued employment of the Employee and to make
certain changes in the Employee's employment arrangements which the CEO has
determined will reinforce and encourage the continued dedication of the
Employee to the Company and will promote the best interests of the Company and
its stockholders. The Employee is willing to continue to serve the Company on
the terms and conditions herein provided.
Certain terms used in this Agreement are defined in Section 16. Certain
provisions and definitions in this document reflect the agreements of the
parties in the Old Agreement and the Stockholders Agreement. This Agreement
will supersede in its entirety the Old Agreement; provided, however, that
Section 10 of the Old Agreement shall remain in full force and effect.
In consideration of the foregoing, the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree that on the Effective Date:
1. Employment. The Company shall continue to employ the Employee, and the
Employee shall continue to serve the Company, as Senior Vice President of
International Sales upon the terms and conditions set forth herein. The
Employee shall have such authority and responsibilities as are consistent with
his position and which may be set forth in this Agreement, in the Bylaws or
assigned by the CEO or President of the Company (the "President") from time to
time. The Employee shall devote his full business time, attention, skill and
efforts to the performance of his duties hereunder, except during periods of
illness or periods of vacation and leaves of absence consistent with Company
policy. The Employee may devote reasonable periods of time to perform
charitable and other community activities and to manage his personal
investments; provided, however, that such activities do not materially
interfere with the performance of his duties hereunder and are not in conflict
or competitive with, or adverse to, the interests of the Company.
2. Term Unless earlier terminated as provided herein, the Employee's
employment under this Agreement shall be for a continuing term (the "Term") of
one year, which shall be extended automatically (without further action of the
Company or the Employee) each day for an additional day so that the remaining
term shall continue to be one year; provided, however, that either party may at
any time, by written notice to the other, fix the Term to a finite term of one
year, without further automatic extension, commencing with the date of such
notice. Notwithstanding the foregoing, the Term of employment hereunder will
end on the date that the Employee attains the age of 65.
<PAGE> 4
3. Compensation and Benefits
a. Effective May 1, 1996, the Company shall pay the Employee a salary at a
rate of not less than $110,000 per annum in accordance with the salary payment
practices of the Company. The CEO and President shall review the Employee's
salary at least annually (on May 1, 1997, for the first review) and may
increase the Employee's base salary if they determine in their sole discretion
that an increase is appropriate.
b. The Employee may participate in a bonus program and, prior to the
Initial Public Offering, shall be eligible to receive annual payments of the
Bonus Amount and, upon completion of the Initial Public Offering, shall be
eligible to receive quarterly payments of the Bonus Amount based upon
achievement of targeted levels of performance and such other criteria as the
CEO and President shall establish from time to time pursuant to that program.
In addition, the Employee shall participate in a commission plan established
annually by the CEO and President.
c. The Employee shall participate in the Plan and be eligible for the
grant of stock options, restricted stock and other awards thereunder.
d. The Employee shall continue to participate in all retirement, welfare,
deferred compensation, life and health insurance, and other benefit plans or
programs of the Company now or hereafter applicable to the Employee or
applicable generally to employees of the Company.
e. The Company shall continue to reimburse the Employee for travel and
other expenses related to the Employee's duties which are incurred and
accounted for in accordance with the historic practices of the Company.
4. Termination a. The Employee's employment under this Agreement
may be terminated prior to the end of the Term only as follows:
(i) upon the death of the Employee;
(ii) by the Company due to the Disability of the Employee
upon delivery of a Notice of Termination to the
Employee; and
(iii) by the Company for Cause upon delivery of a Notice of
Termination to the Employee.
b. If the Employee's employment with the Company shall be terminated
during the Term (i) by reason of the Employee's death, or (ii) by the Company
for Disability or Cause, the Company shall pay to the Employee (or in the case
of his death, the Employee's estate) within 15 days after the Termination Date,
a lump sum cash payment equal to the Accrued
2
<PAGE> 5
Compensation and, if such termination is other than by the Company for Cause,
the Pro Rata Bonus and the Pro Rata Commission.
c. If the Employee's employment with the Company shall be terminated by
the Company for any reason within one year after a Change in Control or by the
Employee with Adequate Justification, in addition to other rights and remedies
available in law or equity, the Employee shall be entitled to the following:
(i) the Company shall pay the Employee in cash within 15
days of the Termination Date an amount equal to all
Accrued Compensation, the Pro Rata Bonus and the Pro
Rata Commission;
(ii) the Company shall pay to the Employee in cash at the end
of each of the 12 consecutive 30-day periods following
the Termination Date an amount equal to one-twelfth of
the sum of the Base Amount, the Bonus Amount and the
Commission Amount.
(iii) for the period from the Termination Date through the
date that is 12 months from the Termination Date (the
"Continuation Period"), the Company shall at its expense
continue on behalf of the Employee the life insurance,
disability, medical, dental and hospitalization benefits
provided (x) to the Employee at any time during the
90-day period prior to the Change in Control or at any
time thereafter or (y) to other similarly situated
employees who continue in the employ of the Company
during the Continuation Period. The coverage and
benefits (including deductibles and costs) provided in
this Section 4(c)(iii) during the Continuation Period
shall be no less favorable to the Employee than the most
favorable of such coverages and benefits during any of
the periods referred to in clauses (x) and (y) above.
The Company's obligation hereunder with respect to the
foregoing benefits shall be limited to the extent that
the Employee obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case the
Company may reduce the coverage of any benefits it is
required to provide the Employee hereunder as long as
the aggregate coverages and benefits of the combined
benefit plans is no less favorable to the Employee than
the coverages and benefits required to be provided
hereunder. This subsection (iii) shall not be
interpreted so as to limit any benefits to which the
Employee may be entitled under any of the Company's
employee benefit plans, programs or practices following
the Employee's termination of employment, including
without limitation, retiree medical and life insurance
benefits; and
(iv) the restrictions on any outstanding incentive awards
(including stock options) granted to the Employee under
the Plan or under any other
3
<PAGE> 6
incentive plan or arrangement shall lapse and such
incentive award shall become 100% vested, all stock
options and stock appreciation rights granted to the
Employee shall become immediately exercisable and shall
become 100% vested, and all stock options granted to the
Employee shall become 100% vested.
d. If the Company terminates the Employee without Cause, the Company shall
pay to the Employee in cash at the end of each of the six consecutive 30-day
periods following the Termination Date an amount equal to one-twelfth of the
sum of the Base Amount, the Bonus Amount and the Commission Amount.
e. The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment
except as provided in Section 4(c)(iii).
f. The severance pay and benefits provided for in this Section 4 shall be
in lieu of any other severance or termination pay to which the Employee may be
entitled under any Company severance or termination plan, program, practice or
arrangement. The Employee's entitlement to any other compensation or benefits
shall be determined in accordance with the Company's employee benefit plans and
other applicable programs, policies and practices then in effect.
g. In the event that the Employee is a director of the Company or any of
its affiliates and his employment hereunder is terminated for any reason, the
Employee shall, and does hereby, tender his resignation as a director of the
Company and any of its affiliates effective as of the Termination Date.
5. Trade Secrets, Non-Competition, Non-Solicitation, and Related Matters.
a. The Employee shall not, at any time, either during the Term of his
employment or after the Termination Date, use or disclose any Trade Secrets of
the Company, except in fulfillment of his duties as the Employee during his
employment, for so long as the pertinent information or data remain Trade
Secrets, whether or not the Trade Secrets are in written or tangible form.
b. The Employee agrees to maintain in strict confidence and, except as
necessary to perform his duties for the Company, not to use or disclose any
Confidential Business Information for so long as the pertinent data or
information remains Confidential Business Information.
c. Upon termination of employment, the Employee shall leave with the
Company all business records relating to the Company and its affiliates
including, without limitation, all contracts, calendars, and other materials or
business records, its business or customers, including
4
<PAGE> 7
all physical, electronic, and computer copies thereof, whether or not the
Employee prepared such materials or records himself. Upon such termination,
the Employee shall retain no copies of any such materials, provided, however,
the Employee may remove and retain all personal items and materials.
d. The Employee may disclose Trade Secrets or Confidential Business
Information pursuant to any order or legal process requiring him (in his legal
counsel's reasonable opinion) to do so; provided, however, that the Employee
shall first have notified the Company of the request or order to so disclose
the Trade Secrets or Confidential Business Information in sufficient time to
allow the Company to seek an appropriate protective order.
e. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee shall not (without the prior written consent of
the Company) compete with the Company or any of its affiliates in any way,
including, but not limited to, (i) serving as an officer of, director of,
employee of, or consultant to, (ii) directly or indirectly, forming, or (iii)
directly or indirectly, acquiring more than a 5% investment in, a Competing
Business in the Territory; provided, however, that (A) if the Employee is
terminated without Cause, then the non-compete period under this Section 5(e)
shall be for a period of six months following the Termination date or (B) if
the Employee is terminated, for any reason after a Change in Control or resigns
with Adequate Justification, then there shall not be a non-compete period under
this Section 5(e).
f. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee shall not (except on behalf of or with the prior
written consent of the Company) either directly or indirectly, on the
Employee's own behalf or in the service or on behalf of others, (i) solicit,
divert, or appropriate to or for a Competing Business, or (ii) attempt to
solicit, divert, or appropriate to or for a Competing Business, any person or
entity that was a customer or a prospective customer of the Company or any of
its affiliates on the Termination Date and is located in the Territory;
provided, however, that (A) if the Employee is terminated without Cause, then
the non-solicit period under this Section 5(f) shall be for a period of six
months following the Termination Date or (B) if the Employee is terminated for
any reason after a Change in Control or resigns with Adequate Justification,
then there shall not be a non-solicit period under this Section 5(f).
g. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee will not, either directly or indirectly, on the
Employee's own behalf or in the service or on behalf of others, (i) solicit,
divert, or hire away, or (ii) attempt to solicit, divert, or hire away, to any
business located in the Territory, any employee of or consultant to the Company
or any of its affiliates engaged or experienced in the Business, regardless of
whether the employee or consultant is full-time or temporary, the employment or
engagement is pursuant to written
5
<PAGE> 8
agreement, or the employment is for a determined period or is at will;
provided, however, that (A) if the Employee is terminated without Cause, then
the non-solicit period under this Section 5(g) shall be for a period of six
months following the Termination Date or (B) if the Employee is terminated for
any reason after a Change in Control or resigns with Adequate Justification,
then there shall not be a non-solicit period under this Section 5(g).
h. The Employee acknowledges and agrees that great loss and irreparable
damage would be suffered by the Company if the Employee should breach or
violate any of the terms or provisions of the covenants and agreements set
forth in this Section 5. The Employee further acknowledges and agrees that
each of these covenants and agreements is reasonably necessary to protect and
preserve the interests of the Company. The parties agree that money damages
for any breach of clauses (a) through (g) of this Section 5 will be
insufficient to compensate for any breaches thereof, and that the Employee or
any of the Employee's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any of the covenants or agreements in this
Agreement; provided, however, that nothing in this Agreement shall be deemed to
deny the Employee the right to defend against this enforcement on the basis
that the Company has no right to its enforcement under the terms of this
Agreement.
i. The Employee acknowledges and agrees that: (i) the covenants and
agreements contained in clauses (a) through (g) of this Section 5 are the
essence of this Agreement; (ii) that the Employee has received good, adequate
and valuable consideration for each of these covenants; (iii) each of these
covenants is reasonable and necessary to protect and preserve the interests and
properties of the Company; (iv) the Company is and will be engaged in and
throughout the Territory in the Business; (v) a Competing Business could be
engaged in from any place in the Territory; and (vi) the Company has a
legitimate business interest in restricting the Employee's activities
throughout the Territory. The Employee also acknowledges and agrees that: (i)
irreparable loss and damage will be suffered by the Company should the Employee
breach any of these covenants and agreements; (ii) each of these covenants and
agreements in clauses (a) through (g) of this Section 5 is separate, distinct
and severable not only from the other covenants and agreements but also from
the remaining provisions of this Agreement; and (iii) the unenforceability of
any covenants or agreements shall not affect the validity or enforceability of
any of the other covenants or agreements or any other provision or provisions
of this Agreement. The Employee acknowledges and agrees that if any of the
provisions of clauses (a) through (g) of this Section 5 shall ever be deemed to
exceed the time, activity, or geographic limitations permitted by applicable
law, then such provisions shall be and hereby are reformed to the maximum time,
activity, or geographical limitations permitted by applicable law.
j. The Employee and the Company hereby agree that they will negotiate in
good faith to amend this Agreement from time to time to modify the terms of
this Section 5, the
6
<PAGE> 9
definition of the term "Territory," and the definition of the term "Business,"
to reflect changes in the Company's business and affairs so that the scope of
the limitations placed on the Employee's activities by this Section 5
accomplishes the parties' intent in relation to the then current facts and
circumstances. Any such amendment shall be effective only when completed in
writing and signed by the Employee and the Company.
6. Successors; Binding Agreement.
a. This Agreement shall be binding upon and shall inure to the benefit of
the Company, its Successors and Assigns and the Company shall require any
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Employee, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Employee's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including but not limited to the costs of experts, accountants and
counsel) incurred by the Employee as they become due as a result of (a) the
termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment) and (b)
the Employee seeking to obtain or enforce any right or benefit provided by this
Agreement; provided, however, that the circumstances set forth in clauses (a)
and (b) above occurred on or after a Change in Control.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other; provided, however, that all notices to the Company shall be
directed to the attention of the CEO with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received
on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or others. The Company may, however,
withhold from any benefits payable under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
7
<PAGE> 10
10. Modification and Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Employee and the Company. No waiver by
any party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in State of Florida.
12. Severability The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the Termination Date but not paid as of the
Termination Date including (i) base salary, (ii) reimbursement for reasonable
and necessary expenses incurred by the Employee on behalf of the Company during
the period ending on the Termination Date, and (iii) bonuses and incentive
compensation (other than the Pro Rata Bonus and the Pro Rata Commission).
b. "Adequate Justification" shall mean the occurrence within one year
after a Change in Control of any of the following events or conditions: (I) a
material failure of the Company to comply with the terms of this Agreement,
(ii) any relocation of the Employee outside a 30-mile radius from the executive
offices occupied by the Employee prior to the Change in Control that is not
approved by members of the Incumbent Board (as defined in Section 16(I)), or
(iii) other than as provided for herein, any substantial diminution in the
8
<PAGE> 11
Employee's authority or the Employee's responsibilities that is not approved by
members of the Incumbent Board.
c. "Base Amount" shall mean the greater of the Employee's annual base
salary (i) at the rate in effect on the Termination Date or (ii) at the highest
rate in effect at any time during the 90-day period prior to the Change in
Control, and shall include all amounts of his base salary that are deferred
under the qualified and non-qualified employee benefit plans of the Company or
any other agreement or arrangement.
d. "Bonus Amount" shall mean the most recent annual bonus paid or payable
to the Employee prior to the Termination Date or the annual bonus paid or
payable for the full fiscal year ended prior to the fiscal year during which a
Change in Control occurred (or, in each case, such lesser period for which
annual bonuses were paid or payable to the Employee).
e. "Business" shall mean the development, marketing or implementation of
core retail banking software directly or through a software service bureau to
the banking and financial industry, and any other related business which the
Company or any of its affiliates is engaged in as of the Termination Date.
f. "Bylaws" shall mean the Amended and Restated Bylaws of the Company, as
amended, supplemented or otherwise modified from time to time.
g. The termination of the Employee's employment shall be for "Cause" if it
is the result of:
(i) the commission or omission of an act by the Employee of
a willful or negligent act which causes harm to the
Company;
(ii) the conviction of the Employee for the commission or
perpetration by the Employee of any felony or any act of
fraud;
(iii) the failure of the Employee to devote his full time and
attention to the business as provided in Section 1; or
(iv) the failure of the Employee to perform his duties
hereunder in a manner satisfactory to the CEO and
President, as determined in their sole discretion;
provided, however, that the Employee shall have 30 days
to cure such failure after receiving notice from the
Company. The Company shall be obligated to provide only
one notice to Employee pursuant to this Section
16(g)(iv). Thereafter, the Company may terminate the
Employee, without the Employee having a right to cure,
if the Employee fails to perform his duties in a manner
satisfactory to the CEO and President, as determined in
their sole discretion.
9
<PAGE> 12
h. "CEO" shall have the meaning set forth in the recitals.
i. A "Change in Control" shall mean the occurrence during the Term of any
of the following events after the Initial Public Offering:
(i) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used
for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934 (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of
40% or more of the combined voting power of the
Company's then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control
has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would cause a Change
in Control. A "Non-Control Acquisition" shall mean an
acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) the Company or
(y) any corporation or other Person of which a majority
of its voting power or its equity securities or equity
interest is owned directly or indirectly by the Company
(a "Subsidiary"), (2) the Company or any Subsidiary, or
(3) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined).
(ii) The individuals who, as of the date of the Initial
Public Offering, are members of the Board of Directors
of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of
Directors; provided, however, that if the election, or
nomination for election by the Company's stockholders,
of any new director was approved by a vote of at least a
majority of the Incumbent Board, such new director
shall, for purposes of this Agreement, be considered as
a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member
of the Incumbent Board if such individual initially
assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule
14a-11 promulgated under the 1934 Act) or other actual
or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board of Directors
(a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or
Proxy Contest; or
(iii) Approval by stockholders of the Company of:
10
<PAGE> 13
(A) A merger, consolidation or reorganization involving
the Company, unless
(1) the stockholders of the Company, immediately
before such merger, consolidation or
reorganization, own, directly or indirectly,
immediately following such merger, consolidation
or reorganization, at least a majority of the
combined voting power of the outstanding voting
securities of the corporation resulting from
such merger or consolidation or reorganization
(the "Surviving Corporation") in substantially
the same proportion as their ownership of the
Voting Securities immediately before such
merger, consolidation or reorganization, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for such
merger, consolidation or reorganization
constitute at least a majority of the members of
the board of directors of the Surviving
Corporation.
(A transaction described in clauses (1) and (2)
shall herein be referred to as a "Non-Control
Transaction").
(B) A complete liquidation or dissolution of the Company;
or
(C) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
(iv) Notwithstanding anything contained in this Agreement to the
contrary, if the Employee's employment is terminated prior
to a Change in Control and the Employee reasonably
demonstrates that such termination (A) was at the request of
a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who
effectuates a Change in Control (a "Third Party") or (B)
otherwise occurred in connection with, or in anticipation
of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control
with respect to the Employee shall mean the date immediately
prior to the date of such termination of the Employee's
employment.
11
<PAGE> 14
j. "Commission Amount" shall mean the most recent annual commission paid
or payable to the Employee prior to the Termination Date or the annual
commission paid or payable for the full fiscal year ended prior to the fiscal
year during which a Change in Control occurred (or, in each case, such lesser
period for which annual commissions were paid or payable to the Employee).
k. "Competing Business" shall mean any business that, in whole or in part,
is the same or substantially the same as the Business.
l. "Confidential Business Information" shall mean any non-public
information of a competitively sensitive or personal nature, other than Trade
Secrets, acquired by the Employee, directly or indirectly, in connection with
the Employee's employment (including his employment with the Company prior to
the date of this Agreement), including (without limitation) oral and written
information concerning the Company or its affiliates relating to financial
position and results of operations (revenues, margins, assets, net income,
etc.), annual and long-range business plans, marketing plans and methods,
account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of disclosure,
directly or indirectly, by the Employee, or was available to the Employee on a
non-confidential basis prior to its disclosure to the Employee.
m. "Continuation Period" shall have the meaning ascribed to it in Section
4(c)(iii).
n. "Disability" shall mean a physical or mental infirmity which impairs
the Employee's ability to substantially perform his duties with the Company for
a period of 180 consecutive days, as determined by an independent physician
selected with the approval of both the Company and the Employee.
o. "Effective Date" shall mean the date set forth in the recitals.
p. "Initial Public Offering" shall mean the closing of the first public
offering of the Company's common stock registered under the Securities Act of
1933.
12
<PAGE> 15
q. "Notice of Termination" shall mean a written notice of termination from
the Company or the Employee which specifies an effective date of termination,
indicates the specific termination provision in this Agreement relied upon, and
sets forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Employee's employment under the provision so
indicated.
r. "President" shall have the meaning ascribed to such term in Section 1.
s. "Plan" shall mean the 1995 Phoenix International Ltd., Inc. Employee
Stock Option Plan adopted by the Board of Directors on October 21, 1995.
t. "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days in the
fiscal year through the Termination Date and the denominator of which is 365.
u. "Pro Rata Commission" shall mean an amount equal to the Commission
Amount multiplied by a fraction the numerator of which is the number of days in
the fiscal year through the Termination Date and the denominator of which is
365.
v. "Stockholders Agreement" shall mean the Amended and Restated
Stockholders Agreement, dated August 31, 1995, by and among the Company and the
stockholders named therein, as amended, supplemented or otherwise modified from
time to time.
w. "Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the Company
(including this Agreement), whether by operation of law or otherwise.
x. "Termination Date" shall mean, in the case of the Employee's death, his
date of death, and in all other cases, the date specified in the Notice of
Termination.
y. "Territory" shall mean that area specified on Exhibit A attached
hereto.
z. "Trade Secrets" shall mean any information, including but not limited
to technical or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, information on customers, or a list of actual
or potential customers or suppliers, which: (i) derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
13
<PAGE> 16
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed and sealed this Agreement, effective as of the date
first above written.
PHOENIX INTERNATIONAL LTD., INC.
ATTEST:
By: /s/ Ralph Reichard By: /s/ Bahram Yusefzadeh
-------------------------------- ------------------------------
Name: Ralph Reichard Name: Bahram Yusefzadeh
Title: Title: Chariman and Chief
(CORPORATE SEAL)
EMPLOYEE
/s/ Michael R. Newes
--------------------------------
MICHAEL R. NEWES
14
<PAGE> 17
EXHIBIT A
"TERRITORY"
UNITED STATES
<PAGE> 1
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
GERALD NISSEN
DATED: April 12, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Employment.......................................................... 1
2. Term................................................................ 1
3. Compensation and Benefits........................................... 2
4. Termination......................................................... 2
5. Trade Secrets, Non-Competition, Non-Solicitation, and
Related Matters..................................................... 4
6. Successors; Binding Agreement....................................... 6
7. Fees and Expenses................................................... 7
8. Notice.............................................................. 7
9. Settlement of Claims................................................ 7
10. Modification and Waiver............................................. 7
11. Governing Law ...................................................... 7
12. Severability........................................................ 8
13. Entire Agreement.................................................... 8
14. Headings............................................................ 8
15. Counterparts ....................................................... 8
16. Definitions......................................................... 8
</TABLE>
i
<PAGE> 3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
GERALD NISSEN, an individual resident of Florida (the "Employee"), as of this
12th day of April, 1996.
The Company presently employs the Employee as its Senior Vice President of
Technology Services. The Chief Executive Officer of the Company ("CEO")
recognizes that the Employee's contribution to the growth and success of the
Company is substantial. The CEO desires to provide for the continued
employment of the Employee and to make certain changes in the Employee's
employment arrangements which the CEO has determined will reinforce and
encourage the continued dedication of the Employee to the Company and will
promote the best interests of the Company and its stockholders. The Employee
is willing to continue to serve the Company on the terms and conditions herein
provided.
Certain terms used in this Agreement are defined in Section 16. Certain
provisions and definitions in this document reflect the agreements of the
parties in the Stockholders Agreement.
In consideration of the foregoing, the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree that on the Effective Date:
1. Employment. The Company shall continue to employ the Employee, and the
Employee shall continue to serve the Company, as Senior Vice President of
Technology Services upon the terms and conditions set forth herein. The
Employee shall have such authority and responsibilities as are consistent with
his position and which may be set forth in this Agreement, in the Bylaws or
assigned by the CEO or the President of the Company (the "President") from time
to time. The Employee shall devote his full business time, attention, skill
and efforts to the performance of his duties hereunder, except during periods
of illness or periods of vacation and leaves of absence consistent with Company
policy. The Employee may devote reasonable periods of time to perform
charitable and other community activities and to manage his personal
investments; provided, however, that such activities do not materially
interfere with the performance of his duties hereunder and are not in conflict
or competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein, the Employee's
employment under this Agreement shall be for a continuing term (the "Term") of
one year, which shall be extended automatically (without further action of the
Company or the Employee) each day for an additional day so that the remaining
term shall continue to be one year; provided, however, that either party may at
any time, by written notice to the other, fix the Term to a finite term of one
year, without further automatic extension, commencing with the date of such
notice. Notwithstanding the foregoing, the Term of employment hereunder will
end on the date that the Employee attains the age of 65.
<PAGE> 4
3. Compensation and Benefit.
a. Effective May 1, 1996, the Company shall pay the Employee a salary at a
rate of not less than $115,000 per annum in accordance with the salary payment
practices of the Company. The CEO and President shall review the Employee's
salary at least annually (on May 1, 1997, for the first review) and may
increase the Employee's base salary if they determine in their sole discretion
that an increase is appropriate.
b. The Employee shall participate in a bonus program and, prior to the
Initial Public Offering, shall be eligible to receive annual payments of the
Bonus Amount and, upon completion of the Initial Public Offering, shall be
eligible to receive quarterly payments of the Bonus Amount based upon
achievement of targeted levels of performance and such other criteria as the
CEO and President shall establish from time to time pursuant to the bonus
program.
c. The Employee shall participate in the Plan and be eligible for the
grant of stock options, restricted stock and other awards thereunder.
d. The Employee shall continue to participate in all retirement, welfare,
deferred compensation, life and health insurance, and other benefit plans or
programs of the Company now or hereafter applicable to the Employee or
applicable generally to employees of the Company.
e. The Company shall continue to reimburse the Employee for travel and
other expenses related to the Employee's duties which are incurred and
accounted for in accordance with the historic practices of the Company.
4. Termination.
a. The Employee's employment under this Agreement may be terminated prior
to the end of the Term only as follows:
(i) upon the death of the Employee;
(ii) by the Company due to the Disability of the
Employee upon delivery of a Notice of Termination to the
Employee; and
(iii) by the Company for Cause upon delivery of
a Notice of Termination to the Employee.
b. If the Employee's employment with the Company shall be terminated
during the Term (i) by reason of the Employee's death, or (ii) by the Company
for Disability or Cause, the Company shall pay to the Employee (or in the case
of his death, the Employee's estate) within 15 days after the Termination Date,
a lump sum cash payment equal to the Accrued
2
<PAGE> 5
Compensation and, if such termination is other than by the Company for Cause,
the Pro Rata Bonus.
c. If the Employee's employment with the Company shall be terminated by
the Company for any reason within one year after a Change in Control or by the
Employee with Adequate Justification, in addition to other rights and remedies
available in law or equity, the Employee shall be entitled to the following:
(i) the Company shall pay the Employee in cash
within 15 days of the Termination Date an amount equal to
all Accrued Compensation and the Pro Rata Bonus;
(ii) the Company shall pay to the Employee in
cash at the end of each of the 12 consecutive 30-day
periods following the Termination Date an amount equal to
one-twelfth of the sum of the Base Amount and the Bonus
Amount.
(iii) for the period from the Termination Date
through the date that is 12 months from the Termination
Date (the "Continuation Period"), the Company shall at its
expense continue on behalf of the Employee the life
insurance, disability, medical, dental and hospitalization
benefits provided (x) to the Employee at any time during
the 90-day period prior to the Change in Control or at any
time thereafter or (y) to other similarly situated
employees who continue in the employ of the Company during
the Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this Section
4(c)(iii) during the Continuation Period shall be no less
favorable to the Employee than the most favorable of such
coverages and benefits during any of the periods referred
to in clauses (x) and (y) above. The Company's obligation
hereunder with respect to the foregoing benefits shall be
limited to the extent that the Employee obtains any such
benefits pursuant to a subsequent employer's benefit plans,
in which case the Company may reduce the coverage of any
benefits it is required to provide the Employee hereunder
as long as the aggregate coverages and benefits of the
combined benefit plans is no less favorable to the Employee
than the coverages and benefits required to be provided
hereunder. This subsection (iii) shall not be interpreted
so as to limit any benefits to which the Employee may be
entitled under any of the Company's employee benefit plans,
programs or practices following the Employee's termination
of employment, including without limitation, retiree
medical and life insurance benefits; and
(iv) the restrictions on any outstanding
incentive awards (including stock options) granted to the
Employee under the Plan or under any other
3
<PAGE> 6
incentive plan or arrangement shall lapse and such
incentive award shall become 100% vested, all stock
options and stock appreciation rights granted to the
Employee shall become immediately exercisable and shall
become 100% vested, and all stock options granted to the
Employee shall become 100% vested.
d. If the Company terminates the Employee without Cause, the Company shall
pay to the Employee in cash at the end of each of the six consecutive 30-day
periods following the Termination Date an amount equal to one-twelfth of the
sum of the Base Amount and the Bonus Amount.
e. The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment
except as provided in Section 4(c)(iii).
f. The severance pay and benefits provided for in this Section 4 shall be
in lieu of any other severance or termination pay to which the Employee may be
entitled under any Company severance or termination plan, program, practice or
arrangement. The Employee's entitlement to any other compensation or benefits
shall be determined in accordance with the Company's employee benefit plans and
other applicable programs, policies and practices then in effect.
g. In the event that the Employee is a director of the Company or any of
its affiliates and his employment hereunder is terminated for any reason, the
Employee shall, and does hereby, tender his resignation as a director of the
Company and any of its affiliates effective as of the Termination Date.
5. Trade Secrets, Non-Competition, Non-Solicitation, and Related Matters.
a. The Employee shall not, at any time, either during the Term of his
employment or after the Termination Date, use or disclose any Trade Secrets of
the Company, except in fulfillment of his duties as the Employee during his
employment, for so long as the pertinent information or data remain Trade
Secrets, whether or not the Trade Secrets are in written or tangible form.
b. The Employee agrees to maintain in strict confidence and, except as
necessary to perform his duties for the Company, not to use or disclose any
Confidential Business Information for so long as the pertinent data or
information remains Confidential Business Information.
c. Upon termination of employment, the Employee shall leave with the
Company all business records relating to the Company and its affiliates
including, without limitation, all contracts, calendars, and other materials or
business records, its business or customers, including
4
<PAGE> 7
all physical, electronic, and computer copies thereof, whether or not the
Employee prepared such materials or records himself. Upon such termination,
the Employee shall retain no copies of any such materials, provided, however,
the Employee may remove and retain all personal items and materials.
d. The Employee may disclose Trade Secrets or Confidential Business
Information pursuant to any order or legal process requiring him (in his legal
counsel's reasonable opinion) to do so; provided, however, that the Employee
shall first have notified the Company of the request or order to so disclose
the Trade Secrets or Confidential Business Information in sufficient time to
allow the Company to seek an appropriate protective order.
e. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee shall not (without the prior written consent of
the Company) compete with the Company or any of its affiliates in any way,
including, but not limited to, (i) serving as an officer of, director of,
employee of, or consultant to, (ii) directly or indirectly, forming, or (iii)
directly or indirectly, acquiring more than a 5% investment in, a Competing
Business in the Territory; provided, however, that (A) if the Employee is
terminated without Cause, then the non-compete period under this Section 5(e)
shall be for a period of six months following the Termination date or (B) if
the Employee is terminated, for any reason after a Change in Control or resigns
with Adequate Justification, then there shall not be a non-compete period under
this Section 5(e).
f. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee shall not (except on behalf of or with the prior
written consent of the Company) either directly or indirectly, on the
Employee's own behalf or in the service or on behalf of others, (i) solicit,
divert, or appropriate to or for a Competing Business, or (ii) attempt to
solicit, divert, or appropriate to or for a Competing Business, any person or
entity that was a customer or a prospective customer of the Company or any of
its affiliates on the Termination Date and is located in the Territory;
provided, however, that (A) if the Employee is terminated without Cause, then
the non-solicit period under this Section 5(f) shall be for a period of six
months following the Termination Date or (B) if the Employee is terminated for
any reason after a Change in Control or resigns with Adequate Justification,
then there shall not be a non-solicit period under this Section 5(f).
g. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee will not, either directly or indirectly, on the
Employee's own behalf or in the service or on behalf of others, (i) solicit,
divert, or hire away, or (ii) attempt to solicit, divert, or hire away, to any
business located in the Territory, any employee of or consultant to the Company
or any of its affiliates engaged or experienced in the Business, regardless of
whether the employee or consultant is full-time or temporary, the employment or
engagement is pursuant to written agreement, or the employment is for a
determined period or is at will; provided, however, that
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<PAGE> 8
(A) if the Employee is terminated without Cause, then the non-solicit period
under this Section 5(g) shall be for a period of six months following the
Termination Date or (B) if the Employee is terminated for any reason after a
Change in Control or resigns with Adequate Justification, then there shall not
be a non-solicit period under this Section 5(g).
h. The Employee acknowledges and agrees that great loss and irreparable
damage would be suffered by the Company if the Employee should breach or
violate any of the terms or provisions of the covenants and agreements set
forth in this Section 5. The Employee further acknowledges and agrees that
each of these covenants and agreements is reasonably necessary to protect and
preserve the interests of the Company. The parties agree that money damages
for any breach of clauses (a) through (g) of this Section 5 will be
insufficient to compensate for any breaches thereof, and that the Employee or
any of the Employee's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any of the covenants or agreements in this
Agreement; provided, however, that nothing in this Agreement shall be deemed to
deny the Employee the right to defend against this enforcement on the basis
that the Company has no right to its enforcement under the terms of this
Agreement.
i. The Employee acknowledges and agrees that: (i) the covenants and
agreements contained in clauses (a) through (g) of this Section 5 are the
essence of this Agreement; (ii) that the Employee has received good, adequate
and valuable consideration for each of these covenants; (iii) each of these
covenants is reasonable and necessary to protect and preserve the interests and
properties of the Company; (iv) the Company is and will be engaged in and
throughout the Territory in the Business; (v) a Competing Business could be
engaged in from any place in the Territory; and (vi) the Company has a
legitimate business interest in restricting the Employee's activities
throughout the Territory. The Employee also acknowledges and agrees that: (i)
irreparable loss and damage will be suffered by the Company should the Employee
breach any of these covenants and agreements; (ii) each of these covenants and
agreements in clauses (a) through (g) of this Section 5 is separate, distinct
and severable not only from the other covenants and agreements but also from
the remaining provisions of this Agreement; and (iii) the unenforceability of
any covenants or agreements shall not affect the validity or enforceability of
any of the other covenants or agreements or any other provision or provisions
of this Agreement. The Employee acknowledges and agrees that if any of the
provisions of clauses (a) through (g) of this Section 5 shall ever be deemed to
exceed the time, activity, or geographic limitations permitted by applicable
law, then such provisions shall be and hereby are reformed to the maximum time,
activity, or geographical limitations permitted by applicable law.
j. The Employee and the Company hereby agree that they will negotiate in
good faith to amend this Agreement from time to time to modify the terms of
this Section 5, the definition of the term "Territory," and the definition of
the term "Business," to reflect changes in
6
<PAGE> 9
the Company's business and affairs so that the scope of the limitations placed
on the Employee's activities by this Section 5 accomplishes the parties' intent
in relation to the then current facts and circumstances. Any such amendment
shall be effective only when completed in writing and signed by the Employee
and the Company.
6. Successors; Binding Agreement
a. This Agreement shall be binding upon and shall inure to the benefit of
the Company, its Successors and Assigns and the Company shall require any
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Employee, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Employee's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including but not limited to the costs of experts, accountants and
counsel) incurred by the Employee as they become due as a result of (a) the
termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment) and (b)
the Employee seeking to obtain or enforce any right or benefit provided by this
Agreement; provided, however, that the circumstances set forth in clauses (a)
and (b) above occurred on or after a Change in Control.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other; provided, however, that all notices to the Company shall be
directed to the attention of the CEO with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received
on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or others. The Company may, however,
withhold from any benefits payable under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
10. Modification and Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and
7
<PAGE> 10
signed by the Employee and the Company. No waiver by any party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in State of Florida.
12. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the Termination Date but not paid as of the
Termination Date including (i) base salary, (ii) reimbursement for reasonable
and necessary expenses incurred by the Employee on behalf of the Company during
the period ending on the Termination Date, and (iii) bonuses and incentive
compensation (other than the Pro Rata Bonus).
b. "Adequate Justification" shall mean the occurrence within one year
after a Change in Control of any of the following events or conditions: (I) a
material failure of the Company to comply with the terms of this Agreement,
(ii) any relocation of the Employee outside a 30-mile radius from the executive
offices occupied by the Employee prior to the Change in Control that is not
approved by members of the Incumbent Board (as defined in Section 16(I)), or
(iii) other than as provided for herein, any substantial diminution in the
Employee's authority or the Employee's responsibilities that is not approved by
members of the Incumbent Board.
8
<PAGE> 11
c. "Base Amount" shall mean the greater of the Employee's annual base
salary (i) at the rate in effect on the Termination Date or (ii) at the highest
rate in effect at any time during the 90-day period prior to the Change in
Control, and shall include all amounts of his base salary that are deferred
under the qualified and non-qualified employee benefit plans of the Company or
any other agreement or arrangement.
d. "Bonus Amount" shall mean the most recent annual bonus paid or payable
to the Employee prior to the Termination Date or the annual bonus paid or
payable for the full fiscal year ended prior to the fiscal year during which a
Change in Control occurred (or, in each case, such lesser period for which
annual bonuses were paid or payable to the Employee).
e. "Business" shall mean the development, marketing or implementation of
core retail banking software directly or through a software service bureau to
the banking and financial industry, and any other related business which the
Company or any of its affiliates is engaged in as of the Termination Date.
f. "Bylaws" shall mean the Amended and Restated Bylaws of the Company, as
amended, supplemented or otherwise modified from time to time.
g. The termination of the Employee's employment shall be for "Cause" if it
is the result of:
(i) the commission or omission of an act by the
Employee of a willful or negligent act which causes harm to
the Company;
(ii) the conviction of the Employee for the
commission or perpetration by the Employee of any felony or
any act of fraud;
(iii) the failure of the Employee to devote his
full time and attention to the business as provided in
Section 1; or
(iv) the failure of the Employee to perform his
duties hereunder in a manner satisfactory to the CEO and
President, as determined in their sole discretion;
provided, however, that the Employee shall have 30 days to
cure such failure after receiving notice from the Company.
The Company shall be obligated to provide only one notice
to Employee pursuant to this Section 16(g)(iv).
Thereafter, the Company may terminate the Employee, without
the Employee having a right to cure, if the Employee fails
to perform his duties in a manner satisfactory to the CEO
and the President, as determined in their sole discretion.
h. "CEO" shall have the meaning set forth in the recitals.
9
<PAGE> 12
i. A "Change in Control" shall mean the occurrence during the Term
of any of the following events after the Initial Public Offering:
(i) An acquisition (other than directly from
the Company) of any voting securities of the Company (the
"Voting Securities") by any "Person" (as the term person is
used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "1934 Act"))
immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of 40% or more of the combined voting
power of the Company's then outstanding Voting Securities;
provided, however, that in determining whether a Change in
Control has occurred, Voting Securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined)
shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean
an acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) the Company or
(y) any corporation or other Person of which a majority of
its voting power or its equity securities or equity
interest is owned directly or indirectly by the Company (a
"Subsidiary"), (2) the Company or any Subsidiary, or (3)
any Person in connection with a "Non-Control Transaction"
(as hereinafter defined).
(ii) The individuals who, as of the date of the
Initial Public Offering, are members of the Board of
Directors of the Company (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board
of Directors; provided, however, that if the election, or
nomination for election by the Company's stockholders, of
any new director was approved by a vote of at least a
majority of the Incumbent Board, such new director shall,
for purposes of this Agreement, be considered as a member
of the Incumbent Board; provided, further, however, that no
individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the 1934
Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the
Board of Directors (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(iii) Approval by stockholders of the Company
of:
(A) A merger, consolidation or
reorganization involving the Company, unless
10
<PAGE> 13
(1) the stockholders of the Company, immediately
before such merger, consolidation or
reorganization, own, directly or indirectly,
immediately following such merger, consolidation
or reorganization, at least a majority of the
combined voting power of the outstanding voting
securities of the corporation resulting from
such merger or consolidation or reorganization
(the "Surviving Corporation") in substantially
the same proportion as their ownership of the
Voting Securities immediately before such
merger, consolidation or reorganization, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for such
merger, consolidation or reorganization
constitute at least a majority of the members of
the board of directors of the Surviving
Corporation.
(A transaction described in clauses (1) and (2)
shall herein be referred to as a "Non-Control
Transaction").
(B) A complete liquidation or
dissolution of the Company; or
(C) An agreement for the sale or
other disposition of all or substantially all of the
assets of the Company to any Person (other than a
transfer to a Subsidiary).
(iv) Notwithstanding anything contained in this
Agreement to the contrary, if the Employee's employment is
terminated prior to a Change in Control and the Employee
reasonably demonstrates that such termination (A) was at
the request of a third party who has indicated an intention
or taken steps reasonably calculated to effect a Change in
Control and who effectuates a Change in Control (a "Third
Party") or (B) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs,
then for all purposes of this Agreement, the date of a
Change in Control with respect to the Employee shall mean
the date immediately prior to the date of such termination
of the Employee's employment.
j. "Competing Business" shall mean any business that, in whole or
in part, is the same or substantially the same as the Business.
11
<PAGE> 14
k. "Confidential Business Information" shall mean any non-public
information of a competitively sensitive or personal nature, other than Trade
Secrets, acquired by the Employee, directly or indirectly, in connection with
the Employee's employment (including his employment with the Company prior to
the date of this Agreement), including (without limitation) oral and written
information concerning the Company or its affiliates relating to financial
position and results of operations (revenues, margins, assets, net income,
etc.), annual and long-range business plans, marketing plans and methods,
account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of
disclosure, directly or indirectly, by the Employee, or was available to the
Employee on a non-confidential basis prior to its disclosure to the Employee.
l. "Continuation Period" shall have the meaning ascribed to it in Section
4(c)(iii).
m. "Disability" shall mean a physical or mental infirmity which impairs
the Employee's ability to substantially perform his duties with the Company for
a period of 180 consecutive days, as determined by an independent physician
selected with the approval of both the Company and the Employee.
n. "Effective Date" shall mean the date set forth in the recitals.
o. "Initial Public Offering" shall mean the closing of the first public
offering of the Company's common stock registered under the Securities Act of
1933.
p. "Notice of Termination" shall mean a written notice of termination from
the Company or the Employee which specifies an effective date of termination,
indicates the specific termination provision in this Agreement relied upon, and
sets forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Employee's employment under the provision so
indicated.
q. "Plan" shall mean the 1995 Phoenix International Ltd., Inc. Employee
Stock Option Plan adopted by the Board of Directors on October 21, 1995.
r. "President" shall have the meaning ascribed to such term in Section 1.
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<PAGE> 15
s. "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days in the
fiscal year through the Termination Date and the denominator of which is 365.
t. "Stockholders Agreement" shall mean the Amended and Restated
Stockholders Agreement, dated August 31, 1995, by and among the Company and the
stockholders named therein, as amended, supplemented or otherwise modified from
time to time.
u. "Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the Company
(including this Agreement), whether by operation of law or otherwise.
v. "Termination Date" shall mean, in the case of the Employee's death, his
date of death, and in all other cases, the date specified in the Notice of
Termination.
w. "Territory" shall mean that area specified on Exhibit A attached
hereto.
x. "Trade Secrets" shall mean any information, including but not limited
to technical or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, information on customers, or a list of actual
or potential customers or suppliers, which: (i) derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
13
<PAGE> 16
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed and sealed this Agreement, effective as of the date
first above written.
PHOENIX INTERNATIONAL LTD., INC.
ATTEST:
By: /s/ Ralph Reichard By: /s/ Bahram Yusefzadeh
------------------------ ------------------------------
Name: Ralph Reichard Name: Bahram Yusefzadeh
Title: President and Chief Title: Chairman and Chief
Operating Officer Executive Officer
(CORPORATE SEAL)
EMPLOYEE
/s/ Gerald Nissen
------------------------------
GERALD NISSEN
14
<PAGE> 17
EXHIBIT A
"TERRITORY"
UNITED STATES
<PAGE> 1
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
TWANNA SOIFER
DATED: April 12, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. Employment............................................................. 1
2. Term.................................................................. 1
3. Compensation and Benefits............................................. 2
4. Termination........................................................... 2
5. Trade Secrets, Non-Competition, Non-Solicitation,
and Related Matters................................................... 4
6. Successors; Binding Agreement......................................... 6
7. Fees and Expenses..................................................... 7
8. Notice................................................................ 7
9. Settlement of Claims.................................................. 7
10. Modification and Waiver............................................... 7
11. Governing Law......................................................... 7
12. Severability.......................................................... 8
13. Entire Agreement...................................................... 8
14. Headings.............................................................. 8
15. Counterparts.......................................................... 8
16. Definitions.......................................................... 8
</TABLE>
i
<PAGE> 3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
TWANNA SOIFER, an individual resident of Florida (the "Employee"), as of this
12th day of April, 1996.
The Company presently employs the Employee as its Senior Vice President of
Implementation Services. The Chief Executive Officer of the Company ("CEO")
recognizes that the Employee's contribution to the growth and success of the
Company is substantial. The CEO desires to provide for the continued
employment of the Employee and to make certain changes in the Employee's
employment arrangements which the CEO has determined will reinforce and
encourage the continued dedication of the Employee to the Company and will
promote the best interests of the Company and its stockholders. The Employee
is willing to continue to serve the Company on the terms and conditions herein
provided.
Certain terms used in this Agreement are defined in Section 16. Certain
provisions and definitions in this document reflect the agreements of the
parties in the Stockholders Agreement.
In consideration of the foregoing, the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree that on the Effective Date:
1. Employment. The Company shall continue to employ the Employee, and the
Employee shall continue to serve the Company, as Senior Vice President of
Implementation Services upon the terms and conditions set forth herein. The
Employee shall have such authority and responsibilities as are consistent with
his position and which may be set forth in this Agreement, in the Bylaws or
assigned by the CEO or the President of the Company (the "President") from time
to time. The Employee shall devote his full business time, attention, skill
and efforts to the performance of his duties hereunder, except during periods
of illness or periods of vacation and leaves of absence consistent with Company
policy. The Employee may devote reasonable periods of time to perform
charitable and other community activities and to manage his personal
investments; provided, however, that such activities do not materially
interfere with the performance of his duties hereunder and are not in conflict
or competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein, the Employee's
employment under this Agreement shall be for a continuing term (the "Term") of
one year, which shall be extended automatically (without further action of the
Company or the Employee) each day for an additional day so that the remaining
term shall continue to be one year; provided, however, that either party may at
any time, by written notice to the other, fix the Term to a finite term of one
year, without further automatic extension, commencing with the date of such
notice. Notwithstanding the foregoing, the Term of employment hereunder will
end on the date that the Employee attains the age of 65.
<PAGE> 4
3. Compensation and Benefits.
a. Effective May 1, 1996, the Company shall pay the Employee a salary at a
rate of not less than $95,000 per annum in accordance with the salary payment
practices of the Company. The CEO and President shall review the Employee's
salary at least annually (on May 1, 1997, for the first review) and may
increase the Employee's base salary if they determine in their sole discretion
that an increase is appropriate.
b. The Employee shall participate in a bonus program and, prior to the
Initial Public Offering, shall be eligible to receive annual payments of the
Bonus Amount and, upon completion of the Initial Public Offering, shall be
eligible to receive quarterly payments of the Bonus Amount based upon
achievement of targeted levels of performance and such other criteria as the
CEO and President shall establish from time to time pursuant to the bonus
program.
c. The Employee shall participate in the Plan and be eligible for the
grant of stock options, restricted stock and other awards thereunder.
d. The Employee shall continue to participate in all retirement, welfare,
deferred compensation, life and health insurance, and other benefit plans or
programs of the Company now or hereafter applicable to the Employee or
applicable generally to employees of the Company.
e. The Company shall continue to reimburse the Employee for travel and
other expenses related to the Employee's duties which are incurred and
accounted for in accordance with the historic practices of the Company.
4. Termination.
a. The Employee's employment under this Agreement may be terminated prior
to the end of the Term only as follows:
(i) upon the death of the Employee;
(ii) by the Company due to the Disability of the Employee
upon delivery of a Notice of Termination to the
Employee; and
(iii) by the Company for Cause upon delivery of a Notice of
Termination to the Employee.
b. If the Employee's employment with the Company shall be terminated
during the Term (i) by reason of the Employee's death, or (ii) by the Company
for Disability or Cause, the Company shall pay to the Employee (or in the case
of his death, the Employee's estate) within 15 days after the Termination Date,
a lump sum cash payment equal to the Accrued
2
<PAGE> 5
Compensation and, if such termination is other than by the Company for Cause,
the Pro Rata Bonus.
c. If the Employee's employment with the Company shall be terminated by
the Company for any reason within one year after a Change in Control or by
Employee with Adequate Justification, in addition to other rights and remedies
available in law or equity, the Employee shall be entitled to the following:
(i) the Company shall pay the Employee in cash within 15
days of the Termination Date an amount equal to all
Accrued Compensation and the Pro Rata Bonus;
(ii) the Company shall pay to the Employee in cash at the
end of each of the 12 consecutive 30-day periods
following the Termination Date an amount equal to
one-twelfth of the sum of the Base Amount and the Bonus
Amount.
(iii) for the period from the Termination Date through the
date that is 12 months from the Termination Date (the
"Continuation Period"), the Company shall at its
expense continue on behalf of the Employee the life
insurance, disability, medical, dental and
hospitalization benefits provided (x) to the Employee
at any time during the 90-day period prior to the
Change in Control or at any time thereafter or (y) to
other similarly situated employees who continue in the
employ of the Company during the Continuation Period.
The coverage and benefits (including deductibles and
costs) provided in this Section 4(c)(iii) during the
Continuation Period shall be no less favorable to the
Employee than the most favorable of such coverages and
benefits during any of the periods referred to in
clauses (x) and (y) above. The Company's obligation
hereunder with respect to the foregoing benefits shall
be limited to the extent that the Employee obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide the
Employee hereunder as long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to the Employee than the coverages and
benefits required to be provided hereunder. This
subsection (iii) shall not be interpreted so as to
limit any benefits to which the Employee may be
entitled under any of the Company's employee benefit
plans, programs or practices following the Employee's
termination of employment, including without
limitation, retiree medical and life insurance
benefits; and
(iv) the restrictions on any outstanding incentive awards
(including stock options) granted to the Employee under
the Plan or under any other
3
<PAGE> 6
incentive plan or arrangement shall lapse and such
incentive award shall become 100% vested, all stock
options and stock appreciation rights granted to the
Employee shall become immediately exercisable and shall
become 100% vested, and all stock options granted to
the Employee shall become 100% vested.
d. If the Company terminates the Employee without Cause, the Company shall
pay to the Employee in cash at the end of each of the six consecutive 30-day
periods following the Termination Date an amount equal to one-twelfth of the
sum of the Base Amount and the Bonus Amount.
e. The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment
except as provided in Section 4(c)(iii).
f. The severance pay and benefits provided for in this Section 4 shall be
in lieu of any other severance or termination pay to which the Employee may be
entitled under any Company severance or termination plan, program, practice or
arrangement. The Employee's entitlement to any other compensation or benefits
shall be determined in accordance with the Company's employee benefit plans and
other applicable programs, policies and practices then in effect.
g. In the event that the Employee is a director of the Company or any of
its affiliates and his employment hereunder is terminated for any reason, the
Employee shall, and does hereby, tender his resignation as a director of the
Company and any of its affiliates effective as of the Termination Date.
5. Trade Secrets, Non-Competition, Non-Solicitation, and Related.
a. The Employee shall not, at any time, either during the Term of his
employment or after the Termination Date, use or disclose any Trade Secrets of
the Company, except in fulfillment of his duties as the Employee during his
employment, for so long as the pertinent information or data remain Trade
Secrets, whether or not the Trade Secrets are in written or tangible form.
b. The Employee agrees to maintain in strict confidence and, except as
necessary to perform his duties for the Company, not to use or disclose any
Confidential Business Information for so long as the pertinent data or
information remains Confidential Business Information.
c. Upon termination of employment, the Employee shall leave with the
Company all business records relating to the Company and its affiliates
including, without limitation, all contracts, calendars, and other materials or
business records, its business or customers, including
4
<PAGE> 7
all physical, electronic, and computer copies thereof, whether or not the
Employee prepared such materials or records himself. Upon such termination,
the Employee shall retain no copies of any such materials, provided, however,
the Employee may remove and retain all personal items and materials.
d. The Employee may disclose Trade Secrets or Confidential Business
Information pursuant to any order or legal process requiring him (in his legal
counsel's reasonable opinion) to do so; provided, however, that the Employee
shall first have notified the Company of the request or order to so disclose
the Trade Secrets or Confidential Business Information in sufficient time to
allow the Company to seek an appropriate protective order.
e. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee shall not (without the prior written consent of
the Company) compete with the Company or any of its affiliates in any way,
including, but not limited to, (i) serving as an officer of, director of,
employee of, or consultant to, (ii) directly or indirectly, forming, or (iii)
directly or indirectly, acquiring more than a 5% investment in, a Competing
Business in the Territory; provided, however, that (A) if the Employee is
terminated without Cause, then the non-compete period under this Section 5(e)
shall be for a period of six months following the Termination date or (B) if
the Employee is terminated, for any reason after a Change in Control or resigns
with Adequate Justification, then there shall not be a non-compete period under
this Section 5(e).
f. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee shall not (except on behalf of or with the prior
written consent of the Company) either directly or indirectly, on the
Employee's own behalf or in the service or on behalf of others, (i) solicit,
divert, or appropriate to or for a Competing Business, or (ii) attempt to
solicit, divert, or appropriate to or for a Competing Business, any person or
entity that was a customer or a prospective customer of the Company or any of
its affiliates on the Termination Date and is located in the Territory;
provided, however, that (A) if the Employee is terminated without Cause, then
the non-solicit period under this Section 5(f) shall be for a period of six
months following the Termination Date or (B) if the Employee is terminated for
any reason after a Change in Control or resigns with Adequate Justification,
then there shall not be a non-solicit period under this Section 5(f).
g. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of one year following the
Termination Date, the Employee will not, either directly or indirectly, on the
Employee's own behalf or in the service or on behalf of others, (i) solicit,
divert, or hire away, or (ii) attempt to solicit, divert, or hire away, to any
business located in the Territory, any employee of or consultant to the Company
or any of its affiliates engaged or experienced in the Business, regardless of
whether the employee or consultant is full-time or temporary, the employment or
engagement is pursuant to written agreement, or the employment is for a
determined period or is at will; provided, however, that
5
<PAGE> 8
(A) if the Employee is terminated without Cause, then the non-solicit period
under this Section 5(g) shall be for a period of six months following the
Termination Date or (B) if the Employee is terminated for any reason after a
Change in Control or resigns with Adequate Justification, then there shall not
be a non-solicit period under this Section 5(g).
h. The Employee acknowledges and agrees that great loss and irreparable
damage would be suffered by the Company if the Employee should breach or
violate any of the terms or provisions of the covenants and agreements set
forth in this Section 5. The Employee further acknowledges and agrees that
each of these covenants and agreements is reasonably necessary to protect and
preserve the interests of the Company. The parties agree that money damages
for any breach of clauses (a) through (g) of this Section 5 will be
insufficient to compensate for any breaches thereof, and that the Employee or
any of the Employee's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any of the covenants or agreements in this
Agreement; provided, however, that nothing in this Agreement shall be deemed to
deny the Employee the right to defend against this enforcement on the basis
that the Company has no right to its enforcement under the terms of this
Agreement.
i. The Employee acknowledges and agrees that: (i) the covenants and
agreements contained in clauses (a) through (g) of this Section 5 are the
essence of this Agreement; (ii) that the Employee has received good, adequate
and valuable consideration for each of these covenants; (iii) each of these
covenants is reasonable and necessary to protect and preserve the interests and
properties of the Company; (iv) the Company is and will be engaged in and
throughout the Territory in the Business; (v) a Competing Business could be
engaged in from any place in the Territory; and (vi) the Company has a
legitimate business interest in restricting the Employee's activities
throughout the Territory. The Employee also acknowledges and agrees that: (i)
irreparable loss and damage will be suffered by the Company should the Employee
breach any of these covenants and agreements; (ii) each of these covenants and
agreements in clauses (a) through (g) of this Section 5 is separate, distinct
and severable not only from the other covenants and agreements but also from
the remaining provisions of this Agreement; and (iii) the unenforceability of
any covenants or agreements shall not affect the validity or enforceability of
any of the other covenants or agreements or any other provision or provisions
of this Agreement. The Employee acknowledges and agrees that if any of the
provisions of clauses (a) through (g) of this Section 5 shall ever be deemed to
exceed the time, activity, or geographic limitations permitted by applicable
law, then such provisions shall be and hereby are reformed to the maximum time,
activity, or geographical limitations permitted by applicable law.
j. The Employee and the Company hereby agree that they will negotiate in
good faith to amend this Agreement from time to time to modify the terms of
this Section 5, the definition of the term "Territory," and the definition of
the term "Business," to reflect changes in
6
<PAGE> 9
the Company's business and affairs so that the scope of the limitations placed
on the Employee's activities by this Section 5 accomplishes the parties' intent
in relation to the then current facts and circumstances. Any such amendment
shall be effective only when completed in writing and signed by the Employee
and the Company.
6. Successors; Binding Agreement
a. This Agreement shall be binding upon and shall inure to the benefit of
the Company, its Successors and Assigns and the Company shall require any
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Employee, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Employee's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including but not limited to the costs of experts, accountants and
counsel) incurred by the Employee as they become due as a result of (a) the
termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment) and (b)
the Employee seeking to obtain or enforce any right or benefit provided by this
Agreement; provided, however, that the circumstances set forth in clauses (a)
and (b) above occurred on or after a Change in Control.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other; provided, however, that all notices to the Company shall be
directed to the attention of the CEO with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received
on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or others. The Company may, however,
withhold from any benefits payable under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
10. Modification and Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and
7
<PAGE> 10
signed by the Employee and the Company. No waiver by any party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in State of Florida.
12. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the Termination Date but not paid as of the
Termination Date including (i) base salary, (ii) reimbursement for reasonable
and necessary expenses incurred by the Employee on behalf of the Company during
the period ending on the Termination Date, and (iii) bonuses and incentive
compensation (other than the Pro Rata Bonus).
b. "Adequate Justification" shall mean the occurrence within one year
after a Change in Control of any of the following events or conditions: (I) a
material failure of the Company to comply with the terms of this Agreement,
(ii) any relocation of the Employee outside a 30-mile radius from the executive
offices occupied by the Employee prior to the Change in Control that is not
approved by members of the Incumbent Board (as defined in Section 16(I)), or
(iii) other than as provided for herein, any substantial diminution in the
Employee's authority or the Employee's responsibilities that is not approved by
members of the Incumbent Board.
8
<PAGE> 11
c. "Base Amount" shall mean the greater of the Employee's annual base
salary (i) at the rate in effect on the Termination Date or (ii) at the highest
rate in effect at any time during the 90-day period prior to the Change in
Control, and shall include all amounts of his base salary that are deferred
under the qualified and non-qualified employee benefit plans of the Company or
any other agreement or arrangement.
d. "Bonus Amount" shall mean the most recent annual bonus paid or payable
to the Employee prior to the Termination Date or the annual bonus paid or
payable for the full fiscal year ended prior to the fiscal year during which a
Change in Control occurred (or, in each case, such lesser period for which
annual bonuses were paid or payable to the Employee).
e. "Business" shall mean the development, marketing or implementation of
core retail banking software directly or through a software service bureau to
the banking and financial industry, and any other related business which the
Company or any of its affiliates is engaged in as of the Termination Date.
f. "Bylaws" shall mean the Amended and Restated Bylaws of the Company, as
amended, supplemented or otherwise modified from time to time.
g. The termination of the Employee's employment shall be for "Cause" if it
is the result of:
(i) the commission or omission of an act by the Employee of
a willful or negligent act which causes harm to the
Company;
(ii) the conviction of the Employee for the commission or
perpetration by the Employee of any felony or any act
of fraud;
(iii) the failure of the Employee to devote his full time and
attention to the business as provided in Section 1; or
(iv) the failure of the Employee to perform his duties
hereunder in a manner satisfactory to the CEO and
President, as determined in their sole discretion;
provided, however, that the Employee shall have 30 days
to cure such failure after receiving notice from the
Company. The Company shall be obligated to provide only
one notice to Employee pursuant to this Section
16(g)(iv). Thereafter, the Company may terminate the
Employee, without the Employee having a right to cure,
if the Employee fails to perform his duties in a manner
satisfactory to the CEO and the President, as
determined in their sole discretion.
h. "CEO" shall have the meaning set forth in the recitals.
9
<PAGE> 12
i. A "Change in Control" shall mean the occurrence during the Term of any
of the following events after the Initial Public Offering:
(i) An acquisition (other than directly from the Company)
of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is
used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "1934 Act"))
immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 40% or more of the
combined voting power of the Company's then outstanding
Voting Securities; provided, however, that in
determining whether a Change in Control has occurred,
Voting Securities which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an
acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) the Company
or (y) any corporation or other Person of which a
majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by
the Company (a "Subsidiary"), (2) the Company or any
Subsidiary, or (3) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined).
(ii) The individuals who, as of the date of the Initial
Public Offering, are members of the Board of Directors
of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board
of Directors; provided, however, that if the election,
or nomination for election by the Company's
stockholders, of any new director was approved by a
vote of at least a majority of the Incumbent Board,
such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent
Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if
such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934
Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other
than the Board of Directors (a "Proxy Contest")
including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization
involving the Company, unless
10
<PAGE> 13
(1) the stockholders of the Company, immediately
before such merger, consolidation or
reorganization, own, directly or indirectly,
immediately following such merger, consolidation
or reorganization, at least a majority of the
combined voting power of the outstanding voting
securities of the corporation resulting from
such merger or consolidation or reorganization
(the "Surviving Corporation") in substantially
the same proportion as their ownership of the
Voting Securities immediately before such
merger, consolidation or reorganization, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for such
merger, consolidation or reorganization
constitute at least a majority of the members of
the board of directors of the Surviving
Corporation.
(A transaction described in clauses (1) and (2) shall
herein be referred to as a "Non-Control
Transaction").
(B) A complete liquidation or dissolution of the Company;
or
(C) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
(iv) Notwithstanding anything contained in this Agreement to the
contrary, if the Employee's employment is terminated prior
to a Change in Control and the Employee reasonably
demonstrates that such termination (A) was at the request of
a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who
effectuates a Change in Control (a "Third Party") or (B)
otherwise occurred in connection with, or in anticipation
of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control
with respect to the Employee shall mean the date immediately
prior to the date of such termination of the Employee's
employment.
j. "Competing Business" shall mean any business that, in whole or in part,
is the same or substantially the same as the Business.
11
<PAGE> 14
k. "Confidential Business Information" shall mean any non-public
information of a competitively sensitive or personal nature, other than Trade
Secrets, acquired by the Employee, directly or indirectly, in connection with
the Employee's employment (including his employment with the Company prior to
the date of this Agreement), including (without limitation) oral and written
information concerning the Company or its affiliates relating to financial
position and results of operations (revenues, margins, assets, net income,
etc.), annual and long-range business plans, marketing plans and methods,
account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of
disclosure, directly or indirectly, by the Employee, or was available to the
Employee on a non-confidential basis prior to its disclosure to the Employee.
l. "Continuation Period" shall have the meaning ascribed to it in Section
4(c)(iii).
m. "Disability" shall mean a physical or mental infirmity which impairs
the Employee's ability to substantially perform his duties with the Company for
a period of 180 consecutive days, as determined by an independent physician
selected with the approval of both the Company and the Employee.
n. "Effective Date" shall mean the date set forth in the recitals.
o. "Initial Public Offering" shall mean the closing of the first public
offering of the Company's common stock registered under the Securities Act of
1933.
p. "Notice of Termination" shall mean a written notice of termination from
the Company or the Employee which specifies an effective date of termination,
indicates the specific termination provision in this Agreement relied upon, and
sets forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Employee's employment under the provision so
indicated.
q. "Plan" shall mean the 1995 Phoenix International Ltd., Inc. Employee
Stock Option Plan adopted by the Board of Directors on October 21, 1995.
r. "President" shall have the meaning ascribed to such term in Section 1.
12
<PAGE> 15
s. "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days in the
fiscal year through the Termination Date and the denominator of which is 365.
t. "Stockholders Agreement" shall mean the Amended and Restated
Stockholders Agreement, dated August 31, 1995, by and among the Company and the
stockholders named therein, as amended, supplemented or otherwise modified from
time to time.
u. "Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the Company
(including this Agreement), whether by operation of law or otherwise.
v. "Termination Date" shall mean, in the case of the Employee's death, his
date of death, and in all other cases, the date specified in the Notice of
Termination.
w. "Territory" shall mean that area specified on Exhibit A attached
hereto.
x. "Trade Secrets" shall mean any information, including but not limited
to technical or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, information on customers, or a list of actual
or potential customers or suppliers, which: (i) derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
13
<PAGE> 16
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed and sealed this Agreement, effective as of the date
first above written.
PHOENIX INTERNATIONAL LTD., INC.
ATTEST:
By: /s/ Ralph Reichard By: /s/ Bahram Yusefzadeh
-------------------------- --------------------------
Name: Ralph Reichard Name: Bahram Yusefzadeh
Title: President and Chief Title: Chairman and Chief
Operating Officer Executive Officer
(CORPORATE SEAL)
EMPLOYEE
/s/ Twanna Soifer
-----------------------------
TWANNA SOIFER
14
<PAGE> 17
EXHIBIT A
"TERRITORY"
UNITED STATES
<PAGE> 1
EXHIBIT 10.22
EMPLOYEE CONFIDENTIALITY AGREEMENT
I, _____________________________, in consideration for my future employment by
Phoenix International Ltd., Inc., or its subsidiaries or successors
(hereinafter called "Phoenix") and the payment of future wages as compensation
for services rendered in the course of my employment, hereby agree as follows:
1. That during the course of such employment I will not act as an employee,
agent or representative of any other company and will devote my full time
to representing Phoenix in a manner consistent with established Phoenix
policies and management directives.
2. That I will not disclose to Phoenix any proprietary information of any
other party previously disclosed to me in confidence, and declare that I
am not bound by any prior agreement which prohibits my employment by
Phoenix or the assignment of any newly created intellectual property right
to Phoenix.
3. That I recognize and acknowledge that in the course of my employment by
Phoenix I may have access to and gain knowledge of proprietary or
confidential information relating to Phoenix's products, processes,
services or business operations, including information relating to
development, marketing, strategy, customers, suppliers, finances,
forecasts and other employees. I understand that Phoenix's confidential
information shall include information of its customers which Phoenix is
under obligation to maintain as confidential. I agree not to disclose to
anyone outside of Phoenix or to use for any purposes other than Phoenix's
business purposes, any of Phoenix's proprietary or confidential
information, either during the term or after my employment by Phoenix.
4. That I will assign, and do hereby assign, to Phoenix, all my rights to
intellectual property which I make or conceive, in the course of my
employment by Phoenix or with the use of Phoenix's time, materials,
facilities, or relating to any subject matter with which Phoenix is
concerned, and I further agree, without charge to Phoenix, but at its
expense, to execute, acknowledge and to aid in preparation of all
documentation as may be necessary to obtain registration of patents or
copyrights in any and all countries and to vest title thereto in Phoenix.
This paragraph shall not apply to an invention for which no equipment,
supplies, facilities, or proprietary information of Phoenix was used and
which was developed entirely on my own time, unless (a) the invention
relates: (1) to the business of Phoenix, or (2) to Phoenix's actual or
demonstrably anticipated research or development; or (b) the invention
results from any work performed by me for Phoenix. I further agree that
upon termination of my employment I will disclose to Phoenix all details
of any computer program or other project on which I have worked during my
employment, which has not been disclosed fully before my termination, and
will deliver up to Phoenix all memoranda, notes, records, manuals,
drawings, electronic media, and any other documents obtained from Phoenix
or produced by me during my employment.
5. That I will disclose promptly to Phoenix any and all ideas, discoveries,
inventions, which I may make or conceive either solely or jointly with
others, during the twelve-month period immediately following termination
of employment by Phoenix, which relate to the work performed by me while
in the employ of Phoenix. I further agree
<PAGE> 2
EMPLOYEE CONFIDENTIALITY AGREEMENT
PAGE 2
to assign and do hereby assign to Phoenix all my rights and interests
in any and all such inventions and further agree, without charge to
Phoenix but at its expense, to execute, to acknowledge and to aid in the
preparation of all such further papers, including applications for patents
or copyrights, as may be necessary to obtain patent or copyright
registrations on said inventions in any and all countries and to vest
title thereto to Phoenix.
6. That for a period of twelve months after termination of my employment for
any reason, I will not directly or indirectly solicit, divert or take
away, or attempt to solicit, divert or take away any customers, licensees
or third party alliances of Phoenix or any potential customers, employees,
licensees or third party alliance candidates negotiating with Phoenix at
the time of termination within any region or territory in which I was
employed by Phoenix; nor will I accept employment at or perform services
for any potential customer, licensee or third party alliance candidate
negotiating with Phoenix at the time of my termination within any region
or territory in which I was employed by Phoenix.
7. That in the event any part of the confidential information recited by
this Agreement becomes generally known to the public through legitimate
origins (other than by breach of this Agreement), that part of the
confidential information shall no longer be deemed confidential
information for the purposes of this Agreement, but I shall continue to be
bound by the terms of this Agreement as to all other confidential
information.
8. That if any phrase, clause or provision of this Agreement is declared
invalid or unequal by a court of competent jurisdiction, such phrase,
clause or provision shall be deemed severed from this Agreement, but will
not affect any other provisions of this Agreement, which shall otherwise
remain in full force and effect. If any restriction or limitation in this
Agreement is deemed to be unreasonable, onerous and unduly restrictive by
a court of competent jurisdiction, it shall not be stricken in its
entirety and held totally void and unenforceable, but shall remain
effective to the maximum extent permissible within reasonable bounds.
9. That I stipulate and agree that breach of this Agreement will result in
immediate and irreparable harm to the business and goodwill of Phoenix and
that damages, if any, and remedies at law for such breach would be
inadequate. Phoenix shall therefore be entitled to apply for and receive
from any court of competent jurisdiction, an injunction to restrain any
violation of this Agreement and for such further relief as the court may
deem just and proper.
10. That this Agreement is a condition of my employment by Phoenix but in no
way operates as a guarantee of continued employment. I understand that
Phoenix is an at-will employer.
Signature of Employee: Date:
---------------------- ---------------------
Witness: Date:
------------------------------------ ---------------------
<PAGE> 1
EXHIBIT 10.23
PROMISSORY NOTE
$40,854.00 Dated: November 17, 1994
Effective Date: November 17, 1994
FOR VALUE RECEIVED, the undersigned, promises to pay to PHOENIX
INTERNATIONAL LTD., INC. or order, in the manner hereinafter specified, the
principal sum of FORTY THOUSAND EIGHT HUNDRED FIFTY FOUR AND 00/100 DOLLARS
($40,854.00) with interest from date at the rate of 7.92%; on the balance from
time to time remaining unpaid. The said principal and interest shall be payable
in lawful money of the United States of America, c/o Phoenix International Ltd.,
Inc. 900 Winderley Place, Suite 140, Maitland, FL 32751, or such other place an
the payee may designate writing, on the date and in the manner following:
Principal and accrued interest shall be due and payable on the last
business day prior to any public offering of the capital stock of
Phoenix International Ltd., Inc.
This note shall be construed and enforced according to the laws of
the State of Florida.
If default is made in the payment of any of the sums or interest
mentioned herein or in the performance of any of the agreements contained
herein, then the entire principal sun and accrued interest shall at: the option
of the holder hereof become at once due and collectible without notice, TIME
BEING OF THE ESSENCE; and said principal sum and accrued interest shall both
bear interest from such time until paid at the highest rate allowable under the
laws of the State of Florida. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same in the event of any
subsequent default.
Maker may at any time prepay in whole or in part without penalty the
indebtedness represented by this promissory note. The maker's obligations
pursuant to this Promissory Note may not be assigned to any third person.
Maker or endorser, hereby waives presentment, protest, notice, notice
of protest and notice of dishonor and agrees repay all costs, including a
reasonable attorney's fee, whether suit be brought or not, if after maturity of
this notice to or default hereunder, counsel shall be employed to collect this
note. In the event suit is instituted to enforce the collection of this note,
the maker herein agrees to submit himself to the jurisdiction of the courts of
the State of Florida and agrees that said courts are suitable, convenient,
just and equitable forum for the prosecution of said suit.
1
<PAGE> 2
Whenever used herein, the terms "holder," "maker," and "payee" shall be
construed in the singular or plural as the context may require or admit.
The Promissory Note is without recourse to any assets of the maker.
MAKER
/s/ Bahram Yusefzadeh
------------------------
Bahram Yusefzadeh
2
<PAGE> 1
EXHIBIT 10.24
PROMISSORY NOTE
$932,910.00 Dated: December 19, 1994
Effective Date: December 19, 1994
FOR VALUE RECEIVED, the undersigned, promises to pay to PHOENIX INTERNATIONAL
LTD., INC., or order, in the manner hereinafter specified, the principal sum of
NINE HUNDRED THIRTY TWO THOUSAND NINE HUNDRED TEN AND 00/100 ($932,910.00) with
interest from date at the rate of 7.92% on the balance from time to time
remaining unpaid. The said principal and interest shall be payable in lawful
money of the United States of America, c/o Phoenix International Ltd., Inc.,
900 Winderley Place,, Suite 140, Maitland, FL 32751, or, such other place as
the payee may designate in writing, on the date and in the manner following:
Principal and accrued interest shall be due and payable on the last
business day prior to any public offering of the capital stock of Phoenix
International Ltd., Inc.
This note shall be construed and enforced according to the laws of the
State of Florida.
If default is made in the payment of any of the sums or interest mentioned
herein or in the performance of any of the agreement contained therein, then
the entire principal sum and accrued interest shall at the option of the holder
hereof become at once due and collectible without notice, TIME BEING OF THE
ESSENCE; and said principal sum and accrued interest shall both bear interest
from such time until paid at the highest rate allowable under the laws of the
State of Florida. Failure to exercise this option shall not constitute a
waiver of the right to exercise the same in the event of any subsequent
default.
Maker may at any time prepay in whole or in part without penalty the
indebtedness represented by this promissory note. The maker's obligations
pursuant to this Promissory Note may not be assigned to any third person.
Maker or endorser, hereby waives presentment, protest, notice, notice of
protest and notice of dishonor and agrees to pay all costs, including a
reasonable attorney's fee, whether suit be brought or not, if after maturity of
this note or default hereunder, counsel shall be employed to collect this note.
In the event suit in instituted to enforce the collection of this note, the
maker herein agrees to submit himself to the jurisdiction of the courts of the
State of Florida and agrees that said courts are suitable, convenient, just and
equitable forum for the prosecution of said suit.
<PAGE> 2
Whenever, used herein, the terms "holder," "maker," and "payee" shall be
construed in the singular or plural as the context may require or admit.
The Promissory Note is without recourse to any assets of the maker.
MAKER:
YUSEFZDEH FAMILY LIMITED PARTNERSHIP
By: /s/ Bahram Yusefzadeh
----------------------------
Bahram Yusefzadeh
General Partner
<PAGE> 1
EXHIBIT 10.25
PROMISSORY NOTE
$344,760.00 Dated: January 30, 1995
Effective Date: January 30, 1995
FOR VALUE RECEIVED, the undersigned, promises to pay to PHOENIX
INTERNATIONAL LTD., INC., or order, in the manner hereinafter specified, the
principal sum of THREE HUNDRED FORTY FOUR THOUSAND SEVEN HUNDRED SIXTY AND
00/100 DOLLARS ($344,760.00) with interest from date at the rate of 7.92% on the
balance from time to time remaining unpaid. The said principal and interest
shall be payable in lawful money of the United States of America, c/o Phoenix
International Ltd., Inc., 900 Winderley Place, Suite 140, Maitland, FL 32751,
or such other place as the payee may designate in writing, on the date and in
the manner following:
Principal and accrued interest shall be due and payable on the last business
day prior to any public offering of the capital stock of Phoenix International
Ltd., Inc.
This note shall be construed and enforced according to the laws of the
State of Florida.
If default is made in the payment of any of the sums or interest
mentioned herein or in the performance of any of the agreements contained
herein, then the entire principal sum and accrued interest shall at the option
of the holder hereof become at once due and collectible without notice, TIME
BEING OF THE ESSENCE; and said principal sum and accrued interest shall both
bear interest from such time until paid at the highest rate allowable under the
laws of the State of Florida. Failure to exercise this option shall not
constitute a value of the right to exercise the same the event of any
subsequent default.
Maker may at any time prepay in whole or in part without penalty the
indebtedness represented by this Promissory Note. The maker's obligations
pursuant to this Promissory Note may not be assigned to any third person.
Maker or endorser, hereby waives presentment, protest, notice, notice of
protest and notice of dishonor and agrees to pay all costs, including a
reasonable attorney's fee, whether
<PAGE> 2
suit be brought or not, if after maturity of this note or default hereunder,
counsel shall be employed to collect this note. In the event suit is
instituted to enforce the collection of this note, the maker herein agrees to
submit himself to the jurisdiction of the courts of the State of Florida and
agrees that said courts are suitable, convenient, just and equitable forum for
the prosecution of said suit.
Whenever used herein, the terms "holder," "maker," and payee shall be
construed in the singular or plural as the context may require or admit.
The Promissory Note is without recourse to any assets of the maker.
MAKER:
YUSEFZADEH FAMILY LIMITED PARTNERSHIP
By: /s/ Bahram Yusefzadeh
------------------------------
Bahram Yusefzadeh
General Partner
<PAGE> 1
EXHIBIT 10.26
GUPTA Agreement No. 95-OEM-5489-PHOE-00
GUPTA(TM)
OEM SOFTWARE LICENSE AGREEMENT
(General Terms and Conditions)
PREAMBLE: The following are the general terms and conditions of an agreement
("Agreement") which consists of (i) these General Terms and Conditions and (ii)
the Signature Pages. The documents are referenced together by the contract
number and are to be taken together and not separately. THIS AGREEMENT SHALL
BE EFFECTIVE AS OF THE "EFFECTIVE DATE" SPECIFIED IN THE SIGNATURE PAGES ONLY
WHEN THE SIGNATURE PAGES ARE EXECUTED BY BOTH PARTIES AND ALL PAGES OF BOTH THE
GENERAL TERMS AND CONDITIONS AND THESE SIGNATURE PAGES ARE INITIALED WHERE
INDICATED BY BOTH PARTIES.
IN CASE OF CONFLICT BETWEEN THE TERMS AND CONDITIONS SPECIFIED IN THE GENERAL
TERMS AND CONDITIONS BELOW AND THOSE OF THE SIGNATURE PAGES, THE TERMS AND
CONDITIONS OF THE SIGNATURE PAGES SHALL CONTROL.
NOTIONAL CONVENTION: Provisions of these General Terms and Conditions shall be
referred to as "Section X.Y(z) GTC". Provisions of the Signature Pages shall
be referred to as "Item A.B(c) SP".
1. PURPOSE OF THIS AGREEMENT
This Agreement is between GUPTA Corporation ("GUPTA"), a California
corporation, with offices at 1060 Marsh Road, Menlo Park, CA 94025 and the
organization as specified in the Signature Pages ("OEM"). GUPTA and OEM desire
to establish the terms and conditions under which GUPTA will provide software
programs for manufacturing and integration into OEM Products for subsequent
sublicensing and distribution by OEM and its distributors subject to the terms
and conditions below.
2. CERTAIN DEFINITIONS
2.1 "Distributor" shall mean a value added reseller, dealer, software developer
or other third party which is granted certain non-exclusive rights by OEM in
accordance with the terms of this Agreement.
2.2 "End User" shall mean a customer of OEM (or a Distributor) who acquires
(and has proof of) a valid license to use the OEM Product (and the Programs as
an embedded component) for personal or internal business purposes in accordance
with the End User License Agreement.
2.3 "End User License Agreement" shall mean the standard OEM license agreement
accompanying each copy of the OEM Product which specifies the terms and
conditions of the license to use the OEM Product and the Programs as an
embedded component.
2.4 "Marks" shall mean the trademarks, service marks and logos of GUPTA and/or
its licensors.
2.5 "OEM Product" shall mean only the OEM software programs or products
specifically described or listed in the Signature Pages and shall also include
any Derivative Works. ANY OEM PRODUCT MUST NOT FUNCTION AS A GENERAL PURPOSE
DATABASE MANAGEMENT OR APPLICATION DEVELOPMENT SYSTEM.
2.6 "Product Update(s)" shall mean all maintenance releases of the Programs
(denoted by GUPTA by changing a number to the right of the second decimal point
in the then-current version number, e.g., a change from version 3.1.1 to 3.1.2.)
and certain other modifications to the Programs designed to provide bug fixes
or minor function improvements to the Programs which may be denoted as Product
Updates by GUPTA from time to time in its generally published programs and
policies.
2.7 "Product Upgrade(s)" shall mean all minor version releases and major
version releases of the Programs (denoted by GUPTA by changing a number to the
left of the first decimal point in the then-current version number, e.g., a
change from version 3.1.2 to 4.0 or from version 3.1.2 to 3.2) and certain
other modifications to the Programs which may be denoted as Product Upgrades by
GUPTA from time to time in its generally published programs and policies.
2.8 "Program(s)" shall mean only the current (as of the date of execution of
this Agreement) versions of the software program(s) in object code form
specified in the Signature Pages.
2.9 "Territory" shall mean the geographic region(s) specified in the Signature
Pages.
2.10 "List-Price" shall mean GUPTA's suggested list price in the Territory for
a single copy of a Program, or of a specified product or service. Such prices
are specified in the applicable Territory Price List or other pricing document
as generally published by GUPTA from time to time during the term of this
Agreement. GUPTA reserves the right to change Program List Price(s), at its
sole discretion, upon 30 days written notice to OEM.
2.11 "Trademark Use Policy" shall mean the written policies, as amended by
GUPTA from time-to-time, for the proper usage of the Marks.
2.12 "Derivative Works" shall mean a revision, enhancement, abridgment or other
modification of an OEM Product.
3. GRANT OF RIGHTS
3.1 Nonexclusive License Grant: GUPTA grants OEM, subject to Sections 3.2 and 4
GTC and the other applicable provisions of this Agreement, the following
nontransferable, nonexclusive, rights which may be exercised solely within the
Territory during the term of this Agreement and provided the Program is for use
only in conjunction with and as an embedded component of an OEM Product:
(a) To manufacture and package copies of the Programs.
(b) To distribute and sublicense OEM manufactured copies of the
Programs to End Users directly and through Distributors.
(c) To grant Distributors the right to distribute OEM manufactured
copies of the Programs to End Users.
(d) To use, in unaltered form, the Marks solely to promote the OEM
Product.
3.2 License Restrictions and Requirements. The rights granted in Section 3.1
GTC are limited to or conditioned upon the following:
(a) Use of Programs by End Users:
(1) THE USE OF THE PROGRAMS DISTRIBUTED AND SUBLICENSED BY OEM
HEREUNDER MUST BE SOLELY IN CONJUNCTION WITH AND AS AN EMBEDDED COMPONENT OF
AN OEM PRODUCT.
(b) GUPTA'S Intellectual Property and Proprietary Rights:
(1) GUPTA and/or its licensors shall retain all and sole right,
title and interest in and to the Programs.
OEM /s/ RR OEM Software License Agreement GTC 1 941014a GUPTA /s/
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<PAGE> 2
GUPTA Agreement No. 95-OEM-5489-PHOE-0
(2) Other than for exercising the rights expressly
granted to OEM hereunder, OEM shall not, nor shall OEM cause or permit a third
party (except as required by law with written notice to GUPTA), to copy,
manufacture, adapt, rent, lease, lend, trade-in, create derivative works from,
translate, reverse engineer, disassemble or decompile or otherwise modify the
Programs.
(3) OEM shall not, nor shall OEM cause or permit a third
party to, delete GUPTA's copyright notice as it appears anywhere in the
Programs.
(4) OEM agrees to sublicense the Programs to End Users
directly and through Distributors only under an enforceable End User License
Agreement, which may be shrinkwrapped, between OEM and End Users, which: (i)
protects GUPTA's (and/or any of GUPTA's licensors') intellectual property and
proprietary rights and title to the Programs, and (ii) expressly prohibits the
End User from using the Programs for any purpose that would violate the
restrictions specified in Sections 2.5 and 3.2(a) or (b).
(5) The use of the Marks by OEM and Distributors shall
strictly adhere to the terms and conditions of GUPTA's Trademark Use Policy,
and to written instructions GUPTA may issue from time to time.
(6) OEM agrees that all use of the Marks by OEM or its
Distributors will inure to the benefit of GUPTA.
(c) Distributors:
(1) OEM shall have no authority to grant any rights to a
Distributor other than those set forth in Section 3.1(c) GTC.
(2) Each agreement between OEM and Distributor shall (i)
contain provisions which are consistent with the terms of this Agreement and do
not exceed the distribution rights granted to OEM herein, (ii) include the
provisions of Sections 3, 6, 7, 8, 9, 10 and 11 GTC in substantially similar
terms, and (iii) provide that the Distributor shall comply with all of OEM's
relevant obligations under this Agreement. OEM shall make a good faith effort
to ensure that all Distributors comply with the Distributor's obligations under
its agreement with OEM.
4. FEES AND PAYMENTS
4.1 Initial Payment and Commitment. OEM irrevocably agrees to make the
payment as specified in the Signature Pages.
4.2 License Fees. For Programs distributed, sublicensed and/or shipped to
an End User or Distributor by OEM under the terms of this Agreement, OEM
agrees to pay License Fees as specified in the Signature Pages.
4.3 Support Fee. In consideration for the support and maintenance
services provided by GUPTA as specified in Section 5 GTC, OEM agrees to pay
GUPTA a Support Fee as specified in the Signature Pages.
4.4 Product Upgrade Fees. For Product Upgrades sublicensed, distributed
and/or shipped by OEM to End Users or Distributors under the terms of this
Agreement, OEM shall pay to GUPTA fees ("Product Upgrade Fee") as specified in
the Signature Pages.
4.5 Reports and Payments.
(a) All payments under this Agreement shall be made in U.S.
dollars or other currency as GUPTA may designate. The terms of payment for
OEM's initial commitment and any orders for Programs or other products or
services acquired by OEM from GUPTA hereunder shall be as specified in the
Signature Pages. Such payment terms may be modified by GUPTA, in its sole
discretion, should: (i) OEM be in default of any payment due to GUPTA or (ii)
exceed its credit limit established by GUPTA in its sole discretion.
(b) Within thirty (30) days of the end of each calendar quarter,
OEM shall report ("Report") to GUPTA in writing all copies of OEM Products and
the Programs sublicensed, distributed and/or shipped by OEM with a geographic
breakdown by country or other geographic region designated by GUPTA. Such
Report shall also include a calculation of License Fees and Product Upgrade
Fees due to GUPTA for such copies, based upon: (i) the fees specified in
Sections 4.2 and 4.4 GTC and (ii) the gross number of copies of the Programs
distributed, sublicensed and/or shipped by OEM less returned copies and a
reasonable number of demonstration and evaluation copies. OEM shall make
payment of the fees specified in each Report, with an adjustment for advances
if any are outstanding. Should the calculation of fees due to GUPTA be found
to be in error, an adjustment shall be made within fifteen (15) days of the
discovery of such error.
Provided, however, if such Report is not provided on time, or is not
accompanied by any payment which may be due to GUPTA, GUPTA, may, at its sole
discretion, and without waiving any other rights or remedies under this
Agreement (i) withhold providing any Programs to OEM, and/or (ii) withhold
providing any support or maintenance services to OEM under Section 5 GTC,
until such Report is filed or the payment is received by GUPTA.
(c) Payment of the Support Fee shall be made as specified in the
Signature Pages.
4.6 Records and Review. OEM shall keep accurate records necessary to
verify compliance with the licensing and payment terms of this Agreement, along
with reasonable detail. OEM shall, with reasonable advance notice, make such
records available to GUPTA for inspection and copying during normal business
hours.
4.7. Shipping Expenses. All prices are FOB GUPTA's point of origin, and
OEM shall: (i) reimburse GUPTA for any shipping expenses incurred by GUPTA
under this Agreement, and (ii) bear the risk of loss, damage or theft while the
Programs are in transmit to OEM.
5. SUPPORT AND MAINTENANCE
5.1 Technical Support. GUPTA shall provide OEM such technical support
services as specified in the Signature Pages, and consistent with GUPTA's
generally published support programs and policies, which may be changed from
time-to-time by GUPTA.
5.2 Support of OEM's End Users and/or Distributors. OEM shall be
responsible for supporting OEM's End Users and/or Distributors.
5.3 Product Updates. Provided that OEM has paid the Support Fee in
Section 4.3 GTC, during the term of this Agreement, Product Updates will be
provided to OEM contemporaneously with if and when GUPTA first makes such
Product Updates commercially available to its other OEM customers. Such
Product Updates shall be considered "Programs" and OEM shall have the right to
sublicense and distribute (on the same basis as provided in Sections 3.1 and
3.2 GTC) such Product Updates to its: (i) new customers for the OEM Products
subject to payment of the applicable License Fees, and (ii) existing customers
for the OEM Products without payment of additional fees to GUPTA.
5.4. Product Upgrades. Provided that OEM has paid the Support Fee in
Section 4.3 GTC, during the term of this Agreement, Product Upgrades will be
provided to OEM contemporaneously with if and when GUPTA first makes such
Product Upgrades commercially available to its other OEM customers. Such
Product Upgrades will include versions of the Programs adapted to run on
additional operating system platforms and foreign language translations, if and
when made commercially available. Such Product Upgrades shall be considered
"Programs" and OEM shall have the right to sublicense and distribute (on the
same basis as provided in Sections 3.1 and 3.2 GTC) such Product Upgrades to:
(i) new customers for the OEM Products subject to payment of the applicable
License Fees and (ii) existing customers for the OEM Products subject to the
payment of Product Upgrade Fees as provided in Section 4.4 above.
OEM /s/ RR OEM Software License Agreement GTC 2 941014a GUPTA /s/
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<PAGE> 3
GUPTA Agreement No. 95-OEM-5489-PHOE-00
6. CONFIDENTIALITY
GUPTA and OEM agree that each of them shall, during the term of this Agreement
and for three (3) years thereafter, take all steps which are reasonable to
safeguard the confidentiality of, and proprietary rights to, the confidential
information ("Confidential Information") of the other party which may be
disclosed hereunder (including, but not limited to, product plans, designs,
business plans, technical specifications, research, customer or financial data)
and shall not, without the prior written consent of the other party, (i) use
such Confidential Information for its own benefit or the benefit of any third
party except for purposes expressly provided for in this Agreement, or (ii)
disclose such Confidential Information to any third party; provided, however,
that this provision shall not be construed to restrict the disclosure of
information which (a) is publicly known at the time of its disclosure to a
party, (b) is lawfully recieved by a party from a third party not bound in a
confidential relationship to GUPTA or OEM, (c) was already known by GUPTA or
OEM prior to entering into this Agreement or (d) is required by law to be
disclosed.
7. WARRANTIES AND INDEMNIFICATION BY OEM
7.1 Warranties, Representations and other Obligations. OEM represents,
warrants and covenants that as of the Effective Date and continuing until
termination of this Agreement:
(a) OEM will use its reasonable efforts to protect GUPTA's intellectual
property and propietary rights as specified in Section 3.2(b).
(b) OEM will make no representations or warranties about the Programs in
excess of the representations or warranties contained in written materials
published by GUPTA and provided by GUPTA to OEM.
(c) OEM has not relied on any promises or representations not expressly
made in this Agreement. OEM possess the facilities, personnel and experience
necessary to meet its financial and other commitments under this Agreement.
(d) If OEM becomes aware of any actual or suspected authorized use,
copying or disclosure of the Programs, Marks or Confidential Information of
GUPTA, OEM will promptly notify GUPTA and will assist GUPTA, at GUPTA's request
and expense, in the investigation and prosecution of such unauthorized use,
copying or disclosure.
(e) OEM has the full right, power and authority to enter into this
Agreement and to carry out its obligations hereunder and there are no
impediments known to OEM which would prevent OEM compliance with all the terms
of this Agreement.
7.2 Indemnification by OEM. OEM agrees to indemnify and hold GUPTA harmless
from and against any and all claims, losses, damages or other liability
whatsoever associated with: (a) the use of the Programs by any End User or OEM
or its Distributors, except to the extent that such liability results from
GUPTA's breach of Section 8.1 GTC; (b) a breach of any of OEM's
representations, warranties or covenants contained in Section 7.1 GTC; or (c)
any claims brought by OEM's Distributors. To qualify for indemnity under this
Section, GUPTA must: (i) give OEM prompt written notice of any such claim, and
(ii) allow OEM to control and cooperate with OEM and OEM's expense in the
defense of any such claim and in all related settlement negotiations. In the
event that GUPTA wishes to participate in the defense of any such claim, OEM
shall allow GUPTA to participate at its own expense.
8. WARRANTIES AND INDEMNIFICATION BY GUPTA
8.1 Representations and Warranties by GUPTA to OEM. GUPTA represents and
warrants to and for the benefit of OEM that: (i) to the best of GUPTA's
knowledge, the Programs do not infringe any patent, copyright, trade secret or
any other proprietary right of any third party, and (ii) GUPTA has full right,
power and authority to enter into this Agreement and to carry out its
obligations hereunder.
8.2 Limitations of Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
SET FORTH IN SECTION 8.1 GTC, THE PROGRAMS ARE OFFERED "AS IS" WITH ALL FAULTS.
ALL WARRANTIES AND OTHER TERMS WHICH WOULD OTHERWISE BE IMPLIED OR
INCORPORATED INTO THIS AGREEMENT BY STATUTE OR COMMON LAW ARE HEREBY EXCLUDED.
THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
SPECIFICALLY DISCLAIMED BY GUPTA. IT IS EXPRESSLY AGREED THAT GUPTA SHALL NOT
BE IN ANY WAY RESPONSIBLE FOR THE COMMERCIAL SUCCESS OF THE PROGRAMS.
8.3 Exclusive Remedies and Indemnification by GUPTA. GUPTA's sole obligation
for a breach of any of the representations and warranties contained in Section
8.1 GTC shall be to indemnify and hold OEM harmless from and against any and
all direct damages (including reasonable attorney's fees) arising out of
GUPTA's breach of any of the warranties contained in such Sections, provided
OEM: (i) gives GUPTA prompt written notice of any such claim or liability, and
(ii) allows GUPTA to control, and provides all reasonable assistance to GUPTA
(at GUPTA's expense) in the defense of any such claim and in all related
settlement negotiations. In the event that OEM wishes to participate in the
defense of any such claim, GUPTA shall allow OEM to participate at its own
expense. GUPTA has no obligations or liability under this Section for any
claim based on the use of the Programs or portions thereof: (i) with respect to
software not delivered by GUPTA; (ii) in a manner for which it was not
designed; (iii) where modified by or for OEM in a manner to become infringing;
or (iv) which is in violation of this Agreement. In the event of any claim
being made that the use or possession of the Programs or any portion thereof
infringes any third party's intellectual property rights then GUPTA may, in its
sole discretion and at its own expense: (i) procure the right to continue using
the concerned Program(s) or portions thereof; or (ii) modify or replace all or
part of the concerned Program(s) in order to avoid any infringement.
9. LIMITATION OF LIABILITY
9.1 Limitation of Liability. EXCEPT AS SET FORTH IN SECTION 8.3 GTC, GUPTA'S
LIABILITY ARISING OUT OF THIS AGREEMENT OR THE USE OR DISTRIBUTION OF ANY
PROGRAM SHALL BE LIMITED TO THE AMOUNT PAID BY OEM TO GUPTA FOR THAT PROGRAM
UNDER THE TERMS OF THIS AGREEMENT.
9.2 Exclusion of Consequential and Other Damages. IN NO EVENT SHALL GUPTA BE
LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE, NOR WILL GUPTA
BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
INCLUDING LOST PROFITS, HOWEVER CAUSED, WHETHER FOR A BREACH OF CONTRACT,
NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT GUPTA HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
9.3 Essential Purpose. THE ESSENTIAL PURPOSE OF THIS SECTION IS TO LIMIT THE
POTENTIAL LIABILITY OF GUPTA ARISING OUT OF THIS AGREEMENT.
10. TERMINATION
10.1 Term of Agreement. This Agreement shall commence on the Effective Date
and, unless otherwise terminated in accordance with Section 10.2 GTC, shall
expire on the date specified in the Signature Pages.
10.2 Termination for Breach. Either party may terminate this Agreement for a
material breach of this Agreement if at the end of a thirty (30) day period
after providing the other party written notice specifying a material breach,
the breaching party has not cured such breach. GUPTA reserves the right to
terminate this Agreement immediately upon written notice if: (i) OEM becomes
insolvent or involuntary bankrupt; or (ii) a receiver or other liquidating
officer is appointed for substantially all of the assets or business of OEM, or
if OEM makes an assignment for the benefit of creditors, or such rights become
an asset under any bankruptcy, insolvency or reoganization proceeding.
OEM /s/ RR OEM Software License Agreement GTC3 941014a GUPTA /s/
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<PAGE> 4
GUPTA Agreement No. 95-OEM-5489-PHOE-00
10.3 Continuing Obligations. The termination of this Agreement for any reason
shall not relieve any party of its obligations to: (i) make payments which may
have accrued hereunder, but which remained unpaid as of the date of
termination; or (ii) maintain the confidentiality of Confidential Information
as provided in Section 6 GTC.
10.4 Results of Termination.
(a) All licenses and other rights granted by GUPTA shall become null and
void upon termination of this Agreement, regardless of the reason for
termination, except for the End User licenses for the Programs previously
distributed by OEM or a Distributor.
(b) Within thirty (30) days of termination of this Agreement for any
reason, OEM shall return to GUPTA all materials related to the Programs
originally delivered to OEM by GUPTA. Within this time, OEM shall deliver to
GUPTA written notice signed by an officer of OEM that OEM has complied with the
requirements of this Section.
(c) Regardless of the reason for termination of this Agreement, OEM shall
have no right to receive any compensation or other amounts from GUPTA, and
shall have no ownership or other right whatsoever in or to: (i) the Programs,
(ii) the Marks or any intellectual or proprietary rights relating to the
Programs, (iii) any copyrighted materials relating to the Programs, (iv) any
goodwill relating to the Programs that may have been created during the term of
this Agreement.
11. MISCELLANEOUS PROVISIONS
11.1 GUPTA's Reservation of Rights and Remedies. In addition to any specific
right or remedy provided for in this Agreement, GUPTA reserves all other rights
and remedies available by law.
11.2 Sale or Assignment. OEM may not assign, transfer or delegate any of its
rights or duties under this Agreement without the prior written consent of
GUPTA.
11.3 Force Majeure. Neither party shall be liable for any delays in the
performance of any of its obligations hereunder (other than the obligation to
pay money) due to causes beyond its reasonable control, including but not
limited to, fire, strike, war, riots, acts of any civil or military authority,
judicial action, acts of God, or other casualty or natural calamity for so long
as and to the extent that the effects of such circumstance continue.
11.4 Entire Agreement/Waiver. This Agreement sets forth the entire agreement
between GUPTA and OEM with respect to the subject matter hereof and supersedes
any and all prior agreements, understandings, promises and representations made
by either party to the other concerning the subject matter hereof and the terms
hereof. This Agreement may not be amended, modified, released or discharged,
amended or modified in any manner, or any term or breach waived except by an
instrument in writing signed by both OEM and GUPTA's General Counsel.
11.5 Conflicts and Additions. In the event of any conflict between the terms
of this Agreement and the terms of any OEM document or other writing exchanged
between the parties (e.g., OEM purchase order), the terms of this Agreement
shall control. In the event that any term contained in any such writing
attempts to add to the terms of this Agreement, such additional term(s) shall
not be effective unless such writing is signed by both OEM and GUPTA's General
Counsel.
11.6 Import and Export Provisions. OEM shall, at its own expense, pay all
import and export licenses and permits, pay customs charges and duty fees
required to accomplish the export and import of the Programs acquired by OEM.
OEM shall, at all times, strictly comply with all laws, regulations and orders
of the United States of America and other applicable jurisdictions regarding
the import, export or re-export of the Programs.
11.7 Parties Independent. The parties are and shall act at all times as
independent contractors and nothing contained in this Agreement shall be
construed or implied to create an agency, partnership or employer and employee
relationship between OEM and GUPTA. At no time shall any party make
commitments or incur any charges or expenses for or in the name of the other
party.
11.8 Severability. The invalidity or enforceability of one or more
provisions of this Agreement shall not affect the validity or enforceability of
any of the other provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provisions were omitted.
11.9 Governing Law.
(a) This Agreement shall be construed and enforced in accordance with the laws
of the state of California and venue shall be exclusive in the federal or state
courts of California.
(b) Notwithstanding the foregoing, GUPTA may seek relief in any court of
competent jurisdiction in any action to: (i) obtain injunctive relief for
protection or enforcement of its Confidential Information or its intellectual
and proprietary rights, (ii) recover monies due GUPTA but not paid hereunder,
or (iii) enforce any judgment obtained by GUPTA against OEM arising out of any
such proceeding.
11.10 Headings. The headings of the sections used in this Agreement are
included for convenience only and are not used in construing or interpreting
this Agreement.
11.11 Notices. Required notices under this Agreement shall be deemed delivered
when: (i) personally delivered, (ii) faxed with confirmation to a designated
fax number, or (iii) upon signed receipt when delivered by certified or
registered mail. Such notices shall be sent to the other party at the address
set forth in this Agreement or to such other address as such party shall
designate by written notice.
11.12 Taxes. All charges in this Agreement are exclusive of sales and use
taxes. If any such taxes (other than GUPTA's income taxes) are imposed on
transactions covered by this Agreement by any state or federal jurisdiction in
the United States of America, GUPTA reserves the right to charge OEM, and OEM
agrees to pay, any such taxes.
11.13 Counterparts and Exchanges by Fax. This Agreement may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument. This
exchange of a fully executed Agreement (in counterparts or otherwise) by fax
shall be sufficient to bind the parties to the terms and conditions of this
Agreement.
11.14 Joint Marketing and Promotional Activities. As soon as practicable after
the Effective Date of this Agreement, both parties will issue a joint press
release announcing OEM's rights to distribute and market the Programs, but in
no case shall such press release be issued without the consent of both parties.
GUPTA shall have the right to use the OEM name in customer lists or promotional
documents that incorporate such lists.
OEM OEM Software License Agreement GTC4 941014a GUPTA /s/
------- -------
<PAGE> 5
XXX = Confidential Treatment Requested
GUPTA Agreement No. 95-OEM-5489-PHOE-00
GUPTA(TM)
OEM SOFTWARE LICENSE AGREEMENT
(Signature Pages)
PREAMBLE: The following are the Signature Pages of an agreement ("Agreement")
which consists of (i) the General Terms and Conditions and (ii) these Signature
Pages. The documents are referenced together by the contract number and are to
be taken together and not separately. THIS AGREEMENT SHALL BE EFFECTIVE AS OF
THE "EFFECTIVE DATE" SPECIFIED BELOW ONLY WHEN THESE SIGNATURE PAGES ARE
EXECUTED BY BOTH PARTIES AND ALL PAGES OF BOTH THE GENERAL TERMS AND CONDITIONS
AND THESE SIGNATURE PAGES ARE INITIALED WHERE INDICATED BY BOTH PARTIES.
IN CASE OF CONFLICT BETWEEN THE TERMS AND CONDITIONS SPECIFIED IN THE SIGNATURE
PAGES BELOW AND THE GENERAL TERMS AND CONDITIONS, THE TERMS AND CONDITIONS OF
THESE SIGNATURE PAGES SHALL CONTROL.
NOTATIONAL CONVENTION: Provisions of the General Terms and Conditions shall be
referred to as "Section X.Y(z)GTC". Provisions of these Signature Pages shall
be referred to as "Item A.B(c)SP".
- --------------------------------------------------------------------------------
1. OEM: For purposes of this Agreement, OEM shall be the following
organization at the designated address:
Organization Name: Phoenix International Ltd., Inc.
Organized under the laws of: Florida
Headquarters Address: 900 Winderly Place, Suite 140
Maitland, Florida 32751
Telephone: (407) 667-0033 Fax: (407) 667-0133
2. TERRITORY: Worldwide
3. EFFECTIVE DATE OF AGREEMENT: June 30, 1995
4. TERMINATION DATE: June 30, 1997
5. PROGRAMS [LIST]: XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX
*THE "SQLBASE SERVER PROGRAMS"
OEM /s/ RR SIG 1 GUPTA /s/ RH
------- ------
Ref. GTC. 941014a
OEM SOFTWARE LICENSE AGREEMENT 950628
<PAGE> 6
XXX = Confidential Treatment Requested
GUPTA Agreement No. 95-OEM-5489-PHOE-00
6. INITIAL PAYMENT AND COMMITMENT: In consideration for the rights granted in
Section 3.1 GTC, OEM irrevocably agrees that the sum of XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX immediately due and payable to GUPTA and
shall be paid XXXXXXXXXXXXXXXXXXX as specified below. This sum shall serve as
a noncontingent, nonrefundable advance against License Fees that may become due
to GUPTA under Section 4.2 GTC.
(i) XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX; and
(i) XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
7. LICENSE FEES/DISCOUNTS:
(a) For each copy of a Program distributed, sublicensed and/or shipped to an
End User or Distributor by OEM under the terms of this Agreement, OEM agrees to
pay GUPTA the following License Fees:
(i) The License Fee for Copies of the SQLBase Server Programs,
EditWindows, Report Windows, Quest and Quest Reporter Programs shall be
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
(ii) The License Fee for Copies of the SQLConsole Program shall be
XXXXXXXXXXXXXXXX.
(iii) The License Fees for Copies of the SQLBase Multi-Tasking Engine
for Windows Program shall be XXXXXXXXXXXXXXXX
8. OEM SUPPORT FEE: In consideration for the support services and maintenance
provided by GUPTA as specified in Section 5 GTC, OEM agrees to pay GUPTA as
follows:
(a) Commencing XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXX thereafter during the term of this Agreement, OEM agrees to pay GUPTA a
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
for the Programs sublicensed by OEM (or distributed by OEM under Section 3.1
GTC) as of the end of that XXXXXXXXXXXXXXXXXXXXXXXXX, reduced by those License
Fees paid to GUPTA by OEM's customers who are not receiving maintenance support
for the OEM Product from OEM.
(b) In consideration for the above payment GUPTA will provide to OEM, the
maintenance services for the Programs as specified in Section 5 GTC, plus
updates and upgrades to the Programs. Such upgrades will cover future
like-for-like releases (identical product, user capacity and operating system)
of the Programs that may become available from GUPTA during the term of this
Agreement.
(c) Within ninety (90) days from the Effective Date of this Agreement, OEM may
identify and report Program Licenses previously acquired from GUPTA by OEM's
customer(s). Such Program Licenses are to be included in the calculation of
OEM Support Fees as specified in this Item 8(a) above.
9. PRODUCT UPGRADE FEES: The Product Upgrade Fees are covered in Item 8SP
above.
10. OEM PRODUCT: For purposes of this Agreement the OEM Product shall mean
OEM's "Complete Banking System" software application product and by whatever
name such product becomes known in the future.
OEM /s/ RR SIG 2 GUPTA /s/ RH
------- ------
Ref. GTC: 941014a
OEM SOFTWARE LICENSE AGREEMENT 950628
<PAGE> 7
XXX = Confidential Treatment Requested
GUPTA Agreement No. 95-OEM-5489-PHOE-00
11. OTHER TERMS:
(A) DISCOUNTS FOR PURCHASES OF STANDARD PRODUCTS.
--------------------------------------------
(i) OEM shall be eligible to acquire Copies of the Standard Products for OEM's
internal use or distribution at XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX from either
(i) GUPTA's then-current XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX for such Standard
Product, or (ii) GUPTA's then current XXXXXXXXXXXXXXXXXXXXXXXXX for Business
Partners who acquire the Standard Products directly from GUPTA.
(ii) Terms of payment for any order for the Standard Products shall be net
thirty (30) days from receipt of GUPTA's invoice. Advance payments paid to
GUPTA under Item 6 SP above shall not be applicable against such purchases.
OEM shall specify on its purchase order for the Standard Products the country
or territory to which such Standard Product is to be used by OEM.
(iii) OEM or OEM's end-users shall be eligible to acquire support services for
the Standard Products under GUPTA's then current prices, terms and according to
GUPTA's Product Support Policy in effect at the time for the applicable country
or territory.
(B) SECTION 2.0 GTC, CERTAIN DEFINITIONS, IS MODIFIED BY ADDING THE FOLLOWING
-------------------
ADDITIONAL DEFINITIONS:
2.13 "GUPTA Software License Agreement" shall mean the standard form license
--------------------------------
agreements between the end user and GUPTA which accompanies each Standard
Product when delivered by GUPTA to OEM in a packaged form.
2.14 "Standard Product(s)" shall mean only the generally commercially available
-------------------
GUPTA proprietary PC software progmm(s) in packaged form each of which includes
(a) the object code form of the software program(s), (b) the applicable User
Documentation, and (c) a GUPTA Software License Agreement.
2.15 "User Documentation" shall mean the GUPTA user manual(s) and other
------------------
published written materials, if any, regarding the proper installation and use
of the Standard Products which normally accompany each Standard Product.
(C) SECTION 3.1 GTC, NONEXCLUSIVE LICENSE GRANT, IS DELETED AND REPLACED WITH
--------------------------
THE FOLLOWING:
3.1 Nonexclusive License Grant
GUPTA hereby grants OEM, subject to Sections 3.2 GTC and 4 GTC and the other
applicable provisions of this Agreement, the following nontransferable,
nonexclusive, rights and licenses which may be exercised solely within the
Territory and provided the use or distribution of the Program or Standard
Product is for use or distribution only in conjunction with an OEM Product:
(a) To manufacture and package copies of the Programs as an embedded component
of component embedded or coupled with an OEM Product.
(b) To distribute and sublicense OEM manufactured copies of the Programs under
perpetual use licenses as an embedded component of component embedded or
coupled with an OEM Product to End Users directly and through Distributors.
OEM /s/ LL SIG 3 GUPTA /s/
------- -----
Ref. GTC: 941014a
OEM SOFTWARE LICENSE AGREEMENT 950628
<PAGE> 8
GUPTA Agreement No. 95-OEM-5489-PHOE-00
(c) To order (from GUPTA) and distribute the Standard Products in unaltered
form in the original sealed package manufactured by GUPTA to End Users and
Distributors.
(d) To grant Distributors the following rights:
(i) The right to distribute OEM manufactured copies of the Programs under
perpetual use licenses as an embedded component of component embedded or
coupled with an OEM Product to End Users.
(ii) The right to distribute the Standard Products in conjunction with the
OEM Product in unaltered form in the original sealed package manufactured by
GUPTA to End Users.
(iii) The right to use, in unaltered form, the Marks solely to promote the
distribution of the Programs or Standard Products.
(e) To use, in unaltered form, the Marks solely to promote the distribution of
the Programs or Standard Products.
(f) A personal, fully paid-up license to use, copy and distribute the User
Documentation for the Programs in machine readable format as made generally
commercially available by GUPTA, provided that the provision of such
documentation is consistent with the limitations on use of the Programs as
provided in Sections 3.1 and 3.2 GTC hereunder. OEM may also acquire such User
Documentation from GUPTA at GUPTA's then-current price.
(D) SECTION 3.2(A) GTC, LICENSE RESTRICTIONS, IS MODIFIED TO ADD THE FOLLOWING
--------------------
RESTRICTION:
(10) Any Standard Product, when provided to an end user by OEM or a Distributor
under this Agreement, must not be embedded in any value added software other
than that marketed by GUPTA, must be contained in the original sealed package
manufactured by GUPTA and must be accompanied by the appropriate GUPTA Software
License Agreement.
(E) MODIFICATION OF SECTION 8.1 GTC ("REPRESENTATION AND WARRANTIES BY GUPTA
TO OEM"): Section 8.1 GTC shall be modified by the addition of the following at
the end of the paragraph:
"; and (iii) the Programs will substantially conform to the
specifications in the Program documentation. GUPTA does not warrant that
the Programs will be error free or run without interruption."
(F) ADDITION OF SECTION 10.4 (D) ("RETENTION OF MATERIALS"): Section 10.4 (d)
("Retention of Materials" shall be added as follows:
"(d) Notwithstanding 1.4 (a) - (c) above, OEM shall be entitled to retain
such materials as are necessary to provide support to OEM end-users who are
active on maintenance, provided that the termination of this Agreement was not
based upon misappropriation of GUPTA's intellectual property rights by OEM."
OEM /s/ RR SIG 4 GUPTA /s/ RH
------- ------
Ref. GTC: 941014a
OEM SOFTWARE LICENSE AGREEMENT 950628
<PAGE> 9
XXX = Confidential Treatment Requested
GUPTA Agreement No. 95-OEM-5489-PHOE-00
(G) PURCHASE OF SQLWINDOWS: Upon the Effective Date of this Agreement, OEM
shall acquire XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXX Version 5.0 only for the nonrefundable, noncontingent
payment of XXXXXXXXXX GUPTA agrees that OEM may make a one-time deduction of
this XXXXXXXXX from the prepayment specified in Item 6 SP above. Upon the
execution of this Agreement, GUPTA will ship the XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX to OEM.
(H) NO SOLICITATION OR HIRING: During the term of this Agreement neither party
shall solicit or hire any employee of the other party.
IN WITNESS WHEREOF, the parties hereby confirm that this Agreement is effective
at the date set forth above and that all terms and conditions have been agreed
to:
OEM: GUPTA:
By: /s/ Ralph Reichard By: /s/ Richard J. Heaps
------------------------------- -------------------------------
Name: Ralph Reichard Name: Richard J. Heaps
----------------------------- -----------------------------
Title: President Title: Vice President
---------------------------- ----------------------------
Date: June 30, 1995 Date: June 30, 1995
----------------------------- -----------------------------
OEM SIG 5 GUPTA /s/
----- -----
Ref. GTC: 941014a
OEM SOFTWARE LICENSE AGREEMENT 950628
<PAGE> 1
EXHIBIT 10.27
VALUE ADDED REMARKETER AGREEMENT
This VALUE ADDED REMARKETER AGREEMENT is made as of the 13th day of October,
1993, between SYBASE, INC. ("Sybase"), a corporation with offices at 6475
Christie Avenue, Emeryville, California, 94608 and Phoenix International Ltd.
Inc. ("VAR"), a Florida Company with offices at 475 Montgomery Place, Altamonte
Springs, FL 32714.
Sybase is the owner of or has rights to distribute certain computer
software. VAR desires to acquire a license to embed such software in certain
software to be developed and distributed by VAR.
NOW, THEREFORE, in consideration of the mutual promises and covenants.
contained herein, Sybase and VAR agree as follows:
I. DEFINITIONS.
1. 1. "AGREEMENT" shall mean this Value Added Remarketer Agreement,
together with the Exhibits and any Addenda attached hereto, and each
supplemental Exhibit A signed by both parties and each Purchase Order, as the
same may be amended from time to time in accordance with Section 13.12 below.
1.2. "DERIVATIVE PRODUCT" shall mean the software program(s) described in
Exhibit B that has/have been or will be developed by VAR for commercial
distribution to more than one third party and which (a) incorporate(s) only an
Embedded Run-Time Version of the Program, (b) contain(s) significant added
functionality over that of the Program as described in Exhibit B, (c) shall
not be usable as a commercially acceptable substitute for the Program or be
competitive with general database products, and (d) operate (s) on the same
hardware and operating system software for which VAR has acquired a Development
or Porting License pursuant to Section 2.1 below.
1.3. "DISTRIBUTOR" shall mean VAR's duly appointed distributors listed on
Exhibit B, and such other distributors as may be appointed hereafter by VAR
(with Sybase's prior written consent which shall not be unreasonably withheld)
to license the Derivative Product under the terms of this Agreement.
1.4. "EMBEDDED RUN-TIME VERSION" shall mean a version of the Program
linked to or embedded in VAR's application code in such a way that structurally
or by license restrictions, it (a) precludes use of the Program to modify
applications except as permitted in clause c of this paragraph; (b) precludes
use of the Program to develop applications, except for report writing and
decision support solely in conjunction with the Derivative Product; (c)
precludes general purpose access to command verbs in the Program except that
the End User may, within the scope of and under control of the Derivative
Product, create or alter tables, columns or rows and add fields to existing
tables, as necessary to implement, operate and administer the Derivative
Product; (d) precludes use of any command verbs in the Program to create new
schemas or databases; and (e) precludes use of the Program or third party
application development tools to modify or enhance existing screens or forms
delivered as part of the Derivative Product, or to create new forms, except as
necessary to implement and operate the Derivative Product.
1.5. "END USER" shall mean a third party who is granted a license to
the Derivative Product either by VAR or by a Distributor, and who shall have no
right to sublicense the Derivative Product further. The term shall include a
Distributor in situations where the Distributor will use the Derivative Product
for internal purposes.
1
<PAGE> 2
XXX = Confidential Treatment Requested
1.6. "HARDWARE SYSTEM" shall mean the central Processing unit (CPU)
and the operating system software listed in the Exhibit A or Purchase Order
applicable to the relevant copy Of the Program.
1.7. "PRICE LIST" shall mean Sybase's XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Program, is to be Used. All prices and policies stated in the Price List are
subject to change without notice, provided that no such change shall become
effective until sixty (60) days after notice to VAR.
1.8. "PRIMARY COPY" shall mean the copy of the Program provided by
Sybase, which may have been provided initially as a trial copy.
1.9. "PROGRAM" shall mean a machine executable copy of the object code
of the Sybase software product(s) listed in Exhibit A, or in a supplemental
Exhibit A signed by both parties, or in a Purchase Order, together with all
data files placed with the copy of such software product(s).
1.10. "PURCHASE ORDER" shall mean a purchase order or other purchase
authorizing document issued by VAR for the Programs and or services and
accepted by Sybase, as confirmed in a Sybase invoice or confirming document.
1.11. "RESTRICTED RELEASE" shall mean any version of the Program
marked alpha, beta or otherwise designated as a Restricted Release.
1.12. "SECONDARY COPY" shall mean a copy of the Program reproduced by
VAR from the Primary Copy.
1.13. "USE" shall mean to load, execute, employ, utilize, store or
display the Program.
2. DEVELOPMENT AND PORTING LICENSES.
2.1. GENERALLY. For the sole purpose of developing, marketing
and supporting the Derivative Product, Sybase grants to VAR a non-exclusive,
nontransferable license (without right to sublicense) to (a) Use each Primary
Copy shown on an Exhibit A or Purchase Order on the Hardware System at the site
specified on the applicable Exhibit A or Purchase Order; (b) make and Use
Secondary Copies (to the extent specified on the applicable Exhibit A or
Purchase Order) on the Hardware System at the site specified on the applicable
Exhibit A or Purchase Order; and (c) make up to two (2) copies of the Primary
Copy exclusively for inactive back-up or archival purposes. In the case of
Development Licenses (as defined below), the Copies may not be used by more
than the number of permissible concurrent users (unique logins) specified on
the applicable Exhibit A or Purchase Order and corresponding to the license
fees paid by VAR for such Copies. In the case of Porting Licenses (as defined
below), use of the Copies shall not be subject to restrictious on the number of
permissible concurrent users. The Program may only be transferred to another
site or to computer hardware other than the Hardware System in accordance with
the fourth paragraph of Section 2.2. Notwithstanding anything to the contrary
in this Section 2.1, development licenses for the Microsoft SQL Server for OS/2
are governed by the "Microsoft License Agreement" enclosed with such Program.
VAR at minimum must license in accordance with the preceding paragraph a
Primary Copy of each Program to be embedded in a Derivative Product, such
Primary Copy to be licensed on the hardware platform on which the Derivative
Product will be developed and for XXXXXXXXXXXXXXX concurrent users
(the "Development Licenses"). VAR shall receive XXXXXXXXXXXXXXXXXXXXXXXXXXXX
for the Development Licenses as set forth in the Price List. If the
Derivative Product will be ported to run on hardware platforms in
addition to the hardware platform(s) on which the Derivative Product
2
<PAGE> 3
XXX = Confidential Treatment Requested
was or is to be developed, VAR shall license XXXXXXXXXXXXXXXXX of each Program
for each such additional hardware paltform (the "Porting Licenses"). VAR shall
pay a license fee for the Porting Licenses XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXX regardless of the hardware class or the number of
users for which the copy was licensed. VAR may not use Development Licenses
or Porting Licenses for general internal use; if VAR wishes to license any
Sybase products for general internal use, prices for such products may be
obtained from the local Sybase sales office.
2.2 SUPPORT OF DEVELOPMENT AND PORTING LICENSES. VAR is required to
purchase telephone support and Program updates for the first year for all
licenses acquired under Section 2.1 above. Support commences on the date the
relevant Primary Copy of the Program is shipped to VAR or the date a license for
the relevant Secondary Copies is invoiced ("the Support Date"). Fees for
support and updates shall be paid in advance annually and are due as set forth
in Section 2.4 below. No maintenance or enhancement releases of the Program
will be provided to VAR for the Primary Copy and no copies of such release may
be made by VAR to update Secondary Copies, unless the applicable support fees,
including charges for support contacts and for maintenance enhancement releases
(collectively "Support Fees") for such Copies have been paid. Subject to
payment of such fees, the license granted to VAR under Section 2.1 shall extend
to each maintenance and enhancement release received by Sybase. Notwithstand-
ing anything to the contrary in this Section 2.2, support of development
licenses for Microsoft SQL Server for OS/2 are governed by the "Support
Agreement for Microsoft SQL Server" enclosed with such Program.
Support will be extended for one year periods on the anniversay of each
Support Date, unless VAR gives at least thirty (30) calendar days prior written
notice of cancellation. The Support Fees for the renewal year shall be as
specified in the Price List. VAR may reinstate lapsed support for any Program
by paying all Support Fees in arrears and all costs invoiced by Sybase on a
time and materials basis for updating VAR's Program to the current version.
Provided VAR has paid the applicable Support Fees, Sybase shall support
the Program in Accordance with this Section 2.2. VAR shall designate two VAR
employees or such greater number of support contact persons for Sybase support
as may be specified (and subject to the additional charges indicated) on the
applicable Exhibit A or Purchase Order. Each contact person may telephone for
problem resolution during the support hours corresponding to the level of
support fees paid by VAR (or during extended hours if VAR has contracted with
Sybase for extended support) at Sybase customer support centers. Upon receipt
from a contact person of notice of a Program problem (which problem can be
reproduced at a Sybase support facility or via remote access to VAR's
facility), Sybase shall use reasonable efforts efforts to correct or curcumvent
the problem. Any corrections to the Program will be made to the most current
generally available release. For twelve (12) months after the introduction of
a new generally available release of a new Program, Sybase will use reasonable
efforts to support the previously released version of such Program.
A Program may be transferred to another site or to computer hardware
other than the Hardware System only with the prior written consent of Sybase
and subject to Sybase's transfer policies and fees then in effect, except that
the Program may be transferred temporarily to a backup computer if the Hardware
System is inoperative.
Sybase shall have no obligation to support the Program (a) for Use on
any computer system other than the Hardware System, or (b) if VAR modifies the
Program in breach of this Agreement. VAR acknowledges that only those versions
of different cooperating Programs specified by Sybase will execute correctly
together on a single CPU or in a network. Sybase has no obligation to modify
outdated versions of the Program to run with new versions of the Hardware
System. If VAR purchases support from Sybase for any Programs in Use on a
specific Hardware System or in a specific network, VAR must purchase support
from Sybase for all products provided by Sybase in Use on such Hardware System
or network.
3
<PAGE> 4
XXX = Confidential Treatment Requested
2.3. CONSULTING. Since it is in both Sybase's and VAR's best
interests that the development of the Derivative Product be successful, VAR
shall order XXXXXXXXXXXXXXXXXXXXXX of consulting services from Sybase at the
price set forth in the Price List. VAR may also order, subject to Sybase's
acceptance, additional consulting services from Sybase. All consulting
services will be provided under the terms and conditions of this Agreement
unless otherwise agreed by both parties in writing. Monies paid to Sybase by
VAR for XXXXXXXXXXXXXXXXXXX of consulting work in connection with development
of the Derivative Product shall be counted as Prepaid Royalties to the extent
such consulting work is ordered on the EXHIBIT A dated concurrently with this
Agreement.
2.4. PAYMENT OF FEES. All fees for Primary Copies of the Program and
related support shall be due and payable XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. All other fees (including fees for
Secondary Copies) shall be due and payable XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX. With respect to the licenses and services provided hereunder,
VAR shall pay all applicable shipping charges and sales, use, personal property
or similar taxes, tariffs or governmental charges, exclusive of Sybase's income
and corporate franchise taxes.
2.5. DELIVERY/INSTALLATION. As soon as practicable after signing
of this Agreement and Sybase's receipt of VAR's Purchase Order, Sybase shall
cause the Program and one set of user manuals (which term shall include
installation instructions and other related documentation) to be delivered to
VAR's site address specified in the applicable Exhibit A or Purchase Order.
VAR, at its own expense, shall be responsible for installing the Program and
all updates thereof on the Hardware System and for complying with environmental
requirements specified by the Hardware System manufacturer.
2.6. DOCUMENTATION. One set of user manuals will be provided with
each Primary Copy. Additional copies may be purchased for internal use at XXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. Except as set forth in
Section 3.3(b), VAR shall not copy all or any part of the user manuals
provided.
2.7. TRAINING. License and/or support fees include Sybase
education only where specified in the Price List. No credit is given for
courses not taken. Additional training may be purchased at XXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. In order to ensure that VAR
has a solid technical understanding of Sybase. VAR shall send at least one
employee to each of the following Sybase training classes within six (6) months
of the date of this Agreement (a) Fast Track to Sybase; (b) Relational Database
Design; and (c) Fundamentals of System and Database Administration (or such
other substitute classes to which Sybase and VAR may agree). VAR shall not
copy all or any part of the training materials provided.
2.8. RESTRICTED RELEASE. If VAR is selected for participation and
elects to participate in a Restricted Release program, VAR shall only receive a
later version or a production version of the Restricted Release if support and
any applicable license fees for the Restricted Release have been paid. With
respect to each Restricted Release, and notwithstanding any other provision of
this Agreement, VAR agrees: (a) neither Sybase nor its licensors shall have any
obligation to correct errors in or deliver updates to the Restricted Release;
(b) neither Sybase nor its licensors shall have any obligation to otherwise
support the Restricted Release once a production version or a later Restricted
Release of the Program is delivered to VAR (or has been made generally
available to customers but VAR has declined to pay the applicable support and
license fees to obtain such version); (c) VAR shall provide Sybase (or its
licensors if Sybase so instructs VAR) with appropriate test data for the
Restricted Release if necessary to resolve problems in the Restricted Release
encountered by VAR and will promptly report any error condition discovered by
VAR in the Restricted Release; (d) the Restricted Release is experimental, may
contain problems and errors and is being provided to VAR on an as-is basis with
no warranty of any kind, express or implied; (e) neither party will be
responsible or liable to the other for any losses, claims or damages of
whatever nature, arising out of or in connection with the Performance or
nonperformance of the Restricted Release; (f) VAR will not Use such release in
production
4
<PAGE> 5
applications without the prior written approval of Sybase; (g) VAR shall pay
the license fees for such Restricted Release specified in the applicable
Exhibit A or Purchase Order, and (h) VAR shall promptly install each later
version and any production version of the Restricted Release upon such receipt
and shall stop Use of the prior version.
3. SUBLICENSING.
3.1. SUBLICENSING BY VAR. Sybase hereby grants to VAR a non-
exclusive license to market, promote and sublicense only to End Users (except
as set out in Section 3.2 below) in those Approved Countries (as set forth on
Exhibit G) in which support for the Derivative Product is available, Embedded
Run-Time Versions of the Program but only to the extent incorporated in the
Derivative Product. Such sublicenses shall be (a) in object code form only,
(b) solely in accordance with the terms and conditions of the Agreement,and (c)
each copy of the Derivative Product may be Used only on it single Hardware
System at a single site. (No right is granted to VAR to use the Derivative
Product internally unless royalties are paid by VAR pursuant to Section 3.4
below for each copy of the Derivative Product used by VAR internally.)
Additional countries may be included in the list of Approved Countries by the
parties amending this Agreement (including amendment of Exhibit C with respect
to such additional countries, if Sybase determines an amendment to Exhibit C
necessary). Sybase will agree to amend this Agreement to include a country if
either (a) Sybase has previously determined that the laws of such country
provide effectively the same protection to Sybase's proprietary rights in the
Program as the protection provided in any of the Approved Countries or (b) VAR
provides Sybase with a legal opinion of an attorney acceptable to Sybase who is
either licensed to practice in such country or is knowledgeable about the laws
of such country to the effect that the laws of such country provide effectively
the same protection to Sybase's proprietary rights in the Program as the
protection provided in any of the Approved Countries. VAR shall create and
support the Derivative Product such that it performs in all material respects
in accordance with VAR's user manuals for the Derivative Product. VAR agrees
to actively promote the Derivative Product in VAR's marketplace in such
countries.
3.2. SUBLICENSING BY DISTRIBUTORS. Sybase hereby grants to VAR a
non-exclusive license to designate Distributors to market, promote and
sublicense to End Users in those Approved Countries in which support for the
Derivative Product is available, Embedded Run-Time Versions of the Program,
but only to the extent incorporated in the Derivative Product. Such sublicenses
shall be (a) in object code form only, (b) solely in accordance with the
terms and conditions of this Agreement, and (c) if the VAR participates in
Program 1 (as outlined in Exhibit D-1) each copy of the Derivative Product may
only be used on a single Hardware System at a single site. Distributors shall
not be permitted to make copies of the Derivative Product but shall order all
copies for sublicensing from VAR. If a Distributor desires to make any
modifications to the Derivative Product, it should contact the local Sybase
sales office to acquire a development license. Each Distributor shall agree in
writing with VAR to market, promote and sublicense the Derivative Product only
in accordance with the provisions of this Agreement, shall grant Sybase
the audit rights set forth in Section 4 below, and shall acknowledge that
Sybase is an interested third party beneficiary of such Agreement between VAR
and such Distributor and that Sybase may enforce the Amendent directly against
such Distributor, provided that Sybase shall have no liability to any such
Distributor. VAR shall, upon request by Sybase, enforce its rights under its
agreement with the Distributor. No such agreement between VAR and any
Distributor outside the United States, Canada or the European Economic
Community will become effective until Sybase has expressly approved and
accepted the agreement and communicated such approval and acceptance to VAR and
Distributor. VAR agrees to use its best efforts to enforce the terms of its
Distributor agreements and to inform Sybase immediately of any known breach
of such terms.
3.3. SUBLICENSING GENERALLY. In marketing the Derivative Product,
VAR and Distributors shall comply with all applicable laws and regulations,
and none shall engage in any deceptive or misleading practices or make any
representations, warranties or guarantees to any End Users or other third
parties concerning the Program that are inconsistent with or in addition to
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XXX = Confidential Treatment Requested
those made by Sybase (or with respect to a Program which is not owned by
Sybase, inconsistent with or in addition to those made by Sybase's licensor).
Each license of the Derivative Product granted by VAR or any of its
Distributors must be in the form of a written agreement signed by an authorized
representative of VAR or its Disbributor and by the End User and must include
in substance all of the terms and conditions set forth in Exhibit C. Upon
Sybase's request from time to time, VAR shall provide Sybase with a copy of the
then current version of VAR's and its Distributors' standard agreements used in
licensing the Derivative Product. VAR agrees to use its best efforts to
enforce the terms of such license agreements and to inform Sybase immediately
of any known breach of such terms. Subject to the terms and conditions of this
Agreement, VAR is authorized to copy the Program as incorporated into the
Derivative Product for distribution to End Users and Distributors.
3.4 DERIVATIVE PRODUCT SUBLICENSE AND SUBLICENSE SUPPORT FEES.
For each copy of a Derivative Product Used internally by VAR or licensed by VAR,
whether to an End User or a Distributor, VAR agrees to pay Sybase the Program
royalties set forth in Exhibit D, based on the amount of VAR's initial payment
to Sybase under this Agreement. The total amount of such initial payment is
specified in the Exhibit A entered into concurrently with this Agreement. In
addition to payment of the royalties, a support fee in the XXXXXXXXXXXXXXXX
XXXXXXXXXXXX shall be paid (on a one-time basis) by VAR to Sybase in respect of
each copy of the Derivative Product licensed by VAR if VAR desires to
incorporate into such copy any future maintenance or enhancement releases of
the embedded Program (the "Runtime Support Fee"). If the Derivative Product is
transferred to a machine in a higher class as shown in the Price List than the
machine for which the license of the copy of the Derivative Product was
initially granted ("Transfer"), VAR shall pay Sybase the transfer fees that are
outlined in the Price List Payment of royalties, sublicense support fees and
transfer fees due to Sybase shall be made no later than thirty (30) days after
the end of the calendar month in which VAR ships the copy of the Derivative
Product (in respect of which such fees are owing), or no later than thirty (30)
days after the end of the calendar month in which a Transfer occurs. The
prepaid royalties shown in Exhibit A shall be non-refundable and may only be
applied against Derivative Product royalties owing under this section 3.4;
they may not be applied against the Runtime Support Fees or any other products
or Services.
3.5. VAR SUBLICENSE REPORTS. VAR shall maintain an accurate list
of End Users, including name, address, Derivative Product copies licensed, and
the make, model and number of the machine on which the Derivative Products are
licensed for use. Within thirty (30) days after the end of each calendar month,
VAR shall complete and submit to Sybase a licensing report in the form of
Exhibit E for all copies of the Derivative Product licensed by VAR to
Distributors and End Users, all copies of the Derivative Product installed for
evaluation purposes at a customer or prospect site pursuant to Section 3.9
below, all copies of the Derivative Product made for demonstration or support
purposes pursuant to Section 3.10 below and all Transfers of copies of the
Derivative Product during such month.
3.6. COMMISSION TO VAR UPON SALE OF FULL USE LICENSES OF A
SYBASE PROGRAM. Other than with respect to the Microsoft SQL Server for OS/2
and other products for which Sybase would owe a royalty to a third party, in
the event (a) an End User of the Derivative Product requests that Sybase
upgrade its sublicense of any copy of the Program incorporated into the
Derivative Product to a full use license of the Program, or (b) a full use
license of a Program is licensed by Sybase concurrently with VAR's licensing
of a Derivative Product and if in either of the above cases (i) the End User
which is acquiring the licenses is not then a customer of Sybase or a
prospect of Sybase identified within a "funnel" or other forecasting report,
(ii) VAR files an application in the form of Exhibit F with respect to such
Program prior to the sale of the licenses by Sybase to the End User and
(iii) the End User has not been identified by Sybase in writing to VAR as a
"House Account" prior to Sybase's receipt of Exhibit F (a "Qualified Order"),
then Sybase shall pay VAR a commission equal XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX in connection with the Qualified Order
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
connection with the Qualified Order. As used herein, Net License Fees
shall mean (i) the net initial upgrade license fee or (ii) the license fee
received by Sybase, as applicable. (Exhibit F is the application to be used
by VAR
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XXX = Confidential Treatment Requested
in seeking such commission and must be submitted to Sybase prior to the
licensing of the upgrade or the full use license.) Such commission shall be
granted only in respect of the license fees for those full use licenses for
Primary and Secondary Copies of the Program ordered by the End User at the time
of the initial upgrade or license of the Derivative Product and shall not apply
to subsequently ordered Secondary Copies, or any other additional, throw-on,
temporary or trial licenses, or to fees received by Sybase as a result of an
upgrade to a higher class of hardware. The commission shall be calculated
based solely on license, excluding fees for support, training, consulting or
other materials or services. (VAR shall not be able to itself sublicense an
upgrade or sell a full use license.) Notwithstanding the foregoing, no more
than one commission to a third party need be paid by Sybase in respect of any
single license or upgrade, and if Sybase determines that even though the
conditions set forth above have been met by VAR, another third party was in
fact substantially responsible for the licenses or upgrades, Sybase in its
discretion shall determine how the commission with respect to such End User
shall be shared by VAR and the responsible third parties; Sybase's
determination in this regard shall be conclusive. In no event will any
commission XXXXXXXXXXXXXXXXXXXX be paid to VAR in respect of any one End User.
Sybase shall indicate its agreement that a commission is owing to VAR with
respect to a particular license or upgrade by causing the Application (EXHIBIT
F) for respect such order to be executed by the Sybase District Manager of the
territory in which the End User's division is located and by the Sybase
District Manager and Business Partner Sales Manager. Any commission owing
hereunder shall be paid within thirty (30) days of Sybase's receipt of the Net
License Fees from the End User.
3.7. LICENSE OF DERIVATIVE PRODUCT TO END USERS WITH FULL USE
LICENSE. If VAR licenses its Derivative Product to an End User who already has
an unlimited user full use license for some or all of the Programs that are
embedded in VAR's Derivative Product (the "Existing Full Use Programs") and
such full use license is on the specific CPU on which the Derivative Product is
licensed, then VAR will not owe, royalties to Sybase for the Existing Full Use
Programs embedded in the Derivative Product but will owe royalties for other
Programs embedded within the Derivative Product as computed in EXHIBIT D. Each
Derivative Product licensed shall be reported on the VAR Sublicense Reports
contemplated by Section 3.5 even if End User already has licensed on the CPU on
which such Derivative Product is licensed an unlimited user full use license
for all of the Programs that are embedded in the Derivative Product.
3.8. DOCUMENTATION, UPDATES, SUPPORT, AND TRAINING. VAR shall be
responsible for providing documentation, updates, technical support and
training to End Users in accordance with the terms of the license agreement
between VAR or its Distributor and the End User. VAR is authorized to copy,
modify and/or incorporate into the documentation for the Derivative Prduct,
portions of the documentation for the Program provided by Sybase to VAR to the
extent such portions are necessary to implement the Program in the Derivative
Product. Copies of Sybase's documentation for the Program may be purchased for
resale at XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. If
requested by Sybase, VAR shall deliver to Sybase, at no charge, one set of the
user manuals for the Derivative Product.
3.9. EVALUATION COPIES. VAR and its Distributors may deliver
copies of the Derivative Product to a prospective End User on a trial basis for
evaluation purposes only (an "Evaluation Copy") after such prospective End
User has signed a trial license with at a minimum the provisions contained in
EXHIBIT C (except that back-up and/or archival copies may not be made and upon
termination of the trial license, all copies of the Derivative Product must be
returned to VAR or Distributor (i.e., certification of destruction will not be
enough]). All such Evaluation Copies of the Derivative Product licensed shall
be reported in the VAR Sublicense Reports contemplated by Section 3.5 and
shall be removed by VAR or Distributor from the End User's site upon
completion of the evaluation period or ninety (90) days from such delivery,
whichever occurs first. Any Evaluation Copies not removed and returned to VAR
or Distributor at the end of such period are deemed to be perpetually
licensed, and royalties and sublicense support fees in respect thereof shall
be due to Sybase.
3.10 DEMONSTRATION AND SUPPORT LICENSES. VAR and its Distributors
shall have the right to use copies of the Derivative Product without incurring
any obligation to pay royalties to
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Sybase in respect thereof, for purposes of (a) demonstrating Derivative Product
on VAR's and/or Distributor's premises, (b) demonstrating Derivative Product at
a prospective End User's site provided that all copies of the Derivative
Product are removed within five (5) days of when they are installed and
provided further that VAR shall be responsible for protecting the
confidentiality of the Program while on the prospective End User's site, and
(c) providing technical support of the Derivative Product. VAR shall report in
the VAR Sublicense Reports contemplated by Section 3.5 the number of copies of
Derivative Product made for the above purposes in any given month. Use of the
Derivative Product pursuant to this Section shall not include VAR's or
Distributor's internal use of the Derivative Product, including but not limited
to the processing of VAR's or Distributor's customer data or internal
administrative data, but rather shall be limited to the processing of test data
pertinent to VAR's or Distributor's demonstration and support of the Derivative
Product.
3.11. TITLE. The Program (including such portions of the
Program that may be incorporated in the Derivative Product) and all related
documentation shall remain at all times the property of Sybase and its
licensors, and neither VAR, its Distributors or their End Users shall have any
right, title or interest therein, except as expressly set forth in this
Agreement. VAR shall not translate any portion of the Program or associated
documentation into any other language without the prior written consent of
Sybase. VAR confirms that Sybase shall be the sole owner of all translations
made by VAR of the Program or any documentation relating to the Program (the
"Materials") and of all copyright or other intellectual property rights
created by such translations, and VAR hereby transfers to Sybase any copyright,
including the right to make adaptations, in such translations which VAR may
acquire by creating or obtaining the translations. All translated Materials
must state in a prominent manner that they were prepared by VAR and that VAR
assumes all responsibility for the accuracy of matters discussed therein.
Regardless of any rights to the Materials which VAR may possess or acquire
(including moral rights), as a result of such translations, VAR agrees that (a)
Sybase and its licensees may make any modifications they desire to the
Materials, (b) Sybase and its licensees may without royalty distribute the
Materials, and any derivative works thereof, whether or not they incorporate
any modifications or developments made by VAR, using the product name and the
indications of copyright ownership and authorship, if any, which Sybase or its
respective licensee or sublicensee desires, and (c) to the extent that VAR
contains a copyright or any other intellectual property right in any portion of
or modification to any of the Materials, VAR hereby expressly transfers and
assigns such copyright or other right, including the right to make adaptations,
to Sybase. Nothing herein shall give Sybase copyright ownership in any
documentation relating to the Derivative Product which is not a translation,
modification or derivative work of the Materials. At Sybase's request, VAR
will cause the execution of any instruments that may be appropriate to perfect
Sybase's or its licensors' exclusive ownership rights in the Materials and all
translations thereof. No copying or Use of the Program other than that
expressly authorized by this Agreement is permitted. Neither VAR nor its
Distributors shall modify, reverse engineer, reverse assemble or reverse
compile any Program or part thereof, except that they may modify the data file
portions of the Program to the extent and in the manner described in the user
manuals for the Program. Neither VAR nor its distributors shall have any
right to sublicense or otherwise distribute, rent, lease or transfer the
Program except Embedded Run-Time Versions of the Program incorporated into the
Derivative Product. No right is granted to VAR, its Distributors or End Users,
to use the Derivative Product within a service bureau or time-sharing
arrangement. No rights are granted to VAR or its Distributors with respect to
any Program source code.
4. AUDIT RIGHTS. Sybase shall have the right to direct a recognized
independent accounting firm to conduct, during normal business hours, an audit
of (and to copy) the appropriate records of VAR and its Distributors to verify
(a) the number of copies of the Program in Use by VAR, the computer systems on
which such copies are installed, the number of processors in such computer
systems, and in the case of limited user licenses, the number of users Using
such copies, (b) the accuracy of VAR's sublicense reports and (c) VAR's
compliance with this Agreement. Representatives of the auditing firm shall
protect the confidentiality of VAR's Confidential Information and abide by
VAR's reasonable security regulations while on VAR's premises. If (i) the
number of copies or users is found to be greater than that contracted for, (ii)
the computer system on which the Program is in use differs from the Hardware
System specified,
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XXX = Confidential Treatment Requested
or (iii) the royalties owing are greater than that reported by VAR, VAR will be
invoiced for the additional copies, users or computer systems at the prices
quoted in the then current Price List and for the underreported royalties; the
additional license and royalties shall be payable within thirty (30) days of
such invoice. If the resulting adjustments to the license/royalties owing by
VAR are XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX reported by VAR, VAR will pay
the reasonable expenses associated with such audit, in addition to the fee
adjustment.
5. TERM AND TERMINATION.
5.1. INITIAL TERM. This Agreement shall become effective on
the date set forth at the top of the first page of this Agreement and shall be
valid for a period of three (3) years unless terminated previously as provided
below. This Agreement may be renewed after expiration by mutual written
agreement of the parties.
5.2. TERMINATION OF AGREEMENT. Either party may at its option
terminate this Agreement by written notice (a) should the other party file a
petition in bankruptcy, or have filed against it an involuntary petition in
bankruptcy not dismissed within sixty (60) calendar days after filing, or apply
for or consent to the appointment of a receiver, custodian, trustee or
liquidator, or make a general assignment for the benefit of its creditors; or
(b) upon the failure of the other party to make a payment hereunder within
fifteen (15) days after written notice that such payment is past due; or (c)
upon any other breach of this Agreement by the other party, which if remediable,
has not been corrected within sixty (60) calendar days after written notice.
6. EFFECT OF TERMINATION OR EXPIRATION.
6.1. GENERALLY. On termination of this Agreement, all licenses
granted by Sybase to VAR hereunder shall terminate, VAR shall cease Using the
Program and user manuals, whether or not modified or incorporated into other
materials, and VAR shall certify in writing to Sybase that all copies (in any
form or media) of the Program and user manuals, whether or not modified or
incorporated into other materials, have been destroyed or returned to Sybase,
provided that (a) all licenses of Derivative Product made prior to the
termination or expiration of this Agreement shall continue in effect until the
termination or expiration of the license agreement under which the Derivative
Product was licensed, (b) should this Agreement be terminated or expire for any
reason other than a breach by VAR of Sybase's proprietary rights in the Program
or of the provisions of this Agreement pertaining to sublicensing and
exportation of the Program, VAR may continue using one copy of the most recent
release of the Program then in VAR's possession on a single Hardware System,
subject to all the restrictions of this Agreement, solely for the purpose of
continuing customer service for licenses of the Derivative Product granted
prior to termination and (c) all rights granted in this Agreement respecting
use, marketing, promotion and sublicensing of the Program shall cease,
excepting as specifically set forth above. If this Agreement is terminated or
expires and VAR is permitted under this Section to continue using a copy of
the Program for purposes of continuing customer service, then provided that
VAR continues to pay support fees as required by Section 2.2 above, Sybase
shall continue to provide VAR with the same maintenance and enhancement
releases of the Program as provided prior to the termination or expiration of
this Agreement, and VAR may continue to provide such maintenance and
enhancement releases of End Users with respect to all copies of the Derivative
Product licensed prior to the termination or expiration of this Agreement.
6.2. LIMIT OF LIABILITY ON ACCOUNT OF TERMINATION. Should this
Agreement expire or be terminated for any reason, neither party will be liable
to the other because of such expiration or termination for compensation,
reimbursement or damages on account of the loss of prospective profits,
anticipated sales, goodwill or on account of expenditures, investments, leases
or commitments in connection with the business of Sybase or VAR, or for any
other reason whatsoever flowing from such termination or expiration. However,
termination or expiration of
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this Agreement shall not release VAR from its liability to pay to Sybase any
fees accruing prior to such termination and shall not limit either party from
pursuing any other remedies available to it.
6.3 RETURN OF CONFIDENTIAL INFORMATION. Upon termination or
expiration of this Agreement, at the written request of the disclosing party,
and subject to Section 6.1(b) above, the other party shall return within ten
(10) business days all originals and copies of Confidential Information (as
defined below) received from the disclosing party, or shall deliver to the
disclosing party within ten (10) business days a certificate signed by an
officer of the receiving party certifying the destruction of all such
Confidential Information.
7. INDEMNIFICATION. VAR agrees to indemnify Sybase and to hold
Sybase and its directors, employees and agents harmless from all costs, loss,
liability and expense (including court costs, disbursements, and reasonable
fees of attorneys and expert witnesses) incurred (a) as a result of any breach
by End Users of any Derivative Product license agreement or any breach by its
Distributors of a distributorship agreement to the extent liability would have
been prevented or limited by VAR's use of best efforts to enforce, in a timely
manner the terms of such license or distributor agreement, or (b) as a result
of any claims or demands brought against Sybase or its directors, employees or
agents by a third party and arising from or in connection with (i) any breach
by VAR or any of its Distributors of the terms of this Agreement or any
Derivative Product license agreement, (ii) the use of the Derivative Products
by VAR's or its Distributor's licensees or any other third party, if liability
on any such claim would have been avoided by the exclusive use of the embedded
Program, or (iii) any use by VAR, its Distributors or its customers of any
product not licensed by Sybase but used in conjunction with the
Sybase-furnished products, if liability on any such claim would have been
avoided by the exclusive use of the Sybase-furnished products. This Section 7
shall survive any termination or expiration of this Agreement.
8. COPYRIGHT AND OTHER NOTICES. VAR acknowledges that the Program
and related user manuals licensed by Sybase to VAR hereunder are proprietary
and protected by copyright and/or trade secret laws. VAR agrees to include
without alteration in all copies and reproductions of the Program, Derivative
Product and packages and containers for the Derivative Product reproductions of
Sybase's restricted rights notices, copyright notices and other proprietary
legends. A copyright notice in a Program does not, by itself, constitute
evidence of publication or public disclosure.
9. CONFIDENTIALITY; PUBLICITY.
9.1. CONFIDENTIAL INFORMATION. "Confidential Information"
shall mean the Program, the Derivative Product, the terms of this Agreement and
any other information of a party which is designated proprietary or
confidential, including but not limited to information regarding the disclosing
party's customers, prospects, unannounced products or prices and financial
information. All Confidential Information shall remain the sole property of
the disclosing party.
9.2. NO DISCLOSURE. Each party shall hold the Confidential
Information received from the other in strict confidence, will not make any
disclosures (including methods or concepts utilized in the Confidential
Information) without the prior express written consent of the other, except to
employees or consultants (for purposes relating solely to the receiving
party's internal business and data processing needs) who have agreed in writing
to maintain the confidentiality of all Confidential Information in a manner
consistent with this Agreement.
9.3. EXCLUSIONS FROM CONFIDENTIAL INFORMATION DEFINITION.
Items will not be considered to be Confidential Information if (a) already
published or available to the public other than by a breach of this Agreement;
(b) rightfully received from a third party not in breach of any obligation of
confidentiality; (c) independently developed by personnel or agents of one
party
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without access to the Confidential Information of the other; (d) proven to be
already known to the recipient at the time of disclosure; or (e) produced in
compliance with applicable law or a court and provided the receiving party
first gives the disclosing party reasonable notice of such law or order and
gives the disclosing party an opportunity to object to and/or attempt to limit
such production.
9.4 PERMITTED DISCLOSURES. Both parties may disclose to third
parties that VAR is a participant in the Sybase Value Added Remarketer Program,
that VAR is developing a value added software product incorporating Sybase
software programs, and the date such Derivative Product is scheduled by VAR to
be generally available to End Users (unless VAR notifies Sybase in writing that
such availability date is to be treated as Confidential Information). VAR shall
not release the results or any benchmark or other evaluation of the Program to
any third party without the prior written approval of Sybase for each such
release. Neither party shall use one other party's name or refer to the other in
any press release, advertising or marketing literature, without the prior
written approval of the other, except as provided in this Section 9.4.
9.5. EFFECT OF TERMINATION OR EXPIRATION. This Section 9
shall survive any termination or expiration of this Agreement.
10. INFRINGEMENT INDEMNITY.
10.1 SYBASE'S OBLIGATIONS. Subject to the limitations set
forth below, Sybase at its own expense shall (a) defend, or at its option
settle, any claim, suit, or proceeding against VAR on the basis of infringement
of any United States patent, trademark, copyright or trade secret by the Program
or Use thereof, and (b) pay any final judgment entered against VAR on such issue
in any such suit or proceeding defended by Sybase.
10.2. VAR's OBLIGATIONS. The obligations of Sybase under
Section 10.1 above are subject to (a) Sybase having sole control of the defense
and/or settlement of any such claim, suit or proceeding, (b) VAR notifying
Sybase promptly in writing of each such claim, suit or proceeding and giving
Sybase authority to proceed as stated in Section 10.1; and (c) VAR, at Sybase's
request, giving Sybase all information known to VAR relating to such claim, suit
or proceeding and cooperating with Sybase to settle and/or defend any such
claim, suit or proceeding, provided that Sybase shall reimburse VAR for all
reasonable out-of-pocket expenses incurred by VAR in providing such information
and cooperating with Sybase.
10.3 SYBASE'S OPTIONS. If all or any part of the Program is,
or in the opinion of Sybase may become, the subject of any claim, suit or
proceeding for infringement of any United States patent, trademark, copyright
or trade secret, Sybase may, and in the event of any adjudication that the
Program or any part thereof infringes any United States patent, trademark,
copyright or trade secret, or if the licensing or Use of the Program or any
part thereof is enjoined, Sybase shall, at its expense do one of the following
things: (a) procure for VAR the right under such patent, trademark, copyright
or trade secret to Use or sublicense, as appropriate, the Program or the
affected part therof; (b) replace the Program or affected part thereof with
other suitable programs or portions of a program; (c) suitably modify the
Program or affected part thereof to make it non-infringing; or (d) if none of
the foregoing remedies are commercially feasible, refund the aggregate payments
paid by VAR for the Program or the affected part thereof, less reasonable
depreciation for Use.
10.4 LIMITATIONS ON LIABILITY. Sybase shall not be liable for
any costs or expenses incurred by VAR with respect to any infringement claim
without Sybase's prior written authorization. Sybase shall have no obligations
under this Section 10 with respect to any claim to the extent it is based upon
(a) the use of any version of the Program other than a current, unaltered
release of the Program, if such infringement would have been avoided by the use
of a current, unaltered release; or (b) the combination, operation or use of
the Program with software which was not provided by Sybase, if such
infringement would have been avoided in the absence of such
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combination, operation or use; or (c) the use of the Program on or in
connection with a computer system other than the Hardware System without
Sybase's prior written approval.
10.5 EXCLUSIVE REMEDY. This Section 10 states the entire
liability and obligation of Sybase and the exclusive remedy of VAR with respect
to any alleged infringement of a patent, copyright, trademark or trade secret
by the Program or any part thereof.
11. WARRANTY/LIMITATIONS ON LIABILITY.
11.1 WARRANTY. Sybase warrants that it has the right to license
the Program to VAR and that each production version of the Program licensed to
VAR, as updated and when properly used, will operate substantially in conformity
with Sybase published specifications for such version for a period of one (1)
year from the date of shipment of the Primary Copy of such version ? VAR.
Sybase warrants the media on which the Program is delivered to be free of
defects in material and workmanship for a period of ninety (90) calendar days
following the date shipment.
11.2. NO OTHER WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN
SECTION 11.1, NO EXPRESS OR IMPLIED WARRANTY IS MADE WITH RESPECT TO THE PROGRAM
OR GOODS OR SERVICES TO BE SUPPLIED BY SYBASE OR ITS SUBSIDIARIES, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. NEITHER SYBASE OR ANY OF ITS SUBSIDIARIES WARRANTS THE
RESULTS OF ANY PROGRAM OR SERVICES OR THAT ALL ERRORS IN THE PROGRAM WILL BE
CORRECTED, OR THAT THE FUNCTIONALITY CONTAINED IN THE PROGRAM WILL MEET VAR'S
REQUIREMENTS.
11.3. LIMITATION ON LIABILITY. EXCEPT AS EXPRESSLY PROVIDED
IN SECTION 10, THE TOTAL LIABILITY, IF ANY, OF SYBASE AND ITS SUBSIDIARIES,
INCLUDING BUT NOT LIMITED TO LIABILITY ARISING OUT OF CONTRACT, TORT, BREACH OF
WARRANTY, INFRINGEMENT OR OTHERWISE SHALL NOT IN ANY EVENT EXCEED THE LICENSE
FEES PAID BY VAR FOR THE AFFECTED PROGRAM(S) OR $1,000,000, WHICHEVER IS LESS.
IN NO EVENT SHALL SYBASE OR ITS LICENSORS BE LIABLE FOR LOSS OF PROFITS, LOSS
OR INACCURACY OF DATA, OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS
SECTION 11.3 SHALL SURVIVE TERMINATION OF THIS AGREEMENT.
12. MARKS.
12.1. OWNERSHIP. All trademarks, service marks, trade names,
logos or other words or symbols identifying the Programs or Sybase's business
(the "Marks") are and will remain the exclusive property of Sybase or its
licensors. VAR will not take any action that jeopardizes Sybase's or its
licensors' proprietary rights or acquire any right in the Marks except as
specifically set forth in Section 12.2 below. VAR will not register, directly
or indirectly, any trademark, service mark, trade name, copyright, company name
or other proprietary or commercial right which is identical or confusingly
similar to the Marks or which constitute a translation into other languages.
Upon Sybase's request, VAR will execute the instruments that may be appropriate
to register, maintain or renew the registration of the Marks in Sybase's or its
licensor's name within countries in which VAR licenses the Derivative Product.
12.2. USE. VAR will use the Marks exclusively to identify the
portions of the Derivative Product licensed from Sybase and shall not use the
Marks in combination with any trademarks, service marks, or logos of VAR. Any
such use of the Marks will clearly identify Sybase or, if applicable, its
licensors as the owner of the Marks, conform to Sybase's then current trademark
12
<PAGE> 13
and logo guidelines, and otherwise comply with any local notice or marking
requirement contemplated under the laws of the country in which VAR licenses
the Derivative Product. Before publishing or disseminating any advertisement or
promotional materials bearing a Mark, VAR will deliver a sample of the
advertisement or promotional materials to Sybase for prior approval. If Sybase
notifies VAR that the use of the Mark is inappropriate, VAR will not publish or
otherwise disseminate the advertisement or promotional materials until they
have been modified to Sybase's satisfaction.
12.3. INFRINGEMENT. VAR will immediately notify Sybase if VAR
learns (a) of any potential infringement of the Marks by a third party, or (b)
that the use of the Marks may infringe the proprietary rights of a third party.
Sybase will determine the steps to be taken under these circumstances. In
connection with any such potential infringement of or by the Marks, VAR will (i)
provide Sybase with the assistance that Sybase may reasonably request and (ii)
not take steps on its own without Sybase's prior approval.
13. GENERAL PROVISIONS.
13.1. RELATIONSHIP BETWEEN THE PARTIES. VAR will in all
matters relating to this Agreement act as an independent contractor. Nothing in
this Agreement shall be deemed to constitute VAR as a partner, joint venturer,
franchisee, agent or employee of Sybase. Neither party will represent that it
has any authority to assume or create any obligation, express or implied, on
behalf of the other party, or to represent the other party. VAR shall be
responsible for all expenses incurred by VAR in the course of exercising any
rights or responsibilities accepted by VAR under this Agreement.
13.2. CALIFORNIA LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE LAWS OF THE STATE OF CALIFORNIA, EXCLUDING ITS CONFLICT OF
LAWS RULES. IT SHALL NOT BE GOVERNED BY THE UNITED NATIONS CONVENTION ON THE
INTERNATIONAL SALE OF GOODS, THE APPLICATION OF WHICH IS EXPRESSLY EXCLUDED.
VAR SUBMITS TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED WITHIN
THE COUNTY OF ALAMEDA OR SAN FRANCISCO WITHIN THE STATE OF CALIFORNIA. SERVICE
OF PROCESS COMMENCING ANY SUIT RELATING TO THIS AGREEMENT IN SUCH COURTS MAY BE
MADE ON EITHER PARTY IN THE MANNER SPECIFIED IN SECTION 13.4 BELOW FOR NOTICE.
13.3. SEVERABILITY. If any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable, such
unenforceability shall not affect the enforceability of the remaining provisions
of this Agreement, and the parties shall substitute for the affected provision
an enforceable provision which approximates the intent and economic effect of
the affected provision as closely as possible.
13.4 NOTICES. All notices relating to this Agreement shall be
in writing and delivered by courier or hand or sent to the other party by first
class certified prepaid mail with return receipt requested to the address of
such party specified on the first page of this Agreement (addressed in the case
of Sybase to the attention of its General Counsel) or such other address as may
be provided by such other party in accordance with this Section, and shall be
deemed given upon receipt.
13.5 NON-ASSIGNMENT. This Agreement may not be assigned,
sublicensed or otherwise transferred by VAR, whether by operation of law or
otherwise, without Sybase's prior written consent, provided that VAR may assign
this Agreement upon notice to Sybase in instances in which such assignment is
to an entity which acquires all or substantially all of the business of VAR,
whether by merger, consolidation, or acquisition of assets, provided further
that such assignee is not directly or indirectly controlled by a competitor of
Sybase (i.e. a vendor of database
13
<PAGE> 14
management software). VAR shall give Sybase written notice of any assignment or
transfer not requiring Sybase's consent.
13.6. WAIVER. A waiver of a breach or default under this
Agreement shall not be a waiver of any other default. Failure or delay by
either party to enforce compliance with any term or condition of this Agreement
shall not constitute a waiver of such term or condition.
13.7. PAST DUE AMOUNTS; ATTORNEYS' FEES. Past due amounts
owing from VAR shall bear interest at a rate equal to 1% per month or the
maximum rate permissible under applicable law, whichever is less. In the event
of any undertaking to collect fees owing hereunder or any claim, suit or other
legal proceeding arising under or related to this Agreement, the prevailing
party shall be entitled to recover from the other party its reasonable costs
incurred in such proceeding including attorneys' fees and disbursements). For
purposes of this section, the term "prevailing party" shall mean the party who
obtains substantially the relief sought by such party in such claim, suit or
other legal proceeding, whether by settlement, summary judgment, judgment
or otherwise.
13.8. INJUNCTION RELIEF. VAR acknowledges that its obligations
under Sections 2, 3, 6, 8, 9 and 12 of this Agreement are of a unique character
and agrees that any breach of such provisions will result in irreparable and
continuing damage to Sybase for which there will be no adequate remedy in
damages and in the event of such breach, Sybase will be entitled to injunctive
relief and/or a decree for specific performance and such further relief as may
be proper.
13.9. UNITED STATES EXPORT REGULATIONS. VAR agrees that it
will comply in all respects with any governmental laws, orders or other
restrictions on the export of the Program and the Derivative Product (and
related information and documentation) which may be imposed from time to time
by the governments of the United States, Canada and the country to which the
program is shipped by Sybase ("Export Requirements"). VAR will take all
actions which may be reasonably necessary to assure that no End User or
Distributor contravenes the Export Requirements. This Section shall survive
the expiration or termination of this Agreement.
13.10. RESTRICTED RIGHTS. If any license described herein is
acquired under a U.S. Government contract, Use, duplication or disclosure by
the U.S. Government is subject to restrictions as set forth in subparagraphs
(b)(3)(ii) and (c)(1)(ii) of 252.227-7013 for Department of Defense contracts
as set forth in 52.227-19 (a)-(d) for civilian agency contracts. All technical
data relating to the Program is subject to limited rights so long as this
Agreement is in effect. Sybase reserves all rights under the copyright laws of
the United States.
13.11. FORCE MAJEURE. No delay, failure or default in
performance of any obligation of either party hereunder, excepting all
obligations to make payments hereunder, shall constitute a breach of this
Agreement to the extent caused by force majeure.
13.12. ENTIRE AGREEMENT. This Agreement, together with the
Exhibits and any Addenda hereto, and all supplemental Exhibits As signed by
both parties and Purchase Orders constitute the entire agreement of the parties
and supersede all previous communications, representations, understandings or
agreements with respect to the subject matter hereof. A facsimile of a signed
copy of this Agreement received by Sybase may be relied upon as an original and
in the event of any inconsistency between such facsimile and a subsequently
received hard copy, the facsimile shall prevail. This Agreement may be
modified only by written agreement. In the event of any inconsistency between
this Agreement and a Purchase Order issued hereunder, this Agreement shall
prevail unless expressly otherwise agreed upon by the parties in writing.
Purchase Orders shall be binding upon Sybase only with respect to quantities
ordered, support, training, consulting and other fees stated, site for
installation and delivery dates. The printed terms on any such Purchase Order
shall be void and of no effect.
14
<PAGE> 15
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by the respective authorized representatives. This Agreement may
be executed in counterparts, each which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
SYBASE, INC. VAR:
By /s/ Daniel R. Carl By /s/ Michael R. Newes
------------------------------- ------------------------------
(Authorized Signatory) (Authorized Signatory)
Name Daniel R. Carl Name Michael R. Newes
--------------------------- ---------------------------
Title ASST. SECRETARY Title Executive Vice President
--------------------------- ---------------------------
Date Date 10/13/93
--------------------------- ---------------------------
<PAGE> 16
ADDENDUM TO VALUE ADDED REMARKETER AGREEMENT
This Addendum ("Addendum") entered into on 10/13, 1993, supplements and
amends the terms of the Value Added Remarketer Agreement ("Agreement") of even
date herewith between Sybase, Inc. ("Sybase") and Phoenix International LTD,
Inc. ("VAR"). Capitalized terms not otherwise defined herein shall have the
meaning set forth in the Agreement. In the event of a conflict between this
Addendum and the Agreement, the terms and conditions of this Addendum shall
prevail.
VAR and Sybase agree as follows:
1. The first sentence of Section 2.3 is deleted.
Except as amended above, the Agreement shall remain in full force and
effect.
SYBASE, INC.
INC.
By: /s/ Daniel R. Carl By: /s/ Michael R. Newes
--------------------------- -----------------------------
Name: Daniel R. Carl Name: Michael R. Newes
------------------------- ---------------------------
Title: ASST. SECRETARY Title: Executive Vice President
------------------------ --------------------------
Date: Date: 10/13/93
------------------------ --------------------------
<PAGE> 17
Schedule of Exhibits
Exhibit A - Value Added Remarketer Licensed Programs
Exhibit B - Description of Derivative Product and List of Distributors
Exhibit C - Mandatory Terms of End User License
Exhibit D - Royalty Schedule
Exhibit E - Monthly Sublicense Fee (Royalty) Report
Exhibit F - Commission Application
Exhibit G - Approved Countries For Sublicensing
<PAGE> 18
XXX = Confidential Treatment Requested
Contract Date:
---------------------------------
EXHIBIT A VALUE ADDED REMARKETER - LICENSED PROGRAMS
<TABLE>
<CAPTION>
Hardware Make & Model HP 9000/8xx Name of VAR: Phoenix International Contact: XXXXXXXXXXXXXXXXX
----------------- --------------------------------- ---------------------
Serial # HP UX Site Address: 475 Montgomery Place Phone: (919) 791-9200
----------------- ------------------------------ ---------------------
or Hardwware not yet delivered to VAR Allamonte Springs, FL 32714 Contact: XXXXXXXXXXX
(VAR agrees to send Serial # to Sybase ------------------------------------------- ---------------------
once delivered) ------------------------------------------- Phone: (919) 791-9200
Operating System Software Corp. Contact: Mike Newes ---------------------
----------------- ----------------------------- (Place Contact information on
(407) 869-1442 additional sheet as needed)
-----------------------------
In exchange for the Program licenses and services listed below, including
Restricted licenses, VAR agrees t pay to Sybase the following fees, due net
thirty (30) days from the date of shipment for Primary Copy license and support
fees, and due net thirgy (30) days form the date of Sybase's invoice for
Secondary Copy license and support fees, and for all other fees. All licenses
(other than for Microsoft SQL Server) shall be subject to the terms of the
Sortware License Agreement referenced above.
Program Quantity If Server or Primary or Maximum List Price Discounted First Year Additional
Product# Gateway, no. Secondary Number License Fees** License Fees Support Fees Consulting
& Product Name* of Processors Copy of Users (including Fees **** (Specify pre-
in Hardware ("P" or "S") applicable paid Value)
on which Access Fees)
Program will
run**
<S> <C> <C> <C> <C> <C> <C> <C> <C>
17200 SQL Server 1 P XXX XXXXXXXXXX XXXXXXXXX
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
17230 Open Client 1 P XXX XXXXXXXXXX XXXXXXXXX
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
98111 Support 2 contacts XXXXXXXXX
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
Consulting 1 week
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
Education
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
Program Additional Additional Restricted
Product# Education Documentation Release?
& Product Name* (Specify (Specify pre- (Y of N)
pre-paid paid Value)
Value)
17200 SQL Server
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
17230 Open Client
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
98111 Support
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
Consulting
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
Education XXXXXXXXX
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
- ----------------- ---------- ----------- -------- ------- ----------- ----------- ----------- ----------
</TABLE>
*If any Microsoft SQL Server products are included on this Exhibit A, they will
be licensed subject to the license agreement printed on the envelope or
accompanying the package in which they are shipped. VAR acknowledges that
license and support fees paid by VAR for the Microsoft SQL Server Program do not
entitle VAR to receive maintenance or new feature releases of such Program.
**VAR only has the right to Use SQL Server, Open Server and/or Net Gateway on
one processor of a multiprocessor CPU unless applicable SMP Access Fees are paid
for additional processors.
***If Education, Specify prepaid value of training.
EXHIBIT A CONTINUED ON NEXT PAGE Value Added Remarketer
Agreement Rev. 3096
Exhibits
<PAGE> 19
XXX = Confidential Treatment Requested
Contract No:
-----------------------------
Contract Date: 10/13/93
-----------------------------
(CONTINUATION OF EXHIBIT A)
<TABLE>
<S> <C> <C>
TOTAL DEVELOPMENT LICENSE FEES (List Price)* XXXXXXXXXX
----------
LESS 40% DEVELOPMENT DISCOUNT XXXXXXXXXXX
----------
SUBTOTAL (DISCOUNTED OR NET XXXXXXXXXXXXX
DEVELOPMENT LICENSE FEES) ----------
NET EDUCATION FEES* XXXXXXXXXXXXX
----------
NET CONSULTING FEES* Up to ten (10) days of consulting fees if ordered on the
----------(C) Exhibit A dated concurrently with the VAR Agreement will
also be counted as Prepaid Royalties)
NET DOCUMENTATION FEES $ XXXX(D)
----------
FIRST YEAR SUPPORT FEES* XXXXXXXXXX(E)
----------
SUBTOTAL (TOTAL DEVELOPMENT PACKAGE): XXXXXXXXXX(F) (A+B+C+D+E)
----------
CASH PREPAID ROYALTIES (G)
----------
TOTAL INITIAL PAYMENT (Net 30) XXXXXXXXXX(H) (F+G, this amount must be equal the amount shown on
---------- Purchase Order)
TOTAL PREPAID ROYALTIES (G PLUS THAT PORTION OF C WHICH MAY BE COUNTED AS PREPAID ROYALTIES $
---------------
</TABLE>
NOTES: A one-time support fee equal to XXXXXXXXXXXXXXXXXXXXXXXXXXXXX shall be
paid to Sybase upon each copy of the Derivative Product licensed if VAR desires
to incorporate into such copy any future maintenance or enhancement releases of
the embedded Program; and (2) the (Total Prepaid royalties" can only be applied
against Derivative Product royalties owing under Section 3.4, and not against
first year support fees or Runtime Support Fees, Development Porting License
fees, training fees, consulting fees or any other fees owning under this
Agreement.
SYBASE, INC.: Name of VAR Phoenix International Limited
------------------------------------------
By /s/ Daniel R. Carl By /s/ Michael R. Newes
----------------------- ------------------------------------------
(Authorized Signature) (Authorized Signature)
Name DANIEL R. CARL Name Michael R. Newes
----------------------- ------------------------------------------
Title ASST. SECRETARY Title Executive Vice President
----------------------- ------------------------------------------
Date of this Exhibit 10/13/93
------------------------------------------
Value Added Remarkerter Agreement Rev.3096
Exhibits
<PAGE> 20
Exhibit B
DESCRIPTION OF DERIVATIVE PRODUCT AND LIST OF DISTRIBUTORS
Name of VAR: Phoenix International, Ltd.
--------------------------------------------------------------------
VAR's Mailing Address: 475 Montgomery Place #200
----------------------------------------------------------
Altamonte Springs, FL 32714
----------------------------------------------------------
Primary Contact: Mike Newes
----------------------------------------------------------------
Address: Same
----------------------------------------------------------------
----------------------------------------------------------------
Sales/Marketing Contact:
---------------------------------------------------------
Same
---------------------------------------------------------
---------------------------------------------------------
Financial Contact: Tracy Toole
--------------------------------------------------------------
Same
--------------------------------------------------------------
--------------------------------------------------------------
Name and Description of Derivative Product(s) Embedding Programs (Be specific,
e.g., Client/Server Financial Accounting Package: integrated general ledger,
accounts payable and accounts receivable):
Product 1: Integrated Client/Server Banking Software Package, including
-----------------------------------------------------------------
Relationship Information Management, loans & deposits,
-----------------------------------------------------------------
transaction processing, and Executive Information System
-----------------------------------------------------------------
-----------------------------------------------------------------
Product 2:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Product 3:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Product 4:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Product 5:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(If more than five products, attach additional sheets).
<PAGE> 21
(CONTINUATION OF EXHIBIT B)
<TABLE>
<CAPTION>
List of VAR's Distributors: All Sales direct at this time
<S> <C>
Company____________________________ Company__________________________
Contact Name_______________________ Contact Name_____________________
Address____________________________ Address__________________________
City_______________________________ City_____________________________
Phone______________________________ Phone____________________________
Territory__________________________ Territory________________________
Company____________________________ Company__________________________
Contact Name_______________________ Contact Name_____________________
Address____________________________ Address__________________________
City_______________________________ City_____________________________
Phone______________________________ Phone____________________________
Territory__________________________ Territory________________________
Sybase Channels Approval:_______
SYBASE, INC: VAR:
By /s/ Daniel R. Carl By /s/ Michael R. Newes
--------------------------------- -----------------------------
(Authorized Signatory) (Authorized Signatory)
Name Daniel R. Carl Name Michael R. Newes
-------------------------------- ----------------------------
Title Assistant Secretary Title Executive Vice President
------------------------------ --------------------------
Date Date 10/13/93
------------------------------- ----------------------------
</TABLE>
<PAGE> 22
EXHIBIT C
Mandatory Terms of End User Licenses
All license agreements for the sublicensing of the Derivative Product
(the "Licensed Copy") all include substantially the following provisions:
(1) Only a non-exclusive, nontransferable right to use each Licensed
Copy is granted to an end User (and if VAR is under Program 1 then such right
is granted only on a single computer system which is designed by serial number
or equivalent). No right to use other than an Embedded Run-Time version of the
Sybase Programs is granted; an "Embedded Run-Time Version" shall mean a
version of the Sybase Programs linked to or embedded in VAR's application code
in such a way that structually by license restrictions, it (a) precludes use of
the Program to modify applications except as permitted by clause c of this
paragraph; (b) precludes use of the Program to develop applications, except for
support writing and decision support solely in conjunction with the Derivative
Product; (c) precludes general purpose access to command verbs in the Program
except that the End User may, within the scope of and under control of the
Derivative Product, create or alter tables, columns or rows and add fields to
existing tables, as necessary to implement, operate and administer the
Derivative Product; (d) precludes use of any command verbs in the Program to
create new schemas or databases; and (e) precludes use of the Program or third
party application development tools to modify or enhance listing screens or
forms delivered as part of the Derivative Product, or to create new forms,
except as necessary to implement and operate the Derivative Product.
(2) VAR and/or its licensors retain all title to the Licensed Copy,
and all copies thereof, and no title to the Licensed Copy, or any intellectual
property therein, is transferred to the licensee;
(3) The licensee may not copy the Licensed Copy, except for backup and
archival purposes only, and the licensee shall include on all copies of the
Licensed Copy all copyright and other monetary notices or legends included on
the Licensed Copy when it was shipped to such licensee;
(4) The licensee agrees not to reverse assemble, decompile or
otherwise attempt to derive source code from the Licensed Copy;
(5) The licensee agrees to comply with all export and re-export
restrictions and regulations ("Export Restrictions") imposed by the
governments of the United States or the country to which the Licensed Copy is
shipped to licensee. Licensee will not commit any act or omission which will
result in a breach of any such Export Requirements; the licensee agrees that it
will comply in all respects with any governmental laws, orders or other
restrictions on the export of the Sybase Program and the Licensed Copy (and
related information and documentation) which may be imposed from time to time
by the governments of the United States and Canada or the country to which the
Sybase Program is shipped by Sybase ("Export Requirements"). This Section
shall survive the expiration or termination of the Licensed Copy license
agreement.
(6) Although copyrighted, the Licensed Copy is unpublished and
contains proprietary and confidential information of VAR and its licensors and
is considered by VAR and its licensors to constitute valuable trade secrets.
The licensee will hold the Licensed Copy in confidence and shall protect the
Licensed Copy with at least the same degree of care with which the licensee
protects its own similar confidential information;
(7) VAR's licensors of software included in the Licensed Copy are
direct and intended third party beneficiaries of the license agreement and may
enforce it directly against the licensee; provided however that none of such
licensors shall be liable to the licensee for any general, special, direct,
indirect, consequential, incidental or other damages arising out of or related
to the Licensed Copy; and
(8) Upon termination of the license for the Licensed Copy, the
licensee shall return to VAR all copies of the Licensed Copy, or certify to VAR
that the licensee has destroyed all such copies.
<PAGE> 23
Exhibit E
PROGRAM 1
Monthly Sublicense Fee (Royalty) Report
Month of ______________, 199_
<TABLE>
<CAPTION>
Sybase Hardware Sybase/ Sybase
Customer Name and Embedded & Operating Machine Class Derivative List Price of
Address Programs** System & Users Products Programs
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Acme SQL Server IBM RS/6000 C 16-32 Acme GL $46,910
San Francisco, CA Open Client AIX C 16-32 $18,760
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total List Price: 1)
- ------------------------ ----------------
By: Subtract VAR Discount ___% 2)( )
--------------------- (See Exhibit D-1) ----------------
Sublicense Fees Due: 3)
----------------
- ------------------------
(Signature) Beginning Prepay Balance: 4)
----------------
- ------------------------
(Please Print) Sublicense Fees Against Prepay: 5)
----------------
- ------------------------ Ending Prepay Balance: 6)
----------------
No:
--------------------- Net Sublicense Fees Due: 7)
(line 3 - 5) ----------------
Must report monthly from start date of VAR Agreement,
whether or not shipment has occurred. One-time Runtime Support Fee: 8)
(___% of line 3) ----------------
[Unreadable text] any Evaluation Copies that have
Distributed or Full-Use Leveraged Copies. TOTAL PAYMENT DUE*** 9)
There is no charge for these copies (line 7 + 8) ----------------
</TABLE>
<PAGE> 24
Exhibit F
COMMISSION APPLICATION
FOR END USER FULL DEVELOPMENT
UPGRADE OR SALE
Name of VAR ____________________________________________
VAR Contact Name ____________________________________________
End User ____________________________________________
End User Address ____________________________________________
____________________________________________
End User Telephone ____________________________________________
End User Contact Name ____________________________________________
Fees Situation (i.e., why____________________________________________
does VAR believe it is
Entitled to a commission)____________________________________________
____________________________________________
____________________________________________
Derivative Product installed at customer site prior to or concurrently with
upgrade or sale?
Yes ______
No ______
Was Derivative Product reason for upgrade or sale? Yes ______
No ______
Net revenue to Sybase or full development sale or upgrade $__________
Commission $________
SIGNATURES
VAR Applicant __________________________________________
Sybase Territory DM __________________________________________
Sybase Business Partner
Sales Manager __________________________________________
Please complete application and return to your Sybase Representative. In order
for VAR to claim a commission, this application must be submitted to Sybase
prior to the licensing of the upgrade or full sublicense.
<PAGE> 25
EXHIBIT G
LIST OF APPROVED COUNTRIES FOR SUBLICENSING
Abu Dhabi Kuwait
Argentina Luxembourg*
Australia Malaysia
Austria Mexico
Belgium* Netherlands*
Bolivia New Zealand
Brazil Norway
Canada Panama
Chile Paraguay
Colombia Peru
Costa Rica Philippines
Denmark* Portugal*
Equador Saudi Arabia
Greenland Singapore
France* South Africa
Germany* Spain*
Greece* Sweden
Hong Kong Switzerland
India Taiwan
Indonesia Turkey
Ireland* United Kingdom
Israel United States
Italy* Uruguay
Japan Venezuela
Korea (South)
* Members of the European Community
<PAGE> 1
EXHIBIT 10.28
UNISYS CORPORATION
SOFTWARE LICENSE AGREEMENT
WITH
PHOENIX INTERNATIONAL LTD, INC.
<PAGE> 2
SOFTWARE LICENSE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 - GRANT OF LICENSE; UNDERTAKING TO
PROMOTE AND MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3 - EXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4 - NO COMPETING PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5 - TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6 - PAYMENT/INVOICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 7 - DELIVERABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 8 - CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 9 - SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 10 - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 11 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.3 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 12 - TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 13 - CONFIDENTIAL INFORMATION AND DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 14 - POWER AND AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 15 - LIMITED WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 16 - DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 17 - LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 18 - TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 19 - OTHER INTELLECTUAL PROPERTY MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 20 - SOURCE CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 21 - FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 22 - ASSIGNMENT, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 23 - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23.2 Captions/Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23.5 Independent Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23.8 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23.9 Entire Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23.10 Notice of Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23.11 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23.12 Access to Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 24 - ADDENDA/ATTACHMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 25 - SURVIVAL OF PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 26 - ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<PAGE> 3
ADDENDUM A PACKAGE AND DOCUMENTATION
ADDENDUM B SCHEDULE FOR ROYALTIES AND PARTICIPATION FEES
ADDENDUM C TERRITORY
ADDENDUM D THIRD-PARTY MATERIALS
ADDENDUM E EXCEPTIONS TO EXCLUSIVITY
ADDENDUM F TRAINING OBJECTIVES
ADDENDUM G DESCRIPTION OF SUPPORT/MAINTENANCE
ii
<PAGE> 4
SOFTWARE LICENSE AGREEMENT
This Agreement is entered into as of this _________ day of
_____________, 19__ (hereinafter the "Effective Date") by and between Unisys
Corporation (hereinafter referred to as "Unisys"), with offices at 7700 West
Camino Real, Boca Raton, Florida 33433-5543; and Phoenix International Ltd,
Inc. (hereinafter referred to as "Phoenix"), with offices at 900 Winderley
Place, Suite 140, Maitland, Florida 32751.
WITNESSETH THAT:
WHEREAS, Phoenix owns or (subject to Section 18.1 below) has the right
to license computer software programs and the documentation related thereto;
and
WHEREAS, Unisys desires to obtain certain rights, as hereinafter
described, in said programs and their related documentation; and
WHEREAS, Phoenix is willing to grant said rights to said programs and
their related documentation to Unisys;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto, intending to be legally bound by the provisions
hereof, hereby agree as follows:
SECTION 1 - DEFINITIONS
Words shall have their normally accepted meanings as employed in this
Agreement. The terms "herein" and "hereof", unless specifically limited, shall
have reference to the entire Agreement. The word "shall" is mandatory, the
word "may" is permissive, and the words "includes" and "including" are not
limiting. The following terms shall have the described meaning:
1.1 "Affiliate" shall mean any corporation, partnership or other entity
that is in or under the direct or indirect control of or with a party
(but only so long as it remains under the direct or indirect control
of such party), and "control" shall exist whenever there is an
ownership, profits, voting or similar interest representing at least
50% of the total interests of the pertinent entity then outstanding.
1.2 "Changes" shall mean (1) localizations, translations (including
Portuguese translations, if and when produced), nationalizations for
foreign countries with respect to a referenced work (i.e., Package or
Documentation, as applicable), (2) revisions to a referenced work
(i.e., Package
1
<PAGE> 5
or Documentation, as applicable), including Corrections, Enhancements,
Improvements, Updates or Upgrades, and (3) any other derivative work
or collective work which, in whole or in part, is based upon or
contains the referenced work (i.e., Package or Documentation, as
applicable).
1.3 "Confidential Information" shall mean any competitively sensitive or
secret business, marketing or technical information of a Disclosing
Party. (References to the "Disclosing Party" and the "Recipient" are
defined in Section 13). The Disclosing Party shall take reasonable
steps to call the Recipient's attention to the confidentiality of its
Confidential Information at the time of disclosure, including by
legending as "Confidential" documentation and media containing
Confidential Information, and summarizing in writing oral disclosures
of Confidential Information so the summaries are provided following
disclosure as evidence of the Confidential Information that has been
imparted. In all cases, however, Phoenix's Confidential Information
shall include the Package (in Object Code and Source Code form) and
Documentation, including all Changes. Confidential Information shall
not include, however, information which (i) is generally known to the
public or readily ascertainable from public sources (other than as a
result of a breach of confidentiality by the Recipient or any person
or entity associated with the Recipient), (ii) is independently
developed without reference to or reliance on any Confidential
Information of the Disclosing Party, as demonstrated by written
records in the Recipient's possession (which shall be provided to the
Disclosing Party at the Disclosing Party's request), or (iii) is
obtained from an independent third party who created or acquired such
information without reference to or reliance on Confidential
Information of the Disclosing Party, as demonstrated by written
records in the Recipient's possession (which shall be provided to the
Disclosing Party at the Disclosing Party's request).
1.4 "Conversion" shall mean conversion and formatting of an End User's
existing data for use with the Package.
1.5 "Correction" shall mean a change made in the Package to correct errors
or defects in the Package or to make the Package conform to Phoenix's
then current technical specifications.
1.6 "Documentation" shall mean the technical and operating documentation
relating to the Package provided to Unisys by Phoenix for purposes of
this Agreement. References to the Documentation include all Changes
provided to Unisys by Phoenix or provided to End Users by Unisys or
otherwise made or obtained by or for Unisys or any End Users.
2
<PAGE> 6
1.7 "End User" shall mean a banking, lending or finance company organized
and doing business primarily in the Territory who has executed a
License Agreement.
1.8 "Equipment" shall mean equipment (as will be mutually identified, but
initially to be 4 personal computers) required by Phoenix to support
Unisys' designated platform (exclusive of Hewlett-Packard equipment),
plus any further components or devices reasonably requested by Phoenix
in the future to support Upgrades.
1.9 "Enhancement" shall mean a new function or feature for any portion of
the Package which provides a new capability which the previous
releases or versions of the Package did not have and which may be
incorporated into the Package by modification to the then existing
programs or by development of new programs.
1.10 "Foreign Branches" shall mean banking, lending or finance companies
which operate in the Territory but are owned or controlled by banks
which have headquarters or principal operations outside the Territory.
1.11 "Gross Proceeds" shall mean all payments made by an End User in the
nature of license or branch fees, and support or maintenance fees
(regardless of whether so denominated). For purposes of calculating
royalties and participations due Phoenix based on Gross Proceeds from
any source, such payments shall be reduced by (a) excise, property,
VAT, sales, use and other similar taxes collected from an End User and
paid by Unisys (or, as applicable, an Affiliate, subcontractor, agent
or distributor acting under Unisys' authority to the extent permitted
under Section 22 hereof), and (b) customs, import or export, duties,
levies, tariffs, or other similar charges imposed by any jurisdiction
outside the United States of America incurred by Unisys (or, as
applicable, an Affiliate, subcontractor, agent or distributor acting
under Unisys' authority to the extent permitted under Section 22
hereof) for the licenses, deliveries or services to which such fees
relate, all of which shall be the sole responsibility of Unisys or the
applicable End User.
1.12 "Hold-Out Accounts" shall mean the existing and prospective customers
listed in Part III of Appendix E hereto. If a Hold-Out Account is
referred by Phoenix to Unisys in accordance with Section 3.2 hereof,
then the Hold-Out Account shall become a Pre-Qualified End User.
1.13 "Improvement" shall mean an addition or change to any portion of the
Package which is intended to or which does improve the performance of
the Package or any portion thereof or which is a replacement for any
such portion.
3
<PAGE> 7
1.14 "License Agreement" shall mean an agreement directly between an End
User and Unisys (or an Affiliate, subcontractor, agent or distributor
acting under Unisys' authority to the extent permitted under Section
22 hereof) containing terms and conditions acceptable to Phoenix for
the sublicense and use of the Package by such End User. Phoenix and
Unisys shall periodically agree on the standard form of the License
Agreement. The License Agreement shall provide that Unisys has sole
authority for establishing and collecting fees and charges thereunder
and shall provide that Unisys has sole responsibility for providing
Support Services, except for those limited functions for which Phoenix
agrees to be responsible hereunder. The License Agreement shall in
all cases contain provisions acceptable to Phoenix regarding
confidentiality, ownership by Phoenix and protection of all applicable
intellectual property rights, limitation of liability, and provisions
permitting the End User to use the Package only for its own internal
banking, lending and finance operations (the "Essential Provisions").
The License Agreement shall also specify, as a further Essential
Provision, unless Unisys concludes on a case-by-case basis that such
provision is not permitted by laws governing the License Agreement
(and it so advises Phoenix prior to executing the applicable License
Agreement), that the End User's right to possess and use the Package
and Documentation shall automatically cease if the End User ceases to
obtain or pay for Support Services from a provider thereof authorized
by Phoenix. The License Agreement may provide for a sale, lease, or
other transaction between Unisys and each applicable End User, so long
as the Essential Provisions are applicable and effective. References
herein to the sale, lease, or sublicense of the Package or
Documentation shall be collectively construed to mean the transaction
effected by the License Agreement, including such Essential
Provisions. Unisys shall obtain Phoenix's written consent before
including terms in the License Agreement which permit use of the
Package and Documentation by branches and affiliates of an End User
located outside the Territory.
1.15 "Object Code" shall mean the machine executable form of the Package
which results from the compilation and/or assembly of Source Code.
1.16 "Offshore Banks" shall mean banking, lending or finance companies
doing business primarily in English and U.S. dollars, typically
chartered under the laws of a country different from the country where
accounts originate, and having a general purpose of permitting
deposits to be held or invested outside the country where the accounts
originate.
1.17 "Package" shall mean the most current version of Phoenix's Retail
Banking System, as described more specifically in Addendum A hereto.
Except for provisions regarding title, confidentiality, ownership
rights, or protection of applicable
4
<PAGE> 8
XXX = Confidential Treatment Requested
intellectual property, and unless otherwise expressly stated herein,
references to the Package shall include only the Object Code (machine
readable) version of the Package. References to the Package include
all Changes provided by Phoenix to Unisys pursuant to Sections 8 or 9
hereof (subject to the fees or other charges that apply for such
Changes, as stated in such provisions), or provided by Unisys to End
Users, or otherwise made or obtained by or for Unisys or any End
Users.
1.18 "Personnel" shall mean individuals who are employees of the referenced
party or its Affiliates or are under contract to provide services
under the direction and control of the referenced party or its
Affiliates which services are of a kind which are generally performed
by employees of the referenced party or its Affiliates. Professional
consultants and individuals engaged to perform design or development
services for the benefit of any person or entity other than the
referenced party and its Affiliates (including services performed for
such individuals' own account) are not included as Personnel.
1.19 "Pre-Qualified End Users" shall mean the prospective End Users
identified in Part II of Addendum E hereto.
1.20 "SFB Product" means (1) the mainframe-based software owned by Unisys
and licensed by Unisys in the Territory on the Effective Date,
including any future version of that software so long as it continues
to be specifically mainframe-based (as opposed to a distributed
application system, or client-server system) and contains
substantially the code and provides substantially the features present
in the SFB Product as it exists on the Effective Date, and (2) with
respect to Section 4.2(2) only, which applies in cases where XXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX may be provided by Unisys to XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX, and Section 4.2(5) only, which applies to certain
excepted customers where significant prior marketing efforts are
already completed, XXXXXXXXXXXXXXX of such software owned and licensed
by Unisys.
1.21 "Source Code" shall mean the version of the Package in symbolic
programming language(s) employed by Phoenix to develop the Package
which when compiled and/or assembled is transformed into an Object
Code form of the Package.
1.22 "Support Agreement" shall mean each agreement between Unisys (or any
Affiliate, subcontractor, agent or distributor acting under Unisys'
authority to the extent permitted under Section 22 hereof) and an End
User providing for the delivery of Support Services.
1.23 "Support Services" shall mean the services that Unisys (or an
Affiliate, subcontractor, agent or distributor acting under Unisys'
authority to the extent permitted under Section 22
5
<PAGE> 9
hereof) is authorized to provide in support of an End User's use of
the Package and Documentation under the terms of a License Agreement
-- for example, installation, conversion, training, hotline support,
troubleshooting, and production of customized "Changes." The Support
Services may be provided pursuant to a License Agreement, one or more
Support Agreements, or a combination thereof.
1.24 "Territory" shall mean the countries situated in Latin America and the
Caribbean, as identified in Addendum C.
1.25 "Update" shall mean a release of the Package subsequent to the initial
delivery in which Phoenix has incorporated (i) accumulated
Corrections, (ii) Upgrades, (iii) Improvements, or (iv) Enhancements,
together with new or revised Documentation which properly describes
the updated Package.
1.26 "Upgrade" shall mean changes (if any) made in the Package to permit
the Package to be used and to operate properly with versions of
operating system that are marketed by Unisys and supported by Phoenix.
SECTION 2 - GRANT OF LICENSE; UNDERTAKING TO PROMOTE AND MARKET
2.1 Phoenix hereby grants to Unisys, and Unisys accepts from Phoenix,
under all of Phoenix's USA and foreign patents and copyrights, as well
as any know-how or trade secrets related to the Package and
Documentation, a right and license within the Territory to:
1. Demonstrate and promote the Package to prospective End Users
pursuant to the terms herein. The Package and Documentation
may not be provided to any prospective End User except
pursuant to a License Agreement, provided that limited copies
of the Package and Documentation may, as necessary, be
provided to prospective End Users for evaluation or trial use
pursuant to a form of agreement containing provisions for
confidentiality, ownership and protection of intellectual
property rights, limitation of liability, restrictions on use,
and provisions for term and termination which are acceptable
to Phoenix. Unisys may engage and use subcontractors, agents
or distributors to assist with promotion and marketing of the
Package to prospective End Users, subject to Section 22.2
hereof.
2. Grant End Users sublicenses to the Package and Documentation
pursuant to License Agreements. To the extent so provided in
the applicable License Agreements, such sublicenses may extend
after termination of this Agreement, notwithstanding the
limited term of this Agreement. The License Agreement may
include a Source Code option only on the terms and for the
fees which may be separately agreed to by Phoenix; except as
provided
6
<PAGE> 10
pursuant to such a Source Code option, the End User shall not
be permitted to receive access to or delivery of Source Code
for the Package.
3. Make Changes to the Package and Documentation, including by
use of the Source Code version of the Package provided subject
to Section 22 hereof, for the sole purpose of providing such
Changes as part of the Package and Documentation to End Users
pursuant to a License Agreement.
4. Contract with End Users for Support Services to be provided by
Unisys to the extent so provided herein.
5. Make copies of the Package and Documentation as necessary to
give effect to the foregoing Items (1) through (4).
6. Authorize one or more Affiliates (so long as they remain
Affiliates) to do one or more of the foregoing Items (1)
through (5), subject to Section 20.3 hereof.
2.2 Except as otherwise expressly stated in this Agreement, the right and
license granted to Unisys is limited to the term and shall cease upon
termination of this Agreement.
2.3 Unisys agrees to devote its reasonable efforts to promote and market
the Package to End Users in the Territory during the term of this
Agreement, and to devote a reasonable level of management and
resources to the promotion, marketing and support of the Package.
Unisys agrees to provide Phoenix at least once each year with
information regarding its marketing plans and forecasts; such plans
and forecasts shall be non-binding and subject to change, and may be
delivered formally or informally, and orally or in writing, but shall
be sufficient to demonstrate that the effort and resources being
devoted by Unisys.
SECTION 3 - EXCLUSIVITY
3.1 Subject to Section 3.2, the right and license granted to Unisys
pursuant to Section 2 to market and sublicense the Package to End
Users and to provide Support Services to End Users shall be exclusive
in all countries in the Territory during the term of this Agreement.
Such exclusivity is contingent on Unisys meeting the minimum sales
criteria set forth in Section 3.3 hereof.
3.2 As exceptions to such exclusivity, Phoenix reserves the right (either
directly or in association with other distributors, subcontractors or
marketing agents, and without obligation to Unisys):
7
<PAGE> 11
XXX = Confidential Treatment Requested
(1) to do business at any time with Offshore Banks or Foreign
Branches; and
(2) to continue to act on those business opportunities identified
in Part I and with those Hold-Out Accounts identified in Part
III of Addendum E hereto.
With regard to the Offshore Banks and Foreign Branches not already
licensed by Phoenix, Phoenix agrees to refer each End User to Unisys
and give Unisys the opportunity to license the Package to such End
User and/or provide installation, support or other services pursuant
to this Agreement before Phoenix does so itself; provided, however,
that Phoenix shall be free of such obligation if the End User is
unwilling to do business with Unisys because of contracts or
commitments with Phoenix or other vendors outside the Territory or if
the size and nature of the proposed transaction make it unlikely that
the End User will pay the fees and charges set forth in Addendum B for
the implementation in the Territory. Except as approved in advance by
Phoenix, Unisys agrees not to offer or provide licensing,
installations or service to any of the Hold-Out Accounts. XXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXX shall be due Unisys from Phoenix for licensing,
installation and/or service previously or hereafter provided by
Phoenix with regard to the foregoing exceptions.
3.3 At the end of each one (1) year period during which Unisys has held
the exclusivity described in Section 3.1 hereof, such exclusivity
shall automatically renew for an additional one (1) year period so
long as the term of this Agreement continues and Unisys sublicenses a
XXXXXXXXXXXXXXXXXXXXXXXXXX of the Package in the first year following
execution of the Agreement, and XXXXXXXXXXXXXXX in each of years two
(2) and three (3). The minimum number of copies of the Package
required to be sublicensed in order for Unisys to maintain exclusivity
in subsequent renewal years shall be determined in accordance with
Section 5.2 hereof. It is further understood by the parties that the
number of sublicensed copies necessary to retain exclusivity is
cumulative in the first three (3) years: thus, for example, in the
event that Unisys XXXXXXXXXXXXXXXXXXXXXXXXXXX in the first year then
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX for the second year XXXXXXX
XXXXXXXXXX.
For purposes of the exclusivity criteria set forth in this paragraph,
a "sublicense of a copy" of the Package is intended to mean execution
of a License Agreement that provides for payment to Unisys of license
fees in accordance with Section 6.2 hereto sufficient to meet the per
copy and branch minimum royalty requirements established for the
Package as set forth in Addendum B hereto. Unless otherwise agreed by
Phoenix with express reference to this Section 3.3, if terms are
included in the License Agreement permitting cancellation at the End
User's option in the event delivery or implementation of the Package
is incomplete, delayed or unacceptable or for any
8
<PAGE> 12
XXX = Confidential Treatment Requested
other reason, or providing for payment of half or more of the initial
license fees to occur longer than six (6) months after the execution
date for such license Agreement, the transaction will not count as a
sublicense of a copy for purposes of this paragraph until the
cancellation right lapses and payment of at least half of the initial
license fees is received.
Sublicenses granted to Off-Shore Banks, Pre-Qualified End Users, or
any other End User that does not agree to pay license and branch fees
sufficient for Phoenix to receive at least the minimum royalties set
forth in Addendum B hereto shall not be counted as sublicenses of a
copy of the Package for purposes of the exclusivity criteria set forth
in this paragraph, unless otherwise agreed by Phoenix in writing in
advance.
SECTION 4 - NO COMPETING PRODUCTS
4.1 In consideration of the exclusivity, Unisys agrees not to market,
employing any resources of Unisys in the Territory, any software
product that is competitive with the Package unless Unisys first
provides Phoenix with written notice at least one hundred and twenty
(120) days in advance of such marketing, whereupon Phoenix may elect,
at its sole option and in its discretion, to terminate this Agreement,
convert this Agreement to a non- exclusive arrangement, propose
stricter measures for protection of Phoenix's intellectual property
rights as an alternative to termination, or any combination of the
foregoing.
4.2 Notwithstanding Section 4.1 hereof, the parties agree that XXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX under the following circumstances:
(1) The customer requires a mainframe-based application
XXXXXXXXXXXXXXXXXXXXXXX; or
(2) The customer is a current user of the SFB Product
(i.e., licensed to use the SFB Product on the
Effective Date) and desires to continue to use and
license the SFB Product (including, for purposes of
this Section 4.2(2) only, versions of the SFB Product
operating in a UNIX environment); or
(3) The customer indicates that the Package is priced
outside of the upper limits of the customer's
budgetary envelope (which XXXXXXXXXXXXXXX would
otherwise satisfy); or
(4) The parties hereto mutually determine that the
Package cannot support the number of branches
requested by the End User (and for such purpose, it
is mutually acknowledged that a single
9
<PAGE> 13
XXX = Confidential Treatment Requested
implementation of the Package XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX, although the parties hereto may
hereafter determine that a greater or lesser number
should apply in view of practical experience and
plans, including Changes made or proposed from time
to time); or
(5) The customer is one of up to 10 prospective customers
of Unisys for which Unisys has already provided
significant marketing effort, as identified on a list
to be provided to Phoenix by March 22, 1996.
In no event, however, without Phoenix's prior written consent, (a) may
the Package or Documentation be provided to an End User to be used
concurrently with a competitive software product, including the SFB
Product, unless the Package is being used concurrently with a
competitive software product on a temporary basis while the Package is
being implemented as a replacement for such competitive software
product and, or (b) may the Package or Documentation be merged or
integrated, in whole or in part, with any competitive software
product, including the SFB Product or related SFB documentation.
SECTION 5 - TERM
5.1 The term of this Agreement shall commence on the Effective Date and
shall continue for an initial period of three (3) years.
5.2 Beginning six (6) months before expiration of the initial term and
each applicable renewal term (which, unless otherwise agreed, shall be
for three (3) years each), the parties agree to commence discussion
and negotiation of the minimum number of copies of the Package that
have to be sublicensed during each year of the ensuing renewal term in
order for Unisys to maintain exclusivity (it being agreed that Phoenix
will not require such number to be greater than XXXXXXXX per year),
the minimum license fees set for each copy of the Package sublicensed
to an End User, and other terms applicable for renewal of this
Agreement. Unless otherwise agreed, exclusivity criteria shall be
applied on a cumulative basis within each renewal term, but Unisys
shall not receive credit in any renewal term for exceeding the
exclusivity criteria in any prior term. Subject to agreement on such
additional terms, and provided that each party is otherwise in
compliance with the terms of this Agreement, this Agreement shall
automatically renew for a further period of three (3) years upon
expiration of the initial term and each renewal term.
10
<PAGE> 14
XXX = Confidential Treatment Requested
SECTION 6 - PAYMENT/INVOICES
6.1 For delivery of a copy of the Package and Documentation to Unisys upon
execution of this Agreement, and in consideration of the license
granted to Unisys in Section 2.1, Unisys agrees to pay Phoenix an
initial royalty for the Package and Documentation, in its existing
form, equal to XXXXXXXX, payable XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX, plus XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX each payable on
the first day of each month from XXXXXXXXXXXXX through and including
XXXXXXXXXXXXXX. Phoenix's right to retain such initial license fees
are subject to the provisions of Section 7.3 hereof. Such initial
license fees shall be applied on a dollar-for-dollar basis as a
credit for additional royalties payable under Section 6.2 hereof.
6.2 In addition to the initial royalty payable under Section 6.1 hereof,
additional royalties shall be due Phoenix on license and branch fees
paid by each End User for the sublicense of each production copy of
the Package sublicensed to an End User as set forth in Part I of
Addendum B. Such royalties are based on the expectation that the End
User will pay XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX upon execution of
a License Agreement, the remainder to be payable XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX, with the balance payable XXXXXXXXXXXXXXXXXXXX
XXXXXX after the execution of the applicable License Agreement or
XXXXXXXXXXXXXXXX after delivery of the Package, whichever is later.
Unisys agrees to consult with Phoenix before agreeing to any further
deferral in payment as part of the terms of the applicable License
Agreement.
6.3 Phoenix shall also receive the participation in maintenance/support
fees and other service fees and charges paid by End Users as provided
in Parts II and III of Addendum B.
6.4 Payment by Unisys to Phoenix of all royalties under Section 6.2
hereof, and all participation fees for maintenance and support or
other services under Section 6.3 hereof shall occur within thirty (30)
days after receipt of the corresponding license or branch fees or
maintenance/support fees from the End User. For purposes of this
Agreement, unless otherwise expressly stated, references to licensee
or branch fees or maintenance/support fees shall mean all Gross
Proceeds paid by an End User, regardless of whether received by
Unisys, its Affiliates, or a subcontractor, distributor or agent, and
references to the receipt of any fees means first receipt of such fees
by Unisys, its Affiliates, or a subcontractor, distributor or agent.
Each payment shall be accompanied by a statement showing the aggregate
amounts received from the End User, the date of receipt, the
calculation of applicable Gross Proceeds after deduction of the items
referred to in the
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definition of "Gross Proceeds" herein, and the calculation of amounts
owing to Phoenix.
6.5 No license fee shall be due to Phoenix for use of the Package and
Documentation by Unisys for purposes of demonstration, promotion,
training, making Changes, or providing Support Services to the extent
otherwise authorized by this Agreement.
6.6 When requested by either party, both parties agree to review the
royalties payable by Unisys when mutual benefit may be achieved in
response to special marketing situations.
6.7 Charges for other services rendered by Phoenix may be invoiced
periodically, in advance, or upon completion, as agreed to in
connection with the particular services, but if not otherwise agreed,
such charges may be invoiced following the end of each month in which
the services are rendered.
6.8 Invoices for reimbursement of travel and living expenses, or other
costs incurred by Phoenix at Unisys' request, shall be submitted to
Unisys when and as such expenses are incurred. If extraordinary
expenses are to be incurred at Unisys' request, Phoenix reserves the
right to require Unisys to pay such expenses directly or advance
Phoenix payment for such expenses.
6.9 Unless otherwise agreed, all invoices shall be paid within thirty (30)
days after receipt by Unisys. If charges are disputed for any reason,
Unisys agrees to pay the undisputed portion of the charges on time and
to act with reasonable speed to notify Phoenix of the amounts in
question.
6.10 All payments to Phoenix shall be made by Unisys in U.S. Dollars. Any
payment received by Unisys in foreign currency shall be converted in
United States Dollars for payment to Phoenix at the exchange rate
published in the Wall Street Journal on the date Unisys receives
payment from the End User.
SECTION 7 - DELIVERABLES
7.1 Upon the Effective Date, Phoenix shall make available or deliver to
Unisys, in reproducible form, a current copy of the items listed in
Addendum A hereto and mutually agreed hardware, software and personnel
to assist Unisys to perform to-be-determined benchmark testing.
7.2 Delivery of Updates shall be in the same form as the initial delivery
of the item being updated unless otherwise mutually agreed.
7.3 Unisys shall have a period of thirty (30) days to evaluate the Package
at Phoenix's premises situated in Maitland, Florida, in order to
determine whether the Package (as used on the
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XXX = Confidential Treatment Requested
Hewlett-Packard platform, consistent with prior use in the U.S.) meets
Unisys' reasonable requirements. During that thirty (30) day period,
Unisys shall conduct its evaluation in consultation with phoenix. If,
prior to March 28, 1996, Unisys gives Phoenix written notice (sent by
telecopy, with confirmation by overnight courier) that the Package and
Documentation do not meet Unisys requirements based on material,
concrete factors specified in such notice, then, unless the parties
reach mutually agreeable terms for resolution of the issue, Unisys may
elect to cancel this Agreement and receive a return of any amounts
paid pursuant to Section 6.1 hereof, XXXXXXXXXXXXX for the work
performed by phoenix in conjunction with Unisys during the evaluation
of the package. If such notice is not received by March 28, 1996, the
amount paid pursuant to Section 6.1 hereof shall be considered
unconditionally earned and non-refundable.
7.4 Unisys shall deliver to Phoenix the Equipment when and as the parties
mutually determine to be appropriate. In the event that the Package
is to be licensed by Unisys for use on platforms other than
Hewlett-Packard platforms supported by Phoenix, Unisys agrees to
provide Phoenix with Equipment consisting of the server(s) for the
platforms to which the Package will be ported. Such Equipment is
provided on a "loaned" basis for use in connection with this
Agreement. Phoenix shall follow ordinary and prudent measures for the
safekeeping of such Equipment. Upon termination of this Agreement,
Phoenix agrees to return the Equipment in its original condition,
reasonable wear and tear excepted, or to pay Unisys the reasonable
value for such Equipment determined on the basis of straight-line
depreciation over a three (3) year period. Unisys shall, without
charge, maintain the Equipment and repair or replace worn, defective
or malfunctioning parts.
SECTION 8 - CHANGES
8.1 Phoenix agrees to provide Unisys with such Changes to the Package (in
Object Code and Source Code) and/or Documentation as Phoenix may make
or obtain from time to time and authorize for general release as a
patch, new release or new version of the Package and/or Documentation
for use by customers who are the same as or similar to actual or
prospective End Users.
If the Changes introduce substantial new functionality or technology
so as to constitute a new product that ordinarily commands a separate
or higher charge, such Changes shall be considered included in the
references to the Package for purposes of the exclusivity provisions
of Section 3, but Phoenix reserves the right to condition availability
of such Changes on an adjustment of the royalty schedule that
equitably reflects the differences.
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XXX = Confidential Treatment Requested
Phoenix shall keep Unisys generally advised with regard to Changes
that are available or that Phoenix has announced are planned, to the
extent such Changes are or may be provided under this Section 8.1.
The undertaking of Phoenix in the preceding sentence shall continue in
effect following termination of this Agreement for so long as Unisys
continues to be directly obligated to End Users to provide support and
maintenance under Support Agreements, as contemplated by Section 11.2.
8.2 Phoenix shall deliver to Unisys Updates, each of which contains an
accumulation of Corrections on the same periodic basis as Phoenix
follows for general release of such Corrections to the same or
similarly situated banking, lending or finance customers. Such
Updates shall be provided not less frequently than twice per year
unless the cumulative Corrections are so insubstantial that less
frequent delivery is reasonable.
The undertaking of Phoenix in the preceding sentence shall continue in
effect following termination of this Agreement for so long as Unisys
continues to be directly obligated to End Users to provide support and
maintenance under Support Agreements, as contemplated by Section 11.2.
8.3 Subject to agreement on mutually acceptable specifications, Phoenix
agrees to provide XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX required to
create a XXXXXXXXXXXXXXXXXXX of the Package, on the following basis.
The first XXXXXXXXXXXXXX devoted by Phoenix for creation of such
XXXXXXXXXXXXXXXXXXX of the Package shall be provided without charge by
Phoenix; the next XXXXXXXXXXX shall be provided at XXXXXXXXXXX; and
any futher hours shall be provided at XXXXXXXXXXX. Unless otherwise
agreed, such work will be performed at Phoenix's facilities in
Maitland, Florida. If Unisys is able to charge either or both of the
first two End Users who license a XXXXXXXXXXXXXXXXXXX of the Package
for customization or development services associated with the creation
of the XXXXXXXXXXXXXXXXXXX of the Package, Unisys shall be entitled to
retain such customization or development charges without paying any
participation to Phoenix with respect thereto under Addendum B, Part
III.
8.4 Except as provided in Section 8.3 regarding the Latinized version of
the Package, or in Section 15.2 with regard to Changes resulting from
specific services for which specific compensation is provided, Phoenix
shall not be required to make Changes specifically for Unisys or any
End Users without prior agreement between Phoenix and Unisys on
applicable charges.
8.5 It is understood and agreed that all right, title and interest in and
to all Changes, including all inventions, copyrights, trade secrets
and all other associated intellectual property
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XXX = Confidential Treatment Requested
rights throughout the world, shall be the exclusive property of
Phoenix. To the extent that such Changes, including all associated
intellectual property rights, are not owned in their entirety by
Phoenix immediately upon their creation, Unisys agrees to assign (and
hereby automatically assigns) and shall cause all other persons and
entities who create or contribute to any Changes made under authority
of, or in association or collaboration with Unisys, to assign, all
right, title and interest therein to Phoenix, to be effective
immediately without the necessity of consideration or further
documentation. Unisys agrees to deliver to Phoenix copies of all
Changes (including object code and source code versions of all
programs) periodically or when otherwise requested by Phoenix. Unisys
agrees to take such further action and execute such further
documentation as Phoenix may reasonable request to give effect to this
Section 8.5.
SECTION 9 - SERVICES
9.1 Phoenix shall provide training and technical assistance to Unisys with
respect to the installation, support and marketing of the Package, on
a basis to be mutually determined in connection with the marketing,
licensing and implementation of initial End Users. Such training and
technical assistance will be in the form of a combination of formal
classroom training and on-the-job training during actual
implementation of sublicensed End Users. Training objectives are
described in Addendum F hereto. As consideration for such training
and technical assistance, Phoenix shall receive XXXXXXXXXXXXXXXXXXXXX
paid by the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX,
including custom code, country-specific code, custom interfaces, etc.,
plus the other charges shown in Addendum B, XXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX per Section 8.3 hereof.
9.2 Additional periodic training (including training appropriate to
address Changes) shall be made available as provided in Part IV of
Addendum B hereto.
9.3 Phoenix shall, upon Unisys' reasonable request, and subject to
reasonable advance notice, provide reasonable assistance to Unisys
with respect to the marketing and promotion of the Package, including
by providing demonstrations and participating in trade shows, user
conferences, etc., and providing pre-sales marketing support. The
assignment of XXXXXXXXXX as described in Section 9.4 is intended to
serve that objective; other marketing assistance may be provided at
mutually agreed times and locations, and for mutually agreed charges.
9.4 For a period of up to one (1) year, Phoenix will assign XXXXXXXXXX, on
an "as needed, as available" basis, without charge (except for travel
and living expenses as provided in Section 9.7 hereof) to provide
marketing assistance to Unisys. If
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XXX = Confidential Treatment Requested
Mike Newes is not available, Phoenix agrees to provide other
personnel, also without charge (except for travel and living expenses
as provided in Section 9.7 hereof), for pre-sales marketing support
with respect to the first two (2) End Users licensed by Unisys. Such
service is provided by Phoenix as general support for sales and
marketing efforts pursued under this Agreement.
9.5 Phoenix shall provide Level 2 maintenance assistance as described in
Addendum G. The consideration for Phoenix's assistance shall be
Phoenix's participation in support/maintenance fees as set forth in
Part III of Addendum B.
Unisys shall be responsible for all Level 1 maintenance as described
in Addendum G, in accordance with the terms of each License Agreement
and Support Agreement, as applicable. If Phoenix is required to
provide any Level 1 maintenance services (other than the
training/technical assistance which Phoenix agrees to provide with
respect to the first two (2) installations), Phoenix shall be entitled
to the consideration set forth in Part IV of Addendum B.
9.6 In the event that Unisys requests services from Phoenix which are
beyond the scope of Phoenix's commitments in this Agreement, Phoenix
will attempt to accommodate Unisys' request by providing such services
on such basis as Phoenix can practically offer, or recommend
appropriate outside consultants. Phoenix's charges for such services
are shown in Part IV of Addendum B.
9.7 Except for the assignment of XXXXXXXXXX (or replacement personnel) as
provided in Section 9.4 hereof, it is acknowledged that Phoenix shall
not be required to travel to the Territory except when Phoenix agrees
to do so. Travel and living expenses for XXXXXXXXXX and any other
on-site assistance shall be paid or (in the case of End User
reimbursement) provided for by Unisys.
SECTION 10 - NOTICES
All notices or other communications to be given hereunder (except payment
instructions and invoices, which shall be transmitted in accordance with normal
business practices and procedures) shall be in writing and delivered
personally, by telecopy (confirmation by air mail), or by commercial overnight
courier (second day courier, in the case of international dispatch), courier
charges prepaid, and, in any such case, addressed to the appropriate party as
set forth below.
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10.1 If to Unisys:
Law Department
Unisys Corporation
Latin America & Caribbean Division
7700 West Camino Real
Boca Raton, Florida 33433-5543
Telecopy: 407/750-7851
10.2 If to Phoenix:
Phoenix International Ltd, Inc.
900 Winderly Place
Maitland, Florida 32751
FOR IMMEDIATE ATTENTION -- Deliver to President
Telecopy: 407/667-0133
With a copy to:
Nelson Mullins Riley & Scarborough, L.L.P.
400 Colony Square, Suite 2200
Atlanta, Georgia 30361
Attention: Peter C. Quittmeyer, Esq.
Telecopy: 404/817-6050
Any notice delivered personally shall be effective upon delivery; any notice
delivered by telecopy or courier shall be effective when it reaches the
specified destination address.
SECTION 11 - TERMINATION
11.1 Termination
1. This Agreement may be terminated by Unisys without cause as
provided in Section 7.1 and Section 21. This Agreement may be
terminated by Unisys for cause, in the event that (i) Phoenix
substantially fails to perform any of its material obligations
hereunder (including, but without limitation, the support
obligations set forth herein) and said cause is not corrected
within thirty (30) days after delivery of a written
termination notice from Unisys specifying such cause or (ii)
Phoenix files, or has filed against it, a voluntary or
involuntary petition under Chapter 3 of Title 11 of the United
States Code, 11 U.S.C. & 301, et seq. (the "Bankruptcy Code"),
upon delivery of a written cancellation notice to Phoenix.
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2. This Agreement may be terminated by Phoenix without cause as
provided in Section 21. This Agreement may be terminated by
Phoenix for cause, as determined by Phoenix at its option and
in its discretion, in the event that:
(i) Unisys fails in any material respect to
perform its obligations hereunder, and such
failure is not corrected within thirty (30)
days after Phoenix gives Unisys written
notice of such failure;
(ii) Unisys fails to make (in full) on the date
due any payment required to be made to
Phoenix, and fails to cure the delinquency
within five (5) business days after Phoenix
gives Unisys written notice of such
delinquency;
(iii) Unisys ceases to do business, makes a
composition or assignment for the
benefit of its creditors, makes a general
arrangement with its creditors concerning any
extension or forgiveness of any of its
secured debt, becomes bankrupt or insolvent,
suffers or seeks the appointment of a
receiver to the whole or any material part of
its business, takes any action to liquidate
or wind up the whole or any material part of
its business, is found subject to any
provisions of any bankruptcy code concerning
involuntary bankruptcy or similar proceeding,
or suffers a material adverse change in its
financial position such that payments to
Phoenix may be affected or delayed by a
creditor or administrator of the business of
Unisys;
(iv) Unisys becomes a subsidiary of, or controlled
as to its management policy by, any
government instrumentality; or
(v) Unisys is required by laws in the Territory
to offer or permit the use or exercise (with
or without payment to Unisys) of the Package
to any person or entity other than an End
User (provided that, if only this Item (v) is
the cause, Phoenix's remedies shall be
limited to termination of Unisys' rights in
the applicable country or countries).
3. If the cause is not corrected within the applicable cure
period specified above, termination shall become effective
immediately upon receipt, by the party failing to correct the
cause, of a written termination notice from the other party.
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11.2 Effect of Termination
1. Termination of this Agreement shall not terminate any License
Agreement or Support Agreement that has previously been signed
by Unisys and an End User pursuant to this Agreement.
2. Following termination of this Agreement, this Agreement shall
continue in effect as necessary for Unisys to carry out its
obligations under the License Agreements and Support
Agreements existing at the time of such termination.
However, if the termination is by Phoenix for cause
pursuant to Section 11.1(2) or if Unisys thereafter defaults
on its obligations hereunder under circumstances that would
materially prejudice Phoenix if Unisys continued to have sole
responsibility for obligations under then existing License
Agreements or Support Agreements (such as if Unisys is in
continual default of payment obligations or fails to provide
Level 1 support and maintenance as required by this
Agreement), then, subject to the consent of applicable End
Users (which Unisys shall cooperate with Phoenix to obtain),
Unisys shall, if and when so requested by Phoenix, assign to
Phoenix or Phoenix's designee all rights and obligations of
Unisys under such then existing License Agreements and Support
Agreements. Furthermore, in such event, to assure a
reasonable transition with respect to any Support Services
that Unisys has agreed to provide to End Users, Unisys agrees,
for a minimum period of the lesser of two (2) years following
termination, or eight (8) months after Phoenix contracts with
a replacement vendor who has authority to provide Support
Services to End Users, to sublicense the Package to End Users,
or both (in no event, however, shall Unisys, without the
consent of Phoenix and the applicable End User, be relieved of
responsibility for providing Support Services for the
remaining term of Support Agreements in effect at the time of
termination, if longer), if and to the extent so requested by
Phoenix, to continue to perform its obligations under some or
all of the License Agreements and Support Agreements in effect
at the time of termination, including any normal continuation
or renewal of such License Agreements and Support Agreements.
In that regard, Phoenix may instruct Unisys to continue to
provide Support Services directly to such End Users, or as a
subcontractor to Phoenix, or a combination thereof, provided
that the fees that Unisys receives for such services shall be
substantially equivalent to the fees Unisys was entitled to
receive for substantially the same services immediately prior
to termination.
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Following termination of this Agreement, Phoenix shall have
the right to contact End Users directly, In addition, in each
case where Phoenix, in its reasonable judgment, determines
that Unisys is taking any action inconsistent with the
long-term continuation of the End Users' use and licensing of
the Package and associated Support Services, Phoenix also
reserves the right to contract directly with those End Users
to license them new or different versions of the Package or
other software programs, and to provide Support Services or
arrange for Support Services to be provided by other sources,
without obligation to Unisys for any resulting reduction in
business Unisys may experience as a result of such activities.
4. Upon and following termination of this Agreement, Unisys
agrees that it shall be entitled to no compensation from
Phoenix or any End User in connection with, or following,
termination of this Agreement, except for license fees that
are earned and unconditionally payable under License
Agreements then in effect, fees for Support Services actually
rendered, and (subject to the possibility of assignment to
Phoenix as provided above) fees received pursuant to any
future operation of the License Agreements and Service
Agreements.
5. Upon termination of this Agreement, Unisys shall deliver to
Phoenix, at Unisys' own expense, when and as requested by
Phoenix, all copies of the Package (including Source Code),
Documentation, and any other materials related to the Package
or Documentation in the possession of or previously delivered
to Unisys by Phoenix, except to the extent Unisys still
requires such materials to perform further Support Services as
authorized by this Section.
11.3 General
No termination or cancellation of this Agreement shall affect the
obligation of Unisys to make payments for royalties and participations
which are or become due hereunder, including royalties and
partipations due in connection with License Agreements and Support
Agreements that remain in effect after the date of termination. The
parties' rights to terminate or cancel this Agreement in accordance
with this Section are in addition to and shall not limit or prejudice
any other right or remedy available under this Agreement, or at law or
in equity under U.S. laws, except as provided herein.
SECTION 12 - TAXES
12.1 For a variety of reasons, including that the Package is licensed
hereunder to Unisys in the United States, that the license is
principally to authorize Unisys to grant
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sublicenses to End Users, and other circumstances, it is expected that
the payments, deliveries and services associated with the transactions
contemplated by this Agreement shall be free of any excise, property,
VAT, sales, use and other similar taxes for which Phoenix could be
responsible. However, if any such tax should be imposed on Phoenix by
any jurisdiction (whether in the United States or in the Territory),
Unisys shall either bear such tax by a direct payment to the taxing
authority or shall reimburse Phoenix for such tax (except that, if
property taxes are imposed on Phoenix as a result of the deliveries
made by Phoenix hereunder, Unisys' responsibility for such propert
taxes shall not exceed $5,000 per year). A list of Unisys'
appropriate sales and use tax exemption certificate numbers shall be
furnished upon request by Phoenix. In the event it shall ever be
determined that any such tax was not required to be paid, Phoenix
agrees to notify Unisys and, if such tax was reimbursed to Phoenix, to
make prompt application for the refund thereof, to take all proper
steps to procure the same, and when received, to pay the same to
Unisys.
12.2 It is contemplated that the license granted by Phoenix to Unisys
hereunder, the deliveries made by Phoenix to Unisys hereunder, and the
services rendered by Phoenix to Unisys hereunder are to be transacted
solely in the United States of America, and therefore Phoenix should
not be subject to income, royalty, service, impost, or similar taxes
or deductions, or any withholding requirement in addition to or in
lieu thereof, imposed by any jurisdiction outside the United States of
America relating to any payments, deliveries, or services, or any
other business or activities whatsoever, associated with the
transactions contemplated by this Agreement. Phoenix reserves the
right to renegotiate royalties, participation in support and
maintenance fees, or service charges if any course of action under
this Agreement results in Phoenix becoming subject to such foreign
taxes or if the amounts received by Phoenix are reduced as a result of
the deduction or withholding of such foreign taxes.
SECTION 13 - CONFIDENTIAL INFORMATION AND DISCLOSURE
13.1 Each party, as recipient ("Recipient") of Confidential Information
obtained directly or indirectly from the other party (the "Disclosing
Party"), agrees to the following confidentiality obligations:
13.2 Unisys, as Recipient, agrees at all times to protect and preserve the
confidentiality of the Package, Documentation, and all other
Confidential Information of Phoenix, as Disclosing Party. Unisys
agrees not to permit or authorize access to, or disclosure of, the
Package, Documentation, and all other Confidential Information of
Phoenix to any person or entity other than (i) End Users who have
entered into
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confidentiality agreements approved by Phoenix, to the extent
necessary such End Users are evaluating the Package in advance of
entering into a License Agreement, (ii) End Users who have entered
into License Agreements, to the extent necessary for such End Users to
exercise their rights under applicable License Agreements, and (iii)
Personnel of Unisys who have a "need to know" such information in
order to enable Unisys to perform Unisys' obligations under this
Agreement and applicable License Agreements and Support Agreements.
Unisys may disclose necessary portions of the Package, Documentation,
or other Confidential Information of Phoenix to governmental
regulatory authorities if such disclosure is required for compliance
with applicable laws, but Unisys shall notify Phoenix of the
applicable legal requirements before such disclosure occurs and Unisys
shall use its best efforts to help Phoenix obtain protection as may be
available to preserve the confidentiality of such information
following disclosure.
13.3 Phoenix, as Recipient, agrees at all times to protect and preserve the
confidentiality of the Confidential Information of Unisys, as
Disclosing Party. Phoenix, as Recipient, agrees at all times to
protect and preserve the confidentiality of all Confidential
Information of Unisys, as Disclosing Party. Phoenix agrees not to
permit or authorize access to, or disclosure of, the Confidential
Information of Unisys to any person or entity other than Personnel of
Phoenix who have a "need to know" such information in order to enable
Phoenix to perform Phoenix's obligations under this Agreement and
applicable License Agreements and Support Agreements. Phoenix may
disclose necessary portions of the Confidential Information of Unisys
to governmental regulatory authorities if such disclosure is required
for compliance with applicable laws, but Phoenix shall notify Unisys
of the applicable legal requirements before such disclosure occurs and
Phoenix shall use its best efforts to help Unisys obtain protection as
may be available to preserve the confidentiality of such information
following disclosure.
13.4 Prior to disposal of any media or materials that contain any part of
the Confidential Information of the Disclosing Party, the Recipient
shall obliterate or otherwise destroy all code, instructions,
commentary, or further evidence of Confidential Information, for
example, by erasing, incinerating, or shredding such materials.
13.5 The restrictions in this Section 13 are in addition to any other
restrictions on use and disclosure set forth elsewhere in this
Agreement (for example, additional restrictions are set forth in
Section 2.1(1) regarding limited disclosure of the Package to
prospective End Users for evaluation purposes; and Section 20 contains
additional restrictions relating to Source Code). The provisions of
this Section 13 shall continue to bind each Recipient, notwithstanding
any termination of this Agreement, until five (5) years after both
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this Agreement has terminated and all materials and media containing
Confidential Information of the other party have been returned or
destroyed.
SECTION 14 - POWER AND AUTHORITY
14.1 Each party hereby represents and warrants to the other party hereto
that it has full power and authority to enter into and perform under
the terms of this Agreement, and the person executing this Agreement
on behalf of such party has been properly authorized and empowered to
so execute this Agreement.
14.2 Each party hereby represents and warrants to the other party hereto
that this Agreement is enforceable against such party under all
applicable laws in accordance with its terms.
SECTION 15 - LIMITED WARRANTY
15.1 Phoenix warrants that the media containing the Package are free from
defects in workmanship or materials, and, when delivered to Unisys by
Phoenix, shall not contain any program routine or device included by
Phoenix having the purpose or effect of deactivating, disabling, or
interfering with use of the Package.
15.2 The sole remedy for Unisys in the event of discovery of any error or
malfunction in the Package or Documentation shall be to obtain
maintenance/support from Phoenix as provided in Section 9 hereof.
SECTION 16 - DISCLAIMER
16.1 EXCEPT AS PROVIDED IN SECTIONS 7.3 OR 15 HEREOF, PHOENIX MAKES AND
UNISYS RECEIVES NO WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, WHETHER IN ANY PROVISION OF THIS AGREEMENT OR ANY OTHER
COMMUNICATION OR OTHERWISE, AND PHOENIX SPECIFICALLY DISCLAIMS ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
16.2 IT IS MUTUALLY ACKNOWLEDGED THAT NEITHER PARTY HAS GIVEN ANY ASSURANCE
TO THE OTHER CONCERNING THE RESULTS, PROFITABILITY OR SUCCESS OF ANY
MARKETING EFFORT WHICH UNISYS MAY UNDERTAKE.
SECTION 17 - LIMITATION OF LIABILITY
17.1 EXCEPT FOR AS NECESSARY TO REMEDY INFRINGEMENT OR MISAPPROPRIATION OF
INTELLECTUAL PROPERTY RIGHTS OWNED BY THE OTHER PARTY (INCLUDING
RIGHTS IN CHANGES REQUIRED TO BE CONVEYED TO THE OTHER PARTY
HEREUNDER), AND EXCEPT AS NECESSARY TO GIVE EFFECT TO THE EXPRESS
INDEMNIFICATION
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PROVISIONS IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE FOR ANY
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT
NOT LIMITED TO, LOST PROFITS (EXCEPT LOST PROFITS THAT ARE DIRECT
DAMAGES RESULTING FROM NON-PAYMENT OF FEES AND CHARGES DUE HEREUNDER),
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
17.2 The cumulative liability of Phoenix to Unisys for all claims made by
or attributable to each End User relating to the any product or
service provided by Phoenix, or any other obligation of Phoenix
hereunder, in contract, tort or otherwise, shall not exceed the total
amount of fees received by Phoenix for such product, service or
obligation with respect to that individual End User. In the event of
any claims not made by or attributable to an End User, the cumulative
liability of Phoenix for all claims by Unisys, in contract, tort or
otherwise, which are not made by or attributable to End Users shall
not exceed the total amount of fees received by Phoenix from Unisys
excluding fees attributable to products, services or obligations with
respect to End Users. This limitation of liability shall not apply to
the indemnification provided in Section 18 below. The foregoing
limitation of liability and exclusion of certain damages shall apply
regardless of the success or effectiveness of other remedies.
SECTION 18 - TITLE
18.1 The Package and/or Documentation may include or require
commercially available programming or materials obtained by Phoenix
under contract from third-party licensors, sellers or distributors
(collectively, "Third- Party Materials"). The Third-Party Materials
may be subject to restrictions, payment obligations or procurement
responsibilities that are different from or in addition to the
restrictions and charges applicable to the Package and Documentation
hereunder and, if so, Unisys and/or each End User shall be responsible
for separate compliance with such restrictions, payment obligations or
procurement responsibilities. Addendum D hereto lists the
Third-Party Materials that are pertinent on the date of execution of
this Agreement and summarizes restrictions, payment obligations and
procurement responsibilities currently applicable thereto. Phoenix
reserves the right to change the Exhibit at any time upon written
notice to Unisys. Phoenix will cooperate with Unisys to process
warranty claims, maintenance requests, or indemnification rights, to
the extent available from the original licensor or supplier of such
Third-Party Materials. Notwithstanding any provision in this
Agreement to the contrary, Phoenix shall have no obligation, express
or implied, with respect to such Third-Party Materials, except for
maintenance and service obligations generally applicable to the
Package as a whole under Section 9 hereof as described in Addendum G.
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18.2 If a third party claims that the Package infringes any patent,
copyright, trade secret, or similar intellectual property rights of
that third party, Phoenix shall defend Unisys and applicable End Users
against that claim at Phoenix's expense and pay all damages awarded by
a court in a final judgment, provided that Unisys promptly notifies
Phoenix in writing of any such claim, and allows Phoenix to control,
and cooperates with Phoenix in, the defense and disposition of such
claim, including any related settlement negotiations.
If such a claim is made or appears possible, Phoenix may, at its
option, secure for Unisys and any End Users the right to continue to
use the Package, or modify or replace the Package so it is
non-infringing.
Phoenix has no obligation hereunder for any claim based on a modified
version of the Package which has not been prepared solely by Phoenix
insofar as the modifications are potentially relevant to the claim, or
for any combination, operation or use of the Package with any product,
data or apparatus not approved in writing by Phoenix insofar as the
combination, operation or use of the Package with such other item(s)
is potentially relevant to the claim. Phoenix also shall have no
obligation hereunder for any claim resulting from any involuntary
confiscation or expropriation of rights that may hereafter occur
pursuant to action of government or law in any non-U.S. jurisdiction.
THIS SECTION STATES PHOENIX'S ENTIRE OBLIGATION TO UNISYS WITH RESPECT
TO MATTERS OF TITLE OR ANY CLAIM OF INFRINGEMENT THEREOF.
SECTION 19 - OTHER INTELLECTUAL PROPERTY MATTERS
19.1 The Package and Documentation are copyrighted works under U.S. and
international copyright laws, treaties and conventions. Unisys shall
include in all copies of the Package and Documentation the legends and
notices required by Phoenix.
19.2 Unisys may not use, distribute, sell, sublease, assign, give, or
transfer in any way the original or any copies of the Package or
Documentation except as provided in this Agreement. Unisys may not
modify, reverse engineer, decompile, or translate the Package or
Documentation, except to make Changes as provided in Section 2.1(3)
hereof. Unless Phoenix agrees otherwise and the parties agree on
applicable royalties payable to Phoenix, Unisys may not operate a
"service bureau" or provide "outsourcing services" by engaging in the
business of processing accounts or records, or generating output data,
for the direct benefit of any business entity or organization.
19.3 Unisys shall assist Phoenix, at Phoenix's request, in perfecting and
maintaining Phoenix's rights under copyright law in each country in
the Territory.
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<PAGE> 29
19.4 Unisys shall have the right, but not the obligation, to identify the
Package according to the Package's applicable brand name, to identify
Unisys as an independent business which has been authorized by Phoenix
to market the Package and provide Support Services to End Users, and
to use and display Phoenix's trade name, trademarks, service marks and
logos for purposes of promotion and marketing of the Package intended
for End Users. All such action shall be subject to reasonable
advertising and usage guidelines provided by Phoenix. In all other
respects, this Agreement confers no right or license with regard to
Phoenix's trade name, trademarks, service marks, logos, or packaging,
or any related goodwill, all of which shall be the exclusive property
of Phoenix. Phoenix reserves the right to add to, change, or withdraw
trade names, trademarks, service marks or logos at any time in any
country or countries. Unisys shall assist Phoenix, at Phoenix's
request, in perfecting and maintaining Phoenix's rights under
trademark and similar laws in each country in the Territory.
19.5 Unisys shall notify Phoenix in the event that it discovers any
infringement of Phoenix's rights in the Package or any violation of
the terms of a License Agreement, and shall cooperate with Phoenix and
assist in the prosecution of Phoenix's claims. Phoenix shall be
entitled to retain any proceeds from such claims, including settlement
amounts, for purposes of funding Phoenix's worldwide intellectual
property protection programs.
19.6 Phoenix shall have the right to enter the premises of Unisys (or, as
applicable, its Affiliates, subcontractors, agents or distributors) at
any time upon reasonable request during regular business hours in a
non-disruptive manner, for the purpose of inspecting the location and
use of the Package and Documentation and the standard procedures of
Unisys regarding retention, safekeeping, and disposal of all media and
materials pertaining thereto.
19.7 Phoenix shall have the right to conduct an audit of any software
product developed in whole or in part by Unisys (or, as applicable,
its Affiliates, subcontractors, agents or distributors) to determine
whether the development of such product has occurred without use of,
reliance on, or reference to the Package or Documentation, or any
Confidential Information or other intellectual property rights of
Phoenix.
SECTION 20 - SOURCE CODE
In addition to the other provisions in this Agreement concerning Unisys'
protection of Confidential Information of Phoenix, Unisys shall at all times
comply with the following precautions with respect to the use and handling of
any Source Code for the Packages:
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<PAGE> 30
20.1 Unisys may give access to the Source Code only to Personnel of Unisys
who have a "need to know" such information in order to enable Unisys
to perform Unisys' obligations under this Agreement and applicable
License Agreements and Support Agreements. For this purpose,
subcontractors, agents and distributors are excluded unless they are
individuals included in the definition of "Personnel" herein.
20.2 Each individual who Unisys permits to receive access to the Source
Code shall enter into an agreement with Unisys whereby such individual
agrees to give effect to Section 8.4 (regarding ownership of Changes),
and Section 13 hereof (applied as if such individual is an integral
constituent of Unisys for such purpose).
20.3 Each individual who Unisys permits to receive access to the Source
Code shall be prohibited from participating in any design, development
or programming activities relating to any software product or
programming that is competitive with the Package, with the sole
exceptions of (1) the SFB Product (to the extent allowed under Section
4.2 hereof) and (2) such other software product or programming as
Phoenix may approve in the future with express reference to this
Section 20.3 after receiving the notice required by Section 4.1
hereof.
20.4 Unisys shall report to Phoenix, when and as requested by Phoenix, but
in any event at least once per year, the number, location and use of
all copies of the Source Code made or received by Unisys, including
any copies provided or authorized to be made by Unisys. Unisys shall
also notify Phoenix, whether or not requested by Phoenix at the time,
each time the Source Code is delivered to any new operating center,
organization or country.
SECTION 21 - FORCE MAJEURE
Neither Unisys nor Phoenix shall be liable to the other for delays in the
performance of or completion of this Agreement if notice of such delays is
provided as required in Section 23.10 hereof, and if such delay is caused by
strikes, riots, wars, government regulations, acts of God, fire, flood or other
similar causes beyond its control; provided, however, if such delay exceeds
ninety (90) days, the other party shall have the option, exercisable by written
notice, to cancel the Agreement pursuant to Section 11.1 hereof. In no event,
however, shall Unisys' payment obligations hereunder, the conditions for
maintaining exclusivity as set forth herein, or Unisys' obligations with
respect to protection of Phoenix's ownership of intellectual property rights
associated with the Package and Documentation be excused or delayed.
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<PAGE> 31
SECTION 22 - ASSIGNMENT, ETC.
22.1 This Agreement may not be assigned by Unisys, nor may Unisys delegate
or subcontract any obligation incurred hereunder or under any
applicable License Agreement or Support Agreement, except as provided
in Sections 22.2, 22.3 and 22.4 hereof.
22.2 Unisys may appoint subcontractors, agents, or distributors to help
Unisys market the Package to prospective End Users, and to provide
Support Services to End Users who enter into License Agreements,
subject to the following limitations:
1. Each such subcontractor, agent or distributor shall enter into
an agreement with Unisys whereby such subcontractor, agent or
distributor agrees to give effect to Section 8.4, Section 13,
and Section 19 (applied as if such subcontractor, agent or
distributor is an integral constituent of Unisys for such
purpose).
2. Unisys shall be strictly liable for compliance of each
subcontractor, agent and distributor with the foregoing
provisions of this Agreement.
3. No subcontractor, agent or distributor may be given access to
the Source Code for the Package or any Confidential
Information obtained by Unisys derived from such Source Code.
22.3 In undertaking and performing this Agreement, each party shall be
entitled to act through, in concert with, or for the benefit of its
Affiliates (so long as they remain Affiliates), and all references to
either party accordingly shall be construed to mean its Affiliates,
provided that the full resources of each party remain available and
committed for purposes of performance of such party's obligations
hereunder, and provided further that such party is strictly liable for
compliance with all provisions of this Agreement (applied as if such
Affiliate is an integral constituent of such party for such purpose).
22.4 Either party may assign this Agreement to a successor to all or
substantially all of its business and assets. In such event, this
Agreement shall inure to the benefit of, and shall be binding upon,
the parties hereto, their successors and assigns.
22.5 Unisys agrees to give Phoenix prompt notice of any change (by virtue
of one transaction or any series of transactions) in control (as
defined in Section 22.3 above) or principal management of Unisys.
Notwithstanding Section 22.4 above, Phoenix may terminate this
Agreement in connection with such a change in ownership or management,
unless Phoenix is provided assurance satisfactory to Phoenix that
Unisys will be
28
<PAGE> 32
able to perform its obligations hereunder at least as effectively as
Unisys previously was able to provide.
SECTION 23 - GENERAL PROVISIONS
23.1 Governing Law
This Agreement shall be construed, governed and interpreted in
accordance with the laws, but not the rules relating to the choice of
law, of the State of Delaware.
23.2 Captions/Headings
The captions and headings of the Sections, clauses and paragraphs
contained herein have been inserted for the convenience of the parties
and shall not be construed as a part of or modifying any provisions of
this Agreement.
23.3 Waiver
The failure of either party to insist, in any one or more instances,
upon the performance of any of the terms, covenants or conditions of
this Agreement or to exercise any right hereunder, shall not be
construed as a waiver of the future performance of any such term,
covenant or condition or the future exercise of such right.
23.4 Severability
If any court should find any particular provision of this Agreement
void, illegal, or unenforceable, then that provision shall be regarded
as stricken from this Agreement and the remainder of this Agreement
shall remain in full force and effect.
23.5 Independent Contractors
1. It is agreed that the relationship between the parties is that
of independent contractors, and nothing contained in this
Agreement shall be construed or implied to create the
relationship of partners, joint venturers, agent and
principal, employer and employee, or any relationship other
than that of independent contractors. At no time shall either
party make any commitments or incur any charges or expenses
for or in the name of the other party.
2. Unisys agrees to indemnify and hold Phoenix harmless from and
against all commitments, undertakings and liabilities incurred
by or on behalf of Unisys, in dealing with subcontractors,
agents and distributors, and prospective or licensed End
Users, insofar as such commitments, undertakings and
liabilities are in addition to, or
29
<PAGE> 33
different from, the obligations expressly assumed by Phoenix
hereunder, unless Unisys is authorized hereunder to incur
such commitments, undertakings or liabilities.
23.6 Counterparts
This Agreement may be executed in any number of counterparts, each of
which together shall constitute one and the same instrument.
23.7 Publicity
Neither party shall, except as may be required by law or federal
regulation, or except with the prior written permission of the other
party, publicly advertise this Agreement or disclose its contents.
23.8 Risk of Loss
Until such time as deliverable items included in the Package or
Documentation are in Unisys' possession, all risk of loss shall be
Phoenix's.
23.9 Entire Compensation
Except as may be specifically provided otherwise in this Agreement,
each party's performance of the work and fulfillment of its other
obligations under this Agreement and the granting and conveyance of
licenses and rights to the other as provided herein shall be at no
cost or charge to other party.
23.10 Notice of Delay
Whenever any occurrence (e.g., an event of Force Majeure or a filing
under a bankruptcy law) is delaying or threatens to delay either
party's timely performance under this Agreement, that party shall
promptly give notice thereof, including all relevant information with
respect thereto, to the other party.
23.11 Compliance with Law
1. The parties shall in the performance of this Agreement comply
with all applicable laws, executive orders, regulations,
ordinances, rules, proclamations, demands and requisitions of
national governments or of any state, local or other
governmental authority which may now or hereafter govern
performance hereunder.
2. This Agreement is entered into in the United States of
America, all funds shall be paid to Phoenix in U.S. dollars in
the United States of America, and nothing herein shall be
construed to require Phoenix to do
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<PAGE> 34
XXX = Confidential Treatment Requested
business or maintain any office of business establishment
outside the United States of America.
3. Unisys shall, at its own expense, comply with all laws
relating to the marketing, distribution or licensing of the
Package in the Territory, and shall procure all licenses and
pay all fees and other charges required thereby.
4. Notwithstanding anything in this Agreement to the contrary, it
is acknowledged and agreed that neither Phoenix nor Unisys may
ship, export or re-export the Package or Documentation, or any
other information, process, product or service obtained
directly or indirectly from Phoenix, to any country or entity
which is the subject of any prohibition imposed by the U.S.
Export Administration Act of 1979, U.S. Executive Orders, the
U.S. Department of Commerce, and the North Atlantic Treaty
Organization. Without limiting the foregoing, Unisys is
advised that U.S. export laws may currently prohibit the
export of the Package, Documentation, and other technical
information to Cuba. Unisys understands that, if such a
prohibition applies and an export license cannot be obtained
with reasonable effort, the disclosure or delivery of the
Package, Documentation and other technical information may not
occur. If unusual costs are involved in obtaining export
licenses, Phoenix may require Unisys to accept responsibility
for some or all of those costs.
23.12 Access to Books
Through a representative selected by Phoenix for such purpose, Phoenix
shall have reasonable access to the sufficient books and records of
Unisys once every twelve (12) months for the sole purpose of
determining the amounts due hereunder, at Phoenix's own cost;
provided, however, that such auditor agrees to be bound by the
provisions of Section 13. Unisys shall be responsible for the
reasonable costs of such audit if Unisys is found to have understated
or underpaid its royalty or other payment obligations XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX.
SECTION 24 - ADDENDA/ATTACHMENTS
All Addenda, attachments and exhibits referred to as accompanying this
Agreement are hereby incorporated in and made part of this Agreement.
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<PAGE> 35
SECTION 25 - SURVIVAL OF PROVISIONS
In addition to the rights and obligations which survive as expressly provided
for elsewhere in this Agreement, the Sections and Addenda which by their nature
should survive (including, without limitation, Sections 1, 5, 6, 8, 9 (except
9.3 and 9.4), and 10 through 26) shall survive and continue after any
termination or cancellation of this Agreement.
SECTION 26 - ENTIRE AGREEMENT
This Agreement, constitutes the entire agreement between the parties with
respect to the subject matter hereof and shall supersede all previous
proposals, negotiations, representations, commitments, writings, agreements and
other communications, both oral and written, between the parties. This
Agreement may not be released, discharged, changed or modified except by an
instrument in writing signed by a duly authorized representative of each of the
parties.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto, as of the Effective Date.
Phoenix International Ltd, Inc. Unisys Corporation
By: _____________________ By: _____________________
_____________________ _____________________
(Printed Name) (Printed Name)
Title: ______________ Title: ______________
Date: ___________________ Date: ___________________
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<PAGE> 36
SOFTWARE LICENSE AGREEMENT
ADDENDUM A
PACKAGE AND DOCUMENTATION
The following software/data will be delivered on a DDS 90mm DAT tape cartridge.
This cartridge will be recorded using Novaback Backup/Restore Program, Version
4.58.
Current release level source code files for:
- - All Gupta SQL Windows applications (the Phoenix System's "Front End").
- - All Sybase stored procedures (the Phoenix System's ("Back End").
- - All SQR statement generation routines.
Current Release level:
- - File layouts for all system reports.
- - All UNIX scripts used to provide administrative support for Phoenix
database server operations.
- - Files that may be necessary to accommodate various components of the
Phoenix software.
Current release level documentation:
- - One full set of user documentation, online help source code
documentation and graphics documentation.
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XXX = Confidential Treatment Requested
SOFTWARE LICENSE AGREEMENT
ADDENDUM B
SCHEDULE FOR ROYALTIES AND PARTICIPATION FEES
I. PACKAGE
Unisys shall pay to Phoenix royalties with respect to Gross Proceeds
from license and branch fees paid by each End User for each sublicense
of the Package based upon the following schedule:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX from license and branch
fees paid by the End User for each sublicense of the Package for the
first four License Agreements executed after the Effective Date, not
counting Pre-Qualified End Users.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX from license and branch
fees paid by each Pre-Qualified End User for each sublicense of the
Package, XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX from license and branch
fees on all other License Agreements.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX shall be paid by
Unisys to Phoenix, through the receipt of above mentioned royalties.
Such level is to be mutually determined by the parties once the
appropriate and necessary market information is available and the
parties shall then have the opportunity to review such level on a
quarterly basis.
If Unisys makes and completes on its own XXXXXXXXXXXXXXXXXXXXXX
Package and Documentation XXXXXXXXXXXXXXX, then Phoenix's share of
royalties for sublicenses of XXXXXXXXXXXXXXXXXXXXXX of the Package
(when the principal version of the Package used by the End User is
XXXXXXXXXX) shall be reduced by XX.
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<PAGE> 38
XXX = Confidential Treatment Requested
The foregoing division of royalties will apply if Gross Proceeds from
license and branch fees equal or exceed the following amounts:
1. BASE LICENSE AND BRANCH FEES:
A. PACKAGE WITH PHOENIX TELLER SYSTEM
<TABLE>
<CAPTION>
BRANCHES BASE FEES PER BRANCH FEE, OVER BASE FEE
-------- --------- -----------------------------
(IN GROSS PROCEEDS) (IN GROSS PROCEEDS)
------------------- -------------------
<S> <C> <C>
XXXXXXX XXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXX XXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX
</TABLE>
B. PACKAGE WITHOUT PHOENIX TELLER SYSTEM
<TABLE>
<S> <C> <C>
BRANCHES BASE FEES PER BRANCH FEE, OVER BASE FEE
-------- --------- -----------------------------
(IN GROSS PROCEEDS) (IN GROSS PROCEEDS)
------------------- -------------------
XXXXX XXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXX XXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
</TABLE>
C. ADJUSTMENTS
Unisys may, if it so desires, authorize its country managers (or
equivalent) to discount the foregoing base fees on a case-by-case
basis by XXXXXXXX (as calculated and determined by type of fee by
individual End User). With that sole exception, and unless otherwise
agreed in writing by Phoenix, if the Gross Proceeds from license fees
or branch fees paid by an End User are less than the foregoing
amounts, then Phoenix's share of the Gross Proceeds will be
correspondingly increased to equal the amount Phoenix would receive if
Gross Proceeds from such fees were equal to the foregoing base fees.
On the other hand, if the Gross Proceeds from license fees or branch
fees paid by and End User are in excess of the foregoing amounts, then
Unisys' share of the portion of the Gross Proceeds in excess of the
foregoing amounts shall be XXXXXXXXXX than the split it would
otherwise have (e.g., if Package with a Phoenix Teller System for XX
branches should carry a license fee of XXXXXXXX and branch fees of
XXXXXXXX for a total of XXXXXXXX, and if Gross Proceeds actually
received for license fees and branch fees from a particular End User
for XX branches is XXXXXXXX rather than XXXXXXXX, then if Unisys would
otherwise be entitled to XXX of the Gross Proceeds, Unisys will
instead be entitled to XXX of the Gross Proceeds on the incrmental
XXXXXXXX).
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XXX = Confidential Treatment Requested
II. PARTICIPATION IN SUPPORT/MAINTENANCE FEES
Unisys shall pay to Phoenix XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXX from support and/or maintenance fees paid by each End User in
connection with a sublicense of the Package based upon the following
schedule:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX from support and/or
maintenance fees paid by all End Users in connection with each
sublicense of the Package -- for all payments due or received from any
or all End Users (regardless of when the sublicense is executed) until
1 year after the First Conversion Date. (For such purpose, the "First
Conversion Date" shall mean the date on which Conversion and
implementation have been completed for the first End User sublicensed
by Unisys.)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX from support and/or
maintenance fees paid by all End Users in connection with each
sublicense of the Package -- for all payments due or received for all
payments due or received from any or all End Users (regardless of when
the sublicense is executed) between 1 year and 2 years after the First
Conversion Date.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX from support and/or
maintenance fees paid by all End User in connection with each
sublicense of the Package -- for all payments due or received for all
payments due or received from any or all End Users (regardless of when
the sublicense is executed) after 3 years after the First Conversion
Date.
The foregoing division of royalties will apply if Gross Proceeds from
support/maintenance fees received from each End User each year are
XXXXXXXXXXXXXXXXXXXXXXXXXXXX of the base license and branch fees such
End User would pay under Part I. If the Gross Proceeds from
support/maintenance fees paid by an End User are less than the
foregoing amounts, then unless otherwise agreed by Phoenix in writing,
Phoenix's share of the Gross Proceeds will be correspondingly
increased to equal the amount Phoenix would receive if Gross Proceeds
from such fees were equal to the foregoing base fees. On the other
hand, if the Gross Proceeds from support/maintenance fees paid by and
End User are in excess of the foregoing amounts, then Unisys' share of
the portion of the Gross Proceeds in excess of the foregoing amounts
shall be XXXXXXXXXX than the split it would otherwise have (e.g., if
Package with a Phoenix Teller System for XX branches should carry a
license fee of XXXXXXXX and branch fees of XXXXXXX, so that the base
support/maintenance fees should be XXXXXXXX per year, and if the Gross
Proceeds from support/maintenance fees are instead XXXXXXXX per year,
then, if Unisys would otherwise be entitled to XXX of the Gross
Proceeds on support/maintenance fees, Unisys will
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<PAGE> 40
XXX = Confidential Treatment Requested
instead be entitled to XXXXXXXXXXXXXXXXXXXXXXXXX on the incremental
XXXXXXXXX
III. PARTICIPATION IN IMPLEMENTATION/CONVERSION CHARGES.
Unisys shall pay to Phoenix a participation with respect to the Gross
Proceeds from all service fees or charges other than fixed annual
support/maintenance fees. Such other service fees or charges for
which such participation is paid shall include (without limitation)
all charges for professional services and all implementation and
conversion charges paid by each End User in connection with each
sublicense of the Package based upon the following schedule:
XXXXXXXXXXXXXXXXXXXXXXXX on service fees or charges in connection with
the XXXXXXXXXXXXXX License Agreements executed after the Effective
Date; XXXXXXXXXXXXXXXXXXXXXXXX on service fees or charges in
connection with all other License Agreements.
IV. OTHER.
After initial training (time, materials and reasonable travel & living
expenses):
[Note: amounts are stated as net amount of Gross Proceeds to be paid
to Phoenix. Not intended to cover creation or development of
"Latinized version" of the Package as provided in Section 8.3 hereof.]
<TABLE>
<CAPTION>
On-site* Orlando*
<S> <C> <C> <C>
1. Sales and Marketing Assistance -- [as mutually agreed] --
2. Training
Additional Training
(End-User or Unisys) XXXXXXXXX XXXXXX(1)
- Technical
- User Training
- Other
3. Implementation Assistance XXXXXX(2) XXXXXX(2)
4. Technical Assistance XXXXXX(2) XXXXXX(2)
- Country-Specific
Requirement
- Custom Code
- Custom Interfaces
</TABLE>
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XXX = Confidential Treatment Requested
<TABLE>
<S> <C> <C> <C>
5. Support N/A XXXX per
hour (w/2
hr. min.)
</TABLE>
* For Off-Site Services, Unisys shall be responsible for transportation
and living costs. For both On-Site and Off-Site Services, Unisys
shall be responsible for shipping charges, costs of media, and other
out-of-pocket expenses, except that Phoenix shall be entitled to
reimbursement of XXXXXXXX of communications charges (unless such
charges are recovered from End Users, in which case Phoenix shall be
entitled to XXXX reimbursement). Phoenix and Unisys agree to
cooperate in efforts to minimize communications charges to be incurred
by Phoenix.
(1) Up to 3 Students for System Administrator Training and up to 8
Students for End User Training
(2) Per 8 hour work period.
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<PAGE> 42
XXX = Confidential Treatment Requested
SOFTWARE LICENSE AGREEMENT
ADDENDUM C
TERRITORY
XXXXXXXXX
XXXXXX
XXXXX
XXXXXXXX
XXXXXXXXXX
Mexico
XXXX
XXXXXXXXXXXX
XXXXXXXXX
XXXXXXX
XXXXXXXX
XXXXXXXX
XXXXXX
Bermuda
XXXXXXX
XXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXX
XXXXXXXXXX
XXXXXXXXX
XXXXXXX
XXXXXXX
XXXXXXXXX
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<PAGE> 43
SOFTWARE LICENSE AGREEMENT
ADDENDUM D
THIRD-PARTY MATERIALS
Sybase run-time modules are currently included in the Package. Phoenix does
not presently have authorization from Sybase to sublicense such modules in some
or all of the Territory. Unisys is responsible for obtaining authorization
from Sybase to copy and sublicense such modules in the Territory as part of the
Package. Unisys shall be responsible for paying all fees and complying with
all restrictions imposed by Sybase.
Gupta software
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<PAGE> 44
XXX = Confidential Treatment Requested
SOFTWARE LICENSE AGREEMENT
ADDENDUM E
EXCEPTIONS TO EXCLUSIVITY
[NOTE: ADDRESSES AND CONTACT NAMES, WHERE PROVIDED, ARE NOT INTENDED TO BE
LIMITING. REFERENCES TO AN EXCEPTED ORGANIZATION INCLUDE, UNLESS OTHERWISE
STATED, ALL PRESENT AND FUTURE AFFILIATES OF THE LISTED EXCEPTION.]
Part I: Existing business with other business organizations:
1. Phoenix is a party to a Global Solutions Partner Agreement with AT&T
Global Information Solutions ("AT&T"), dated May 1, 1994, and a Business
Framework Exhibit having an End Date of May 1, 1996 (the "AT&T Agreement").
The marketing relationship between AT&T and Phoenix is non-exclusive in the
Territory, and there is currently no activity or effort by either party in
furtherance of the AT&T Agreement. Phoenix's marketing activities under the
AT&T Agreement are limited to defined Prospects who are the subject of an
exclusive or non-exclusive referral. AT&T and Phoenix each have the right to
decline a referral from the other, and to decline joint marketing opportunities
that may be presented. There are no referrals pending or in effect at this
time.
Phoenix has decided, independent of its discussions with Unisys, to terminate
the AT&T Agreement on May 1, 1996. Notice of termination has already been
issued by Phoenix to AT&T. Nonetheless, if any business opportunity exists or
arises in the Territory prior to May 1, 1996 which AT&T or Phoenix desires to
pursue in collaboration with one another pursuant to the AT&T Agreement,
Phoenix reserves the right to do so without obligation to Unisys.
2. Phoenix has a marketing relationship currently in effect with XXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Pursuant to that marketing
relationship, Phoenix will continue to call on and determine the role of Unisys
(provided that Unisys agrees to perform such role, on terms and conditions
mutually acceptable to Unisys and Phoenix) in installation, conversion and
professional services for the following End Users:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
[NOTE: THE FOREGOING XXXXXXXXXXXX SHALL CONSTITUTE HOLD-OUT ACCOUNTS,
INCLUDED IN PART III OF THIS ADDENDUM.]
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XXX = Confidential Treatment Requested
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
[NOTE: THE FOREGOING XXXXXXXXXX SHALL CONSTITUTE A PRE-QUALIFIED END
USER, INCLUDED IN PART II OF THIS ADDENDUM.]
3. Phoenix is a party to a General Agreement for Strategic Relationship
with Hewlett-Packard Company, dated April 30, 1993 (the "H-P Agreement").
Pursuant to the H-P Agreement, Phoenix is precluded from development, porting,
marketing, or selling activities in conjunction with non-HP platforms (the
"exclusivity obligation"). The exclusivity obligation is binding only on
Phoenix by its terms and applies only for markets in the United States and
Canada. Accordingly, the exclusivity obligation is not necessarily binding on
an independent distributor or licensee of the Package. Furthermore, Phoenix
believes there may be legal considerations that would apply to limit its
ability to require end users to procure and use an HP Platform as a condition
for licensing the package. Nonetheless, to avoid question with regard to
Phoenix's compliance with the H-P Agreement, Unisys acknowledges that Phoenix
shall have no obligation to develop, port, market or sell the Package for use
with non-HP platforms in the United States and Canada. Subject to Phoenix's
prior written consent, Unisys may license the Package to Customers in the part
of the Territory overlapping with the United States (i.e., Puerto Rico) only if
(1) the Customer declines to use the Package on an HP platform, or (2) the HP
platform is subject to performance limiting features so that use of the Package
by a Customer on an HP platform is not realistically feasible.
Unisys agrees to cooperate with Phoenix to assure that the Package is marketed
and distributed for use on the HP Products in Puerto Rico. If Phoenix, in its
reasonable judgment, determines that Unisys is unable to provide that
assurance, Phoenix reserves the right to conduct or manage its own marketing
and distribution in those areas as necessary to comply with the terms of the
H-P Agreement.
42
<PAGE> 46
XXX = Confidential Treatment Requested
Part II: Pre-Qualified End Users
XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX
43
<PAGE> 47
XXX = Confidential Treatment Requested
Part III. Hold-Out Accounts
1. Existing End Users:
XXXXXXXXXXXXXXXXXXXXX
XXXXXX
XXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX
2. Marketing Already Substantially in Progress
XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXX
XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
44
<PAGE> 48
XXX = Confidential Treatment Requested
Part IV. For the benefit of understanding, the following prospective
End Users have been the subject of marketing efforts by
Phoenix, but may be pursued by Unisys without being treated as
Pre-Qualified End Users or Hold-Out Accounts.
XXXXXXXXXXXXX
XXXXXXXXXXX
XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXX
XXXXXXXXXXXXXXXXXXXXX
XXXXXXXX
XXXXXX
45
<PAGE> 49
XXX = Confidential Treatment Requested
SOFTWARE LICENSE AGREEMENT
ADDENDUM F
TRAINING OBJECTIVES
<TABLE>
<CAPTION>
Functional Area Objective
- --------------- ---------
<S> <C> <C>
1. Marketing - XXXXXXXXXXXXXXXXXXXXXXXXXXX
- Presentation/ XXXXXXXXXXXXXXXXXXXXXXXXXX
Demonstration XXXXXXXXXXXXXXXXXXXXX
- Collateral XXXXXXXXXXXXXXXXXXXXXXXXX
- Tools XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- XXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXX
- XXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
2. Implementation XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- Methodology XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- PBS XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- Third Party XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Software XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- Network and XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
System XXXXXXXXXXXXXXX
Certification
3. Conversion - XXXXXXXXXXXXXXXXXXXXXXXXX
- Methodology XXXXXXXXXXXXXXXXXX
- Data Mapping - XXXXXXXXXXXXXXXXXXXXXXXX
- Conversion XXXXXXXXXXXXXXXXXXXXX
- Reconciliation/ XXXXXXX
Balancing - XXXXXXXXXXXXXXXXXXXXXXXXX
- Use of Automated XXXXXXXXXXXXXXXXXXXXXXXXXXXX
Tools XXXXXXXXXXXXXXXXXXXX
</TABLE>
46
<PAGE> 50
XXX = Confidential Treatment Requested
<TABLE>
<S> <C> <C>
4. Training (End User - Understand and be able to train the
and Unisys Support trainers of end users in the areas
Personnel): of: initial system set-up, system
a. Methodology capabilities and processing,
b. Systems day-to-day operations, nightly
Administration processing and controls, including
security administration and report
Bank Controls configuration.
R/M Controls
Deposit Controls
Loan Controls
Financial Controls
c. Implementation
Training
Account Processing
Batch Processing
Report Management
Teller Operations
Back Office
Operations
EIS and Budgeting
5. Technical - XXXXXXXXXXXXXXXXXXXXXXXXXX
a. Architectural XXXXXXXXXXXXXXXXXXXXXXX
Methodology XXXXXXXXXXXXXXXXXXXXXXXXXX
Network XXXXXXXXXXXXXXXXXXX
PBS System XXXXXXXXXXXXXXXXXXXXXXXXXXX
Interfaces - Provide appropriate understanding
of methodology of Phoenix for
making Changes at source code level.
Unless otherwise agreed, such
methodology shall provide for
Phoenix to maintain Source Code and
provide Level 2 support with respect
to the basic XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXX of the Package for individual
countries supporting Changes necessary for
use in such countries, but not necessarily
"customer-specific" Changes which may be
subject to separate support terms and/or
separate support charges.
- Differentiate between network,
third party, Unix, and PBS
b. Tools problems, including Level 1
versus level 2.
</TABLE>
47
<PAGE> 51
<TABLE>
<S> <C> <C>
- Effectively configure, price,
implement, and certify PBS
compliant networks (hardware,
software, etc.).
6. Support - Differentiate between Level 1
- Technical and Level 2 support calls.
- User - Answer end user questions
- Tools regarding feature/
functionality problems.
- Record and track open system
issues and documentation.
- Record and track user request
for enhancements.
</TABLE>
48
<PAGE> 52
SOFTWARE LICENSE AGREEMENT
ADDENDUM G
DESCRIPTION OF SUPPORT/MAINTENANCE
LEVEL 1 -- SUPPORT/MAINTENANCE TO BE PROVIDED BY UNISYS
Level 1 is to serve as the point of contact for each End User.
In Level 1, support specialists will be provided as the experts on how to use
the system. The support specialists will be responsible for receiving calls
from End Users and log the calls into the automated call tracking system,
Bugsy. Approximately 80 - 85% of all calls coming into Level 1 should be
resolved by the Level 1 support specialist.
A typical call might be a question about how to use a specific feature of the
Package. In such an instance, the support specialist would log this call into
Bugsy, answer the question and close the incident.
Level 1 also covers reports of those system problems, i.e., the APY is
incorrect on a statement. In such an instance, the support specialist would
log this call into Bugsy and then make sure that all parameters that may affect
APY are set up correctly in the End User's system. If the problem cannot be
identified and resolved by the Level 1 support specialist, the problem is
passed to Level 2.
LEVEL 2
Level 2 is a technical resource available if Level 1 support specialist are
unable to diagnose or resolve problems with the Package.
Once a problem is properly referred from Level 1 to Level 2, the Level 2
technician should direct problem diagnosis and correction. Level 1 support
experts will provide assistance, as requested, if the Level 2 technician needs
to contact the End User for additional information or perform remote tasks.
Problem resolution may involve changing code on the system or fixing a data
field on an End User's files. If the Level 2 technician determines the Package
operates per specifications but the End User would like changes made, the
request is be treated as a request for modifications outside the scope of Level
2 support.
Once the Level 2 technician has completed any necessary "fix" and the "fix" has
been tested by the Q/A department, as applicable, the Level 2 technician would
notify Level 1 personnel that the "fix" is available. Level 1 notifies the End
User of the fix and coordinates delivery and implementation of the "fix" with
the End User. After the End User has verified that the "fix" in fact corrects
the problem, the Level 1 support specialist closes the incident in Bugsy.
49
<PAGE> 53
Level 2 shall include troubleshooting (to the extent within Phoenix's means)
and coordination with licensors or providers of Third-Party Materials to
identify and correct errors in Third-Party Materials. Phoenix shall also
provide technical support for the integration of such Third-Party Materials as
part of the Package.
50
<PAGE> 1
EXHIBIT 10.29
GENERAL AGREEMENT FOR STRATEGIC RELATIONSHIP
This Agreement ("Agreement") is made effective April 30, 1993 (the "Signature
Date") between Phoenix International, Ltd., Inc., a Florida corporation with
principal offices at 475 Montgomery Place, Suite 200, Altamonte Springs,
Florida 32714 ("Phoenix"), and the Hewlett-Packard Company, a California
corporation with principal offices at 3000 Hanover Street, Palo Alto,
California 94304 ("HP").
1. DEVELOPMENT AND ENHANCEMENTS
1.1 Phoenix is developing the Phoenix Banking Systems software that
facilitates the automation of retail banking operations as more particularly
described in Exhibit A ("Programs").
1.2 HP and Phoenix desire to have Programs developed to run on the HP 9000
Series 800 computer systems platform and successor product lines in supported
client/server configurations, and with all associated peripherals ("HP
Products").
1.3 Phoenix shall develop the Programs for the HP Products in accordance with
the delivembles, specifications, development schedule, and other requirements
contained in Exhibit A.
1.4 In order to assist Phoenix in its development obligations under this
Agreement, HP shall provide access to HP Products in accordance with Exhibit B.
1.5 Subject to Section 2.1, any versions, releases, modifications, updates,
upgrades, error corrections, new features, or new functionalitites developed by
Phoenix for the Programs ("Enhancements") shall be made commercially available
by Phoenix on the HP Products no later than the date by which each such
Enhancement is commercially available on any non-HP platforms.
1.6 Except to the extent of any performance limiting features of an HP Product,
all ported Programs and Enhancements shall perform on the HP Products with
features, functionality, and speed no less than that of the performance of the
Programs and Enhancements on any non-HP platforms.
1.7 Phoenix shall adapt all Programs and Enhancements to operate on object code
compatible revisions, releases, and successors to HP Products.
1.8 Phoenix shall conduct performance tests on each developed Program or
Enhancement consistent with the criteria and procedures specified in Exhibit C.
When a Program or Enhancement successfully passes those tests, Phoenix shall
deliver to HP a copy of the
Final Agreement Page 1 4/26/93
<PAGE> 2
Program or Enhancement, together with the test results and all other
deliverables required under this Agreement.
1.9 The development will be complete when the developed Programs or
Enhancements operate on the HP Products in accordance with sections 1.3, 1.6,
and 1.8 above.
1.10 Except as provided in section 1.4 above and in Exhibit E, Phoenix shall
bear all costs and expenses with respect to performing its obligation under this
Agreement.
2. MARKETING
2.1 Phoenix shall be solely responsible for all marketing and distribution of
Programs and Enhancements. Phoenix shall exclusively market and distribute all
Programs and Enhancements on the HP Products for a period of three (3) years
from the date of commercial availability of the Programs or July 1994,
whichever is later. Exclusivity is defined to mean that no development,
porting, marketing, or selling activities of the Programs in conjunction with
non-HP platforms may take place during the term of this Agreement.
(a) The initial term of exclusivity shall apply to the United States and
Canada only and,
(b) HP and Phoenix have a mutual desire to expand into International markets,
that is all geographic markets outside the United States and Canada.
Phoenix agrees to discuss with HP opportunities to expand the area of
exclusivity into International markets.
2.2 Phoenix shall promote all Programs and Enhancements on the HP Products in
a commercially reasonable fashion. Such promotion shall include a statement
in Phoenix's literature of the availability of the Programs and Enhancements on
the HP Products.
2.3 Except as expressly provided in the Agreement, neither HP nor Phoenix has
made any promise or other representation regarding any Program or Enhancement,
including with respect to the success of any Program or Enhancement in the
marketplace.
2.4 Upon completion of the development of the Programs initially developed
pursuant to sections 1.3, 1.8, and 1.9 above, HP may assist Phoenix in becoming
a U.S. Value Added Business in accordance with HP's standard programs and
agreements.
2.5 Phoenix shall provide HP with three (3) free copies of each Program and
Enhancement, including all associated documentation. Such copies shall be for
demonstration, benchmarking, support, and training purposes and may not be
copied, reverse engineered, or distributed, nor the contents thereof disclosed
to any other person without Phoenix's prior written approval.
2.6 Phoenix agrees to sign and execute standard HP Software Supplier Agreements
on an annual basis. These Software Supplier Agreements have individual terms
of one (1) year and are to be renewed each year as long as Phoenix has
maintained its commitment to exclusivity as
Final Agreement Page 2 4/26/93
<PAGE> 3
XXX = Confidential Treatment Requested
set forth in Section 2. 1.
3. FUNDING AND CASH PAYMENTS
3.1 HP shall pay Phoenix XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (the
"Development Fee") which will be used by Phoenix to meet its development
obligations as set forth in sections 1.3, 1.6, 1.8, and 1.9. Payments shall be
made by HP to Phoenix in installments according to milestones as set forth in
Exhibit E.
3.2 Phoenix shall use its best efforts to complete milestones by the dates
listed in Exhibit E. HP shall pay the Development Fee as long as the estimated
Alpha Release date does not fall behind the schedule provided in Exhibit E by
more thin ninety (90) days. If the Alpha Release date has fallen behind by
more than ninety (90) days, then HP shall have the right to renegotiate the
terms of its cash payments to Phoenix or failing mutual agreement, HP shall
have the right to a refund of all monies paid or to be paid through the date of
Alpha Release.
3.3 Phoenix shall pay HP XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, in accordance
with the installation of the Programs on HP Products XXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXX. Phoenix shall pay HP the XXXXXXXX according to the following
schedule: i) the first installment payment of XXXXXXX shall occur upon the
XXXXXXXXXXXXXXXXX of the Programs on HP Products to an end-user customer. The
installment payments of XXXXXXX shall continue with XXXXXXXXXXXXXXXXXXXXXX of
the Programs on HP Products to end-user customers until XXXXXXXX installment
payments have been completed. Upon termination of the Agreement as provided
in Section 7, Phoenix shall immediately pay HP all parts of the XXXXXXXX which
have not paid as specifled above.
3.4 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX on HP 9000
Series 800 products when sold directly by HP and leveraged by the Programs to
any and all end user customers which have paid Phoenix XXXXXXX and signed a
copy of the XXXXXXXX letter specified in Exhitit F as an advance against future
XXXXXXXXX on the HP Products. Phoenix must have received the XXXXXXX payments
from participating end-user customers XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. The
XXXXXXXXXXXXXXXXXXXXXX authorization to end-user customers expires XXXXXXXXXXX
XXXXXXXX. That is, participating end-user customers must have purchased and
installed the Programs on HP Products XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX to
receive XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. This discount
authorization is not valid with XXXXXXXXXXXXXXXXXXX on the HP Products.
4. SUPPORT
4.1 Phoenix shall be solely responsible for all maintenance and support
of Programs and Enhancements on the HP Products. At a minimum, Phoenix shall:
(a) Cure defects in the Programs, Enhancements, and associated documentation
pursuant to the requirements set forth in Exhibit C;
Final Agreement Page 3 4/26/93
<PAGE> 4
(b) Maintain a telephone number for HP and end-users to call during Phoenix's
business hours to report defects and to otherwise receive assistance; and
(c) Coordinate problem resolution with HP when operational problems appear
traceable to HP Products.
4.2 Phoenix and HP have designated, in Exhibit D, Account Managers to facilitate
communication between Phoenix and HP. The Account Managers may be changed by
either party upon notice to the other.
4.3 Phoenix shall support each Program and Enhancement for five (5) years after
the date that Phoenix discontinues distributing the Program or Enhancement on
the HP Products.
5. Warranty and Indemnity
5.1 Phoenix warrants that:
(a) It has the rights necessary to perform this Agreement, without
restriction; and
(b) The Programs, Enhancements, and associated documentation and intellectual
property do not violate or infringe any third party's intellectual
property rights.
5.2 As used in the Agreement, the term "intellectual property" means all
patents, tradenames, trade secrets, trademarks, service marks, copyrights,
and other similar proprietary rights.
5.3 Phoenix shall defend at its sole expense any claim, suit, or proceeding
brought against HP or end-users that any Program, Enhancement, or asociated
documentation violates or infringes any third party's intellectual property
right (collectively "Infringement Action"). HP shall give Phoenix the
authority, information, and assistance (at Phoenix's expense) to defend the
Infringement Action. Phoenix shall pay all damages and costs awarded in any
Infringement Action against HP or end-users.
5.4 EXCEPT AS EXPRESSLY PROVIDED IN THE AGREEMENT, NEITHER PARTY SHALL
BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES
(INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS) ARISING OUT OF ANY PERFORMANCE
OF THIS AGREEMENT OR IN FURTHERANCE OF THE PROVISIONS AND OBJECTIVES OF THIS
AGREEMENT, THE FOREGOING EXCLUSION OF DAMAGES SHALL APPLY REGARDLESS OF
WHETHER SUCH DAMAGES ARE BASED ON TORT, WARRANTY, CONTRACT, OR ANY OTHER
LEGAL THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6. PROGRAMMING MATERIALS
Final Agreement Page 4 4/26/93
<PAGE> 5
6.1 Phoenix hereby grants HP and its subsidiaries a present, worldwide,
non-exclusive, fully paid-up license to use the Programming Materials to
support and maintain the Programs on the HP Products. HP's license shall be
exercisable only in the event Phoenix ceases to do business in the normal
course or enters into any proceeding in bankruptcy, whether voluntary or
involuntary.
6.2 The term "Programming Materials" includes the source code version of each
Program and Enhancement, in a format acceptable to HP, together with all
associated printouts, listings, programmers' notes, technical documentation,
custom compilers, utilities, libraries, test suites, build scripts, and other
materials necessary for HP to exercise its license.
6.3 Phoenix shall provide all Programming Materials to HP on request at any time
after exercise of the license by HP.
6.4 Except as provided in this article 6, this Agreement grants no license in
the Programs or Enhancements to HP.
7. TERM AND TERMINATION
7.1 This Agreement shall have an initial term of three (3) years from the
date of general availability of the Programs, expected to be July 1994. It
shall automatically be renewed for successive one-year terms thereafter unless
a written notice of termination is given by HP or Phoenix to the other no
later than six (6) months prior to the expiration of the initial or any
subsequent term.
7.2 This Agreement may be terminated either (i) at any time upon mutual
agreement; or (ii) by either party upon thirty (30) days written notice in the
event of a material breach of any obligations under this Agreement by the
other party, provided, however, that the party in breach shall have an
opportunity to cure such breach during the thirty (30) day period, or such
longer period as is reasonably required to cure such breach, and if so cured to
the reasonable satisfaction of the other party, no termination will be deemed
to have occurred.
7.3 This Agreement shall not become effective unless Phoenix receives at least
five hundred thousand dollars ($500,000) in startup capital from prospective
end-user customers within ten (10) days of the Signature Date of this Agreement
(the "Effective Date"). Otherwise, this Agreement is null and void and all HP
Products loaned to Phoenix for development of the Programs and any cash
payments made by HP to Phoenix shall be returned immediately to HP, at
Phoenix's expense.
7.4 The following provisions shall survive the termination of this Agreement:
Sections 4, 5, 6, and Section 3.3.
8. Miscellaneous
8.1 All notices under this Agreement shall be in writing and shall be
considered given as of
Final Agreement Page 5 4/26/93
<PAGE> 6
twenty-four (24) hours after sending by electronic means (such as telecopy) or
by air courier service or as of forty-eight (48) hours after deposit in the
U.S. Mail (certified, return receipt requested). All notices shall be sent to
the respective Account Manager at the address listed on Exhibit D.
8.2 Neither party may, without the prior written consent of the other party,
publicize or otherwise disclose the terms or existence of this Agreement to any
third party.
8.3 Neither party shall assign or otherwise transfer any rights or
responsibilities set forth in this Agreement.
8.4 The following Exhibits are fully incorporated in this Agreement by the
first reference in this Agreement to each such Exhibit:
(a) Exhibit A, the Programs, Program Specifications, and Deliverables;
(b) Exhibit B, Access to HP Products;
(c) Exhibit C, Performance Criteria and Error Definitions;
(d) Exhibit D, Account Managers; and
(e) Exhibit E, Payments Milestones.
8.5 The remedies contained in this Agreement are in addition to any other
remedies available at law or in equity.
8.6 Neither party's failure to exercise any right under this Agreement shall be
deemed a waiver of such right.
8.7 This Agreement represents the entire understanding and agreement between
the parties as to the matters set forth. Any representation, promise, or
condition not explicitly set forth in this Agreement shall not be binding on
either party.
8.8 No provision of this Agreement shall prevent HP from having the right to
market directly or indirectly or otherwise support the marketing of software
applications which compete with the Programs.
9.9 This Agreement may only be modified by a writing signed by authorized
representatives of both Phoenix and HP.
Final Agreement Page 6 4/26/93
<PAGE> 7
PHOENIX INTERNATIONAL, LTD., INC. HEWLETT-PACKARD COMPANY
By: /s/ Bahram Yusefzadeh By: /s/ Carol G. Mills
------------------------------ --------------------------
Typed Name: Bahram Yusefzdeh Typed Name: Carol G. Mills
---------------------- ------------------
Title: President Title: General Manager
--------------------------- -----------------------
Date: 4-30-93 Date: 4-30-93
---------------------------- ------------------------
Final Agreement Page 7 4/26/93
<PAGE> 8
EXHIBIT A: PROGRAMS, PROGRAM SPECIFICATIONS, AND DELIVERABLES
-------------------------------------------------------------
1. Programs to be Developed:
/ / Customer Information Facility
/ / Financial Management Deposits
/ / Loan
/ / System Manager
2. Program Specifications:
(a) Features and functionality
- Customer Information Facility - providing a fully integrated
customer information management and reporting capability that will
support the banking industry's growing emphasis on a "personal
banker" approach to products and services. The CIF module will be
fully integrated with the system's online signature verification
capability.
- Financial Management - providing support for general ledger,
balance sheet and profit & loss reporting, budgeting, cost center
accounting, and holding company consolidation. The Financial
Management module will also provide an Executive Information
System for graphical consolidated reporting.
- Deposits - supporting the processing needs of traditional
checking, savings, and time deposit products including Individual
Retirement Accounts, Keough programs, and tax-deferred annuities.
Transaction processing will support online platform and teller
entry; batch MICR capture; and online clearing for Fedline, ATM, and
ACH items.
- Loan - supporting all traditional functions in the areas of
installment, mortgage, line-of-credit and commercial lending. This
module will include an integrated link to the system's document
imaging facility.
- System Manager - providing integrated controls for all
cross-application functionality and external system interfaces. In
addition, System Manager will link all application data to an
optical disk archival system.
(b) Performance:
The Programs will provide levels of performance equal to or greater
than comparable bank applications software on equivalent hardware
platforms.
3. Deliverables:
Final Agreement Page 8 4/26/93
<PAGE> 9
(a) Program Media:
All Programs and Enhancements will be delivered on 4mm Digital Data
Storage (DDS) or CD-ROM formatted for the applicable target
environment.
(b) Documentation:
All documentation will be delivered in paper format.
(c) Product Literature:
Product literature formats will be determined in the future.
4. Schedule of Development:
(a) Initial designs of core banking applications are complete.
(b) Final tuning of these designs will be completed by March 15, 1993.
(c) Full scale programming will begin by March 31, 1993.
(d) Beta installation is scheduled for April 1994.
(e) National rollout of the Phoenix Banking System will begin in July
1994.
Final Agreement Page 9 4/26/93
<PAGE> 10
EXHIBIT B: ACCESS TO HP PRODUCTS
--------------------------------
1. To assist Phoenix in its development obligations under the Agreement, HP
will loan Phoenix the following HP Products:
<TABLE>
<CAPTION>
Qty Description
- --- -----------
<S> <C>
1 HP 9000 Model 817S Business Server standard configuration
except: w/32MB RAM upgrade, 1.3 GB Disk, Powerfail
Battery Backup
10 Vectra 486/66U - Model 240
2 Vectra 486/66U - Model 430
11 14" Super VGA Display
1 20" High-Resolution Color Display
12 Ethertwist EISA 32-bit Adapter Card
1 Ethertwist Hub Plus 48
1 Router ER
1 HP Remote Bridge RB
1 Ethertwist Hub 8
1 OpenView Interconnect Manager/Windows
1 OpenView Resource Manager/Windows
1 OpenView Hub Manager/Windows
2 Laserjet 4 Printer
2 Laserjet Postscript SIMM
2 Laserjet RAM Upgrade - 8MB
1 Paintjet XL300 Color Postscript Printer
1 Paintjet RAM Upgrade - 4MB
1 Scanjet IIc
1 Scanjet Automatic Document Feeder
1 CD-ROM Drive
1 SCSI Tape Backup Unit (525MB capacity);
</TABLE>
(the "Loaner Products"). The description of the Loaner Products is subject to
any changes evidenced in miscellaneous shippers issued from time to time by HP.
HP retains title and ownership to the Loaner Products, although Phoenix shall
be responsible for all risk of loss or damage to Loaner Products until returned
to HP.
2. The Loaner Products shall be loaned to Phoenix for a period on three (3)
years from the date of this Agreement (the "Loan Period"). Unless Phoenix
obtains title to the Loaner Products as provided in Section 9 of this Exhibit
B, the Loaner Products shall be returned to HP immediately upon the expiration
of the Loaner Period, at Phoenix's expense.
3. Subject to availability, HP shall ship the Loaner Products to the Phoenix as
soon as practical after all necessary documents to evidence and perfect HP's
security interests in the Loaner Products, as required by applicable law and
as elected by HP, are recorded or filed.
Final Agreement Page 10 4/26/93
<PAGE> 11
Phoenix hereby irrevocably appoints HP as its attorney-in-fact to execute any
document reasonably necessary to protect its right, title, and interest in the
Loaner Products.
4. During the Loan Period, HP will provide, at no charge to Phoenix, remedial
hardware maintenence on the Loaner Products on as as-needed basis to cover
equipment failures.
5. Phoenix will purchase a separate software support contract, at ResponseLine
level of support or higher, for the Loaner Products for the duration of the Loan
Period.
6. Phoenix's right-to-use the Loaner Products is non-transferable, and Phoenix
shall not encumber the Loaner Products in any manner. Phoenix shall use the
Loaner Products only at Phoenix's principal or development offices and primarily
for development and testing purposes incident to this Agreement.
7. All software in the Loaner Products shall be licensed from HP under HP's
standard software license terms.
8. Phoenix is responsible for adequate levels of training on the HP-UX Operating
System and HP-UX System Administration.
9. Upon completion of the Loan Period and if Phoenix has satisfactorily met all
milestones as set forth in Exhibit E, HP will transfer ownership of the Loaner
Products to Phoenix. Upon the transfer, HP shall, at Phoenix's request, execute
any documentation requested by Phoenix to evidence Phoenix's right, title, and
interest in the Loaner Products.
Final Agreement Page 11 4/26/93
<PAGE> 12
EXHIBIT C: PERFORMANCE CRITERIA AND ERROR DEFINITIONS
-----------------------------------------------------
1. Performance Criteria:
The Phoenix Banking System is designed to provide performance and throughput
that are at least equivalent to comparative applications on comparative
hardware platforms.
2. Testing Procedures:
Phoenix testing will be automated both from a test execution and a test design
and management standpoint. Through the use of these automated testing tools,
QA will be able to execute structured performance and regression testing against
the Phoenix Banking System.
The testing environment is able to replay and monitor all keystrokes, mouse
movements, and DDE conversations. In addition, automated testing for the
existence of files, windows, and tasks can be performed, and comparisons
utilizing masks and filters can be made between screens and individual
windows. All test results and performance scores are stored in a test
repository and future testing can reference this repository as well as
predetermined baselines.
3. Error Definitions:
(a) Severity 1 Error - Produces an emergency situation in which the Program or
Enhancement is unusable; produces incorrect results; loses information or
data; or fails catastrophically in response to internal errors, user errors, or
incorrect input files.
(b) Severity 2 Error - Produces a detrimental or serious situation in which
performance (throughput and response) of the Program or Enhancement degrades
such that there is a severe impact on use; the Program or Enhancement is usable
but incomplete; one or more commands or functions are inoperable; or the use of
the Program or Enhancement is otherwise significantly impacted.
(c) Severity 3 Error - Produces an inconvenient situation in which the Program
or Enhancement is usable but does not provide a function in the most convenient
or expeditious manner, and the use of the Program or Enhancement suffers little
or no significant impact.
(d) Severity 4 Error - Produces a notice situation in which the use of the
Program or Enhancement is affected in some way which is correctable by a
temporary documentation change or workaround to be permanently corrected in the
next scheduled release.
3.1 HP software quality standards require that no Severity 1 or 2 errors will
be allowed and less than five (5) total Severity 3 or 4 errors will be allowed
for the Programs to be commercially released.
4. Procedure for Remedying Errors:
Final Agreement Page 12 4/26/93
<PAGE> 13
During the initial development stages all error reporting and correction will
be handled by the development and design groups. When the Alpha systems are
released, an accompanying document will define the procedures and contacts for
reporting and remedying any application errors that are discovered.
Following the production release, all error reporting will be handled through
the customer support area and an additional document will be released at that
time to define the procedures and contacts that should be utilized.
Final Agreement Page 13 4/26/93
<PAGE> 14
XXX = Confidential Treatment Requested
EXHIBIT D: ACCOUNT MANAGERS
---------------------------
<TABLE>
<CAPTION>
Phoenix Executive Manager: HP Executive Account Manager:
-------------------------- ----------------------------
<S> <C>
Name: Bahram Yusefzadeh Name: XXXXXXXXXXX
Title: President/CEO Title: Director - Strategic Business
Address: 475 Montgomery Place Address: 19111 Pruneridge Ave
Suite 200 Cupertino, CA 95014
Altamonte Springs, FL 32714
Telephone: (407) 862-1441 Telephone: (408) 447-XXXX
FAX: (407) 862-3432 FAX: (408) 447-
Phoenix Technical Manager HP "Phoenix" Account Manager:
------------------------- -----------------------------
Name: George Taylor Name: XXXXXXXXXXXX
Title: Executive VP - Development Title: Channels Business Manager
Address: 777 East Kerr Ave Address: 19111 Pruneridge Ave
Wilmington, NC 28403 Cupertino, CA 95014
Telephone: (919) 791-9200 Telephone: (408) 447-XXXX
FAX: (919) 791-5700 FAX: (408) 447-XXXX
HP Technical Manager
--------------------
Name: XXXXXXXXXXXX
Title: R & D Manager
Address: 19055 Pruneridge Ave
Cupertino, CA 95014
Telephone: (408) 447-XXXX
FAX: (408) 447-XXXX
</TABLE>
Final Agreement Page 14 4/26/93
<PAGE> 15
XXX = Confidential Treatment Requested
EXHIBIT E: HP - PHOENIX PAYMENT MILESTONES
------------------------------------------
<TABLE>
<CAPTION>
TARGET DATE PAYMENT AMOUNT MILESTONE DESCRIPTION
-------------------------------------------------------------------------
<S> <C> <C>
XXXXXXXXXXXXXX XXXXXXXX Upon the Effective Date this Agreement as
provided in Section 7.3
XXXXXXXXXXXXXX XXXXXXXX Design Complete; Technology Audit
Final Review, Sign-off and Documentation of:
- Entity-Relationship Diagram (ERD)
- User Interface Standards
- Object Development/Re-use Standards
- Software Metrics Procedures and Expectations
- Joint Application Development Procedures
- Software Quality Assurance Program
- Project Timeline
XXXXXXXXXXXXXXXXX XXXXXXXX Completion of Alpha System
XXXXXXXXXXXXX XXXXXXXX Programs Complete; General Availability
</TABLE>
Final Agreement Page 15 4/26/93
<PAGE> 16
XXX = Confidential Treatment Requested
EXHIBIT F: XXXXXXXX LETTER
--------------------------
April 12, 1993
______________________ Bank or Bank Holding Company Name
______________________ Street Address
______________________ City, State, ZIP Code
Dear _________,
As you know, we have entered into an agreement with Phoenix International
LTD., Inc. in order for them to develop a client/server-based banking
software system that will run on Hewlett-Packard hardware.
In conjunction with Phoenix International LTD., Inc., we have agreed to offer
each of the initial participating Banks or Bank Holding Companies a XXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX on HP 9000 Series 800 systems and associated operating
software purchased by the Bank or Bank Holding Company and sold directly by
Hewlett-Packard for use with the Phoenix Banking System software. This offer is
valid so long as you:
1. XXXX delivery of such equipment XXXXXXXXXXXXXXXXXXXXXXXXXX, and
2. Make a deposit of XXXXXXX with Phoenix International, LTD., Inc. upon
signing of this letter.
This XXXXXXXXXXXX offer applies only to HP 9000 Series 800 hardware, associated
operating system software, and peripherals required for operation such as disc
drives and tape drives. Desktop items such as PCs, laser or ink-jet printers,
plotters, scanners are not eligible XXXXXXXXXXXXXXXXXXXXXXX. This XXXXXXXXXXXX
offer is not valid XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX is available only one per Bank customer.
It shall be clearly understood that the Banks or Bank Holding Companies have no
obligation to purchase any equipment from the Hewlett-Packard Company. It shall
also be clearly understood that the availability, delivery, licensing terms,
and support under which the Phoenix Banking System software may be provided is
the sole responsibility of Phoenix International LTD., Inc. The
Hewlett-Packard Company assumes no responsibility with respect to the Phoenix
Banking Systems software. Additionally, the Hewlett-Packard Company assumes no
responsibility with respect to the XXXXXXX payment to Phoenix International,
LTD., Inc.
If you wish to receive XXXXXXXXXXXXXXXX offer as stated above, please sign a
copy of this letter, list names of all your affiliates or subsidiary banks and
return it to Phoenix International LTD., Inc. with your check for XXXXXXX.
We look forward to having you as a Hewlett-Packard customer.
Final Agreement Page 16 4/26/93
<PAGE> 17
Sincerely,
Bernard Guidon
Hewlett-Packard Company
Final Agreement Page 17 4/26/93
<PAGE> 18
XXX = Confidential Treatment Requested
ATTACHMENT TO EXHIBIT F
Bank or Bank Holding Company
- ----------------------------
- ----------------------------
- ----------------------------
- ----------------------------
Affiliate or Subsidiary Banks
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
- ---------------------------- --------------------------
Enclosed is a our check for for XXXXXXX. We wish to have the option to
purchase the HP 9000 Series 800 hardware in conjunction with the Phoenix
Banking System software as indicated in your letter dated April 12, 1993, at a
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
Authorized Signature
Bank or Bank Holding Company
- --------------------------
Title
- --------------------------
Printed Name
- --------------------------
Signature
- --------------------------
Date
- --------------------------
Final Agreement Page 18 4/26/93
<PAGE> 1
EXHIBIT 10.30
Agreement No. ______
PHOENIX INTERNATIONAL LTD., INC.
SOFTWARE LICENSE AGREEMENT
PARTIES:
BANK'S NAME
AND
PHOENIX INTERNATIONAL LTD., INC., A FLORIDA CORPORATION
PHOENIX FSC, INC.
DATED: MAY 2, 1996
<PAGE> 2
CONTENTS
Section 1. Definitions
Section 2. License Grant
Section 3. Term
Section 4. Title
Section 5. Payments and Terms
Section 6. Warranties
Section 7. Patent and Copyright Indemnity
Section 8. Confidentiality
Section 9. Customer and Software Support Services
Section 10. Implementation, Conversion and Installation
Section 11. Termination
Section 12. Client Obligations
Section 13. Source Code Escrow
Section 14. General
EXHIBIT LIST
Exhibit A Fees and Software Description
Exhibit B Designated and Remote Locations
Exhibit C Contact Person
Exhibit D Third Party Hardware and Licensed Software Configurations
<PAGE> 3
PHOENIX INTERNATIONAL LTD., INC.
SOFTWARE LICENSE AGREEMENT
AGREEMENT NO. ______________________ EFFECTIVE DATE: ________________
PARTIES: (Hereinafter referred to as "Customer")
Phoenix International Ltd., Inc. (Hereinafter referred to as "Phoenix")
Phoenix FSC, Inc.
900 Winderley Place
Suite 140
Maitland, Florida 32751
The parties hereby agree as follows:
1.0 DEFINITIONS
1.1 "Conversion" shall mean conversion and formatting of Customer's existing
data for use with the Software.
1.2 "Customer Network" shall mean the local and wide area network
communication system, server, remote PC's and Software based on the
machine and technical specifications as set forth in Exhibit D.
1.3 "De-Conversion" shall mean the regeneration of the Customer's existing
data utilized by the Software into a generic format.
1.4 "Designated Location" is the street address of the server as specified on
Exhibit B., as modified from time to time by written notice from Customer,
plus remote PC's connected to the server by local or wide area network.
1.5 "Installation" shall mean the installation in an executable format of the
Software on the Customer System at the Designated Location and all Remote
Locations.
1.6 "Implementation" shall mean the Installation and Conversion of the
Customer data for use by the Software.
1.7 "Implementation Date" shall be the last day of the month in which Phoenix
provides Customer with notice that the Software is installed and the
Conversion is complete.
License Agreement
May 2, 1996.0
Page 1
<PAGE> 4
1.8 "Implementation Period" shall be the period from the Effective Date until
the earlier of (i) the Implementation Date or (ii) the date one hundred
eighty (180) days after the Effective Date.
1.9 "Documentation" shall mean all documentation generally provided to
Phoenix's customers with the Software.
1.10 "Licensed Products" shall mean collectively the Software and
Documentation.
1.11 "Software" shall mean Phoenix's Retail Banking System software and Third
Party software, as described in Exhibit A, in object code form and all
updates, modifications, enhancements or revisions supplied by Phoenix, as
part of Customer and Software Support services.
1.12 "Remote Locations" shall mean the street addresses listed in Exhibit B as
may be modified from time to time by written notice from Customer to
Phoenix, where PCs/workstations are connected to the Software through the
Customer's local and wide area networks.
1.13 "Use" shall mean the reading into memory of the Software and the
execution of such Software, in whole or in part, by the Customer Network
for the Customer's own data processing. Use of the Software shall be
confined to the United States of America, unless otherwise agreed in
writing by Phoenix. Commencement and effectiveness of Customer's license
of the Licensed Products is not delayed or contingent based on the
delivery or completion of any related or other services, including
Implementation, and Customer Software Support.
1.14 "Related Expenses" shall mean reasonable travel and other reasonable
out-of-pocket expenses incurred in Implementation and/or Customer and
Software Support, including (without limitation) file conversion costs;
optional products, services, or hardware requested or authorized by
Customer; shipping charges; courier or delivery charges; tape, cartridge
or diskette costs; or non-voice telephone or communication costs not
already covered as part of Customer and Software Support.
2.0 LICENSE GRANT
2.1 Phoenix hereby grants to Customer a non-exclusive non-transferable
license to Use Software on the Customer Network and to use the
Documentation in support of the Software during the term and pursuant to
the terms and conditions of this Agreement. Phoenix will provide one copy
of the Software and Documentation.
2.2 Customer may copy the Software and the Documentation provided to Customer
in machine readable form into machine readable or printed form to provide
sufficient copies to support the Customer's Use of the Software as
authorized under this Agreement. Customer shall not make any other copies
of the Software, except for testing, backup, or archive purposes.
Customer may make unlimited copies of the Documentation, subject to the
provisions of Section 4.0 and 9.0. Customer shall maintain a record of
the number and location of all copies of the Software and Documentation;
and a copy of that record will be provided to Phoenix upon request.
2.3 Customer may transfer the Software to: (a) A backup machine when the
Customer's server or any associated machine elements required for Use of
the Software are temporarily inoperable or unusable; or (b) Another
machine for disaster recovery testing (which may occur concurrent with
normal Use of the Software to process Customer's data on Customer
Network), or another machine for actual disaster recovery and processing
in the event the Customer Network is non-functional due to the occurrence
of disaster.
License Agreement
May 2, 1996.0
Page 2
<PAGE> 5
2.4 The License herein granted is subject to the following restrictions and
limitations:
2.4.1 Customer may Use the software to process only its own data or the
data of the Customer Group. For such purpose, the "Customer Group"
means a subsidiary or affiliate of Customer, the parent corporation of
Customer, and any holding company of which Customer is a subsidiary
(collectively the "Customer Group"), except that Customer may process
the data only of such members of the Customer Group for which Customer
paid or pays, prior to commencement of processing for such members of
the Customer Group, License Fees at all times sufficient for their
aggregate asset size calculated in combination with the asset size of
Customer. For the purpose of this subsection, an affiliate will mean a
corporation that is more than fifty percent (50%) owned directly or
indirectly by the parent corporation of a Customer, a subsidiary shall
be a corporation of which Customer directly or indirectly owns more than
fifty percent (50%), and a parent corporation shall be a corporation
that directly or indirectly owns more than fifty percent (50%) of
Customer, but only so long as such entities continue to qualify as such
an affiliate, subsidiary or parent corporation.
2.4.2 Customer shall not translate, reverse engineer, de-compile,
interpret or disassemble the Software. Customer shall not transfer,
distribute, sell, lease, or assign the Licensed Products except as
expressly authorized in this Agreement. Customer shall not make any
modifications or additions to the Software or Documentation without the
prior written consent of Phoenix.
3.0 TERM
This Agreement and the license granted herein shall be for an initial
term commencing on the Effective Date and continuing for a period of
five (5) year from the last day of the Implementation Period (the
"Initial Term"). This Agreement shall be automatically renewed for an
additional one (1) year periods unless either party notifies the other
of its desire to not renew this Agreement more than six (6) months prior
to the last day of the Initial Term or any renewal period.
4.0 TITLE
Phoenix represents and warrants to Customer that it owns all right,
title and interest in or has sufficient rights to license all of the
Software. Customer acknowledges that the Licensed Products are either
owned or licensed by Phoenix, that neither legal nor equitable title to
the Licensed Products passes to Customer pursuant to this Agreement, and
that the Licensed Products contains trade secrets of Phoenix. Customer
shall ensure that copyright notices or other legends contained in or on
any copies of the Licensed Products remain in or on the original and any
copies reproduced by Customer. All copies, modifications and additions
made by Customer of or to the Software and Documentation shall become
the property of Phoenix.
5.0 PAYMENTS AND TERMS.
5.1 The fees and charges for products and services to be provided under this
Agreement are set forth in Exhibit A. All amounts due shall be paid in
U.S. dollars.
1) An initial one-time License Fee for the license of the Software is
due upon execution of this Agreement by Customer. The License Fee is
for the delivery by Phoenix of the Software in its unmodified form. The
License Fee is calculated based upon asset size of Customer and
License Agreement
May 2, 1996.0
Page 3
<PAGE> 6
XXX = Confidential Treatment Requested
any included Customer Group, according to the schedule set forth in
Exhibit A. Each time Customer and the Customer Group, or any of them,
merges, adds affiliates or otherwise grows beyond the aggregate asset
size for which Customer has paid a License Fee, Customer agrees to pay an
upgrade fee equal to the then current difference in tiers.
2) An initial one-time Implementation Fee for Phoenix's Implementation
services is due upon execution of this Agreement by Customer. Phoenix
shall be entitled to additional Implementation Fees, to be paid in
advance, if Implementation is required whenever Customer or the Customer
Group merges, adds affiliates, etc.
3) A Customer and Software Support Fee is due on the Implementation Date
and each anniversary thereof for so long as the license to the Software
is in effect or Customer continues to use the Software.
4) Customer agrees, in addition, to pay Related Expenses upon receipt of
Phoenix's invoice.
5.2 All invoices shall be due and payable not later than fifteen (15) days
following the date of invoice. Sums overdue shall bear interest at the
lesser of (i) 1 1/2% per month, or (ii) the highest rate allowed under
applicable law.
5.3 Amounts payable to Phoenix hereunder are payable in full without
deduction, or set off, and shall be in addition to all sales, use or
other taxes or duties, which Customer shall also be responsible for
paying. Customer shall duly and timely pay all taxes and duties, however
designated, levied or based upon amounts payable to Phoenix hereunder
(exclusive of United States Federal, state or local taxes based upon the
net income of Phoenix) or the license, use or possession of the Licensed
Products. Customer agrees to indemnify and hold Phoenix harmless from
any such taxes or duties which any federal, state or local taxing
authority requires Phoenix to pay. Customer may challenge the
applicability of any such tax only after paying the tax or giving
Phoenix other satisfactory assurances of compliance.
5.4 Phoenix reserves the right to adjust its prices at any time subject to 30
days advanced notice. Such changes shall have no retroactive effect on
Customer. The Customer and Software Support Fee shall not be increased
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
6.0 WARRANTIES
6.1 Phoenix warrants, for a period of six (6) months after delivery, the
original unmodified version of the Software shall conform in all
material respects with any program descriptions included in
corresponding Documentation provided by Phoenix. Phoenix does not
warrant that the Licensed Products will operate without interruption or
be error-free. In the event Customer discovers any defect or error
covered by the warranty, Customer agrees to provide Phoenix sufficient
detail to enable Phoenix to recreate the defect or error. Phoenix
agrees, as its exclusive obligation (except as covered outside the
foregoing warranty as part of Customer and Software Support) for such
defect or error, to correct the defect or error through all reasonable
efforts. Phoenix shall not be responsible for unreported error or
errors caused by negligence or nonconformance with the Phoenix Hardware
and Network Services Guide. Customer shall be limited to the warranties
provided by third-party licensors or manufacturers with respect to
third-party software or equipment that may be provided by
Phoenix.
License Agreement
May 2, 1996.0
Page 4
<PAGE> 7
6.2 Phoenix's total liability to Customer or any member of the Customer Group
under any provision of this Agreement (except 7.0) or for any and all
claims, losses or damages relating to the Licensed Products (whether based
on tort, contract, or any other theory) shall be limited to the amount
actually paid by Customer to Phoenix for the Licensed Products giving rise
to the liability. The parties acknowledge that each of them relied upon
the inclusion of this limitation in consideration of entering into this
Agreement.
6.3 EXCEPT AS PROVIDED IN SECTION 6.1 ABOVE, PHOENIX SPECIFICALLY DISCLAIMS
ANY OTHER WARRANTIES OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE.
6.4 IN NO EVENT SHALL PHOENIX OR ITS LICENSORS BE LIABLE FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE, OR
INABILITY TO USE, THE LICENSED PRODUCTS OR ARISING OUT OF ANY OTHER
CIRCUMSTANCES ASSOCIATED WITH THE SUBJECT MATTER OF THIS AGREEMENT, AND
IN SUCH RESPECT CUSTOMER AND CUSTOMER GROUP SHALL NOT BE ENTITLED TO
DAMAGES BASED ON LOSS OF PROFIT, LOSS OR INTERRUPTION OF DATA OR COMPUTER
TIME, ALTERATION OR ERRONEOUS TRANSMISSION OF DATA, EVEN IF PHOENIX IS
ADVISED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES.
7.0 PATENT AND COPYRIGHT INDEMNITY
Phoenix, at its own expense, shall defend, indemnify, and hold harmless
Customer and any members of the Customer Group from any legal action based
upon a claim that any of the Licensed Products infringes the patent,
copyright, license or other proprietary right of a third party, provided
that Phoenix is notified promptly of such claim when it is first
anticipated, threatened or asserted. Phoenix shall have the sole right to
control the defense and disposition of any such claim or action. Phoenix
shall have no obligation to defend Customer or to pay costs, damages or
attorney's fees for any claim based upon use of other than a current
unaltered version of the Licensed Product to the extent that such
infringement would have been avoided thereby. Recourse for infringement
involving software or equipment supplied to Phoenix by third-party
licensors or manufacturers shall be limited to indemnification provided by
those third parties. This Section 7 states Phoenix's sole obligation with
respect to title and infringement matters.
8.0 CONFIDENTIALITY
8.1 Customer understands and agrees that the Licensed Products and any
related information ("Confidential Information"), contains valuable
intellectual property and trade secrets of Phoenix and embody substantial
creative efforts and confidential information, ideas and expressions
belonging to Phoenix. Where required by the circumstances, such
Confidential Information may include software, documentation or
information provided to Phoenix by third parties subject to obligations of
confidentiality.
8.2 Phoenix understands and agrees that in the performance of its duties
under this Agreement, Phoenix may gain access to certain materials and
data relating to Customer's business ("Confidential Information").
8.3 Both parties shall at all times observe reasonable care in maintaining
complete confidentiality of the other party's Confidential Information,
and shall not permit or authorize access to or disclosure of the other
party's Confidential Information to any person or entity other than (i)
employees, (ii) accountants for auditing purposes, (iii) independent
License Agreement
May 2, 1996.0
Page 5
<PAGE> 8
contractors, provided that Phoenix shall have the right to approve
(approval not to be unreasonably withheld) in advance all contractors who
are given access to the Software or any Phoenix Confidential Information
and (iv) governmental regulatory authorities, to the extent required for
compliance with applicable laws, and subject to such protective measures
as may be available to preserve the confidentiality of such information
following disclosure. For purposes of this Agreement, "reasonable care"
shall mean a standard no less than the standard of care each party
exercises in protecting its own confidential property. Each party shall
promptly notify the other in writing of the existence of any unauthorized
knowledge, possession or use of the Confidential Information by any person
or entity.
8.4 Confidential Information shall not include information which (i) is in
the public domain, (ii) is obtained from a third party who acquired such
confidential information independently, without reliance on other
Confidential Information, and free of any obligation to the other party or
(iii) is independently developed by either party without reference to
Confidential Information of the other party, as demonstrated by written
documentation.
9.0 CUSTOMER AND SOFTWARE SUPPORT SERVICES
9.1 Effective immediately after the Implementation Date, Phoenix shall
provide certain software maintenance, software operation and use services
and system enhancements ("Customer and Software Support") for the fee
hereinafter set forth, which services:
9.1.1 Include enhancements to the Software and updates to Documentation
generally made available to all of Phoenix's Customers. Ensure that the
Licensed Software complies with the minimum regulatory requirements of
U.S. Federal Agencies having jurisdiction over the operation of Customer.
Enhancements include modifications or additions made to improve upon
existing features and operations performed by the Software.
9.1.2 Include reasonable maintenance and telephone consultation related to
the Licensed Products. Phoenix will correct or replace software and/or
provide services necessary to remedy any critical or non-critical
programming error that is attributable to Phoenix. Such correction,
replacement, or services will be promptly undertaken by Phoenix after the
Customer has identified and notified Phoenix of any such error, which
notice shall be in accordance with Phoenix reporting procedures. Phoenix
will use reasonable commercial efforts to telephonically diagnose (i) any
errors or malfunctions in the system, or (ii) malfunctions in the system
caused by operator error, and advise Customer of possible corrective
measures that the Customer may take. Phoenix will also clarify operating
instructions contained in the Documentation delivered with the programs.
9.1.3 Include direct first line support of third party software and
coordination of all other support with the third party licensor on behalf
of Customer.
9.1.4 Include telephonic support 24 hours per day, 365 days per year via
beeper access to support personnel. Normal office hours are Monday
through Friday, 8:00 AM to 5:00 PM Eastern Standard Time.
9.2 If Phoenix, after using its best telephonic diagnostic efforts, shall
determine that it requires documentation of problems, errors or
malfunctions in writing, Customer agrees to provide assistance in
identifying and detecting problems, errors or malfunctions in sufficient
detail and with sufficient supporting documentation and information to
enable Phoenix to recreate the problem, error or malfunction
License Agreement
May 2, 1996.0
Page 6
<PAGE> 9
9.3 Customer and Software Support is limited to Hardware and Customer Network
configurations supported by Phoenix as stated in the Phoenix Network and
Configuration Standards Guide. Phoenix agrees to give Customer at least
six (6) months' advance notice if an applicable configuration will no
longer be supported.
10.0 IMPLEMENTATION
10.1 Phoenix shall conduct an implementation planning session at a location,
date and time mutually agreed to by both parties (the "Implementation
Planning Session") to develop a mutually acceptable Implementation
Schedule. Customer shall make available up to five (5) of its appropriate
personnel for the Implementation Planning Session.
10.2 Phoenix will make all reasonable efforts to effect the Implementation of
the Software in accordance with the Implementation Schedule; but, Phoenix
shall not be liable to the Customer or any other person for any damages,
in the event Implementation is not completed within such time.
11.0 TERMINATION
11.1 Termination by Customer. Customer may terminate the License at any time
after the Initial Term or any renewal term upon three months advance
written notice to Phoenix.
11.2 Termination by Phoenix. Phoenix shall have the right to terminate the
License upon the occurrence of any of the following events:
11.2.1 Customer breaching or failing to perform any provision of this
Agreement and the same is not cured within ten (10) days after
Customer's receipt of notice in writing from Phoenix specifying such
breach or failure; or
11.2.2 Customer not implementing the most recent version of the
Licensed Products within ninety (90) days of the date such version is
made available to Customer; or
11.2.3 Customer failing to pay the annual Customer and Software Support
Fee.
11.3 Effect of Termination
11.3.1 Except for breaches of Paragraphs 2.4, 4.0 or 8 by Customer,
Phoenix shall allow Customer up to one hundred eighty (180) days to
continue to Use the Licensed Products; provided that Customer has paid
and continues to pay all amounts due. At the end of such period of
time (and in all other instances immediately upon termination) Customer
shall return or destroy all copies of the Licensed Products; if Phoenix
so requests, Customer shall certify it has completed such action.
Customer grants Phoenix the right to enter Customer's business premises
during regular business hours to retrieve all Licensed Products or
verify the destruction of the same by Customer's personnel.
11.3.2 No monies shall be refundable upon termination of the License,
whether such termination is by Customer or Phoenix.
11.3.3 Phoenix agrees to provide reasonable De-Conversion Assistance
for which Customer agrees to pay in advance to Phoenix a de-conversion
fee equal to one half (1/2) the then applicable annual Customer and
Software Support Fee ("De-Conversion Fee").
License Agreement
May 2, 1996.0
Page 7
<PAGE> 10
11.3.4 All obligations of confidentiality and payment of monies due
shall survive termination.
11.4 The rights and remedies of Phoenix included in this Section shall not be
exclusive and are in addition to any other rights and remedies provided by
law or equity.
12.0 CUSTOMER OBLIGATIONS
12.1 Customer shall appoint a Contact Person, on Exhibit "C", to service as
the focal point of communication between Phoenix and Customer. Customer
may change the Contact Person upon written notice to Phoenix.
12.2 Customer agrees to acquire and maintain Customer Network at the
Designated Location by the required dates in the Implementation Schedule.
Customer shall provide an on-line telecommunications link with a telephone
modem in order to provide digital communication with Phoenix's systems.
12.3 Customer shall add all corrections or enhancements ("System Release")
provided by Phoenix for the Licensed Products within twenty-five (25) days
of availability.
12.4 Customer shall keep its personnel trained in the operation of the
Licensed Products and Customer Network.
12.5 Customer shall pay the annual Customer and Software Support Fee for so
long as Customer continues to hold or use the Licensed Products.
13.0 SOURCE CODE ESCROW
13.1 Phoenix will deposit the most current version of the source code for the
Phoenix Banking System with an independent escrow agent. In the event
that Phoenix, or its successor, shall cease to provide Customer and
Software Support, and Customer has paid its Customer and Software Support
Fee, Customer shall have the right to obtain, for its own sole and
exclusive use, with no right of transfer, a single copy of such source
code from the escrow agent, subject to the License Agreement.
14.0 GENERAL
14.1 Notices shall be deemed given as of the date deposited in the U.S. mail
(with provision for confirmation of receipt, if outside U.S.). Either
party may change its address by written notice to the other.
14.2 This Agreement shall not be assignable or transferable by Customer. This
Agreement may be assigned or conveyed by Phoenix without any prior consent
or approval, pursuant to a sale or merger of the company or a major
division. Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding upon the parties, their successors and
authorized assigns.
14.3 The failure of either party to enforce any term of this Agreement shall
not constitute a waiver of either party's right to enforce each and every
term of this Agreement.
License Agreement
May 2, 1996.0
Page 8
<PAGE> 11
14.4 If either party brings an action under this Agreement (including appeal),
the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs. Should any provision of this Agreement be held by a court
of competent jurisdiction to be unenforceable, the remaining provisions of
this Agreement shall not be affected or impaired thereby. This Agreement
shall be governed by the laws of Florida.
14.5 Neither party shall be in default by reason of any failure in the
performance of this Agreement (other than a failure to make payment when
due or to comply with restrictions upon the Use of the Licensed Products)
if such failure arises out of any act, event or circumstance beyond the
reasonable control of such party, whether or not otherwise foreseeable.
The party so affected will resume performance as soon as reasonably
possible.
14.6 The captions appearing in this Agreement are inserted only as a matter of
convenience and in no way limit the scope or affect the meaning of any
section.
14.7 This Agreement constitutes the entire agreement between the parties and
supersedes all prior understandings and agreements between them regarding
the Licensed Products, and may not be modified except in writing signed by
authorized representatives of both parties.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the dates indicated.
PHOENIX INTERNATIONAL LTD., INC.
PHOENIX FSC., INC.
By: By:
------------------------------ ------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Date: Date:
---------------------------- ----------------------------------
EXECUTION BY PHOENIX: this Agreement shall not be binding until the same
has been executed by an Executive Officer of Phoenix.
License Agreement
May 2, 1996.0
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<PAGE> 12
XXX = Confidential Treatment Requested
EXHIBIT A
FEES* AND SOFTWARE DESCRIPTION
<TABLE>
<S> <C> <C>
1. LICENSE FEES:
A. This license fee is based upon the asset size of the
customer.
TOTAL INITIAL LICENSE FEES: $
======
2. IMPLEMENTATION FEES
(PLUS OUT-OF-POCKET EXPENSES)
ICI $
Basic Training Charges $XXXXXX
(Including the following classes):
SYSTEM ADMINISTRATION (9 days for 3 people)
- Bank Controls
- RIM Controls
- Deposit Controls
- Loan Controls
- Financial Controls
- Teller Controls
ADDITIONAL PEOPLE ATTENDING - XXXXXX each
ACCOUNT PROCESSING (10 Training Days in Bank)
- Account Processing (6 days)
- RIM
- Deposits
- Loans
- Nightly Processing (2 days)
- Back Office Processing (1 day)
- G/L Processing (1 day)
OPTIONAL TRAINING
- Teller Processing (2 days) - XXXXXX
- EIS (2 days) - XXXXXX
- Budgeting (1 day) - XXXXXX
- Report Writing (2 days) - XXXXXX
ADDITIONAL CLASSES - XXXXXX/day/Instructor
TOTAL INITIAL IMPLEMENTATION FEES $
======
</TABLE>
License Agreement
May 2, 1996.0
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<PAGE> 13
<TABLE>
<S> <C> <C>
3. ANNUAL CUSTOMER AND SOFTWARE SUPPORT FEE $
===
TOTAL INITIAL ANNUAL CUSTOMER AND SOFTWARE
SUPPORT FEES $ /YEAR
===
</TABLE>
4. THE COMPONENTS OF THE LICENSED SOFTWARE AND THE LICENSED
DOCUMENTATION:
Customer & Product Controls
Administrative Controls
Customer Processing
Deposit Processing
Loan Processing
Teller Processing
Nightly Processing
*- ALL FEES OTHER THAN IMPLEMENTATION FEES ARE SUBJECT TO
INCREASE BASED ON AGGREGATE SIZE OF CUSTOMER GROUP
General Ledger Administration & Maintenance
Executive Information System
Data Dictionary: Deposits
Data Dictionary: Loans
Data Dictionary: Customer Information
Report Dictionary
Budgeting
THE LICENSED PROGRAM DESCRIPTIONS ARE LOCATED IN THE LICENSED
DOCUMENTATION.
Interfaces: All necessary interfaces should be identified at the
Implementation Planning Session. Additional fees, if any, will be
presented to the bank subsequent to the Implementation Planning Session.
5. THIRD PARTY SOFTWARE
The following software programs are licensed under this Agreement, but
owned by third parties. Initial calls for support should be made to
Phoenix unless the program is marked with an asterisk.
Sybase
License Agreement
May 2, 1996.0
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<PAGE> 14
EXHIBIT B
DESIGNATED AND REMOTE LOCATION(S):
DESIGNATED LOCATION(S):
1.________________________________
__________________________________
__________________________________
__________________________________PHONE
__________________________________FAX
2.________________________________
__________________________________
__________________________________PHONE
__________________________________FAX
REMOTE LOCATION(S):
1.________________________________
__________________________________
__________________________________PHONE
__________________________________FAX
2.________________________________
__________________________________
__________________________________PHONE
__________________________________FAX
License Agreement
May 2, 1996.0
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<PAGE> 15
EXHIBIT C
CONTACT PERSON
CONTACT PERSON: ________________________________________
ADDRESS: ________________________________________
________________________________________
PHONE: ________________________________________
FACSIMILE: ________________________________________
License Agreement
May 2, 1996.0
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<PAGE> 16
XXX = Confidential Treatment Requested
EXHIBIT D
PRELIMINARY HARDWARE AND LICENSED SOFTWARE CONFIGURATIONS
1. UNIX SERVER REQUIREMENTS
Customer agrees to provide and maintain a Hewlett-Packard 9000 Series
server at a size recommended by Phoenix, or greater.
1 Sybase CPU Class B SQL Server Runtime License Version 10.0.2 and
higher. PHOENIX WILL ORDER FOR YOU AND INVOICE YOU DIRECTLY UPON THE
FIRST DAY OF TRAINING OR THE FIRST DAY SYBASE IS INSTALLED ON YOUR SERVER.
PRICES ARE PUBLISHED BY SYBASE PERIODICALLY. THESE PRICES WERE PUBLISHED
SEPTEMBER 30, 1994. AMOUNT INVOICED TO YOU AT THE TIME OF YOUR
INSTALLATION MAY VARY, DEPENDING UPON ANY CHANGES SYBASE MAKES TO ITS
PRICING IN THE INTERIM. Cost is based upon the total number of users on
the server, which you will have to tell us.
<TABLE>
<CAPTION>
Number International Latin Am. Asian Canada U.S.
of Users Price Price Price Price Price
-------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
XXXXXX XXXXXXXX XXXXXXX XXXXXXXX XXXXXXXX XXXXXXX
XXXXXX XXXXXX XXXXX XXXXXX XXXXXX XXXXX
XXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
XXXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
XXXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
XXXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
XXXXX XXXXXX XXXXXX XXXXXX XXXXXXX XXXXXX
XXXXXXXXX XXXXXXX XXXXXX XXXXXXX XXXXXXX XXXXXX
</TABLE>
PLEASE NOTE: ALL SYBASE LICENSES PURCHASED PURSUANT TO THIS AGREEMENT ARE
SUBJECT TO RESTRICTIONS AS FOLLOWS: You are purchasing "End User
Licenses", terms of which are mandated in our License with Sybase, and are
reproduced and incorporated herein. You will not receive support,
manuals, or information from Sybase. "Derivative Product" is the copy of
Sybase licensed by Phoenix and sublicensed to you. "End User" and
"licensee" is you. "VAR" is Phoenix.
License Agreement
May 2, 1996.0
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<PAGE> 17
ADDITIONAL TERMS APPLICABLE TO SYBASE PRODUCT
(1) Only a non-exclusive, nontransferable right to use each
Licensed Copy is granted to an End User. No right to use other than
an Embedded Run-Time version of the Sybase Programs is granted; an
"Embedded Run-Time Version" shall mean a version of the Sybase
Programs linked to or embedded in Phoenix's application code in such
a way that structurally or by license restrictions, it (a) precludes
use of the Program to develop applications, except for clause c of
this paragraph; (b) precludes use of the Program to develop
applications, except for report writing and decision support solely
in conjunction with the Derivative Product; (c) precludes general
purpose access to command verbs in the Program except that the End
User may, within the scope of and under control of the Derivative
Product, create or alter tables, columns or rows and add fields to
existing tables, as necessary to implement, operate and administer
the Derivative Product; (d) precludes use of any command verbs in
the Program to create new schemas or databases; and (e) precludes
use of the Program or third party application development tools to
modify or enhance existing screens or forms delivered as part of the
Derivative Product, or to create new forms, except as necessary to
implement and operate the Derivative Product.
(2) Phoenix and/or its licensors retain all title to the
Licensed Copy, and all copies thereof, and no title to the Licensed
Copy, or any intellectual property therein, is transferred to the
licensee.
(3) The licensee may not copy the Licensed Copy, except for
backup and archival purposes only, and the licensee shall include on
all copies of the Licensed Copy all copyright and other proprietary
notices or legends included on the Licensed Copy which was shipped
to such licensee.
(4) The licensee agrees not to reverse assemble, decompile, or
otherwise attempt to derive source code from the Licensed Copy;
(5) The licensee agrees to comply with all export and
re-export restrictions and regulations ("Export Restrictions")
imposed by the governments of the United States or the country to
which the Licensed Copy is shipped to licensee. Licensee will not
commit any act or omission which will result in a breach of any such
Export Requirements; the licensee agrees that it will comply in all
respects with any governmental laws, orders, or other restrictions
on the export of the Sybase Program and the Licensed Copy (and the
related information and documentation) which may be imposed from
time to time by the governments of the United States and Canada or
the country to which the Sybase Program is shipped by Sybase
("Export Requirements"). This Section shall survive the expiration
or termination of the Licensed Copy license agreement.
(6) Although copyrighted, the Licensed Copy is unpublished and
contains proprietary and confidential information of Phoenix and its
licensors and is considered by Phoenix and its licensors to
constitute valuable trade secrets. The licensee will hold the
Licensed Copy in confidence and shall protect the Licensed copy with
at least the same degree of care with which the licensee protects
its own similar confidential information;
License Agreement
May 2, 1996.0
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<PAGE> 18
(7) VAR's licensors of software included in the Licensed
Copy are direct and intended third party beneficiaries of the
license agreement and may enforce it directly against the
licensee; provided, however, that none of such licensors shall be
liable to the licensee for any general, special, direct, indirect,
consequential, incidental or other damages arising out of or
related to the Licensed Copy; and
(8) Upon termination of the license for the Licensed Copy,
the licensee shall return to VAR all copies of the Licensed Copy,
or certify to VAR that the licensee has destroyed all such copies.
2. Network Requirements
Customer agrees to provide and maintain a network in accordance with the
standards set forth in the Phoenix Hardware and Network Services Guide, as
amended from time to time.
License Agreement
May 7, 1996.0
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<PAGE> 1
EXHIBIT 10.31
Agreement No. ______
PHOENIX INTERNATIONAL LTD., INC.
INTERNATIONAL SOFTWARE LICENSE AGREEMENT
PARTIES:
BANK'S NAME
AND
PHOENIX INTERNATIONAL LTD., INC., A FLORIDA CORPORATION
PHOENIX FSC, INC.
DATED: May 2, 1996
<PAGE> 2
CONTENTS
Section 1. Definitions
Section 2. License Grant
Section 3. Term
Section 4. Title
Section 5. Payments and Terms
Section 6. Warranties
Section 7. Patent and Copyright Indemnity
Section 8. Confidentiality
Section 9. Customer and Software Support
Section 10. Implementation
Section 11. Termination
Section 12. Client Obligations
Section 13. Source Code Escrow
Section 14. Arbitration
Section 15. Export Controls
Section 16. Foreign Corrupt Practices Act of 1977
Section 17. General
EXHIBIT LIST
Exhibit A Fees and Software Description
Exhibit B Designated Location and Remote Branches
Exhibit C Contact Person
Exhibit D Third Party Hardware and Software Configurations
<PAGE> 3
PHOENIX INTERNATIONAL LTD., INC.
SOFTWARE LICENSE AGREEMENT
AGREEMENT NO. EFFECTIVE DATE:
-------------- --------------
PARTIES: List Customer Name (Hereinafter referred to as "Customer")
Phoenix International Ltd., Inc. (Hereinafter referred to as "Phoenix")
Phoenix FSC, Inc.
900 Winderley Place
Suite 140
Maitland, Florida 32751
The parties hereby agree as follows:
1.0 DEFINITIONS
1.1 "Additional Branch" shall mean a Remote Branch not listed in Exhibit B
which is connected to the Customer network after the Effective Date,
whether as a result of changes in operations, growth, acquisition, or
otherwise.
1.2 "Acquired Financial Institution" shall mean any financial institution in
which Customer acquires a greater than 50% interest or which merges with
or into the Customer.
1.3 "Changes" shall mean corrections, updates, upgrades, translations,
additions and modifications to the Software and Documentation, and any
other new or additional works based in whole or in part on the Software
or Documentation.
1.4 "Client Devices" shall mean workstations, personal computers and
terminals connected to the Customer Network which, subject to control of
the authorized Server, have access to and Use the Software to input,
read, and interpret Customer's data.
1.5 "Conversion" shall mean conversion and formatting of Customer's existing
data for use with the Software.
1.6 "Customer Network" shall mean the local and wide area network system of
the Customer, including one (1) Server at the Designated Location, the
Client Devices connected thereto located at the Designated Location and
the Remote Branches, and the Software. Customer shall be responsible
International Agreement
May 2, 1996.0
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<PAGE> 4
for assuring that the Customer Network is in compliance with the Phoenix
Network and Configuaration Standards Guide (as provided by Phoenix).
1.7 "Customer and Software Support" shall have the meanings set forth in
Section 9.
1.8 "De-Conversion" shall mean the regeneration of the Customer's then
existing data utilized by the Software into a generic format.
1.9 "Designated Location" shall mean the street address of the location of
the Server as specified on Exhibit B. customer may replace the location
of the Server by providing Phoenix with written notice of the change,
whereupon Exhibit B hereto will be deemed automatically amended to
reflect the replacement.
1.10 "Documentation" shall mean the technical and operating documentation
relating to the Software provided to Customer by or on behalf of Phoenix,
and all Changes thereto provided to Customer by or on behalf of Phoenix
or otherwise made or obtained by or for Customer.
1.11 "Installation" shall mean the installation in an executable format of the
Software on the Customer Network at the Designated Location and selected
Remote Branches.
1.12 "Implementation" shall mean the Installation and Conversion.
1.13 "Implementation Date" shall be the last day of the month in which Phoenix
provides Customer with notice that Implementation is complete.
1.14 "Implementation Period" shall mean the period from the Effective Date
until the earlier of (i) the Implementation Date or (ii) the date one
hundred eighty (180) days after the Effective Date.
1.15 "Licensed Products" shall mean collectively the Software and
Documentation.
1.16 "Server" shall mean a network file server serving as the Sybase data base
for the Software.
1.17 "Software" shall mean Phoenix's Retail Banking System software and Third
Party software, as described in Exhibit A, in object code form and all
updates, modifications, enhancements or revisions supplied by Phoenix as
part of Customer and Software Support.
1.18 "Related Expenses" shall mean reasonable travel and other reasonable
out-of-pocket expenses incurred in connection with Implementation and/or
Customer and Software Support, including (without limitation) file
conversion costs; the cost of optional products, services, or hardware
requested or authorized by Customer; shipping charges; courier or delivery
charges; tape, cartridge or diskette costs; or non-voice telephone or
communication costs not already covered as part of Customer and Software
Support.
1.19 "Remote Branches" shall mean the street addresses listed in Exhibit B
where Client Devices reside which are connected to the Customer Network.
The Remote Branches will include Additional Branches at such time as
Phoenix receives written notice from Customer that such Additional
Branches have been connected to the Customer Network, whereupon Exhibit B
hereto will be deemed automatically amended to include such Additional
Branches.
1.20 "Territory" shall mean the countries or territories set forth in Exhibit
G.
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1.21 "Use" (used as a noun or verb) shall mean the reading into memory of the
Software and the access to and/or execution of such Software, in whole or
in part, on the Customer Network. Use of the Software is permitted only
for Customer's and its Affiliates' own internal data processing needs and
shall be confined to the Territory, unless otherwise agreed in writing by
Phoenix.
2.0 LICENSE GRANT
2.1 Subject to the restrictions and limitations of this Agreement, Phoenix
grants to Customer a non-exclusive, non-transferable license to Use the
Software on the Customer Network (on one (1) Server only) at the
Designated Location and Remote Branches, during the Term, pursuant to the
terms and conditions of this Agreement. Pursuant to such license,
Customer may:
(a) load and execute the Software on the Customer Network;
(b) transfer the Software to a backup machine when the Server or any
associated machine elements required for Use of the Software are
temporarily inoperable or unusable, or to another machine for disaster
recovery testing (which may occur concurrent with normal Use of the
Software to process Customer's data on Customer Network), or for actual
disaster recovery and processing in the event the Customer Network is
non-functional due to the occurrence of disaster;
(c) make a reasonable number of additional copies of the Software for
testing, backup, and archival purposes in support of its ordinary User of
the Software.
2.2 Subject to the restrictions and limitations of this Agreement, Phoenix
grants to Customer a non-exclusive, non-transferable license to use the
Documentation in support of its Use of the Software, during the Term,
pursuant to the terms and conditions of this Agreement. Pursuant to such
license, Customer may make a reasonable number of additional copies of the
Documentation as required in support of its Use of the Software.
2.3 Phoenix will (if it has not done so already) immediately deliver to
Customer one (1) copy of the current version of the Software in object
code form, and one (1) copy of the current version of the Documentation.
The licenses granted to Customer under Sections 2.1 and 2.2 hereof shall
become immediately effective upon delivery of such items, and shall not
delayed or contingent based on installation, operation, or the delivery or
completion of any services.
2.4 The Software is provided to Customer in object code form only. Customer
agrees not to translate, reverse engineer, de-compile, interpret or
disassemble the Software without the prior written consent of Phoenix.
Customer agrees not to transfer, distribute, sell, lease, or assign the
Licensed Products without the prior written consent of Phoenix. Customer
agrees not to make any Changes to the Licensed Products without the prior
written consent of Phoenix.
2.5 Customer may not use the Software or Documentation to process accounts
or records, or to generate output data, for the direct benefit of, or for
purposes of rendering services to, any business entity or organization
other than Customer and its Affiliates.
2.6 Customer agrees to maintain a record of the number and location of all
of the Licensed Products in its possession. Customer agrees to provide
Phoenix with a copy of that record will upon Phoenix's request.
International Agreement
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<PAGE> 6
3.0 TERM
This Agreement and the license granted herein shall be for an initial term
commencing on the Effective Date and continuing for a period of five (5)
year from the last day of the Implementation Period (the "Initial Term").
Thereafter, his Agreement shall automatically renew for additional one (1)
year periods unless either party notifies the other in writing of its
desire not to renew this Agreement at least six (6) months prior to the
last day of the Initial Term or any subsequent renewal period.
4.0 TITLE
4.1 The Software and Documentation are copyrighted works protected by
copyright laws, treaties and conventions applicable in the United States
and the Territory. The Software and Documentation are protected under
applicable law as trade secrets and Confidential Information of Phoenix.
Phoenix retains all right, title, and interest in and to the Software,
Documentation, and all intellectual property rights contained therein,
subject only to the limited license granted to Customer in Section 2
hereof.
4.2 All output reports and formats (e.g., ad hoc reports, SQL queries, etc.)
first created by Customer shall be subject to joint ownership of Phoenix
and Customer, as applicable (except that, to the extent such output
reports derive from or contain any part of the Software or Documentation,
the restrictions applicable to the Software and Documentation shall apply
to any use thereof).
4.3 Customer agrees that all Changes made or obtained by Phoenix or Customer,
or their respective employees or agents acting alone or in collaboration
with each other, shall, together with all intellectual property rights
associated therewith, be the exclusive property of Phoenix. To the extent
that such Changes, including all associated intellectual property rights,
are not owned in their entirety by Phoenix immediately upon their
creation, Customer agrees to assign (and hereby automatically assigns) all
right, title and interest therein to Phoenix, without any requirement of
consideration or further documentation. Customer agrees to take such
further action and execute such further documentation as Phoenix may
reasonable request to give effect to this Section 6.3.
4.4 Customer shall notify Phoenix in the event that it discovers any
infringement of Phoenix's rights in the Licensed Products or any violation
of the terms of a License Agreement, and shall cooperate with Phoenix and
assist in the prosecution of Phoenix's claims, provided that Phoenix
retains financial responsibility for costs of assistance and prosecution.
Phoenix shall be entitled to retain any proceeds from such claims,
including settlement amounts, for purposes of funding Phoenix's worldwide
intellectual property protection programs.
4.5 Phoenix or its designee shall have the right to enter the premises of
Customer at any time upon reasonable request during regular business hours
in a non-disruptive manner, for the purpose of inspecting the location and
use of the Software and Documentation, compliance with the provisions of
this Agreement, and the standard procedures of Customer regarding
retention, safekeeping, and disposal of all media and materials pertaining
thereto.
5.0 PAYMENTS AND TERMS.
5.1 The fees and charges for products and services to be provided under this
Agreement are set forth in Exhibit A hereto. All amounts due shall be
paid in U.S. dollars by wire transfer to the bank account designated by
Phoenix.
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1) Upon execution of this Agreement by Customer, Customer shall pay
Phoenix the License Fee shown in Exhibit A hereto, which is an initial
one-time fee for the delivery of the current version of the Software in
unmodified form and the grant of the license thereto pursuant to this
Agreement. The License Fee is based on the total number of Remote
Branches, including Additional Branches, which are included on the
Customer Network from time to time. Whenever the total number of Remote
Branches included on the Customer Network increases to the next tier,
Customer shall pay Phoenix an upgrade fee equal to the difference between
the License Fee for the new tier and the aggregate License Fees
previously paid for previous tiers. The License Fee is fully earned by
Phoenix, regardless of whether Customer has or adds the maximum number of
Remote Branches permitted for the tier for which the License Fee is paid.
2) In addition to the License Fee, an initial one-time Branch Fee is due
upon execution of this Agreement for each Remote Branch, including each
Additional Branch, which is included on the Customer Network from time to
time. The current Branch Fees are shown in Exhibit A hereto. Customer
shall pay Phoenix a Branch Fee each time a Remote Branch is installed or
added on the Customer Network.
3) For Customer's convenience, upgrade fees under items (1) and (2)
above resulting from tier changes involving the License Fee and extra
Branch Fees for Additional Branches may be paid by Customer within thirty
(30) days after the end of each calendar quarter (through the end of
March, June, September and December) in which the change or addition
occurred. Customer agrees to certify annually (and at other times, if so
requested by Phoenix) the total number of Remote Branches included on the
Customer Network.
4) An initial one-time Implementation Fee is due upon execution of this
Agreement for Phoenix's assistance with the Implementation of the
Software. The Implementation Fee is shown in Exhibit A hereto. Phoenix
shall be entitled to additional Implementation Fees, to be paid in
advance, if Implementation is required when Customer adds an Acquired
Financial Institution or other Additional Branches.
5) A Customer and Software Support Fee for Customer and Software Support
is due on the Implementation Date and each anniversary thereof for so
long as the license to the Software is in effect or Customer continues to
use the Software.
6) Customer agrees, in addition, to pay Related Expenses upon receipt of
Phoenix's invoice.
5.2 All invoices shall be due and payable on the date specified herein or, if
a date is not specified, not later than fifteen (15) days following the
date of invoice. Sums overdue shall bear interest at the lesser of 1-1/2%
per month, or the highest rate allowed under applicable law.
5.3 Amounts payable to Phoenix hereunder are payable in full without
deduction or set off. In addition, Customer shall pay on a timely basis
all sales, use, import, export or other taxes, tariffs, or duties arising
out the transactions contemplated herein, however designated, based or
levied by any federal, state, municipal or local taxing authority of
United States or the Territory, (exclusive of United States Federal, state
or local taxes based upon the net income of Phoenix) ("Taxes"). Customer
shall indemnify and hold Phoenix harmless from Taxes which Phoenix is
required by any taxing authority to pay. Customer may challenge the
applicability of any Tax only after paying the Tax or giving Phoenix other
satisfactory assurances of compliance.
5.4 Phoenix reserves the right to adjust its prices at any time subject to 30
days advanced notice. Such changes shall have no retroactive effect on
Customer. The Customer and Software Support Fee
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XXX = Confidential Treatment Requested
shall not be increased XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX.
5.5 Time is of the essence with respect to all payments due from Customer
hereunder. Customer may not suspend or set-off any payment due Phoenix
hereunder on any basis whatsoever.
6.0 WARRANTIES
6.1 Phoenix warrants that, for a period of six (6) months after delivery, the
original unmodified version of the Software shall conform in all material
respects with any program descriptions included in corresponding
Documentation provided by Phoenix. Phoenix does not warrant that the
Licensed Products will operate without interruption or be error-free. In
the event Customer discovers any defect or error covered by the warranty,
Customer agrees to provide Phoenix notice of such defect or error in
sufficient detail to enable Phoenix to recreate the defect or error.
Phoenix agrees, as its exclusive obligation (except as covered outside the
foregoing warranty as part of Customer and Software Support) for any
non-compliance with the foregoing warranty, to use its best reasonable
efforts to correct reported defects and errors. Phoenix shall not be
responsible for unreported error or errors caused by negligence of a party
other than Phoenix or non-conformance with the Phoenix Hardware and
Network Services Guide. Customer shall be limited to the warranties
provided by third-party licensors or manufacturers with respect to
third-party software or equipment that may be provided by Phoenix.
6.2 Phoenix's total liability to Customer under any provision of this
Agreement (except 7.0) or for any and all claims, losses or damages
relating to the Licensed Products (whether based on tort, contract, or any
other theory) shall be limited to the amount actually paid by Customer to
Phoenix for the Licensed Products giving rise to the liability. The
parties acknowledge that each of them relied upon the inclusion of this
limitation in consideration of entering into this Agreement.
6.3 EXCEPT AS PROVIDED IN SECTION 6.1 ABOVE, PHOENIX SPECIFICALLY DISCLAIMS
ANY OTHER WARRANTIES OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
6.4 IN NO EVENT SHALL PHOENIX OR ITS LICENSORS BE LIABLE FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE, OR
INABILITY TO USE, THE LICENSED PRODUCTS OR ARISING OUT OF ANY OTHER
CIRCUMSTANCES ASSOCIATED WITH THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION DAMAGES BASED ON LOSS OF PROFIT, LOSS OR
INTERRUPTION OF DATA OR COMPUTER TIME, ALTERATION OR ERRONEOUS
TRANSMISSION OF DATA, EVEN IF PHOENIX IS ADVISED IN ADVANCE OF THE
POSSIBILITY OF SUCH DAMAGES.
7.0 PATENT AND COPYRIGHT INDEMNITY
7.1 If a third party claims that the Software infringes any patent,
copyright, trade secret, or similar intellectual property rights of a
third party Phoenix shall (as long as Customer is not in default under
this Agreement or any other agreement with Phoenix) defend Customer
against that claim at Phoenix's expense and pay all damages awarded by a
court in a final judgment, provided that Customer promptly notifies
Phoenix in writing of any such claim, and allows Phoenix to control, and
cooperates with Phoenix in, the defense and disposition of such claim,
including any related settlement negotiations.
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7.2 If such a claim is made or appears possible, Phoenix may, at its option,
secure for Customer the right to continue to use the Software, modify or
replace the Software so it is non-infringing, or refund all license fees
paid for the infringing material less a reasonable deduction for prior
use. Phoenix has no obligation hereunder for any claim based on a
modified version of the Software which has not been prepared solely by
Phoenix, or for any combination, operation or use of the Software with any
product, data or apparatus not approved in writing by Phoenix. Phoenix
also shall have no obligation hereunder for any claim based on theories of
law that are not substantially equivalent to laws, treaties and
conventions applicable to U.S. patents, copyrights, trade secrets, and
similar intellectual property rights. THIS SECTION 7.0 STATES PHOENIX'S
ENTIRE OBLIGATION TO CUSTOMER WITH RESPECT TO MATTERS OF TITLE OR ANY
CLAIM OF INFRINGEMENT THEREOF.
8.0 CONFIDENTIALITY
8.1 Customer acknowledges that the Software and Documentation contain
Confidential Information of Phoenix, as defined in Section 8.5 hereof.
8.2 Customer agrees at all times to maintain the complete confidentiality of
the Software, Documentation, and all other Confidential Information of
Phoenix.
8.3 Customer agrees not to permit or authorize access to, or disclosure of,
the Software, Documentation, and all other Confidential Information of
Phoenix to any person or entity other employees of Customer who have a
"need to know" such information in order to enable Customer to exercise
its rights under this Agreement. The Software and Documentation, and all
other Confidential Information of Phoenix may not be disclosed or provided
to any independent contractors or consultants working for or with
Customer, unless Phoenix gives its prior written approval. Customer may
disclose necessary portions of the Software, Documentation, or other
Confidential Information of Phoenix to governmental regulatory authorities
if such disclosure is required for compliance with applicable laws, but
Customer shall notify Phoenix of the applicable legal requirements before
such disclosure occurs and Customer shall use its best efforts to help
Phoenix obtain protection as may be available to preserve the
confidentiality of such information following disclosure.
8.4 Prior to disposal of any media or materials that contain any part of the
Software, Documentation or other Confidential Information of Phoenix,
Customer shall obliterate or otherwise destroy all code, instructions,
commentary, or further evidence of Confidential Information, for example,
by erasing, incinerating, or shredding such materials.
8.5 For purposes of this Agreement, "Confidential Information" shall mean any
competitively sensitive or secret business, marketing or technical
information of Phoenix. In all cases, Phoenix's Confidential Information
shall include the Software and Documentation, including all Changes.
Confidential Information shall not include, however, information which (i)
is generally known to the public or readily ascertainable from public
sources (other than as a result of a breach of confidentiality by Customer
or any person or entity associated with Customer), (ii) is independently
developed without reference to or reliance on any Confidential Information
of Phoenix, as demonstrated by written records in Customer's possession
(which shall be provided to Phoenix at Phoenix's request), or (iii) is
obtained from an independent third party who created or acquired such
information without reference to or reliance on Confidential Information
of Phoenix, as demonstrated by written records in Customer's possession
(which shall be provided to Phoenix at Phoenix's request).
International Agreement
May 2, 1996.0
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<PAGE> 10
9.0 CUSTOMER AND SOFTWARE SUPPORT
9.1 Commencing upon the Implementation Date, Phoenix shall provide certain
software support, operation and use services and system enhancements
("Customer and Software Support"). Such services shall include the
following:
1) Enhancements to the Software and updates to Documentation generally
made available to all of Phoenix's Customers.
2) Reasonable software support and telephone consultation related to the
Licensed Products. Support means Phoenix will correct or replace
software and/or provide services necessary to remedy any critical or
non-critical programming error that is attributable to Phoenix. Such
correction, replacement, or services will be promptly undertaken by
Phoenix after the Customer has identified and notified Phoenix of any
such error, which notice shall be in accordance with Phoenix reporting
procedures. Phoenix will use reasonable commercial efforts to
telephonically diagnose (i) any errors or malfunctions in the system, or
(ii) malfunctions in the system caused by operator error, and advise
Customer of possible corrective measures that the Customer may take.
Phoenix will also clarify operating instructions contained in the
Documentation delivered with the programs.
3) Direct first line support of third party software and coordination of
all other support with third party licensors on behalf of Customer.
4) Telephonic support 24 hours per day, 365 days per year via pager
access to support personnel. Normal office hours are Monday through
Friday, 8:00 AM to 5:00 PM Atlanta, Georgia Time.
9.2 If Phoenix, after using its best telephonic diagnostic efforts,
determines that it requires documentation of problems, errors or
malfunctions in writing, Customer agrees to provide assistance in
identifying and detecting problems, errors or malfunctions in sufficient
detail and with sufficient supporting documentation and information to
enable Phoenix to recreate the problem, error or malfunction
9.3 Customer and Software Support is limited to Hardware and Customer Network
configurations supported by Phoenix as stated in the Phoenix Network and
Configuration Standards Guide. Phoenix agrees to give Customer at least
six (6) months' advance notice if an applicable configuration will no
longer be supported.
10.0 IMPLEMENTATION
10.1 Phoenix shall conduct an implementation planning session at a location,
date and time mutually agreed to by both parties (the "Implementation
Planning Session") to develop a mutually acceptable implementation
schedule. Customer shall make available up to five (5) of its appropriate
personnel for the Implementation Planning Session.
10.2 Phoenix will make all reasonable efforts to effect the Implementation of
the Software in accordance with the implementation schedule including the
provision of adequate personnel resources; provided, however, that Phoenix
shall not be liable to the Customer or any other person for any damages in
the event Implementation is not completed within such time, other than an
abatement of the Implementation Fee reasonably related to the delay.
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<PAGE> 11
11.0 TERMINATION
11.1 Customer may terminate the license granted hereunder by electing not to
renew this Agreement in accordance with Section 3.
11.2 Phoenix shall have the right to terminate the License upon the occurrence
of any of the following events:
1) Customer's breach of any provision of this Agreement if the breach is
not cured within ten (10) days after Customer's receipt of notice in
writing from Phoenix of such breach; or
2) Customer's failure to implement the most recent version of the
Licensed Products within thirty (30) days of the date such version is
received by Customer; or
3) Customer's failure to obtain and pay for Support Services; or
4) Customer ceases to do business, makes a composition or assignment for
the benefit of its creditors, makes a general arrangement with its
creditors concerning any extension or forgiveness of any of its secured
debt, becomes bankrupt or insolvent, suffers or seeks the appointment of
a receiver to the whole or any material part of its business, takes any
action to liquidate or wind up the whole or any material part of its
business, is found subject to any provisions of any bankruptcy code
concerning involuntary bankruptcy or similar proceeding, or suffers a
material adverse change in its financial position such that payments to
Phoenix may be affected or delayed by a creditor or administrator of the
business of Customer; or
5) Customer becomes a subsidiary of, or controlled as to its management
policy by, any government instrumentality; or
6) Customer is required by laws in the Territory to offer or permit the
use or exercise (with or without payment to Phoenix) of the Customer to
any other person or entity.
11.3 Phoenix shall also have the right to terminate this Agreement in the
event of the acquisition of more than 50% of the voting stock of Customer,
or of the acquisition of all or substantially all the business and assets
of Customer, or of the merger of Customer with or into another entity,
which entity is the surviving entity; provided, however, that, so long as
all other provisions of this Agreement are duly honored, the Agreement may
be continued in effect and the surviving entity may continue under the
license granted hereby if the surviving entity signs a new license
agreement with Phoenix containing terms and conditions reasonably
requested by Phoenix, and pays additional license fees for use of the
Licensed Products in respect of the new or different Remote Branches
resulting out of the transaction.
11.4 In the event that this Agreement terminates as a result of a breach by
Customer, Customer's license to Use the Software shall immediately cease.
In all other cases, Customer may continue to Use the Software in
accordance with this Agreement for up to one hundred eighty (180) days
following termination, provided that Customer has paid and continues to
pay all amounts due as if this Agreement were still in effect. Upon
expiration of such period (and immediately, in the event of termination as
a result of a breach by Customer), Customer shall return or destroy all
copies of the Licensed Products; if Phoenix so requests, Customer shall
certify it has completed such action.
11.5 No payments shall be refundable upon termination of the License, whether
such termination is by Customer or Phoenix.
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XXX = Confidential Treatment Requested
11.6 All obligations with respect to confidentiality, ownership, and
protection of intellectual property rights, and all obligations for
payment of amounts due shall survive termination.
11.7 The rights and remedies of Phoenix included in this Section 11.0 shall
not be exclusive and are in addition to any other rights and remedies
provided by law or equity.
11.8 Phoenix agrees to provide reasonable De-Conversion assistance for which
Customer agrees to pay in advance to Phoenix a de-conversion fee equal to
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXX.
12.0 CUSTOMER OBLIGATIONS
12.1 Customer shall appoint a Contact Person, listed on Exhibit C, to service
as the focal point of communication between Phoenix and Customer.
Customer may change the Contact Person at any time upon written notice to
Phoenix.
12.2 Customer agrees to acquire and maintain Customer Network at the
Designated Location by the required dates in the Implementation Schedule.
Customer shall provide at its cost an on-line telecommunications link with
a telephone modem in order to provide digital communication with Phoenix's
systems.
12.3 Customer shall install all corrections or enhancements ("System Release")
provided by Phoenix for the Licensed Products within thirty (30) days
after receipt.
12.4 Customer shall keep its personnel trained in the operation of the
Licensed Products and Customer Network.
12.5 Customer shall pay the annual Customer and Software Support Fee for so
long as Customer continues to hold or use the Licensed Products.
13.0 SOURCE CODE ESCROW
13.1 Phoenix will deposit the most current version of the source code for the
Phoenix Banking System with an independent escrow agent. In the event
that Phoenix, or its successor, shall cease to provide Customer and
Software Support, and Customer has paid its Customer and Software Support
Fee, Customer shall have the right to obtain, for its own sole and
exclusive use, with no right of transfer, a single copy of such source
code from the escrow agent, subject to the License Agreement.
14.0 ARBITRATION
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May 2, 1996.0
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<PAGE> 13
In the event a claim, controversy or dispute between Phoenix and Customer
arises out of or in connection with this Agreement or the transactions
and business contemplated hereby, including the validity, construction or
enforcement thereof, either party may demand that such matter be
submitted to final and binding arbitration before a single arbitrator
selected by the parties in accordance with the then-existing rules of the
Internal Chamber of Commerce. The situs of all arbitration proceedings
shall be Atlanta, Georgia, unless Phoenix and Customer agree in writing
to another situs. All arbitration proceedings and records shall be in
English. Issuance of an arbitration demand shall suspend the effect of
any default entailed by such claim, controversy or dispute and any
judicial or administrative proceedings instituted in connection
therewith, for the duration of the arbitration proceedings. If Phoenix
and Customer cannot agree on the identity of a single arbitrator within
five (5) days of receipt of the arbitration demand, each of them shall
appoint one (1) arbitrator and the party-appointed arbitrators shall
appoint a third arbitrator within five (5) days of their appointment.
The arbitrator or arbitrators shall determine whether a default has
occurred, and shall deliver its or their decision within ninety (90) days
of the date of receipt of the arbitration demand, specifying such remedy
(including money damages) as shall (a) fully implement the intent and
purposes of this Agreement and (b) indemnify and hold harmless the
non-breaching party from all losses, costs and expenses (including costs
of arbitration and reasonable attorneys' fees) resulting from the
default. Termination or limitation of Phoenix's rights in the Software,
the Documentation, or any associated intellectual property rights may not
be awarded under any circumstances. The right to demand arbitration and
to receive damages and obtain other available remedies as provided
hereunder shall be the exclusive remedy in the event an arbitration
demand is made, except that Phoenix shall be entitled to obtain equitable
relief, such as injunctive relief, from any court of competent
jurisdiction in order to protect its rights in the Software, the
Documentation, or any associated intellectual property rights while such
proceeding is pending or in support of any award made pursuant to such
arbitration. Phoenix and Customer hereby consent to the enforcement in
the courts of each country in the Territory and the United States of any
arbitral judgment or award rendered pursuant to this Section.
15.0 COMPLIANCE WITH LAWS
15.1 Customer shall, at its own expense, comply with all laws relating to the
licensing and use of the Licensed Products, and shall procure all licenses
and pay all fees and other charges required thereby.
15.2 Notwithstanding anything in this Agreement to the contrary, it is
acknowledged and agreed that neither Phoenix nor Customer may ship, export
or re-export the Software or Documentation, or any other information,
process, product or service obtained directly or indirectly from Phoenix,
to any country or entity which is the subject of any prohibition imposed
by the U.S. Export Administration Act of 1979, U.S. Executive Orders, the
U.S. Department of Commerce, and the North Atlantic Treaty Organization.
Customer understands that, if such a prohibition applies and an export
license cannot be obtained with reasonable effort, the disclosure or
delivery of the Software and Documentation may not occur.
15.3 Customer hereby agrees that Customer and its directors, officers,
employees, and agents will comply with the Foreign Corrupt Practices Act
of 1977, as amended (the "Act") with respect to the subject matter of this
Agreement. In this regard, neither Customer nor any of its directors,
officers, employees, or agents will make, offer to make, or accept any
payment or gift directly or indirectly to any employee, officer, or
representative of any governmental entity or instrumentality or to any
foreign political party, any official of a foreign political party, or
candidate, where such payment would constitute a bribe, kickback, or
illegal payment under U.S. or applicable foreign laws.
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<PAGE> 14
16.0 DISABLING PROCEDURES
THE LICENSED PRODUCTS MAY CONTAIN DISABLING PROCEDURES. IF THERE OCCURS
ANY UNAUTHORIZED USE OF THE LICENSED PRODUCTS OR ANY OTHER MATERIAL,
CONTINUING BREACH OF THIS AGREEMENT, SUCH DISABLING PROCEDURES MAY LIMIT
ACCESS TO THE LICENSED PRODUCTS AND ANY ASSOCIATED PRODUCTS OR DATA. The
function of such disabling procedures is documented in Phoenix's
specifications for the Software. Insofar as date-sensitive Software
Protection Codes are issued, they will have an expiration consistent with
the payment terms for fees and charges hereunder or will have a one (1)
year expiration, as applicable. On or before the expiration date,
Phoenix will reissue the Software Protection Codes with extended
expiration dates so long as Customer continues to comply with the payment
terms and other material obligations of this Agreement. Phoenix warrants
that all disabling procedures will only prevent access to the Licensed
Products and will not destroy or corrupt any of Customer's programs or
data. Further, if the disabling codes are enabled when there is no
unauthorized use or other material breach by Customer, Phoenix will, on a
highest priority basis, assist Customer in returning to normal operations
at no cost to Customer.
17.0 GENERAL
17.1 Notices shall be deemed given as of the date deposited with an
international courier service (such as FedEx) or the mail of the United
States or any country within the Territory (with provision for
confirmation of receipt, if using the mail outside of the United states).
Either party may change its address by written notice to the other.
17.2 Except as expressly permitted by this Agreement, Customer may not assign,
transfer or delegate its rights or obligations hereunder without Phoenix's
prior written consent. Subject to the foregoing, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
authorized successors and assigns.
17.3 The failure of either party to enforce any term of this Agreement shall
not constitute a waiver of either party's right to enforce each and every
term of this Agreement.
17.4 If either party brings an action under this Agreement (including appeal),
the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs. Should any provision of this Agreement be held by a court
of competent jurisdiction or arbitration authority to be unenforceable,
the remaining provisions of this Agreement shall not be affected or
impaired thereby.
17.5 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTURED UNDER THE LAWS OF THE
UNITED STATES OF AMERICA AND THE STATE OF FLORIDA, EXCLUDING ITS CONFLICT
OF LAWS RULES. IT SHALL NOT BE GOVERNED BY THE UNITED NATIONS CONVENTION
ON THE INTERNATIONAL SALE OF GOODS, THE APPLICATION OF WHICH IS EXPRESSLY
EXCLUDED.
17.5 Neither party shall be in default by reason of any failure in the
performance of this Agreement (other than a failure to make payment when
due or to comply with restrictions upon the Use of the Licensed Products)
if such failure arises out of any act, event or circumstance beyond the
reasonable control of such party, whether or not otherwise foreseeable.
The party so affected will resume performance as soon as reasonably
possible.
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<PAGE> 15
17.6 The captions appearing in this Agreement are inserted only as a matter of
convenience and in no way limit the scope or affect the meaning of any
section.
17.7 This Agreement constitutes the entire agreement between the parties and
supersedes all prior understandings and agreements between them regarding
the Licensed Products, and may not be modified except in writing signed by
authorized representatives of both parties.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the dates indicated.
PHOENIX INTERNATIONAL LTD., INC.
PHOENIX FSC., INC.
- ------------------------------- --------------------------------
Signature Signature
- ------------------------------- -------------------------------
Name (print) Name (print)
- ------------------------------ -------------------------------
Title Title
EXECUTION BY PHOENIX: this Agreement shall not be binding until the same
has been executed by an Executive Officer of Phoenix.
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<PAGE> 16
XXX = Confidential Treatment Requested
EXHIBIT A
FEES AND SOFTWARE DESCRIPTION
1. LICENSE FEES:
A. Initial Financial Institution
(one Server) $
---------------
B. Remote Branch Fees $ XXXXX each
TOTAL INITIAL LICENSE FEES: $
===============
2. ADDITIONAL LICENSE FEES:
A. Acquired Financial
Institution Fee $ each
-----------
B. Additional Branch Fee $ each
-----------
3. IMPLEMENTATION, CONVERSION AND INSTALLATION FEES
(PLUS OUT-OF-POCKET EXPENSES)
A. Initial Financial Institution and
Initial Remote Branches of Initial
Financial Institution $
-----------
B. Implementation for ____ initial Remote Branches of initial
Financial Institution are included in the above figure. Efforts
made by Phoenix to implement any initial Remote Branches in excess
will be invoiced to Customer at XXXXXX per day plus out of pocket
expenses.
C. Additional Branches of Pricing will be based on level of
Existing Financial Institution effort at XXXXXX per day, plus
out of pocket expenses.
D. Acquired Financial Institutions Pricing will be based on level of
effort at XXXXXX per day, plus
out of pocket expenses.
4. ANNUAL CUSTOMER AND SOFTWARE SUPPORT FEES:
(PLUS OUT-OF-POCKET EXPENSES)
A. Initial Financial Institutions: $_____/year
B. Initial Remote Branches of Initial
Financial Institution XXXXXX/year
Customer has _____ initial Remote Branches. Actual initial Remote
Branches (estimated to be _____) implemented at the Implementation Date
of CUSTOMER will be invoiced. As the balance of the initial Remote
Branches is implemented, Customer and Software Support Fees will be
invoiced in accordance with Implementation Date of that Branch.
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<PAGE> 17
XXX = Confidential Treatment Requested
C. Additional Branches of
Existing Financial Institution XXXXXX/branch/year
D. Acquired Financial Institutions Phoenix's then current
price.
TOTAL INITIAL ANNUAL CUSTOMER AND SOFTWARE
SUPPORT FEES (PLUS OUT-OF-POCKET EXPENSES) $
=============
4. THE COMPONENTS OF THE SOFTWARE AND DOCUMENTATION
Customer & Product Controls
Administrative Controls
Customer Processing
Deposit Processing
Loan Processing
Teller Processing
Nightly Processing
General Ledger Administration & Maintenance
Executive Information System
Data Dictionary: Deposits
Data Dictionary: Loans
Data Dictionary: Customer Information
Report Dictionary
Budgeting
THE SOFTWARE SPECIFICATIONS ARE LOCATED IN THE LICENSED DOCUMENTATION.
5. PAYMENT SCHEDULE
DESCRIPTION DATE AMOUNT
----------- ---- ------
License Fees Execution of License Agreement
-------
Implementation Related Fees Execution of License Agreement $ (*)
-------
Annual Customer and CUSTOMER Implementation Date $ (**)
-------
Software Support
Annual Customer and Quarterly upon invoice 4 (**)
-------
Software Support
(**) Adjusted to reflect actual number of branches implemented with CUSTOMER.
(***) Adjusted in accordance with Exhibit E and to reflect increased number of
branches implemented.
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<PAGE> 18
XXX = Confidential Treatment Requested
EXHIBIT B
3RD PARTY HARDWARE AND SOFTWARE CONFIGURATIONS
SUBJECT TO REVISION AT ANY TIME
UNIX SERVER REQUIREMENTS
CENTRAL UNIX DATABASE SERVER:
NOTE: CUSTOMER WILL BE ORDERING ATT EQUIPMENT, CONFIGURATION OF WHICH IS TO
BE DETERMINED BY GRUPO-TECNETRON. FOLLOWING IS A TYPICAL HP SOLUTION.
(1) XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
operating system, 8GB DAT tape backup, battery backup and mirroring. Your
specific configuration will be determined by your HP sales representative,
and your price will vary accordingly, but for planning purposes, you may use
the following amounts:
<TABLE>
<CAPTION>
Machine Approximate
Size Cost
---- ----
<S> <C>
XXX XXXXXXX
XXX XXXXXX
XXX XXXXXX
XXX XXXXXX
</TABLE>
1 Sybase CPU Class B SQL Server Runtime License Version 10.0.2 and higher.
NOTE: CUSTOMER IS CONSIDERING ORDERING A SYBASE DEVELOPMENT LICENSE DIRECTLY
FROM SYBASE. CUSTOMER MUST PROVIDE PHOENIX WITH THE NAME AND TELEPHONE
NUMBER OF CUSTOMER'S SYBASE CONTACT. PHOENIX MUST PROVIDE PROOF TO
PHOENIX'S SYBASE CONTACT THAT CUSTOMER PURCHASED SYBASE DIRECTLY, OR
PHOENIX MUST CHARGE CUSTOMER FOR THE FOLLOWING LICENSE.
PHOENIX WILL ORDER FOR YOU AND INVOICE YOU DIRECTLY UPON THE FIRST DAY OF
TRAINING OR THE FIRST DAY SYBASE IS INSTALLED ON YOUR SERVER. PRICES ARE
PUBLISHED BY SYBASE PERIODICALLY. THESE PRICES WERE PUBLISHED SEPTEMBER 30,
1994. AMOUNT INVOICED TO YOU AT THE TIME OF YOUR INSTALLATION MAY VARY,
DEPENDING UPON ANY CHANGES SYBASE MAKES TO ITS PRICING IN THE INTERIM. COST IS
BASED UPON THE TOTAL NUMBER OF USERS ON THE SERVER, WHICH YOU WILL HAVE TO TELL
US.
<TABLE>
<CAPTION>
Number International Latin Am. Asian Canada U.S.
of Users Price Price Price Price Price
-------- ----- ------- ----- ------ -----
<S> <C> <C> <C> <C> <C>
XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
XXXXX XXXXXX XXXXX XXXXXX XXXXXX XXXXX
XXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
XXXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
XXXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
XXXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX
</TABLE>
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XXX = Confidential Treatment Requested
<TABLE>
<S> <C> <C> <C> <C> <C>
XXXXX XXXXXX XXXXXX XXXXXX XXXXXXX XXXXXX
XXXXXXXXX XXXXXXX XXXXXX XXXXXXX XXXXXXX XXXXXX
</TABLE>
PLEASE NOTE: ALL SYBASE LICENSES PURCHASED PURSUANT TO THIS AGREEMENT ARE
SUBJECT TO RESTRICTIONS AS FOLLOWS: You are purchasing "End User
Licenses", terms of which are mandated in our License with Sybase, and are
reproduced and incorporated herein. You will not receive support,
manuals, or information from Sybase. "Derivative Product" is the copy of
Sybase licensed by Phoenix and sublicensed to you. "End User" and
"licensee" is you. "VAR" is Phoenix.
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<PAGE> 20
TERMS OF EXHIBIT C FROM SYBASE LICENSE AGREEMENT:
MANDATORY TERMS OF END USER LICENSES
All license agreements for the sublicensing of the Derivative
Product (the "Licensed Copy") shall include substantially the
following provisions:
(1) Only a non-exclusive, nontransferable right to use each
Licensed Copy is granted to an End User (and if VAR is under
Program 1 then such right is granted only on a single computer
system which is designated by serial number or equivalent). No
right to use other than an Embedded Run-Time version of the Sybase
Programs is granted; an "Embedded Run-Time Version" shall mean a
version of the Sybase Programs linked to or embedded in VAR's
application code in such a way that structurally or by license
restrictions, it (a) precludes use of the Program to develop
applications, except for clause c of this paragraph; (b) precludes
use of the Program to develop applications, except for report
writing and decision support solely in conjunction with the
Derivative Product; (c) precludes general purpose access to
command verbs in the Program except that the End User may, within
the scope of and under control of the Derivative Product, create
or alter tables, columns or rows and add fields to existing
tables, as necessary to implement, operate and administer the
Derivative Product; (d) precludes use of any command verbs in the
Program to create new schemas or databases; and (e) precludes use
of the Program or third party application development tools to
modify or enhance existing screens or forms delivered as part of
the Derivative Product, or to create new forms, except as
necessary to implement and operate the Derivative Product.
(2) VAR and/or its licensors retain all title to the
Licensed Copy, and all copies thereof, and no title to the
Licensed Copy, or any intellectual property therein, is
transferred to the licensee.
(3) The licensee may not copy the Licensed Copy, except for
backup and archival purposes only, and the licensee shall include
on all copies of the Licensed Copy all copyright and other
proprietary notices or legends included on the Licensed Copy which
was shipped to such licensee.
(4) The licensee agrees not to reverse assemble, decompile,
or otherwise attempt to derive source code from the Licensed Copy;
(5) The licensee agrees to comply with all export and
re-export restrictions and regulations ('Export Restrictions")
imposed by the governments of the United States or the country to
which the Licensed Copy is shipped to licensee. Licensee will not
commit any act or omission which will result in a breach of any
such Export Requirements; the licensee agrees that it will comply
in all respects with any governmental laws, orders, or other
restrictions on the export of the Sybase Program and the Licensed
Copy (and the related information and documentation) which may be
imposed from time to time by the governments of the United States
and Canada or the country to which the Sybase Program is shipped
by Sybase ("Export Requirements"). This Section shall survive the
expiration or termination of the Licensed Copy license agreement.
International Agreement
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<PAGE> 21
(6) Although copyrighted, the Licensed Copy is unpublished
and contains proprietary and confidential information of VAR and
its licensors and is considered by VAR and its licensors to
constitute valuable trade secrets. The licensee will hold the
Licensed Copy in confidence and shall protect the Licensed copy
with at least the same degree of care with which the licensee
protects its own similar confidential information;
(7) VAR's licensors of software included in the Licensed
Copy are direct and intended third party beneficiaries of the
license agreement and may enforce it directly against the
licensee; provided, however, that none of such licensors shall be
liable to the licensee for any general, special, direct, indirect,
consequential, incidental or other damages arising out of or
related to the Licensed Copy; and
(8) Upon termination of the license for the Licensed Copy,
the licensee shall return to VAR all copies of the Licensed Copy,
or certify to VAR that the licensee has destroyed all such copies.
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XXX = Confidential Treatment Requested
REQUIREMENTS PER END-USER PC
- MINIMUM CONFIGURATION: 1 Microsoft Windows compatible PC using a
486/DX2 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX available hard disk
space, SVGA (800X600 resolution) monitor, Ethernet Network Interface
Card, MS-DOS 6.22 or higher, Microsoft Windows or Windows for Workgroups
version 3.11 or higher. RECOMMENDED CONFIGURATION: XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXX and 15 inch SVGA monitor, Ethernet Network
Interface Card, MS-DOS 6.22, Windows for Workgroups 3.11, Microsoft
Office Version 4.3 (including Word, Excel and e-mail). Gateway offers a
machine that meets or exceeds these requirements. As of November 4,
1994, price for 486 is $2,348 shipped; Pentium is $2,648 shipped.
Gateway's number is 1-800-846-2042.
- 1 Gupta QuestReporter License Version 3.0 per end-user wishing to
develop customized queries/reports. As of October 28, 1994, price is
$250 per PC, or a QuestReporter 50 pack is available for $5,000. Gupta
may be reached by calling 1-800-444-8782 (1-800-44-GUPTA).
REQUIREMENTS PER TELLER
- MINIMUM CONFIGURATION: 1 Microsoft Windows compatible PC using a
486/DX2 50 MHz processor, 12MB RAM, 50MB available hard disk space, SVGA
(800X600 resolution) monitor, Ethernet Network Interface Card, MS-DOS
6.22 or higher, Microsoft Windows or Windows for Workgroups version 3.11
or higher. RECOMMENDED CONFIGURATION: Pentium 60 MHz PC, 16MB memory,
340MB disk, and 15 inch SVGA monitor, Ethernet Network Interface Card,
MS-DOS 6.22, Windows for Workgroups 3.11, Microsoft Office Version 4.3
(including Word, Excel and e-mail). Gateway offers a machine that meets
or exceeds these requirements. As of November 4, 1994, price for 486 is
$2,348 shipped; Pentium is $2,648 shipped. Gateway's number is
1-800-846-2042.
- OPTIONAL (IF OFF-LINE OPERATION FEATURE IS USED): 1 Gupta SQLBase
Novell Netware NLM Version 5.2 per Novell file server with teller PC's
attached (one per branch), one licensed user per teller PC. As of
October 28, 1994, prices through Gupta, 1-800-444-8782 (1-800-44-GUPTA)
are:
<TABLE>
<CAPTION>
Number U.S.
of Users Price
-------- -----
<S> <C>
X XXXXXX
XX XXXXX
XX XXXXX
XX XXXXX
XXXXXXXXX XXXXX
</TABLE>
- Choice of the following printers:
OLIVETTI 5327 VALIDATION PRINTER. This is a single line validation
printer useful for basic receipt printing and check validation. As of
October 27, 1994, price is approximately $600; pricing and other
information is available from Olivetti at 1-800-633-9909.
OLIVETTI 46-S GENERAL PURPOSE PRINTER. Multi-line receipt printer
that also may be used to print documents such as checks and money
orders. As of October 27, 1994, price is approximately $900; pricing
and other information is available from Olivetti at 1-800-633-9909.
OLIVETTI PR 50 GENERAL PURPOSE PRINTER. Passbook, receipt and full
size form printer. As of October 27, 1994, price is approximately
$1,950; pricing and other information is available from Olivetti at
1-800-633-9909.
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XXX = Confidential Treatment Requested
NEXUS DH 4771 PRINTER. This is a multi-line receipt printer with
an integrated journal roll. As of October 27, 1994, list price is $850
(plus $12 for a ten foot cord). Phoenix customer price is $698 (plus
$12 for a ten foot cord). Pricing and other information is available
from Pat Padden at Nexus, 818-246-9107.
NETWORK REQUIREMENTS
- EACH NOVELL FILE SERVER: A Minimum of 1 Novell Netware compatible PC
per branch with sufficient disk space for the Novell Netware software,
MS-DOS, the Phoenix executables (60MB), the Phoenix print queues
(depends on account volume), and other applications residing on the
server. RECOMMENDED CONFIGURATION: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX (more may be needed depending upon your volume),
Ethernet Network Interface Card, MS-DOS 6.22 license, 15 inch SVGA
monitor, and tape backup. Gateway offers a machine that meets or
exceeds these requirements. As of November 4, 1994, price is $3,127
shipped. Gateway's number is 1-800-846-2042. RECOMMENDED CONFIGURATION
IF OPTIONAL OFF-LINE-TELLER OPERATION FEATURE IS USED: XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (more may be needed depending
upon your volume), Ethernet Network Interface Card, MS-DOS 6.22 license,
15 inch SVGA monitor, and tape backup. Gateway offers a machine that
meets or exceeds these requirements. Gateway's number is
1-800-846-2042.
- EACH NOVELL FILE SERVER: 1 Novell Netware 3.12 server software. Price
is based on number of users. As of October 28, 1994, prices through
National Data Products, Orlando Florida 407-296-0393, fax 407-296-2193,
are as follows:
<TABLE>
<CAPTION>
Number U.S.
of Users Price
-------- -----
<S> <C>
X XXXXXX
XX XXXXX
XX XXXXX
XX XXXXX
XXX XXXXX
XXX XXXXX
</TABLE>
- EACH NOVELL FILE SERVER (REQUIRED IF E-MAIL IS USED): 1 Microsoft
Mail Server License Version 3.2b. As of October 28, 1994, price through
National Data Products, Orlando Florida 407-296-0393, fax 407-296-2193,
is $410 for a 10 user license pack .
- EACH NOVELL NETWORK PRINTER: 1 80286 or better PC, 640K RAM and 20MB
disk, Ethernet Network Interface Card, MS-DOS 6.22 license. Gateway
offers a machine that meets or exceeds these requirements. As of
November 4, 1994, price for is $1,473 shipped. Gateway's number is
1-800-846-2042.
- EACH NOVELL NETWORK SERVER LOCATION: 1 Ethernet 10BaseT hub with
enough ports for each user, and a few extras for the print servers, etc.
Price is based on number of ports. If you want a managed hub, you must
get the SNMP module, for $415 (unit no. 61914812). For HP Advancestack
Hub, as of October 28, 1994, prices through National Data Products,
Orlando Florida 407-296-0393, fax 407-296-2193, are as follows:
<TABLE>
<Caption
Number U.S.
of Ports Price
-------- -----
<S> <C>
XX XXX
XX XXX
XX XXXXX
</TABLE>
International Agreement
May 7, 1996.0
Page 21
<PAGE> 24
XXX = Confidential Treatment Requested
OTHER HARDWARE AND SOFTWARE REQUIREMENTS
PHOENIX SYSTEM CONSOLE: Used to run nightly processing, process
external files, and manage Phoenix software installation and support.
MINIMUM CONFIGURATION: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX 15 inch SVGA monitor, Ethernet Network Interface Card,
Serial Port, MS-DOS 6.22 license, and Windows for Workgroup`s 3.11
license. Gateway offers a machine that meets or exceeds these
requirements. As of November 4, 1994, price is $3,013 shipped.
Gateway's number is 1-800-846-2042.
- PER PHOENIX SYSTEM CONSOLE: 1 Sybase SQR Execute License Version 2.5
for an Intel PC with Windows for the Phoenix System Console for printing
statements. PHOENIX WILL ORDER FOR YOU AND INVOICE YOU DIRECTLY UPON
THE FIRST DAY OF TRAINING OR THE FIRST DAY SYBASE IS INSTALLED ON YOUR
SERVER. PRICES ARE PUBLISHED BY SYBASE PERIODICALLY. THESE PRICES WERE
PUBLISHED SEPTEMBER 30, 1994. AMOUNT INVOICED TO YOU AT THE TIME OF
YOUR INSTALLATION MAY VARY, DEPENDING UPON ANY CHANGES SYBASE MAKES TO
ITS PRICING IN THE INTERIM. License subject to restrictions noted
above.
<TABLE>
<CAPTION>
Price International Latin Am. Asian Canada U.S.
Per User Price Price Price Price Price
-------- ------------- --------- ----- ------ -----
<S> <C> <C> <C> <C> <C>
$ XXX XXX XXX XXX XXX
</TABLE>
- PRINTERS: NOTE: ALL PHOENIX REPORTS, NOTICES, CHECKS, AND STATEMENTS
ARE DESIGNED FOR LASER PAGE PRINTERS. 1 HP Laser Jet 4M Plus (12 PPM),
4si (15 PPM), or C30 (30 PPM) printer, depending on print volumes.
Multiple printers or combinations may be more effective or required
depending on volumes. Cost, through National Data Products, Orlando
Florida 407-296-0393, fax 407-296-2193, as of October 28, 1994, is
$1,915 for 4M Plus (item no. 6330068) and $2,895 for 4si (item no.
6330073). Cost for C30, through Hewlett-Packard, on November 2, 1994,
is $16,734.
NOVELL NETWARE DOS CLIENT KIT: Novell part number 00662644013411.
The DOS Client Kit includes (among other things) the TCP/IP protocol
driver that is installed on each client PC to provide connectivity to
the HP database server. According to a Novell Client Service
representative, as of November 16, 1994 the price is $99 and licensing
is per-company. This means that each bank only needs to purchase one
copy of the DOS Client Kit and the necessary client software can be
installed on every PC in the bank, including Phoenix users, Teller PC's,
and the Phoenix Console PC.
- IMAGE CAPTURE: As necessary, but at least 1 Logitech Fotoman plus PC
Version digital camera and 1 Logitech Scanman 32 Win/Om digital hand
scanner for capturing images and signature cards. As of October 28,
1994, cost is $550 per camera (item no. 68015999) and $90 per scanner
(item no. 63810674) from National Data Products, Orlando Florida
407-296-0393, fax 407-296-2193.
- REMOTE PHOENIX TECHNICAL SUPPORT: 1 Shiva LANrover network bridge. As
of October 28, 1994, cost is $2,395 for a 4 port unit (item no.
65327931) from National Data Products, Orlando Florida 407-296-0393,
fax 407-296-2193. As of October 28, 1994, cost is $2,599 for a 4 port
unit (item no. DMD1180) from Data Comm Warehouse 1-800-328-2261.
- REMOTE PHOENIX AND HP TECHNICAL SUPPORT: 2 Zoom V.32 analog modems.
As of October 28, 1994, cost is $125 per external modem (item no.
66012867) from National Data Products, Orlando Florida 407-296-0393,
fax 407-296-2193.
International Agreement
May 7, 1996.0
Page 22
<PAGE> 25
- PHOENIX EXECUTIVE INFORMATION SYSTEM: As necessary for EIS users that
do not have Microsoft Office installed on their PC, Microsoft Excel
Version 5.0. As of October 27, 1994, cost is $285 per standalone
license or $114 for an upgrade license from National Data Products,
Orlando Florida 407-296-0393, fax 407-296-2193.
International Agreement
May 7, 1996.0
Page 23
<PAGE> 26
EXHIBIT C
IMPLEMENTATION PLAN
TO BE DETERMINED.
International Agreement
May 7, 1996.0
Page 24
<PAGE> 27
EXHIBIT D
MAINTENANCE AND SUPPORT SERVICES
During the term of this Agreement, Phoenix will correct or replace
software and/or provide services necessary to remedy any critical or
non-critical programming error that is attributable to Phoenix. Such
correction, replacement, or services will be promptly undertaken by
Phoenix after the Customer has identified and notified Phoenix of any
such error, which notice shall be in accordance with Phoenix reporting
procedures. The support services to be provided by Phoenix are those
set forth in the Agreement, and will include the following
tele-maintenance support services, to wit:
A. Support Services:
Phoenix will use its best efforts to telephonically diagnose (i) any
errors or malfunctions in the system, or (ii) malfunctions in the system
caused by operator error, and advise Customer of possible corrective
measures that the Customer may take. Phoenix will also use its best
effort to clarify operating instructions contained in the documentation
delivered with the programs. Under no circumstances shall Phoenix be
required to actually perform or implement the corrective measures
recommended to Customer to correct malfunctions in the system caused by
operator error.
B. Availability of Support Services:
Phoenix's office hours are Monday through Friday during the hours of 8
a.m. and 5 p.m. eastern standard time. However, Phoenix will provide
Customer with telephonic support 24 hours per day, 365 days per year.
To enable Phoenix to provide support services, the Customer agrees to
install all current releases to the system within twenty-five (25) days
after receipt, or as otherwise provided by this Agreement, and all
updates and revisions thereto as the same become available from time to
time during the term of this Agreement. Additionally, the Customer
agrees to cooperate with Phoenix in connection with the foregoing
maintenance and support services, which cooperation will include,
without limitation, the provision of dumps, as requested, and the
provision of sufficient support and test time in the Customer's computer
system to duplicate the problem, certify that the problem is
attributable to Phoenix's software, and to certify that the problem has
been corrected.
International Agreement
May 7, 1996.0
Page 25
<PAGE> 28
XXX = Confidential Treatment Requested
EXHIBIT E
CUSTOMER AND SOFTWARE SUPPORT FEE ADJUSTMENTS
Phoenix shall have the option to increase the rate of the Customer
and Software Support Fee ("CSS"), effective XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. The fee shall not be
increased XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX. The new CSS shall be calculated using the
following formula: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX. The numerator will be the XXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXX following the Implementation Date. For year 3 of support,
the denominator will be XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX following
the Implementation Date. The numerator will be XXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXX following the Implementation Date. For year 4 of support
the denominator will be the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
the Implementation Date. The numerator will be the CPI published for
XXXXXXXXXXXXXX following the Implementation Date. For year 5 of
support, the denominator will be XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
following the Implementation Date. The numerator will be XXXXXXX
XXXXXXXXXXXXXXXXXXXXXX month following the Implementation Date.
This progression will continue for any successive renewal periods.
International Agreement
May 7, 1996.0
Page 26
<PAGE> 29
EXHIBIT F
(DESIGNATED CONTACTS)
FOR TECHNICAL ISSUES
International Agreement
May 7, 1996.0
Page 27
<PAGE> 30
EXHIBIT G
(DESIGNATED AND REMOTE LOCATIONS)
International Agreement
May 7, 1996.0
Page 28
<PAGE> 1
EXHIBIT 10.32
Agreement No. ______
PHOENIX INTERNATIONAL LTD., INC.
DISASTER RECOVERY SERVICE AGREEMENT
PARTIES:
BANK'S NAME
AND
PHOENIX INTERNATIONAL LTD., INC., A FLORIDA CORPORATION
PHOENIX FSC, INC.
DATED: _______________
<PAGE> 2
CONTENTS
Section 1.0 Definitions
Section 2.0 Scope of Recovery Services
Section 3.0 Equipment and Information
Section 4.0 Test Procedures
Section 5.0 Term of Agreement
Section 6.0 Payment of Fees by Customer
Section 7.0 Multiple Disasters
Section 8.0 Limitation on Warranties, Liabilities, and Remedies
Section 9.0 Indemnification for Certain Acts and Omissions
Section 10.0 Equipment Modifications
Section 11.0 Confidentiality
Section 12.0 Termination
Section 13.0 Miscellaneous
<PAGE> 3
PHOENIX INTERNATIONAL LTD., INC.
DISASTER RECOVERY SERVICES AGREEMENT
Agreement No.____ Effective Date: ______________
PARTIES: [Name]
a [type of entity] (hereinafter referred to as "Customer"), and
Phoenix International Ltd., Inc.
Phoenix FSC, Inc.
900 Winderley Place
Suite 140
Maitland, Florida 32751,
a Florida corporation (hereinafter referred to as "Phoenix"),
Phoenix and Customer have entered into Software License Agreement No.___,
Effective Date ______________ ("Software Agreement"). In conjunction with such
Software Agreement, Customer desires to retain, and Phoenix desires to provide,
disaster recovery services in the event of a Disaster (as herein defined).
Therefore, Phoenix and Customer (collectively, the "Parties") hereby agree as
follows:
1.0 DEFINITIONS
For purposes of this Agreement, the following terms shall have the
definitions listed below (in addition to terms elsewhere expressly defined
herein):
1.1 "Annual Fee" - The basic annual charge imposed by Phoenix in accordance
with the fee schedule in Exhibit A hereto entitling Customer to use of the
Recovery Services in accordance with the terms hereof.
1.2 "Customer Facilities" - Any of the data processing facilities of Customer
described in Exhibit B hereto.
1.3 "Declaration Fee" - The charge imposed by Phoenix in accordance with the
fee schedule in Exhibit A on each occasion that Customer delivers a
Declaration of Disaster.
1.4 "Declaration of Disaster" - The notice that Customer delivers to Phoenix
pursuant to the terms hereof upon the occurrence of a Disaster.
1.5 "Disaster" - Any unplanned interruption of operations at the Customer
Facilities or unplanned failure of access to telecommunications to the
Customer Facilities due to a cause beyond the control of the Customer and
reasonably projected at the time of occurrence to last over 24 hours.
Disaster Recovery
May 2, 1996 1
<PAGE> 4
1.6 "Multiple Disasters" - One or more disasters comparable to a Disaster as
defined herein experienced by more than one Recovery Services Subscriber
or other computer facilities owned, operated or supported by Phoenix.
1.7 "Recovery Services" - The services provided by Phoenix to Customer upon a
Declaration of Disaster. These services shall be tailored to fit the
needs of the Customer created by the specific Disaster. Recovery Services
shall include backup protection against failures of data base servers,
file servers, wide area network equipment, local area network equipment
and report and notice printing equipment caused by a Disaster. Excluded
from Recovery Services are failures of proof equipment, telecommunication
lines, electrical power lines, ancillary non-Phoenix applications,
including (without limitation) word processing, electronic mail, optical
archives, and ancillary non-mission critical hardware, including (without
limitation) normal office printers and individual personal computer work
stations in the event their operations are impaired by a Disaster.
1.8 "Recovery Services Subscribers" - The subscribers to disaster recovery
services provided by Phoenix.
1.9 "Related Expenses" - Reasonable travel and other reasonable out-of-pocket
expenses incurred by Phoenix in effecting this Agreement, including
(without limitation) file conversion costs, shipping charges, tape,
cartridge and diskette costs, or telephone or other communication costs.
1.10 "Site Fee" - The daily charge imposed by Phoenix in accordance with the
fee schedule in Exhibit A for each Phoenix employee assigned to the
Customer Facilities pursuant to the terms of this Agreement or at the
request of the Customer.
1.11 "Usage Fee" - The charges imposed by Phoenix in accordance with the fee
schedule in Exhibit A for use of the Recovery Services in connection with
a Disaster beyond the initial 30 day recovery period as provided in
Section 2.3.
2.0 SCOPE OF RECOVERY SERVICES
2.1 Recovery Services. In the event of a Disaster, Phoenix shall provide
Customer with Recovery Services at any designated Customer Facilities or
such other facilities as Phoenix determines to be necessary in light of
the particular elements of the Disaster.
2.2 Declaration of Disaster. Phoenix shall activate the Recovery Services
upon receipt of a Declaration of Disaster. Disasters may be declared by
any of the Customer's representatives listed on Exhibit C. Such
designated representatives may declare a Disaster by contacting Phoenix by
telephone at the appropriate number listed on Exhibit D or by such other
means of communication as may be appropriate and possible. Upon receipt
of a Declaration of Disaster, Phoenix may request Customer to transmit a
signed and completed Disaster Recovery Request Notice, a sample of which
is contained in Exhibit E. In the event that the nature of the Disaster
prevents Customer from transmitting the Disaster Recovery Request Notice,
Phoenix will ask Customer to provide as much information regarding the
Disaster as possible by telephone or other means of communication.
2.3 Recovery Period. Phoenix shall provide Recovery Services for up to 30
consecutive days subsequent to delivery of a Declaration of Disaster
without charging Usage Fees. Recovery Services shall be subject to
payment of Site Fees if site visits are necessary. After the initial
30-day period, Phoenix shall continue to provide Recovery Services in
accordance with the terms hereof, if necessary, so long as Customer
continues substantial and good-faith efforts to repair the damage to the
Customer Facilities resulting from the Disaster and upon Customer's
payment of the Usage Fees. Notwithstanding the foregoing, if another
Disaster Recovery
May 2, 1996 2
<PAGE> 5
Recovery Services Subscriber experiences a Disaster as defined in
accordance with its contract terms during the extended period of
utilization of Recovery Services by Customer, Phoenix reserves the right
to give priority to such other subscriber during the initial 30-day
period following such other subscriber's Disaster.
3.0 EQUIPMENT AND INFORMATION
3.1 Disaster Recovery Planning Session. Within 45 days after the execution
of this Agreement, Customer shall schedule a Disaster Recovery Planning
Session with Phoenix for a mutually convenient time. Phoenix shall
conduct a site visit at one or more of the Customer Facilities and shall
work with Customer to determine the scope of potential Recovery Services,
the equipment Customer shall be required to maintain at specified
locations (the "Required Equipment") and the information Customer shall be
required to provide to Phoenix and update as necessary (the "Required
Information"). Upon the conclusion of the Disaster Recovery Planning
Session, Phoenix and Customer shall complete and sign a Customer Survey
Completion Addendum which Phoenix shall be entitled to use (to the extent
otherwise consistent with this Agreement) as a reference for Customer's
Required Equipment, Required Information and other technical requirements
under this Agreement. The Customer Survey Completion Addendum, when
signed by both parties, shall be incorporated into and become a part of
this Agreement for such purpose. Customer shall maintain all Required
Equipment in good operating condition. Phoenix shall in no way be liable
for any damage incurred after a Declaration of Disaster because Required
Equipment may be missing, inadequate or non-operational or because
Required Information may be inaccurate, incomplete, obsolete or
inadequate. The Disaster Recovery Planning Session shall be subject to
Customer's payment of Site Fees and Related Expenses. Customer
acknowledges that the Disaster Recovery Planning Session is critical to
Phoenix's ability to provide Recovery Services. In the event of a
Declaration of Disaster by Customer prior to completion of the Disaster
Recovery Planning Session, Phoenix shall make all reasonable efforts in
providing Recovery Services to Customer, but Phoenix shall have no
liability to Customer if the Recovery Services are ineffective or if the
effectiveness is delayed, regardless of the cause of such ineffectiveness
or delay. Further site surveys may be required by Phoenix if Customer
expands or if there is any other significant change in the Customer
Facilities or related operations.
3.2 Phoenix Equipment. In the event of a Disaster, Phoenix may provide
Customer with such equipment, in addition to the Required Equipment, as
Phoenix may have on hand and available as necessary for the Recovery
Services. Upon termination of the Recovery Services, Customer shall
return all computers and other equipment owned by Phoenix. If Customer
fails to return Phoenix's equipment at the termination of the Recovery
Services, Phoenix may charge Customer such equipment use fees as Phoenix
establishes for such purpose.
3.3 Equipment Capacity. The Recovery Services are designed to provide
temporary backup support in the event of a Disaster. The equipment used
in the Recovery Services may not be identical to the equipment ordinarily
used in for the Customer Facilities. Customer acknowledges that the
equipment used in the Recovery Services may be of a different vendor,
size, or capacity than equipment that would be used in the absence of a
Disaster.
4.0 TEST PROCEDURES
4.1 Annual Tests. Customer shall test the application of potential Recovery
Services annually at a mutually convenient time. Such test may be
conducted at Phoenix's facilities or at the Customer Facilities as
mutually agreed. If the test occurs at the Customer Facilities, Customer
shall be responsible for all costs associated with transporting any
equipment from Phoenix to Customer for purposes of the test.
Disaster Recovery
May 2, 1996 3
<PAGE> 6
4.2 Test Support. Customer shall schedule its annual test with Phoenix in
advance for a mutually satisfactory time. Phoenix shall provide Customer
with up to four (4) hours of telephone support during annual tests at no
additional cost. If Customer requires additional time for telephone
support or on-site assistance from Phoenix, Customer shall pay Phoenix's
then current rate for such support, any Site Fees and any Related
Expenses.
4.3 Postponement of Tests. Phoenix reserves the right to postpone scheduled
test times (or any other preparatory work) if Phoenix is occupied
responding to a Declaration of Disaster from another Recovery Services
Subscriber. In such event, Phoenix shall extend the time period for
Customer's obligation to conduct an annual test.
4.4 Incomplete Tests. If Customer is unable to fulfill its annual test
obligation, Phoenix shall make all reasonable efforts in providing
Recovery Services to Customer, but Phoenix shall have no liability to
Customer if the Recovery Services are ineffective or if the effectiveness
is delayed, regardless of the cause of such ineffectiveness or delay.
4.5 Additional Tests. If tests in excess of the annual test are requested by
Customer due to malfunction of Customer's equipment at the Customer
Facilities or for any other reason, such additional tests shall be
billable to Customer in accordance with Phoenix's current rates.
5.0 TERM OF AGREEMENT
5.1 The term of this Agreement shall commence as of the date first set forth
above (the "Effective Date") and shall continue for ________ years
thereafter, terminating on ______________, 19__ (the "Initial Term").
Upon expiration of the Initial Term, this Agreement shall be automatically
renewed for additional successive two (2) year periods unless and until
either party notifies the other of its desire to not renew this Agreement
at least six (6) months prior to the last day of the Initial Term or any
renewal period then in effect.
6.0 PAYMENT OF FEES BY CUSTOMER
6.1 Annual Fee. The first Annual Fee shall be payable upon execution of this
Agreement. Customer shall pay Phoenix subsequent Annual Fees at least 30
days in advance of the anniversary date of this Agreement.
6.2 Declaration Fee. Each Declaration of Disaster by Customer shall result
in the payment by Customer of a Declaration Fee. The Declaration Fee
shall accompany the Declaration of Disaster Notice or shall be payable at
such time thereafter as Phoenix may designate.
6.3 Usage Fee. Within 30 days of receipt by Customer of the invoice
therefor, Customer shall pay Phoenix a Usage Fee for use made by Customer
of the Recovery Services in excess of the initial 30-day recovery period.
6.4 Related Expenses. Phoenix reserves the right to charge Customer for any
Related Expenses incurred in the provision of any services pursuant to
this Agreement. Charges for Related Expenses shall be payable by Customer
within 30 days of receipt of an invoice therefor.
6.5 Site Fees. Phoenix shall charge daily Site Fees for each Phoenix
representative assigned to the Customer Facilities as part of the Recovery
Services, Disaster Recovery Planning Session, or at the request of the
Customer. Site Fees shall be payable by Customer within 30 days of
receipt of an invoice therefor.
Disaster Recovery
May 2, 1996 4
<PAGE> 7
XXX = Confidential Treatment Requested
6.6 Inflation-Adjustment Factor. In recognition of the impact of
inflationary costs likely to be incurred by Phoenix during the term of
this Agreement, Phoenix reserves the right to increase the Annual Fee, the
Declaration Fee, the Usage Fee and the Site Fees charged hereunder on an
annual basis at the commencement of and with respect to each successive
12-month period beginning 12 months after the effective date of this
Agreement. Such increase shall not be increased by XXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
6.7 Taxes. The Fees imposed hereunder are exclusive of all federal, state,
and local levies, taxes, and tariffs (exclusive of federal and estate
taxes on net income) imposed with respect to the Recovery Services to be
provided by Phoenix hereunder, all of which Customer shall be responsible
to pay when and as they come due.
6.8 Customer Expansion. The fees imposed hereunder are based upon the size
or capacity of server (referenced by model number) and number of branch
locations. Customer agrees to notify Phoenix promptly in the event of any
increase or expansion of such server or branch locations, including as a
result of any merger or addion of affiliates, and, as of the date of
increase or expansion, Customer shall be subject to such increased Annual
Fee, Usage Fee, and Declaration Fee as may apply based on Customer's new
configuration. In the event of an expansion, Customer shall obtain such
additional equipment as Phoenix may require and shall provide Phoenix with
all other requested information.
7.0 MULTIPLE DISASTERS
7.1 Multiple Use of Recovery Services. In the event of a Disaster, Customer
shall have the right to the Recovery Services as set forth in Section 2
hereof. Customer acknowledges that use of the Recovery Services to be
afforded to Customer hereunder will be offered by Phoenix to other
Recovery Services Subscribers. Accordingly, in the event that Multiple
Disasters should be experienced by Customer and other Recovery Services
Subscribers, Customer may not be afforded immediate access to and use of
the Recovery Services.
7.2 Customer Cooperation. In the event of Multiple Disasters, Customer shall
cooperate with Phoenix by reasonably accommodating other Recovery
Services Subscribers who are likewise affected by the Multiple Disasters.
7.3 Phoenix's Obligations. In the event of Multiple Disasters, Phoenix shall
use all reasonable efforts, subject to practical limitations, to
coordinate and arrange for prompt Recovery Services for all Recovery
Services Subscribers affected by the Multiple Disasters. Phoenix will not
intentionally provide any other Recovery Services Subscribers with access
or use rights more favorable than those accorded hereunder to Customer.
8.0 LIMITATION ON WARRANTIES, LIABILITIES, AND REMEDIES
8.1 Limitation on Warranties. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, PHOENIX MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE RECOVERY SERVICES
AND THE OTHER SERVICES AND EQUIPMENT TO BE PROVIDED HEREUNDER.
Disaster Recovery
May 2, 1996 5
<PAGE> 8
8.2 Limitation on Liabilities and Remedies.
(1) This is a contract for services and not a guarantee of
operating performance. Customer's sole remedy, in the event of any
deficiency for which Phoenix is responsible, is to request that
services be restored to the levels required by this Agreement,
whereupon Phoenix shall be obligated to take all reasonable steps
available to correct or overcome the identified deficiency.
(2) The aggregate liability of Phoenix to Customer for any losses
or damages, direct or indirect, arising out of or relating to this
Agreement, regardless of the cause and regardless of any other
failure of any provision or undertaking herein, under contract,
tort, or any other theory of liability, shall not in any event
exceed the aggregate sums paid or to be paid by Customer to Phoenix
during the 12-month period immediately preceding the month in which
such loss or damage was incurred.
(3) Under no circumstances shall Phoenix be liable for
consequential, special, incidental, or exemplary damages, including
(but not limited to) business interruption damages, loss of
anticipated profits or other economic loss, even if Phoenix has been
advised of the possibility of such damages.
8.3 Situations Beyond Phoenix's Control. Phoenix shall not be liable for any
act, omission, event or circumstance caused by Customer or any other
person or entity, acts of any federal, state, or local governmental
authority; fires, floods, or other natural disasters; strikes or labor
unrest; terrorism or acts of war, degradation of telecommunications
service; severe weather conditions, or for any other matters that are
beyond Phoenix's control, whether or not otherwise foreseeable.
9.0 INDEMNIFICATION FOR CERTAIN ACTS AND OMISSIONS
9.1 Indemnification by Phoenix. Subject to the provisions of Section 8
hereof, Phoenix shall indemnify and hold harmless Customer and its
affiliates, subsidiaries, employees, and agents against all claims,
liabilities, losses, damages, and causes of action relating to personal
injury or property damage suffered by Phoenix or its personnel, except to
the extent arising solely out of the intentional or grossly negligent acts
or omissions of Customer.
9.2 Indemnification by Customer. Customer shall indemnify and hold harmless
Phoenix and its subsidiaries, affiliates, employees, and agents against
any and all claims, liabilities, losses, damages, and causes of action
relating to personal injury or property damage suffered by Customer or its
personnel, except to the extent arising solely out of the intentional or
grossly negligent acts or omissions of Phoenix.
10.0 EQUIPMENT MODIFICATIONS
10.1 Right of Modification. The Parties acknowledge that continued rapid
change in the technology associated with data processing, data storage,
and telecommunications is expected to result in changes in the computer
and data-communications equipment and systems of both Phoenix and
Customer. Accordingly, each party reserves the right to supplement, alter,
or change its data-processing equipment and related telecommunications
equipment, subject to the terms hereof.
10.2 Modification of Recovery Services. In the event that Phoenix intends to
make any change in the Recovery Services that adversely affects
performance, results in altered functionality, or requires material
changes in protocols or other interface functions, Phoenix shall afford
Disaster Recovery
May 2, 1996 6
<PAGE> 9
Customer sixty (60) days' prior written notice of any such change, and
Phoenix shall provide Customer with an opportunity to test such modified
Recovery Services without charge (other than shipping charges and Related
Expenses) after each such substantial change.
11.0 CONFIDENTIALITY
11.1 Trade Secrets. The Recovery Services and disaster recovery plans and
equipment developed and implemented by Phoenix are trade secrets, the
development of which required the efforts of skilled professionals and the
expenditure of considerable time and money. Customer agrees that any such
information shall not be used by Customer or disclosed to any third party
by Customer for any purpose other than as strictly necessary for the
generation of this Agreement.
11.2 Nondisclosure. If Customer desires to use a contractor for any purpose
that would require disclosure of Phoenix's proprietary and confidential
information to such contractor, Customer shall obtain Phoenix's advance
written approval for such contractor. Customer agrees to use its best
efforts to prevent such confidential or proprietary information from being
disclosed to any third party by any employee of Customer or any contractor
of Customer, and Customer agrees if required by Company, to require its
employees and approved contractors who have access to confidential or
proprietary information of Phoenix's to execute nondisclosure statements
in the form required by Phoenix.
11.3 Protection of Confidential Information. Phoenix and Customer shall each
exercise the same standard of care to protect any proprietary and
confidential data of the other that is disclosed pursuant to the terms of
this Agreement as is used to protect its own proprietary and confidential
data from unauthorized use and disclosure, including prudent measures to
restrict copying and unauthorized access. Furthermore, Customer has
advised Phoenix that it has developed special procedures for protecting
its data, and Phoenix shall use its best efforts to conform to such
programs for protection of such data, provided that the same are
consistent with the normal operation by Phoenix of its business of
providing disaster recovery services to various Recovery Services
Subscribers. The foregoing restrictions shall not apply to information
(1) in the public domain, (2) already rightfully in the recipient's
possession, or (3) thereafter rightfully obtained by recipient from other
sources.
12.0 TERMINATION
12.1 Termination for Change by Phoenix. In the event that Phoenix announces
or makes a significant change to the Recovery Services so that the
Recovery Services do not meet Customer's requirements, Customer shall be
entitled, for a period of 30 days after receipt of notice of such change,
to terminate this Agreement effective on the next anniversary of the
Effective Date by written notice to Phoenix without further obligation
hereunder except for the payment of all sums otherwise due to Phoenix at
the time of such termination.
12.2 Termination of Software Agreement. The Parties acknowledge that they
would not have entered into this Agreement without previously or
simultaneously entering into the Software Agreement. Consequently,
Phoenix reserves the right to terminate this Agreement in the event that
the Software Agreement is terminated without the Parties entering into a
replacement software license or similar agreement. Phoenix shall notify
Customer of its exercise of such right of termination within thirty (30)
days of the effective date of the termination of the Software Agreement,
and such termination shall be effective as of the date of notice. In the
event of such a termination, Customer shall not be entitled to any refund
of any previously paid Annual Fee, and, if termination of this Agreement
occurs less than six (6) months before the anniversary of the effective
date of this Agreement, Customer shall pay Phoenix a cancellation fee
equal to one half of the of the current Annual Fee.
Disaster Recovery
May 2, 1996 7
<PAGE> 10
12.3 Termination for Cause. Either Customer or Phoenix may, upon written
notice and subject to the provisions of this Section respecting notice and
right to cure, terminate this Agreement for cause upon the occurrence of a
material and continuing breach of the terms of this Agreement. Written
notification expressly identifying such breach shall be furnished to the
breaching party, whereupon such party shall have twenty (20) days to
remedy the specific breach or demonstrate that no such breach has
occurred. Failure to cure the identified breach within such 20-day period
shall constitute cause for immediate termination.
12.4 Survival. All obligations of confidentiality and payment for amounts due
shall survive termination of this Agreement.
13.0 MISCELLANEOUS
13.1 Assignment. Customer may not assign this Agreement or any rights or
obligations hereunder, except to its successor pursuant to a merger,
consolidation, or sale of substantially all of its assets, without
obtaining prior written consent of the other party. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding
upon the parties hereto, their successors and assigns.
13.2 Governing Law. This Agreement shall be governed by the laws of the State
of Florida as it applies to a contract executed, delivered and performed
in such State.
13.3 No Waiver. No waiver by either party of any breach or default of any of
the covenants or conditions herein contained and performed by the other
party shall be construed as a waiver of any succeeding breach of the same
or of any other covenant or condition.
13.4 Sole Agreement. This Agreement supersedes all prior agreements, oral and
written, including all statements in previous communications or
understandings between Phoenix and Customer with respect to disaster
recovery services, and this Agreement may not be modified in any manner
except by a writing signed by an authorized representative of the party
being bound thereby.
13.5 Independent Contractor Status. The relationship between Phoenix and
Customer created by this Agreement shall be that of independent
contractors, and nothing contained herein shall be construed as
constituting a partnership, joint venture or agency between Phoenix and
Customer.
13.6 Notices. Any notice, request, or other communication to either party by
the other as provided for herein shall be given in writing and shall be
deemed received only upon the earlier of (1) receipt or (2) five days
after mailing, if mailed postage prepaid by regular or airmail at the
address for such party as first set forth above or at such changed address
as may be subsequently submitted by written notice of either party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
PHOENIX INTERNATIONAL LTD., INC.
------------------------------
By: By:
--------------------------- ---------------------------
Title: Title:
------------------------ ------------------------
Date: , 19 Date: , 19
------------------- -- ------------------- --
Disaster Recovery
May 2, 1996 8
<PAGE> 11
EXHIBIT A
FEE SCHEDULE(*)
<TABLE>
<S> <C> <C>
1. ANNUAL FEE
This fee is based on the size of the server and number of
physical locations.
- Base $
- Remote Location/Branch $
Total Annual Fee $
2. DISASTER RECOVERY PLANNING SESSION(**) $
(Plus Out-of-Pocket Expenses)
3. DECLARATION FEE $
4. USAGE FEE (per month) $
5. SITE FEE $
(Per day, per person plus Out-of-Pocket Expenses)
</TABLE>
(*) All fees other than Disaster Recovery Planning Session are subject to
increase based on size of server.
(**) Not to exceed $____ (Plus Out-of-Pocket)
Disaster Recovery
May 2, 1996 9
<PAGE> 12
EXHIBIT B
CUSTOMER FACILITIES
Disaster Recovery
May 2, 1996 10
<PAGE> 13
EXHIBIT C
CUSTOMER REPRESENTATIVES
AUTHORIZED TO DECLARE DISASTER
Disaster Recovery
May 2, 1996 11
<PAGE> 14
EXHIBIT D
PHOENIX CONTACTS FOR DECLARATION OF DISASTER
Phoenix International Ltd., Inc.'s normal support number is (407) 667-0033.
Disaster Recovery
May 2, 1996 12
<PAGE> 15
EXHIBIT E
DISASTER RECOVERY REQUEST NOTICE
(SUBJECT TO CHANGE FROM TIME TO TIME)
DISASTER DECLARATION NOTICE
Date:___________________________
Time:___________________________
For purposes of receiving Disaster Recovery Services from Phoenix
International, I wish to declare that my bank is currently experiencing a
disaster as defined by Section 1.5 of my Disaster Recovery Services Agreement
with Phoenix. I further certify that I am authorized by my bank to make this
declaration.
Signature:_________________________ Name: __________________________
Title: __________________________
Bank: __________________________
1. Is your phone system functional? Yes No
If not, please provide the following contact information:
Voice Number: ________________________________________
Fax Number: ________________________________________
Modem Number: ________________________________________
2. Is your UNIX database server functional? Yes No
If not, please describe the nature of the problem(s):___________________
________________________________________________________________________
3. Are your local area networks functional? Yes No
If not, please describe the nature of the problem(s):___________________
________________________________________________________________________
4. Are your wide area network connections functional? Yes No
If not, please describe the nature of the problem(s):___________________
________________________________________________________________________
Phoenix Use Only:
Call Taken By: ____________________ Name of DRS Contact Notified:_____________
Date & Time: ____________________
Disaster Recovery
May 2, 1996 13
<PAGE> 1
EXHIBIT 10.33
SOFTWARE DEPOSIT AGREEMENT
Number
-----------------
-----------------
THIS AGREEMENT ("the Agreement") is effective this 9th day of October,
1995, by and between Phoenix International Limited, Inc. ("Licensor") and Allen,
Dyer, Doppelt, Franjola & Milbrath, P.A. ("ADDFM").
WHEREAS, the Licensor has or will enter into a contract(s) with persons or
corporation(s) ("Licensee(s)") for the use of the computer programs and other
materials; and
WHEREAS, availability of or access to proprietary data related to the
computer software and other materials is critical to certain Licensees in the
conduct of their business; and
WHEREAS, the Licensor has deposited or will deposit with ADDFM the related
proprietary data to provide for retention and controlled access for certain
Licensees under certain conditions;
ARTICLE 1
Definition of Deposit. The Deposit of proprietary data consists of any and
all material supplied by the Licensor to ADDFM pursuant to this Agreement
(including amendments hereto), as specified in the attached "Description of
Deposit Materials" (Exhibit A). The Deposit will include any supplemental
materials which may be added to the Deposit from time to time by Licensor
pursuant to this Agreement. Such supplements to the Deposit will be added by an
Amendment to Exhibit A.
Definition of Registered Licensee. The Licensor agrees to submit and
execute a "List of Registered Licensees" (Exhibit B)
<PAGE> 2
each calendar quarter to cover the Licensees who are currently paying a
support fee and are thereby covered under this Agreement. Each Licensee on
such list shall be referred to as a Registered Licensee for that calendar
quarter, and each such list shall become part of Exhibit B.
ARTICLE 2
Replacement of Deposit. The Licensor may from time to time replace the
Deposit with replacement materials. The Licensor shall submit such replacement
materials (e.g., modifications, new versions, or new editions) to ADDFM by an
Amendment to Exhibit A describing such new materials. Such replacement Deposit
shall be treated by ADDFM as required in the case of the initial deposit. ADDFM
will, at the Licensor's option, either destroy, retain, or return to Licensor
the replaced Deposit.
ARTICLE 3
Obligations of ADDFM. ADDFM agrees to accept the Deposit referred to in
Article 1 in accordance with this Agreement. ADDFM agrees to establish a
receptacle in which it will place the Deposit, and will put the receptacle under
the control of one or more individuals, selected by ADDFM from time to time,
whose identity shall be available to the Licensor at all times. ADDFM will
exercise that high level of care in carrying out the terms of this Agreement as
ADDFM would use to protect items of this nature which ADDFM might own.
ADDFM shall bear no obligation or responsibility whatsoever to determine
the existence, completeness, or accuracy of that Deposit.
2
<PAGE> 3
ADDFM shall have no obligation or responsibility to determine whether what is
deposited is or is not proprietary data as defined or contemplated herein.
ARTICLE 4
Term of Agreement. This Agreement shall have an initial term of one year.
This Agreement may be renewed for additional one year periods upon receipt by
ADDFM of the specified renewal fee. In the event that the renewal fee is not
received on or before the expiration date, ADDFM shall notify the Licensor. If
the fee is not received within the subsequent thirty (30) days, the Agreement
shall expire without further notice and without liability to any other party.
ARTICLE 5
Expiration. Upon expiration or non-renewal of this Agreement, all duties
and obligation of ADDFM to the Licensor hereunder shall terminate. In the event
that a Registered Licensee pays the renewal fee pursuant to Article 4 and the
licensor is of the opinion that any necessary condition for renewal is not met,
the Licensor may so notify ADDFM and the Registered Licensee in writing within
thirty (30) days of receipt of payment by ADDFM. The resulting dispute shall be
resolved pursuant to the dispute resolution provisions contained in Exhibit B.
ARTICLE 6
Delivery of Deposit. In the event that ADDFM is notified by a Registered
Licensee of the occurrence of a release condition as defined in Exhibit B for
that Registered Licensee, ADDFM shall so
3
<PAGE> 4
notify the Licensor and shall provide a copy of the notice from the Registered
Licensee. If the Licensor provides contrary instructions, as defined in this
Article, within ten (10) days of the mailing or other service of the notice to
Licensor, ADDFM will not deliver a duplicate copy of the Deposit to the
Registered Licensee demanding delivery. If no contrary instructions are
received within the ten-day period, ADDFM will deliver a duplicate copy of the
Deposit to the Registered Licensee demanding delivery.
Contrary instructions, for the purposes of this Article means the filing of
a notice with ADDFM by the Licensor, with a copy to the Registered Licensee
demanding delivery, that a Release Condition has not occurred, or has been
cured. Upon receipt of such contrary instructions, ADDFM shall not deliver the
Deposit but shall continue to store the Deposit until otherwise directed by the
Registered Licensee and Licensor jointly, or until resolution of the dispute
resolution process defined in Exhibit B or by a court of competent jurisdiction.
ARTICLE 7
Release Conditions. Release conditions shall have the meaning ascribed
thereto in Exhibit C.
ARTICLE 8
Nondisclosure. Except as provided in this Agreement, ADDFM agrees that it
will not divulge, disclose nor otherwise make available to third parties, nor
make any use whatsoever of the Deposit or any other information provided to it
by the Licensor or the Registered Licensee in connection with this Agreement,
without
4
<PAGE> 5
the express prior written consent of the Licensor or Registered Licensee, as
the case may be.
ARTICLE 9
Indemnification. Licensor agrees to defend and indemnify ADDFM and hold
ADDFM harmless from and against any and all claims, actions and suits, and from
and against any and all liabilities, losses, damages, costs, charges, penalties,
counsel fees, and other expenses of any nature (including, without limitation,
settlement costs) incurred by ADDFM on account of any act or omission of ADDFM
in respect of or with regard to this Agreement, except as specified in Articles
3 and 8.
ARTICLE 10
Audit Rights. ADDFM agrees to keep complete written records of the
activities undertaken and materials prepared pursuant to this Agreement. The
Licensor shall be entitled at reasonable times during normal business hours and
upon reasonable notice to ADDFM during the term of this Agreement to inspect the
records of ADDFM with respect to this Agreement.
The Licensor shall be entitled, upon reasonable notice to ADDFM and during
normal business hours, to inspect the facilities of ADDFM with respect to the
physical and technical status and condition of the Deposit.
ARTICLE 11
Designated Representative. The Licensor agrees to designate an
authorized individual to receive notices and otherwise act on
5
<PAGE> 6
behalf of the Licensor with respect to the performance of its obligations under
this Agreement.
ARTICLE 12
General. ADDFM may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any person purporting to
give any writing, notice, request, advice, or instruction in connection with or
relating to this Agreement has been duly authorized to do so.
This Agreement shall be governed by, and construed in accordance with the
laws of the State of Florida.
This Agreement, including the Exhibits, and any Amendments and Supplements
hereto, constitutes the entire agreement between the parties concerning the
subject matter hereof, and shall supersede all previous communications,
representations, understandings, and agreements, either oral or written, between
the parties.
ARTICLE 13
Delivery of Notice. All notices required by this Agreement shall be
sufficiently given by mailing the same by certified or registered mail, return
receipt requested, to the parties at their respective addresses, as set forth
below.
Notices to Phoenix International Limited, Inc. should be sent to:
Phoenix International Limited, Inc.
Attn: Mr. Ralph Reichard
Spectrum Building
900 Winderly Place, #140
Maitland, Florida 32751
(407) 667-0033
Fax (407) 667-0133
6
<PAGE> 7
Notices to ADDFM should be sent to:
Allen, Dyer, Doppelt,
Franjola & Milbrath, P.A.
Post Office Box 3791
Orlando, Florida 32802
(407) 841-2330
Fax (407) 841-2343
ARTICLE 14
Fees. As compensation for the services to be performed by ADDFM hereunder,
ADDFM shall be paid the following fees:
$500.00 per year
All fees shall be due in full upon the receipt of invoice or at the time of
the request for service as the case may be.
PHOENIX INTERNATIONAL LIMITED, ALLEN, DYER, DOPPELT, FRANJOLA
INC. & MILBRATH, P.A.
By: /s/ Ralph Reichard By: /s/ [signature illegible]
---------------------------- -----------------------------
Title: President Title: Director
------------------------- ---------------------------
7
<PAGE> 8
DESCRIPTION OF DEPOSIT MATERIALS
Account Number
---------------------------
PLAN FOR:
Software owner/licensor PHOENIX INTERNATIONAL LIMITED.,
--------------------------------------
INC.
-------------------------------------------------------------
Authorized representative Ralph Reichard Title President
---------------- ---------
Phone (404) 667-0033 Address 900 Winderly Pl.-Suite 140-Maitland, FL 32751
-------------- ---------------------------------------------
Technical contact Jerry Nissen Phone 407 667-0033
------------------------ ------------
Software asset value. Replacement value $5,000,000
(estimated) ----------
Current market value $
-----------------------------------------------
DEPOSIT MATERIALS:
Product name Phoenix Banking System Version
------------------------------------ -----
Date Oct. 1, 1995 CPU/OS DOS & UNIX No. Compiler SQL Windows/Sybase
---------------- ---------------- -------------------
Application
-------------------------------------------------------
Utilities needed
--------------------------------------------------
Special operating instructions Recorded using Novaback V.4.58
-----------------------------------
Backup/Restore Program Media DAT Tape
------------------------------------------------ -----------
Media Format Quantity
DDS-2 120mm 1
Related documents
Description (title/document no.) Media Quantity
Date
Other:
Media value (for insurance) $ 40.00 /By: R.R.
---------- ----------
EXHIBIT A - Page 2 of 4
<PAGE> 9
THE ADDITIONAL TERMS AND CONDITIONS ON THE FOLLOWING PAGES OF EXHIBIT A ARE
INCORPORATED IN AND MADE A PART OF THIS AGREEMENT.
Accepted by: Accepted by:
Software owner/licensor:
PHOENIX INTERNATIONAL for ALLEN, DYER, FRANJOLA
LIMITED, INC. & MILBRATH, P.A.
By: /s/ Ralph Reichard By: /s/ Ava K. Doppelt
------------------------ -------------------------
Authorized Signature Authorized Signature
Name Ralph Reichard Name AVA K. DOPPELT
----------------------- ------------------------
Title President Title Director
---------------------- ------------------------
Date Oct. 9, 1995 Date 9/12/95
----------------------- --------------------
TRANSMITTAL AGREEMENT
This agreement is between Allen, Dyer, Doppelt, Franjola & Milbrath,
P.A. and Phoenix International Limited, Inc. Licensor. THIS IS NOT AN ESCROW
AGREEMENT. This is an agreement as to how certain deposit materials will be
sent to ADDFM.
ADDFM's obligations are to:
1. Take custody of the deposit materials, including magnetic tapes,
disk packs, tabulating cards, paper documents, aperture cards, microfilm and any
other form of machine or manual recorded or machine manual readable data.
2. To place the deposit materials in secure storage.
3. To not disclose, divulge or otherwise make available to any third
party the deposited materials except pursuant to an agreement between the
Licensor and ADDFM, or under the compulsion of a valid court order.
EXHIBIT A - Page 3 of 4
<PAGE> 10
4. To determine if the objects delivered as the deposit conform to the
description of the deposited materials as set forth above.
The Licensor's obligations are:
1. To properly pack and deliver the deposit materials to ADDFM. If in
the opinion of ADDFM the materials are not in proper condition to be stored, the
Licensor will repack the deposit materials to ADDFM's standards.
2. To pay ADDFM for the services provided under this agreement as
specified in the agreement between ADDFM and the Licensor. In addition, the
Licensor shall pay any federal, state or local sales, use, or gross receipts
taxes arising from the transactions and services contemplated by this agreement.
These charges will be due and payable by the Licensor ten (10) days after the
date of billing. All other charges will be billed to the Licensor on the last
day of each month for services rendered for that month. These charges will also
be due and payable by the Customer ten (10) days after the date of billing by
ADDFM.
Warranties by the Licensor:
The Licensor represents and warrants that it is lawfully possessed of
all deposit materials stored under this agreement and has the authority to store
it in accordance with the terms thereof. The Licensor agrees to indemnify and
hold harmless ADDFM if it is made a party to any litigation with respect to the
deposit materials and any related information which is the subject of this
agreement.
EXHIBIT A - Page 4 of 4
<PAGE> 11
Limitations on ADDFM's liability:
ADDFM is not operating a public warehouse. It shall be liable only for
its failure to use ordinary care, and then only in the amount of the replacement
value of the tangible items of property injured, destroyed or lost as a result
of such failure. ADDFM shall under no circumstances be liable for the loss or
destruction of any information or data contained on any media, or for the cost
of recreating any such information or data, or for any loss of profits or other
indirect or consequential damages suffered by Customer for any reason. The
Licensor understands and agrees that it shall assume sole responsibility for any
and all risks or loss or injury not expressly assumed by ADDFM under this
paragraph, and, if appropriate, that is shall procure additional insurance
coverage, and/or take any other steps necessary to cover these risks.
EXHIBIT A - Page 5 of 4
<PAGE> 12
XXX = Confidential Treatment Requested
EXHIBIT B
LIST OR REGISTERED LICENSEES
PHOENIX INTERNATIONAL LTD., INC. - CLIENTS
XXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX XXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX
EXHIBIT B - Page 1 of 2 March 11, 1996
<PAGE> 13
EXHIBIT B
LIST OF REGISTERED LICENSEES
ALLEN, DYER, DOPPELT, FRANJOLA &
PHOENIX INTERNATIONAL LTD, INC. MILBRATH, P.A.
Initial: /s/ RR Initial:
------------------------------ ------------------------
Date: March 11, 1996 Date:
---------------------------
Calendar Quarter: [X] January - March 1996
[ ] April - June 1996
[ ] July - September 1996
[ ] October - December 1996
EXHIBIT B - Page 2 of 2 March 11, 1996
<PAGE> 14
EXHIBIT C
DEFINITION OF RELEASE CONDITIONS
Release Conditions. The term "release conditions" is defined and used to mean:
1. Failure of the Licensor or a successor to carry out
maintenance or support obligations imposed on it pursuant to the License
Agreement; or
2. Failure of the Licensor or successor to continue to do
business in the ordinary course.
PHOENIX INTERNATIONAL LIMITED, INC. ALLEN, DYER, DOPPELT, FRANJOLA
& MILBRATH, P.A.
Initial /s/ RR Initial /s/ AKD
------------------------------ ------------------------
EXHIBIT C - Page 1 of 1
<PAGE> 1
EXHIBIT 10.34
CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT
In order to facilitate discussions relating to the possible business
relationship between ________________________________ (Company) and Phoenix
International Ltd., Inc. (Phoenix), it will be necessary for Company to review
and analyze certain information that Phoenix regards as propriety and
confidential in nature. The Company understands that Phoenix is willing to
furnish such information solely for the purpose of discussions concerning the
proposed business transactions and pursuant to the following terms and
conditions:
1. "Proprietary Information" shall mean all information disclosed by Phoenix
or its representatives to the Company, or by the Company of its
representatives to Phoenix, in accordance with the provisions of this
Agreement. Proprietary Information shall not include information which
(a) is or becomes generally available to the public other than as a result
of a disclosure by the Parties or their directors, officers, employees, or
representatives, (b) is or becomes available to the parties on a
non-confidential basis from a source other than Parties or their
representatives provided that such source is not bound by a
confidentiality agreement with Parties in respect thereof; or (c) is
within the possession of the Parties prior to its being furnished to the
Company by Phoenix, provided that the source of such information is not
bound by a confidentiality agreement with Phoenix in respect thereof.
2. The Proprietary Information will be kept confidential and will not,
without the prior written consent of Phoenix, be disclosed by the Company
or its representatives to any third party. The Company agrees to transmit
the Proprietary Information only to those representatives who need to know
the Proprietary Information for the purpose of evaluating the transaction,
who are informed of the confidential nature of the Proprietary
Information, and who agree to be bound by the terms of this Agreement.
3. The Proprietary Information shall not be (a) used by the Company to
invent, create, modify, adopt or manufacture any hardware or software
product or to provide, perform or furnish any other services which would
directly or indirectly compete or be used in lieu of the hardware,
software or other products or services of Phoenix; (b) used by the Company
in any operations of Phoenix; (c) reproduced without the consent of
Phoenix; or (d) disclosed to third parties without consent of Phoenix
unless such disclosure is required by law, rule or regulation binding on
the Company. In the event that the Company is requested or required by
legal process or by the operation of applicable law to disclose any
Proprietary Information, it is agreed that the Company will provide
Phoenix with prompt notice of such requests so Phoenix may seek an
appropriate protective order and/or waive compliance by and with
provisions of the agreement.
4. Except to the extent provided by this Agreement, neither Company or
Phoenix shall disclose to any other person the fact that the Proprietary
Information has been made available, that discussions or negotiations are
taking place concerning a possible transaction with Phoenix, or any of the
term, conditions or other facts with respect to
<PAGE> 2
any such possible transactions, including the status thereof, except as
required by law, and then only with written notice as soon as possible to
Phoenix.
5. Upon request in writing of Phoenix, all copies, in whatever form held or
maintained, of any Proprietary Information furnished by Phoenix or its
representatives to the Company shall be returned as promptly as
practicable and no copies of any Proprietary Information shall be kept or
maintained by the Company. All documents, memoranda, notes and other
writings whatsoever prepared by the company or its representatives based
on the Proprietary Information shall be destroyed, and such destruction
shall be certified in writing to Phoenix by an authorized officer of the
Company supervising such destruction.
6. Except as set forth in the terms of this Agreement, neither Company nor
Phoenix shall be committed in any way with respect to the matter to be
discussed.
7. This Agreement shall be binding upon and inure to the benefit of and
shall be enforceable by the parties hereto, their successors and assigns.
This Agreement shall be governed and construed in accordance with the laws
of the State of Florida applicable to agreements made and to be performed
within such state.
8. Any modification or waiver of the conditions of this Agreement must be in
writing and be signed by both the Company and Phoenix.
Accepted and agreed to on this ________ day of _______________, 19___.
COMPANY PHOENIX INTERNATIONAL LTD. INC.
900 Winderley Place, Suite 140
Individual's Name Maitland, Florida 32751
---------------------
Signature By:
----------------------------- ---------------------------
Company Representative
----------------
<PAGE> 1
EXHIBIT 10.35
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT (this "Agreement") is made and entered into
this _____ day of __________, 1996, by and between Phoenix International Ltd.,
Inc., a client/server banking software company, located at 900 Winderley Place,
Suite 140, Maitland, FL 32751 ("Company"), and _________________ "Recipient"
below.
1. DEFINITIONS. For purposes of this Agreement, "Information" shall mean
the information referred to in Attachment A, Information, as well as any other
information labeled "Confidential" by Company or provided to Recipient by
Company with reference to this Agreement. Such Information excludes, however,
any information that (1) has been or is obtained by Recipient from a source
independent of Company and not desiring such information from Company, (2) is
or becomes generally available to the public other than as a result of an
unauthorized disclosure by Recipient or its personnel, or (3) is independently
developed by Recipient without reliance in any way on the Information or
Materials provided by Company. "Materials" shall mean all memoranda, notes,
records, drawings, manuals, disks, or other documents and media, including all
copies, extracts, and summaries thereof, containing any Information or provided
to Recipient by Company with reference to this Agreement. "Authorized Use"
means the purposes described in Attachment B, Authorized Use.
2. LIMITED USE. Recipient acknowledges that it is to be given access to
the Information and Materials solely for purposes of Authorized Use. Recipient
agrees that (1) it will not use the Information, (2) will keep the Information
confidential at all times, and (3) will not copy or modify the Materials, or
any copy, adaptation, transcription, or merged portion thereof, except as
expressly authorized by Company. Recipient shall limit its disclosure of the
Information and Materials to employees within its own organization whom Company
could reasonably expect to have a legitimate need to receive such Information
and Materials in order to accomplish the Authorized Use.
3. PROPRIETARY PROTECTION. Company shall have sole and exclusive
ownership of all right, title, and interest in and to the Information and
Materials, including ownership of all copyrights and trade secrets pertaining
thereto, subject only to the rights and privileges expressly granted by
Company.
Company claims and reserves all rights and benefits afforded under federal
and international copyright law in all software programs and documentation
included in the Materials as copyrighted works. The binary or object code
version of such software programs may under no circumstances be
reverse-engineered or reverse-compiled without Company's further written
consent.
The Information, including the source code version of all software
programs that may be included in the Materials, is considered to include
valuable trade secrets of Company. Recipient acknowledges that, in the event of
any breach of this Agreement, Company will not have an adequate remedy in money
or damages. Company therefore shall be entitled in such event to obtain an
injunction against such breach from any court of competent jurisdiction
immediately upon request. Company's right to obtain such relief shall not limit
its right to obtain other remedies.
Page 1
<PAGE> 2
4. DISCLAIMER. Except as may otherwise be set forth in a signed, written
agreement between parties, Company makes no representation or warranty as to
accuracy, completeness, condition, suitability, or performance of the
Information or Materials, and Company shall have no liability whatsoever to
Recipient resulting from its use of the Information and Materials.
5. TERM AND TERMINATION. Upon the earlier of Company's request or the
completion of the Authorized Use, Recipient shall promptly return or destroy
all Materials and discontinue all further use of the Information. Upon
Company's request, Recipient shall promptly certify that such action has been
taken. The restrictions contained in this Agreement shall remain in effect
until three (3) years after the return or destruction of all Materials.
6. GENERAL. The interpretation and enforcement of this Agreement shall be
governed by the laws of the State of Florida, as it applies to a contract
executed, delivered, and performed solely in such state. Recipient may not
sell, transfer, assign, sublicense, or subcontract any right or obligation
hereunder without the prior written consent of Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as set forth below.
PHOENIX INTERNATIONAL LTD., INC.
Signature:
---------------------------------
By: Ralph Reichard
--------------------------------------
Title: President & Chief Operating Officer
-----------------------------------
Date:
------------------------------------
---------------------------------
Signature:
By:
----------------------------------------
Title:
------------------------------------
Date:.
------------------------------------
Page 2
<PAGE> 3
Attachment A
INFORMATION
Information related to Company's software products and services, and future
plans, business practices, installation and conversion methodology, sales and
marketing plans, and strategy and differentiating strategy for product
positioning.
Page 3
<PAGE> 4
Attachment B
AUTHORIZED USE
Information, Materials, conversations, and presentations to be used only by
MONE for the express purpose of completing the market and product assessment
engagement including providing contracted-for deliverables to Company.
Page 4
<PAGE> 1
EXHIBIT 10.36
MUTUAL NON-DISCLOSURE AGREEMENT
THIS AGREEMENT is made this _________ day of ___________, 19 ___, by and
between __________________________ ("Company" and Phoenix International Ltd.,
Inc. ("Phoenix"), having its principal place of business at 900 Winderley
Place, Suite 140, Maitland, Florida 32751.
RECITALS
WHEREAS, Phoenix and Company mutually desire to engage in discussions
concerning a possible business relationship for the development and/or
licensing of software products and, in furtherance of those discussions may
find it necessary and advantageous to disclose to each other, certain
confidential information regarding software products and strategic plans; and
WHEREAS, Company and Phoenix consider such documents, records and information
pertaining to products confidential and do not want them disclosed to third
parties;
NOW, THEREFORE IN CONSIDERATION of the mutual covenants and conditions herein
contained, the parties agree as follows:
1. Phoenix and Company agree that they shall hold in confidence and shall
not disclose any Confidential Information (as defined in Paragraph 2
below) without the prior written authorization from a corporate officer of
the party to whom the information belongs nor use such Confidential
Information for any purpose other than that contemplated by this
Agreement. This obligation, however, shall not extend to any of the
following:
A. Confidential Information which at the time of disclosure is
in the public domain;
B. Confidential Information which after generation or disclosure
is published or otherwise becomes part of the public domain through
no fault of the disclosing party (but only after and to the extent
that it is published or otherwise becomes part of the public
domain);
C. Confidential Information which either party can show was in
its possession at the time of generation or disclosure and was not
acquired, directly or indirectly, from the other party or from a
third party under obligation of confidence;
D. Confidential Information which was received after the time of
generation or disclosure hereunder, from a third party who did not
require that party to hold it in confidence and who did not acquire
it, directly or indirectly, form the other party under an obligation
of confidence; and
<PAGE> 2
E. Confidential Information which Phoenix and Company can show
was developed independently without benefit of, or based on
information generated hereunder or made available by the other
party.
2. "Confidential Information" shall be deemed to include the source and
object code computer programs and associated documentation, manuals and
other printed or visually acceptable materials describing the use or
design of software and strategic plans as well as any other information,
oral or written, which shall be so noted on its face as being confidential
or proprietary to the disclosing party.
3. Each party shall exercise such care in the protection of the confidential
information of the other as they exercise in the protection of
confidential information of their own.
4. Rights and obligations of this Agreement shall be binding upon the heirs,
assigns and successors of Phoenix and Company.
5. At the termination of this examination, both parties agree to return to
each other all of the documents and other information provided in
connection with this examination, and all copies thereof, as soon as
requested by the other party.
6. Phoenix and Company warrant that they have the unqualified right to
disclose fully the Confidential Information disclosed hereunder.
7. Phoenix and Company agree to maintain as Confidential Information, the
existence of these discussions regarding a possible business relationship,
until an agreement is completed.
IN WITNESS HEREOF, the parties hereto by their duly authorized
representatives have executed this Agreement as of the date first written
above.
PHOENIX INTERNATIONAL LTD., INC.
By: By:
---------------------------- ----------------------------
Authorized Signature Authorized Signature
---------------------------- ----------------------------
Type or Print Name and Title Type or Print Name and Title
---------------------------- ----------------------------
Date Date
<PAGE> 1
EXHIBIT 10.37
CONFIDENTIALITY/NON-DISCLOSURE AGREEMENT
PERMITTING ACCESS TO SYSTEM DOCUMENTATION
AND DATA FILES FOR DATA CONVERSION
THIS CONFIDENTIALITY/NON-DISCLOSURE AGREEMENT PERMITTING ACCESS TO SYSTEM
DOCUMENTATION AND DATA FILES FOR DATA CONVERSION (hereinafter referred to as
the "Agreement") is made and entered into as of the last day and year written
below by and between Phoenix International Ltd., Inc., a Florida Corporation,
of 900 Winderley Place, Suite 140, Maitland, Florida 32751 ("Company"), and
the following parties:
<TABLE>
<S> <C>
CLIENT: RECIPIENT:
- ------------------------------------------- -------------------------------------------------------
- ------------------------------------------- -------------------------------------------------------
- ------------------------------------------- -------------------------------------------------------
Contact: Contact:
----------------------------------- -----------------------------------------------
Telephone: Telephone:
--------------------------------- ---------------------------------------------
(above party is hereinafter to as "Client") (above party is hereinafter referred to as "Recipient")
</TABLE>
Purpose of Agreement:
Company has developed, owns, uses, or re-markets certain confidential and
proprietary computer software and related documentation and materials (all of
which shall collectively be referred to hereinafter as "Application Software"),
which Application Software is used to process certain of Client's data pursuant
to a separate license or service agreement between Company and Client. Client
desires that certain of its data being processed by the Application Software be
converted to another software program (hereinafter referred to as the
"Conversion"), and Client desires that Recipient assist with this Conversion.
In order for Recipient to perform Recipient's job functions with Client, Client
desires that Recipient have access to those data files of Client and to those
portions of the documentation for the Application Software which are
specifically identified in Paragraph 1 below (those items identified in
Paragraph 1 shall collectively be hereinafter referred to as the "Confidential
Information"). Recipient, on its own behalf and on behalf of its employees,
agrees to abide by the terms of this Agreement. Company and Client agree to
permit Recipient to have access to the Confidential Information as requested
herein by Client, but only in accordance with the terms of this Agreement.
Therefore, in consideration of the premises hereof, and other good and valuable
consideration not herein recited but the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE> 2
CONFIDENTIALITY/NON-DISCLOSURE AGREEMENT
1. Grant of Access to Confidential Information. Company and
Client hereby agree to permit Recipient to have access to the
Confidential Information listed below for the sole purpose of
assisting Client with the Conversion, and such access is granted
solely upon the terms and conditions set forth in this Agreement.
This Agreement DOES NOT grant to Recipient the right to have access
to any portion of the Application Software other than the
documentation specifically set forth below. The Confidential
Information to be disclosed is as follows:
Client data files to be Deconverted:
-----------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Application Software Documentation to be Provided to Recipient:
--------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
2. Confidential Nature of Application Software and Confidential
Information. Recipient acknowledges that the Application Software
and all documentation and related materials are proprietary to
Company and are confidential and constitute a valuable asset of
Company, and that the data files contained in the Confidential
Information are proprietary to Client and are confidential and
constitute a valuable asset of Client. Recipient agrees to
safeguard the Confidential Information, and Recipient shall not
disclose or give access to the Confidential Information to any
person or entity other than those employees of Recipient who have a
need for such access in order to assist Client with Conversion.
3. Unauthorized Use. Recipient shall not make any unauthorized
use or disclosure of the Confidential Information and Recipient
shall promptly advise Company and Client in writing if Recipient
learns of any unauthorized use or disclosure of the Confidential
Information or Application Software by anyone, whether an employee,
former employee or agent of Recipient, or others, and shall
immediately take all reasonable steps within Recipient's power to
stop any unauthorized use or disclosure of the Confidential
Information or Application Software by anyone. Recipient shall not,
and it will not permit anyone else, to copy the Confidential
Information or Application Software.
4. Termination. In the event an employee of Recipient
terminates his or her employment with Recipient, Recipient agrees to
require such terminated employee to immediately return to Recipient
all copies of the Confidential Information in such employee's
possession at the time of termination of employment. Recipient
shall, upon the earlier occurrence of (i) completion of the tasks
assigned to it by Client which require access to the Confidential
<PAGE> 3
CONFIDENTIALITY/NON-DISCLOSURE AGREEMENT
Information, or (ii) Recipient's termination of employment with
Client, return to Client all copies of the Confidential Information.
5. Injunctive Relief. Recipient acknowledges that the use or
disclosure of the Confidential Information or Application Software
by Recipient (including any of its employees or anyone who obtains
the Confidential Information or Application Software or gains access
thereto from or through Recipient or any of its employees) in a
manner inconsistent with this Agreement will cause Company or Client
as the case may be, irreparable damage. In such event, Company and
Client shall have the right to equitable and injunctive relief to
prevent any unauthorized use or disclosure, and to such damages as
are occasioned by any such unauthorized use or disclosure, including
but not limited to reasonable attorneys' fees and costs incurred in
enforcing Company's or Client's rights hereunder.
6. Miscellaneous. This agreement shall be governed by,
interpreted in accordance with, and enforced under the laws of the
State of Florida. Recipient and Client hereby agree and acknowledge
that Company is a benefited third party to this Agreement.
Modification of this Agreement must be in writing and signed by all
parties.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum in
manner and form sufficient to bind them on the day and year indicated
after their respective execution hereof.
CLIENT: RECIPIENT:
---------------------------- ----------------------------
Authorized Signature Authorized Signature
---------------------------- ----------------------------
Type or Print Name and Title Type or Print Name and Title
---------------------------- ----------------------------
Date Date
PHOENIX INTERNATIONAL LTD., INC.
----------------------------
Authorized Signature
----------------------------
Type or Print Name and Title
----------------------------
Date
<PAGE> 1
EXHIBIT 10.38
PHOENIX INTERNATIONAL LTD., INC.
CONFIDENTIALITY AGREEMENT
This Agreement is made this _____ day of ___________, 19___, by and between
______________________________________________________________________________
(Company) and Phoenix International Ltd., Inc., a Florida Corporation having a
principal place of business at 900 Winderley Place, Suite 140, Maitland,
Florida 32751 (Phoenix).
Whereas Phoenix and Company mutually desire to engage in discussions concerning
a possible acquisition, license or distribution agreement for Company's
product(s) and, in furtherance of those discussions Company may find it
necessary and advantageous to disclose to Phoenix, pursuant to this
Confidentiality Agreement, certain specified confidential information regarding
Company products, certain of its business practices and its financial statues;
Therefore, Phoenix and Company agree to the following terms of disclosure:
1. For purposes of this Agreement the expression Software shall be deemed
to include the source and object code computer programs and associated
documentation, manuals and other printed or visually perceptible materials
describing the use or design of Company software, but shall exclude
material which has been otherwise protected by copyright, or which has
been distributed to outside sources without protection or otherwise not
previously held strictly confidential by Company.
2. Phoenix acknowledges that much of what will be disclosed by Company
during the course of discussions regarding the Software is confidential
and is claimed and represented by Company to be proprietary information
belonging solely to Company. Further, to the extent that certain of such
information is not already protected by the copyright laws of the United
States by virtue of publication, it may be entitled to protection at some
point in the future. In addition to information about the Software during
the course of these discussions, Company may disclose to Phoenix certain
know-how which Company believes to be valuable, confidential and
proprietary information developed by Company from time to time relating to
the contents, workings, installation and implementation of the Software.
3. Except as set forth herein, Phoenix agrees to hold in confidence all
written disclosures specified to be confidential and proprietary
information which may be made by Company employees about the design and
execution of the Software, Company business operations or practices,
Company product development plans and Company customers or prospective
customers. Phoenix agrees to use such confidential and proprietary
information only for the purpose contemplated by this Agreement and shall
not otherwise use such confidential information for its own commercial
benefit. During the time that Phoenix has possession of the Software
Confidential material, it will not copy or duplicate or permit anyone else
to copy or duplicate any portions of these items.
Further, Phoenix shall release it only to Phoenix employees and
authorized consultants who have a need to use such information for the
purposes of this Agreement, shall not disclose it to any other person and
will store the materials in a secure place. The materials will be
returned within 60 days from the date Company or Phoenix advises the other
in writing that discussions have been terminated.
<PAGE> 2
PHOENIX INTERNATIONAL LTD., INC.
CONFIDENTIALITY AGREEMENT
4. Any and all copyright, patent, trade secret and other intellectual and
proprietary rights in the Software to which Company is otherwise entitled
are and shall remain the property of Company. All obligations of
confidentiality under this Agreement shall survive the termination of the
Agreement for a period of five (5) years after the date of disclosure,
except as set forth below.
5. Any obligations of confidentiality or non-disclosure set forth herein
shall not apply to material or information that:
a. is or can be obtained, derived or developed by Phoenix independently
of disclosure by Company; or
b. is rightfully obtained in the United States or elsewhere by Phoenix
from a third party who has the right to transfer disclose it,
or is under no obligation to hold it confidential; or
c. is publicly available in the United States or elsewhere other than
through the fault or negligence of Phoenix.
6. Nothing contained in this Agreement shall be construed as granting or
implying any rights or obligations by license, estoppel or otherwise.
This Agreement shall not be assigned by either party and any attempted
Assignment shall be void.
7. This agreement shall be governed and interpreted in accordance with the
laws of the State of Florida.
8. Nothing herein shall prevent or restrict Phoenix from reviewing,
evaluating, developing or contracting to develop similar and/or
competitive products or from marketing similar or competitive products.
9. If any provision of this Agreement shall be held to be unenforceable,
such holding shall not affect the enforceability of any other provisions
hereof. Waiver of any breach of this Agreement by Company shall not be
considered a waiver of any other or subsequent breach except insofar as
Phoenix may be predjuiced by such partial waiver.
In witness whereof, the parties hereto have executed this Agreement.
PHOENIX INTERNATIONAL LTD., INC.
----------------------------------
Company
- -------------------------------- ----------------------------------
Signature Signature
- -------------------------------- ----------------------------------
Print Name Print Name
- -------------------------------- ----------------------------------
Title Title
- -------------------------------- ----------------------------------
Date Date
<PAGE> 1
EXHIBIT 10.39
STANDARD COMMERCIAL LEASE
ARTICLE 1.00 BASIC LEASE TERMS
1.01 Parties. This lease agreement ("Lease") is entered into by and
between the following Lessor and Lessee:
ABR Spectrum, Ltd. ("Lessor")
- --------------------------------------------------------------------
Phoenix International, Ltd., Inc. ("Lessee")
- --------------------------------------------------------------------
1.02 Leased Premises. In consideration of the rents, terms,
provisions and covenants of this Lease, Lessor hereby leases, lets and demises
to Lessee the following described premises ("leased premises"):
10,370 rentable (Approximate sq. ft.) (Job no.)
- ----------------- -----------------------------
The Spectrum (Name of building or project)
- ------------------------------------------------
900 Winderley Place, Suite 140 (Street address/suite number)
- ------------------------------------------------
Maitland, FL 32751 (City, State, and Zip Code)
- ---------------------------------------------------
1.03 Term. Subject to and upon the conditions set forth herein, the
term of this Lease shall commence on (January 1, 1994 the "commencement date")
(the "completion date", which Lessor shall use its best efforts to establish as
_______________________________________________________________), and shall
terminate 48 months thereafter.
1.04 Base Rent and Security Deposit, Base rent is SEE ADDENDUM per
month. Security deposit is $SEE ADDENDUM.
1.05 Addresses.
Lessor's Address: Lessee's Address:
ABR Spectrum, Ltd. Phoenix International, Ltd. Inc.
- --------------------------------------- -----------------------------------
c/o VRS Realty Services - Florida, Inc. 900 Winderley Place, Suite 140
- --------------------------------------- -----------------------------------
900 Winderley Place, Suite 100 Maitland, FL 32751
- --------------------------------------- -----------------------------------
Maitland, FL 32751
1.06 Permitted Use. General office
-----------------------------------------------
ARTICLE 2.00 RENT
2.01 Base Rent. Lessee agrees to pay monthly as base rent during
the term of this Lease the sum of money set forth in SEE ADDENDUM of this
Lease, which amount shall be payable to Lessor at the address shown above. One
monthly installment of rent shall be due and payable on the date of execution
of this Lease by Lessee for the first month's rent and a like monthly
installment shall be due and payable on or before the first day of each
calendar month succeeding the commencement date or completion date during the
term of this Lease; provided, if the commencement date or the completion date
should be a date other than the first day of a calendar month, the monthly
rental set forth above shall be prorated to the end of that calendar month, and
all succeeding installments of rent shall be payable on or before the first day
of each succeeding calendar month during the term of this Lease. Lessee shall
pay, as additional rent, all other sums due under this Lease.
[2.02 and 2.03 deleted]
2.04 Late Payment Charge. Other remedies for nonpayment of rent
notwithstanding. If the monthly rental payment is not received by Lessor on or
before the tenth day of the month for which the rent is due, or if any other
payment due Lessor by Lessee is not received by Lessor on or before the tenth
day of the month next following the month in which Lessee was invoiced, a late
payment charge of five percent of such past due amount shall become due and
payable in addition to such amounts owed under this Lease.
2.05 Increase in Insurance Premiums. If an increase in any
insurance premiums paid by Lessor for the building is caused by Lessee's use of
the leased premises in a manner other than as set forth in section 1.06, or if
Lessee vacates the leased premises and causes an increase in such premiums,
then Lessee shall pay as additional rent the amount of such increase to Lessor.
-1-
<PAGE> 2
2.06 Security Deposit. The security deposit set forth above shall
be held by Lessor for the performance of Lessee's covenants and obligations
under this Lease, it being expressly understood that the security deposit shall
not be considered an advance payment of rental or a measure of Lessor's damage
in case of default by Lessee. Upon the occurrence of any event of default by
Lessee or in each by Lessee of Lessee's covenants under this Lease, Lessor may,
from time to time, without prejudice to any other remedy, use the security
deposit to the extent necessary to make good any arrears of rent, or to repair
any damage or injury, or pay any expense or liability incurred by Lessor as a
result of the event of default or breach of covenant, and any remaining balance
of the security deposit shall be returned by Lessor to Lessee upon termination
of this Lease. If any portion of the security deposits is so used or applied,
Lessee shall upon ten days written notice from Lessor, deposit with Lessor by
cash or cashier's check an amount sufficient to restore the security deposit
to its original amount. SEE ADDENDUM
2.07 Holding Over. In the event that Lessee does not vacate the
leased premises upon the expiration or termination of this Lease, Lessee shall
be a tenant at will for the holdover period and all of the terms and provisions
of this Lease shall be applicable during that period, except that Lessee shall
pay Lessor as base rental for the period of such holdover and amount equal to
two times the base rent which would have been payable by Lessee had the
holdover period been a part of the original term of this Lease. Lessee agrees
to vacate and deliver the leased premises to Lessor upon Lessee's receipt of
notice from Lessor to vacate. The rental payable during the holdover period
shall be payable to Lessor on demand. No holding over by Lessee, whether with
or without the consent of Lessor, shall operate to extend the term of this
Lease.
ARTICLE 3.00 OCCUPANCY AND USE
3.01 Use. Lessee warrants and represents to Lessor that the leased
premises shall be used and occupied only for the purpose as set forth in
section 1.06. Lessee shall occupy the leased premises, conduct its business
and control its agents, employees, invitees and visitors in such a manner as is
lawful, reputable and will not create a nuisance. Lessee shall not permit any
operation which emits any odor or matter which intrudes into other portions of
the building, use any apparatus or machine which makes undue noise or causes
vibration in any portion of the building or otherwise interfere with, annoy or
disturb any other lessee in its normal business operations or Lessor in its
management of the building. Lessee shall neither permit any waste on the
leased premises nor allow the leased premises to be used in any way which
would, in the opinion of Lessor, be extra hazardous on account of fire or which
would in any way increase or render void the fire insurance on the building.
3.02 Signs. No sign of any type or description shall be erected,
placed or painted in or about the leased premises or project except those signs
submitted to Lessor in writing and approved by Lessor in writing, and which
signs are in conformance with Lessor's sign criteria established for the
project.
3.03 Compliance with Laws, Rules and Regulations. Lessee, at
Lessee's sole cost and expense, shall comply with all laws, ordinances, orders,
rules and regulations of state, federal, municipal or other agencies or bodies
having jurisdiction over the use, condition or occupancy of the leased
premises. Lessee will comply with the rules and regulations of the building
adopted by Lessor which are set forth on a schedule attached to this Lease.
Lessor shall have the right at all times to change and amend the rules and
regulations in any reasonable manner as may be deemed advisable for the safety,
care, cleanliness, preservation of good order and operation or use of the
building or the leased premises. All changes and amendments to the rules and
regulations of the building will be sent by Lessor to Lessee in writing and
shall thereafter be carried out and observed by Lessee.
3.04 Warranty of Possession. Lessor warrants that it has the right
and authority to execute this Lease, and Lessee, upon payment of the required
rents and subject to the terms, conditions, covenants and agreements contained
in this Lease, shall have possession of the leased premises during the full
term of this Lease as well as any extension or renewal thereof. Lessor shall
not be responsible for the acts or omissions of any other lessee or third party
that may interfere with Lessee's use and enjoyment of the leased premises.
3.05 Inspection. Lessor or its authorized agents shall at any and
all reasonable times have the right to enter the leased premises to inspect the
same, to supply janitorial service or any other service to be provided by
Lessor, to show the leased premises to prospective purchasers or lessees, and
to alter, improve or repair the leased premises or any other portion of the
building. Lessee hereby waives any claim for damages for injury or
inconvenience to or interference with Lessee's business, any loss of occupancy
or use of the leased premises, and any other loss occasioned thereby. Lessor
shall at all times have and retain a key with which to unlock all of the doors
in, upon and about the leased premises. Lessee shall not change Lessor's lock
system or in any other manner prohibit Lessor from entering the leased
premises. Lessor shall have the right to use any and all means which Lessor
may deem proper to open any door in an emergency without liability therefor.
ARTICLE 4.00 UTILITIES AND SERVICE
4.01 Building Services. Lessor shall provide water and electricity
for Lessee during the term of this Lease. Lessee shall pay all telephone
charges. Lessor shall furnish Lessee hot and cold water at those points of
supply provided for general use of other lessees in the building, central
heating and air conditioning in season (at times Lessor normally provides these
services to other lessees in the building, and at temperatures and in amounts
as are considered by Lessor to be standard or in compliance with any
governmental regulations, such service on Saturday afternoons, Sundays,
evenings and holidays to be furnished only upon the request of Lessee, who
shall bear the entire cost). Lessor shall also provide routine maintenance,
painting and electric lighting service for all public areas and special service
areas of the building in the manner and to the extent deemed by Lessor to be
standard. Lessor may, in its sole discretion, provide additional services not
enumerated herein. Failure by Lessor to any extent to provide these defined
services or any other services not enumerated, or any cessation thereof, shall
not render Lessor liable in any respect for damages to either person or
property, be construed as an eviction of Lessee, work an abatement of rent or
relieve Lessee from fulfillment of any covenant in this Lease. Should any of
the equipment or machinery break down, or for any cause cease to function
properly, Lessor shall use reasonable diligence to repair the same promptly,
but Lessee shall have no claim for rebate of rent on account of any
interruption in service occasioned from the repairs. Lessor reserves the
right from time to time to make changes in the utilities and services provided
by Lessor to the building.
4.02 Theft or Burglary. Lessor shall not be liable to Lessee for
losses to Lessee's property or personal injury caused by criminal acts or entry
by unauthorized persons into the leased premises or the building.
4.03 Janitorial Service. Lessor shall furnish janitorial services
to the leased premises and public areas of the building five times per week
during the term of this Lease, excluding holidays. Lessor shall not provide
janitorial service to kitchens or storage areas included in the leased
premises.
4.04 Excessive Utility Consumption. Lessee shall pay all utility
costs occasioned by electrodata processing machines, telephone equipment,
computers and other equipment of high electrical consumption, including without
limitation, the cost of installing, servicing and maintaining any special or
additional inside or outside wiring or lines, meters or submeters,
transformers, poles, air conditioning costs, or the cost of any other equipment
necessary to increase the amount or type of electricity or power available to
the leased premises.
4.05 Window Coverings. Lessor shall furnish and install window
coverings on all exterior windows to maintain a uniform exterior appearance.
Lessee shall not remove or replace these window coverings or install any other
window covering which would affect the exterior appearance of the building.
Lessee may install lined or unlined over draperies on the interior sides of the
Lessor furnished window coverings for interior appearance or to reduce light
transmission, provided such over draperies do not affect the exterior
appearance of the building or affect the operation of the building's heating,
ventilating and air conditioning systems.
4.06 Charge for Service. All costs of Lessor for providing the
services set forth in article 4.00 (except those charges paid by Lessee
pursuant to section 4.04) shall be subject to the additional rent provisions in
section 2.02.
ARTICLE 5.00 REPAIRS AND MAINTENANCE
5.01 Lessor Repairs. Lessor shall not be required to make any
improvements, replacements or repairs of any kind or character to the leased
premises or the project during the term of this Lease except as are set forth
in this section. Lessor shall maintain only the roof, foundation, parking and
common areas, the structural soundness of the exterior walls, doors, corridors,
windows and other structures or equipment serving the leased premises.
Lessor's cost of maintaining and repairing the items set forth in this section
are subject to the additional rent provisions in
-2-
<PAGE> 3
section 2.02. Lessor shall not be liable to Lessee, except as expressly
provided in this Lease, for any damage or inconvenience, and Lessee shall not be
entitled to any abatement or reduction of rent by reason of any repairs,
alterations or additions made by Lessor under this Lease.
5.02 Lessee Repairs. Lessee shall, at its own cost and expense,
repair or replace any damage or injury to all or any part of the leased
premises caused by any act or omission of Lessee or Lessee's agents, employees,
invitees, licensees or visitors; provided, however, if Lessee fails to make the
repairs or replacements promptly, Lessor may, at its option, make the repairs
or replacements, and the costs of such repairs or replacements shall be charged
to Lessee as additional rent and shall become payable by Lessee with the
payment of the rent next due hereunder.
5.03 Request for Repairs. All requests for repairs or maintenance
that are the responsibility of Lessor pursuant to any provision of this Lease
must be made in writing to Lessor at the address in section 1.05.
5.04 Lessee Damages. Lessee shall not allow any damage to be
committed on any portion of the leased premises or building, and at the
termination of this Lease, by lapse of time or otherwise. Lessee shall deliver
the leased premises to Lessor in as good condition as existed at the
commencement date of this Lease, ordinary wear and tear excepted. The cost and
expense of any repairs necessary to restore the condition of the leased
premises shall be borne by Lessee.
ARTICLE 6.00 ALTERATIONS AND IMPROVEMENTS
6.01 Lessor Improvements. If construction to the leased premises is
to be performed by Lessor prior to or during Lessee's occupancy, Lessor will
complete the construction of the improvements to the leased premises in
accordance with plans and specifications agreed to by Lessor and Lessee, which
plans and specifications are made a part of this Lease by reference. Within
seven days of receipt of plans and specifications, Lessee shall execute a copy
of the plans and specifications and, if applicable, change orders setting forth
the amount of any costs to be borne by Lessee. In the event Lessee fails to
execute the plans and specifications and change order within the seven day
period, Lessor may, at its sole option, declare this Lease cancelled or notify
Lessee that the base rent shall commence on the completion date even though the
improvements to be constructed by Lessor may not be complete. Any changes or
modifications in the approved plans and specifications shall be made and
accepted by written change order or agreement signed by Lessor and Lessee and
shall constitute an amendment to this Lease.
6.02 Lessee Improvements. Lessee shall not make or allow to be made
any alterations or physical additions in or to the leased premises without
first obtaining the written consent of Lessor, which consent may in the sole
and absolute discretion of Lessor be denied. Any alterations, physical
additions or improvements to the leased premises made by Lessee shall at once
become the property of Lessor and shall be surrendered to Lessor upon the
termination of this Lease; provided, however, Lessor, at its option, may
require Lessee to remove any physical additions and/or repair any alterations
in order to restore the leased premises to the condition existing at the time
Lessee took possession, all costs of removal and/or alterations to be borne by
Lessee. This clause shall not apply to moveable equipment or furniture owned
by Lessee, which may be removed by Lessee at the end of the term of this Lease
if Lessee is not then in default and if such equipment and furniture are
not then subject to any other rights, liens and interests of Lessor.
6.03 Mechanics Lien. Lessee will not permit any mechanic's or
materialman's lien(s) or other lien to be placed upon the leased premises or
the building and nothing in this Lease shall be deemed or construed in any way
as constituting the consent or request of Lessor, express or implied, by
inference or otherwise, to any person for the performance of any labor or the
furnishing of any materials to the leased premises, or any part thereof, nor as
giving Lessee any right, power, or authority to contract for or permit the
rendering of any services or the furnishing of any materials that would give
rise to any mechanic's, materialman's or other lien against the leased
premises. In the event any such lien is attached to the leased premises, then,
in addition to any other right or remedy of Lessor, Lessor may, but shall not
be obligated to, obtain the release of or otherwise discharge the same. Any
amount paid by Lessor for any of the aforesaid purposes shall be paid by Lessee
to Lessor on demand as additional rent.
ARTICLE 7.00 CASUALTY AND INSURANCE
7.01 Substantial Destruction. If the leased premises should be
totally destroyed by fire or other casualty, or if the leased premises should
be damaged so that rebuilding cannot reasonably be completed within ninety
working days after the date of written notification by Lessee to Lessor of the
destruction, this Lease shall terminate and the rent shall be abated for the
unexpired portion of the Lease, effective as of the date of the written
notification.
7.02 Partial Destruction. If the leased premises should be
partially damaged by fire or other casualty, and rebuilding or repairs can
reasonably be completed within ninety working days from the date of written
notification by Lessee to Lessor of the destruction, this Lease shall not
terminate, and Lessor shall at its sole risk and expense proceed with
reasonable diligence to rebuild or repair the building or other improvements to
substantially the same condition in which they existed prior to the damage. If
the leased premises are to be rebuilt or repaired and are untenantable in
whole or in part following the damage, and the damage or destruction was not
caused or contributed to by act or negligence of Lessee, its agents, employees,
invitees or those for whom Lessee is responsible, the rent payable under this
Lease during the period for which the leased premises are untenantable shall be
adjusted to such an extent as may be fair and reasonable under the
circumstances. In the event that Lessor fails to complete the necessary
repairs or rebuilding within ninety working days from the date of written
notification by Lessee to Lessor of the destruction, Lessee may at its option
terminate this Lease by delivering written notice of termination to Lessor,
whereupon all rights and obligations under this Lease shall cease to exist.
7.03 Property Insurance. Lessor shall at all times during the term
of this Lease maintain a policy or policies of insurance with the premiums paid
in advance, issued by and binding upon some solvent insurance company, insuring
the building against all risk of direct physical loss in an amount equal to at
least ninety percent of the full replacement cost of the building structure and
its improvements as of the date of the loss; provided, Lessor shall not be
obligated in any way or manner to insure any personal property (including, but
not limited to, any furniture, machinery, goods or supplies) of Lessee upon or
within the leased premises, any fixtures installed or paid for by Lessee upon
or within the leased premises, or any improvements which Lessee may construct
on the leased premises. Lessee shall have no right in or claim to the proceeds
of any policy of insurance maintained by Lessor even though the cost of such
insurance is borne by Lessee as set forth in Article 2.00.
7.04 Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Lessor and Lessee hereby waive and release each other of and
from any and all right of recovery, claim, action or cause of action, against
each other, their agents, officers and employees, for any loss or damage that
may occur to the leased premises, improvements to the building of which the
leased premises are a part, or personal property within the building, by reason
of fire or the elements, regardless of cause or origin, including negligence of
Lessor or Lessee and their agents, officers and employees. Lessor and Lessee
agree immediately to give their respective insurance companies which have
issued policies of insurance covering all risk of direct physical loss, written
notice of the terms of the mutual waivers contained in this section, and to
have the insurance policies property endorsed, if necessary, to prevent the
invalidation of the insurance coverages by reason of the mutual waivers.
7.05 Hold Harmless. Lessor shall not be liable to Lessee's
employees, agents, invitees, licensees or visitors, or to any other person, for
an injury to person or damage to property on or about the leased premises
caused by any act or omission of Lessee, its agents, servants or employees, or
of any other person entering upon the leased premises under express or implied
invitation by Lessee, or caused by the improvements located on the leased
premises becoming out of repair, the failure or cessation of any service
provided by Lessor (including security service and devices), or caused by
leakage of gas, oil, water or steam or by electricity emanating from the leased
premises. Lessee agrees to indemnify and hold harmless Lessor of and from any
loss, attorney's fees, expenses or claims arising out of any such damage or
injury.
ARTICLE 8.00 CONDEMNATION
8.01 Substantial Taking. If all or a substantial part of the leased
premises are taken for any public or quasi-public use under any governmental
law, ordinance or regulation, or by right of eminent domain or by purchase in
lieu thereof, and the taking would prevent or materially interfere with the use
of the leased premises for the purpose for which it is then being used, this
Lease shall terminate and the rent shall be abated during the unexpired portion
of this Lease effective on the date physical possession is taken by the
condemning authority. Lessee shall have no [illegible text] in lieu thereof.
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<PAGE> 4
8.02 Partial Taking. If a portion of the leased premises shall be
taken for any public or quasi-public use under any governmental law, ordinance
or regulation, or by right of eminent domain or by purchase in lieu thereof,
and this Lease is not terminated as provided in section 8.01 above, Lessor
shall at Lessor's sole risk and expense, restore and reconstruct the building
and other improvements on the leased premises to the extent necessary to make
it reasonably tenantable. The rent payable under this Lease during the
unexpired portion of the term shall be adjusted to such an extent as may be
fair and reasonable under the circumstances. Lessee shall have no claim to the
condemnation award or proceeds in lieu thereof.
ARTICLE 9.00 ASSIGNMENT OR SUBLEASE
9.01 Lessor Assignment. Lessor shall have the right to sell,
transfer or assign, in whole or in part, its rights and obligations under this
Lease and in the building. Any such sale, transfer or assignment shall operate
to release Lessor from any and all liabilities under this Lease arising after
the date of such sale, assignment or transfer.
9.02 Lessee Assignment. Lessee shall not assign, in whole or in
part, this Lease, or allow it to be assigned, in whole or in part, by operation
of law or otherwise (including without limitations by transfer of a majority
interest of stock, merger, or dissolution, which transfer of majority interest
of stock, merger or dissolution shall be deemed an assignment) or mortgage or
pledge the same, or sublet the leased premises, in whole or in part, without
the prior written consent of Lessor, and in no event shall any such assignment
or sublease ever release Lessee or any guarantor from any obligations or
liability hereunder. No assignee or sublessee of the leased premises or any
portion thereof may assign or sublet the leased premises or any portion
thereof.
9.03 Conditions of Assignment. If Lessee desires to assign or
sublet all or any part of the leased premises, it shall so notify Lessor at
least thirty days in advance of the date on which Lessee desires to make such
assignment or sublease. Lessee shall provide Lessor with a copy of the
proposed assignment or sublease and such information as Lessor might request
concerning the proposed sublessee or assignee to allow Lessor to make informed
judgments as to the financial condition, reputation, operations and general
desirability of the proposed sublessee or assignee. Within fifteen days after
Lessor's receipt of Lessee's proposed assignment or sublease and all required
information concerning the proposed sublessee or assignee. Lessor shall have
the following options: (1) cancel this Lease as to the leased premises or
portion thereof proposed to be assigned or sublet; (2) consent to the proposed
assignment or sublease, and, if the rent due and payable by any assignee or
sublessee under any such permitted assignment or sublease (or a combination of
the rent payable under such assignment or sublease plus any bonus or any other
consideration or any payment incident thereto) exceeds the rent payable under
this Lease for such space. Lessee shall pay to Lessor all such excess rent and
other excess consideration within ten days following receipt thereof by Lessee;
or (3) refuse, in its sole and absolute discretion and judgment, to consent to
the proposed assignment or sublease, which refusal shall be deemed to have been
exercised unless Lessor gives Lessee written notice providing otherwise. Upon
the occurrence of an event of default, if all or any part of the leased
premises are then assigned or sublet, Lessor, in addition to any other remedies
provided by this Lease or provided by law, may, at its option, collect directly
from the assignee or sublessee all rents becoming due to Lessee by reason of
the assignment or sublease, and Lessor shall have a security interest in all
properties on the leased premises to secure payment of such sums. Any
collection directly by Lessor from the assignee or sublessee shall not be
construed to constitute a novation or a release of Lessee or any guarantor from
the further performance of its obligations under this Lease.
9.04 Subordination. Lessee accepts this Lease subject and
subordinate to any recorded mortgage or deed of trust lien presently existing
or hereafter created upon the building or project and to all existing recorded
restrictions, covenants, easements and agreements with respect to the building
or project. Lessor is hereby irrevocably vested with full power and authority
to subordinate Lessee's interest under this Lease to any first mortgage or deed
of trust lien hereafter placed on the leased premises, and Lessee agrees upon
demand to execute additional instruments subordinating this Lease as Lessor may
require. If the interests of Lessor under this Lease shall be transferred by
reason of foreclosure or other proceedings for enforcement of any first
mortgage or deed of trust lien on the leased premises, Lessee shall be bound to
the transferee (sometimes called the "Purchaser") at the option of the
Purchaser, under the terms, covenants and conditions of this Lease for the
balance of the term remaining, including any extensions or renewals, with the
same force and effect as if the Purchaser were Lessor under this Lease, and, if
requested by the Purchaser, Lessee agrees to attorn to the Purchaser, including
the first mortgagee under any such mortgage if it be the Purchaser, as its
Lessor.
9.05 Estoppel Certificates. Lessee agrees to furnish, from time to
time, within ten days after receipt of a request from Lessor or Lessor's
mortgagee, a statement certifying, if applicable, the following: Lessee is in
possession of the leased premises; the leased premises are acceptable; the
Lease is in full force and effect; the Lease is unmodified; Lessee claims no
present charge, lien, or claim of offset against rent; the rent is paid for
the current month, but is not prepaid for more than one month and will not be
prepaid for more than one month in advance; there is no existing default by
reason of some act or omission by Lessor; and such other matters as may be
reasonably required by Lessor or Lessor's mortgagee. Lessee's failure to
deliver such statement, in addition to being a default under this Lease, shall
be deemed to establish conclusively that this Lease is in full force and effect
except as declared by Lessor, that Lessor is not in default of any of its
obligations under this Lease, and that Lessor has not received more than one
month's rent in advance.
ARTICLE 10.00 LIENS
10.01 Landlord's Lien. As security for payment of rent, damages and
all other payments required to be made by Lease, Lessee hereby grants to Lessor
a lien upon all property of Lessee now or subsequently located upon the leased
premises. If Lessee abandons or vacates any substantial portion of the leased
premises or is in default in the payment of any rentals, damages or other
payments required to be made by this Lease or is in default of any other
provision of this Lease, Lessor may enter upon the leased premises, by picking
or changing locks if necessary, and take possession of all or any part of the
personal property, and may sell all or any part of the personal property at a
public or private sale, in one or successive sales, with or without notice, to
the highest bidder for cash, and, on behalf of Lessee, sell and convey all or
part of the personal property to the highest bidder, delivering to the highest
bidder all of Lessee's title and interest in the personal property sold. The
proceeds of the sale of the personal property shall be applied by Lessor toward
the reasonable costs and expenses of the sale, including attorney's fees, and
then toward the payment of all sums then due by Lessee to Lessor under the
terms of this Lease. Any excess remaining shall be paid to Lessee or any other
person entitled thereto by law.
10.02 Uniform Commercial Code. This Lease is intended as and
constitutes a security agreement within the meaning of the Uniform Commercial
Code of the state in which the leased premises are situated. Lessor, in
addition to the rights prescribed in this Lease, shall have all of the rights,
titles, liens and interests in and to Lessee's property, now or hereafter
located upon the leased premises, which may be granted a secured party, as that
term is defined, under the Uniform Commercial Code to secure to Lessor payment
of all sums due and the full performance of all Lessee's convenants under this
Lease. Lessee will on request execute and deliver to Lessor a financing
statement for the purpose of perfecting Lessor's security interest under this
Lease or Lessor may file this Lease or a copy thereof as a financing statement.
Unless otherwise provided by law and for the purpose of exercising any right
pursuant to this section, Lessor and Lessee agree that reasonable notice shall
be met if such notice is given by ten days written notice, certified mail,
return receipt requested, to Lessor or Lessee at the addresses specified
herein.
ARTICLE 11.00 DEFAULT AND REMEDIES
11.01 Default by Lessee. The following shall be deemed to be events
of default by Lessee under this Lease; (1) Lessee shall fail to pay when due
any installments of rent or any other payment required pursuant to this Lease;
(2) Lessee shall abandon any substantial portion of the leased premises; (3)
Lessee shall fail to comply with any term, provision or covenant of this
Lease, other than the payment of rent, and the failure is not cured within ten
days after written notice to Lessee; (4) Lessee shall file a petition or be
adjudged bankrupt or insolvent under any applicable federal or state bankruptcy
or insolvency law or admit that it cannot meet its financial obligations as
they become due; or a receiver or trustee shall be appointed for all or
substantially all of the assets of Lessee; or Lessee shall make a transfer in
fraud of creditors or shall make an assignment for the benefit of creditors; or
(5) Lessee shall do or permit to be done any act which results in a lien being
filed against the leased premises or the building and/or project of which the
leased premises are a part.
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<PAGE> 5
11.02 Remedies for Lessee's Default. Upon the occurrence of any event of
default set forth in this Lease, Lessor shall have the option to pursue any
one or more of the remedies set forth herein without any notice or demand. (1)
Lessor may enter upon and take possession of the leased premises, by picking or
changing locks if necessary, and lock out, expel or remove Lessee and any other
person who may be occupying all or any part of the leased premises without
being liable for any claim for damages, and reject the leased premises on
behalf of Lessee and receive the rent directly by reason of the reletting.
Lessee agrees to pay Lessor on demand any deficiency that may arise by reason
of any reletting of the leased premises; further, Lessee agrees to reimburse
Lessor for any expenditures made by it in order to relet the leased premises,
including, but not limited to, remodeling and repair costs. (2) Lessor may
enter upon the leased premises, by picking or changing locks if necessary,
without being liable for any claim for damages, and do whatever Lessee is
obligated to do under the terms of this Lease. Lessee agrees to reimburse
Lessor on demand for any expenses which Lessor may incur in effecting
compliance with Lessee's obligations under this Lease; further, Lessee agrees
that Lessor shall not be liable for any damages resulting to Lessee from
effecting compliance with Lessee's obligations under this Lease caused by the
negligence of Lessor or otherwise. (3) Lessor may terminate this Lease, in
which event Lessee shall immediately surrender the leased premises to Lessor,
and if Lessee fails to surrender the leased premises, Lessor may, without
prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the leased premises, by picking or
changing locks if necessary, and lock out, expel or remove Lessee and any other
person who may be occupying all or any part of the leased premises without
being liable for any claim for damages. Lessee agrees to pay on demand the
amount of all loss and damage which Lessor may suffer by reason of the
termination of this Lease under this section, whether through inability to
relet the leased premises on satisfactory terms or otherwise. Notwithstanding
any other remedy set forth in this Lease, in the event Lessor has made rent
concessions or any type or character, or waived any base rent, and Lessee fails
to take possession of the leased premises on the commencement or completion
date or otherwise defaults at any time during the term of this Lease, the rent
concessions, including any waived base rent, shall be cancelled and the amount
of the base rent or other rent concessions shall be due and payable immediately
as if no rent concessions or waiver of any base rent had ever been granted. A
rent concession or waiver of the base rent shall not relieve Lessee of any
obligation to pay any other charge due and payable under this Lease including
without limitation any sum due under section 2.02. Notwithstanding anything
contained in this Lease to the contrary, this Lease may be terminated by Lessor
only by mailing or delivering written notice of such termination to Lessee, and
no other act or omission of Lessor shall be construed as a termination of this
Lease.
ARTICLE 12.00 RELOCATION
12.01 Relocation Option. In the event Lessor determines to utilize the
leased premises for other purposes during the term of this Lease, Lessee agrees
to relocate to other space in the building and/or project designated by Lessor,
provided such other space is of equal or larger size than the leased premises.
12.02 Expenses. Lessor shall pay all out-of-pocket expenses of any such
relocation, including the expenses of moving and reconstruction of all Lessee
furnished and Lessor furnished improvements. In the event of such relocation,
this Lease shall continue in full force and effect without any change in the
terms or conditions of this Lease, but with the new location substituted for
the old location set forth in section 1.02 of this Lease.
ARTICLE 13.00 DEFINITIONS
13.01 Abandon. "Abandon" means the vacating of all or a substantial
portion of the leased premises by Lessee, whether or not Lessee is in default
of the rental payments due under this Lease.
13.02 Act of God or Force Majeure. An "act of God" or "force majeure" is
defined for purposes of this Lease as strikes, lockouts, sitdowns, material or
labor restrictions by any governmental authority, unusual transportation
delays, riots, floods, washouts, explosions, earthquakes, fire, storms, weather
(including wet grounds or inclement weather which prevents construction), acts
of the public enemy, wars, insurrections and any other cause not reasonably
within the control of Lessor and which by the exercise of due diligence Lessor
is unable, wholly or in part, to prevent or overcome.
13.03 Building or Project. "Building" or "project" as used in this Lease
means the building and/or project described in section 1.02, including the
leased premises and the land upon which the building or project is situated.
13.04. Commencement Date. "Commencement date" shall be the date set
forth in section 1.03. The commencement date shall constitute the commencement
of the term of this Lease for all purposes, whether or not Lessee has actually
taken possession.
13.05 Completion Date. "Completion date" shall be the date on which the
improvements erected and to be erected upon the leased premises shall have been
completed in accordance with the plans and specifications described in article
6.00. The completion date shall constitute the commencement of the term of
this Lease for all purposes, whether or not Lessee has actually taken
possession. Lessor shall use its best efforts to establish the completion date
as the date set forth in section 1.03. In the event that the improvements
have not in fact been completed as of that date, Lessee shall notify Lessor in
writing of its objections. Lessor shall have a reasonable time after delivery
of the notice in which to take such corrective action as may be necessary and
shall notify Lessee in writing as soon as it deems such corrective action has
been completed and the improvements are ready for occupancy. Upon completion
of construction, Lessee shall deliver to Lessor a letter accepting the leased
premises as suitable for the purposes for which they are let and the date of
such letter shall constitute the commencement of the term of this Lease.
Whether or not Lessee has executed such letter of acceptance, taking possession
of the leased premises by Lessee shall be deemed to establish conclusively
that the improvements have been completed in accordance with the plans and
specifications, are suitable for the purposes for which the leased premises are
let, and that the leased premises are in good and satisfactory condition as of
the date possession was so taken by Lessee, except for latent defects, if any.
13.06 Square Feet. "Square feet" or "square foot" as used in this Lease
includes the area contained within the leased premises together with a common
area percentage factor of the leased premises proportionate to the total
building area.
ARTICLE 14.00 MISCELLANEOUS
14.01 Waiver. Failure of Lessor to declare an event of default
immediately upon its occurrence, or delay in taking any action in connection
with an event of default, shall not constitute a waiver of the default, but
Lessor shall have the right to declare the default at any time and take such
action as is lawful or authorized under this Lease. Pursuit of any one or
more of the remedies set forth in article 11.00 above shall not preclude
pursuit of any one or more of the other remedies provided elsewhere in this
Lease or provided by law, nor shall pursuit of any remedy constitute forfeiture
or waiver of any rent or damages accruing to Lessor by reason of the violation
of any of the terms, provisions or covenants of this Lease. Failure by Lessor
to enforce one or more of the remedies provided upon an event of default shall
not be deemed or construed to constitute a waiver of the default or of any
other violation or breach of any of the terms, provisions and covenants
contained in this Lease.
14.02 Act of God. Lessor shall not be required to perform any covenant
or obligation in this Lease, or be liable in damages to Lessee, so long as the
performance or non-performance of the covenant or obligation is delayed, caused
or prevented by an act of God, force majeure or by Lessee.
14.03 Attorney's Fees. In the event Lessee defaults in the performance of
any of the terms, covenants, agreements or conditions contained in this Lease
and Lessor places in the hands of an attorney the enforcement of all or any
part of this Lease, the collection of any rent due or to become due or recovery
of the possession of the leased premises, Lessee agrees to pay Lessor's costs
of collection, including reasonable attorney's fees for the services of the
attorney, whether suit is actually filed or not.
14.04 Successors. This Lease shall be binding upon and inure to the
benefit of Lessor and Lessee and their respective heirs, personal
representatives, successors and assigns. It is hereby covenanted and agreed
that should Lessor's interest in the leased premises cease to exist for any
reason during the term of this Lease, then notwithstanding the happening of
such event this Lease nevertheless shall remain unimpaired and [illegible text]
to the then owner of the leased premises.
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<PAGE> 6
14.05 Rent Tax. If applicable in the jurisdiction where the leased
premises are situated, Lessee shall pay and be liable for all rental, sales
and use taxes or other similar taxes, if any, levied or imposed by any city,
state, county or other governmental body having authority, such payments to be
in addition to all other payments required to be paid to Lessor by Lessee under
the terms of this Lease. Any such payment shall be paid concurrently with the
payment of the rent, additional rent, operating expenses or other charge upon
which the tax is based as set forth above.
14.06 Captions. The captions appearing in this Lease are inserted
only as a matter of convenience and in no way define, limit, construe or
describe the scope or intent of any section.
14.07 Notice. All rent and other payments required to be made by
Lessee shall be payable to Lessor at the address set forth in section 1.05.
All payments required to be made by Lessor to Lessee shall be payable to Lessee
at the address set forth in section 1.05, or at any other address within the
United States as Lessee may specify from time to time by written notice. Any
notice or document required or permitted to be delivered by the terms of this
Lease shall be deemed to be delivered (whether or not actually received) when
deposited in the United States Mail, postage prepaid, certified mail, return
receipt requested, addressed to the parties at the respective addresses set
forth in section 1.05.
14.08 Submission of Lease. Submission of this Lease to Lessee for
signature does not constitute a reservation of space or an option to lease.
This Lease is not effective until execution by and delivery to both Lessor and
Lessee.
14.09 Corporate Authority. If Lessee executes this Lease as a
corporation, each of the persons executing this Lease on behalf of Lessee does
hereby personally represent and warrant that Lessee is a duly authorized and
existing corporation, that Lessee is qualified to do business in the state in
which the leased premises are located, that the corporation has full right and
authority to enter into this Lease, and that each person signing on behalf of
the corporation is authorized to do so. In the event any representation or
warranty is false, all persons who execute this Lease shall be liable,
individually, as Lessee.
14.10 Severability. If any provision of this Lease or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Lease and the application of
such provisions to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
14.11 Lessor's Liability. If Lessor shall be in default under this
Lease and, if as a consequence of such default, Lessee shall recover a money
judgment against Lessor, such judgment shall be satisfied only out of the
right, title and interest of Lessor in the building as the same may then be
encumbered and neither Lessor nor any person or entity comprising Lessor shall
be liable for any deficiency, in no event shall Lessee have the right to levy
execution against any property of Lessor nor any person or entity comprising
Lessor other than its interest in the building as herein expressly provided.
14.12 Indemnity. Lessor agrees in indemnify and hold harmless Lessee
from and against any liability or claim, whether meritorious or not, arising
with respect to any broker whose claim arises by, through or on behalf of
Lessor. Lessee agrees to indemnify and hold harmless Lessor from and against
any liability or claim, whether meritorious or not, arising with respect to any
broker whose claim arises by, through or on behalf of Lessee.
ARTICLE 15.00 AMENDMENT AND LIMITATION OF WARRANTIES
15.01 Entire Agreement. IT IS EXPRESSLY AGREED BY LESSEE, AS A
MATERIAL CONSIDERATION FOR THE EXECUTION OF THIS LEASE, THAT THIS LEASE, WITH
THE SPECIFIC REFERENCES TO WRITTEN EXTRINSIC DOCUMENTS, IS THE ENTIRE AGREEMENT
OF THE PARTIES; THAT THERE ARE, AND WERE, NO VERBAL REPRESENTATIONS,
WARRANTIES, UNDERSTANDINGS, STIPULATIONS, AGREEMENTS OR PROMISES PERTAINING TO
THIS LEASE OR TO THE EXPRESSLY MENTIONED WRITTEN EXTRINSIC DOCUMENTS NOT
INCORPORATED IN WRITING IN THIS LEASE.
15.02 Amendment. THIS LEASE MAY NOT BE ALTERED, WAIVED, AMENDED OR
EXTENDED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY LESSOR AND LESSEE.
15.03 Limitation of Warranties. LESSOR AND LESSEE EXPRESSLY AGREE
THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY,
HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT
OF THIS LEASE, AND THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY
SET FORTH IN THIS LEASE.
ARTICLE 16.00 OTHER PROVISIONS
16.01 PROPERTY AND LIABILITY INSURANCE: Lessee shall, at all times
during the term of this Lease, maintain a policy or policies of insurance, with
the premiums paid in advance, issued by and binding upon an insurance company
licensed to do business in the State of Florida and satisfactory to Lessor.
Said policy or policies shall insure Lessee's personal property upon or within
the leased premises, or any improvements constructed by Lessee on the leased
premises and shall include public liability insurance. The policy or policies
shall name Lessor as an additional insured, and shall be in an amount of at
least $1,000,000 (or the personal property insurance and $1,000,000 for public
liability insurance. Lessee shall furnish proof of such insurance policies to
Lessor prior to occupancy and, at Lessor's request, during the term of this
Lease.
16.02 RADON GAS: Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your county public health unit.
16.03 The Addendum attached hereto is incorporated herein and by this
reference made a part thereof.
ARTICLE 17.00 SIGNATURES
SIGNED at ___________________________________ this 8th day of December, 1993
LESSOR LESSEE
ABR SPECTRUM, LTD. PHOENIX INTERNATIONAL, LTD., INC.
- -------------------------------------- ------------------------------------
- -------------------------------------- ------------------------------------
By: By: /s/ Bahram Yusefzadeh
----------------------------------- ------------------------------------
Robert M. Reed, II, General Partner President
- -------------------------------------- ------------------------------------
(Type Name and Title) (Type Name and Title)
WITNESSES: WITNESSES:
/s/ ?? Bailey
- -------------------------------------- ------------------------------------
/s/ Tracy A. Toole
- -------------------------------------- ------------------------------------
-6-
<PAGE> 7
ADDENDUM TO STANDARD COMMERCIAL LEASE
*ABR SPECTRUM, LTD., AS LESSOR
*PHOENIX INTERNATIONAL, LTD., INC., AS LESSEE
********************************************************************************
THIS ADDENDUM TO STANDARD COMMERCIAL LEASE is hereby attached and made
a part of that certain Lease Agreement (the "Lease") between ABR SPECTRUM, LTD.
("Lessor") and PHOENIX INTERNATIONAL, LTD., INC. ("Lessee").
17.00 RENTAL SCHEDULE:
<TABLE>
<CAPTION>
Months Sq. Ft. Rate per R.S.F. Monthly Rent* Annual Rent
- ------ ------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
1 - 9 10,370 $ 6.00 $ 5,185.00 $ 46,665.00 (9 months)
10 - 21 10,370 $12.50 $10,802.08 $129,625.00 (12 months)
22 - 33 10,370 $14.00 $12,098.33 $145,180.00 (12 months)
34 - 48 10,370 $14.50 $12,530.42 $187,956.24 (15 months)
</TABLE>
* LESSEE is responsible for State Sales Tax which is not reflected in
the above rates.
18.00 RENEWAL OPTION:
LESSEE shall have one (1) Option to Renew this Lease for a term of three (3)
years provided LESSEE is not in default of this Lease. The rental rates for the
renewal term will be as follows:
<TABLE>
<CAPTION> Total Annual
Year Base Rent Operating Expense Cost per RSF
---- --------- ----------------- ------------
<S> <C> <C> <C> <C>
1 $ 9.00 + $6.00 * $15.00
2 $ 9.50 + $6.00 * $15.50
3 $10.00 + $6.00 * $16.00
</TABLE>
* Upon exercising the Renewal Option at the end of the existing Lease
Term, the current Operating Expenses for the preceding year shall be
projected and added to the Base Rent of the three (3) year extension of the
Lease to determine the total annual costs per Rentable Square Foot. In no
event shall the Operating Expenses be lower than the current $6.00.
19.00 PERSONAL GUARANTY:
LESSEE shall sign a Personal Guaranty in the amount of $61,857.00, which covers
the Tenant Improvement Allowance of $41,480.00 and Outside Brokerage Commissions
of four percent (4%) totalling $20,377.00.
20.00 TENANT IMPROVEMENTS:
LESSOR shall provide, up to, but not to exceed, $41,480.00 for Tenant
Improvements.
WITNESSES DATE: 12/8/93
----------------------------
LESSOR:
ABR SPECTRUM, LTD.
BY:
- ---------------------------------- ------------------------------
- ---------------------------------- ITS:
------------------------------
LESSEE:
PHOENIX INTERNATIONAL, LTD., INC.
/s/ M. Bailey BY: /s/ Bahram Yusefzadeh
- ---------------------------------- ------------------------------
/s/ Tracy A. Toole ITS: President
- ---------------------------------- ------------------------------
<PAGE> 8
RULES AND REGULATIONS
1. Lessor agrees to furnish Lessee two keys without charge. Additional keys
will be furnished at a nominal charge. Lessee shall not change locks or
install additional locks on doors without prior written consent of Lessor.
Lessee shall not make or cause to be made duplicates of keys procured from
Lessor without prior approval of Lessor. All keys to leased premises
shall be surrendered to Lessor upon termination of this Lease.
2. Lessee will refer all contractors, contractor's representatives and
installation technicians rendering any service on or to the leased
premises for Lessee to Lessor for Lessor's approval before performance of
any contractual service. Lessee's contractors and installation
technicians shall comply with Lessor's rules and regulations pertaining to
construction and installation. This provision shall apply to all work
performed on or about the leased premises or project, including
installation of telephones, telegraph equipment, electrical devices and
attachments and installations of any nature affecting floors, walls,
woodwork, trim, windows, ceilings and equipment or any other physical
portion of the leased premises or project.
3. Lessee shall not at any time occupy any part of the leased premises or
project as sleeping or lodging quarters.
4. Lessee shall not place, install or operate on the leased premises or in
any part of the building any engine, stove or machinery, or conduct
mechanical operations or cook thereon or therein, or place or use in or
about the leased premises or project any explosives, gasoline, kerosene,
oil, acids, caustics, or any flammable, explosive or hazardous material
without written consent of Lessor.
5. Lessor will not be responsible for lost or stolen personal property,
equipment, money or jewelry from the leased premises or the project
regardless of whether such loss occurs when the area is locked against
entry or not.
6. No dogs, cats, fowl, or other animals shall be brought into or kept in or
about the leased premises or project.
7. Employees of Lessor shall not receive or carry messages for or to any
Lessee or other person or contract with or render free or paid services to
any Lessee or to any of Lessee's agents, employees or invitees.
8. None of the parking, plaza, recreation or lawn areas, entries, passages,
doors, elevators, hallways or stairways shall be blocked or obstructed or
any rubbish, litter, trash, or material of any nature placed, emptied or
thrown into these areas or such area used by Lessee's agents, employees or
invitees at any time for purposes inconsistent with their designation by
Lessor.
9. The water closets and other water fixtures shall not be used for any
purpose other than those for which they were constructed, and any damage
resulting to them from misuse or by the defacing or injury of any part of
the building shall be borne by the person who shall occasion it. No
person shall waste water by interfering with the faucets or otherwise.
10. No person shall disturb occupants of the building by the use of any
radios, record players, tape recorders, musical instruments, the making of
unseemly noises or any unreasonable use.
11. Nothing shall be thrown out of the windows of the building or down the
stairways or other passages.
12. Lessee and its employees, agents and invitees shall park their vehicles
only in those parking areas designated by Lessor. Lessee shall furnish
Lessor with state automobile license numbers of Lessee's vehicles and its
employees' vehicles within five days after taking possession of the leased
premises and shall notify Lessor of any changes within five days after
such change occurs. Lessee shall not leave any vehicle in a state of
disrepair (including without limitation, flat tires, out of date inspection
stickers or license plates) on the leased premises or project. If Lessee
or its employees, agents or invitees park their vehicles in areas other
than the designated parking areas or leave any vehicle in a state of
disrepair, Lessor, after giving written notice to Lessee of such
violation, shall have the right to remove such vehicles at Lessee's
expense.
13. Parking in a parking garage or area shall be in compliance with all
parking rules and regulations including any sticker or other
identification system established by Lessor. Failure to observe the rules
and regulations shall terminate Lessee's right to use the parking garage
or area and subject the vehicle in violation of the parking rules and
regulations to removal and impoundment. No termination of parking
privileges or removal of impoundment of a vehicle shall create any
liability on Lessor or be deemed to interfere with Lessee's right to
possession of its leased premises. Vehicles must be parked entirely
within the stall lines and all directional signs, arrows and posted speed
limits must be observed. Parking is prohibited in areas not striped for
parking, in aisles, where "No Parking" signs are posted, on ramps, in
cross hatched areas, and in other areas as may be designated by Lessor.
Parking stickers or other forms of identification supplied by Lessor shall
remain the property of Lessor and not the property of Lessee and are not
transferable. Every person is required to park and lock his vehicle. All
responsibility for damage to vehicles or persons is assumed by the owner
of the vehicle or its driver.
14. Movement in or out of the building of furniture or office supplies and
equipment, or dispatch or receipt by Lessee of any merchandise or
materials which requires use of elevators or stairways, or movement through
the building entrances or lobby, shall be restricted to hours designated
by Lessor. All such movement shall be under supervision of Lessor and
carried out in the manner agreed between Lessee and Lessor by
prearrangement before performance. Such prearrangement will include
determination by Lessor of time, method, and routing of movement and
limitations imposed by safety or other concerns which may prohibit any
article, equipment or any other item from being brought into the building.
Lessee assumes, and shall indemnify Lessor against, all risks and claims
of damage to persons and properties arising in connection with any said
movement.
15. Lessor shall not be liable for any damages from the stoppage of elevators
for necessary or desirable repairs or improvements or delays of any sort
or duration in connection with the elevator service.
16. Lessee shall not lay floor covering within the leased premises without
written approval of the Lessor. The use of cement or other similar
adhesive materials not easily removed with water is expressly prohibited.
17. Lessee agrees to cooperate and assist Lessor in the prevention of
canvassing, soliciting and peddling within the building or project.
18. Lessor reserves the right to exclude from the building or project, between
the hours of 6:00 p.m. and 7:00 a.m. on weekdays and at all hours on
Saturday, Sunday and legal holidays, all persons who are not known to the
building or project security personnel and who do not present a pass to
the building signed by the Lessee. Each Lessee shall be responsible for
all persons for whom he supplies a pass.
20. It is Lessor's desire to maintain in the building or project the highest
standard of dignity and good taste consistent with comfort and convenience
for Lessees. Any action or condition not meeting this high standard
should be reported directly to Lessor. Your cooperation will be mutually
beneficial and sincerely appreciated. Lessor reserves the right to make
such other and further reasonable rules and regulations as in its
judgment may from time to time be necessary, for the safety, care and
cleanliness of the leased premises and for the preservation of good order
therein.
<PAGE> 9
MODIFICATION AND RATIFICATION OF LEASE
ADDENDUM II
THIS MODIFICATION AND RATIFICATION OF LEASE is made and entered into by and
between ABR SPECTRUM, LTD. (Lessor) and PHOENIX INTERNATIONAL, LTD., INC.
(Lessee) for and in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, receipt of which is hereby acknowledged.
Lessor and Lessee hereby confirm and ratify, except as modified below, all of
the terms, conditions and covenants in that certain written Lease Agreement and
Addendum I dated December 8, 1993, for the rental of the following described
property:
Suite 140 consisting of 10,370 Rentable Square Feet of office space
located at The Spectrum Building, 900 Winderley Place, Suite 100,
Maitland, Florida 32751.
WITNESSETH
1. Article 1,03, Term: Is hereby modified to reflect that the Lease
Commencement Date is February 1, 1994 and the Lease shall terminate 48
months thereafter, January 31, 1998.
All other terms and conditions of the original Lease Agreement dated December 8,
1993 shall remain in full force and effect.
SIGNED THIS 24th day of January 1994.
-------- --------------------
WITNESSES AS TO LESSOR: LESSOR:
ABR SPECTRUM, LTD.
/s/ Sylvia Damiano
- ---------------------------- By: /s/ Robert M. Reed, II
-----------------------------
Robert M. Reed, II
Its: General Partner
---------------------------
WITNESSES AS TO LESSEE: LESSEE:
PHOENIX INTERNATIONAL, LTD, INC.
/s/ Tracy A. Toole
---------------------------
/s/ Cynthia Santiago By: /s/ M. Bailey
--------------------------- -----------------------------
Its: Chief Financial Officer
----------------------------
<PAGE> 1
EXHIBIT 10.40
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT is entered into as of the 28th day of September 1995,
by and between CCS Technology Group, Inc., hereinafter referred to as
SUBLESSOR, and Phoenix International Ltd., Inc., a Florida corporation,
hereinafter referred to as SUBLESSEE
WITNESSETH:
WHEREAS, the SUBLESSOR leases space in the Spectrum Building; and
SUBLESSE desires to sublease a portion of such space, the terms of this
SUBLEASE AGREEMENT are as follows:
1. The space to be subleased is known as Suite 120 and contains
approximately 7,000 square feet of rentable space (see attached "Exhibit
A").
2. The term of the SUBLEASE shall commence on October 1, 1995, and shall
continue through December 31, 1996. SUBLESSE shall have access
immediately to prepare the space for use.
3. The total price shall be fourteen dollars ($14) per square foot per
year. The monthly rent will be $8,167.00 plus State of Florida sales tax.
SUBLESSEE will be responsible for any after hours air
conditioning/heating. No other charges apply to SUBLESSEE.
4. The SUBLESSEE's occupancy of the SUBLEASED PREMISES shall be subject to
the terms and conditions of that master Lease except to the extent that
such terms and conditions are inconsistent within this SUBLEASE AGREEMENT
in which case the terms of this SUBLEASE AGREEMENT shall govern.
5. SUBLESSEE understands and agrees that this SUBLEASE, including all
improvements, is subject to the prior written approval of LESSOR, ASR
SPECTRUM, LTD., as signified by their signature below. SUBLESSEE
acknowledges and agrees to take the premises in an "As Is" condition, with
no repairs, alterations or improvements to be made by SUBLESSOR or
LANDLORD.
6. SUBLESSEE shall hold LANDLORD and SUBLESSOR harmless from all claims, or
causes of action resulting from injuries to persons or property arising out
of the use, occupancy or condition of the SUBLEASED PREMISES and shall
continue to carry public liability insurance, as previously approved by the
LANDLORD.
7. SUBLESSOR agrees to remain primarily liable to LESSOR under the terms of
the underlying LEASE AGREEMENT.
Page 1 of 2
<PAGE> 2
8. Both parties agree that if, at the end of the term of this sublease,
SUBLESSOR does not require the space for its own use, or for a related
party's use and if SUBLESSOR desires to continue to sublet Suite 120,
SUBLESSEE will have the right of first refusal to sublet the Suite on
terms and conditions which the parties will negotiate at that time.
SIGNED IN THE PRESENCE OF: SUBLESSOR:
CCS Technology Group, Inc.
- ------------------------------- 900 Winderley Place, Suite 200
Maitland, FL 32751
- -------------------------------
By:
-------------------------
Title:
-------------------------
Date:
-------------------------
SUBLESSEE:
/s/ Lois J. Smail Phoenix International Ltd., Inc.
- ------------------------------- 900 Winderley Place, Suite 140
/s/ Ruthann M. Rackawack Maitland, FL 332751
- -------------------------------
BY: /s/ Ralph Reichard
---------------------------
Title: President
-------------------------
Date: September 28, 1995
--------------------------
APPROVED BY LESSOR:
ASR SPECTRUM, LTD.
900 Winderley Place
Maitland, FL 32751
By:
--------------------------
Date:
--------------------------
Page 2 of 2
<PAGE> 3
[BLUEPRINT]
FIRST FLOOR PLAN
THE SPECTRUM OFFICE BUILDING
<PAGE> 1
EXHIBIT 10.41
SAVINGS PLAN
[THE PRINCIPAL FINANCIAL GROUP LOGO]
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
Des Moines, Iowa 50392-0001
THE PRINCIPAL
FINANCIAL GROUP
PROTOTYPE FOR
SAVINGS PLANS
THIS PLAN IS A 401 (K) PROFIT SHARING PLAN
==========================================
ADOPTION AGREEMENT - PLUS
IRS SERIAL NO.: D347609B
ADOPTION AGREEMENT PLAN NO.: 001
TO BE USED WITH BASIC PLAN NO. 03
APPROVED: OCTOBER 26, 1992
103
<PAGE> 2
<TABLE>
<S> <S>
00
INTERNAL REVENUE SERVICE Department of the Treasury
Plan Description: Prototype Non-standardized Profit Sharing Plan with CODA
FFN: 50307440003-001 Case: 9200863 EIN: 42-0127290
BDP: 03 Plan: 001 Letter Serial No: D347609b Washington, DC 20224
Person to Contact: Ms. Wiggins
PRINCIPAL MUTUAL LIFE INSURANCE CO Telephone Number: (202) 622-8380
711 HIGH STREET Refer Reply to: E:EP:Q:8
DES MOINES, IA 50309 Date: 10/26/92
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under section 401 of
the Internal Revenue Code. This opinion relaxes only to the amendment to
the form of the plan. It is not an opinion as to the acceptability of
any other amendment or of the form of the plan as a whole, or as to the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to
the initial opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number
is only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by
adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ John S-----
-------------------------------------------
Chief, Employee Plans Qualifications Branch
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
A. ADOPTION AGREEMENT ............................................. 1
B. EMPLOYER ....................................................... 1
C. PLAN NAME ...................................................... 1
D. EFFECTIVE DATE ................................................. 1
E. YEARLY DATE .................................................... 2
F. FISCAL YEAR .................................................... 2
G. NAMED FIDUCIARY ................................................ 2
H. PLAN ADMINISTRATOR ............................................. 2
I. PREDECESSOR .................................................... 3
J. ELIGIBLE EMPLOYEE .............................................. 4
K. ENTRY REQUIREMENTS ............................................. 5
L. ENTRY DATE ..................................................... 7
M. PAY ............................................................ 7
N. ELECTIVE DEFERRAL CONTRIBUTIONS ................................ 9
0. MATCHING CONTRIBUTIONS ......................................... 10
P. OTHER EMPLOYER CONTRIBUTIONS AND FORFEITURES ................... 12
Q. NET PROFITS AND CONTRIBUTION REQUIREMENTS ...................... 15
R. CONTRIBUTION MODIFICATIONS ..................................... 17
S. VOLUNTARY CONTRIBUTIONS ........................................ 18
T. INVESTMENT ..................................................... 18
U. VESTING PERCENTAGE ............................................. 21
V. VESTING SERVICE ................................................ 22
W. WITHDRAWAL BENEFITS ............................................ 24
X. RETIREMENT AND THE START OF BENEFITS .......................... 25
Y. FORMS OF DISTRIBUTION .......................................... 27
Z. ADOPTING EMPLOYER .............................................. 31
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C> <C>
THE PRINCIPAL FINANCIAL GROUP PROTOTYPE FOR SAVINGS PLANS
ADOPTION AGREEMENT - PLUS
Use black ink to complete the Adoption Agreement.
A. Select (1) or (2). A. THIS ADOPTION AGREEMENT is
1) if selected, check (a) or (b) 1) [ ] the Employer's first adoption of The Principal Financial Group
If this Plan is a restatement, Prototype for Savings Plans. Together with THE PRINCIPAL
check (b). FINANCIAL GROUP PROTOTYPE BASIC SAVINGS PLAN, it
constitutes
a) [ ] a new plan.
b) If selected, fill in the b) [ ] a restatement of an existing plan (and trust). That plan
restatement date. was qualifiable under 401 (a) of the Internal Revenue Code.
The provisions of this restatement are effective
on ________________________, 19________________.
This is the RESTATEMENT DATE.
2) If selected, fill in the 2) [x] Amendment No. 3 to the Plan. It replaces all prior
amendment number and amendments to the Plan and the first Adoption Agreement. The
date. provisions of this amendment are effective on January 1 1995
B. Fill in exact, legal name. B. The terms we, us and our, as they are used in this Plan, refer to the
EMPLOYER.
We, PHOENIX INTERNATIONAL LTD. INC.
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
are the Employer.
C. For example: ABC, Inc. C. The PLAN'S NAME is PHOENIX INTERNATIONAL LTD., INC.
Savings Plan. SAVINGS PLAN _______________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
D. Fill in the date your Prior D. Our retirement plan became effective on September 1
Plan started if this Plan is a 1994. This is the EFFECTIVE DATE.
restatement. If this Plan is
new, use the first day of the
first Plan Year.
</TABLE>
<PAGE> 5
E. Fill in Effective Date and check (1), (2) or (3).
2) The first Plan Year is short.
3) A later Plan Year is short.
(b) First day of short year (use same month and day as in (a)).
(c) First day of new Plan Year.
1) Principal Mutual Life Insurance Company may not be named.
1) Principal Mutual Life Insurance Company may not be named.
E. The YEARLY DATE is the first day of each Plan Year. The Yearly Date is
September 1, 1994 and
1) [ ] the same day of each following year.
2) [X] each following January 1 (month and day).
3) [ ] (a) each following ____________________ (month and day)
through (b) ___________________ 19 ____ and (c) each following
______________________ (month and day).
If the first date in Item E is after the Effective Date, Yearly Dates,
before the first date in Item E above, shall be determined under the
provisions of the Prior Plan (Plan) before that date.
F. The FISCAL YEAR is our taxable year and ends on January 31 (month and
day).
G. We are the NAMED FIDUCIARY, unless otherwise specified in (1) below.
1) [ ] __________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
is the Named Fiduciary.
H. We are the PLAN ADMINISTRATOR, unless otherwise specified in (1) below.
1) [ ] __________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
is the Plan Administrator. The address, phone number and tax filing
number of the Plan Administrator are the same as the Employer's unless
otherwise specified below.
Address:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Phone No.: ____________________________________________________________
Tax Filing No.: _______________________________________________________
2
<PAGE> 6
I. Select any items below which apply.
1) If this Plan is a continuation of a plan of a Predecessor employer,
service with that Predecessor must be treated as service with you.
b) Exact, legal name(s).
I. A PREDECESSOR employer is a firm of which we were once a part or a
firm absorbed by us because of a change of name, merger, acquisition
or a change of corporate status.
1) [ ] A Predecessor is deemed to be the Employer for purposes of
determining:
a) [ ] Entry Service.
b) [ ] vesting Service.
c) [ ] Hours of Service required to be eligible for an
Employer Contribution.
d) [ ] Pay.
2) [ ] Service with or pay from a Predecessor shall be counted
only if service continued with us without interruption. This
item shall not apply if this Plan is a continuation of a plan
of that Predecessor.
3) [ ] Service with or pay from a Predecessor shall include
service or pay while a proprietor or partner. (It this item
is not checked, such service or pay shall not be counted.)
4) [ ] Service with or pay from a Predecessor shall be counted
only as to a Predecessor which
a) [ ] maintained a qualified pension or profit sharing
plan (or)
b) [ ] is named below:
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
3
<PAGE> 7
Select (1) or (2). Use Item Z to identify the Controlled Group and
Affiliated Service Group members whose Employees may participate in
the Plan.
2) If selected, check the requirements in (a), (c), (d) and (e) below
which apply.
a) Select any employment classifications below which apply.
B. Bargaining unit's name.
B. Bargaining unit's name.
b) If more than one employment classification is selected in (a), check
(i) or (ii).
J. An ELIGIBLE EMPLOYEE is
1) [X] an Employee of ours or of an Adopting Employer listed in
Item Z.
2) [ ] an Employee of ours or of an Adopting Employer listed in
Item Z provided the Employee meets the requirement(s) below.
a) [ ] Employed in the following employment
classification:
i) [ ] Paid on a salaried basis.
ii) [ ] Paid an a commission basis.
iii) [ ] Paid on an hourly rate basis.
iv) [ ] Represented for collective bargaining
purposes by
A. [ ] any bargaining unit.
B. [ ] ________________________________
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
v) [ ] Not represented for collective bargaining
purposes by
A. [ ] any bargaining unit for which
retirement benefits have been the
subject of good faith bargaining
between Employee representatives and
us.
B. [ ] ________________________________
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
b) If more than one employment classification is
selected, the Employee must meet
i) [ ] each one of the employment
classifications selected above.
ii) [ ] any one of the employment classifications
selected above.
4
<PAGE> 8
c) If selected, check (i), (ii) or both.
1) Select (a) or (b).
b) If selected, check (i) or (ii). Up to 1 year may be used (6 months if
Entry Date is Yearly Date).
ii) If selected, fill in numerator of fraction (e.g. 6/12 for half a year).
2) Select (a) or (b). (Use only if service is required for entry.)
c) [ ] Not covered under any other qualified
i) [ ] profit sharing plan (or)
ii) [ ] pension plan to which we contribute.
d) [ ] Employed at the following location or divisions
or in the following positions:
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
e) [ ] Not employed at the following location or
divisions or in the following positions:
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
K. ENTRY REQUIREMENTS
1) SERVICE REQUIRED to become an Active Member:
a) [ ] Service is not required.
b) [X] The minimum Entry Service required is
i) [ ] 1 (one) whole year.
ii) [X] 6/12 of a year.
Note: If a fractional part of a year is required,
the Hours Method may not be used to determine Entry
Service.
2) ENTRY SERVICE, subject to the provisions of Plan Section 1.02,
shall be determined as follows:
a) [X] ELAPSED TIME METHOD. Entry Service is the total
of an Employee's countable Periods of Service without
regard to Hours of Service.
5
<PAGE> 9
b) Only available if one year is used in K(1) above.
i) Optional reduced Hours of Service requirement.
ii) Optional crediting of Entry Service before Entry Service Period ends.
A. Optional Entry Service Period, continues on employment anniversaries.
A. Optional Hours of Service requirement. Fill in up to 500 hours but
less than hours required for year of Entry Service.
3) Select (a) or (b).
b) Not over age 21 (20 1/2 if Entry Date is Yearly Date).
4) This waiver applies only on the date you fill in.
b) [ ] HOURS METHOD. A year of Entry Service is an
Entry Service Period which has ended and in which an
Employee has 1,000 Hours of Service, unless a lesser
number is specified in (i) below.
i) [ ] _________ Hours of Service.
ii) [ ] A year of Entry Service shall be credited
before the end of the Entry Service Period if
the Employee has the number of Hours of
Service specified above.
iii) An ENTRY SERVICE PERIOD is the 12-consecutive
month period beginning on an Employee's Hire
Date and each following 12-consecutive month
period ending on the last day of the Plan
Year, including the 12-consecutive month
period ending on the last day of the first
Plan Year after his Hire Date, unless
otherwise specified in A. below. (See Plan
Section 1.02 for the crediting of Entry
Service during the first two periods.)
A. [ ] An Entry Service Period is the
12-consecutive month period
beginning on an Employee's Hire Date
and each following 12-consecutive
month period beginning on an
anniversary of that Hire Date.
iv) An ENTRY BREAK in service, when the Hours
Method is used, is an Entry Service Period
in which an Employee is credited with not
more than one-half of the Hours of Service
required for a year of Entry Service, unless
otherwise specified in A. below.
A. [ ] __________ or fewer Hours of
Service.
3) AGE REQUIRED to become an Active Member:
a) [ ] A minimum age is not required.
b) [X] The Employee must be 21 or older.
4) [ ] The requirement(s) for entry checked below shall be waived
on ____________, 19_____. This date shall be an Entry Date if
the Eligible Employee has met all the other entry requirements.
a) [ ] Service requirement.
b) [ ] Age requirement.
6
<PAGE> 10
L. Select one of the following dates.
4) If selected, age and service required in Item K can't be over age 20
1/2 or more than 6 months, respectively.
a) Optional 415 (c)(3) definition of Pay.
b) Optional W-2 definition of Pay.
2) Optional provision to continue old definition until 1994 Limitation
Year.
4) Optional provision to continue old definition until 1994 Plan Year.
L. ENTRY DATE. An Eligible Employee may enter the Plan as an Active
Member on the earliest
1) [ ] Monthly Date,
2) [ ] Semi-yearly Date,
3) [X] Quarterly Date,
4) [ ] Yearly Date,
5) [ ] date,
on or after the date this Plan became effective, on which he meets all
the entry requirements. This date is his ENTRY DATE.
M. PAY
1) COMPENSATION for purposes of Plan Section 3.06 is as defined
therein, under Information required to be reported under Code
Sections 6041 and 6051 (Wages, Tips and Other Compensation Box
on Form W-2), which is actually paid or made available by us
for the Limitation Year, unless otherwise specified in (a) or
(b) below.
a) [ ] 415 safe-harbor compensation as defined in Plan
Section 3.06.
b) [ ] Code Section 3401(a) wages (wages for purposes of
income tax withholding) as defined in Plan Section
3.06.
2) [ ] The definition of Compensation above shall apply on and
after the 1994 Limitation Year. The definition of
Compensation on any date before the 1994 Limitation Year shall
be determined in accordance with the provisions of the Prior
Plan.
3) PAY for purposes of Plan Section 1.02 is the same as
compensation for purposes of Plan Section 3.06 as specified in
(1) above.
4) [ ] The definition of Pay in this Item M shall apply and after
the first Yearly Date In 1994. The definition of Pay an any
date before the first Yearly Date in 1994 shall be determined
in accordance with the provisions of the Prior Plan.
7
<PAGE> 11
5) Safe harbor fringe benefit exclusion.
a) Optional provision to exclude fringe benefits for all purposes.
a) Optional Pay Year.
Select any modifications below which apply.
Pay shall include elective contributions. Elective contributions are amounts
excludable from the gross income of the Employee under Code Sections 125,
402(a)(8), 402(h) or 403(b), and contributed by us, at the Employee's election,
to a Code Section 401(k) arrangement, a simplified employee pension, cafeteria
plan or tax-sheltered annuity. Elective contributions also include Pay
deferred under a Code Section 457 plan maintained by us and Employee
contributions "picked up" by a governmental entity and, pursuant to Code
Section 414(h)(2), treated as our contributions.
5) For purposes of Elective Deferral Contributions only Pay shall
not include reimbursements or other expense allowances, fringe
benefits (cash or non-cash), moving expenses, deferred
compensation, and welfare benefits, unless otherwise specified
in (a) below.
a) [ ] Pay for all purposes under the Plan shall not
include reimbursements or other expense allowances,
fringe benefits (cash or non-cash), moving expenses,
deferred compensation, and welfare benefits.
6) ANNUAL PAY is, on any given date, an Employee's Pay for the
latest Pay Year ending on or before that date.
7) The PAY YEAR is the one-year period ending on the last day of
each Plan Year, unless a different Pay Year is specified in
(a) below.
a) [ ] The one-year period ending on each ______________
(month and day).
Pay is modified as follows:
8) [ ] An Employee's Annual Pay over $_______________ shall be
excluded.
9) [ ] If a Member's Entry Date occurs after ____________________
19____, Pay before such Entry Date shall be excluded.
8
<PAGE> 12
10) Optional exclusions.
h) Specify type of special pay excluded
1) Optional effective dates for elective deferral agreements. If
selected, check (a), (b), (c) or (d).
Item (10) shall apply to the Pay used for purposes of determining the
allocation or amount of specified Contributions. Item (10) Shall not
apply to the Pay used for purposes of determining the allocation of
Contributions if an Integration Level is used to determine the
allocation of Contributions.
10) [ ] Pay for purposes of determining the allocation or amount of
a) [ ] All Employer Contributions
b) [ ] Elective Deferral Contributions
c) [ ] Additional Contributions
d) [ ] Discretionary Contributions
excludes
e) [ ] bonuses
f) [ ] commissions
g) [ ] overtime pay
h) [ ] other special pay _________________________________
_______________________________________________________________
_______________________________________________________________
Item (11) shall only apply to the Pay used for purposes of determining
excess amounts under Plan Section 3.07.
11) [X] Pay shall include only amounts received while an Active
Member of the Plan for the period described in Plan Section
3.07.
N. ELECTIVE DEFERRAL CONTRIBUTIONS for a Member are equal to a portion of
Pay as specified in the written elective deferral agreement. An
Employee who is eligible to participate in the Plan may file an
elective deferral agreement with us. The elective deferral agreement
to start Elective Deferral Contributions may be effective on a
Member's Entry Date (Reentry Date, if applicable) or any following
Semi-yearly Date, unless otherwise specified in (1) below.
1) [X] Following a Member's Entry Date (Reentry Date, if
applicable), a Member's elective deferral agreement may become
effective on any
a) [ ] Monthly Date.
b) [X] Quarterly Date.
c) [ ] Yearly Date.
d) [ ] date.
9
<PAGE> 13
2) Optional minimum.
4) Optional maximum. (Consider using 20% reduced by the amount of other
Contributions made for the Member.)
1) If item O is selected, check (a) or (b).
a) Not more than 100%.
i) Optional minimum percentage.
ii) Optional maximum percentage. Less than 100%.
2) Optional limit on Elective Deferral Contributions matched. If
selected, check (a) or (b). Limit can help meet nondiscrimination
tests.
i) Optional minimum percentage.
ii) Optional maximum percentage.
The Member shall make any change or terminate the elective deferral
agreement by filing a new elective deferral agreement. A Member's
elective deferral agreement making a change may be effective on any
date an elective deferral agreement to start Elective Deferral
Contributions could be effective. A Member's elective deferral
agreement to stop Elective Deferral Contributions may be effective on
any date. The elective deferral agreement must be in writing and
effective before the beginning of the pay period in which Elective
Deferral Contributions are to start, change or stop. A Member may not
defer more then 20% of Pay for the Plan Year. Elective Deferral
Contributions shall be limited as needed to meet nondiscrimination
tests.
2) [ ] _______% of Pay is the minimum Elective Deferral
Contribution.
3) [X] Elective Deferral Contributions must be a whole percentage
of Pay.
4) [X] 20% of Pay is the maximum Elective Deferral Contribution.
O. [X] We shall make MATCHING CONTRIBUTIONS.
1) The percentage of Elective Deferral Contributions matched is
a) [ ] _______%.
b) [X] determined by us, but won't be more than 100%.
i) [ ] ________% is the minimum percentage.
ii) [ ] ________% is the maximum percentage.
2) [x] Elective Deferral Contributions which are over the
percentage of Pay below won't be matched.
a) [ ] _______%.
b) [X] A percentage determined by us.
i) [ ] ________% is the minimum percentage.
ii) [ ] ________% is the maximum percentage.
10
<PAGE> 14
3) If Item O is selected, check (a) or (b).
4) If (3)(a) is selected, this option may be used to adjust the Matching
Contributions at the end of the Plan Year.
a) Optional. Match at end of year only for those meeting requirements in
Item Q.
b) If (4) is selected, check (i) or (ii).
i) Not more than 100%.
A. Optional minimum percentage.
B. Optional maximum percentage. Less than 100%.
c) Optional limit on Elective Deferral Contributions matched if (4) is
selected. If selected, check (i) or (ii). Limit will help meet
nondiscrimination tests.
A. Optional minimum percentage.
B. Optional maximum percentage.
3) Matching Contributions are made
a) [X] as Elective Deferral Contributions are made.
b) [ ] at the end of the Plan Year for Members meeting the
requirements in Item Q.
4) [X] At the end of the Plan Year we may make more Matching
Contributions for Members who made Elective Deferral Contributions.
Our total Matching Contributions for the Plan Year shall be made as
specified below.
a) [X] The Matching Contributions made at the end of the Plan
Year shall only be made for those meeting the requirements in
Item Q.
b) The percentage of Elective Deferral Contributions matched is
i) [ ] _________%.
ii) [X] determined by us, but won't be more than 100%.
A. [ ] _______% is the minimum percentage.
B. [ ] _______% is the maximum percentage.
c) [X] Elective Deferral Contributions which are over the
percentage of Pay below won't be matched.
i) [ ] ________%.
ii) [X] A percentage determined by us.
A. [ ] _______% is the minimum percentage.
B. [ ] _______% is the maximum percentage.
11
<PAGE> 15
If selected, Matching Contributions may be tested for
nondiscrimination with the Elective Deferral Contributions.
a) Optional if (5) is selected. Nonhighly Compensated Employees only.
6) Optional maximum on Matching Contributions.
a) Optional treatment of forfeitures which relate to excess amounts.
1) These contributions are used in the nondiscrimination tests. If
selected, check (a) or (b).
a) Qualified Nonelective Contributions are a set amount. If selected,
check the contribution formula, (i) or (ii).
i) If selected, check A. or B.
5) [ ] Matching Contributions are Qualified Matching
Contributions. Qualified Matching Contributions are 100%
vested and subject to the withdrawal restrictions of Code
Section 401(k).
a) [ ] Qualified Matching Contributions shall be made
only for Nonhighly Compensated Employees.
6) [ ] Our Matching Contributions for a Member during any Plan
Year shall not be more than $ __________.
7) Forfeitures of Matching Contributions which relate to excess
amounts as provided in Plan Section 3.07 shall be used to
offset our first Contribution after the Forfeiture occurs,
unless otherwise specified in (a) below.
a) [ ] Forfeitures of Matching Contributions which
relate to excess amounts as provided in Plan Section
3.07 shall be allocated to those meeting the
requirements in Item Q who do not have an excess
amount using the allocation formula in P(3)(a) and
shall be deemed to be Matching Contributions.
P. OTHER EMPLOYER CONTRIBUTIONS AND FORFEITURES
1) [ ] QUALIFIED NONELECTIVE CONTRIBUTIONS. Qualified
Nonelective Contributions are 100% vested and subject to the
withdrawal restrictions of Code Section 401(k).
a) [ ] We shall make Qualified Nonelective Contributions
equal to the following:
i) [ ] PAY FORMULA. An amount equal to
A. [ ] ________% of Pay for the pay
period for each Member who is an
Active Member on the last day of
that period.
B. [ ] ________% of Annual Pay at the
end of the Plan Year for Members who
meet the requirements in Item Q.
12
<PAGE> 16
ii) if selected, check A. or B.
b) Qualified Nonelective Contributions are determined by you each year.
c) Optional. Nonhighly Compensated Employees only.
2) These contributions are a set amount. If selected, check the
contribution formula, (a) or (b).
a) If selected, check (i) or (ii).
b) If selected, check (i), (ii), (iii) or (iv).
iii) No contribution for paid nonworking hours such as vacation.
iv) Contribution is made for paid nonworking hours such as vacation.
ii) SERVICE FORMULA. An amount equal to
A. [ ] $ _____ for the pay period for
each Member who is an Active Member
on the last day of that period.
B. [ ] $ _____ at the end of the Plan
Year for Members who meet the
requirements in Item Q.
b) [ ] Qualified Nonelective Contributions may be made
for each Plan Year in an amount determined by us.
Our Qualified Nonelective Contributions shall be
allocated to those meeting the requirements in Item Q
using the allocation formula in P(3)(a).
c) [ ] Qualified Nonelective Contributions shall be made
only for or allocated only to Nonhighly Compensated
Employees.
2) [ ] We shall make ADDITIONAL CONTRIBUTIONS equal to the
following:
a) [ ] PAY FORMULA. An amount equal to
i) [ ] ______% of Pay for the pay period for
each Member who is an Active Member on the
last day of that period.
ii) [ ] ______% of Annual Pay at the end of the
Plan Year for Members who meet the
requirements in Item Q.
b) [ ] SERVICE FORMULA. An amount equal to
i) [ ] $ ________ for the pay period for each
Member who is an Active Member on the last
day of that period.
ii) [ ] $ ________ at the end of the Plan Year
for Members who meet the requirements in Item
Q.
iii) [ ] $ ________ for each Hour of Service he
has performed during the pay period for each
Member who is an Active Member during the pay
period.
iv) [ ] $ ________ for each Hour of Service
credited during the pay period for each
Member who is an Active Member during the pay
period.
13
<PAGE> 17
These contributions are determined by you each year. If selected,
check the allocation formula, (a) or (b).
i) Optional percentage. If selected, fill in a percentage up to the
Maximum Integration Rate.
3) [X] DISCRETIONARY CONTRIBUTIONS may be made for each Plan Year in an
amount determined by us. The amount of our Discretionary
Contributions and Forfeitures. If applicable, allocated to a person
meeting the requirements in Item Q shall be equal to the following:
a) [X] PAY FORMULA. An amount equal to our Discretionary
Contributions and Forfeitures. If applicable, multiplied by
the ratio of such person's Annual Pay to the total Annual Pay
of all such persons.
b) [ ] INTEGRATED FORMULA. An amount equal to a percentage of
the person's Annual Pay up to the Integration Level plus a
percentage (equal to 2 times the first percentage) of his
Annual Pay over the Integration Level. The first percentage
shall be the Maximum Integration Rate, unless otherwise
specified in (i) below.
i) [ ] __________% (If this percentage exceeds the
Maximum Integration Rate, the Maximum Integration
Rate shall apply.)
If our Discretionary Contributions and Forfeitures, if
applicable, are not great enough to provide this allocation,
the percentage above shall be proportionally reduced.
If our Discretionary Contributions and Forfeitures, if
applicable, are more than enough to provide the allocation
above, any amount remaining shall be allocated in the same
manner as provided in the Pay Formula, Item P(3)(a).
ii) The MAXIMUM INTEGRATION RATE shall be determined
according to the following schedule:
<TABLE>
<CAPTION>
INTEGRATION
INTEGRATION LEVEL RATE
<S> <C>
100% of TWB 5.7%
Less than 100%, but more than
80% Of TWB 5.4%
More than the greater of $10,000
or 20% of TWB, but not more than
80% of TWB 4.3%
Not more than the greater of
$10,000 or 20% of TWB 5.7%
</TABLE>
14
<PAGE> 18
A. Optional dollar amount. Must be less than such taxable wage base.
B. Optional percentage of such taxable wage base. Must be less than
100%.
4) Not applicable if Vesting Percentage is 100%.
a) Optional treatment of Forfeitures if P(3) is selected.
b) Optional treatment of Forfeitures if P(3) is not selected, but P(2) is
selected.
"TWB" means the taxable wage base as in
effect on the latest Yearly Date. "Taxable
wage base" means the maximum amount of
earnings which may be considered for wages
for a year under Code Section 3121(a)(1).
On any date the portion of the rate of tax
under Code Section 3111(a) (in effect on the
latest Yearly Date) which is attributable to
old age insurance exceeds 5.7%, such rate
shall be substituted for 5.7% and 5.4% and
4.3% shall be increased proportionately.
iii) The INTEGRATION LEVEL is the taxable wage
base (as defined in (ii) above) as in effect
on the latest Yearly Date, unless otherwise
specified in A. or B. below.
A. [ ] $___________________.
B. [ ] ________% of such taxable wage
base.
4) If P(3) is selected, FORFEITURES shall be reallocated to
remaining Members and if P(3) is not selected, Forfeitures
shall be used to offset our first Contribution made after the
Forfeiture is determined, unless otherwise specified in (a) or
(b) below. If P(3) is selected, Forfeitures shall be
allocated with our Discretionary Contributions and deemed to
be Discretionary Contributions. (See Plan Section 3.05.)
a) [X] Forfeitures shall not be allocated with our
Discretionary Contributions, but shall be used to
offset our first Contribution made after the
Forfeiture is determined.
b) [ ] Forfeitures shall not be used to offset our first
Contribution, but shall be allocated to those meeting
the requirements in Item Q using the allocation
formula in P(3)(a) and shall be deemed to be
Additional Contributions.
Q. NET PROFITS AND CONTRIBUTION REQUIREMENTS
1) Our Contributions shall be made out of our current or
accumulated NET PROFITS unless otherwise specified below.
a) [X] Our Contributions may be made without regard to
our current or accumulated Net Profits.
15
<PAGE> 19
If annual contributions are subject to these requirements or if
Forfeitures are reallocated (see Items O(7) and P(4)), select (a),
(b), (c) or (d) below. If advanced funding is used, (a) must be
checked.
i) Optional reduced Hours of Service requirement.
Optional reduced Hours of Service requirement.
e) Optional allocation requirement. Do not use with (a) above.
a) Optional Accrual Service Period if you use hours in (2) above.
2) REQUIREMENTS FOR CONTRIBUTIONS. The allocation of our
Contributions is subject to the provisions of Article III and
Article X of the Plan. Our Contributions which are subject to
the requirements of this Item Q and Forfeitures shall be
allocated as of the last day of the Plan Year to each
a) [ ] person who was an Active Member at any time
during the Plan Year.
b) [ ] Active Member on that date.
c) [ ] person who was an Active Member at any time
during the Plan Year and who has at least 1,000 Hours
of Service during the latest Accrual Service Period
ending on or before that date, unless a lesser number
is specified in (i) below.
i) [ ] _______ Hours of Service.
d) [X] Active Member on that date who has at least 1,000
Hours of Service during the latest Accrual Service
Period ending on or before that date. unless a lesser
number is specified in (i) below.
i) [ ] _______ Hours of Service.
The allocation requirements in (b), (c) or (d) are modified as
follows:
e) [ ] Our Contributions shall also be allocated to each
person who was an Active Member at any time during
the Plan Year and who has retired, become Totally
Disabled, or died.
3) The ACCRUAL SERVICE PERIOD Is the 12-consecutive month period
ending on the last day of each Plan Year, unless a different
period is specified in (a) below.
a) [ ] The 12-consecutive month period ending on each
_______________________(month and day).
16
<PAGE> 20
2) Fill in last day of the Limitation Year. Normally, the last day of
the Plan Year is used. You must match the Limitation Years of all
your other plans.
If you or an Employer, as defined in Plan Section 3.06. maintain or ever
maintained another qualified plan in which any Member in this Plan is (or was)
a member or could become a member, you must complete (3) and (4) of this Item R.
5) Optional maximum allocation.
d) Less than 25%.
R. CONTRIBUTION MODIFICATIONS
Contribution Limitations: The Annual Additions for a Member during a
Limitation Year shall not be more than the Maximum Permissible Amount.
(See Plan Sections 3.06 and 10.05.)
1) For Limitations Years beginning after December 31, 1991, for
purposes of applying the limitations of Plan Section 3.06,
Compensation for a Limitation Year is the Compensation
actually paid or made available during such Limitation Year.
2) The LIMITATION YEAR is the 12-consecutive month period ending
on each December 31 (month and day).
3) If the Member is covered under another qualified defined
contribution plan maintained by the Employer, as defined in
Plan Section 3.06, other than a Master or Prototype Plan:
a) [ ] The provisions of (f) through (k) of Plan Section
3.06 will apply as if the other plan were a Master or
Prototype Plan.
b) [ ] The method described on the attached page shall
be used to limit total Annual Additions to the
Maximum Permissible Amount, and will properly reduce
the Excess Amounts, in a manner which precludes
Employer discretion.
4) If the Member is or has ever been a member in a defined
benefit plan maintained by the Employer, as defined in Plan
Section 3.06, the method described on the attached page shall
be used to satisfy the 1.0 limitation of Code Section 415, in
a manner which precludes Employer discretion.
5) [ ] The amount of our Contributions for any
a) [ ] Plan Year
b) [ ] Limitation Year
allocated to a person meeting the requirements in Item Q
shall not be more than (the lesser of)
c) [ ] $__________(or)
d) [ ] ___________% of his Annual Pay (Compensation for
the Limitation Year if (b) above is selected).
17
<PAGE> 21
In Years when this Plan is a Top-heavy Plan, special minimum and maximum
Contribution provisions apply. Use Items (6) through (9), as needed, to meet
the requirements for your plans which are top-heavy or to extend the minimums
to other employees or Years. The items you select here override any provisions
of Article X to the contrary.
1) Select if Voluntary Contributions are permitted.
T. Select (1) or (2) and complete (3).
1) If selected, fill in the names of all trustees. (Consider naming two
or more.) Complete (a) and (b).
Top-heavy Plan Requirements: The amount and allocation of
Contributions shall be subject to the provisions of Article X of the
Plan in Years when this is a Top-heavy Plan.
6) [ ] Key Employees who are Employees on the last day of the
Year shall also receive the minimum allocation required in
Years when this is a Top-heavy Plan.
7) [ ] A _______________ % (not less than 3%) minimum allocation
shall apply in Years when this is a Top-heavy Plan.
8) [ ] The minimum allocation in (6) and (7) above and in Article
X shall apply in all Years without regard to whether or not
this is a Top-heavy Plan or to the requirements in Item Q.
9) [ ] The method described on the attached page shall be used to
meet the minimum allocation and benefit requirements in Years
when this is a Top-heavy Plan, in a manner which precludes
Employer discretion.
Present Value: For purposes of establishing Present Value to compute
the Top-heavy Ratio, any benefit shall be discounted only for 7 1/2%
interest and mortality according to the 1971 Group Annuity Table
(Male) without the 7% margin but with projection by Scale E from 1971
to the later of (a) 1974, or (b) the year determined by adding the age
to 1920, and wherein for females the male age six years younger is
used, unless otherwise specified in (10) and (11) below:
10) [ ] Interest rate _______________%.
11) [ ] Mortality table:
__________________________________________
______________________________________________________________________
_______________________________________________________________________
S. VOLUNTARY CONTRIBUTIONS are not permitted, unless otherwise specified
in (1) below.
1) [ ] Voluntary Contributions are permitted.
T. INVESTMENT
1) [X] The Plan is trusteed. Plan assets may be invested in an
Annuity Contract and other funding vehicle(s).
We have named the following person(s) to act as TRUSTEE under the
Trust:
RALPH H. REICHARD
---------------------------------------------------------------------
BAHRAM YUSEFZADEH
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
18
<PAGE> 22
a) If the Plan is trusteed, select (i) or (ii).
b) If the Plan is trusteed, select (i) or (ii).
iii) Fill in the person or position authorized to administer the Member
loan program. Principal Mutual Life Insurance Company may not be
used.
iv) Optional minimum loan amount. Fill in up to $1,000. If none is
selected, there is no minimum.
v) Optional maximum loan amount. Fill in up to $49,999. If none is
selected, the maximum is the lesser of 50% of Vested Account or
$50,000, reduced by any loan balance.
vi) Optional number of outstanding loans.
a) LIFE INSURANCE
i) [ ] With the Trustee's consent and subject to the limits
and provisions of Article IV of the Plan, an Active Member
may elect to have his Account applied to purchase life
insurance coverage on his life.
ii) [X] Life insurance coverage is not provided under this Plan.
b) LOANS
i) [ ] The Trustee shall not make a loan to a Member.
ii) [X] The Trustee may make a loan to a Member from the Trust
Fund, subject to the provisions of Plan Section 5.06.
iii) CONTROLLER
____________________________________________________________
____________________________________________________________________
is the Loan Administrator.
iv) [X] The minimum amount of any loan is $1,000
v) [ ] The maximum amount of any loan is the lesser of 50%
of the Member's Vested Account or $__________, reduced
by any outstanding loan balance.
vi) The number of outstanding loans shall be limited to one,
unless otherwise specified in A. or B. below.
A. [ ] The number shall be limited to ___________
B. [ ] The number shall not be limited.
19
<PAGE> 23
Optional number of loans approved in any 12-month period.
a) Select (i), (ii) or (iii).
b) Select (i), (ii) or (iii).
c) Select (i), (ii) or (iii).
vii) The number of loans approved in a 12-month
period shall be limited to one, unless
otherwise specified in A. or B. below.
A. [ ] The number shall be limited to
_________________
B. [ ] The number shall not be limited.
2) [ ] The Plan is not trusteed. Plan assets shall be invested
only in an Annuity Contract.
3) Subject to the provisions of Articles IV and VIIIA of the Plan
and the Annuity Contract, the investment of that part of a
Member's Account resulting from
a) our Contributions other than Elective Deferral
Contributions shall be directed by
i) [ ] the Member with the Trustee's consent
(our consent, if not trusteed).
ii) [X] the Member.
iii) [ ] the Trustee (us, if not trusteed).
b) Elective Deferral Contributions shall be directed by
i) [ ] the Member with the Trustee's consent
(our consent, if not trusteed).
ii) [X] the Member.
iii) [ ] the Trustee (us, if not trusteed).
c) Member Contributions and Rollover Contributions shall
be directed by
i) [ ] the Member with the Trustee's consent
(our consent, if not trusteed).
ii) [X] the Member.
iii) [ ] the Trustee (us, if not trusteed).
20
<PAGE> 24
1) Check any other Employer Contributions which are also 100% vested.
2) Select one of the schedules below if some Employer Contributions
aren't 100% vested when made.
e) If selected, fill in the percentages. The schedule must provide full
(100%) vesting after 5 years of Vesting Service or must at all times
be as great as the Vesting Percentage which the schedule in (d) would
provide.
U. VESTING PERCENTAGE is used to determine the nonforfeitable percentage
of a Member's Account resulting from our Contributions.
The Vesting Percentage for a Member who is an Employee on the date he
reaches Normal Retirement Age, meets the requirement(s) for Early
Retirement Date, becomes Totally Disabled or dies, whichever occurs
first, shall be 100% on such date.
1) Fully Vested Contributions. Elective Deferral Contributions
are 100% vested. Qualified Matching Contributions and
Qualified Nonelective Contributions are 100% vested. The
following Employer Contributions are also 100% vested at all
times.
a) [ ] All other Employer Contributions.
b) [ ] Additional Contributions.
c) [ ] Matching Contributions.
d) [ ] Discretionary Contributions.
2) A Member's Account resulting from our Contributions which are
not 100% vested is subject to the Vesting Percentage below.
<TABLE>
<CAPTION>
Vesting
Service Vesting Percentage
(a) (b) (c) (d) (e)
[ ] [ ] [ ] [ ] [X]
<S> <C> <C> <C> <C> <C>
Less
than 1 0 0 0 0 0
---------
1 0 0 0 0 20
---------
2 0 20 0 0 40
---------
3 100 40 0 20 60
---------
4 60 0 40 80
---------
5 80 100 60 100
---------
6 100 80
---------
7 100
---------
</TABLE>
A Member's Vesting Percentage determined above shall never be reduced in later
years. If this Plan is or ever has been a Top-heavy Plan, the minimum vesting
provisions of Article X shall apply.
21
<PAGE> 25
V. Select (1) or (2). (Don't use this item if all Employer Contributions
are fully vested and Early Retirement Date is not based on Vesting
Service.)
Use (a), (b) or both only if the method of crediting service has changed. The
Plan must use either the Elapsed Time Method or the Hours Method after the date
the Plan became subject to ERISA.
a) Optional reduced Hours of Service.
i) Optional Vesting Service Period.
ii) Optional Vesting Service Period which changes.
B. Month and day used in A. and last year this period is used.
C. Month and day on which new period ends.
V. VESTING SERVICE, subject to the provisions of Plan Section 1.02, shall
be determined as follows:
1) [X] ELAPSED TIME METHOD. Vesting Service is the total of an
Employee's countable Periods of Service without regard to
Hours of Service.
a) [ ] The Elapsed Time Method is used to determine
service on and after_______________, 19____
b) [ ] The Elapsed Time Method is used to determine
service before ________________, 19________.
2) [ ] HOURS METHOD. A year of Vesting Service is a Vesting
Service Period in which an Employee has 1,000 Hours of
Service, unless a lesser number is specified in (a) below.
a) [ ]___________ Hours of Service.
b) A VESTING SERVICE PERIOD is the 12-consecutive month
period ending on the last day of each Plan Year,
unless otherwise specified in (i) or (ii) below.
i) [ ] The 12-consecutive month period ending on
each ________________________ (month and
day).
ii) [ ] The 12-consecutive month period ending on
A. each _____________________ (month and
day) through
B.________________________ 19 ____________
and
C. each following (month and day).
---------
22
<PAGE> 26
i) Optional Hours of Service requirement. Fill in up to 500 hours, but
less than hours required for year of Vesting Service.
d) and e). See comment for V(1)(a) and (b).
Select any modifications below which apply. If the Hours Method is used, any
date you use should be the first day of a service period.
a) Not available for service after the date the Plan became subject to
ERISA.
4) If selected, fill in a date on or before the Effective Date.
5) Not over age 18.
c) A VESTING BREAK in service, when the Hours Method is
used, is a Vesting Service Period in which an
Employee is credited with not more than one-half of
the Hours of Service required for a year of Vesting
Service, unless otherwise specified in (i) below.
i) [ ] _____________ or fewer Hours of Service.
d) [ ] The Hours Method is used to determine service on
and after _______________, 19________.
e) [ ] The Hours Method is used to determine service
before __________________, 19________.
Vesting Service is modified as follows:
3) [ ] Service before _________________________, 19_______
a) [ ] is the total of an Employee's countable service
with us, expressed in whole years and fractional
parts of a year (counting a partial month as a
complete month).
b) [ ] shall be determined under the provisions of the
Plan in effect on the day before that date.
4) [ ] Service before ______________________, 19______ shall not
be counted.
5) [ ] Service before an Employee attains age ______________
shall not be counted. (If the Hours Method is used, service
during the Vesting Service Period in which he attains this
age shall not be excluded because of this item.)
23
<PAGE> 27
a) Optional frequency for withdrawal of Voluntary Contributions. If
selected, check (i) or (ii).
2) Optional 401(k) hardship withdrawal.
a) Optional restriction on hardship withdrawal.
3) Optional withdrawal after age 59 1/2.
a) Optional frequency for withdrawal after age 59 1/2. If selected,
check (i) or (ii).
4) Optional withdrawal after 5 years as an Active Member. Must have
Matching Contributions that are not qualified, Additional
Contributions or Discretionary Contributions. If selected, check (a),
(b), (c) or (d).
W. WITHDRAWAL BENEFITS
1) A Member may withdraw, in a single sum, any part of his Vested
Account resulting from Voluntary Contributions. A Member may
make only two such withdrawals in any twelve-month period,
unless otherwise specified in (a) below.
a) [ ] A Member may make
i) [ ] such a withdrawal at any time.
ii) [ ] only ___________ such withdrawal(s) in
any twelve-month period.
2) [X] Unless otherwise specified in (a) below, a Member may
withdraw any part of his Vested Account which does not result
from Voluntary Contributions, Qualified Matching Contributions
or Qualified Nonelective Contributions in the event of undue
financial hardship. Withdrawals from the Member's Account
resulting from Elective Deferral Contributions shall be
limited to the amount of the Member's Elective Contributions
(and earnings thereon accrued as of December 31, 1988). The
withdrawal is subject to the provisions of Plan Section 5.05.
a) [ ] Such withdrawal shall be limited to the amount of
the Member's Elective Deferral Contributions (and
earnings thereon accrued as of December 31, 1988).
3) [ ] A Member may withdraw any part of his Vested Account which
does not result from Voluntary Contributions at any time after
he attains age 59 1/2. A Member may make only two such
withdrawals in any twelve-month period, unless otherwise
specified in (a) below.
a) [ ] A Member may make
i) [ ] such a withdrawal at any time.
ii) [ ] only ___________ such withdrawal(s) in
any twelve-month period.
4) [ ] A percentage of a Member's Vested Account which does not
result from Voluntary Contributions, Elective Deferral
Contributions, Qualified Matching Contributions or Qualified
Nonelective Contributions may be withdrawn after he has been
an Active Member for at least five (5) years.
The percentage which may be withdrawn is
a) [ ] 25%.
b) [ ] 25% or 50%, as he requests.
24
<PAGE> 28
1) Normal Retirement Age may not exceed any mandatory retirement age
imposed by you on your Employees. Must use (a) or (b) if mandatory
age is younger than 65.
a) Optional Normal Retirement Age. Fill in age younger than 65.
b) Optional Normal Retirement Age. Select (i) or (ii) and fill in up to
age 65.
i) Fill in up to 5 years.
ii) Fill in up to 5 years.
iii) Optional maximum Normal Retirement Age if (b) is selected. Fill in up
to age 70.
c) [ ] 25%, 50% or 75%, as he requests.
d) [ ] any percentage up to _____________%, as he
requests.
A Member shall not make another withdrawal under this item
until he has been an Active Member for at least five (5) years
since his last withdrawal.
Note: Withdrawals are subject to the qualified election procedures of
Article VI.
X. RETIREMENT AND THE START OF BENEFITS
1) NORMAL RETIREMENT AGE is the age at which the Member's Account
shall become nonforfeitable if he is an Employee. A Member's
Normal Retirement Age is age 65, unless otherwise specified in
(a) or (b) below.
a) [ ] Age _______________.
b) [ ] The older of age _______________ or his age on the
i) [ ] date ________________ years after the
first day of the Plan Year in which his Entry
Date occurred.
ii) [ ] earlier of the date ___________ years
after his Hire Date or the date 5 years after
the first day of the Plan Year in which his
Entry Date occurred.
iii) [ ] A Member's Normal Retirement Age shall
not be older than age ________________.
c) [ ] A Member's Normal Retirement Age shall not be
older than normal retirement age under the Plan on
the day before any change in the Normal Retirement
Age provisions, if he was a Member on such date.
25
<PAGE> 29
2) Select (a) or (b).
a) If selected, check and complete any requirements below which apply.
An Employee's Account is 100% vested when the requirements are met.
3) Optional modification of the start of benefits. Check (a) or (b).
i) Optional. Restriction does not apply to Elective Deferral
Contributions.
b) If selected, check (i) or (ii).
2) EARLY RETIREMENT DATE
a) [X] Early Retirement Date is the first day of the
month before a Member's Normal Retirement Date which
he selects for the start of retirement benefits.
This day shall be on or after the date the Member
ceases to be an Employee and the date the following
requirement(s) are met:
i) [X] He Is age 55.
ii) [X] He has 5 years of Vesting Service.
iii) [ ] He is within _____________ years of
Normal Retirement Date.
iv) [ ] He has been an Active Member _________
years.
b) [ ] Early retirement is not permitted.
3) Section 5.03 permits an Employee to elect to start benefits
after he ceases to be an Employee. The start of benefits is
modified as follows:
a) [ ] Benefit payments from that part of a Member's
Vested Account resulting from our Contributions shall
not begin before the Member retires, becomes Totally
Disabled or dies. A small Vested Account may be paid
earlier in a single sum. (See Plan Section 9.10.)
i) [ ] Such restriction shall not apply to that
part of a Member's Vested Account resulting
from Elective Deferral Contributions.
b) [ ] The Member may elect to receive his Member
Contributions in a single sum. Any other benefit
payment under Plan Section 5.03 shall not begin
before the Member has ceased to be an Employee for a
period of time. Payment of a small Vested Account
will also be delayed. (See Plan Section 9.10.) The
period of time is
i) [ ] ___________________ month(s).
ii) [ ] ___________________ year(s).
26
<PAGE> 30
1) If selected, check (a) or (b).
Y. FORMS OF DISTRIBUTION
1) [ ] A Member may not receive a single sum payment of that part
of his Vested Account resulting from our Contributions
a) [ ] at any time.
b) [ ] before the Member retires or becomes Totally
Disabled.
A small Vested Account may be paid in a single sum. (See Plan
Section 9.10.)
27
<PAGE> 31
By executing this Adoption Agreement, we, the Employer adopt "The Principal
Financial Group Prototype for Savings Plans" for the exclusive benefit of our
employees. Our selections and specifications contained in this Adoption
Agreement and the terms, provisions and conditions provided in The Principal
Financial Group Prototype Basic Savings Plan constitute our PLAN. No other
basic plan may be used with this Adoption Agreement.
It is understood that Principal Mutual Life Insurance Company is not a party to
our Plan and shall not be responsible for any tax or legal aspects of our Plan.
We assume responsibility for these matters. We acknowledge that we have
counseled, to the extent necessary, with selected legal and tax advisors. The
obligations of Principal Mutual Life Insurance Company shall be governed solely
by the provisions of its contracts and policies. Principal Mutual Life
Insurance Company shall not be required to look into any action taken by the
Plan Administrator, Named Fiduciary, Trustee or us and shall be fully protected
in taking, permitting or omitting any action on the basis of our actions.
Principal Mutual Life Insurance Company shall incur no liability or
responsibility for carrying out actions as directed by the Plan Administrator,
Named Fiduciary, Trustee or us.
This Plan is an important legal document. It may not fit your
situation. You will want to consult with your lawyer on whether it
does or not and on its tax and legal implications, for which neither
Principal Mutual Life Insurance Company nor its agents can assume
responsibility.
Failure to properly fill out this Adoption Agreement may result in
disqualification of this Plan. Principal Mutual Life Insurance
Company will inform you of any amendments made to the Plan or of the
abandonment of the Plan. The address of Principal Mutual Life
Insurance Company is 711 High Street, Des Moines, Iowa 50392-0001.
When you first adopt the prototype, Principal Mutual will assign a
contact person and give you a toll-free number. If you have not been
assigned a contact person, call 1-800-543-4015. Extension 75397, for
assistance.
The opinion letter issued by the National Office of the Internal
Revenue Service applies to the prototype form. You may not rely on it
as evidence that your Plan is qualified under Code Section 401. In
order to obtain reliance with respect to the qualification of your
plan, you must apply to your Key District Office for a determination
letter.
(Complete in black ink.)
This Adoption Agreement is executed ___________________, 19______.
(month and day)
FOR THE EMPLOYER
By /s/ David A. Haas
----------------------------------
(signature)
Executive Vice President
------------------------------------
(title)
[ ] By my signature above, I hereby
execute this Adoption Agreement on
behalf of each Adopting Employer
identified in Item Z.
ACKNOWLEDGEMENT BY THE NAMED FIDUCIARY
(IF OTHER THAN THE EMPLOYER OR TRUSTEE)
By
-----------------------------------
(signature)
Amend No. 3, Effective January 1, 1995 Annuity Contract No.: GA 4-14581
29
<PAGE> 32
Z. ADOPTING EMPLOYERS
There are no Adopting Employers under this Plan.
31
<PAGE> 33
FOR THE TRUSTEE(S)
By /s/ Ralph Reichard
---------------------------------------------------------------
(signature)
Title: PRESIDENT AND CHIEF OPERATING OFFICER
---------------------------------------------------------------
Address: PHOENIX INTERNATIONAL LTD, INC.
---------------------------------------------------------------
900 WINDERLY PL STE 140
---------------------------------------------------------------
MAITLAND FL 32751-7229
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
By /s/ Bahram Yusefzadeh
---------------------------------------------------------------
(signature)
Title: CEO
---------------------------------------------------------------
Address: PHOENIX INTERNATIONAL LTD, INC.
---------------------------------------------------------------
900 WINDERLY PL STE 140
---------------------------------------------------------------
MAITLAND FL 32751-7229
---------------------------------------------------------------
By
---------------------------------------------------------------
(signature)
Title:
---------------------------------------------------------------
Address:
---------------------------------------------------------------
By
---------------------------------------------------------------
(signature)
Title:
---------------------------------------------------------------
Address:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Amend No. 3, Effective January 1, 1995 Annuity Contract No.: GA 4-14581
-----------
33
<PAGE> 34
By
-----------------------------------------------------------------
(signature)
Title:
-----------------------------------------------------------------
Address:
-----------------------------------------------------------------
By
-----------------------------------------------------------------
(signature)
Title:
-----------------------------------------------------------------
Address:
-----------------------------------------------------------------
By
-----------------------------------------------------------------
(signature)
Title:
-----------------------------------------------------------------
Address:
-----------------------------------------------------------------
By
-----------------------------------------------------------------
(signature)
Title:
-----------------------------------------------------------------
Address:
-----------------------------------------------------------------
Amend No. 3, Effective January 1, 1995 Annuity Contract No.: GA 4-14581
-----------
34
<PAGE> 35
Item R(3)(b) The method used to limit Annual Additions to the Maximum
Permissible Amount:
Item R(4) The method used to satisfy the 1.0 limitation of Code Section 415:
Item R(9) The method used to meet the minimum contribution and allocation
requirements in Years when this is a Top-heavy Plan:
<PAGE> 36
UNILATERAL AMENDMENT - MODEL AMENDMENT TO
COMPLY WITH SECTION 401(a)(17) OF THE INTERNAL
REVENUE CODE AS AMENDED BY
THE OMNIBUS BUDGET RECONCILIATION ACT OF 1993
Principal Mutual Life Insurance Company hereby amends, effective as of the
first day of January 1, 1994, the following prototype plans and by such
amendment, amends each retirement plan set forth on any such prototype by an
adopting employer:
<TABLE>
<S> <C> <C> <C>
THE PRINCIPAL FINANCIAL GROUP PROTOTYPE FOR:
Profit Sharing Plans-Plus Letter Serial No.:D347613B Plan No.:003 Basic Plan No.:01
Profit Sharing Plans-Standardized Letter Serial No.:D247614B Plan No.:004 Basic Plan No.:01
Savings Plans-Plus Letter Serial No.:D347609B Plan No.:001 Basic Plan No.:03
Savings Plans-Standardized Letter Serial No.:D247610B Plan No.:002 Basic Plan No.:03
Money Purchase Plans-Plus Letter Serial No.:D347611B Plan No.:001 Basic Plan No.:01
Money Purchase Plans-Standardized Letter Serial No.:D247612B Plan No.:006 Basic Plan No.:01
Target Plans-Plus Letter Serial No.:D360921A Plan No.:005 Basic Plan No.:01
Target Plans-Standardized Letter Serial No.:D260922A Plan No.:006 Basic Plan No.:01
</TABLE>
ARTICLE I: The following is added to the definition of PAY:
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan years
beginning on or after January 1, 1994, the annual pay of each employee taken
into account under the plan shall not exceed the OBRA '93 annual pay limit.
The OBRA '93 annual pay limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with section 401(a)(17)(B) of the
Internal Revenue Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which pay is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93 annual pay
limit will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in this
plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA
'93 annual pay limit set forth in this provision.
If pay for any prior determination, period is taken into account in determining
an employee's benefits accruing in the current plan year, the pay for that
prior determination period is subject to the OBRA '93 annual pay limit in
effect for that prior determination period. For this purpose, for
determination periods beginning before the first day of the first plan year
beginning on or after January 1, 1994, the OBRA '93 annual pay limit is
$150,000.
Executed by PRINCIPAL MUTUAL LIFE INSURANCE COMPANY on
April 8 , 1994 by
- -----------------------
Roger Jacobsen
- -----------------------
Officer
[The Principal Finncial Group LOGO]
<PAGE> 37
UNILATERAL AMENDMENT - MODEL AMENDMENT TO COMPLY WITH
SECTION 401(A)(31) OF THE INTERNAL REVENUE CODE
AS ADDED BY THE UNEMPLOYMENT COMPENSATION AMENDMENTS OF 1992
Principal Mutual Life Insurance Company hereby amends, effective as of January
1, 1993, the following prototype plans and by such amendment, amends each
retirement plan set forth on any such prototype by an adopting employer:
<TABLE>
<S> <C>
The Principal Financial Group Prototype for:
Profit Sharing Plans - Plus Letter Serial No.: D347613B Plan No.: 003 Basic Plan No.: 01
Profit Sharing Plans - Standardized Letter Serial No.: D247614B Plan No.: 004 Basic Plan No.: 01
Savings Plans - Plus Letter Serial No.: D347609B Plan No.: 001 Basic Plan No.: 03
Savings Plans - Standardized Letter Serial No.: D247610B Plan No.: 002 Basic Plan No.: 03
Money Purchase Plans - Plus Letter Serial No.: D347611B Plan No.: 001 Basic Plan No.: 01
Money Purchase Plans - Standardized Letter Serial No.: D247612B Plan No.: 002 Basic Plan No.: 01
Target Plans - Plus Letter Serial No.: D360921A Plan No.: 005 Basic Plan No.: 01
Target Plans - Standardized Letter Serial No.: D260922A Plan No.: 006 Basic Plan No.: 01
Defined Benefit Plans - Nonintegrated Letter Serial No.: D359699A Plan No.: 002 Basic Plan No.: 02
Defined Benefit Plans - Integrated Letter Serial No.: D359698A Plan No.: 001 Basic Plan No.: 02
</TABLE>
ARTICLE I: The following words and phrases are added to the DEFINITIONS
section of Article I:
Direct Rollover: A Direct Rollover is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
Distributee: A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employer's or former Employer's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are Distributees with regard to the interest of the spouse or
former spouse.
Eligible Retirement Plan: Eligible Retirement Plan is an individual retirement
account described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) of the Code, an annuity plan described in
section 403(a) of the Code, or a qualified trust described in section 401(a) of
the Code, that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to the surviving
spouse, an Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.
Eligible Rollover Distribution: An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not include:
any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated Beneficiary, or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code; and the portion
of any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities).
ARTICLE IX: The following section is added as SECTION 9.01A - DIRECT
ROLLOVERS:
This section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distributee's election under this section, a Distributee may elect, at
the time and in the manner prescribed by the Plan Administrator, to have any
portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan, specified by the Distributee in a Direct Rollover.
Executed by PRINCIPAL MUTUAL LIFE INSURANCE COMPANY on January 11, 1993 by
----------
/s/ Owen M. Westman
-------------------
Officer
[PRINCIPAL FINANCIAL GROUP]
[LOGO]
<PAGE> 38
B
A
S THE PRINCIPAL
I FINANCIAL GROUP
C PROTOTYPE
BASIC
S SAVINGS PLAN
A ------------------------------------
V ------------------------------------
I
N BASIC PLAN NO.: 03 TO BE USED WITH
G ADOPTION AGREEMENT PLAN NOS.: 001-002
S APPROVED: OCTOBER 26,1992
P
L
A
N
<PAGE> 39
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION 1
----------------------------------------------------------------
ARTICLE I - FORMAT AND DEFINITIONS 1
Section 1.01 - Format
Section 1.02 - Definitions
----------------------------------------------------------------
ARTICLE 11 - MEMBERSHIP 8
Section 2.01 - Active Membership
Section 2.02 - Ceasing Active Membership
Section 2.03 - Adopting Employers - Separate Plans
Section 2.04 - Adopting Employers - Single Plan
----------------------------------------------------------------
ARTICLE III CONTRIBUTIONS 9
Section 3.01 - Employer Contributions
Section 3.02 - Voluntary Contributions by Members
Section 3.03 - Rollover Contributions
Section 3.04 - Forfeitures and Restoration
Section 3.05 - Allocation
Section 3.06 - Contribution Limitation
Section 3.07 - Excess Amounts
----------------------------------------------------------------
ARTICLE IV INVESTMENT OF CONTRIBUTIONS 19
Section 4.01 - Investment of Contributions
Section 4.02 - Purchase of Insurance
Section 4.03 - Transfer of Ownership
Section 4.04 - Termination of Insurance
----------------------------------------------------------------
ARTICLE V BENEFITS 20
Section 5.01 - Retirement Benefits
Section 5.02 - Death Benefits
Section 5.03 - Vested Benefits
Section 5.04 - When Benefits Start
Section 5.05 - Withdrawal Benefits
Section 5.06 - Loans to Members
----------------------------------------------------------------
ARTICLE VI DISTRIBUTION OF BENEFITS 24
Section 6.01 - Automatic Forms of Distribution
Section 6.02 - Optional Forms of Distribution and
Distribution Requirements
Section 6.03 - Election Procedures
Section 6.04 - Notice Requirements
Section 6.05 - Transitional Rules
----------------------------------------------------------------
ARTICLE VII - TERMINATION OF PLAN 30
</TABLE>
<PAGE> 40
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
ARTICLE VIII - ADMINISTRATION OF PLAN 30
Section 8.01 - Administration
Section 8.02 - Records
Section 8.03 - Information Available
Section 8.04 - Claim and Appeal Procedures
Section 8.05 - Unclaimed Vested Account Procedures
Section 8.06 - Delegation of Authority
- -------------------------------------------------------------------------------
ARTICLE VIIIA - TRUST PROVISIONS 31
Section 8A.01 - The Trust and Trust Fund
Section 8A.02 - The Trustee
Section 8A.03 - Duties of Trustee
Section 8A.04 - Powers of Trustee
Section 8A.05 - Expenses
Section 8A.06 - Accounting
- -------------------------------------------------------------------------------
ARTICLE IX - GENERAL PROVISIONS 32
Section 9.01 - Amendments
Section 9.02 - Mergers and Direct Transfers
Section 9.03 - Provisions Relating to the Insurer and
Other Parties
Section 9.04 - Employment Status
Section 9.05 - Rights to Plan Assets
Section 9.06 - Beneficiary
Section 9.07 - Nonalienation of Benefits
Section 9.08 - Construction
Section 9.09 - Legal Actions
Section 9.10 - Small Amounts
Section 9.11 - Word Usage
Section 9.12 - Transfers Between Plans
Section 9.13 - Partnership or Sole Proprietorship
Section 9.14 - Qualification of Plan
- -------------------------------------------------------------------------------
ARTICLE X - TOP-HEAVY PLAN REQUIREMENTS 36
Section 10.01 - Application
Section 10.02 - Definitions
Section 10.03 - Modification of Vesting Requirements
Section 10.04 - Modification of Contributions
Section 10.05 - Modification of Contribution Limitation
</TABLE>
<PAGE> 41
- --------------------------------------------------------------------------------
INTRODUCTION
- --------------------------------------------------------------------------------
The provisions of this Plan apply as of the date specified in Item A or such
other dates as may be specified in this Plan with the following exceptions:
1. The provisions included to comply with the technical corrections to
the Deficit Reduction Act and the Retirement Equity Act (REA)
contained in the Tax Reform Act of 1986 are effective as if included
in the respective bills to which the corrections apply.
2. The provisions included to comply with the provisions of the Tax Reform
Act of 1986 other than the technical corrections to DEFRA and REA are
effective as of the dates specified in the law.
3. The provisions included to comply with the provisions of the Omnibus
Budget Reconciliation Act of 1986 (OBRA 86) are effective as of the dates
specified in the law.
4. The provisions included to comply with the provisions of the Omnibus
Budget Reconciliation Act of 1987 (OBRA 87) are effective as of the dates
specified in the law.
5. The provisions included to comply with the final regulations on optional
forms of benefit issued July 11, 1988, are effective as of the effective
date prescribed by such regulations.
6. The provisions included to comply with the final REA regulations issued
August 22, 1988, are effective as of the effective date prescribed by such
regulations.
7. The provisions included to comply with the provisions of the Technical
and Miscellaneous Revenue Act of 1988 are effective as of the dates
specified in the law.
8. The provisions included to comply with the final regulations on loans
issued July 20,1989, are effective as of the effective date prescribed by
such regulations.
- --------------------------------------------------------------------------------
ARTICLE I
FORMAT AND DEFINITIONS
- --------------------------------------------------------------------------------
SECTION 1.01 - FORMAT.
Our retirement plan is set out in this document, the attached Adoption
Agreement which we signed, and any amendments to these documents.
Words and phrases defined in Section 1.02 shall have that defined meaning when
used in this Plan, unless the context clearly indicates otherwise. These words
and phrases have initial capital letters to aid in identifying them as defined
terms. References to "Section" are references to parts of this document;
references to "Item" are references to parts of the Adoption Agreement.
Some of the defined terms and phrases in Section 1.02 and some of the
provisions contained in the following articles do not apply to our Plan and
shall have no meaning when used in our Plan. The provisions of the attached
Adoption Agreement shall determine whether or not the terms apply.
SECTION 1.02 - DEFINITIONS.
ACCOUNT means a Member's share of the Investment Fund plus the cash value of
any insurance coverage on his life under this Plan. Separate accounting
records shall be kept for those parts of the Member's Account resulting from
the following:
(a) Required Contributions, if any.
(b) Nondeductible Voluntary Contributions, if any.
(c) Deductible Voluntary Contributions, if any.
(d) Rollover Contributions, if any.
(e) Elective Deferral Contributions.
(f) Qualified Matching Contributions.
(g) Matching Contributions that are not Qualified Matching Contributions.
(h) Qualified Nonelective Contributions.
(i) All other Employer Contributions.
If the Member's Vesting Percentage is less than 100% as to any of these
Contributions, a separate accounting record will be kept for any part of
his Account resulting from such Contributions and, if there has been a
prior Forfeiture Date, from such Contributions made before a prior
Forfeiture Date.
The Account shall be reduced by any distribution of the Member's Vested Account
and by any Forfeitures. The Account shall participate in the earnings
credited, expenses charged and any appreciation or depreciation of the
Investment Fund. The Account is subject to any minimum guarantees applicable
under the Annuity Contract or other investment arrangement.
ACCRUAL SERVICE PERIOD means the period defined in Item Q of the Adoption
Agreement - Plus.
ACTIVE MEMBER means an Eligible Employee who is actively participating in the
Plan according to the provisions of Section 2.01.
ADDITIONAL CONTRIBUTIONS means additional contributions we make to fund this
Plan. (See Item P and Section 3.01.)
ADJUSTMENT FACTOR means the cost of living adjustment factor prescribed by the
Secretary of the Treasury under Section 41 6(d) of the Code for years beginning
after December 31, 1987, as applied to such items and in such manner as the
Secretary shall provide.
ADOPTING EMPLOYER means an employer controlled by or affiliated with us and
listed in Item Z of the Adoption Agreement - Plus. If the Adoption Agreement -
Plus is not used, all members of the Controlled Group and the Affiliated
Service Group, whether or not listed in Item Y, shall be Adopting Employers
participating in a single plan.
ADOPTION AGREEMENT means the attached document which contains our selections
and specifications for our Plan.
AFFILIATED SERVICE GROUP means any group of corporations, partnerships or
other organizations of which we are a part and which is affiliated within the
meaning of Code Section 414(m) and regulations thereunder. Such a group
includes at least two organizations one of which is either a service
organization (that is, an organization the principal business of which is
performing services), or an organization the principal business of which
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is performing management functions on a regular and continuing basis. Such
service is of a type historically performed by employees. In the case of a
management organization, the Affiliated Service Group shall include
organizations related, within the meaning of Code Section 144(a)(3), to either
the management organization or the organization for which it performs
management functions. The term Controlled Group, as it is used in our Plan,
shall include the term Affiliated Service Group.
ANNUAL PAY means the Employee's annual pay as defined in Item M.
ANNUITY CONTRACT means the annuity contract or contracts into which the Trustee
enters (into which we enter, if our Plan is not trusteed) with the Insurer for
the investment of Contributions and the payment of benefits under this Plan.
The term Annuity Contract as it is used in this Plan shall include the plural
unless the context clearly indicates the singular is meant.
ANNUITY STARTING DATE means, for a Member, the first day of the first period
for which an amount is payable as an annuity or any other form.
BENEFICIARY means the person or persons named by a Member to receive any
benefits under the Plan when the Member dies. (See Section 9.06.)
CLAIMANT means any person who makes a claim for benefits under this Plan. (See
Section 8.04.)
CODE means the Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT means an individual named by a Member to receive a
lifetime benefit according to a survivorship life annuity after the Member
dies.
CONTRIBUTIONS means Elective Deferral, Additional, Discretionary, Matching,
Qualified Nonelective, Voluntary and Rollover Contributions, and Required
Contributions made under the Prior Plan, unless the context clearly indicates
only one is, or certain of these are, meant.
CONTROLLED GROUP means any group of corporations, trades or businesses of
which we are a part that are under common control. A Controlled Group includes
any group of corporations, trades or businesses, whether or not incorporated,
which is either a parent-subsidiary group, a brother-sister group or a combined
group within the meaning of Code Section 414(b), Code Section 414(c) and
regulations thereunder and, for the purpose of determining contribution
limitations under Section 3.06, as modified by Code Section 415(h) and, for the
purpose of identifying Leased Employees, as modified by Code Section 144(a)(3).
The term Controlled Group, as it is used in our Plan, shall include the term
Affiliated Service Group.
DISCRETIONARY CONTRIBUTIONS means discretionary contributions we make to fund
this Plan. (See Item P and Section 3.01.)
EARLY RETIREMENT DATE means the date a Member selects for beginning his early
retirement benefit. Early retirement benefits may begin whether the Member met
the age requirement if any, before or after ceasing to be an Employee. (See
Item X.)
EFFECTIVE DATE means the date in Item D.
ELECTIVE DEFERRAL CONTRIBUTIONS means Contributions we make to fund this Plan
in accordance with elective deferral agreements between Eligible Employees and
us. Elective deferral agreements shall be made, changed, or terminated
according to the provisions of Item N. (See Item N and Section 3.01.)
A Member's Account resulting from Elective Deferral contributions may not be
distributed before the Member's separation from service, death, the date the
Member becomes Totally Disabled, before the events described in the last
paragraph of Section 5.04, or before termination of the Plan as described in
Article VII. Elective Deferrals (but no earnings credited after December 31,
1988) may be withdrawn in the case of hardship if Item W(2) is selected.
ELIGIBLE EMPLOYEE means an Employee who meets the requirements specified in
Item J.
EMPLOYEE means an individual who is employed by us or any other employer
required to be aggregated with us under Code Sections 414(b), (c), (m) or (o).
A Controlled group member is required to be aggregated with us.
The term Employee shall also include any leased employee deemed to be an
employee of any employer described in the preceding paragraph as provided in
Code Sections 414(n) or 414(o).
EMPLOYER means the Employer named in Item B and any successor corporation,
trade or business which will, by written agreement, assume the obligations of
this Plan or any Predecessor which maintained this Plan. The terms we, us, and
ours as they are used in this Plan refer to the employer.
EMPLOYER CONTRIBUTIONS means the Contributions made by us to fund the Plan.
(See Section 3.01.)
ENTRY BREAK means, when the elapsed time method is used, a one-year Period of
Severance beginning on an employee's Severance Date. An Employee incurs an
Entry Break on the last day of a one-year Period of Severance.
When the hours method is used, Entry Break is defined in Item K. However, if
the Adoption Agreement - Plus is not used, Entry Break means an Entry Service
Period in which an Employee does not have more than one-half of the Hours of
Service required in Item K for a year of Entry Service. An Employee incurs an
Entry Break on the last day of the Entry Service Period in which he has an Entry
Break.
ENTRY DATE means the date an Employee first enters the Plan as an Active
Member. (See Item L and Section 2.01.)
ENTRY SERVICE means an Employee's service as defined in Item K. Entry Service
shall include service with a Controlled Group member while we are both members
of the Controlled Group.
Entry Service shall include a Period of Military Duty. It the elapsed time
method is used, the entire Period of Military Duty shall be included to the
extent it has not already been counted as Entry Service. If the hours
method is used, an Hour of Service shall be credited (without regard to the 501
Hours of Service limitation) for each hour the Employee would normally have
been scheduled to work for us during such Period of Military Duty to the extent
such hour has not already been counted for purposes of Entry Service.
If the elapsed time method is used and an Employee has more than one countable
Period of Service, Entry Service shall be determined by adjusting his Hire Date
so that the Employee has one continuous period of Entry Service equal to the
total of all his countable Periods of Service. This period of Entry
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Service shall be expressed as whole years (on the basis that 365 days equal one
year) and days.
If the elapsed time method is used, Entry Service shall include a Period of
Severance (service spanning rule) if
(a) the Period of Severance immediately follows a period during which an
Employee is not absent from work and ends within twelve months, or
(b) the Period of Severance immediately follows a period during which an
Employee is absent from work for any reason other than quitting, being
discharged, or retiring (such as a leave of absence or layoff) and ends
within twelve months of the date he was first absent.
If the hours method is used and the Entry Service Period shifts to the Plan
Year, an Employee will be credited with two years of Entry Service if he has the
Hours of Service required for a year of Entry Service in both his first and
second Entry Service Periods.
If the method of crediting Entry Service changes, the provisions of Section
9.12 shall apply.
ENTRY SERVICE PERIOD means the period defined in Item K. However, if the
Adoption Agreement - Plus is not used, Entry Service Period means a 12
consecutive month period beginning on an Employee's Hire Date and each
following 12-consecutive month period beginning on an anniversary of that Hire
Date. If an Employee has a Rehire Date, a new Entry Service Period shall begin
on that date in the same manner as if it were a Hire Date.
ERISA means the Employee Retirement Income Security Act of 1974.
FAMILY MEMBER means an individual described in Code Section 414(q)(6)(B).
FISCAL YEAR means our taxable year. (See Item F.)
FORFEITURE means the part, if any, of a Member's Account which is forfeited.
(See Section 3.04.)
FORFEITURE DATE means, as to a Member, the date the Member incurs five
consecutive Vesting Breaks. Before the first Yearly Date in 1985, the
Forfeiture Date is the date the Member incurs a Vesting Break.
HIGHLY COMPENSATED EMPLOYEE means a highly compensated active Employee or a
highly compensated former Employee.
A highly compensated active Employee means any Employee who performs service
for us during the determination year and who, during the look-back year:
(a) received compensation from us in excess of $75,000 (as adjusted pursuant
to Code Section 415(d));
(b) received compensation from us in excess of $50,000 (as adjusted pursuant
to Code Section 415(d)) and was a member of the top-paid group for such
year; or
(c) was an officer of ours and received compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Code
Section 415(b)(1)(A).
The term Highly Compensated Employee also means:
(d) Employees who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and the
Employee is one of the 100 Employees who received the most compensation
from us during the determination year; and
(e) Employees who are 5 percent owners at any time during the look-back year
or determination year.
If no officer has satisfied the compensation requirement of (c) above during
either a determination year or look-back year, the highest paid officer for
such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding the
determination year.
A highly compensated former Employee means any Employee who separated from
service (or was deemed to have separated) prior to the determination year,
performs no service for us during the determination year, and was a highly
compensated active Employee for either the separation year or any determination
year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a 5 percent owner who is an active or former Employee or a
Highly Compensated Employee who is one of the 10 most highly compensated
Employees ranked on the basis of compensation paid by us during such year, then
the family member and the 5 percent owner or top-ten highly compensated
Employee shall be aggregated. In such case, the family member and 5 percent
owner or top-ten highly compensated Employee shall be treated as a single
Employee receiving compensation and Plan contributions or benefits equal to the
sum of such compensation and contributions or benefits of the family member and
5 percent owner or top-ten highly compensated Employee. For purposes of this
definition, family member includes the spouse, lineal ascendants and descendants
of the Employee or former Employee and the spouses of such lineal ascendants and
descendants.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid group,
the top 100 Employees, the number of Employees treated as officers and the
compensation that is considered, will be made in accordance with Code Section
414(q) and the regulations thereunder.
HIRE DATE means the date an Employee first performs an Hour of Service.
HOUR OF SERVICE means, for the elapsed time method of crediting service in this
Plan, each hour for which an Employee is paid, or entitled to payment, for
performing duties for us. Hour of Service means, for the hours method of
crediting service in this Plan, the following:
(a) Each hour for which an Employee is paid, or entitled to payment, for
performing duties for us during the applicable service period.
(b) Each hour for which an Employee is paid, or entitled to payment, by us on
account of a period of time in which no duties are performed (irrespective
of whether the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff, jury duty,
military duty, or leave of absence. Notwithstanding the preceding
provisions of this subparagraph (b) no credit shall be given to the
Employee
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(1) for more than 501 Hours of Service under this subparagraph (b) on
account of any single continuous period in which the Employee performs
no duties (whether or not such period occurs in a single service
period); or
(2) for an Hour of Service for which the Employee is directly or
indirectly paid, or entitled to payment, on account of a period in
which no duties are performed if such payment is made or due under a
plan maintained solely for the purpose of complying with applicable
worker's or workmen's compensation, or unemployment compensation or
disability insurance laws; or
(3) for an Hour of Service for a payment which solely reimburses the
Employee for medical or medically related expenses incurred by him.
For purpose of this subparagraph (b), a payment shall be deemed to be made
by or due from us regardless of whether such payment is made by or due from
us directly or indirectly through, among others, a trust fund or insurer,
to which we contribute or pay premiums and regardless of whether
contributions made or due to the trust fund, insurer, or other entity are
for the benefit of particular employees or are on behalf of a group of
employees in the aggregate.
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by us. The same Hour of Service shall not be
credited under both this subparagraph (c) and under either subparagraph
(a) or (b) above. Crediting of Hours of Service for back pay awarded or
agreed to with respect to periods described in subparagraph (b) above
shall be subject to the limitations set forth in that subparagraph.
The crediting of Hours of Service above shall be applied under the rules of
paragraphs (b) and (c) of the Department of Labor Regulation 2530.200b-2
(including any interpretations or opinions implementing said rules); which
rules, by this reference, are specifically incorporated in full within this
Plan. The reference to paragraph (b) applies to the special rule for
determining hours of service for reasons other than the performance of duties
such as payments calculated (or not calculated) on the basis of units of time
and the rule against double credit. The reference to paragraph (c) applies to
the crediting of hours of service to service periods.
Hours of Service shall be credited for employment with any other employer
required to be aggregated with us under Code Section 414(b), (c), (m) or (o)
and the regulations thereunder for purposes of entry, vesting and, when the
Adoption Agreement - Plus is not used, for purposes of determining eligibility
for contributions. Hours of Service shall also be credited for any individual
who is considered an employee for purposes of this Plan pursuant to Code Section
414(n) or Code Section 414(o) and the regulations thereunder.
Solely for purposes of determining whether a one-year break in service has
occurred for entry or vesting purposes, during a Parental Absence an Employee
shall be credited with the Hours of Service which would otherwise have
been credited to the Employee but for such absence, or in any case in which
such hours cannot be determined, eight Hours of Service per day of such
absence. The Hours of Service credited under this paragraph shall be credited
in the service period in which the absence begins if the crediting is necessary
to prevent a break in service in that period: or in all other cases, in the
following service period.
INACTIVE MEMBER means a former Active Member who has an Account. (See Section
2.02.)
INSURANCE POLICY means, for trusteed plans, the life insurance policy or
policies issued by the Insurer as provided in Item T and Article IV. The term
Insurance Policy as it is used in this Plan is deemed to include the plural
unless the context clearly indicates the singular is meant.
INSURER means Principal Mutual Life Insurance Company and, if our Plan is
trusteed, any other insurance company or companies named by the Trustee.
INTEGRATION LEVEL means the Integration Level defined in Item P. If a Member
also participates in a Controlled Group member's plan which uses an integration
level to determine the allocation or amount of contributions, his Integration
Level shall be adjusted based upon the ratio of the Member's Pay from us to his
total pay from us and the Controlled Group member.
INVESTMENT FUND means that part of the Plan assets held under the Trust,
excluding the cash values of any Insurance Policy. (See Article VIIIA.)
If our Plan is not trusteed, Investment Fund means the total assets held under
the Annuity Contract which result from Contributions made under our Plan. The
Investment Fund shall be valued at current fair market value as of the last day
of the last calendar month ending in the Plan Year and, at the discretion of the
Insurer, may be valued more frequently. The valuation shall take into
consideration investment earnings credited, expenses charged, payments made, and
changes in the values of the assets held in the fund.
The Investment Fund shall be allocated at all times to Members. The Account of
a Member shall be credited with its share of the gains and losses of the
Investment Fund. That part of a Member's Account invested in a funding
arrangement which establishes an account or accounts for such Member thereunder
shall be credited with the gain or loss from such account or accounts. That
part of a Member's Account which is invested in other funding arrangements shall
be credited with a proportionate share of the gain or loss of such investments.
The share shall be determined by multiplying the gain or loss of the investment
by the ratio of the part of the Member's Account invested in such funding
arrangement to the total of the investment Fund invested in such funding
arrangement.
INVESTMENT MANAGER means any fiduciary (other than a Trustee or Named
Fiduciary)
(a) who has the power to manage, acquire, or dispose of any assets of the
plan;
(b) who (1) is registered as an investment adviser under the Investment
Advisers Act of 1940, or (2) is a bank, as defined in the Investment
Advisers Act of 1940, or (3) is an insurance company qualified to perform
services described in subparagraph (a) above under the laws of more than
one state; and
(c) who has acknowledged in writing being a fiduciary with respect to the
Plan.
ITEM means the specified item in the Adoption Agreement we signed.
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<PAGE> 45
LATE RETIREMENT DATE means the first day of any month which is after a Member's
Normal Retirement Date and on which retirement benefits begin. If a Member
continues to work for us after Normal Retirement Date, his Late Retirement Date
shall be the earliest first day of the month on or after he ceases to be an
Employee. An earlier or a later Retirement Date may apply if the Member so
elects. An earlier Retirement Date may apply if the Member is 70 1/2. (See
Section 5.04.)
LEASED EMPLOYEE means any person (other than an employee of the recipient) who
pursuant to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with Code Section 414(n)(6)) on a
substantially full time basis for a period of at least one year, and such
services are of a type historically performed by employees in the business
field of the recipient employer. Contributions or benefits provided a Leased
Employee by the leasing organization which are attributable to service
performed for the recipient employer shall be treated as provided by the
recipient employer.
A Leased Employee shall not be considered an employee of the recipient if:
(a) such employee is covered by a money purchase pension plan providing (1) a
nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in Code Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction agreement which are excludable
from the employee's gross income under Code Sections 125, 402(a)(8),
402(h) or 403(b), (2) immediate participation, and (3) full and immediate
vesting and
(b) Leased Employees do not constitute more than 20 percent of the recipient's
nonhighly compensated workforce.
LOAN ADMINISTRATOR means the person or positions named in Item T(b)(iii).
MATCHING CONTRIBUTIONS means matching contributions we make to fund this Plan.
(See Item O and Section 3.01.)
MAXIMUM INTEGRATION RATE means the Maximum Integration Rate defined in Item P.
MEMBER means either an Active Member or an Inactive Member.
MEMBER CONTRIBUTIONS means Voluntary Contributions and Required Contributions
made under the Prior Plan, if any, unless the context clearly indicates only
one is meant.
MONTHLY DATE means the Yearly Date and the same day of each following month
during the Plan Year which begins on that Yearly Date.
NAMED FIDUCIARY means the person named in Item G.
NET PROFITS means our current or accumulated net earnings, determined according
to generally accepted accounting practices, before any Contributions made by us
under this Plan and before any deduction for Federal or state income tax,
dividends on our stock, and capital gains or losses. If we are a nonprofit
organization under Code Section 501 (c)(3), Net Profits means excess revenues
(excess of receipts over expenditures).
NONHIGHLY COMPENSATED EMPLOYEE means an Employee of the Employer who is neither
a Highly Compensated Employee nor a Family Member.
NONVESTED ACCOUNT means the excess, if any, of a Member's Account over his
Vested Account.
NORMAL FORM means a single life annuity with installment refund.
NORMAL RETIREMENT AGE means, for a Member, the age defined in Item X.
NORMAL RETIREMENT DATE means the earliest first day of the month on or after a
Member reaches Normal Retirement Age. Retirement benefits shall begin on
Normal Retirement Date if the Member is not an Employee, has a Vested Account,
and has not elected to have retirement benefits begin later. However,
retirement benefits shall not begin before the later of age 62 or Normal
Retirement Age unless the qualified election procedures of Article VI are met.
Even if the Member is an Employee on his Normal Retirement Date, he may choose
to have retirement benefits begin on such date. An earlier Retirement Date may
apply if the Member is 70 1/2. (See Section 5.04.)
PARENTAL ABSENCE means an Employee's absence from work which begins on or after
the first Yearly Date after December 31, 1984
(a) by reason of pregnancy of the Employee,
(b) by reason of birth of a child of the Employee,
(c) by reason of the placement of a child with the Employee in connection
with adoption of such child by such Employee, or
(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
PAY means the pay defined in Item M. For any Plan Year beginning after December
31, 1988, the annual Pay of each Member taken into account for determining all
benefits provided under the Plan for any determination period shall not exceed
$200,000. This limitation shall be adjusted by the Secretary at the same time
and in the same manner as under Code Section 415(d), except that the dollar
increase in effect on January 1 of any calendar year is effective for years
beginning in such calendar year and the first adjustment to the $200,000
limitation is effected on January 1, 1990. If the Plan determines Pay on a
period of time that contains fewer than 12 calendar months, then the annual Pay
limit is an amount equal to the annual Pay limit for the calendar year in which
the pay period begins multiplied by the ratio obtained by dividing the number
of full months in the period by 12.
In determining the Pay of a Member for purposes of this limitation, the rules
of Code Section 414(c)(6) shall apply, except that in applying such rules, the
term "family" shall include only the spouse of the Member and any lineal
descendants of the Member who have not attained age 19 before the close of the
Plan Year. If, as a result of the application of such rules the adjusted
$200,000 limitation is exceeded, then (except for purposes of determining the
portion of Pay up to the Integration Level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Pay as determined under this definition
prior to the appliceition of this limitation.
If Pay for any prior Plan Year is taken into account in determining an
Employee's contributions or benefits for the current year, the Pay for such
prior year is subject to the applicable annual Pay limit in effect for that
prior year. For this purpose, for years
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<PAGE> 46
beginning before January 1, 1990, the applicable annual Pay limit is S200,000.
Pay means, for a Leased Employee, Pay for the services the Leased Employee
performs for us, determined in the same manner as the Pay of Employees who are
not Leased Employees, regardless of whether such Pay is received directly from
us or from the leasing organization.
PAY YEAR means the period defined in Item M of the Adoption Agreement - Plus.
PERIOD OF MILITARY DUTY means, for an Employee
(a) who served as a member of the armed forces of the United States, and
(b) who was reemployed by us at a time when the Employee had a right to
reemployment in accordance with seniority rights as protected under
Section 2021 through 2026 of Title 38 of the United States Code,
the period of time from the date the Employee was first absent from work for us
because of such military duty to the date the Employee was reemployed.
PERIOD OF SERVICE means a period of time beginning on an Employee's Hire or
Rehire Date, whichever applies, and ending on his Severance Date.
PERIOD OF SEVERANCE means a period beginning on an Employee's Severance Date
and ending on the date he again performs an Hour of Service.
A one-year Period of Severance means a Period of Severance of 12 consecutive
months.
Solely for purposes of determining whether a one-year Period of Severance has
occurred for entry or vesting purposes, the 12-consecutive month period
beginning on the first anniversary of the first date of a Parental Absence
shall not be a one-year Period of Severance.
PLAN means our retirement plan set forth in the attached Adoption Agreement and
this document, including any later amendments to them. If this Plan is
trusteed, the term Plan shall include the term Trust, unless the context
clearly indicates otherwise.
PLAN ADMINISTRATOR means the person named in Item H.
PLAN YEAR means a 12-consecutive month period beginning on a Yearly Date and
ending on the day before the next Yearly Date. If the Yearly Date changes, the
change will result in a short Plan Year. If a service period or the Pay Year
is based on the Plan Year, corresponding years before the Effective Date shall
be included.
PREDECESSOR means a Predecessor designated in Item 1.
PRIOR PLAN means a retirement plan of ours or of a Predecessor which was
qualifiable under Code Section 401 (a), and of which this Plan is a
restatement, as specified in the initial Adoption Agreement. If, because of a
merger, consolidation or transfer of assets or liabilities, this Plan is a
continuation of a plan which was qualifiable under Code Section 401(a), that
plan shall be a Prior Plan. If, with the approval of any governmental agency
to which it is subject, the assets of a terminated plan of ours which was
qualified under Code Section 401 (a) are transferred to this Plan, that
terminated plan shall be deemed to be the Prior Plan.
PRIOR PLAN ASSETS means the assets accumulated under the Prior Plan which have
not been distributed and which are held under this Plan.
QUALIFIED JOINT AND SURVIVOR FORM means, for a Member who has a spouse, a
survivorship life annuity with installment refund, where the Contingent
Annuitant is the Member's spouse and the survivorship percentage is 50%. A
former spouse will be treated as the spouse to the extent provided under a
qualified domestic relations order as described in Code Section 414(p). If a
Member does not have a spouse, the Qualified Joint and Survivor Form means the
Normal Form.
The amount of the benefit payable under the Qualified Joint and Survivor Form
shall be the amount of benefit which may be provided by the Member's Vested
Account.
QUALIFIED MATCHING CONTRIBUTIONS means Matching Contributions which are 100%
vested when made and which (including investment gain) may not be distributed
before the Member's separation from service, death, the date the Member becomes
Totally Disabled, before the events described in the last paragraph of Section
5.04, or before termination of Plan as described in Article VII. Our Matching
Contributions shall be Qualified Matching Contributions if so elected in Item
O.
QUALIFIED NONELECTIVE CONTRIBUTIONS means Employer Contributions which are 100%.
vested when made and which (including investment gain) may not be distributed
before the Member's separation from service, death, the date the Member becomes
Totally Disabled, before the events described in the last paragraph of Section
5.04, or before termination of the Plan as described in Article VII. (See Item P
of the Adoption Agreement - Plus and Section 3.01.)
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY means a life annuity with installment
refund payable to the surviving spouse of a Member who dies before his Annuity
Starting Date. A former spouse will be treated as the surviving spouse to the
extent provided under a qualified domestic relations order as described in Code
Section 414(p).
QUARTERLY DATE means each Yearly Date and the third, sixth and ninth Monthly
Date after each Yearly Date which is within the same Plan Year.
REENTRY DATE means the date a former Active Member reenters the Plan. (See
Section 2.01.)
REHIRE DATE means the date an Employee first performs an Hour of Service
following an Entry Break, when the hours method is used, or a Period of
Severance, when the elapsed time method is used.
REQUIRED CONTRIBUTIONS means nondeductible contributions required from a Member
in order to participate in the Prior Plan.
RESTATEMENT DATE means the date our retirement plan was last restated. (See
Item A of the initial Adoption Agreement.)
RETIREMENT DATE means the date a retirement benefit will begin and is a
Member's Early, Normal or Late Retirement Date, as the case may be.
ROLLOVER CONTRIBUTIONS means the Rollover Contributions which are made by or
for a Member. (See Section 3.03.)
SEMI-YEARLY Date means each Yearly Date and the sixth Monthly Date after each
Yearly Date which is within the same Plan Year.
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Severance Date means the earlier of
(a) the date on which an Employee quits, retires, dies or is discharged, or
(b) the first anniversary of the date an Employee begins a one year absence
from service (with or without pay). This absence may be the result of any
combination of vacation, holiday, sickness, disability, leave of absence,
or layoff.
Solely to determine whether a one-year Period of Severance has occurred for
entry or vesting purposes for an Employee who is absent from service beyond the
first anniversary of the first day of a Parental Absence, Severance Date is the
second anniversary of the first day of the Parental Absence. The period
between the first and second anniversaries of the first day of the Parental
Absence is not a Period of Service and is not a Period of Severance.
TAXABLE WAGE BASE means the maximum amount of earnings which may be considered
wages for a year under Code Section 3121 (a)(i).
TEFRA means the Tax Equity and Fiscal Responsibility Act of 1982.
TEFRA COMPLIANCE DATE means the date our Plan is to comply with the provisions
of TEFRA. The TEFRA Compliance Date as used in this Plan is,
(a) for purposes of determining the Maximum Permissible Amount and
contribution limitations of Section 3.06,
(1) if this Plan was in effect on July 1, 1982, the first day of the
first Limitation Year which begins after December 31, 1982, or
(2) if this Plan was not in effect on July 1, 1982, the first day of the
first Limitation Year which ends after July 1, 1982.
(b) for all other purposes, the first Yearly Date after December 31, 1983.
TOTALLY DISABLED means that a Member is disabled, as a result of sickness or
injury, to the extent that he is prevented from engaging in any substantial
gainful activity, and is eligible for and receives a disability benefit under
Title II of the Federal Social Security Act.
If our Employees are not covered under Title II of the Federal Social Security
Act, Totally Disabled means that a Member is disabled as a result of sickness or
injury, to the extent that he is completely prevented from performing any work,
engaging in any occupation for wage or profit and has been continuously disabled
for six months. Initial written proof that the disability exists and has
continued for at least six months must be furnished to the Plan Administrator by
the Member within one year after the date the disability begins. The Plan
Administrator, upon receipt of any notice of proof of a Participant's total
disability, shall have the right and opportunity to have physician it designates
examine the Member when and as often as it may reasonably require, but not more
than once each year after the disability has continued uninterruptedly for at
least two years beyond the date of furnishing the first, proof.
TRUST means, foe trusteed plans, the Agreement of Trust set out in Article
VIIIA.
TRUST FUND means, for trusteed plans, the total funds held under the Trust as
provided in Article VIIIA.
TRUSTEE means, for trusteed plans, the party or parties named in Item T. The
term Trustee as it is used in this Plan shall include the plural unless the
context clearly indicates the singular is meant.
VESTED ACCOUNT means, on any date, the vested part of a Member's Account
(including the cash values of any insurance coverage on his life under this
Plan). If the Member's Vesting Percentage is 100%, the Vested Account equals
his Account. If the Member's Vesting Percentage is not 100%, the Vested
Account equals the sum of (a) and (b) below:
(a) The part of the Member's Account resulting from vested Employer
Contributions made before any prior Forfeiture Date, and from Member
Contributions and Rollover Contributions. The Member is fully (100%)
vested in this part of his Account.
(b) The balance of the Member's Account in excess of the amount in (a) above
multiplied by his Vesting Percentage.
If the Member has withdrawn any part of his Account resulting from our
Contributions, other than vested Employer Contributions included in (a)
above, the amount determined under this subparagraph (b) shall be equal to
P(AB + D) - D as defined below:
P The Member's Vesting Percentage.
AB the balance of the Member's Account in excess of the amount in (a)
above.
D The amount of withdrawal resulting from our Contributions, other than
our vested Contributions included in (a) above.
VESTING BREAK means, when the elapsed time method is used, a one-year Period of
Severance. An Employee incurs a Vesting Break on the last day of a one-year
Period of Severance.
When the hours method is used, Vesting Break is defined in Item V. However, if
the Adoption Agreement - Plus is not used, Vesting Break means a Vesting
Service Period in which an Employee does not have more than one-half of the
Hours of Service required in Item V for a year of Vesting Service. An Employee
incurs a Vesting Break on the last day of the Vesting Service Period in which
he has a Vesting Break.
VESTING PERCENTAGE means the Vesting Percentage of A Member determined under
Item U. IF the computation of Vesting Percentage is changed (whether directly
or indirectly), a Member's Vesting Percentage as of the day before the change
shall not be reduced due to the change. Indirect changes include, but are not
limited to, changes in Early Retirement Date requirements or the method of
crediting Vesting Service. The provisions of Section 9.01 regarding changes in
the computation of Vesting Percentage shall apply.
VESTING SERVICE means an Employee's service determined under Item V. Vesting
Service is subject to the modifications selected under that item. Vesting
Service shall include service with a Controlled Group member while we are both
members of the Controlled Group.
If, under Item V(4), Vesting Service is determined under the Prior Plan
provisions, service before the date the Prior Plan became subject to ERISA may
be disregarded if such service would have been disregarded under the Prior Plan
break in service rules as in effect on the day before such date.
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Vesting Service shall include a Period of Military Duty. If the elapsed time
method is used, the entire Period of Military Duty shall be included to the
extent it has not already been counted as Vesting Service. If the hours method
is used, an Hour of Service shall be credited (without regard to the 501 Hours
of Service limitation) for each hour the Employee would normally have been
scheduled to work for us during such Period of Military Duty, to the extent
such hour has not already been credited as Vesting Service.
If the elapsed time method is used and the Employee has more than one countable
Period of Service or if all or a part of a Period of Service is not counted,
Vesting Service shall be determined by adjusting his Hire Date so that the
Employee has one continuous period of Vesting Service equal to the total of all
his countable Periods of Service. This period of Vesting Service shall be
expressed as whole years (on the basis that 365 days equal one year) and days.
If the elapsed time method is used, Vesting Service shall include a Period of
Severance (service spanning rule) if
(a) the Period of Severance immediately follows a period during which an
Employee is not absent from work and ends within twelve months, or
(b) the Period of Severance immediately follows a period during which an
Employee is absent from work for any reason other than quitting, being
discharged, or retiring (such as a leave of absence or layoff) and ends
within twelve months of the date he was first absent.
If the Prior Plan applied the rule of parity before the first Yearly Date in
1985, an Employee's Vesting Service, accumulated before a Vesting Break
which occurred before that date, shall be excluded according to the Prior Plan
provisions if (a) his Vesting Percentage is zero, and (b) his latest period of
consecutive Vesting Breaks equals or exceeds his prior Vesting Service
(disregarding any Vesting Service that was excluded because of a previous
period of Vesting Breaks).
For a Member who is not credited with an Hour of Service on or after the first
Yearly Date in 1985, Vesting Service accrued before such date and before an age
greater than 18 (before the beginning of the Vesting Service Period in which
he attained that age, when the hours method is used) shall be excluded if the
Prior Plan excluded such service.
If the method of crediting Vesting Service changes, the provisions of Sections
9.01 and 9.12 shall apply.
VESTING SERVICE PERIOD means the period defined in Item V. However, if the
Adoption Agreement - Plus is not used, Vesting Service Period means a
12-consecutive month period ending on the last day of the Plan Year.
VOLUNTARY CONTRIBUTIONS means the Contributions by a Member that are not
required as a condition of employment or membership or for obtaining additional
benefits from our Contributions. (See Item S and Section 3.02.)
YEARLY DATE means the Yearly Date defined in Item E.
YEARS OF SERVICE means an Employee's Vesting Service as defined in Item V,
disregarding any modifications which exclude service.
If Vesting Service is not defined in Item V, then for purposes of determining
Years of Service, Vesting Service shall be deemed to be determined using the
elapsed time method.
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ARTICLE II
MEMBERSHIP
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SECTION 2.01 - ACTIVE MEMBERSHIP.
An Employee shall first become an Active Member (begin active participation in
the Plan) on the earliest date specified in Item L on which he is an Eligible
Employee and has met all of the entry requirements selected in Item K. This
date is the Member's Entry Date.
Each Employee who was an active member under the Prior Plan on the day before
the Restatement Date shall become an Active Member under this Plan on the
Restatement Date if he is still an Eligible Employee. The Member's entry date
under the Prior Plan is deemed to be his Entry Date under this Plan.
If a person has been an Eligible Employee who has met all of the entry
requirements selected in Item K but is not an Eligible Employee on the date
which would have been his Entry Date, he shall become an Active Member on the
date he again becomes an Eligible Employee. This date is the Member's Entry
Date.
A former Active Member shall reenter the Plan as an Active Member on the date
he again performs an Hour of Service as an Eligible Employee. This date is the
Member's Reentry Date. An Inactive Member ceases to be an Inactive Member on
his Reentry Date.
A Member's benefits under this Plan shall not be duplicated because of more
than one period as an Active Member.
SECTION 2.02 - CEASING ACTIVE MEMBERSHIP.
An Active Member shall become an Inactive Member (stop accruing benefits under
the Plan) on the earlier of the following:
(a) The date the Member ceases to be an Eligible Employee (his Retirement
Date if he ceases to be an Eligible Employee within one month of his
Retirement Date).
(b) The effective date of complete termination of the Plan under Article VII.
An Employee or former Employee who was an inactive member under the Prior Plan
on the day before the Restatement Date shall become an Inactive Member under
this Plan on the Restatement Date. Eligibility for any benefits payable to the
Member or on his behalf and the amount of the benefits shall be determined
according to the provisions of the Prior Plan.
A Member shall cease to be a Member on the date he is no longer an Eligible
Employee and his Account is zero.
SECTION 2.03 - ADOPTING EMPLOYERS - SEPARATE PLANS.
If Item Z(1)(a)(i) of the Adoption Agreement - Plus is selected, each Adopting
Employer listed in Item Z maintains this Plan as a separate and distinct plan
for the exclusive benefit of its employees. If Item Z(1)(a)(ii) of the
Adoption Agreement - Plus is selected, each Adopting Employer identified in
Item Z(1)(a)(ii) maintains this Plan as a separate and distinct plan for the
exclusive benefit of its employees. An Adopting Employer's adoption of the
Plan shall be in writing. If the Adopting Employer
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did not maintain a Prior Plan, the date of adoption specified in Item Z is the
Effective Date of its Plan. This date is the first Yearly Date for the
Adopting Employer's Plan and shall be the Entry Date for any of its employees
who have met the requirements in Section 2.01 as of that date. If the Adopting
Employer did maintain a Prior Plan, the date of adoption is the Restatement
Date of its Plan.
An Adopting Employer shall be deemed to be the Employer but only with respect
to its Plan and for those Employees who are on its payroll. In interpreting
the Adoption Agreement and this document as to an Adopting Employer, the terms
Employer, we, us, and ours shall be deemed to refer to the Adopting Employer
and the Adopting Employer's fiscal year is deemed to be the Fiscal Year. The
primary Employer in Item B is deemed to be an Adopting Employer for purposes of
the following two paragraphs.
The Contributions made by an Adopting Employer, and Forfeitures arising from
such Contributions, shall not be used to fund the benefits for Employees of any
other Adopting Employer. Service with an Adopting Employer shall be included
as service with all other Adopting Employers and transfer of employment,
without interruption, between Adopting Employers shall not be an interruption
of service. It an Active Member ceases to be an Employee of an Adopting
Employer on other than the last day of the Plan Year and immediately becomes an
Employee of another Adopting Employer, he shall be an Active Member under the
first Adopting Employer's Plan until the next annual Contribution, if any, is
due, regardless of whether he has also become an Active Member in the other
Adopting Employer's Plan. Both Adopting Employers' Contributions on his behalf
will be proportionately reduced on that date based upon his period of
employment with and Pay from each.
If an integrated allocation formula is in effect and a Member received Pay from
more than one Adopting Employer during a Pay Year, the Integration Level used
to determine the allocation of an Adopting Employer's Contributions is equal to
his Integration Level multiplied by the ratio of (a) the Member's Pay from the
Adopting Employer for that year to (b) the Member's Pay from all Adopting
Employers for that year.
Any amendment to the Plan by the primary Employer in Item B of the Adoption
Agreement shall be deemed to be an amendment to each Adopting Employer's Plan.
Without the consent of any other Adopting Employer, an Adopting Employer may
restate its Plan in the form of a separate document at any time and, in that
event, cease to be an Adopting Employer. An employer shall not be an Adopting
Employer if it ceases to be controlled by us or affiliated with us. Such an
employer may continue its Plan by restating it in the form of a separate
document. This Plan shall be amended to delete a former Adopting Employer from
Item Z of the Adoption Agreement.
If the Plan of the Adopting Employer terminates, the provisions of Article VII
shall apply to its Plan.
SECTION 2.04 - ADOPTING EMPLOYERS - SINGLE PLAN.
If the Adoption Agreement - Plus is not used, each Adopting Employer listed in
Item Y and each Controlled Group member, whether or not listed in that item,
shall be an Adopting Employer who participates with us in this Plan. If Item
Z(1)(b)(i) of the Adoption Agreement - Plus is selected, each Adopting Employer
listed in Item Z participates with us in this Plan. If Item Z(1)(b)(ii) of the
Adoption Agreement - Plus is selected, each Adopting Employer identified in
Item Z(1)(b)(ii) participates with us in this Plan. An Adopting Employer's
agreement to participate in this Plan shall be in writing. Employees of
Adopting Employers who do not make such written agreement shall be eligible
to become Members and shall be entitled to Contributions in the same manner as
if their employers had agreed to participate in the Plan. An Adopting Employer
has no rights or privileges under this Plan.
If the Adopting Employer did not maintain a Prior Plan, the date of
participation in Item Z (Item Y) shall be the Entry Date for any of its
employees who have met the requirements in Section 2.01 as of that date.
Service with and pay from an Adopting Employer shall be included as service
with and pay from us. Transfer of employment, without interruption, between an
Adopting Employer and another Adopting Employer or us shall not be considered
an interruption of service. Our Fiscal Year in Item F shall be the Fiscal Year
used in interpreting this Plan for Adopting Employers.
Contributions made by an Adopting Employer shall be treated as Contributions
made by us. Forfeitures arising from those Contributions shall be used for the
benefit of all Members.
An employer shall not be an Adopting Employer if it ceases to be controlled by
us or affiliated with us. Such an employer may continue a retirement plan for
its employees in the form of a separate document. This Plan shall be amended
to delete a former Adopting Employer from the list of Adopting Employers in the
Adoption Agreement.
If an employer ceases to be an Adopting Employer and does not continue a
retirement plan for the benefit of its employees, partial termination may
result and the provisions of Article VII apply.
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ARTICLE III
CONTRIBUTIONS
- --------------------------------------------------------------------------------
SECTION 3.01 - EMPLOYER CONTRIBUTIONS.
Our Contributions are conditioned on initial qualification of the
Plan. If the Plan is denied initial qualification, the provisions of
Section 9.14 shall apply.
The amount of our Contributions is specified in the Adoption Agreement. Our
Contributions are made from Net Profits unless otherwise specified in Item Q.
Notwithstanding the foregoing, the Plan shall continue to be designed to
qualify as a profit sharing plan for purposes of Code Sections 401(a), 402,
412, and 417.
No Member shall be permitted to have Elective Deferral Contributions, as
defined in Section 3.07, made under this Plan, or any other qualified plan
maintained by us, during any taxable year, in excess of the dollar limitation
contained in Code Section 402(g) in effect at the beginning of such taxable
year.
If Matching Contributions, Additional Contributions or Qualified Nonelective
Contributions under Item P(1)(a) of the Adoption Agreement - Plus are made from
Net Profits, Item Q, and our Net Profits are not sufficient to provide such
Contributions, such Contributions shall be proportionately reduced.
Our Contributions are allocated according to the provisions of Section 3.05.
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<PAGE> 50
If Item Q(2)(a) is selected, we may make all or part of our annual Contributions
before the end of the Plan Year. Such Contributions shall be allocated when
made in a manner which approximates the allocation which would otherwise have
been made as of the last day of the Plan Year. Succeeding allocations shall
take into account amounts previously allocated for the Plan Year. The
percentage of our Contributions allocated to the Member for the Plan Year shall
be the same percentage which would have been allocated to him if the entire
allocation had been made as of the last day of the Plan Year.
We shall pay to the Insurer or Trustee our Contributions used to determine the
Actual Deferral Percentage, as defined in Section 3.07, (Elective Deferral
Contributions, Qualified Nonelective Contributions, and Qualified Matching
Contributions) to the Plan for each Plan Year not later than the end of the
twelve-month period immediately following the Plan Year for which they are
deemed to be paid. Any such Contributions accumulated through payroll
deductions shall be paid within 90 days of the date withheld or the date it is
first reasonably practical for us to do so, if earlier.
A portion of the Plan assets resulting from our Contributions (but not more
than the original amount of those Contributions) may be returned if our
Contributions are made because of a mistake of fact or are more than the amount
deductible under Code Section 404 (excluding any amount which is not deductible
because the Plan is disqualified). The amount involved must be returned to us
within one year after the date our Contributions are made by mistake of fact or
the date the deduction is disallowed, whichever applies. Except as provided
under this paragraph and Articles VII and IX, the assets of the Plan shall
never be used for our benefit and are held for the exclusive purpose of
providing benefits to Members and their Beneficiaries and for defraying
reasonable expenses of administering the Plan.
Prior Plan Assets which result from contributions made by us shall be treated
in the same manner as Employer Contributions made under this Plan. They shall
be treated in the same manner as Employer Contributions made under this Plan
before a Forfeiture Date if the Prior Plan Assets are transferred from a
terminated plan.
SECTION 3.02 - VOLUNTARY CONTRIBUTIONS BY MEMBERS.
If permitted under Item S, an Active Member may make Voluntary Contributions.
Voluntary Contributions shall be made according to nondiscriminatory procedures
and limitations set up by the Plan Administrator.
A Member's membership in the Plan is not affected by stopping or changing
Voluntary Contributions. An Active Member's request to start, change, or stop
Voluntary Contributions must be in writing on a form furnished for that
purpose. The form must be delivered to the Plan Administrator before the date
the Member is to start, change, or stop Voluntary Contributions.
The part of the Member's Account resulting from Voluntary Contributions is
fully (100%) vested and nonforfeitable at all times.
Prior Plan Assets which result from voluntary contributions made by the Member
shall be treated in the same manner as Voluntary Contributions made under this
Plan. These Prior Plan Assets may include deductible Voluntary Contributions
which were made according to the provisions of the Prior Plan.
SECTION 3.03 - ROLLOVER CONTRIBUTIONS.
With our consent, a Rollover Contribution may be made by or for an Eligible
Employee if the following conditions are met:
(a) The Contribution is a rollover contribution which the Code permits to be
transferred to a plan that meets the requirements of Code Section 401(a).
(b) If the Contribution is made by the Eligible Employee, it is made within
sixty days after he receives the distribution.
(c) The Eligible Employee furnishes evidence satisfactory to the Plan
Administrator that the proposed transfer is in fact a rollover
contribution which meets conditions (a) and (b) above.
The Rollover Contribution may be made by the Eligible Employee or the Eligible
Employee may direct the trustee or named fiduciary of another plan to
transfer the funds which would otherwise be a Rollover Contribution directly to
this Plan. Such transferred funds shall be called a Rollover Contribution.
The Contribution shall be made according to procedures set up by the Plan
Administrator.
If an Eligible Employee participated in a retirement plan which met the
requirements of Code Section 401(a), with our consent, the trustee or named
fiduciary of that plan may transfer funds which could not have been a Rollover
Contribution to this Plan on behalf of the Eligible Employee. The transferred
funds shall be called a Rollover Contribution. If such Rollover Contributions
were made for a period when the Eligible Employee was a five percent owner of
the employer that maintained the plan, the Rollover Contributions shall be
treated in the same manner as if they were Contributions made under this Plan
for a period when he was a five-percent owner of us.
If the Eligible Employee is not an Active Member when the Rollover Contribution
is made, he shall be deemed to be an Active Member only for the purpose of
investment and distribution of the Rollover Contribution. Our Contributions
shall not be made for or allocated to the Eligible Employee and he may not make
Member Contributions, until the time he meets all of the requirements to become
an Active Member.
Rollover Contributions made by or for an Eligible Employee shall be credited to
his Account. The part of the Member's Account resulting from Rollover
Contributions is fully (100%) vested and nonforfeitable at all times. A
separate accounting record shall be maintained for that part of his Rollover
Contribution consisting of voluntary contributions which were deducted from the
Member's gross income for Federal income tax purposes.
Prior Plan Assets which result from the Member's rollover contributions shall
be treated in the same manner as Rollover Contributions made under this Plan.
SECTION 3.04 - FORFEITURES AND RESTORATION.
The Nonvested Account of a Member shall be forfeited as of the earlier of the
following: the date the Member dies, if prior to such date he had ceased to be
an Employee; or his Forfeiture Date. All, or part of a Member's Nonvested
Account will be forfeited if, after he ceases to be an Employee, he receives a
distribution of his entire Vested Account or a distribution of his Vested
Account derived from our Contributions which were not 100% vested when made
according to the provisions of Section 5.03 or Section 9.10. If a Member's
Vested Account is zero on the date he ceases to be an Employee, he shall be
deemed to
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have received a distribution of his entire Vested Account on such date. The
forfeiture will occur as of the date he receives the distribution or on the
date such provision became effective, if later. If he receives a distribution
of his entire Vested Account, his entire Nonvested Account will be forfeited.
If he receives a distribution of his Vested Account from our Contributions
which were not 100% vested when made, but less than his entire Vested
Account, the amount to be forfeited will be determined by multiplying his
Nonvested Account by a fraction. The numerator of the fraction is the amount of
the distribution derived from our Contributions which were not 100% vested
when made and the denominator of the fraction is his entire Vested Account
derived from such Contributions on the date of the distribution.
If the Adoption Agreement - Plus is used, Forfeitures shall be allocated as of
the last day of the Plan Year in which such Forfeitures arise or applied to
reduce the earliest Employer Contribution made after the Forfeitures are
determined as provided in Item P(4). Forfeitures shall be determined at least
once during each taxable year of ours. If the Adoption Agreement - Plus is not
used and Item P(2) is selected, Forfeitures shall be allocated with our
Discretionary Contributions and deemed to be Discretionary Contributions as of
the last day of the Plan Year in which such Forfeitures arise. If the Adoption
Agreement - Plus is not used and Item P(2) is not selected, Forfeitures shall
be applied to reduce the earliest Employer Contribution made after the
Forfeitures are determined. Forfeitures of Matching Contributions which relate
to excess amounts shall be applied as provided in Section 3.07.
Forfeitures may first be applied to pay expenses under the Plan which would
otherwise be paid by us before they are applied or allocated as provided above.
Upon their application or allocation, such Forfeitures shall be deemed to be
Employer Contributions.
If a Member again becomes an Eligible Employee after receiving a distribution
which caused his Nonvested Account to be forfeited, he shall have the right to
repay to the Plan the entire amount of the distribution he received (excluding
any amount of such distribution resulting from Contributions which were 100%
vested when made). The repayment must be made before the earlier of the date
five years after the date he again becomes an Eligible Employee or the end of
the first period of five consecutive Vesting Breaks which begin after the date
of the distribution.
If the Member makes the repayment provided above, the Plan Administrator shall
restore to his Account an amount equal to his Nonvested Account which was
forfeited on the date of distribution, unadjusted for any investment gains or
losses. If the Member was deemed to have received a distribution because his
Vested Account was zero or the Plan did not have the repayment provisions in
effect on the date the distribution was made and he again performs an Hour of
Service as an Eligible Employee within the repayment period, the Plan
Administrator shall restore the Member's Account as if he had made a required
repayment on the date he performed such Hour of Service. Restoration of the
Member's Account shall include restoration of all Code Section 411(d)(6)
protected benefits with respect to the restored Account, according to
applicable Treasury regulations. Provided, however, the Plan Administrator
shall not restore the Nonvested Account if a Forfeiture Date has occurred
after the date of the distribution and on or before the date of repayment and
that Forfeiture would result in a complete forfeiture of the amount the Plan
Administrator would otherwise restore.
The Plan Administrator shall restore the Member's Account by the close of the
Plan Year following the Plan Year in which repayment is made.
SECTION 3.05 - ALLOCATION.
Our Contributions which are not subject to the requirements of Item Q(2) shall
be allocated to the Members for whom they were made and credited to the
Members' Accounts. Our Contributions which are subject to the requirements of
Item Q(2) plus any Forfeitures released for allocation for the Plan Year, shall
be allocated among all persons meeting the requirements in Items P and Q. The
amount allocated to such a person shall be determined under the allocation
formula selected in the Adoption Agreement and Article X.
In determining the amount of our Contributions allocated to a Member who is a
Leased Employee, contributions and benefits provided by the leasing
organization which are attributable to services such Leased Employee performs
for us shall be treated as provided by us. Those contributions or benefits
shall not be duplicated under this Plan.
SECTION 3.06 - CONTRIBUTION LIMITATION.
(a) For the purpose of determining the contribution limitation set forth in
this section, the following terms are defined:
ADDITION ADDITIONS mean the sum of the following amounts credited to a
Member's account for the Limitation Year:
(1) employer contributions,
(2) employee contributions,
(3) forfeitures, and
(4) amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Code Section 415(i)(2), which is part of a
pension or annuity plan maintained by the Employer.
These amounts are treated as Annual Additions to a defined contribution
plan. Also amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits, allocated to the
separate account of a key employee, as defined in Code Section 419e(d)(3),
under a welfare benefit fund, as defined in Code Section 419(e),
maintained by the Employer are treated as Annual Additions to a defined
contribution plan.
For this purpose, any Excess Amount applied under (d) and (j) below in the
Limitation Year to reduce Employer Contributions will be considered Annual
Additions for such Limitation Year.
COMPENSATION means one of the following as elected in Item M for purposes
of this section and as defined below:
(1) Information required to be reported under Code Sections 6041 and 6051
(Wages, Tips and Other Compensation Box on Form W-2). Compensation is
defined as a Member's wages within the meaning of Code Section 3401(a)
and all other payments of compensation to an Employee by us (in the
course of our trade or business), for which we are required to
furnish the Employee a written statement under Code Section 6041(d)
and 6051(a)(3), which is actually paid or made available by us for a
specified period.
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Compensation is determined without regard to any rules under
Code Section 3401(a) that limit the remuneration included in wages
based on the nature or location of the employment or services
performed (such as the exception for agricultural labor in Code
Section 3401(a)(2)).
(2) Code Section 3401(a) wages (Wages for purposes of income
tax withholding). Compensation is defined as a Member's wages within
the meaning of Code Section 3401(a), for the purpose of income tax
withholding at the source, which is actually paid or made available
by us for a specified period. Compensation is determined without
regard to any rules under Code Section 3401(a) that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
(3) 415 safe-harbor compensation. Compensation is defined as
a Member's wages, salaries, and fees for professional service and
other amounts received (without regard to whether or not an amount is
paid in cash) for personal service actually rendered in the course of
employment with the employer maintaining the plan to the extent that
the amounts are includible in gross income (including, but not
limited to, commissions paid salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements or other
expense allowances under a nonaccountable plan (as described in
Section 1.62-2(c) of the regulations)), and excluding the following:
(i) Employer contributions to a plan of deferred compensation
to the extent contributions are not included in the gross
income of the Employee for the taxable year in which
contributed, or employer contributions under a simplified
employee pension plan to the extent such contributions are
deductible by the Employee, or any distributions from a plan of
deferred compensation.
(ii) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by an
Employee becomes freely transferable or is no longer subject to
a substantial risk of forfeiture.
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option.
(iv) Other amounts which receive special tax benefits, or
contributions made by the employer (whether or not
under a salary reduction agreement) towards the purchase of an
annuity contract described in Code Section 403(b) (whether or
not the contributions are actually excludible from the gross
income of the Employee).
For any self-employed individual Compensation will mean earned income.
For Limitation Years beginning after December 31, 1991, for purposes of
applying the limitations of this section,
Compensation for a Limitation Year is the Compensation actually paid or made
available during such Limitation Year.
For any Limitation Year beginning after December 31, 1988, only the first
$200,000 (multiplied by the Adjustment Factor) of the Member's Compensation
shall be taken into account under the Plan.
DEFINED BENEFIT PLAN FRACTION means a fraction, the numerator of which is the
sum of the Member's Projected Annual Benefits under all the defined benefit
plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the dollar limitation
determined for the Limitation Year under Code Sections 415 (b) and (d) or 140
percent of the Highest Average Compensation, including any adjustments under
Code Section 415(b).
Notwithstanding the above, if the Member was a member as of the first day of
the first Limitation Year beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Employer which were in existence on May
6, 1986, the denominator of this fraction will not be less than 125 percent of
the sum of the annual benefits under such plans which the Member had accrued as
of the close of the last Limitation Year beginning before January 1, 1987,
disregarding any changes in the terms and conditions of the plan after May
5, 1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code Section
415 for all Limitation Years beginning before January 1, 1987.
DEFINED CONTRIBUTION DOLLAR LIMITATION means $30,000 or if greater, one-fourth
of the defined benefit dollar limitation set forth in Code Section 415(b)(1) as
in effect for the Limitation Year.
DEFINED CONTRIBUTION PLAN FRACTION means a fraction, the numerator of which is
the sum of the Annual Additions to the Member's account under all the defined
contribution plans (whether or not terminated) maintained by the Employer for
the current and all prior Limitation Years (including the Annual Additions
attributable to the Member's nondeductible employee contributions to all
defined benefit plans, whether or not terminated, maintained by the Employer,
and the Annual Additions attributable to all welfare benefit funds, as defined
in Code Section 419(e), and individual medical accounts, as defined in Code
Section 415(1)(2), maintained by the Employer), and the denominator of which is
the sum of the maximum aggregate amounts for the current and all prior
Limitation Years of service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The maximum aggregate
amount in any Limitation Year is the lesser of 125 percent of the dollar
limitation determined under Code Section 415(b) and (d) in effect under Code
Section 415(c)(1)(A) of the Code or 35 percent of the Member's Compensation
for such year.
If the Member was a member as of the end of the first Limitation Year beginning
after December 31, 1986, in one or more defined contribution plans maintained
by the Employer which were in existence on May 6, 1986, the numerator of this
fraction shall be adjusted if the sum of this fraction and the Defined Benefit
Plan Fraction would otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of (1) the
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<PAGE> 53
excess of the sum of the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they would be computed as
of the end of the last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the plan made after May
5, 1986, but using the Code Section 415 limitations applicable to the first
Limitation Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before January 1, 1987,
shall not be recomputed to treat all employee contributions as Annual
Additions.
EMPLOYER means the employer that adopts this Plan and all members of a
controlled group of corporations (as defined in Code Section 414(b) as modified
by Code Section 415(h)), all commonly controlled trades or businesses (as
defined in Code Section 414(c) as modified by Code Section 415(h)) or
affiliated service groups (as defined in Code Section 414(m)) of which the
adopting employer is a part, and any other entity required to be aggregated
with the employer pursuant to regulations under Code Section 414(o).
EXCESS AMOUNT means the excess or the Member's Annual Additions for the
Limitation Year over the Maximum Permissible Amount.
HIGHEST AVERAGE COMPENSATION means the average Compensation for the three
consecutive Years of Service (see Section 1.02) with the Employer that produces
the highest average.
LIMITATION YEAR means a calendar year or the 12 consecutive month period
elected by the Employer in Item R. If the Limitation Year ends on the last day
of the Fiscal Year and the Fiscal Year is a 52-53 week period, then the
Limitation Year shall be such period. All qualified plans maintained by the
Employer must use the same Limitation Year. If the Limitation Year is amended
to a different 12-consecutive month period, the new Limitation Year must begin
on a date within the Limitation Year in which the amendment is made.
MASTER OR PROTOTYPE PLAN means a plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
MAXIMUM PERMISSIBLE AMOUNT means the maximum Annual Addition that may be
contributed or allocated to a Member's Account under the Plan for any
Limitation Year. This amount shall not exceed the lesser of:
(1) the Defined Contribution Dollar Limitation, or
(2) 25 percent of the Member's Compensation for the Limitation Year.
The compensation limitation referred to in (2) shall not apply to any
contribution for medical benefits (within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)) which is otherwise treated as an Annual Addition under
Code Section 415(l)(1) or 419A(d)(2).
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive month period, the Maximum
Permissible Amount will not exceed the Defined Contribution Dollar Limitation
multiplied by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
PROJECTED ANNUAL BENEFIT means the annual retirement benefit (adjusted to
an actuarially equivalent straight life annuity if such benefit is expressed
in a form other than a straight life annuity or qualified joint and survivor
form) to which the Member would be entitled under the terms of the plan
assuming:
(1) the Member will continue employment until normal retirement age
under the plan (or current age, if later), and
(2) the Member's Compensation for the current Limitation Year and all
other relevant factor used to determine benefits under the plan will
remain constant for all future Limitation Years.
(b) If the Member does not participate in, and has never participated in
another qualified plan maintained by the Employer or a welfare benefit
fund, as defined in Code Section 419(e) maintained by the Employer, or an
individual medical account, as defined in Code Section 415(l)(2) of the
Code, maintained by the Employer, which provides an Annual Addition, the
amount of Annual Additions which may be credited to the Member's Account
for any Limitation Year will not exceed the lesser of the Maximum
Permissible amount or any other limitation contained in this Plan. If the
Employer Contribution that would otherwise be contributed or allocated to
the Member's Account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation
Year will equal the Maximum Permissible Amount.
(c) Prior to determining the Member's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount
for a Member on the basis of reasonable estimation of the Member's
Compensation for the Limitation Year, uniformly determined for all
Members similarly situated.
(d) As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Member's actual Compensation for the
Limitation Year.
(e) If pursuant to (d) above, as a result of the allocation of forfeitures,
or as a result of a reasonable error in determining the amount of Elective
Deferrals (within the meaning of Code Section 402(g)(3)) that may be made
with respect to any individual under the limits of Code Section 415, there
is an Excess Amount, the excess will be disposed of as follows:
(1) Any nondeductible voluntary employee contributions, to the extent
they would reduce the excess amount, will be returned to the Member;
(2) Any Elective Deferral Contributions, to the extent they would reduce
the excess amount, will be returned to the Member;
(3) If after the application of (1) and (2) above an Excess Amount still
exists, and the Member is covered by the
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<PAGE> 54
Plan at the end of the Limitation Year, the Excess Amount in the
Member's Account will be used to reduce Employer Contributions
(including any allocation of forfeitures) for such Member in the next
Limitation Year, and each succeeding Limitation Year if necessary.
(4) If after the application of (1) and (2) above an excess amount still
exists, and the Member is not covered by the Plan at the end of a
Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce
future Employer Contributions for all remaining Members in the next
Limitation Year, and each succeeding Limitation Year if necessary.
(5) If a suspense account is in existence at any time during a
Limitation Year pursuant to this (e), it will participate in the
allocation of the trust's investment gains or losses. If a suspense
account is in existence at any time during a particular Limitation
Year, all amounts in the suspense account must be allocated and
reallocated to Member's Accounts before any Employer or any Member
contributions may be made to the Plan for that Limitation Year.
Excess amounts may not be distributed to Members or former Members.
(f) This (f) applies if, in addition to this Plan, the Member is covered
under another qualified defined contribution Master or Prototype Plan
maintained by the Employer, a welfare benefit fund, as defined in Code
Section 419(e), maintained by the Employer, or an individual medical
account, as defined in Code Section 415(l)(2), maintained by the
Employer, which provides an Annual Addition, during any Limitation Year.
The Annual Additions which may be credited to a Member's Account under
this Plan for any such Limitation Year will not exceed the Maximum
Permissible Amount reduced by the Annual Additions credited to a Member's
account under the other plans and welfare benefit funds for the same
Limitation Year. If the Annual Additions with respect to the Member under
other defined contribution plans and welfare benefit funds maintained by
the Employer are less than the Maximum Permissible Amount and the Employer
Contribution that would otherwise be contributed or allocated to the
Member's Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or
allocated will be reduced so that the Annual Additions under all such
plans and funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Member under such
other defined contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum Permissible Amount, no
amount will be contributed or allocated to the Member's Account under this
Plan for the Limitation Year.
(g) Prior to determining the Member's actual Compensation for the Limitation
Year, the Employer may determine the Maximum Permissible Amount for a
Member in the manner described in (c) above.
(h) As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Member's actual Compensation for the
Limitation Year.
(i) If pursuant to (h) above, as a result of the allocation of forfeitures,
or as a result of a reasonable error in determining the amount of Elective
Deferrals (within the meaning of Code Section 402(g)(3)) that may be made
with respect to any individual under the limits of Code Section 415, a
Member's Annual Additions under this Plan and such other plans would
result in an Excess Amount for a Limitation Year, the Excess Amount will
be deemed to consist of the Annual Additions last allocated, except that
Annual Additions attributable to a welfare benefit fund or individual
medical account will be deemed to have been allocated first regardless of
the actual allocation date.
(j) If an Excess Amount was allocated to a Member on an allocation date of this
Plan which coincides with an allocation date of another plan, the Excess
Amount attributed to this Plan will be the product of,
(1) the total Excess Amount allocated as of such date, times
(2) the ratio of (i) the Annual Additions allocated to the Member
for the Limitation Year as of such date under this Plan to (ii) the
total Annual Additions allocated to the Member for the Limitation
Year as of such date under this and all the other qualified defined
contribution Master and Prototype Plans.
(k) Any excess amount attributed to this Plan will be disposed in the manner
described in (a) above.
(l) If the Member is covered under another qualified defined contribution
plan maintained by the Employer which is not a Master or Prototype Plan,
Annual Additions which may be credited to the Member's Account under this
Plan for any Limitation Year will be limited in accordance with (f)
through (k) above as though the other plan were a Master or Prototype Plan
unless the Employer provides other limitations in Item R.
(m) If the Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any Member in this Plan, the sum of the Member's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will
not exceed 1.0 in any Limitation Year. The Annual Additions credited to
the Member's Account under this Plan for any Limitation Year will be
limited in accordance with Item R.
SECTION 3.07 - EXCESS AMOUNTS.
(a) For the purposes of this section, the following terms are defined:
ACTUAL DEFERRAL PERCENTAGE means the ratio (expressed as a percentage)
of Elective Deferral Contributions under this Plan on behalf of the
Eligible Member for the Plan Year to the Eligible Member's Pay for the
Plan Year (whether or not the Eligible Member was a Member for the entire
Plan Year). For the first Plan Year of the cash or deferred arrangement,
the amount of Pay for the entire 12-month period ending on the last day
of such Plan Year shall be taken into account. If selected in Item M and
in modification of the foregoing, Pay shall be limited to the Pay received
while an Active Member of the Plan. The Elective Deferral Contributions
used to determine the Actual Deferral Percentage shall include Excess
Elective Deferrals (other than Excess Elective Deferrals of Nonhighly
Compensated Employees that arise solely from Elective Deferral
Contributions made under this Plan or any other plans of ours or a
Controlled Group member), but shall exclude Elective Deferral
Contributions that are used in computing the Contribution Percentage
(provided the Average Actual
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<PAGE> 55
Deferral Percentage test is satisfied both with and without exclusion
of these Elective Deferral Contributions). Under such rules as the
Secretary of the Treasury shall prescribe, we may elect to include
Qualified Nonelective Contributions and Qualified Matching Contributions
under this Plan in computing the Actual Deferral Percentage. For an
Eligible Member for whom such Contributions on his behalf for the Plan
Year are zero, the percentage is zero.
AGGREGATE LIMIT means the sum of
(1) 125 percent of the greater of the Average Actual Deferral
Percentage of the Nonhighly Compensated Employees for the Plan
Year or the Average Contribution Percentage of Nonhighly Compensated
Employees under the Plan subject to Code Section 401(m) for the Plan
Year beginning with or within the Plan Year of the cash or deferred
arrangement and
(2) the lesser of 200% or two plus the lesser of such Average Actual
Deferral Percentage or Average Contribution Percentage.
For Plan Years beginning before January 1, 1992, or such later date as
provided in Internal Revenue Service regulations, the Aggregate Limit
shall be the greater of the sum above or the sum of
(3) 125 percent of the lesser of the Average Actual Deferral
Percentage of the Nonhighly Compensated Employees for the Plan
Year or the Average Contribution Percentage of Nonhighly Compensated
Employees under the Plan subject to Code Section 401(m) for the Plan
Year beginning with or within the Plan Year of the cash or deferred
arrangement and
(4) the lesser of 200% or two plus the greater of such Average Actual
Deferral Percentage or Average Contribution Percentage.
AVERAGE ACTUAL DEFERRAL PERCENTAGE means the average (expressed as a
percentage) of the Actual Deferral Percentages of the Eligible Members in
a group.
AVERAGE CONTRIBUTION PERCENTAGE means the average (expressed as a
percentage) of the Contribution Percentages of the Eligible Members in a
group.
CONTRIBUTION PERCENTAGE means the ratio (expressed as a percentage) of
the Eligible Member's Contribution Percentage Amounts to the Eligible
Member's Pay for the Plan Year (whether or not the Eligible Member was a
Member for the entire Plan Year). For the first Plan Year of the Plan,
the amount of Pay for the entire 12-month period ending on the last day of
such Plan Year shall be taken into account. If selected in Item M and in
modification of the foregoing, Pay shall be limited to the Pay received
while an Active Member of the Plan. For an Eligible Member for whom such
Contribution Percentage Amounts for the Plan Year are zero, the percentage
is zero.
CONTRIBUTION PERCENTAGE AMOUNTS means the sum of the Member
Contributions and Matching Contributions (that are not Qualified Matching
Contributions) under this Plan on behalf of the Eligible Member for the
Plan Year. On and after the first Yearly Date in 1993, such Contribution
Percentage Amounts shall not include Matching Contributions that are
forfeited either to correct Excess Aggregate Contributions or because the
Contributions to which they relate are Excess Elective Deferrals, Excess
Contributions or Excess Aggregate Contributions. Under such rules as the
Secretary of the Treasury shall prescribe, we may elect to include
Qualified Nonelective Contributions and Qualified Matching Contributions
under this Plan which were not used in computing the Actual Deferral
Percentage in computing the Contribution Percentage. We may also elect
to use Elective Deferral Contributions in computing the Contribution
Percentage so long as the Average Actual Deferral Percentage test is met
before the Elective Deferral Contributions are used in the Average
Contribution Percentage test and continues to be met following the
exclusion of those Elective Deferral Contributions that are used to meet
the Average Contribution Percentage test.
ELECTIVE DEFERRAL CONTRIBUTIONS means employer contributions made on
behalf of a member pursuant to an election to defer under any qualified
cash or deferred arrangement as described in Code Section 401(k), any
simplified employee pension cash or deferred arrangement as described in
Code Section 402(h)(1)(B), any eligible deferred compensation plan under
Code Section 457, any plan as described under Code Section 501(c)(18),
and any employer contributions made on behalf OF a member for the purchase
of an annuity contract under Code Section 403(b) pursuant to a salary
reduction agreement. Elective Deferral Contributions shall not include
any deferrals properly distributed as excess Annual Additions.
ELIGIBLE MEMBER means, for purposes of determining the Actual Deferral
Percentage, any Employee who is otherwise authorized under the terms of
the Plan to have Elective Deferral Contributions made on his behalf for
the Plan Year. Eligible Member means, for purposes of determining the
Average Contribution Percentage, any Employee who is otherwise authorized
under the terms of the Plan to have Member Contributions or Matching
Contributions made on his behalf for the Plan Year.
EXCESS AGGREGATE CONTRIBUTIONS means, with respect to any Plan Year, the
excess of:
(1) The aggregate Contributions taken into account in computing the
numerator of the Contribution Percentage actually made on behalf of
Highly Compensated Employees for such Plan Year, over
(2) The maximum amount of such Contributions permitted by the Average
Contribution Percentage test (determined by reducing Contributions
made on behalf of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess
Elective Deferrals and then determining Excess Contributions.
EXCESS CONTRIBUTIONS means, with respect to any Plan Year, the excess of:
(1) The aggregate amount of Contributions actually taken into account
in computing the Actual Deferral Percentage of Highly Compensated
Employees for such Plan Year, over
(2) The maximum amount of such Contributions permitted by the Actual
Deferral Percentage test (determined by reducing Contributions made
on behalf of Highly
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<PAGE> 56
Compensated Employees in order of the actual Deferral Percentages.
beginning with the highest of such percentages)
Such determination shall be made after first determining Excess
Elective Deferrals.
EXCESS ELECTIVE DEFERRALS means those Elective Deferral Contributions
that are includible in a Member's gross income under Code Section 402(g)
to the extent such Member's Elective Deferral Contributions for a taxable
year exceed the dollar limitation under such Code section. Excess
Elective Deferrals shall be treated as Annual Additions under the Plan,
unless such amounts are distributed no later than the first April 15
following the close of the Member's taxable year.
MATCHING CONTRIBUTIONS means employer contributions made to this or any
other defined contribution plan, or to a contract described in Code
Section 403(b), on behalf of a member on account of a Member Contribution
made by such member, or on account of a member's Elective Deferral
Contributions, under a plan maintained by the employer.
MEMBER CONTRIBUTIONS means contributions made to any plan by or on
behalf of a member that are included in the member's gross income in the
year in which made and that are maintained under a separate account to
which earnings and losses are allocated.
QUALIFIED MATCHING CONTRIBUTIONS means Matching Contributions which are
subject to the distribution and nonforfeitability requirements under Code
Section 401(k) when made.
QUALIFIED NONELECTIVE CONTRIBUTIONS means any employer contributions
(other than Matching Contributions) which an employee may not elect to
have paid to him in cash instead of being contributed to the plan and which
(c) are subject to the distribution and nonforfeitability requirements
under Code Section 401(k).
(b) A Member may assign to this Plan any Excess Elective Deferrals made
during a taxable year of the Member by notifying the Plan Administrator in
writing on or before the first following March 1 of the amount of the
Excess Elective Deferrals to be assigned to the Plan. On and after the
first Yearly Date in 1993, a Member is deemed to notify the Plan
Administrator of any Excess Elective Deferrals that arise by taking into
account only those Elective Deferral Contributions made to this Plan and
any other plan of ours. The Member's claim for Excess Elective Deferrals
shall be accompanied by the Member's written statement that if such
amounts are not distributed, such Excess Elective Deferrals, when added to
amounts deferred under other plans or arrangements described in Code
Sections 401(k), 408(k) or 403(b), will exceed the limit imposed on the
Member by Code Section 402(g) for the year in which the deferral occurred.
The Excess Elective Deferrals assigned to this Plan can not exceed the
Elective Deferral Contributions allocated under this Plan for such taxable
year.
Notwithstanding any other provisions of the Plan, Elective Deferral
Contributions in an amount equal to the Excess Elective Deferrals assigned
to this Plan, plus any income and minus any loss allocable thereto, shall
be distributed no later than April 15 to any Member to whose Account
Excess Elective Deferrals were assigned for the Preceding year and who
claims Excess Elective Deferrals for such taxable year.
The income or loss allocable to such Excess Elective Deferrals shall be
equal to the sum of:
(1) the income or loss allocable to the Member's Elective Deferral
Contributions for the taxable year in which the excess occurred
multiplied by a fraction and
(2) the income or loss allocable to the Member's Elective Deferral
Contributions for the gap period between the end of such taxable
year and the date of distribution multiplied by a fraction.
The numerator of the fractions is the Excess Elective Deferrals. The
denominator of the fraction in (1) above is the closing balance without
regard to any income or loss occurring during such taxable year (as of the
end of such taxable year) of the Member's Account resulting from Elective
Deferral Contributions. The denominator of the fraction in (2) above is
the closing balance without regard to any income or loss occurring during
such gap period (as of the end of such gap period) of the Member's Account
resulting from Elective Deferral Contributions. The amount determined in
(2) above shall not be included for taxable years beginning after December
31, 1992.
Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Elective Deferrals, plus any
income and minus any loss allocable thereto, shall be forfeited, if
forfeitable. If the Adoption Agreement - Plus is used, these Forfeitures
shall be applied according to the provisions of Item O(7). If the
Adoption Agreement - Plus is not used, these Forfeitures shall be used to
offset the earliest Employer Contribution due after the Forfeiture arises.
(c) As of the end of each Plan Year after Excess Elective Deferrals have been
determined, one of the following tests must be met:
(1) The Average Actual Deferral Percentage for Eligible Members who are
Highly Compensated Employees for the Plan Year is not more than
the Average Actual Deferral Percentage for Eligible Members who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Average Actual Deferral Percentage for Eligible Members who
are Highly Compensated Employees for the Plan Year is not more
than the Average Actual Deferral Percentage for Eligible Members who
are Nonhighly Compensated Employees for the Plan Year multiplied by 2
and the difference between the Average Actual Deferral Percentages is
not more than 2.
The Actual Deferral Percentage for any Eligible Member who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
Elective Deferral Contributions (and Qualified Nonelective Contributions
or Qualified Matching Contributions, or both, if used in computing the
Actual Deferral Percentage) allocated to his account under two or more
plans or arrangements described in Code Section 401(k) that are
maintained by us or a Controlled Group member shall be determined as if
all such Elective Deferral Contributions (and, if applicable, such
Qualified Nonelective Contributions or Qualified Matching Contributions,
or both) were made under a single arrangement. If
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<PAGE> 57
a Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year shall be treated
as a single arrangement. The foregoing notwithstanding, certain plans
shall be treated as separate if mandatorily disaggregated under the
regulations of Code Section 401(k).
In the event that this Plan satisfies the requirements of Code Sections
401(k), 401(a)(4), or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such Code
sections only if aggregated with this Plan, then this section shall be
applied by determining the Actual Deferral Percentage of employees as if
all such plans were a single plan. For Plan Years beginning after
December 31, 1989, plans may be aggregated in order to satisfy Code
Section 401(k) only if they have the same Plan Year.
For purposes of determining the Actual Deferral Percentage of an
Eligible Member who is a five-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the Elective Deferral
Contributions (and Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, if used in computing the Actual Deferral
Percentage) and Pay of such Eligible Member include the Elective Deferral
Contributions (and, if applicable, Qualified Nonelective Contributions or
Qualified Matching Contributions, or both) and Pay for the Plan Year of
Family Members. Family Members, with respect to such Highly Compensated
Employees, shall be disregarded as separate employees in determining the
Actual Deferral Percentage both for Members who are Nonhighly Compensated
Employees and for Members who are Highly Compensated Employees.
For purposes of determining the Actual Deferral Percentage, Elective
Deferral Contributions, Qualified Nonelective Contributions and Qualified
Matching Contributions must be made before the last day of the
twelve-month period immediately following the Plan Year to which
contributions relate.
We shall maintain records sufficient to demonstrate satisfaction of the
Average Actual Deferral Percentage test and the amount of Qualified
Nonelective Contributions or Qualified Matching Contributions, or both,
used in such test.
The determination and treatment of the Contributions used in computing
the Actual Deferral Percentage shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
If the Plan Administrator should determine during the Plan Year that
neither of the above tests is being met, the Plan Administrator may adjust
the amount of future Elective Deferral Contributions of the Highly
Compensated Employees.
Notwithstanding any other provisions of this Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall be
distributed no later than the last day of each Plan Year to Members to
whose Accounts such Excess Contributions were allocated for the preceding
Plan Year. If such excess amounts are distributed more than 2 1/2 months
after the last day of the Plan Year in which such excess amounts arose, a
ten (10) percent excise tax will be imposed on the employer maintaining
the plan with respect to such amounts. Such distributions shall be made
to Highly Compensated Employees on the basis of the respective portions
of the Excess Contributions attributable to each of such employees.
Excess Contributions shall be allocated to Members who are subject to the
family member aggregation rules of Code Section 414(q)(6) in the manner
prescribed by the regulations. On and after the first Yearly Date in
1993, Excess Contributions of Members who are subject to the family member
aggregation rules shall be allocated among the Family Members in
proportion to the Elective Deferral Contributions (and amounts treated as
Elective Deferral Contributions) of each Family Member that is combined to
determine the combined Actual Deferral Percentage.
Excess Contributions shall be treated as Annual Additions under the Plan.
The Excess Contributions shall be adjusted for income or loss. The
income or loss allocable to such Excess Contributions shall be equal to
the sum of
(3) the income or loss allocable to the Member's Elective Deferral
Contributions (and, if applicable, Qualified Nonelective
Contributions or Qualified Matching Contributions, or both) for the
Plan Year in which the excess occurred multiplied by a fraction and
(4) the income or loss allocable to the Member's Elective Deferral
Contributions (and, if applicable, Qualified Nonelective
Contributions or Qualified Matching Contributions, or both) for the
gap period between the end of such Plan Year and the date of
distribution multiplied by a fraction.
The numerator of the fractions is the Excess Contributions. The
denominator of the fraction in (3) above is the closing balance without
regard to any income or loss occurring during such Plan Year (as of the
end of such Plan Year) of the Member's Account resulting from Elective
Deferral Contributions (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if used in computing the Actual
Deferral Percentage). The denominator of the fraction in (4) above is the
closing balance without regard to any income or loss occurring during such
gap period (as of the end of such gap period) of the Member's Account
resulting from Elective Deferral Contributions (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if used in
computing the Actual Deferral Percentage). The amount determined in (4)
above shall not be included for Plan Years beginning after December 31,
1992.
Excess Contributions shall be distributed from the Member's Account
resulting from Elective Deferral Contributions. If such Excess
Contributions exceed the balance in the Member's Account resulting from
Elective Deferral Contributions, the balance shall be distributed from the
Member's Account resulting from Qualified Matching Contributions (if
applicable) and Qualified Nonelective Contributions, respectively.
On and after the first Yearly Date in 1993, any Matching Contributions
which are distributed as Excess Contributions, plus any income and minus
any loss allocable thereto, shall be forfeited, if forfeitable. If the
Adoption Agreement - Plus is used, these Forfeitures shall be applied
according to the provisions of Item O(7). If the Adoption Agreement -
Plus
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is not used, these Forfeitures shall be used to offset the earliest
Employer Contribution due after the Forfeiture arises.
(d) As of the end of each Plan Year, one of the following tests must be met:
(1) The Average Contribution Percentage for Eligible Members who are
Highly Compensated Employees for the Plan Year is not more than
the Average Contribution Percentage for Eligible Members who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Average Contribution Percentage for Eligible Members who are
Highly Compensated Employees for the Plan Year is not more than
the Average Contribution Percentage for Eligible Members who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2 and
the difference between the Average Contribution Percentages is not
more than 2.
If one or more Highly Compensated Employees participate in both a cash
or deferred arrangement and a plan subject to the Average Contribution
Percentage test maintained by us or a Controlled Group member and the sum
of the Average Actual Deferral Percentage and Average Contribution
Percentage of those Highly Compensated Employees subject to either or both
tests exceeds the Aggregate Limit, then the Contribution Percentage of
those Highly Compensated Employees who also participate in a cash or
deferred arrangement will be reduced (beginning with such Highly
Compensated Employees whose Contribution Percentage is the highest) so
that the limit is not exceeded. The amount by which each Highly
Compensated Employee's Contribution Percentage is reduced shall be treated
as an Excess Aggregate Contribution. The Average Actual Deferral
Percentage and Average Contribution Percentage of the Highly Compensated
Employees are determined after any corrections required to meet the
Average Actual Deferral Percentage and Average Contribution Percentage
tests. Multiple use does not occur if both the Average Actual Deferral
Percentage and Average Contribution Percentage of the Highly Compensated
Employees does not exceed 1.25 multiplied by the Average Actual Deferral
Percentage and Average Contribution Percentage of the Nonhighly
Compensated Employees.
The Contribution Percentage for any Eligible Member who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
Contribution Percentage Amounts allocated to his account under two or more
plans described in Code Section 401(a) or arrangements described in Code
Section 401(k) that are maintained by us or a Controlled Group member
shall be determined as if the total of such Contribution Percentage
Amounts was made under each plan. If a Highly Compensated Employee
participates in two or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
The foregoing notwithstanding, certain plans shall be treated as separate
if mandatorily disaggregated under the regulations of Code Section 401
(m).
In the event that this Plan satisfies the requirements of Code Section
410(b) only if aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of Code Section 410(b) only if
aggregated with this Plan, then this section shall be applied by
determining the Contribution Percentages of Eligible Members as if all
such plans were a single plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy Code Section 401(m)
only if they have the same Plan Year.
For purposes of determining the Contribution Percentage of an Eligible
Member who is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Contribution Percentage Amounts and Pay
of such Member shall include Contribution Percentage Amounts and Pay for
the Plan Year of Family Members. Family Members, with respect to Highly
Compensated Employees, shall be disregarded as separate employees in
determining the Contribution Percentage both for employees who are
Nonhighly Compensated Employees and for employees who are Highly
Compensated Employees.
For purposes of determining the Contribution Percentage, Member
Contributions are considered to have been made in the Plan Year in which
contributed to the Plan. Matching Contributions and Qualified Nonelective
Contributions will be considered made for a Plan Year if made no later
than the end of the twelve-month period beginning on the day after the
close of the Plan Year.
We shall maintain records sufficient to demonstrate satisfaction of the
Average Contribution Percentage test and the amount of Qualified
Nonelective Contributions or Qualified Matching Contributions, or both,
used in such test.
The determination and treatment of the Contribution Percentage of any
Member shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
Notwithstanding any other provisions of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall
be forfeited, if not vested, or distributed, if vested, no later than the
last day of each Plan Year to Members to whose Accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year.
Excess Aggregate Contributions shall be allocated to Members who are
subject to the family member aggregation rules of Code Section 414(q)(6)
in the manner prescribed by the regulations. On and after the first
Yearly Date in 1993, Excess Aggregate Contributions of Members who are
subject to the family aggregation rules shall be allocated among the
Family Members in proportion to the employee and Matching Contributions
(or amounts treated as Matching Contributions) of each Family Member that
is combined to determine the combined Contribution Percentage. If such
Excess Aggregate Contributions are distributed more than 2 1/2 months
after the last day of the Plan Year in which such excess amounts arose, a
ten (10) percent excise tax will be imposed on the employer maintaining
the plan with respect to those amounts. Excess Aggregate Contributions
shall be treated as Annual Additions under the Plan.
The Excess Aggregate Contributions shall be adjusted for income or
loss. The income or loss allocable to such Excess Aggregate Contributions
shall be equal to the sum of:
(3) the income or loss allocable to the Member's Contribution Percentage
Amounts for the Plan Year in which the excess occurred multiplied by a
fraction and
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<PAGE> 59
(4) the income or loss allocable to the Member's Contribution Percentage
Amounts for the gap period between the end of such Plan Year and the
date of distribution multiplied by a traction.
The numerator of the fractions is the Excess Aggregate Contributions.
The denominator of the fraction in (3) above is the closing balance
without regard to any income or loss occurring during such Plan Year (as
of the end of such Plan Year) of the Member's Account resulting from
Contribution Percentage Amounts. The denominator of the fraction in (4)
above is the closing balance without regard to any income or loss
occurring during such gap period (as of the end of such gap period) of the
Member's Account resulting from Contribution Percentage Amounts. The
amount determined in (4) above shall not be included for Plan Years
beginning after December 31, 1992.
Excess Aggregate Contributions shall be distributed from the Member's
Account resulting from Member Contributions that are not required as a
condition of employment or participation or for obtaining additional
benefits from Employer Contributions. If such Excess Aggregate
Contributions exceed the balance in the Member's Account resulting from
such Member Contributions, the balance shall be forfeited, if not vested,
or distributed, if vested, on a prorata basis from the Member's Account
resulting from Contribution Percentage Amounts. If the Adoption Agreement
- Plus is used, these Forfeitures shall be applied according to the
provisions of Item O(7). If the Adoption Agreement - Plus is not used,
these Forfeitures shall be used to offset the earliest Employer
Contribution due after the Forfeiture arises.
- --------------------------------------------------------------------------------
ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
- --------------------------------------------------------------------------------
SECTION 4.01 - INVESTMENT OF CONTRIBUTIONS.
(a) The provisions of this subsection apply to trusteed plans.
All Contributions are forwarded by us to the Trustee to be deposited in the
Trust Fund. Member Contributions shall be forwarded within three months
after they are made.
Investment of Contributions is governed by the provisions of the Trust,
the Annuity Contract and any other funding arrangement in which the Trust
Fund is or may be invested. To the extent permitted by the Trust, Annuity
Contract, or other funding arrangement, the parties named in Item T of the
Adoption Agreement shall direct the Contributions to any of the accounts
available under the Trust and may request the transfer of assets resulting
from those Contributions between such accounts. A Member may not direct
the Trustee to invest the Member's Account in collectibles. Collectible
means any work of art, rug or antique, metal or gem, stamp or coin,
alcoholic beverage or other tangible personal property specified by the
Secretary of the Treasury. To the extent that a Member does not direct
the investment of his Account, such Account shall be invested ratably in
the accounts available under the Trust in the same manner as the
undirected Accounts of all other Members.
The Vested Accounts of all Inactive Members may be segregated and invested
separately from the Accounts of all other Members.
At least annually, the Named Fiduciary shall review all pertinent
Employee information and Plan data in order to establish the funding
policy of the Plan and to determine appropriate methods of carrying out
the Plan's objectives. The Named Fiduciary shall inform the Trustee and
any Investment Manager of the Plan's short-term and long-term financial
needs so the investment policy can be coordinated with the Plan's
financial requirements.
However, the Named Fiduciary may delegate to the Investment Manager
investment discretion for Contributions and Plan assets which are not
subject to Member direction.
(b) The provisions of this subsection apply to plans which are not trusteed.
All Contributions are forwarded by us to the Insurer to be deposited under
the Annuity Contract. Member Contributions shall be forwarded within three
months after they are made.
Investment of Contributions is governed by the provisions of the
Annuity Contract. To the extent permitted by the Annuity Contract, the
parties named in Item T of the Adoption Agreement shall direct the
Contributions to any of the accounts available under the Annuity Contract
and may request the transfer of assets resulting from those Contributions
between such accounts. To the extent that a Member does not direct the
investment of his Account, such Account shall be invested ratably in the
accounts available under the Annuity Contract in the same manner as the
undirected Accounts of all other Members. The Vested Accounts of all
Inactive Members may be segregated and invested separately from the
Accounts of all other Members.
At least annually, the Named Fiduciary shall review all pertinent
Employee information and Plan data in order to establish the funding
policy of the Plan and to determine appropriate methods of carrying out
the Plan's objectives. The Named Fiduciary shall inform any Investment
Manager of the Plan's short-term and long-term financial needs so the
investment policy can be coordinated with the Plan's financial
requirements.
However, the Named Fiduciary may delegate to the Investment Manager
investment discretion for Contributions and Plan assets which are not
subject to Member direction.
SECTION 4.02 - PURCHASE OF INSURANCE.
If permitted under Item T of the Adoption Agreement, life insurance may be
purchased under this Plan for Active Members to provide incidental death
benefits. The Trustee shall apply for and will be the owner of any Insurance
Policy purchased under the terms of this Plan. The purchase shall be subject
to the provisions of this section, the distribution of benefits provisions of
Article VI, and the beneficiary provisions of Section 9.06. If the Member has a
spouse to whom he has been continuously married for at least one year, such
spouse shall be his Beneficiary under the Insurance Policy unless (a) a
qualified election has been made according to the provisions of Section 6.03 or
(b) the Trustee has been named as Beneficiary. If the Trustee is named as
Beneficiary, upon the death of the Member, the Trustee shall be required to pay
over all proceeds of the Insurance Policy to the Member's Beneficiary or
spouse, as the case may be,
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<PAGE> 60
according to the distribution of benefits provisions of Article VI. Under no
circumstances shall the Trust retain any part of the proceeds. In the event of
any conflict between the terms of this Plan and the terms of any Insurance
Policy purchased hereunder, the Plan provisions shall control.
The purchase of insurance shall be subject to the limitations that may be
imposed by the Insurer under the applicable Insurance Policy. The Insurance
Policy may provide for waiver of premium for disability.
The total of all insurance premiums for insurance coverage on the life of a
Member provided by our Contributions shall be limited to a percentage of all our
Contributions made for that Member. All such ordinary life insurance premiums
shall be limited to a percentage which is less than 50%. All such term life
and universal life insurance premiums shall be limited to a percentage which is
not more than 25%. If both ordinary life insurance and term life or universal
life insurance is purchased, 1/2 of all such ordinary life insurance premiums
and all such other life insurance premiums shall be limited to a percentage
which is not more than 25%. Ordinary life insurance policies are policies with
both nondecreasing death benefits and nonincreasing premiums. The Member's
Account resulting from deductible Voluntary Contributions (and nondeductible
Voluntary Contributions if the Adoption Agreement - Plus is not used) shall not
be applied to pay life insurance premiums.
Any dividends declared upon an amount of insurance in force on the life of a
Member may, within the terms of the Insurance Policy, be applied to reduce the
earliest premium due, purchase paid-up insurance coverage, accumulate under the
policy to provide additional death benefit or be credited to the Member's
Account which is included in the Investment Fund. In the absence of any
direction, such dividends shall be applied to reduce the earliest premium due
for such amount of insurance.
A Member may elect to have amounts deducted from his Account to pay insurance
premiums. The total amount deducted cannot exceed the amount of contributions
credited to his Account which were not used to provide insurance, but could
have been.
If a decrease in the amount of life insurance is necessary, any cash values of
the terminated insurance shall be retained in the Member's Account and added to
the Investment Fund.
SECTION 4.03 - TRANSFER OF OWNERSHIP.
Any transfer of ownership under this section shall be subject to the
distribution of benefits provisions of Article VI.
Upon the request of a Member, we may purchase for its cash value a personal
life insurance policy issued to, and insuring the life of, the Member. Such
policy shall be immediately transferred from us to the Trustee. The cash value
of the purchased policy shall be a part of our Contribution for the Plan Year.
Any such purchase shall be accomplished only under an appropriate written
agreement between the Member, the Trustee and us. In lieu of our purchase of
such policy and at our direction, the Trustee may purchase the policy directly
from the Member. These provisions shall not be available if the policy is
subject to a policy loan or similar lien. The purchase of and future premiums
for any such policy shall be subject to the limitations in Section 4.02.
If the Insurance Policy allows, a Member may pay the Trustee an amount equal to
the cash values of any Insurance Policy on his life. Such payment shall become
a part of his Account.
Upon receiving the payment, the Trustee shall transfer ownership of the policy
to the Member. This transfer of ownership is not a distribution from the Plan.
This option shall only be available to a Member if the policy would, but for
the sale, be surrendered by the Plan.
If distribution of a Member's Vested Account would include the cash values of
an Insurance Policy on his life, the Member may have ownership of an Insurance
Policy on his life transferred to him without making payment to the Trustee if
permitted by such Insurance Policy. Any Insurance Policy transferred to the
Member for which he has not made payment to the Trustee is a distribution from
the Plan.
In applying the provisions of this section, all Members in similar
circumstances shall be treated in a similar manner. Members who are Highly
Compensated Employees (officers, shareholders or highly compensated Employees
before the first Yearly Date after December 31, 1988) shall not be treated in a
manner more favorable than that afforded all other Members.
SECTION 4.04 - TERMINATION OF INSURANCE.
The termination of insurance under this section shall be subject to the
distribution of benefits provisions of Article VI.
No premium payments shall be made under this Plan for an Inactive Member. If a
Member becomes an Inactive Member before Retirement Date, the Trustee may
either use the cash values of the Insurance Policy on his life to provide
paid-up insurance or may surrender the Insurance Policy. The cash values of a
surrendered Insurance Policy are retained in the Member's Account and added to
the Investment Fund. The purchase of paid-up insurance shall be subject to the
provisions of the Insurance Policy. If the Member ceases to be an Employee
before Retirement Date, the Member may elect to have the ownership of the
Insurance Policy transferred as provided in Section 4.03.
On a Member's Retirement Date, any Insurance Policy on his life, the ownership
of which has not been transferred to him, shall terminate. The cash values
shall be paid to the Member in cash or applied to provide an income for him
according to the provisions of the Insurance Policy. In any event, no portion
of the value of any Insurance Policy shall be used to continue life insurance
protection under the Plan beyond actual retirement.
- --------------------------------------------------------------------------------
ARTICLE V
BENEFITS
- --------------------------------------------------------------------------------
SECTION 5.01 - RETIREMENT BENEFITS.
On a Member's Retirement Date, the Member's Vested Account shall be distributed
to the Member according to the distribution of benefits provisions of Article
VI and the small amounts provisions of Section 9.10.
SECTION 5.02 - DEATH BENEFITS.
If a Member dies before his Annuity Starting Date, the Member's Vested Account
shall be distributed according to the distribution of benefits provisions of
Article VI and the small amounts provisions of Section 9.10.
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<PAGE> 61
SECTION 5.03 - VESTED BENEFITS.
If the Inactive Member's Vested Account is not payable under the small amounts
provisions of 9.10, he may elect, but is not required, to receive in a single
sum that part of his Vested Account which results from Member Contributions
after he ceases to be an Employee. The Member's election shall meet the
consent requirements in Section 6.03 for a qualified election of a benefit
payable in a form other than a Qualified Joint and Survivor Form.
If the Inactive Member's Vested Account is not payable under the small amounts
provisions of Section 9.10, he may elect, but is not required, to receive a
distribution of his Vested Account after he ceases to be an Employee. If Item
X(3)(a) of the Adoption Agreement - Plus is selected, distributions from the
Member's Vested Account which results from the designated Contributions shall
not begin before the Member retires, becomes Totally Disabled or dies. If Item
X(3)(b) of the Adoption Agreement Plus is selected, distributions shall not be
made until he has ceased to be an Employee for the period of time selected in
Item X(3)(b). The Member's election shall be subject to his spouse's consent
as provided in Section 6.03. A distribution under this paragraph will be a
retirement benefit and shall be distributed to the Member according to the
provisions of Article VI.
If an Inactive Member does not receive an earlier distribution according to the
provisions of the preceding paragraph or the small amounts provisions of
Section 9.10, upon his Retirement Date or death, his Vested Account shall be
applied according to the provisions of Section 5.01 or 5.02.
A Member may not receive any such distribution under the provisions of this
section after he again becomes an Employee until he subsequently ceases to be
an Employee and again meets the requirements of this section.
Some or all of an Inactive Member's Vested Account may be transferred directly
to the trustee, named fiduciary, or insurer under the retirement plan of the
Inactive Member's current employer if the following requirements are met: the
Inactive Member would be eligible to receive a distribution of his Vested
Account at the time the transfer is to occur; the amount transferred, if
distributed to the Member, would quality as a rollover contribution which the
Code permits to be transferred to a plan that meets the requirements of Code
Section 401(a); the current employer's plan meets the requirements of Code
Section 401(a). The Member must request the transfer in writing. The
trustee, named fiduciary or insurer under the plan must be willing to accept
such a transfer. Such transferred amount shall be treated as a distribution
under this plan.
The Nonvested Account of an Inactive Member shall remain a part of his Account
until it becomes a Forfeiture; provided, however, if the Inactive Member again
becomes an Employee so that his Vesting Percentage may increase, the Nonvested
Account may become part of his Vested Account.
SECTION 5.04 - WHEN BENEFITS START.
Benefits under the Plan begin when a Member retires, dies or ceases to be an
Employee, whichever applies, as provided in the preceding sections of this
article. Benefits which begin before Normal Retirement Date for a Member who
became Totally Disabled when he was an Employee shall be deemed to begin
because he is Totally Disabled. The start of benefits is subject to the
qualified election procedures of Article VI.
Unless otherwise elected, benefits shall begin before the sixtieth day
following the close of the Plan Year in which the latest date below occurs:
(a) The date the Member attains the earlier of (i) age 65 or
(ii) the later of Normal Retirement Age or age 62.
(b) The tenth anniversary of the Member's Entry Date.
(c) The date the Member ceases to be an Employee.
Notwithstanding the foregoing, the failure of a Member and spouse to consent to
a distribution while a benefit is immediately distributable, within the meaning
of Section 6.03, shall be deemed to be an election to defer commencement of
payment of any benefit sufficient to satisfy this section.
The Member may elect to have benefits begin after the latest date for beginning
benefits described above, subject to the following provisions of this section.
The Member shall make the election in writing and deliver the signed election
to the Plan Administrator before Normal Retirement Date or the date he ceases
to be an Employee, if later. The election must describe the form of
distribution and the date benefits will begin. The Member shall not elect a
date for beginning benefits or a form of distribution which would result in a
benefit payable when he dies which would be more than incidental within the
meaning of governmental regulations.
Benefits shall begin by the Member's Required Beginning Date, as defined in
Section 6.02. Distribution of the Vested Account resulting from Contributions
made after the Member's Required Beginning Date shall begin by the April 1
following the calendar year in which such Contributions were made.
If a Member receives a taxable distribution (including a withdrawal) of any
part of his Vested Account, he may be subject to a Federal tax penalty. The
tax penalty does not apply if the distribution is:
(a) made on or after age 59 1/2;
(b) made on account of the Member's death to his Beneficiary or estate;
(c) made on account of being disabled;
(d) part of a series of periodic payments after separation from service that
are substantially equal, at least annual, and based on the life expectancy
of the Member or the Member and his Beneficiary; or
(e) made after separation from service after the attainment of age 55.
In addition, no tax is imposed on amounts received and paid during the taxable
year for medical expenses in an amount not to exceed that deductible under Code
Section 213. Disabled means that a Member is disabled to the extent he is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or be of long-continued and indefinite duration. Proof of the existence
of the disability will be in such form and manner as the Secretary of the
Treasury may require.
Contributions which are used to compute the Actual Deferral Percentage, as
defined in Section 3.07, (Elective Deferral Contributions, Qualified
Nonelective Contributions, and Qualified Matching Contributions) may be
distributed upon disposition by us of substantially all of the assets used by
us in a trade or
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business or disposition by us of our interest in a subsidiary if the transferee
corporation is not a Controlled Group member, the Employee continues employment
with the transferor corporation and the transferor corporation continues to
maintain the Plan. The distribution must be a total distribution.
SECTION 5.05 - WITHDRAWAL BENEFITS.
(a) Distributions on Account of Financial Hardship
If elected by us in Item W(2) of the Adoption Agreement, withdrawals of
part of the Member's Account as provided in Item W(2) will be permitted in
the event of hardship due to an immediate and heavy financial need.
Immediate and heavy financial need shall be limited to: (i) medical
expenses described in Code Section 213(d) incurred by the Member, the
Member's spouse, or any dependents of the Member (as defined in Code
Section 152); (ii) purchase (excluding mortgage payments) of a principal
residence for the Member: (iii) payment of tuition for the next semester
or quarter of post-secondary education for the Member, his spouse,
children or dependents; (iv) the need to prevent the eviction of the
Member from his principal residence or foreclosure on the mortgage of the
Member's principal residence: or (v) any other distribution which is
deemed by the Commissioner of Internal Revenue to be made on account of
immediate and heavy financial need as provided in Treasury regulations.
The Member's request for a withdrawal shall include his written statement
that an immediate and heavy financial need exists and explain its nature.
On and after the first Yearly Date in 1993, immediate and heavy
financial need in (i) shall include medical expenses incurred or necessary
for medical care, described in Code Section 213(d), of the Member, the
Member's spouse, or any dependents of the Member (as defined in Code
Section 152) and such need in (iii) shall include payment of tuition and
related educational fees for the next 12 months of post-secondary
education for the Member, his spouse, children or dependents. In
addition, the amount of the immediate and heavy financial need may include
amounts necessary to pay any Federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution.
No withdrawal shall be allowed which is not necessary to satisfy such
immediate and heavy financial need. Such withdrawal shall be deemed
necessary only if all of the following requirements are met: (i) the
distribution is not in excess of the amount of the immediate and heavy
financial need of the Member; (ii) the Member has obtained all
distributions, other than hardship distributions, and all nontaxable loans
currently available under all plans maintained by us; (iii) the Plan, and
all other plans maintained by us, provide that the Member's elective
contributions and employee contributions will be suspended for at least
12 months after receipt of the hardship distribution; and (iv) the Plan,
and all other plans maintained by us, provide that the Member may not make
elective contributions for the Member's taxable year immediately following
the taxable year of the hardship distribution in excess of the applicable
limit under Code Section 402(g) for such next taxable year less the amount
of such Member's elective contributions for the taxable year of the
hardship distribution. The Plan will suspend elective contributions and
employee contributions for 12 months and limit elective deferrals as
provided in the preceding sentence. A Member shall not cease to be an
Eligible Member, as defined in Section 3.07, merely because his elective
contributions or employee contributions are suspended.
(b) Distributions on Account of Other Withdrawals
A Member may withdraw in a single sum any part of his Account resulting
from his Voluntary Contributions subject to the limitations provided in
Item W(l). If selected by us in Item W(3), withdrawals of the Member's
Account as provided in Item W(3) will be permitted at any time after he
attains age 59 1/2 subject to the limitations provided in Item W(3). If
selected by us in Item W(4) of the Adoption Agreement - Plus, withdrawals
of part of the Member's Account as provided in Item W(4) will be permitted
after he has been an Active Member for at least 5 years subject to the
limitations provided in Item W(4).
A request for withdrawal shall be in writing on a form furnished for that
purpose and delivered to the Plan Administrator before the withdrawal is to
occur. Withdrawals shall be subject to the qualified election provisions of
Article VI. A forfeiture shall not occur solely as a result of a withdrawal.
SECTION 5.06 - LOANS TO MEMBERS.
Loans shall be made available to all Members on a reasonably equivalent basis.
For purposes of this section, Member means any Member or Beneficiary who is an
Employee. Loans shall not be made to highly compensated employees, as defined
in Code Section 414(q), in an amount greater than the amount made available to
other Members.
No loans will be made to any shareholder-employee or owner-employee. For
purposes of this requirement, a shareholder-employee means an employee or
officer of an electing small business (Subchapter S) corporation who owns (or
is considered as owning within the meaning of Code Section 318(a)(1)), on any
day during the taxable year of such corporation, more than 5% of the
outstanding stock of the corporation.
A loan to a Member shall be a Member-directed investment of his Account. The
loan is a Trust investment but no Account other than the borrowing Member's
Account shall share in the interest paid on the loan or bear any expense or
loss incurred because of the loan.
The number of outstanding loans shall be limited to one, unless otherwise
specified in Item T(b)(vi). No more than one loan will be approved for any
Member in any 12-month period, unless otherwise specified in Item T(b)(vii).
The minimum amount of any loan shall be selected in Item T(b)(iv).
Loans must be adequately secured and bear a reasonable rate of interest.
The amount of the loan shall not exceed the maximum amount that may be treated
as a loan under Code Section 72(p) (rather than a distribution) to the Member
and shall be equal to the lesser of (a) or (b) below:
(a) $50,000 reduced by the highest outstanding loan balance of loans
during the one-year period ending on the day before the new loan
is made.
(b) The greater of (i) or (ii), reduced by (iii) below:
(i) One-half of the Member's Vested Account.
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(ii) $10,000.
(iii) Any outstanding loan balance on the date the new loan is
made.
For purposes of this maximum, a Member's Vested Account does not include any
accumulated deductible employee contributions, as defined in Code Section
72(o)(5)(B), and all qualified employer plans, as defined in Code Section
72(p)(4), of ours and any Controlled Group member shall be treated as one
plan.
The foregoing notwithstanding, the amount of such loan shall not exceed 50% of
the amount of the Member's Vested Account reduced by any outstanding loan
balance on the date the new loan is made. In addition, the amount of the loan
may be further limited to a specified dollar amount, if Item T(b)(v) so
indicates. No collateral other than a portion of the Member's Vested Account
(as limited above) shall be accepted. The Loan Administrator shall determine
if the collateral is adequate for the amount of the loan requested.
A Member must obtain the consent of the Member's spouse, if any, to the use of
the Vested Account as security for the loan. Spousal consent shall be obtained
no earlier than the beginning of the 90-day period that ends on the date on
which the loan to be so secured is made. The consent must be in writing, must
acknowledge the effect of the loan, and must be witnessed by a plan
representative or a notary public. Such consent shall thereafter be binding
with respect to the consenting spouse or any subsequent spouse with respect to
that loan. A new consent shall be required if the Vested Account is used for
collateral upon renegotiation, extension, renewal, or other revision of the
loan.
If a valid spousal consent has been obtained in accordance with the above,
then, notwithstanding any other provision of this Plan, the portion of the
Member's Vested Account used as a security interest held by the Plan by reason
of a loan outstanding to the Member shall be taken into account for purposes of
determining the amount of the Vested Account payable at the time of death or
distribution, but only if the reduction is used as repayment of the loan. If
less than 100% of the Member's Vested Account (determined without regard to
the preceding sentence) is payable to the surviving spouse, then the Vested
Account shall be adjusted by first reducing the Vested Account by the amount of
the security used as repayment of the loan, and then determining the benefit
payable to the surviving spouse.
Each loan shall bear a reasonable fixed rate of interest to be determined by
the Loan Administrator. In determining the interest rate, the Loan
Administrator shall take into consideration fixed interest rates currently
being charged by commercial lenders for loans of comparable risk on similar
terms and for similar durations, so that the interest will provide for a return
commensurate with rates currently charged by commercial lenders for loans made
under similar circumstances. The Loan Administrator shall not discriminate
among Members in the matter of interest rates; but loans granted at different
times may bear different interest rates in accordance with the current
appropriate standards.
The loan shall by its terms require that repayment (principal and interest) be
amortized in level payments, not less frequently than quarterly, over a period
not extending beyond five years from the date of the loan. The period of
repayment for any loan shall be arrived at by mutual agreement between the Loan
Administrator and the Member.
The Member shall make a written application for a loan from the Plan on forms
provided by the Loan Administrator. The application must specify the amount
and duration requested. No loan will be approved unless the Member is
creditworthy. The Member must grant authority to the Loan Administrator to
investigate the Member's creditworthiness so that the loan application may be
properly considered.
Information contained in the application for the loan concerning the income,
liabilities, and assets of the Member will be evaluated to determine whether
there is a reasonable expectation that the Member will be able to satisfy
payments on the loan as due. Additionally, the Loan Administrator will pursue
any appropriate further investigations concerning the creditworthiness and/or
credit history of the Member to determine whether a loan should be approved.
Each loan shall be fully documented in the form of a promissory note signed by
the Member for the face amount of the loan, together with interest determined
as specified above.
There will be an assignment of collateral to the Plan executed at the time the
loan is made.
In those cases where repayment through payroll deduction by us is available,
installments are so payable, and a payroll deduction agreement will be executed
by the Member at the time of making the loan.
Where payroll deduction is not available, payments are to be timely made.
Any payment that is not by payroll deduction shall be made payable to us or the
Trustee, as specified in the promissory note, and delivered to the Loan
Administrator, including prepayments, service fees and penalties, if any, and
other amounts due under the note.
The promissory note may provide for reasonable late payment penalties and/or
service fees. Any penalties or service fees shall be applied to all Members
in a nondiscriminatory manner. If the promissory note so provides, such
amounts may be assessed and collected from the Account of the Member as part
of the loan balance.
Each loan may be paid prior to maturity, in part or in full, without penalty or
service fee, except as may be set out in the promissory note.
If any amount remains unpaid for more than 31 days after due, a default is
deemed to occur.
Upon default, the Plan has the right to pursue any remedy available by law to
satisfy the amount due, along with accrued interest, including the right to
enforce its claim against the security pledged and execute upon the collateral
as allowed by law.
If any payment of principal or interest or any other amount due under the
promissory note, or any portion thereof, is not made for a period of 90 days
after due, the entire principal balance whether or not otherwise then due,
shall become immediately due and payable without demand or notice, and subject
to collection or satisfaction by any lawful means, including specifically but
not limited to the right to enforce the claim against the security pledged and
to execute upon the collateral as allowed by law.
In the event of default, foreclosure on the note and attachment of security or
use of amounts pledged to satisfy the amount then due, will not occur until a
distributable event occurs in
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accordance with the Plan, and will not occur to an extent greater than the
amount then available upon any distributable event which has occurred under the
Plan.
All reasonable costs and expenses, including but not limited to attorney's
fees, incurred by the Plan in connection with any default or in any proceeding
to enforce any provision of a promissory note or instrument by which a
promissory note for a Member loan is secured, shall be assessed and collected
from the Account of the Member as part of the loan balance.
If payroll deduction is being utilized, in the event that a Member's available
payroll deduction amounts in any given month are insufficient to satisfy the
total amount due, there will be an increase in the amount taken subsequently,
sufficient to make up the amount that is then due. If the subsequent deduction
is also insufficient to satisfy the amount due within 31 days, a default is
deemed to occur as above. If any amount remains past due more than 90 days,
the entire principal amount, whether or not otherwise then due, along with
interest then accrued and any other amount then due under the promissory note,
shall become due and payable, as above.
If the Member ceases to be an Employee, the balance of the outstanding loan
becomes due and payable, and the Member's Vested Account will be used as
available for distribution(s) to pay the outstanding loan. The Member's Vested
Account will not be used to pay any amount due under the outstanding loan
before the date which is 31 days after the date he ceased to be an Employee,
and the Member may elect to repay the outstanding loan with interest on the day
of repayment. If no distributable event has occurred under the Plan at the
time that the Member's Vested Account would otherwise be used under this
provision to pay any amount due under the outstanding loan, this will not occur
until the time, or in excess of the extent to which, a distributable event
occurs under the Plan.
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ARTICLE VI
DISTRIBUTION OF BENEFITS
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The provisions of this article shall apply on or after August 23, 1984, to any
Member who is credited with at least one Hour of Service or one hour of paid
leave on or after that date and to such other Members as provided in Section
6.05. If the Effective Date of our Plan is before January 1, 1984, the
provisions of the Prior Plan as in effect on the day before the TEFRA
Compliance Date shall apply before August 23, 1984. If the Effective Date of
our Plan is on or after January 1, 1984, and before August 23, 1984, the
provisions of the Plan as originally adopted shall apply before August 23,
1984.
SECTION 6.01 - AUTOMATIC FORMS OF DISTRIBUTION.
Unless a qualified election of an optional form of benefit has been made within
the election period (see Section 6.03), the automatic form of benefit payable
to or on behalf of a Member is determined as follows:
(a) The automatic form of retirement benefit for a Member who does not die
before his Annuity Starting Date shall be the Qualified Joint and Survivor
Form.
(b) The automatic form of death benefit for a Member who dies before his
Annuity Starting Date shall be:
(1) A Qualified Preretirement Survivor Annuity for a Member who has a
spouse to whom he has been continuously married throughout the
one-year period ending on the date of his death. The spouse may
elect to start receiving the death benefit on any first day of the
month on or after the Member dies and by the date the Member would
have been age 70 1/2. If the spouse dies before benefits start, the
Member's Vested Account, determined as of the date of the spouse's
death, shall be paid to the spouse's Beneficiary.
(2) A single sum payment to the Member's Beneficiary for a Member who does
not have a spouse who is entitled to a Qualified Preretirement
Survivor Annuity.
Before a death benefit will be paid on account of the death of a Member
who does not have a spouse who is entitled to a Qualified Preretirement
Survivor Annuity, it must be established to the satisfaction of a plan
representative that the Member does not have such a spouse.
SECTION 6.02 - OPTIONAL FORMS OF DISTRIBUTION
AND DISTRIBUTION REQUIREMENTS.
(a) For purposes of this section, the following terms are defined:
APPLICABLE LIFE EXPECTANCY means Life Expectancy (or Joint and Last
Survivor Expectancy) calculated using the attained age of the Member (or
Designated Beneficiary) as of the Member's (or Designated Beneficiary's)
birthday in the applicable calendar year reduced by one for each calendar
year which has elapsed since the date Life Expectancy was first
calculated. If Life Expectancy is being recalculated, the Applicable Life
Expectancy shall be the Life Expectancy so recalculated. The applicable
calendar year shall be the first Distribution Calendar Year, and if Life
Expectancy is being recalculated such succeeding calendar year.
DESIGNATED BENEFICIARY means the individual who is designated as the
beneficiary under the Plan in accordance with Code Section 401(a)(9) and
the regulations thereunder.
DISTRIBUTION CALENDAR YEAR means a calendar year for which a minimum
distribution is required. For distributions beginning before the
Member's death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Member's
Required Beginning Date. For distributions beginning after the Member's
death, the first Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to (e) below.
JOINT AND LAST SURVIVOR EXPECTANCY means joint and last survivor expectancy
computed by use of the expected return multiples in Tables V and VI of
section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Member (or spouse, in the case of
distributions described in (e)(2)(ii) below) by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Member (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse Beneficiary
may not be recalculated.
LIFE EXPECTANCY means life expectancy computed by use of the expected
return multiples in Tables V and VI of section 1-72-9 of the Income Tax
Regulations.
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Unless otherwise elected by the Member (or spouse, in the case of
distributions described in (e)(2)(ii) below) by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Member (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse Beneficiary
may not be recalculated.
MEMBER'S BENEFIT means
(1) The Account balance as of the last valuation date in the calendar
year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any
contributions or forfeitures allocated to the Account balance as of
the dates in the valuation calendar year after the valuation date and
decreased by distributions made in the valuation calendar year after
the valuation date.
(2) For purposes of (1) above, if any portion of the minimum
distribution for the first Distribution Calendar Year is made
in the second Distribution Calendar Year on or before the Required
Beginning Date, the amount of the minimum distribution made in the
second Distribution Calendar Year shall be treated as if it had been
made in the immediately preceding Distribution Calendar Year.
REQUIRED BEGINNING DATE means, for a Member, the first day of April of
the calendar year following the calendar year in which the Member attains
age 70 1/2, unless otherwise provided in (1), (2) or (3) below:
(1) The Required Beginning Date for a Member who attains age 70 1/2
before January 1, 1988, and who is not a 5-percent owner is the
first day of April of the calendar year following the calendar year
in which the later of retirement or attainment of age 70 1/2 occurs.
(2) The Required Beginning Date for a Member who attains age 70 1/2
before January 1, 1988, and who is a 5 percent owner is the
first day of April of the calendar year following the later of
(i) the calendar year in which the Member attains age 70 1/2,
or
(ii) the earlier of the calendar year with or within which ends
the Plan Year in which the Member becomes a 5-percent owner, or
the calendar year in which the Member retires.
(3) The Required Beginning Date of a Member who is not a 5-percent
owner and who attains age 70 1/2 during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
A Member is treated as a 5-percent owner for purposes of this section
if such Member is a 5-percent owner as defined in Code Section 416(i)
(determined in accordance with Code Section 416 but without regard to
whether the Plan is top-heavy) at any time during the Plan Year ending
with or within the calendar year in which such owner attains age 66 1/2 or
any subsequent Plan Year.
Once distributions have begun to a 5-percent owner under this section,
they must continue to be distributed, even if the Member ceases to be a
5-percent owner in a subsequent year.
(b) The optional forms of retirement benefit shall be the following: a
straight life annuity; single life annuities with certain periods of five,
ten, or fifteen years; a single life annuity with installment refund;
survivorship life annuities with installment refund and survivor
percentages of 50, 66 2/3, or 100; fixed period annuities for any period
of whole months which is not less than sixty and does not exceed the Life
Expectancy of the Member and the named Beneficiary as provided in (d)
below where the Life Expectancy is not recalculated; and a series of
installments chosen by the Member with a minimum payment each year
beginning with the year the Member turns age 70 1/2. The payment for the
first year in which a minimum payment is required will be made by April 1
of the following calendar year. The payment for the second year and each
successive year will be made by December 31 of that year. The minimum
payment will be based on a period equal to the Joint and Last Survivor
Expectancy of the Member and the Member's spouse, if any, as provided in
(d) below where the Joint and Last Survivor Expectancy is recalculated.
The balance of the Member's Vested Account, if any, will be payable on the
Member's death to his Beneficiary in a single sum. If not prohibited in
Item Y of the Adoption Agreement - Plus, a single sum payment is also
available.
Election of an optional form is subject to the qualified election
provisions of Article VI.
Any annuity contract distributed shall be nontransferable. The terms of
any annuity contract purchased and distributed by the Plan to a Member or
spouse shall comply with the requirements of this Plan.
(c) The optional forms of death benefit are a single sum payment and any
annuity that is an optional form of retirement benefit. However, a series
of installments shall not be available if the Beneficiary is not the
spouse of the deceased Member.
(d) Subject to Section 6.01, joint and survivor annuity requirements, the
requirements of this section shall apply to any distribution of a Member's
interest and will take precedence over any inconsistent provisions of this
Plan. Unless otherwise specified, the provisions of this
section apply to calendar years beginning after December 31,1984.
All distributions required under this section shall be determined and made
in accordance with the proposed regulations under Code Section 401(a)(9),
including the minimum distribution incidental benefit requirement of
section 1.401(a)(9)-2 of the proposed regulations.
The entire interest of a Member must be distributed or begin to be
distributed no later than the Member's Required Beginning Date.
As of the first Distribution Calendar Year, distributions, if not made in a
single sum, may only be made over one of the following periods (or
combination thereof):
(1) the life of the Member,
(2) the life of the Member and a Designated Beneficiary,
(3) a period certain not extending beyond the Life Expectancy of the
Member, or
(4) a period certain not extending beyond the Joint and Last Survivor
Expectancy of the Member and a Designated Beneficiary.
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<PAGE> 66
If the Members interest is to be distributed in other than a single sum,
the following minimum distribution rules shall apply on or after the
Required Beginning Date:
(5) Individual account:
(i) If a Member's Benefit is to be distributed over
(A) a period not extending beyond the Life Expectancy of the
Member or the Joint Life and Last Survivor Expectancy of
the Member and the Member's Designated Beneficiary or
(B) a period not extending beyond the Life Expectancy of the
Designated Beneficiary,
the amount required to be distributed for each calendar year
beginning with the distributions for the first Distribution
Calendar Year, must be at least equal to the quotient obtained
by dividing the Member's Benefit by the Applicable Life
Expectancy.
(ii) For calendar years beginning before January 1, 1989, if
the Member's spouse is not the Designated Beneficiary, the
method of distribution selected must assure that at least 50%
of the present value of the amount available for distribution
is paid within the Life Expectancy of the Member.
(iii)For calendar year beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year shall
not be less than the quotient obtained by dividing the Member's
Benefit by the lesser of
(A) the Applicable Life Expectancy or
(B) if the Member's spouse is not the Designated Beneficiary,
the applicable divisor determined from the table set forth
in Q&A-4 of section 1.401 (a)(9)-2 of the proposed
regulations.
Distributions after the death of the Member shall be
distributed using the Applicable Life Expectancy in (5)(i)
above as the relevant divisor without regard to Proposed
Regulations section 1.401 (a)(9)-2.
(iv) The minimum distribution required for the Member's first
Distribution Calendar Year must be made on or before the Member's
Required Beginning Date. The minimum distribution for the
Distribution Calendar Year for other calendar years, including
the minimum distribution for the Distribution Calendar Year in
which the Member's Required Beginning Date occurs, must be made
on or before December 31 of that Distribution Calendar Year.
(6) Other forms:
(i) If the Member's Benefit is distributed in the form of an
annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of
Code Section 401(a)(9) and the proposed regulations thereunder.
(e) Death distribution provisions:
(1) Distribution beginning before death. If the Member dies after
distribution of his interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as
under the method of distribution being used prior to the Member's
death.
(2) Distribution beginning after death. If the Member dies before
distribution of his interest begins, distribution of the
Member's entire interest shall be completed by December 31 of the
calendar year containing the fifth anniversary of the Member's death
except to the extent that an election is made to receive
distributions in accordance with (i) or (ii) below:
(i) if any portion of the Member's interest is payable to a
Designated Beneficiary, distributions may be made over the life
or over a period certain not greater than the Life Expectancy
of the Designated Beneficiary commencing on or before December
31 of the calendar year immediately following the calendar year
in which the Member died;
(ii) if the Designated Beneficiary is the Member's surviving
spouse, the date distributions are required to begin in
accordance with (i) above shall not be earlier than the later of
(A) December 31 of the calendar year immediately following the
calendar year in which the Member died and
(B) December 31 of the calendar year in which the Member would
have attained age 70 1/2.
If the Member has not made an election pursuant to this (e)(2)
by the time of his death, the Member's Designated Beneficiary must
elect the method of distribution no later than the earlier of
(iii)December 31 of the calendar year in which distributions
would be required to begin under this subparagraph, or
(iv) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Member.
If the Member has no Designated Beneficiary, or if the
Designated Beneficiary does not elect a method of distribution,
distribution of the Member's entire interest must be completed by
December 31 of the calendar year containing the fifth anniversary of
the Member's death.
(3) For purposes of (e)(2) above, if the surviving spouse dies after
the Member, but before payments to such spouse begin, the provisions
of (e)(2) above, with the exception of (e)(2)(ii) therein, shall be
applied as if the surviving spouse were the Member.
(4) For purposes of this (e), any amount paid to a child of the Member
will be treated as if it had been paid to the surviving spouse if the
amount becomes payable to the surviving spouse when the child
reaches the age of majority.
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<PAGE> 67
(5) For purposes of this (e), distribution of a Member's interest is
considered to begin on the Member's Required Beginning Date (or if
(e)(3) above is applicable, the date distribution is required to
begin to the surviving spouse pursuant to (e)(2) above). If
distribution in the form of an annuity irrevocably commences to the
Member before the Required Beginning Date, the date distribution is
considered to begin is the date distribution actually commences.
SECTION 6.03 - ELECTION PROCEDURES.
The Member, Beneficiary, or spouse shall make any election under this section
in writing. The Plan Administrator may require such individual to complete and
sign any necessary documents as to the provisions to be made. Any election
permitted under (a) and (b) below shall be subject to the qualified election
provisions of (c) below.
(a) Retirement Benefits. A Member may elect his Beneficiary or Contingent
Annuitant and may elect to have retirement benefits distributed under any
of the optional forms of retirement benefit described in Section 6.02.
(b) Death Benefits. A Member may elect his Beneficiary and may elect to have
death benefits distributed under any of the optional forms of death
benefit described in Section 6.02.
If the Member has not elected an optional form of distribution for the
death benefit payable to his Beneficiary, the Beneficiary may, for his own
benefit, elect the form of distribution, in like manner as a Member.
The Member may waive the Qualified Preretirement Survivor Annuity by
naming someone other than his spouse as Beneficiary.
In lieu of the Qualified Preretirement Survivor Annuity described in
Section 6.01, the spouse may, for his own benefit, waive the Qualified
Preretirement Survivor Annuity by electing to have the benefit distributed
under any of the optional forms of death benefit described in Section
6.02.
(c) Qualified Election. The Member, Beneficiary or spouse may make an
election at any time during the election period. The Member, Beneficiary,
or spouse may revoke the election made (or make a new election) at any
time and any number of times during the election period. An election is
effective only if it meets the consent requirements below.
The election period as to retirement benefits is the 90-day period
ending on the Annuity Starting Date. An election to waive the Qualified
Joint and Survivor Form may not be made before the date he is provided
with the notice of the ability to waive the Qualified Joint and Survivor
Form. If the Member elects the series of installments, he may elect on
any later date to have the balance of his Vested Account paid under any of
the optional forms of retirement benefit available under the Plan. His
election period for this election is the 90-day period ending on the
Annuity Starting Date for the optional form of retirement benefit elected.
A Member may make an election as to death benefits at any time before
he dies. The spouse's election period begins on the date the Member dies
and ends on the date benefits begin. The Beneficiary's election period
begins on the date the Member dies and ends on the date benefits begin.
An election to waive the Qualified Preretirement Survivor Annuity may not
be made by the Member before the date he is provided with the notice of
the ability to waive the Qualified Preretirement Survivor Annuity. A
Member's election to waive the Qualified Preretirement Survivor Annuity
which is made before the first day of the Plan Year in which he reaches
age 35 shall become invalid on such date. An election made by a Member
after he ceases to be an Employee will not become invalid on the first
day of the Plan Year in which he reaches age 35 with respect to death
benefits from that part of his Account resulting from Contributions made
before he ceased to be an Employee.
If the Member's Vested Account has at any time exceeded $3,500, any
benefit which is (1) immediately distributable or (2) payable in a form
other than a Qualified Joint and Survivor Form or a Qualified
Preretirement Survivor Annuity requires the consent of the Member and the
Member's spouse (or where either the Member or the spouse has died, the
survivor). The consent of the Member or spouse to a benefit which is
immediately distributable must not be made before the date the Member or
spouse is provided with the notice of the ability to defer the
distribution. Such consent shall be made in writing. The consent shall
not be made more than 90 days before the Annuity Starting Date. Spousal
consent is not required for a benefit which is immediately distributable
in a Qualified Joint and Survivor Form. Furthermore, if spousal consent
is not required because the Member is electing an optional form of
retirement benefit that is not a life annuity pursuant to (d) below, only
the Member need consent to the distribution of a benefit payable in a form
that is not a life annuity and which is immediately distributable.
Neither the consent of the Member nor the Member's spouse shall be
required to the extent that a distribution is required to satisfy Code
Section 401(a)(9) or Code Section 415. In addition, upon termination of
this Plan if the Plan does not offer an annuity option (purchased from a
commercial provider), the Member's Account balance may, without the
Member's consent, be distributed to the Member or transferred to another
defined contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)) within the same Controlled Group. A
benefit is immediately distributable if any part of the benefit could be
distributed to the Member (or surviving spouse) before the Member attains
(or would have attained it not deceased) the older of Normal Retirement
Age or age 62. If the Qualified Joint and Survivor Form is waived, the
spouse has the right to limit consent only to a specific Beneficiary or a
specific form of benefit. The spouse can relinquish one or both such
rights. Such consent shall be made in writing. The consent shall not be
made more than 90 days before the Annuity Starting Date. If the Qualified
Preretirement Survivor Annuity is waived, the spouse has the right to
limit consent only to a specific Beneficiary. Such consent shall be in
writing. The spouse's consent shall be witnessed by a plan representative
or notary public. The spouse's consent must acknowledge the effect of the
election, including that the spouse had the right to limit consent only to
a specific Beneficiary or a specific form of benefit, if applicable, and
that the relinquishment of one or both such rights was voluntary. Unless
the consent of the spouse expressly permits designations by the Member
without a requirement of further consent by the spouse, the spouse's
consent must be limited to the form of benefit, if applicable, and the
Beneficiary (including any Contingent Annuitant), class of Beneficiaries,
or contingent Beneficiary named in the election. Spousal consent is not
required, however, if the
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<PAGE> 68
Member establishes to the satisfaction of the plan representative that
the consent of the spouse cannot be obtained because there is no spouse or
the spouse cannot be located. A spouse's consent under this paragraph
shall not be valid with respect to any other spouse. A Member may revoke
a prior election without the consent of the spouse. Any new election will
require a new spousal consent, unless the consent of the spouse expressly
permits such election by the Member without further consent by the spouse.
A spouse's consent may be revoked at any time within the Member's election
period.
Before the first Yearly Date in 1989, the Member's Account which
results from deductible Voluntary Contributions shall not be taken into
account in determining whether the Member's Vested Account has exceeded
$3,500 and an election as to the distribution of a Member's Vested Account
which results from deductible Voluntary Contributions is not subject to
the consent requirements above and may be made any time before such
distribution is to begin.
(d) Special Rule for Profit Sharing Plans. As provided in the preceding
provisions of the Plan, if a Member has a spouse to whom he has been
continuously married throughout the one-year period ending on the date of
the Member's death, the Member's Vested Account, including the proceeds
payable under any Insurance Policy on the Member's life, shall be paid to
such spouse. However, if there is no such spouse or if the surviving
spouse has already consented in a manner conforming to the qualified
election requirements in (c) above, the Vested Account shall be payable to
the Member's Beneficiary in the event of the Member's death.
The Member may waive the spousal death benefit described above at any
time provided that no such waiver shall be effective unless it satisfies
the conditions of (c) above (other than the notification requirement
referred to therein) that would apply to the Member's waiver of the
Qualified Preretirement Survivor Annuity.
This subsection (d) applies if with respect to the Member, the Plan is
not a direct or indirect transferee after December 31, 1984, of a defined
benefit plan, money purchase plan (including a target plan), stock bonus
or profit sharing plan which is subject to the survivor annuity
requirements of Code Section 401(a)(11) and Code Section 417. If the
above condition is met, spousal consent is not required for electing an
optional form of retirement benefit that is not a life annuity. If the
above condition is not met, the consent requirements of this Article shall
be operative.
SECTION 6.04 - NOTICE REQUIREMENTS.
(a) Optional forms of retirement benefit. The Plan Administrator shall
furnish to the Member and the Member's spouse a written explanation of the
optional forms of retirement benefit in Section 6.02, including the
material features and relative values of these options, in a manner that
would satisfy the notice requirements of Code Section 417(a)(3) and the
right of the Member and the Member's spouse to defer distribution until
the benefit is no longer immediately distributable. The Plan
Administrator shall furnish the written explanation by a method reasonably
calculated to reach the attention of the Member and the Member's spouse no
less than 30 days and no more than 90 days before the Annuity Starting
Date.
(b) Qualified Joint and Survivor Form. The Plan Administrator shall
furnish to the Member a written explanation of the following: the terms
and conditions of the Qualified Joint and Survivor Form; the Member's
right to make, and the effect of, an election to waive the Qualified Joint
and Survivor Form; the rights of the Member's spouse; and the right to
revoke an election and the effect of such a revocation. The Plan
Administrator shall furnish the written explanation by a method reasonably
calculated to reach the attention of the Member no less than 30 days and
no more than 90 days before the Annuity Starting Date.
After the written explanation is given, a Member or spouse may make
written request for additional information. The written explanation must
be personally delivered or mailed (first class mail, postage prepaid) to
the Member or spouse within thirty days from the date of the written
request. The Plan Administrator does not need to comply with more than one
such request by a Member or spouse.
The Plan Administrator's explanation shall be written in nontechnical
language and will explain the terms and conditions of the Qualified Joint
and Survivor Form and the financial effect upon the Member's benefit (in
terms of dollars per benefit payment) of electing not to have benefits
distributed in accordance with the Qualified Joint and Survivor Form.
(c) Qualified Preretirement Survivor Annuity. The Plan Administrator shall
furnish to the Member a written explanation of the following: the terms
and conditions of the Qualified Preretirement Survivor Annuity; the
Member's right to make, and the effect of, an election to waive the
Qualified Preretirement Survivor Annuity; the rights of the Member's
spouse; and the right to revoke an election and the effect of such a
revocation. The Plan Administrator shall furnish the written explanation
by a method reasonably calculated to reach the attention of the Member
within the applicable period. The applicable period for a Member is
whichever of the following periods ends last:
(1) the period beginning one year before the date the individual
becomes a Member and ending one year after such date; or
(2) the period beginning one year before the date the Member's spouse
is first entitled to a Qualified Preretirement Survivor Annuity and
ending one year after such date.
If such notice is given before the period beginning with the first day
of the Plan Year in which the Member attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the Member attains
age 35, an additional notice shall be given within such period. If a
Member ceases to be an Employee before attaining age 35, an additional
notice shall be given within the period beginning one year before the date
he ceases to be an Employee and ending one year after such date,
After the written explanation is given, a Member or spouse may make
written request for additional information. The written explanation must
be personally delivered or mailed (first class mail, postage prepaid) to
the Member or spouse within thirty days from the date of the written
request. The Plan Administrator does not need to comply with more than one
such request by a Member or spouse.
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The Plan Administrator's explanation shall be written in nontechnical
language and will explain the terms and conditions of the Qualified
Preretirement Survivor Annuity and the financial effect upon the spouse's
benefit (in terms of dollars per benefit payment) of electing not to have
benefits distributed in accordance with the Qualified Preretirement
Survivor Annuity.
SECTION 6.05 - TRANSITIONAL RULES.
In modification of the preceding provisions of this Plan, distributions
(including distributions to a five-percent owner of us) may be made in a form
which would not have caused this Plan to be disqualified under Code Section 401
(a)(9) as in effect before the TEFRA Compliance Date. The form must be elected
by the Member or, if the Member has died, by the Beneficiary. The election
must be made in writing and signed before January 1, 1984. The election will
only be applicable if the Member has an Account as of December 31, 1983. The
Member's or Beneficiary's election must specify when the distribution is to
begin, the form of distribution and the Contingent Annuitant and/or
Beneficiaries listed in the order of priority, if applicable. A distribution
upon death will not be covered by this transitional rule unless the election
contains the required information described above with respect to the
distributions to be made when the Member dies. Distributions in the process of
payment on January 1, 1984, are deemed to meet the above requirements if the
form of distribution was elected in writing and the form met the requirements
of Code Section 401(a)(9) as in effect before the TEFRA Compliance Date. If
the election under this paragraph is revoked, any subsequent distribution must
meet the requirements of Code Section 401(a)(9) and the proposed regulations
thereunder. If an election is revoked subsequent to the date distributions are
required to begin, the Plan must distribute by the end of the calendar year
following the calendar year in which the revocation occurs the total amount not
yet distributed which would have been required to have been distributed to
satisfy Code Section 401(a)(9) and the proposed regulations thereunder, but
for the Code Section 242(b)(2) election. For calendar years beginning after
December 31, 1988, such distribution must meet the minimum distribution
incidental benefit requirements in section 1.401(a)(9)-2 of the proposed
regulations. Any changes in the election will be considered a revocation of
the election. However, the mere substitution or addition of another
Beneficiary (one not named in the election) under the election will not be
considered to be a revocation of the election, so long as such substitution or
addition does not alter the period over which distributions are to be made
under the election, directly or indirectly (for example, by altering the
relevant measuring life). In the case in which an amount is transferred or
rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 of
section 1.401(a)(9)-1 of the proposed regulations shall apply. A Member's
election of an optional form of retirement benefit shall be subject to his
spouse's consent as provided in Section 6.03.
A Member, who would not otherwise receive the benefits prescribed by the
previous sections of this article, will be entitled to the following benefits:
(a) If he is living and not receiving benefits on August 23, 1984, he will be
given the opportunity to elect to have the prior sections of this article
apply, if he is credited with at least one Hour of Service under this Plan
or a predecessor plan in a plan year beginning on or after January 1,
1976, and he had at least ten Years of Service when he separated from
service.
(b) If he is living and not receiving benefits on August 23, 1984, he will
be given the opportunity to elect to have his benefits paid according to
the following provisions of this section, if he is credited with at least
one Hour of Service under this Plan or a predecessor plan on or after
September 2, 1974, and he is not credited with any service in a plan year
beginning on or after January 1, 1976.
The respective opportunities to elect (as described in (a) and (b) above) must
be afforded to the appropriate Members during the period beginning on August
23, 1984, and ending on the date benefits would otherwise begin to such Member.
Any Member who has elected according to (b) above and any member who does not
elect under (a) above or who meets the requirements of (a) above except that
such Member does not have at least ten Years of Service when he separated from
service, shall have his benefits distributed in accordance, with the following
if benefits would have been payable in the form of a life annuity:
(c) Automatic joint and survivor annuity. If benefits in the form of a life
annuity become payable to a married Member who:
(1) begins to receive payments under the Plan on or after Normal
Retirement Age; or
(2) dies on or after Normal Retirement Age while still working for us; or
(3) begins to receive payments on or after the qualified early retirement
age; or
(4) separates from service on or after attaining Normal Retirement Age (or
the qualified early retirement age) and after satisfying the
eligibility requirements for the payment of benefits under the Plan
and thereafter dies before beginning to receive such benefits;
then such benefits will be paid under the Qualified Joint and Survivor
Form, unless the Member has elected otherwise during the election period.
The election period must begin at least six months before the Member
attains qualified early retirement age and end not more than 90 days
before benefits begin. Any election hereunder will be in writing and may
be changed by the Member at any time.
(d) Election of early survivor annuity. A Member who is employed after
attaining the qualified early retirement age will be given the opportunity
to elect, during the election period, to have a Qualified Preretirement
Survivor Annuity payable on death. Any election under this provision will
be in writing and may be changed by the Member at any time. The election
period begins on the later of (1) the 90th day before the Member attains
the qualified early retirement age, or (2) the Member's Entry Date, and
ends on the date the Member terminates employment.
(e) For purposes of this paragraph, qualified early retirement age is the
latest of:
(1) the earliest date, under the Plan, on which the Member may elect to
receive retirement benefits,
(2) the first day of the 120th month beginning before the Member reaches
Normal Retirement Age, or
(3) the Member's Entry Date.
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ARTICLE VII
TERMINATION OF PLAN
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We expect to continue the Plan indefinitely, but reserve the right to terminate
the Plan in whole or in part at any time upon giving written notice to all
parties concerned. Complete discontinuance of Contributions constitutes
complete termination of Plan.
The Account of each Member shall be fully (100%) vested and nonforfeitable as
of the effective date of complete termination of the Plan. The Account of each
Member who becomes an Inactive Member because he is no longer an Eligible
Employee due to partial termination of the Plan shall be fully (100%) vested
and nonforfeitable as of the effective date of the partial Plan termination.
If a Member ceased to be an Employee before partial termination of the Plan but
otherwise would have become an Inactive Member upon partial termination due to
no longer being an Eligible Employee, his Account shall be fully (100%) vested
and nonforfeitable as of the effective date of the partial termination of the
Plan. An Inactive Member's Vested Account shall continue to participate in the
earnings credited, expenses charged and any appreciation or depreciation of the
Investment Fund until the Vested Account is distributed. A distribution under
this article shall be a retirement benefit and shall be distributed to the
Member according to the provisions of Article VI.
A Member's Account which does not result from Contributions which are used to
compute the Actual Deferral Percentage, as defined in Section 3.07, may be
distributed to the Member after the effective date of the complete or partial
Plan termination. A Member's Account resulting from Contributions which are
used to compute such percentage (Elective Deferral Contributions, Qualified
Nonelective Contributions, and Qualified Matching Contributions) may be
distributed upon termination of the Plan without the establishment of another
defined contribution plan.
Upon complete termination of the Plan, no more Employees shall become Members
and no more Contributions shall be made.
The assets of this Plan shall not be paid to us at any time, except that, after
the satisfaction of all liabilities under the Plan, any assets remaining may be
paid to us. The payment may not be made if it would contravene any provision
of law.
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ARTICLE VIII
ADMINISTRATION OF PLAN
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SECTION 8.01 - ADMINISTRATION.
Subject to the provisions of this article, the Plan Administrator has complete
control of the administration of the Plan. The Plan Administrator has all the
powers necessary for it to properly carry out its administrative duties. Not
in limitation, but in amplification of the foregoing, the Plan Administrator
has the power to construe the Plan and to determine all questions that may
arise under the Plan, including all questions relating to the eligibility of
Employees to participate in the Plan and the amount of benefit to which any
Member, Beneficiary, spouse, or
Contingent Annuitant may become entitled. The Plan Administrators decisions
upon all matters within the scope of its authority are final.
Unless otherwise set out in the Plan or Annuity Contract, the Plan
Administrator may delegate recordkeeping and other duties which are necessary
to assist it with the administration of the Plan to any person or firm which
agrees to accept such duties. The Plan Administrator shall be entitled to rely
upon all tables, valuations, certificates, and reports furnished by the
consultant or actuary appointed by the Plan Administrator and upon all opinions
given by any counsel selected or approved by the Plan Administrator.
The Plan Administrator shall receive all claims for benefits by Members, former
Members, Beneficiaries, spouses, and Contingent Annuitants. The Plan
Administrator shall determine all facts necessary to establish the right of any
Claimant to benefits and the amount of those benefits under the provisions of
the Plan. The Plan Administrator may establish rules and procedures to be
followed by Claimants in filing claims for benefits, in furnishing and
verifying proofs necessary to determine age, and in any other matters required
to administer the Plan.
SECTION 8.02 - RECORDS.
All acts and determinations of the Plan Administrator shall be duly recorded.
All these records, together with other documents necessary for the
administration of the Plan, shall be preserved in the Plan Administrator's
custody.
Writing (handwriting, typing, printing), photostating, photographing,
micro-filming, magnetic impulse, mechanical or electrical recording, or other
forms of data compilation shall be acceptable means of keeping records.
SECTION 8.03 - INFORMATION AVAILABLE.
Any Member in the Plan or any Beneficiary may examine copies of the Plan
description, latest annual report, any bargaining agreement, this Plan, the
contract, or any other instrument under which the Plan was established or is
operated. The Plan Administrator shall maintain all of the items listed in
this section in its office, or in such other place or places as it may
designate in order to comply with governmental regulations. These items may be
examined during reasonable business hours. Upon the written request of a
Member or Beneficiary receiving benefits under the Plan, the Plan Administrator
shall furnish him with a copy of any of these items. The Plan Administrator
may make a reasonable charge to the requesting person for the copy.
SECTION 8.04 - CLAIM AND APPEAL PROCEDURES.
A Claimant must submit any required forms and pertinent information when
making a claim for benefits under the Plan.
If a claim for benefits under the Plan is denied, the Plan Administrator shall
provide adequate written notice to any Claimant whose claim for benefits under
the Plan has been denied. The notice must be furnished within ninety days of
the date that the claim is received by the Plan Administrator. The Claimant
shall be notified in writing within this initial ninety-day period if special
circumstances require an extension of time needed to process the claim and the
date by which the Plan Administrator's decision is expected to be rendered.
The written notice shall be furnished no later than 180 days after the date the
claim was received by the Plan Administrator.
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The Plan Administrator's notice to the Claimant shall specify the reason for
the denial; specify references to pertinent Plan provisions on which denial is
based; describe any additional material and information needed for the Claimant
to perfect his claim for benefits; explain why the material and information is
needed; inform the Claimant that any appeal he wishes to make must be made in
writing to the Plan Administrator within sixty days after receipt of the Plan
Administrator's notice of denial of benefits and that failure to make the
written appeal within such sixty-day period renders the Plan Administrator's
determination of such denial final, binding and conclusive.
If the Claimant appeals to the Plan Administrator, the Claimant, or his
authorized representative, may submit in writing whatever issues and comments
the Claimant, or the representative, feels are pertinent. The Claimant, or the
authorized representative, may review pertinent Plan documents. The Plan
Administrator shall reexamine all facts related to the appeal and make a final
determination as to whether the denial of benefits is justified under the
circumstances. The Plan Administrator shall advise the Claimant of its
decision within sixty days of his written request for review, unless special
circumstances (such as a hearing) would make rendering a decision within the
sixty-day limit unfeasible. The Claimant shall be notified within the
sixty-day limit if an extension is necessary. The Plan Administrator shall
render a decision on a claim for benefits no later than 120 days after the
request for review is received.
SECTION 8.05 - UNCLAIMED VESTED ACCOUNT PROCEDURES.
If a Member or the Member's spouse or Beneficiary does not claim the Member's
Vested Account, the Vested Account may be forfeited and applied according to
the provisions of Section 3.04. An unclaimed Vested Account shall not be
forfeited until the latest of the date the Member attains age 62, attains
Normal Retirement Age, or six months after the date the Member, spouse, or
Beneficiary is notified, by certified or registered mail addressed to his last
known address, that he is entitled to a benefit. If by the latest date above,
the Member, spouse, or Beneficiary has not claimed the Vested Account or made
his whereabouts known in writing, the Plan Administrator may treat the Vested
Account as a Forfeiture.
It a Member's Vested Account is forfeited according to the provisions of the
above paragraph and the Member or the Member's spouse or Beneficiary at any
time makes a claim for benefits, the forfeited Vested Account shall be
reinstated, unadjusted for any gains or losses occurring after the date it was
forfeited. The reinstated Vested Account shall then be distributed to the
Member, spouse, or Beneficiary according to the preceding provisions of the
Plan.
SECTION 8.06 - DELEGATION OF AUTHORITY.
All or any part of the administrative duties and responsibilities under this
article may be delegated by the Plan Administrator to a retirement committee.
The duties and responsibilities of the retirement committee shall be set out in
a separate written agreement.
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ARTICLE VIIIA
TRUST PROVISIONS
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SECTION 8A.01 - THE TRUST AND TRUST FUND.
If Item T(l) is selected, we have established this Trust by executing the
attached Adoption Agreement. The Trust is established for the purpose of
holding and distributing the Trust Fund under the provisions of the Plan. The
Trust is construed, regulated, and administered under the law of the state in
which we have our principal office.
The Trust Fund consists of the total funds held under the Trust for the purpose
of providing benefits for Members. These funds result from Contributions made
under the Plan, which are forwarded to the Trustee to be deposited in the Trust
Fund. The Trust Fund shall be valued at current fair market value as of the
last day of the last calendar month ending in the Plan Year and, at the
discretion of the Trustee, may be valued more frequently. The valuation shall
take into consideration investment earnings credited, expenses charged,
payments made, and changes in the values of the assets held in the Trust Fund.
The Account of a Member shall be credited with its share of the gains and
losses of the Trust Fund. That part of a Member's Account invested in a
funding arrangement which establishes an account or accounts for such Member
thereunder shall be credited with the gain or loss from such account or
accounts. That part of a Member's Account which is invested in other funding
arrangements shall be credited with a proportionate share of the gain or loss
of such investments. The share shall be determined by multiplying the gain or
loss of the investment by the ratio of the part of the Member's Account
invested in such funding arrangement to the total of the Trust Fund invested in
such funding arrangement.
SECTION 8A.02 - THE TRUSTEE.
We have appointed the Trustee named in Item T. We have the power to appoint an
additional or successor Trustee or remove a Trustee at any time by amending the
Adoption Agreement.
The Trustee accepts this appointment by executing the Adoption Agreement or an
amendment to it. A Trustee may resign at any time upon thirty days written
notice to us. If a Trustee is removed, resigns or dies, the successor Trustee
whom we appoint has the same powers and duties as the Trustee replaced. Pending
the appointment of and acceptance of the successor Trustee, a remaining Trustee
has full power to act. When appointment has been accepted by a successor
Trustee, the removed or resigning Trustee must assign, transfer, pay over, and
deliver to the successor Trustee all of the assets which then constitute the
Trust Fund.
If there are two or more persons appointed as Trustees, the Trustees may, in
writing, name one of their number to act in the execution of all documents
relating to the Plan and Trust. When more than two persons have been appointed
as Trustee, all acts and decisions shall be made by majority vote.
SECTION 8A.03 - DUTIES OF TRUSTEE.
It is the duty of the Trustee to accept and hold the Trust Fund and administer
it according to the provisions of the Trust. The Trustee has no duty to demand
or require that Contributions
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be made to the Trust, nor shall a Trustee be liable to determine the amount
of any Contributions to the Trust.
The Plan is administered by the Plan Administrator. The Trustee is not
responsible for any aspect of its administration. The Trustee is not required
to look into any action taken by the Named Fiduciary, Plan Administrator, or us
and will be fully protected in taking, permitting or omitting any action on the
basis of our actions. Any action by the Named Fiduciary, Plan Administrator,
or us according to the Plan provisions shall be evidenced in writing. We will
indemnify the Trustee by satisfying any liabilities the Trustee may incur in
acting in accordance with the Trust provisions upon written instruction from
the Named Fiduciary, Plan Administrator, or us.
SECTION 8A.04 - POWERS OF TRUSTEE.
Except where the Plan expressly provides that the Trustee is subject to the
direction of the Named Fiduciary, Plan Administrator, or us, the Trustee is
authorized and empowered
(a) to apply for and invest all or any part of the assets of the Trust Fund
in the Annuity Contract, an Insurance Policy or both, issued by the
Insurer and to hold the Annuity Contract and any Insurance Policy as
owner;
(b) to invest and reinvest all or any part of the assets of the Trust Fund in
any bonds, debentures, notes, mortgages or mortgage participations,
preferred stocks, common stocks or other securities, or other real or
personal properties;
(c) to sell, exchange, convey, transfer, or otherwise dispose of any property
held by it, by private contract or at public auction;
(d) to exercise the voting rights of any stocks, bonds or other securities
and to exercise any of the powers of an owner with respect to stocks,
bonds, securities, or other property held in the Trust Fund;
(e) to retain in cash an amount which the Trustee considers advisable, and to
deposit cash in any depository selected by it, without liability for
interest;
(f) to make, execute, acknowledge, and deliver any instruments necessary to
carry out the powers granted it;
(g) to employ such agents, actuaries, clerical help, custodians, and others
as are needed to carry out the Trustee's duties;
(h) to consult with legal counsel, including our counsel, with respect to the
meaning or construction of, or the Trustee's obligations or duties under,
the Plan and Trust, or with respect to any action or proceeding or any
question of law. The Trustee shall be fully protected with respect to any
action it takes in good faith pursuant to the advice of such counsel.
(i) to enforce any right, obligation, or claim and, in its absolute
discretion, to protect in any way the interest of the Trust Fund and if
the Trustee considers such an action to be in the best interest of the
Trust Fund, to abstain from the enforcement of any right, obligation, or
claim and to abandon any property it has held.
SECTION 8A.05 - EXPENSES.
We pay the expenses incurred by the Trustee in the performance of its duties,
any fees for legal services rendered to the Trustee, and compensation to the
Trustee which we have mutually agreed upon in writing. The Trustee may charge
against the Trust Fund taxes imposed with respect to the Trust Fund or its
income.
SECTION 8A.06 - ACCOUNTING.
The Trustee shall maintain accurate and detailed records on all receipts,
investments, disbursements, and other transactions performed in its capacity as
Trustee. These records must be open to inspection and audit by the Plan
Administrator, Named Fiduciary, and us at all reasonable times.
Writing (handwriting, typing, printing), photostating, photographing,
microfilming, magnetic impulse, mechanical or electrical recording, or other
forms of data compilation shall be acceptable means of keeping records.
The Trustee shall file all reports, returns, and information required under
the Code and regulations and rulings issued under the Code.
The Trustee shall file with us an accounting of its transactions as soon as
practical after each Yearly Date or any other date we may specify. Any report
or accounting which the Trustee files with us is open to inspection by a
Member for a period of sixty days following the date it is filed. At the end
of the sixty-day period, the Trustee is released and discharged as to any
matters set forth in the report or account, except with respect to any act or
omission as to which a Member, the Plan Administrator, the Named Fiduciary or
we have filed a written objection within the sixty-day period.
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ARTICLE IX
GENERAL PROVISIONS
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SECTION 9.01 - AMENDMENTS.
We may amend a selection or specification in the Adoption Agreement at any
time, including any remedial retroactive changes (within the time specified by
Internal Revenue Service regulation) to comply with any law or regulation
issued by any governmental agency to which the Plan is subject. An amendment
may not diminish or adversely affect any accrued interest or benefit of Members
or their Beneficiaries or eliminate an optional form of distribution with
respect to benefits attributable to service before the amendment nor allow
reversion or diversion of Plan assets to us at any time, except as may be
required to comply with any law or regulation issued by any governmental agency
to which the Plan is subject. No amendment to this Plan shall be effective to
the extent that it has the effect of decreasing a Member's accrued benefit.
However, a Member's Account may be reduced to the extent permitted under Code
Section 412(c)(8). For purposes of this paragraph, a Plan amendment which has
the effect of decreasing a Member's Account or eliminating an optional form of
benefit, with respect to benefits attributable to service before the amendment
shall be treated as reducing an accrued benefit. Furthermore, if the vesting
schedule of the Plan is amended, in the case of an Employee who is a Member as
of the later of the date such amendment is adopted or the date it becomes
effective, the nonforfeitable percentage (determined as of such date) of such
Employee's right to his employer-derived accrued benefit will not be less than
his percentage computed under the Plan without regard to such amendment. We may
amend the Plan by adding overriding plan language to the Adoption Agreement in
order to satisfy Code Sections 415 and
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<PAGE> 73
416 because of the required aggregation of multiple plans under those
sections. We may amend the Plan by adding certain model amendments published
by the Internal Revenue Service which specifically provide that their adoption
will not cause the Plan to be treated as individually designed. An amendment
to this Plan will be forwarded to Principal Mutual Life Insurance Company, the
prototype plan sponsor.
If we amend the Plan for any reason other than those set out above or if the
Plan loses its qualified status, the Plan shall not be a prototype plan within
the meaning of governmental regulations. In that event, Principal Mutual Life
Insurance Company will not be the prototype plan sponsor and the Plan will not
be a prototype plan. As the Employer, we reserve the right to continue our
retirement program under a document separate and distinct from this Plan. In
such event, all rights and obligations of any Member, Beneficiary, or of ours
under this document shall cease. Assets held in support of this Plan will be
transferred to the designated funding medium under the new or restated plan
and, if applicable, trust, in the manner permitted under, and subject to the
provisions of, the Annuity Contract.
We delegate authority to amend this Plan to Principal Mutual Life Insurance
Company as sponsor. We hereby consent to any such amendment. However, no such
amendment shall increase the duties of the Named Fiduciary without his consent.
Such an amendment shall not deprive any Member or Beneficiary of any accrued
benefit except to the extent necessary to comply with any law or regulation
issued by any governmental agency to which this Plan is subject. Such an
amendment shall not provide that the Investment Fund be used for any purpose
other than the exclusive benefit of Members or their Beneficiaries or that the
Investment Fund ever revert to or be used by us.
Any amendment to this Plan by Principal Mutual Life Insurance Company, as
sponsor, shall be deemed to be an amendment to this Plan by us. The effective
date of any amendment shall be specified in the written instrument of
amendment.
An amendment shall not decrease a Member's vested interest in the Plan. If an
amendment to the Plan, or a deemed amendment in the case of a change in
top-heavy status of the Plan as provided in Section 10.03, changes the
computation of Vesting Percentage (whether directly or indirectly), each Member
or former Member
(a) who has completed at least three Years of Service with us on the date the
election period described below ends (five Years of Service if the Member
does not have at least one Hour of Service in a Plan Year beginning after
December 31,1988) and
(b) whose Vesting Percentage will be determined on any date after the date
of the change may elect, during the election period, to have the
nonforfeitable percentage of his Account which results from our
Contributions determined without regard to the amendment. This election
may not be revoked. If after the Plan is changed the Member's Vesting
Percentage will at all times be as great as it would have been if the
change had not been made, no election needs to be provided. The election
period shall begin no later than the date the Plan amendment is adopted,
or deemed adopted in the case of a change in the top-heavy status of the
Plan, and end no earlier than the sixtieth day after the latest of the
date the amendment is adopted (deemed adopted) or becomes effective, or
the date the Member is issued written notice of the amendment (deemed
amendment) by us or the Plan Administrator.
SECTION 9.02 - MERGERS AND DIRECT TRANSFERS.
The Plan may not be merged or consolidated with, nor have its assets or
liabilities transferred to, any other retirement plan, unless each Member in
the plan would (if the plan then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit the Member would have been entitled to receive immediately before
the merger, consolidation or transfer (if this Plan had then terminated). We
may enter into merger agreements or direct transfer of assets agreements with
the employers under other retirement plans which are qualifiable under Code
Section 401 (a), including an elective transfer, and may accept the direct
transfer of plan assets, or may transfer plan assets, as a party to any such
agreement. We shall not consent to, or be a party to a merger, consolidation
or transfer of assets with a defined benefit plan if such action would result
in a defined benefit feature being maintained under this Plan.
The Plan may accept a direct transfer of plan assets on behalf of an Eligible
Employee. If the Eligible Employee is not an Active Member when the transfer
is made, the Eligible Employee shall be deemed to be an Active Member only for
the purpose of investment and distribution of the transferred assets. Our
Contributions shall not be made for or allocated to the Eligible Employee and
he may not make Member Contributions, until the time he meets all of the
requirements to become an Active Member.
The Plan shall hold, administer and distribute the transferred assets as a part
of the Plan. The Plan shall maintain a separate account for the benefit of the
Employee on whose behalf the Plan accepted the transfer in order to reflect the
value of the transferred assets. Unless a transfer of assets to the Plan is an
elective transfer, the Plan shall apply the optional forms of benefit
protections described in Section 9.01 to all transferred assets. A transfer is
elective if: (1) the transfer is voluntary, under a fully informed election by
the Member; (2) the Member has an alternative that retains his Code Section
411(d)(6) protected benefits (including an option to leave his benefit in the
transferor plan, if that plan is not terminating); (3) if the transferor plan
is subject to Code Sections 401(a)(11) and 417, the transfer satisfies the
applicable spousal consent requirements of the Code; (4) the notice
requirements under Code Section 417, requiring a written explanation with
respect to an election not to receive benefits in the form of a qualified joint
and survivor annuity, are met with respect to the Member and spousal transfer
election; (5) the Member has a right to immediate distribution from the
transferor plan under provisions in the plan not inconsistent with Code Section
401 (a); (6) the transferred benefit is equal to the Member's entire
nonforfeitable accrued benefit under the transferor plan, calculated to be at
least the greater of the single sum distribution provided by the transferor
plan (if any) or the present value of the Member's accrued benefit under the
transferor plan payable at the plan's normal retirement age and calculated
using an interest rate subject to the restrictions of Code Section 417(e) and
subject to the overall limitations of Code Section 415; (7) the Member has a
100% nonforfeitable interest in the transferred benefit; and (8) the transfer
otherwise satisfies applicable Treasury regulations.
SECTION 9.03 - PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.
The obligations of an Insurer shall be governed solely by the provisions of the
Annuity Contract or Insurance Policy. The Insurer shall not be required to
perform any act not provided
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in or contrary to the provisions of the Annuity Contract or Insurance Policy.
The Annuity Contract when purchased will comply with the Plan. See Section
9.08.
Any issuer or distributor of investment contracts or securities is governed
solely by the terms of its policies, written investment contract, prospectuses,
security instruments, and any other written agreements entered into with the
Trustee.
Such Insurer, issuer, or distributor is not a party to the Plan, nor bound in
any way by the Plan provisions. Such parties shall not be required to look to
the terms of this Plan, nor to determine whether we, the Plan Administrator,
the Trustee, or the Named Fiduciary have the authority to act in any particular
manner or to make any contract or agreement.
Until notice of any amendment or termination of this Plan or of a change in
Trustee has been received by the Insurer at its home office or an issuer or
distributor at their principal address, they are and shall be fully protected
in assuming that the Plan has not been amended or terminated and in dealing
with any party acting as Trustee according to the latest information which they
have received at their home office or principal address.
SECTION 9.04 - EMPLOYMENT STATUS.
Nothing contained in this Plan gives any Employee the right to be retained in
our employ or to interfere with our right to discharge any Employee.
SECTION 9.05 - RIGHTS TO PLAN ASSETS.
An Employee shall not have any right to or interest in any assets of the Plan
upon termination of employment or otherwise except as specifically provided
under this Plan, and then only to the extent of the benefits payable to such
Employee according to the Plan provisions.
Any final payment or distribution to a Member or his legal representative or to
any Beneficiaries, spouse, or Contingent Annuitant of such Member under the
Plan provisions shall be in full satisfaction of all claims against the Plan,
the Named Fiduciary, the Plan Administrator, the Insurer, the Trustee, and us
arising under or by virtue of the Plan.
SECTION 9.06 - BENEFICIARY.
Each Member may name a Beneficiary to receive any death benefit (other than any
income payable to a Contingent Annuitant) which may arise out of his membership
in the Plan, The Member may change his Beneficiary from time to time. Unless a
qualified election has been made, for purposes of distributing any death
benefits before Retirement Date, the Beneficiary of a Member who has a spouse
who is entitled to a Qualified Preretirement Survivor Annuity shall be the
Member's spouse. The Member's Beneficiary designation and any change of
Beneficiary shall be subject to the provisions of Section 6.03. It is the
responsibility of the Member to give written notice to the Insurer of the name
of the Beneficiary on a form furnished for that purpose.
With our consent, the Plan Administrator may maintain records of Beneficiary
designations for Members before their Retirement Dates. In that event, the
written designations made by Members shall be filed with the Plan
Administrator. If a Member dies before his Retirement Date, the Plan
Administrator shall certify to the Insurer the Beneficiary designation on its
records for the Member.
If there is no Beneficiary named or surviving when a Member dies, any death
benefit under the Annuity Contract or Insurance Policy will be paid according
to the provisions of the respective documents.
SECTION 9.07 - NONALIENATION OF BENEFITS.
Benefits payable under the Plan are not subject to the claims of any creditor
of any Member, Beneficiary, spouse, or Contingent Annuitant. A Member,
Beneficiary, spouse, or Contingent Annuitant does not have any rights to
alienate, anticipate, commute, pledge, encumber or assign such benefits except
in the case of a Trustee approved loan as provided in Section 5.06. The
preceding sentences shall also apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a Member
according to a domestic relations order, unless such order is determined by the
Plan Administrator to be a qualified domestic relations order, as defined in
Code Section 414(p), or any domestic relations order entered before January 1,
1985.
SECTION 9.08 - CONSTRUCTION.
The validity of the Plan or any of its provisions is determined under and
construed according to Federal law and, to the extent permissible, according to
the laws of the state in which we have our principal office. In case any
provision of this Plan is held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included.
In the event of any conflict between the provisions of the Plan and the terms
of any contract or policy issued hereunder, the provisions of the Plan control.
SECTION 9.09 - LEGAL ACTIONS.
The Plan, the Plan Administrator, the Trustee and the Named Fiduciary are the
necessary parties to any action or proceeding involving the assets held with
respect to the Plan or administration of the Plan or Trust. No person employed
by us, no Member, former Member, or their Beneficiaries or any other person
having or claiming to have an interest in the Plan is entitled to any notice of
process. A final judgment entered in any such action or proceeding shall be
binding and conclusive on all persons having or claiming to have an interest in
the Plan.
SECTION 9.10 - SMALL AMOUNTS.
If the Vested Account of a Member has never exceeded $3,500, the entire Vested
Account shall be payable in a single sum as of the earliest of his Retirement
Date, the date he dies, or the date he ceases to be an Employee for any other
reason. If Item X(3)(b) of the Adoption Agreement - Plus is selected, the
Member shall not be treated as having ceased to be an Employee for any reason
other than retirement or death before the period of time elected in Item
X(3)(b) has elapsed and no small amount payment shall be made if he again
becomes an Employee before such period of time has elapsed. This is a small
amounts payment. If a small amount is payable as of the date the Member dies,
the small amounts payment shall be made to the Member's Beneficiary (spouse if
the death benefit is payable to the spouse). If a small amount is payable
while the Member is living, the small amounts payment shall be made to the
Member. The small amounts payment is in full settlement of all benefits
otherwise payable.
Before the first Yearly Date in 1989, the Member's Vested Account which
results from deductible Voluntary Contributions
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<PAGE> 75
shall not be taken into account in determining whether his Vested Account has
exceeded $3,500.
No other small amounts payment shall be made.
SECTION 9.11 - WORD USAGE.
The masculine gender, where used in this Plan, shall include the feminine
gender and singular words as used in this Plan may include the plural, unless
the context indicates otherwise.
SECTION 9.12 - TRANSFERS BETWEEN PLANS.
If an Employee has been a member of another plan of ours which credited service
under the elapsed time method for any purpose which under this Plan is
determined using the hours method, then the Employee's service shall be equal
to the sum of (a), (b) and (c) below:
(a) The number of whole years of service credited to the Employee under the
other plan as of the date he became an Eligible Employee under this Plan.
(b) One year of service for the applicable service period in which he became
an Eligible Employee if he is credited with the required number of Hours
of Service. If we do not have sufficient records to determine the
Employee's actual Hours of Service in that part of the service period
before the date he became an Eligible Employee, the Hours of Service shall
be determined using an equivalency. For any month in which he would be
required to be credited with one Hour of Service, the Employee shall be
deemed for purposes of this section to be credited with 190 Hours of
Service.
(c) The Employee's service determined under this Plan using the hours method
after the end of the service period in which he became an Eligible
Employee.
If an Employee has been a member of another plan of ours which credited service
under the hours method for any purpose which under this Plan is determined
using the elapsed time method, then the Employee's service shall be equal to
the sum of (d), (e) and (f) below:
(d) The number of whole years of service credited to the Employee under the
other plan as of the beginning of the service period under that plan in
which he became an Eligible Employee under this Plan.
(e) The greater of (1) the service that would be credited to the Employee for
that entire service period using the elapsed time method or (2) the
service credited to him under the other plan as of the date he became an
Eligible Employee under this Plan.
(f) The Employee's service determined under this Plan using the elapsed time
method after the end of the applicable service period under the other plan
in which he became an Eligible Employee.
Any modification of service contained in this Plan shall be applicable to the
service determined pursuant to this section.
If an Employee used to be a member of a Controlled Group member's plan which
credited service under a different method than is used in this Plan, in order
to determine entry and vesting, the provisions above shall apply as though the
Controlled Group member's plan were our plan. If the method of crediting
service under this Plan is changed, the service credited to an Employee
shall be equal to the service that would be credited to him under the above
provisions as though the Plan as in effect before the change were another plan
of ours.
SECTION 9.13 - PARTNERSHIP OR SOLE PROPRIETORSHIP.
(a) For the purpose of applying the provisions of this Plan as to any Plan
Year in which we are a partnership or sole proprietorship, the following
terms are defined:
CONTROL(S) means, with regard to a trade or business, one owner-employee
owns or a group of owner-employees together own (1) the entire interest
in such trade or business or (2) in the case of a partnership, more than
fifty percent of either the capital interest or the profits interest in
the partnership. An owner-employee, or a group of owner employees, shall
be treated as owning any interest in a partnership which is owned,
directly or indirectly, by a partnership which such owner-employee, or
group of owner-employees, are considered to control within the meaning of
the preceding sentence.
EARNED INCOME means, for a Self-Employed Individual, net earnings from
self-employment in the trade or business for which this Plan is
established if such Self-Employed Individual's personal services are a
material income producing factor for that trade or business. Earned
Income shall be determined without regard to items not included in gross
income and the deductions properly allocable to or chargeable against such
items. After the TEFRA Compliance Date, Earned Income shall be reduced
for our employer contributions to our qualified retirement plan(s) to the
extent deductible under Code Section 404.
Net earnings shall be determined with regard to the deduction allowed to us
by Code Section 164(f) for taxable years beginning after December 31, 1989.
In applying the provisions of this Plan, the Self-Employed lndividual's
Earned Income shall be deemed to be his Pay. For purposes of Section
3.06, Earned Income shall include earned income within the meaning of Code
Section 911 from sources outside the United States and shall be deemed to
be his Compensation. If any exclusions are used for Pay, Earned Income
shall be adjusted by multiplying the Self-Employed lndividual's Earned
Income by a fraction. The numerator of the fraction is the total Pay for
all Nonhighly Compensated Employees after such exclusions are applied.
The denominator of the fraction is the total Pay for all Nonhighly
Compensated Employees before such exclusions are applied. Self-Employed
Individuals who are Nonhighly Compensated Employees are not included for
purposes of calculating this fraction. Earned Income includes a
Self-Employed lndividual's elective contributions.
OWNER-EMPLOYEE means a Self-Employed Individual who, in the case of a
sole proprietorship, owns the entire interest in the unincorporated trade
or business for which this Plan is established. If this Plan is
established for a partnership, an Owner-Employee means a Self-Employed
Individual who owns more than ten percent of either the capital interest
or profits interest in such partnership.
In applying the provisions of this Plan, an Owner-Employee shall be deemed
to be an Employee.
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SELF-EMPLOYED INDIVIDUAL means, with respect to any Fiscal Year, an
individual who has Earned Income for the Fiscal Year (or who would have
Earned Income but for the fact the trade or business for which this Plan
is established did not have net profits for such Fiscal Year).
In applying the provisions of this Plan, a Self-Employed Individual shall
be deemed to be an Employee.
(b) If contributions are made for or allocated to or benefits accrue to an
Owner-Employee who Controls, or a group of Owner-employees who together
Control, both the trade or business for which this Plan is established and
one or more other trades or businesses, then this Plan and the plans
established for such other trade(s) or business(es) must, if they were
combined as a single plan, satisfy the requirements of Code Sections
401(a) and 401(d) and regulations thereunder.
If this Plan provides Contributions for an Owner-Employee who Controls,
or a group of Owner-Employees who Control, one or more other trades or
businesses, the employees of each such other trade or business must be
included in a plan which satisfies Code Sections 401(a) and 401(d) and
regulations thereunder. Each such plan must provide contributions and
benefits which are not less favorable than the Contributions and benefits
provided for the Owner-Employee(s) under this Plan.
If an Owner-Employee is covered under another qualifiable retirement
plan as an owner-employee of a trade or business he does not Control, then
the plan(s) of the trade(s) or business(es) the Owner-Employee does
Control (including this Plan, if applicable) must provide contributions or
benefits as favorable as those provided under the most favorable plan of
the trade or business the Owner-Employee does not Control.
SECTION 9.14 - QUALIFICATION OF PLAN.
If the Plan is denied initial qualification, it will terminate. We shall give
written notice to the Insurer and Trustee of the denial in sufficient time so
the assets resulting from Contributions which were conditioned on initial
qualification of the Plan may be returned within one year after the date of
denial, but only if the application for the qualification is made by the time
prescribed by law for filing our return for the taxable year in which the Plan
is adopted, or such later date as the Secretary of the Treasury may prescribe.
The Insurer will be notified that the Annuity Contract is to be terminated and
any Insurance Policy surrendered. The Plan assets which result from Employer
Contributions and Member Contributions shall be returned to us and the Members,
respectively. The Trustee, the Plan Administrator, and the Named Fiduciary
shall then be discharged from all obligations under the Plan and Trust and the
Insurer shall be discharged from all obligations under the Annuity Contract and
any Insurance Policy. A Member or Beneficiary shall not have any right or
claim to the assets or to any benefit under this Plan before the Internal
Revenue Service determines that the Plan and Trust qualify under the provisions
of Section 401(a) of the Code.
If the Plan loses its qualified status, it shall no longer be a prototype plan
within the meaning of governmental regulations. In that event, Principal
Mutual Life Insurance Company will no longer be the Plan sponsor. We agree to
give written notification to Principal Mutual Life Insurance Company of the
loss of qualification.
- --------------------------------------------------------------------------------
ARTICLE X
TOP-HEAVY PLAN REQUIREMENTS
- --------------------------------------------------------------------------------
SECTION 10.01 - APPLICATION.
The provisions of this Article X shall supersede all other provisions in the
Plan to the contrary.
For the purpose of applying the Top-heavy Plan requirements of this article,
all members of the Controlled Group shall be treated as one Employer. The
terms we, us, and our as they are used in this article shall be deemed to
include all members of the Controlled Group unless the terms as used clearly
indicate only the Employer is meant.
The accrued benefit or account of a member which results from deductible
voluntary contributions shall not be included for any purpose under this
article.
The minimum vesting and contribution provisions of Sections 10.03 and 10.04
shall not apply to any Employee who is included in a group of Employees covered
by a collective bargaining agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or
more employers, including us, if there is evidence that retirement benefits
were the subject of good faith bargaining between such representatives. For
this purpose, the term "employee representatives" does not include any
organization more than half of whose members are employees who are owners,
officers or executives.
SECTION 10.02 - DEFINITIONS.
The following terms are defined for purposes of this article.
AGGREGATION GROUP means
(a) each of our retirement plans in which a Key Employee is a member during the
Year containing the Determination Date or one of the four preceding Years.
(b) each of our other retirement plans which allows the plan(s) described in
(a) above to meet the nondiscrimination requirement of Code Section 401(a)
(4) or the minimum coverage requirement of Code Section 410, and
(c) any of our other retirement plans not included in (a) or (b) above which
we desire to include as part of the Aggregation Group. Such a retirement
plan shall be included only if the Aggregation Group would continue to
satisfy the requirements of Code Section 401(a)(4) and Code Section 410.
The plans in (a) and (b) above constitute the "required" Aggregation Group.
The plans in (a), (b) and (c) above constitute the "permissive" Aggregation
Group.
COMPENSATION means, as to an Employee for any period, compensation as defined
in Item M for purposes of Plan Section 3.06. For purposes of determining who
is a Key Employee, Compensation shall include, in addition to compensation as
defined in Item M for purposes of Plan Section 3.06, elective contributions.
Elective contributions are amounts excludable from the gross income of the
Employee under Code Sections 125, 402(a)(8), 402(h) or 403(b), and contributed
by us, at the Employee's election, to a Code Section 401(k) arrangement, a
simplified employee pension, cafeteria plan or tax-sheltered
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annuity. Elective contributions also include Pay deferred under a Code Section
457 plan maintained by us and Employee contributions "picked up" by a
governmental entity and, pursuant to Code Section 414(h)(2), treated as our
contributions.
DETERMINATION DATE means as to this Plan, for any Year, the last day of the
preceding Year. However, if there is no preceding Year, the Determination Date
is the last day of such Year.
KEY EMPLOYEE means any Employee or former Employee (including Beneficiaries of
deceased Employees) who at any time during the determination period was
(a) one of our officers (subject to the maximum below) whose Compensation (as
defined in this section) for the Year exceeds 50 percent of the dollar
limitation under Code Section 415(b)(1)(A),
(b) one of the ten Employees who owns (or is considered to own, under Code
Section 318) more than a half percent ownership interest and one of the
largest interests in us during any Year of the determination period if
such person's Compensation (as defined in this section) for the Year
exceeds the dollar limitation under Code Section 415(c)(1)(A),
(c) a five-percent owner of us, or
(d) a one-percent owner of us whose Compensation (as defined in this section)
for the Year is more than $150,000.
Each member of the Controlled Group shall be treated as a separate employer for
purposes of determining ownership in us.
The determination period is the Year containing the Determination Date and the
four preceding Years. If we have fewer than 30 Employees, no more than three
Employees shall be treated as Key Employees because they are officers. If we
have between 30 and 500 Employees, no more than ten percent of our Employees
(if not an integer, increased to the next integer) shall be treated as Key
Employees because they are officers. In no event will more than 50 Employees
be treated as Key Employees because they are officers if we have 500 or more
Employees. The number of Employees for any Plan Year is the greatest number of
Employees during the determination period. Officers who are employees
described in Code Section 414(q)(8) shall be excluded. If we have more than
the maximum number of officers to be treated as Key Employees, the officers
shall be ranked by the amount of annual Compensation (as defined in this
section), and those with the greater amount of annual Compensation during the
determination period shall be treated as Key Employees. To determine the ten
Employees owning the largest interests in us, if more than one Employee has the
same ownership interest, the Employee(s) having the greater annual Compensation
shall be treated as owning the larger interest(s). The determination of who
is a Key Employee shall be made according to Code Section 416(i)(1) and the
regulations thereunder.
NON-KEY EMPLOYEE means a person who is a non-key employee within the meaning
of Code Section 416 and regulations thereunder.
PRESENT VALUE means the present value of a member's accrued benefit under a
defined benefit plan as of his normal retirement age (attained age if later)
or, if the plan provides non-proportional subsidies, the age at which the
benefit is most valuable. The accrued benefit of any Employee (other than a
Key Employee) shall be determined under the method which is used for accrual
purposes for all our plans or if there is no one method which is used for
accrual purposes for all our plans, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under Code Section 411(b)(1)(C). The
Present Value shall be based only on the interest and mortality rates specified
in the Adoption Agreement. If the Present Value of accrued benefits is
determined for a member under more than one defined benefit plan included in
the Aggregation Group, all such plans shall use the same actuarial assumptions
to determine the Present Value.
TOP-HEAVY Plan means a plan which is a top-heavy plan for any plan year
beginning after December 31, 1983. This Plan shall be a Top-heavy Plan if
(a) the Top-heavy Ratio for this Plan alone exceeds sixty percent and this
Plan is not part of any required Aggregation Group or permissive
Aggregation Group.
(b) this Plan is a part of a required Aggregation Group, but not part of a
permissive Aggregation Group, and the Top heavy Ratio for the required
Aggregation Group exceeds sixty percent.
(c) this Plan is a part of a required Aggregation Group and part of a
permissive Aggregation Group and the Top-heavy Ratio for the permissive
Aggregation Group exceeds sixty percent.
TOP-HEAVY RATIO means the ratio calculated below for this Plan or for the
Aggregation Group.
(a) The Top-heavy Ratio for this Plan or for the Aggregation Group (including
any simplified employee pension plan) if the Aggregation Group does not
contain a defined benefit plan during the five-year period ending on the
determination date which has or has had accrued benefits, is a fraction,
the numerator of which is the sum of the account balances of all
Key Employees as of the determination date and the denominator of which is
the sum of all account balances of all employees as of the determination
date. Both the numerator and denominator of the Top-heavy Ratio are
adjusted for any distribution of an account balance made in the five-year
period ending on the determination date in accordance with Code Section
416 and the regulations thereunder. Both the numerator and denominator of
the Top-heavy Ratio are increased to reflect any contribution not actually
made as of the Determination Date, but which is required to be taken into
account on that date under Code Section 416 and the regulations
thereunder.
(b) The Top-heavy Ratio for the Aggregation Group (including any simplified
employee pension plan) if the Aggregation Group contains a defined benefit
plan during the five-year period ending on the determination date which
has or has had accrued benefits, is a fraction, the numerator of which is
the sum of the account balances under the defined contribution plan(s) of
all Key Employees and the Present Value of accrued benefits under the
defined benefit plan(s) for all Key Employees, and the denominator of
which is the sum of the account balances under the defined contribution
plan(s) for all employees and the Present Value of accrued benefits under
the defined benefit plans for all employees. Both the numerator and
denominator of the Top-heavy Ratio are adjusted for any distribution of an
account balance or an accrued benefit (including those made from
terminated plan(s) of ours which would have been part of
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the required Aggregation Group had such plan(s) not been terminated)
made in the five-year period ending on the determination date in
accordance with Code Section 416 and the regulations thereunder.
(c) For purposes of (a) and lb) above, the value of account balances and the
Present Value of accrued benefits will be determined as of the most recent
valuation date that falls within or ends with the 12-month period ending
on the determination date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a defined
benefit plan. The account balances and accrued benefits of an employee
who is not a Key Employee but who was a Key Employee in a prior year will
be disregarded. The calculation of the Top-heavy Ratio and the extent to
which distributions, rollovers and transfers during the five-year period
ending on the determination date are to be taken into account, shall be
determined according to the provisions of Code Section 416 and regulations
thereunder. The account balances and accrued benefits of an individual
who has performed no service for us during the five-year period ending on
the determination date shall be excluded from the Top-heavy Ratio until
the time the individual again performs service for us. Deductible
employee contributions will not be taken into account for purposes of
computing the Top-heavy Ratio. When aggregating plans, the value of
account balances and accrued benefits will be calculated with reference to
the determination dates that fall within the same calendar year.
Account, as used in this definition, means the value of an employee's account
under one of our retirement plans on the latest valuation date. In the case of
a money purchase plan or target benefit plan, such value shall be adjusted to
include any contributions made for or by the employee after the valuation date
and on or before such determination date or due to be made as of such
determination date but not yet forwarded to the insurer or trustee. In the
case of a profit sharing plan, such value shall be adjusted to include any
contributions made for or by the employee after the valuation date and on or
before such determination date. During the first Year of any profit sharing
plan such adjustment in value shall include contributions made after such
determination date that are allocated as of a date in such Year. The
nondeductible voluntary contributions which an employee makes under a defined
benefit plan of ours shall be treated as if they were contributions under a
separate defined contribution plan.
VALUATION DATE means, as to this Plan, the last day of the last calendar month
ending in a Year.
YEAR means the Plan Year unless another year is specified by us in a separate
written resolution in accordance with regulations issued by the Secretary of
the Treasury or his delegate.
SECTION 10.03 - MODIFICATION OF VESTING REQUIREMENTS.
If a Member's Vesting Percentage determined under the vesting schedule selected
in Item V is not as great as the Vesting Percentage would be if it were
determined under a schedule permitted in Code Section 416, the following shall
apply. During any Year in which the Plan is a Top-heavy Plan, the Member's
Vesting Percentage shall be the greater of the Vesting Percentage determined
under the schedule selected in Item U or,
(a) if the vesting schedule provides for partial vesting between 0% and 100%,
the schedule below.
<TABLE>
<CAPTION>
VESTING SERVICE VESTING
(WHOLE YEARS) PERCENTAGE
<S> <C>
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
</TABLE>
(b) if the vesting schedule provides for only 0% or 100% vesting, the schedule
below.
<TABLE>
<CAPTION>
VESTING SERVICE VESTING
(WHOLE YEARS) PERCENTAGE
<S> <C>
Less than 3 0
3 or more 100
</TABLE>
The applicable schedule above shall not apply to Members who are not credited
with an Hour of Service after the Plan first becomes a Top-heavy Plan. The
Vesting Percentage determined above applies to all of the Member's Account
resulting from our Contributions, including Contributions we make before the
TEFRA Compliance Date or when this Plan is not a Top-heavy Plan.
If, in a later Year, this Plan is not a Top-heavy Plan, a Member's Vesting
Percentage shall be determined according to the provisions of Item U. A
Member's Vesting Percentage determined under either Item U or the schedule
above shall never be reduced and the election procedures of Section 9.01 shall
apply when changing to or from the above schedule as though the automatic
change were the result of an amendment.
The part of the Member's Vested Account resulting from the minimum
contributions required pursuant to Section 10.04 shall not be forfeited because
of a period of reemployment after benefit payments have begun or because of a
withdrawal of required contributions, if any.
SECTION 10.04 - MODIFICATION OF CONTRIBUTIONS.
For any Plan Year in which the Plan is top-heavy, only the first $200,000
(multiplied by the Adjustment Factor) of a Member's annual compensation shall
be taken into account for purposes of determining Employer Contributions under
the Plan. For any Plan Year beginning after December 31, 1988, in determining
the Compensation, as defined in this article, of a Member for purposes of this
limitation, the rules of Code Section 414(q)(6) shall apply, except that in
applying such rules, the term "family" shall include only the spouse of the
Member and any lineal descendants of the Member who have not attained age 19
before the close of the Plan Year. If as a result of the application of such
rules the adjusted $200,000 limitation is exceeded, then the limitation shall
be prorated among the affected individuals in proportion to each such
individual's Compensation as determined under the definition in this article
prior to the application of this limitation.
During any Year in which this Plan is a Top-heavy Plan, we shall make a minimum
contribution or allocation on the last day of the Year for each person who is a
Non-key Employee on that day and who either was or could have been an Active
Member during the Year. A Non-key Employee is not required to have a minimum
number of Hours of Service or minimum
-38-
<PAGE> 79
amount of Pay, or to have made any Elective Deferral Contributions in order to
be entitled to this minimum. The selections we make in Item R shall determine
if Key Employees who are Employees on the last day of the Year are also
entitled to this minimum and if the minimum contribution or allocation shall
apply in Years when this Plan is not a Top-heavy Plan. The minimum
contribution and allocation for such person shall be equal to the amount
specified in Item R. If overriding provisions are not specified in Item R, the
minimum is the lesser of (a) or (b) below:
(a) Three percent of such person's Compensation (as defined in this article).
(b) The "highest percentage" of Compensation (as defined in this article) for
such Year at which our contributions are made for or allocated to any Key
Employee. The highest percentage shall be determined by dividing our
contributions made for or allocated to each Key Employee during the Year
by the amount of his Compensation (as defined in this article) which is
not more than the maximum set out above, and selecting the greatest
quotient (expressed as a percentage). To determine the highest
percentage, all our defined contribution plans within the Aggregation
Group shall be treated as one plan. The provisions of this paragraph
shall not apply if this Plan and a defined benefit plan of ours are
required to be included in the Aggregation Group and this Plan enables the
defined benefit plan to meet the requirements of Code Section 401(a)(4) or
Code Section 410.
If our contributions and allocations otherwise required under the defined
contribution plan(s) are at least equal to the minimum above, no additional
contribution or allocation shall be required. If our contributions and
allocations are less than the minimum above and our Contributions under this
Plan are allocated to Members, our Contributions (other than Elective Deferral
Contributions) shall be reallocated to provide the minimum. The remaining
Contributions shall be allocated as provided in the preceding articles of this
Plan. If our total contributions and allocations are less than the minimum
above and our Contributions under this Plan are not allocated, we shall
contribute the difference for the Year.
The minimum contribution or allocation applies to all of our defined
contribution plans in the aggregate which are Top-heavy Plans. A minimum
allocation under a profit sharing plan shall be made without regard to whether
or not we have profits. If a person who is otherwise entitled to an additional
contribution or allocation above is also covered under a defined benefit plan
of ours which is a Top-heavy Plan during that same Year, the minimum benefits
for him shall not be duplicated. The defined benefit plan shall provide an
annual benefit for him on, or adjusted to, a straight life basis of the lesser
of (c) two percent of his average pay multiplied by his years of service or (d)
twenty percent of his average pay. Average pay and years of service shall have
the meaning set forth in such defined benefit plan for this purpose.
We may provide overriding provisions in Item R to satisfy the requirements of
Code Section 416 because of the aggregation of multiple plans.
For purposes of this section, any employer contribution made according to a
salary reduction or similar arrangement shall not apply before the first Yearly
Date in 1985. On and after the first Yearly Date in 1989, any such employer
contributions and employer contributions which are matching contributions, as
defined in Code Section 401(m), shall not apply in determining if the minimum
contribution requirement has been met, but shall apply in determining the
minimum contribution required. Forfeitures credited to a Member's account are
treated as employer contributions.
The requirements of this section shall be met without regard to contributions
under Chapter 2 of the Code (relating to tax on self-employment), Chapter 21 of
the Code (relating to Federal Insurance Contributions Act), Title 11 of the
Social Security Act or any other Federal or state law.
SECTION 10.05 - MODIFICATION OF CONTRIBUTION LIMITATION.
If the provisions of subsection (1) of Section 3.06 are applicable for any
Limitation Year during which this Plan is a Top-heavy Plan, the Contribution
limitations shall be modified. The definitions of Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction in Section 3.06 shall be
modified by substituting "100 percent" in lieu of "125 percent." In addition,
an adjustment shall be made to the numerator of the Defined Contribution Plan
Fraction. The adjustment is a reduction of that numerator similar to the
modification of the Defined Contribution Plan Fraction described in Section
3.06 and shall be made with respect to the last Plan Year beginning before
January 1, 1984.
The modifications in the paragraph above shall not apply with respect to a
Member so long as employer contributions, forfeitures or nondeductible employee
contributions are not credited to his account under this or any of our other
defined contribution plans and benefits do not accrue for such Member under our
defined benefit plan(s), until the sum of his Defined Contribution and Defined
Benefit Plan Fractions is less than 1.0.
The modification of the Contribution limitation shall not apply if both of the
following requirements are met:
(a) This Plan would not be a Top-heavy Plan if "ninety percent" were
substituted for "sixty percent" in the definition of Top-heavy Plan.
(b) A Non-key Employee who is not covered under a defined contribution plan
of ours, accrues a minimum benefit on, or adjusted to, a straight life
basis equal to the lesser of (a) twenty percent of his average pay or (b)
two percent of his average pay multiplied by his years of service,
increased by one percentage point for each year (not to exceed ten in the
case of (a)) earned while the benefit limitation is to be modified as
described above.
The account of a Non-key Employee who is covered under only one or more
defined contribution plans of ours, is credited with a minimum employer
contribution or allocation under such plan(s) equal to four percent of the
person's Compensation for each year in which the plan is a Top-heavy Plan.
If a Non-key Employee is covered under both defined contribution and
defined benefit plans of ours, (i) a minimum accrued benefit for such
person equal to the amount determined above for a person who is not
covered under a defined contribution plan is accrued in the defined
benefit plan(s) or (ii) a minimum contribution or allocation equal to 7.5
percent of the person's Compensation for a Year in which the plans are
Top-heavy Plans will be credited to his account under the defined
contribution plans.
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<PAGE> 80
[the Principal Financial Group LOGO]
the Principal Mutual Life Insurance Company
Des Moines, Iowa 50392
<PAGE> 1
EXHIBIT 11.1
PHOENIX INTERNATIONAL LTD., INC.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
<TABLE>
<CAPTION>
ELEVEN THREE THREE
YEAR ENDED YEAR ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
JANUARY 31, JANUARY 31, DECEMBER 31, MARCH 31, MARCH 31,
1994 1995 1995 1995 1996
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PRIMARY
Weighted average common stock
outstanding during the
period......................... 1,741,813 2,330,391 2,906,038 2,847,053 2,952,553
Effect of dilutive common stock
equivalents outstanding during
the period..................... -- -- 99,734 -- 116,131
Effect of common stock issued and
stock options granted during
the 12-month period preceding
May 8, 1996(1)................. 229,760 229,760 229,760 229,760 229,760
----------- ----------- ------------ ------------ ------------
Total common and common
equivalent shares.............. 1,971,573 2,560,151 3,235,532 3,076,813 3,298,444
========== ========== ========== ========== ==========
Net income (loss)................ $(1,013,142) $(2,830,365) $ 554,269 $ (605,973) $ 141,526
========== ========== ========== ========== ==========
Net income (loss) per share...... $ (0.51) $ (1.11) $ 0.17 $ (0.20) $ 0.04
========== ========== ========== ========== ==========
FULLY DILUTED
Weighted average common stock
outstanding during the
period......................... 1,741,813 2,330,391 2,906,038 2,847,053 2,952,553
Effect of dilutive common stock
equivalents outstanding during
the period..................... -- -- 99,734 -- 151,673
Effect of common stock issued and
stock options granted during
the 12-month period preceding
May 8, 1996(1)................. 229,760 229,760 229,760 229,760 229,760
----------- ----------- ------------ ------------ ------------
Total common and common
equivalent shares.............. 1,971,573 2,560,151 3,235,532 3,076,813 3,333,986
========== ========== ========== ========== ==========
Net income (loss)................ $(1,013,142) $(2,830,365) $ 554,269 $ (605,973) $ 141,526
========== ========== ========== ========== ==========
Net income (loss) per share...... $ (0.51) $ (1.11) $ 0.17 $ (0.20) $ 0.04
========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No.
83, common stock issued and stock options granted at prices below the
initial public offering price per share during the 12-months period
immediately preceding the initial filing date of the Company's Registration
Statement for its initial public offering have been included as outstanding
for all periods presented using the treasury stock method.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial and Operating Data" and "Experts" and to the use of our
report dated March 1, 1996, except for Note 12, as to which the date is May 8,
1996 in the Registration Statement on Form S-1 and related Prospectus of Phoenix
International Ltd., Inc. for the registration of 1,207,500 shares of its common
stock.
ERNST & YOUNG LLP
Atlanta, Georgia
May 8, 1996
