<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998.
Or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO
__________, 19__.
Commission file number : 0-20937
-------------
PHOENIX INTERNATIONAL LTD., INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Florida 59-3171810
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
500 International Parkway, Heathrow, Florida 32746
(Address of principal executive offices)
(407) 548-5100
(Registrant's telephone number including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 5, 1998
Common Stock, $0.01 par value 5,576,618
---------------
(No. of Shares)
<PAGE> 2
PHOENIX INTERNATIONAL LTD., INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations for
the Three Months ended March 31, 1998 and March 31,
1997 4
Condensed Consolidated Statements of Cash Flows for
the Three Months ended March 31, 1998 and March 31,
1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES
EXHIBIT INDEX
</TABLE>
3
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHOENIX INTERNATIONAL LTD., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $11,869,289 $13,034,491
Investments, available for sale 7,769,300 7,705,000
Accounts receivable, net of allowance for
doubtful accounts of $236,200 and
$155,000 at March 31, 1998 and
December 31, 1997, respectively 3,915,346 4,578,485
Unbilled accounts receivable 4,651,259 3,766,322
Deferred tax asset 2,309,483 2,229,000
Prepaid expenses and other current assets 654,201 592,274
----------- -----------
Total current assets 31,168,878 31,905,572
Long term investments, available for sale 13,290,178 13,088,014
Property and equipment:
Computer equipment and purchased software 2,624,093 2,217,366
Furniture, office equipment and leasehold improvements 1,391,305 1,100,275
----------- -----------
4,015,398 3,317,641
Accumulated depreciation and amortization (1,195,027) (972,616)
----------- -----------
Total property and equipment 2,820,371 2,345,025
Capitalized software costs, net of accumulated
amortization of $1,306,708 and $1,078,749
at March 31, 1998 and December 31, 1997, respectively 4,446,610 3,522,484
Other assets 1,296,400 1,296,400
=========== ===========
Total assets $53,022,437 $52,157,495
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 749,784 $ 624,924
Accrued expenses 2,087,519 1,810,662
Capital lease, current portion 132,911 129,997
Deferred revenue 1,632,636 1,851,960
----------- -----------
Total current liabilities 4,602,850 4,417,543
Deferred revenue under economic development grant 95,000 95,000
Deferred tax liability 1,283,689 1,309,000
Capital lease, long term portion 465,930 500,821
----------- -----------
Total long term liabilities 1,844,619 1,904,821
Shareholders' equity:
Common stock, $0.01 par value
50,000,000 shares authorized, 5,571,910
and 5,435,418 issued and Outstanding at
March 31, 1998 and December 31, 1997 respectively 55,719 54,354
Additional paid-in capital 44,630,727 43,927,426
Stock subscription receivables (13,312) (13,360)
Retained earnings 1,901,834 1,866,711
----------- -----------
Total shareholders' equity 46,574,968 45,835,131
=========== ===========
Total liabilities and shareholders' equity $53,022,437 $52,157,495
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
3
<PAGE> 4
PHOENIX INTERNATIONAL LTD., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenues:
License fees and other $3,031,210 $2,268,406
Implementation, customer and software
support and other service fees 1,567,234 1,445,318
---------- ----------
Total revenues 4,598,444 3,713,724
Expenses:
Cost of license fees and other 544,366 219,737
Cost of implementation, customer and
software support and other service fees 1,222,524 831,633
Sales and marketing 971,625 560,997
General and administrative 1,084,323 436,607
Product development 1,157,462 553,140
---------- ----------
Total expenses 4,980,300 2,602,114
Other income (expense):
Interest income 447,334 74,788
Interest expense (13,926) (5,389)
Other income 2,485 --
---------- ----------
Income before income taxes 54,037 1,181,009
Income tax expense 18,913 167,713
---------- ----------
Net income $ 35,124 $1,013,296
========== ==========
Net income per share - basic $ 0.01 $ 0.26
========== ==========
Net income per share - diluted $ 0.01 $ 0.24
========== ==========
Weighted average shares outstanding - basic 5,487,802 3,848,697
========== ==========
Weighted average shares outstanding - diluted 5,817,081 4,286,640
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements of operations.
4
<PAGE> 5
PHOENIX INTERNATIONAL LTD., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1998 1997
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 35,124 $1,013,296
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 450,371 216,891
Provision for doubtful accounts 81,200 35,000
Deferred taxes (105,794) --
Changes in operating assets and liabilities:
Accounts receivable 581,939 (767,164)
Unbilled accounts receivable (884,937) (389,065)
Prepaid expenses and other current assets (61,927) (206,528)
Accounts payable 124,860 65,062
Accrued expenses 276,857 (411,797)
Deferred revenue (219,323) (102,964)
----------- ----------
Net cash provided by (used in) operating activities 278,370 (547,269)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (697,346) (384,978)
Sale (Purchase) of short term investments (64,300) 2,730,825
Sale (Purchase) of long term investments (202,164) --
Changes in other assets -- (266,400)
Purchased software (450,000) --
Capitalized software costs (702,085) (673,363)
----------- ----------
Net cash provided by (used in) investing activities (2,115,895) 1,406,084
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital lease obligations (32,390) (9,657)
Net proceeds from issuance of common stock 704,665 123,528
Cash payments for stock subscription receivable 48 27,240
----------- ----------
Net cash provided by financing activities 672,323 141,111
Net increase (decrease) in cash and cash equivalents (1,165,202) 999,926
Cash and cash equivalents at beginning of the period 13,034,491 3,770,889
----------- ----------
Cash and cash equivalents at end of the period $11,869,289 $4,770,815
=========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements of cash flows.
5
<PAGE> 6
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include all adjustments, consisting only of normal recurring accruals, which the
Company considers necessary for a fair presentation of the financial position
and the results of operations for the interim periods presented. The condensed
consolidated financial statements have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures usually found in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
"Selected Financial and Operating Data" included in the Company's annual report
on Form 10-K for the year ended December 31, 1997.
2. NET INCOME PER SHARE
Net income per share is calculated and presented in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS
128"). Basic earnings per share is computed using the average number of common
shares outstanding. Diluted earnings per share is computed on the basis of the
average number of common shares outstanding plus the effect of outstanding stock
options using the "treasury stock" method based on average stock price for the
period. All prior periods have been restated and are also presented under SFAS
128.
The following table sets forth the computation of basic and diluted earnings per
share.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1997 1998
---------- ----------
<S> <C> <C>
Numerator - net income available
to common shareholders $ 35,124 $1,013,296
========== ==========
Denominator for basic net income per
Share - weighted average shares outstanding 5,487,802 3,848,697
Effect of dilutive securities -
employee stock options 329,279 437,943
---------- ----------
Denominator for diluted net income per
Share - adjusted weighted average shares
outstanding and assumed conversion of
dilutive securities 5,817,081 4,286,640
========== ==========
Net income per share - basic $ 0.01 $ 0.26
========== ==========
Net income per share - diluted $ 0.01 $ 0.24
========== ==========
</TABLE>
6
<PAGE> 7
3. CAPITALIZED SOFTWARE 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."
These costs include costs incurred internally after technological feasibility
has been established to develop and enhance computer software products and
include certain purchased software costs. Capitalized software costs include
purchased software costs of $761,000, and $311,000 at March 31, 1998 and
December 31, 1997, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
OVERVIEW
The following discussion contains statements which constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
These statements appear in a number of places in this Quarterly Report and
include all statements that are not historical statements of fact regarding the
intent, anticipation, belief or current expectations of the Company, its
directors or its officers with respect to, among other things: (i) the Company's
financing plans; (ii) trends affecting the Company's financial condition or
results of operations; (iii) the Company's growth strategy and operating
strategy (including, but not limited to, the Company's development and
implementation of the Phoenix System and its other products); and (iv) the
declaration and payment of dividends. The words "may," "would," "could," "will,"
"expect," "estimate," "anticipate," "believe," "intends," "plans," and similar
expressions and variations thereof are intended to identify forward-looking
statements. Investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, many
of which are beyond the Company's ability to control, and that actual results
may differ materially from those projected in the forward-looking statements.
Actual results may differ materially from these forward-looking
statements as a result of many factors, including the inability to obtain,
continue and manage growth or execute agreements with new customers; market
acceptance of new products and enhancements; growth in the Company's customers;
increased competition; dependence on new products; rapid changes in technology,
and the other factors discussed in the Company's registration statement on Form
S-1 as declared effective on August 13, 1997, including the "Risk Factors"
section contained therein.
The Company derives its revenues 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, programming services, conversion training and installation
services, interface services for tying the Phoenix System to third-party
applications, customer and software support services, disaster recovery services
and Internet/Intranet consulting services.
Revenues are recorded in accordance with the American Institute of
Certified Public
7
<PAGE> 8
Accountants ("AICPA") Statement of Position 91-1 "Software Revenue Recognition"
("SOP 91-1") for the three months ended March 31, 1997. 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. Revenues for
implementation, conversion, installation, training, interface and consulting
services are recognized when the services are performed. Service revenues for
ongoing customer and software support and product updates and disaster recovery
services provide recurring revenues as they are recognized ratably over each
year of the license agreement, the term of which is typically five years.
In October 1997, the AICPA issued a new Statement of Position 97-2
("SOP 97-2"), "Software Revenue Recognition." SOP 97-2 supersedes SOP 91-1, and
was effective for the three months ended March 31, 1998. The Company has applied
SOP 97-2 to all contracts signed during the first quarter, 1998. While some
principles remain the same, there are several key differences between the two
pronouncements, including accounting for multiple element arrangements.
The Company currently believes, based on its reading and interpretation
of SOP 97-2, that future license and service agreements that require
modifications to the software may require contract accounting for both the
license fees and services and result in a deferral of license revenue compared
to revenue recognition under SOP 91-1 for some agreements. If this historical
trend continues there will be a material adverse effect on the Company's
recognition of revenues and earnings in 1998 during the implementation of SOP
97-2, but the Company anticipates this effect will be reduced in future periods
as the revenues are recognized over the service period. In addition, the percent
of total revenue recognized from international sales could be reduced in 1998 as
a result of implementation of SOP 97-2.
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, the Company 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. 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 Company's common stock would likely be materially
adversely affected.
The Company has determined that it will not need to modify or replace
significant portions of its software so that its computer systems will function
properly with respect to dates in the Year 2000 and beyond. However, while the
Company believes its products, computer systems and applications currently in
use are Year 2000 compliant, the Company has not made an assessment as to
whether any of its customers, suppliers or service providers have resolved their
Year 2000 issues. The Company has developed a plan and is testing its
8
<PAGE> 9
software, suppliers, and service providers for Year 2000 compliance. Failure of
the Company's software or that of its customers, suppliers or service providers
to be Year 2000 compliant could have a material adverse impact on the Company's
business, financial condition and result of operations.
RESULTS OF OPERATIONS
The following table sets forth the percentage of total revenues
represented by certain line items in the Company's statement of operations for
the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
----- -----
<S> <C> <C>
Revenues
License fees and other 65.9% 61.1%
Implementation, customer and software
Software support and other service fees 34.1% 38.9%
----- -----
Total revenues 100.0% 100.0%
Expenses
Cost of license fees and other 11.8% 5.9%
Cost of implementation, customer and
Software support and other service fees 26.6% 22.4%
Sales and marketing 21.1% 15.1%
General and administrative 23.6% 11.8%
Product development 25.2% 14.9%
----- -----
Total expenses 108.3% 70.1%
Other income (expense)
Interest income 9.7% 2.0%
Interest expense (0.3)% (0.1)%
Other income (expense) 0.1% --
----- -----
Income before taxes 1.2% 31.8%
Income tax expense 0.4% 4.5%
----- -----
Net income 0.8% 27.3%
===== =====
</TABLE>
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Revenues. Total revenues increased 23.8% to $4.6 million in the three
months ended March 31, 1998 from $3.7 million for the three months ended March
31, 1997. Revenues from license fees and other increased $763,000, or 33.6%, to
$3.0 million for the three months ended March 31, 1998 from $2.3 million in the
three months ended March 31, 1997 due to increased number of customers and
increased U.S. prices. Revenues from implementation, customer and software
support and other service fees increased $122,000, or 8.4%, to $1.6 million in
the three months ended March 31, 1998 from $1.4 million in the three months
ended March 31, 1997 due to increased number of customers and increased U.S.
prices.
9
<PAGE> 10
Expenses. Cost of license fees and other was $544,000 and $220,000 in
the three months ended March 31, 1998 and 1997, respectively. These costs
increased as a result of higher amortization of capitalized software development
costs and higher third party software royalties.
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 increased $391,000, or 47.0%, to $1.2 million in the three months ended
March 31, 1998 from $832,000 in the three months ended March 31, 1997 as a
result of additional personnel costs related to increased Phoenix System
implementation activity.
Sales and marketing expenses increased $411,000, or 73.2%, to $972,000
in the three months ended March 31, 1998 from $561,000 in the three months ended
March 31, 1997 as a result of additional expenses incurred in connection with
increased staffing and personnel related costs.
General and administration expenses increased $648,000, or 148.4%, to
$1.1 million in the three months ended March 31, 1998 from $437,000 in the three
months ended March 31, 1997 primarily as the result of increased professional
services fees, personnel related costs and bad debt expense.
Product development expenses increased $604,000, or 109.3%, to $1.2
million in the three months ended March 31, 1998 from $553,000 in the three
months ended March 31, 1997. Product development expenses increased as a result
of increased contract labor and personnel related costs.
Other Income (Expense). Interest income was $447,000 and $75,000 in the
three months ended March 31, 1998 and 1997, respectively. Interest income
increased primarily due to the increase in interest-bearing funds resulting from
the investment of the proceeds from the secondary public offering of the
Company's common stock in August 1997.
Income Tax Expense. Income tax expense was $19,000 and $168,000 in the
three months ended March 31, 1998 and 1997, respectively. The Company's
effective tax rate in the three months ended March 31, 1998 was 35% based on the
estimated 1998 effective annual income tax rate. In the three months ended March
31, 1997, income tax expense represents withholding taxes which relate to the
license of the Company's products to foreign customers and which are
contractually payable by those customers and alternative minimum tax.
Net Income. Net income decreased $978,000 to $35,000 in the three
months ended March 31, 1998 from net income of $1.0 million in the quarter ended
March 31, 1997 as a result of increased expenses.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $11.9 million at March 31, 1998. For the
three months ended March 31, 1998, cash provided by operations was $278,000. An
increase in unbilled accounts receivable of $885,000 and a decrease in deferred
revenue of $219,000 were significant uses of cash in the Company's operating
activities. Cash used by investing activities was $2.1 million, including
$697,000 for purchases of property and equipment,
10
<PAGE> 11
$450,000 for purchased software to be used to further develop the Phoenix
System, and $702,000 for capitalized software development costs. Purchases of
short term and long term investments used $64,000 and $202,000 respectively.
Financing activities provided $672,000 of cash, including $705,000 from the
issuance of common stock pursuant to the exercise of stock options. Capital
lease payments represented a use of cash of $33,000. Working capital was $26.6
million at March 31, 1998.
The Company believes its cash balances, investments and cash flow from
operations will be sufficient to meet its working capital, capital expenditure
and capitalized software development requirements through 1998. 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.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to, nor is any of its property subject to,
any material legal proceedings, other than routine litigation incidental to its
business.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote by the Company's security holders
during the first quarter ended March 31, 1998.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
3.1 Amended and Restated Articles of Incorporation, as amended by the
Articles of Amendment to Amended and Restated articles of
Incorporation as filed with the Secretary of the State of Florida on
May 28, 1997 (incorporated by reference to Exhibit 3.1 of the
Company's Registration Statement on Form S-1 (No. 333-31415) as
declared effective by the SEC on August 13, 1997. (the "Registration
Statement").
3.2 Amended and Restated Bylaws, effective July 8, 1996, (incorporated by
reference to Exhibit 3.2 of the Company's Form 10-Q, dated August 14,
1996, File No. 0-20937)
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 Company
(incorporated by reference to Exhibit 4.1 of Registration Statement).
</TABLE>
12
<PAGE> 13
<TABLE>
<S> <C>
10.1 Source Code License and Marketing Agreement, dated as of March
31, 1998, between the Company and Computer Systems Associates
(Nigeria) Limited.+
10.2 Software License and Development Agreement, dated as of
January 15, 1998, between the Company and Intercept Systems,
Inc.+
10.3 Amended and Restated Employment Agreement dated as of March
20, 1998 between the Company and Raju M. Shivdasani
10.4 Employment Agreement dated as of March 6, 1998 between the
Company and Daniel P. Baker
10.5 Employment Agreement dated as of March 25, 1998 between the
Company and Jocelyn Ruggiero
27.1 Financial Data Schedule for the three months ended March 31,
1998 (for SEC use only)
</TABLE>
b) Reports on Form 8-K
None.
- ------------------
+ Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of
1934, as amended. In accordance with Rule 24b-2, these confidential portions
have been omitted from this exhibit and filed separately with the Commission.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934,the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PHOENIX INTERNATIONAL LTD., INC.
May 6, 1998 /s/ Bahram Yusefzadeh
- ----------- -------------------------------------------------
Date Bahram Yusefzadeh
Chairman of the Board and Chief Executive Officer
(principal executive officer)
May 6, 1998 /s/ Clay E. Scarborough
- ----------- -------------------------------------------------
Date Clay E. Scarborough
Senior Vice President and Chief Financial Officer
(principal financial and accounting officer)
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
------- ----------- ----
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation, as amended by
the Articles of Amendment to Amended and Restated articles of
Incorporation as filed with the Secretary of the State of
Florida on May 28, 1997 (incorporated by reference to Exhibit
3.1 of the Company's Registration Statement on Form S-1 (No.
333-31415) as declared effective by the SEC on August 13,
1997. (the "Registration Statement").
3.2 Amended and Restated Bylaws, effective July 8, 1996,
(incorporated by reference to Exhibit 3.2 of the Company's
Form 10-Q, dated August 14, 1996, File No. 0-20937)
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 Company (incorporated by reference to Exhibit 4.1 of the
Registration Statement)
10.1 Source Code License and Marketing Agreement, dated as of March
31, 1998, between the Company and Computer Systems Associates
(Nigeria) Limited.+
10.2 Software License and Development Agreement, dated as of
January 15, 1998, between the Company and Intercept Systems,
Inc.+
10.3 Amended and Restated Employment Agreement dated as of March
20, 1998 between the Company and Raju M. Shivdasani
10.4 Employment Agreement dated as of March 6, 1998 between the
Company and Daniel P. Baker
10.5 Employment Agreement dated as of March 25, 1998 between the
Company and Jocelyn Ruggiero
27.1 Financial Data Schedule for the three months ended March 31,
1998 (for SEC use only)
</TABLE>
- ------------------
+ Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of
1934, as amended. In accordance with Rule 24b-2, these confidential portions
have been omitted from this exhibit and filed separately with the Commission.
<PAGE> 1
EXHIBIT 10.1
CONFIDENTIAL TREATMENT REQUESTED AND
CONFIDENTIAL PORTIONS FILED SEPARATELY WITH SEC
SOURCE CODE LICENSE AND MARKETING AGREEMENT
THIS SOURCE CODE LICENSE AND MARKETING AGREEMENT (this "Agreement"), is
entered into as of March 31, 1998, by and between Phoenix International, Inc.
("Phoenix") and Computer Systems Associates (Nigeria) Limited ("CSA").
Phoenix has developed certain software applications for banks, which CSA
wishes to license, modify, distribute, implement and support on the continent of
Africa under CSA's brand name and trademarks, pursuant to the terms and
conditions of this Agreement. Phoenix and CSA, intending to be legally bound,
agree as follows:
1 DEFINITIONS.
1.1 "Changes" means any and all corrections, updates, upgrades, additions and
modifications to any of the Licensed Products, including, but not limited to,
translations into foreign languages used in the Territory, modifications for use
in countries included in the Territory, and any other new or additional works
based in whole or in part on any of the Licensed Products.
1.2 "Customer" means an Eligible Prospect that has executed a License Agreement
with CSA for use of the Software pursuant to the terms of this Agreement.
1.3 "Documentation" means the current English version of the operating
documentation relating to the Software as provided to CSA by Phoenix.
1.4 "Eligible Prospect" means a bank organized and doing business in the
Territory.
1.5 "License Agreement" means the form of license agreement to be used between
CSA and Eligible Prospects. License Agreements shall contain terms and
conditions for protection of Phoenix's intellectual property acceptable to
Phoenix, but shall not refer to Phoenix unless expressly approved by Phoenix.
CSA shall provide a copy of the License Agreement which it proposes to use to
Phoenix for its review and approval prior to use, and shall do the same with any
material changes in the License Agreement thereafter.
1.6 "Licensed Products" means the Software, Source Code, Documentation and
Source Code Documentation.
1.7 "Software" means the object code for the software listed in Exhibit A
attached hereto, along with all Changes either produced by or for CSA, or
provided to CSA by Phoenix. The Software shall include all object code produced
by CSA from the compilation of the Source Code and all Changes thereto.
1.8 "Source Code" means the source code version of the Software, along with all
Changes either produced by or for CSA or provided to CSA by Phoenix.
1.9 "Source Code Documentation" means the development level documentation for
the Source Code as provided to CSA by Phoenix.
1.10 "Territory" means all countries on the continent of Africa, but does not
include Egypt or any country in the Middle East, and Eskom Finance Company in
South Africa shall be excluded from the Territory.
1
<PAGE> 2
XXX - CONFIDENTIAL TREATMENT REQUESTED
AND CONFIDENTIAL PORTIONS FILED
SEPARATELY WITH THE COMMISSION
2 PRIOR MARKETING AGREEMENT
The Remarketing Agreement and Support Authorization (the "Remarketing
Agreement") dated as of April 22, 1996 between Phoenix and CSA shall continue in
effect, but shall apply only to (i) Customers who have signed License Agreements
pursuant to the Remarketing Agreement prior to the date of this Agreement and
(ii) Customers identified by CSA who, prior to March 31, 1999, choose in their
sole discretion to enter into License Agreements for the Phoenix brand version
of the Software, as opposed to the CSA private label version of the Software
authorized hereunder. For all other and additional Customers, this Agreement
shall control. Notwithstanding the foregoing, CSA may convert current Customers
originating from CSA's marketing efforts to CSA's private labeled software
hereunder if (i) each Customer executes a new license agreement with CSA for the
CSA version of the Software, (ii) CSA accepts responsibility for all Customer
and Software Support for each such Customer, and (iii) CSA continues to pay
Phoenix its share of the license and support fees as required under the terms of
the Remarketing Agreement.
3 SOURCE CODE LICENSE.
3.1 Phoenix shall deliver to CSA upon execution of this Agreement one copy of
the Source Code and Source Code Documentation. Phoenix hereby grants to CSA, and
CSA accepts, subject to the terms and conditions of this Agreement, a perpetual
right and license to:
(a) Further develop and make Changes to the Licensed Products;
(b) Compile the Source Code into object code;
(c) Demonstrate and promote the Software and Documentation to Eligible
Prospects under its own trademarks and trade names;
(d) Sublicense the Software and Documentation to Eligible Prospects pursuant to
License Agreements under its own trademarks and trade names; and
(e) Provide implementation, training and support services to Customers for the
Software.
3.2 CSA shall perform all marketing of the Software and Documentation, all
licensing and sublicensing of the Software and Documentation, and perform all
services related to the Software under CSA's own brand names and trademarks. CSA
shall not use any of Phoenix's brand names, trademarks or service marks in
connection with the use, license or service of the Software or otherwise without
Phoenix's express written consent, provided, however, that the Software shall
contain such legends and copyright notices as Phoenix shall reasonably require
to protect its intellectual property rights in the Licensed Products. For a
period of one year from the date of this Agreement, CSA may indicate that the
Software as marketed and distributed by CSA is a derivative of the Phoenix
Software to assist in establishing the market for the Software as private
labeled by CSA.
Until XXXX, Phoenix shall not grant any other party the right to market, sell or
license the Software within the Territory under such parties own trademarks and
trade names. Phoenix shall not grant the right to market, sell or license the
Software within the territory to more than one other party under Phoenix's
trademarks and trade names. Phoenix may continue to market, sell and license the
Software within the Territory, but only in conjunction with CSA on terms to be
2
<PAGE> 3
XXX - CONFIDENTIAL TREATMENT REQUESTED
AND CONFIDENTIAL PORTIONS FILED
SEPARATELY WITH THE COMMISSION
mutually agreed upon. Notwithstanding the foregoing, until XXXX, CSA's rights
hereunder shall be exclusive within XXXX. After XXXX all rights granted
hereunder shall be non-exclusive.
4 RESTRICTIONS.
4.1 Except as expressly stated in this Agreement, Phoenix shall have no
obligation to render any services or provide any effort, or to refrain from any
business or activity. Phoenix provides no assurance with regard to the results
or profitability of the promotional activities and services CSA is authorized to
pursue hereunder, or of the performance of the Software or Source Code.
4.2 CSA may copy the Licensed Products only as required to perform its duties
hereunder. The Software and Documentation shall not be provided to any third
party for use, evaluation or any other purpose except pursuant to a fully
executed License Agreement. The Source Code and Source Code Documentation shall
not be provided to any other party under any circumstances.
4.3 CSA shall follow the security procedures set forth in Exhibit C with respect
to the Source Code and Source Code Documentation, and shall give a copy of such
procedures to its employees who are given access to the Source Code or Source
Code Documentation. At the end of each quarter, CSA shall prepare, sign and send
to Phoenix the Certification attached hereto as Exhibit D.
4.4 Prior to April 1, 1999, CSA shall purchase insurance or a bond providing a
minimum of XXX to secure all of CSA's obligations under this Agreement. CSA
shall maintain such bond or insurance through XXXX. In the event that Phoenix
can show that the Source Code or Source Code Documentation provided to CSA
hereunder is in the possession of or is being used by any third party not
authorized by Phoenix to have access to such Source Code or Source Code
Documentation, Phoenix shall be entitled to collect the entire XXXX under such
bond or insurance policy. CSA acknowledges that the Source Code and Source Code
Documentation are Phoenix's most valuable assets, embody most of Phoenix's trade
secrets and intellectual property, and that the dissemination of the Source Code
or Source Code Documentation to any third party without Phoenix's consent would
cause irreparable and immeasurable harm to Phoenix, and that such XXXX is not
only a reasonable amount to cover damages caused thereby, but is probably
insufficient. The foregoing shall be in addition to any other remedies Phoenix
may have in law or equity under the laws of the United Sates, the Territory or
any other country.
4.5 Phoenix, or its authorized agent, shall have the right to audit CSA for
compliance with the terms of this Agreement. CSA shall provide Phoenix or such
agent access during regular business hours to CSA's premises and books and
records for any such audit upon 2 day's notice from Phoenix.
5 TERM AND TERMINATION
5.1 The rights and licenses granted to CSA herein shall be perpetual, subject to
prior termination by Phoenix as set forth herein.
5.2 This Agreement may be terminated by Phoenix upon 30 day's written notice if
CSA fails to perform its obligations hereunder in any material respect or
breaches the terms of this Agreement and such failure or breach is not cured
within such 30 day period. The 30 day period shall be 90
days if the applicable breach relates solely to late payment of fees due
hereunder.
3
<PAGE> 4
XXX - CONFIDENTIAL TREATMENT REQUESTED
AND CONFIDENTIAL PORTIONS FILED
SEPARATELY WITH THE COMMISSION
5.3 Upon termination of this Agreement, CSA shall immediately deliver to
Phoenix, at CSA's own expense, all copies of the Licensed Products and any other
materials related to Phoenix in the possession of or previously delivered to CSA
by Phoenix, except that CSA may retain copies of materials Phoenix agrees CSA
may retain in order to continue to provide support services to Customers for so
long as CSA continues to be authorized by Phoenix (pursuant to this Agreement or
a subsequent agreement) to provide such support services. Following termination
of this Agreement, CSA shall continue to be responsible for providing support
services to Customers in accordance with each Support Agreement, unless Phoenix
elects (at its option) to take over such support services in some or all cases
for the reason that CSA has failed to provide such support services or perform
its other obligations hereunder in a satisfactory manner. If such an exception
applies, CSA agrees to assign to Phoenix or Phoenix's designee some or all
support agreements still in effect, as requested by Phoenix. CSA agrees that
upon the breach by CSA of any terms or restrictions hereunder associated with
the Software, Phoenix shall be entitled to seek such injunctive and/or other
equitable relief as it deems proper in a court of appropriate jurisdiction.
5.4 Sections 4, 5, 6 and 8 of this Agreement shall survive termination and shall
remain in effect in accordance with their terms.
6 SERVICES.
6.1 Within one year following the date of this Agreement, Phoenix shall provide
up to XXX man-days of training in the use and support of the Source Code for
Trademark, TradeWind and TradeCentre at Phoenix's offices in Wellington, New
Zealand and up XXX man-days of training to CSA in the use and support of the
other portions of the Source Code at Phoenix's offices in Orlando, Florida. CSA
may purchase additional training and assistance for XXX per man-day for the
first year following the date of this Agreement, and at Phoenix's then current
rates for such services thereafter, subject to availability of Phoenix
personnel. All training shall be provided at Phoenix's offices.
6.2 CSA shall be responsible for providing all implementation, training and
support services to Customers. Phoenix shall provide remote assistance in the
provision of these services from its offices in Florida at Phoenix's then
current rates for such services, subject to availability of Phoenix personnel.
Phoenix shall not be required to provide assistance for changes made by CSA. In
no case shall Phoenix be required to travel to the Territory to provide services
to CSA or Customers.
6.3 In the event CSA requires services from Phoenix which are beyond the scope
of this Agreement, Phoenix will have no obligation to provide such services
unless it agrees to do so and satisfactory provision is made for associated fees
and travel and living expenses.
6.4 At Phoenix's request, CSA shall make itself available to provide Support
Services to other licensed end users located inside or outside the Territory.
Such Support Services shall be provided by CSA working directly for the
specified end users, or as a subcontractor working for Phoenix, at Phoenix's
option. Fees and charges will be agreed to by Phoenix and CSA on a case-by-case
basis, provided that CSA agrees that its fees and charges will not exceed the
fees and charges it customarily obtains for similar services in other
circumstances.
4
<PAGE> 5
6.5 For a period of one year from the date of this Agreement, for educational
purposes, CSA personnel shall be allowed to participate in the development of
the Software for Customers in the Territory. Such participation shall be
alongside Phoenix developers in Orlando or such other site to be chosen by
Phoenix upon terms and conditions mutually acceptable to Phoenix and CSA.
7 TITLE; INTELLECTUAL PROPERTY.
7.1 The Licensed Products are protected by U.S., Nigerian, and other
international copyright laws, treaties and conventions, the Licensed Products
are copyrighted works under U.S. and foreign laws, and the Licensed Products are
protected as trade secrets and Confidential Information of Phoenix. Phoenix
retains all right, title, and interest in and to the Licensed Products, and all
intellectual property rights contained therein, subject only to the limited
license granted to CSA in this Agreement. Output reports and formats (e.g., ad
hoc reports, SQL queries, etc.) first created by CSA and/or any Customers shall
be subject to joint ownership of Phoenix and either CSA or the Customers, as
applicable (except that, to the extent such output reports derive from or
contain any part of the Licensed Products, the restrictions applicable to the
Licensed Products shall apply to any use thereof). CSA shall assist Phoenix, at
Phoenix's request, in perfecting and maintaining Phoenix's rights under
copyright law in each country in the Territory by advising Phoenix of any
special registration, recording or notice requirements.
7.2 All Changes made or obtained by CSA, any Customer, or their respective
employees or agents acting alone or in collaboration with each other, shall,
together with all intellectual property rights associated therewith, belong to
CSA or such Customer as agreed between the Customer and CSA, provided that
Phoenix shall be provided a copy of all Changes, and shall have an unlimited,
unrestricted, royalty free right and license to use, modify, copy, integrate,
distribute and sublicense such Changes outside of the Territory. At Phoenix's
request, CSA shall provide such rights to Phoenix within the Territory at a
reasonable royalty rate to be agreed upon by Phoenix and CSA.
7.3 CSA may not distribute, sell, sublease, assign, give, or transfer in any way
any copies of the Licensed Products except as provided in this Agreement.
7.4 CSA 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.
8 CONFIDENTIALITY OBLIGATIONS.
8.1 CSA acknowledges that the Licensed Products contain Confidential Information
and Trade Secrets of Phoenix.
8.2 CSA agrees at all times to maintain the complete confidentiality of the
Licensed Products, and all other Confidential Information of Phoenix. CSA shall
use its best efforts to protect the confidentiality of the Source Code and
Source Code Documentation, shall keep the Source Code and Source Code
Documentation in a secure place and shall not provide access to the Source Code
or Source Code Documentation to any employee or agent other than those employees
and agents who have a need for access in order for CSA to exercise its rights
hereunder.
5
<PAGE> 6
8.3 CSA agrees not to permit or authorize access to, or disclosure of, the
Licensed Products or any other Confidential Information of Phoenix to any person
or entity other than (i) Eligible Prospects who have entered into
confidentiality agreements approved by Phoenix, to the extent necessary for such
Eligible Prospects to evaluate the Software, (ii) Customers, to the extent
necessary for such Customers to exercise their rights under applicable License
Agreements, and (iii) employees of CSA who have a "need to know" such
information in order to enable CSA to perform its obligations under this
Agreement and applicable License Agreements and Support Agreements. CSA 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 CSA shall
notify Phoenix of the applicable legal requirements before such disclosure
occurs and CSA 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 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
Licensed Products, 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 CSA or any person or entity associated with CSA), (ii) is
independently developed without reference to or reliance on any Confidential
Information of Phoenix, as demonstrated by written records in CSA'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 CSA's possession (which shall be provided to Phoenix at
Phoenix's request).
8.5 Each employee of CSA who is granted access to the Source Code or Source Code
Documentation shall have entered into a confidentiality agreement with CSA
containing terms and conditions which are at least as protective as those
contained in this Agreement. CSA shall provide copies of all such agreements to
Phoenix upon Phoenix's written request. CSA shall be responsible for all actions
of its employees and all persons to whom CSA grants access to the Licensed
Products, including Customers.
9 FEES AND CHARGES.
9.1 CSA shall pay Phoenix the fees set forth in Exhibit B.
9.2 CSA shall collect, report and pay to the relevant taxing authority, and
indemnify Phoenix for any liability relating to, all applicable excise,
property, VAT, sales and use, or similar taxes, any withholding requirement in
addition to or in lieu thereof, and any customs, import, export or other duties,
levies, tariffs, taxes, or other similar charges that are imposed by any
jurisdiction outside the United States of America for the transactions
contemplated herein, including the license of the Software by Phoenix.
6
<PAGE> 7
XXX - CONFIDENTIAL TREATMENT REQUESTED
AND CONFIDENTIAL PORTIONS FILED
SEPARATELY WITH THE COMMISSION
9.3 Time is of the essence with respect to all payments due from CSA hereunder.
CSA may not suspend or set-off any payment due Phoenix hereunder on any basis
whatsoever. All amounts past due shall be due and payable 30 days following
invoice from Phoenix, or as otherwise set forth in Exhibit B. Late payments
shall accrue interest at the annual rate equal to XXXXX.
9.4 XXXXXX shall be the rate shown in XXXXXXXXX section of XXXXXXX on the XXXX
day of each XXXX.
10 LIMITATIONS.
10.1 PHOENIX SHALL HAVE NO LIABILITY FOR THE SOFTWARE OR ANY SERVICES PROVIDED
HEREUNDER, INCLUDING ANY LIABILITY FOR NEGLIGENCE. PHOENIX MAKES AND CSA
RECEIVES NO WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE IN ANY
PROVISION OF THIS AGREEMENT OR ANY OTHER COMMUNICATION, AND PHOENIX SPECIFICALLY
DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
10.2 The cumulative liability of Phoenix to CSA for all claims relating to the
Licensed Products and any services rendered hereunder, in contract, tort or
otherwise, shall not exceed the total amount of all license fees paid by CSA to
Phoenix for the relevant Software within the prior year. In no event shall
Phoenix be liable to CSA for any consequential, indirect, special, or incidental
damages, including without limitation lost profits, even if Phoenix has been
advised of the possibility of such potential loss or damage. The foregoing
limitation of liability and exclusion of certain damages shall apply regardless
of the success or effectiveness of other remedies.
11 INDEMNIFICATION BY PHOENIX.
11.1 If a third party claims that the Licensed Products infringes any patent,
copyright, trade secret, or similar intellectual property rights of a third
party Phoenix shall (as long as CSA is not in default under this Agreement or
any other agreement with Phoenix) defend CSA against that claim at Phoenix's
expense and pay all damages awarded by a court in a final judgment, provided
that CSA 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.
11.2 If such a claim is made or appears possible, Phoenix may, at its option,
secure for CSA 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 STATES PHOENIX'S ENTIRE
OBLIGATION TO CSA WITH RESPECT TO MATTERS OF TITLE OR ANY CLAIM OF INFRINGEMENT
THEREOF.
7
<PAGE> 8
12 GENERAL
12.1 Power and Authority. 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.
12.2 Notices. All notices or other communications to be given hereunder shall be
in writing and delivered either by telecopy (confirmation by air mail), or by
international second day courier, courier charges prepaid, and addressed to the
appropriate party as set forth below.
(a) If to CSA:
Computer Systems Associates (Nigeria) Limited
Yinka Folawiyo Plaza
38 Warehouse Road
Apapa, Lagos
Nigeria
Telecopy: 234 1 5870420
(b) If to Phoenix:
Phoenix International
500 International Parkway
Heathrow, Florida 32746
FOR IMMEDIATE ATTENTION -- Deliver to President
Telecopy: (407) 548-5296
With a copy to:
Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza, Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Peter C. Quittmeyer, Esq.
Fax: 404/817-6050
Notices delivered personally shall be effective upon delivery and notices
delivered by mail shall be effective upon their receipt by the party to whom
they are addressed.
12.3 Assignment. This Agreement may not be assigned by CSA, nor may CSA delegate
or subcontract any obligation incurred hereunder or under any applicable License
Agreement except with the prior written consent of Phoenix. Phoenix may
terminate this Agreement in the event that CSA experiences (in one transaction
or any series of transactions) a change of majority ownership or principal
management, or is merged with any other entity, unless Phoenix is promptly
notified of such change, is provided satisfactory assurance that CSA will be
able to perform its obligations hereunder to Phoenix's satisfaction, and such
change in ownership does not result in control of CSA by any entity which is in
the same business as Phoenix, or which competes with or is competitive with
Phoenix either in Africa or any other part of the world. A change in control in
violation of the foregoing sentence shall permit Phoenix to terminate the right
granted hereunder immediately. Subject to the foregoing, this Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto, their
successors and assigns.
8
<PAGE> 9
12.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.
12.5 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the U.K.
12.6 Entire Agreement. This Agreement may not be modified except by a writing
signed by authorized representatives of both parties. A waiver by either party
of its rights hereunder shall not be binding unless contained in a writing
signed by an authorized representative of the party waiving its rights. The
non-enforcement or waiver of any provision on one occasion shall not constitute
a waiver of such provision on any other occasions unless expressly so agreed in
writing. It is agreed that no usage of trade or other regular practice or method
of dealing between the parties hereto shall be used to modify, interpret,
supplement or alter in any manner the terms of this Agreement. The English
Language form of this Agreement shall be controlling for purposes of
interpretation and enforcement.
12.7 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation hereof.
12.8 Employees. Neither party shall hire nor recruit any employee of the other
without the prior written consent of such party.
12.9 Compliance With Laws.
(a) CSA shall, at its own expense, comply with all laws relating to the
marketing, distribution or licensing of the Software, and shall procure all
licenses and pay all fees and other charges required thereby.
(b) Notwithstanding anything in this Agreement to the contrary, it is
acknowledged and agreed that neither Phoenix nor CSA may ship, export or
re-export the Licensed Products, 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. CSA understand that, if
such a prohibition applies and an export license cannot be obtained with
reasonable effort, the disclosure or delivery of the Licensed Products may not
occur. To assure compliance, CSA agrees to notify Phoenix of each Eligible
Prospect as soon as possible so that Phoenix can evaluate whether prohibitions
may apply or export licenses may be available. If unusual costs are involved in
obtaining export licenses, Phoenix may require CSA to accept responsibility for
some or all of those costs.
(c) CSA hereby agrees that CSA 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 CSA nor any of its directors, officers, employees, or agents
will make or offer to make 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.
12.10 Independent Contractor. Each party hereto shall be and remain an
independent contractor; nothing herein shall be deemed to constitute the parties
as partners, and neither party shall have any authority to act, or attempt to
act, or represent itself, directly or by implication, as an agent of the other
or in any manner assume or create, or attempt to assume or create, any
obligation on
9
<PAGE> 10
behalf of or in the name of the other, nor shall either by deemed the agent or
employee of the other.
12.11 Arbitration. In the event a claim, controversy or dispute between Phoenix
and CSA 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 London, England, unless
Phoenix and CSA 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 CSA 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 CSA 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.
Initials accepting arbitration provisions:
Phoenix: /s/ RMS CSA: /s/ Simeon C. Agu
---------------- ----------------------
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PHOENIX INTERNATIONAL LTD., INC. COMPUTER SYSTEMS ASSOCIATES
(NIGERIA) LIMITED
By: /s/ Raju Shivdasani By: /s/ Simeon C. Agu
---------------------------- ------------------------------
Title: President & COO Title: Managing Director/CEO
------------------------- ---------------------------
Date: 31st March, 1998 Date: 31st March, 1998
-------------------------- ----------------------------
10
<PAGE> 11
EXHIBIT A
SOFTWARE
Current International Version of the Phoenix Banking System and TradeWind and
all releases and maintenance updates for such products prior to March 31, 1999,
if any, inclusive of all modifications made by Phoenix for Customers in the
Territory.
The current version only of the following Phoenix software:
Phoenix Voice Response System
Phoenix ATM
Phoenix Internet Banking System
TradeCentre
TradeMark
Phoenix is not obligated to provide any additional releases or software to CSA
other than as specifically listed above.
11
<PAGE> 12
XXX - CONFIDENTIAL TREATMENT REQUESTED
AND CONFIDENTIAL PORTIONS FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT B
LICENSE FEES AND ROYALTIES
All amounts due hereunder shall be paid in U.S. Dollars via wire transfer to the
bank account in the United States as designated by Phoenix from time to time.
A. Source Code License Fee XXXX
B. Continuing Royalties XXXX per year for XXXX years
Payment terms:
1. The source Code License Fee shall be paid as follows:
XXXX
XXXX on XXXX
XXXX on XXXX
XXXX on XXXX
XXXX on XXXX
2. The Continuing Royalties Fee shall be paid as follows:
XXXX on the last day of the second month of each calendar quarter with the
first payment on XXXX and the last payment on XXXX.
3. Fees for Services: Fees for all services requested hereunder shall be payable
in advance, based on Phoenix's estimate of work required for each project. Upon
completion of a particular project, the prepaid amount will be reconciled with
the amount of time actually required to complete such project, and Phoenix shall
refund to CSA, or CSA shall pay to Phoenix, the difference, as the case may be.
4. By April 27, 1998, CSA shall obtain an irrevocable demand letter of credit in
favor of Phoenix in the amount of XXXX (less amounts actually paid by CSA to
Phoenix hereunder, or otherwise secured in a manner acceptable to Phoenix, but
in no case less than XXXX, nor more at any time than amounts actually due
Phoenix within the next 6 months) confirmed by a U.S. financial institution
acceptable to Phoenix, payable upon presentment by Phoenix of invoices in
accordance with the payment schedule set forth above, with terms reasonably
acceptable to Phoenix. CSA shall maintain such letter of credit on the same
terms through the XXXX payment. Thereafter CSA shall maintain a letter of credit
on the same terms with an available amount of XXXX until all amounts due
hereunder have been paid in full, provided that the letter of credit may be
reduced as the total of amounts due hereunder is reduced for the last two
payment dates.
12
<PAGE> 13
EXHIBIT C
SECURITY PROCEDURES FOR PHOENIX SOFTWARE
1. The information contained in the Phoenix Banking System and other Phoenix
Software is highly proprietary and confidential information belonging to
Phoenix International Ltd., Inc. CSA is responsible for the security and
safekeeping of such information, including all copies of the Source Code
and Source Code Documentation for such Software. It is each employee's duty
to follow the procedures set forth below to ensure CSA's compliance with
its security obligations.
2. Strict security measures are necessary to insure the safety and security of
the Phoenix Source Code and other proprietary information.
3. Only those employees who need to have access to the Phoenix Source Code and
Source Code Documentation shall be authorized for access by CSA. CSA shall
keep a list of such authorized employees. Only authorized employees shall
be allowed access to the Source Code and Source Code Documentation.
4. The Source Code and Source Code Documentation shall be kept in a secure
area at all times. Only authorized employees shall have access to such
area.
5. During non-working hours, all hard copies of the Source Code and Source
Code Documentation and all computer disks, tapes, CDs and other media
containing copies of the Source Code and Source Code Documentation shall be
kept in a locked and secure file cabinet or safe.
6. All Source Code accessible on a computer or computer network shall be
secured with an encrypted security scheme with password protection. A
separate password shall be allocated to each employee with access to the
Source Code and Source Code Documentation, and all access by any person
shall be recorded and logged by name and password. Passwords shall be
changed periodically, but no less than quarterly.
7. Computers which are logged in for access to the Source Code or Source Code
Documentation shall never be left unattended by authorized personnel. All
employees shall log off of computers before leaving them unattended.
8. A written record shall be kept of the number and location of all copies of
the Source Code, Object Code, Documentation and Source Code Documentation
for the Phoenix Software. Each employee shall keep a detailed record of all
changes made to the Source Code. CSA shall keep a comprehensive and
thorough record of all changes to the Source Code.
9. Prior to disposal of any media or materials that contain any part of the
software, documentation, other proprietary or confidential information of
Phoenix, CSA and its employees 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
<PAGE> 14
EXHIBIT D
SECURITY COMPLIANCE CERTIFICATION
Date _____________________
As of the date set forth above, Computer Systems Associates (Nigeria) Limited
("CSA") hereby certifies to Phoenix International Ltd., Inc. ("Phoenix") the
following:
1. CSA is in compliance with all security procedures and terms and conditions
set forth in the Source Code License Agreement between Phoenix and CSA dated
March 31, 1998. All employees of CSA who have been given access to the Source
Code have entered into confidentiality agreements with CSA concerning the use
and protection of the Source Code and Source Code Documentation in accordance
with the terms of the License Agreement.
2. Following is a comprehensive list of the number and location of all copies of
the Source Code and Source Code Documentation, complete with street addresses:
3. Following is a list of all Customers to whom CSA has licensed the Software
within the last quarter:
4. Attached is a summary of the Changes that have been made to the Source Code,
accompanied by a development level description of such Changes, and a copy of
the current version of the Source Code with all such Changes in a computer
readable format acceptable to Phoenix.
14
<PAGE> 15
This certification has been signed by an authorized officer of CSA as of the
date first set forth above.
Computer Systems Associates ( Nigeria) Limited
By:
---------------------------------------------------
- ------------------------------------------------------
Print Name
- ------------------------------------------------------
Print Title
15
<PAGE> 1
EXHIBIT 10.2
CONFIDENTIAL TREATMENT REQUESTED AND
CONFIDENTIAL PORTIONS FILED SEPARATELY WITH SEC
SOFTWARE LICENSE AND DEVELOPMENT AGREEMENT
BETWEEN
INTERCEPT SYSTEMS, INC.
AND
PHOENIX INTERNATIONAL LTD., INC.
DATED: JANUARY 15, 1998
Parties:
Intercept Systems, Inc., a Georgia corporation ("Intercept")
3150 Holcomb Bridge Road
Suite 200
Norcross, Georgia 30071
Phoenix International Ltd., Inc., a Florida corporation ("Phoenix")
500 International Parkway
Heathrow, Florida 32746
THIS LICENSE AND DEVELOPMENT AGREEMENT (this "Agreement") is
effective as of the date first set forth above by and between Intercept and
Phoenix. Intercept has developed software and related documentation for
financial institutions for the operation and administration of automatic teller
machines. Phoenix desires to further develop such software and integrate it with
Phoenix's existing software programs, and to market such modified programs with
Phoenix's other products. In consideration of the premises set forth above, and
of the obligations herein made and undertaken and other good and valuable
consideration, the parties hereby agree as follows:
1 DEFINITIONS
Capitalized terms used in this Agreement shall have the following definitions:
1.1 Confidential Information. Any competitively sensitive or secret business,
marketing, or technical information, disclosed by one party to the other,
including all source and object code versions of all software, and all
documentation, technical manuals, design and development documentation, and all
other non-public information relating to either party's software or business.
Notwithstanding the foregoing, Confidential Information does not include
information which (i) becomes generally available to the public other than as a
result of a disclosure by the receiving party or its representatives, (ii) was
available to a party prior to its disclosure to such party by the other party or
its representatives, provided the receiving party has no knowledge that such
information
<PAGE> 2
was obtained, directly or indirectly, from a source that was bound by a
confidentiality agreement with the disclosing party or other obligation of
secrecy to the disclosing party or its representatives, (iii) becomes available
to a party, directly or indirectly, from a source other than the other party or
its representatives, provided that such source is not bound by a confidentiality
agreement with the disclosing party, or (iv) that is independently developed by
the receiving party without reference to any Confidential Information of the
disclosing party.
1.2 Derivative Work. A work that is based upon one or more preexisting works,
such as a revision, modification, translation, abridgment, condensation,
expansion, or any other form in which such a preexisting work may be recast,
transformed, or adapted, and that, if prepared without authorization by the
owner of the preexisting work, would constitute a copyright infringement.
1.3 Documentation. The printed material relating to the Program, including all
instructional, technical and development documentation.
1.4 Enhancement. A change or addition to the Program or Documentation, that
improves its function, adds new function, or enhances its performance, including
changes, additions, modifications, new releases, new versions, error corrections
and bug fixes.
1.5 Intellectual Property Rights. All copyrights, patent, patent rights, trade
secrets, trademarks, service marks, Confidential Information, know-how and other
intellectual property rights in software or documentation owned or claimed by
any person under the laws of the United States, or any other country.
1.6 Phoenix Product. Derivative Works of the Program created by Phoenix.
1.7 Program. Computer programming code, including source code (human-readable),
and object code (machine-readable), and associated procedural code, including
all current and subsequent Enhancements, as more fully described in Exhibit A.
2 LICENSE GRANT
2.1 Program License. Subject to termination pursuant to Section 5 below,
Intercept hereby grants Phoenix a non-exclusive worldwide, perpetual,
irrevocable right and license to install, use, copy, modify, adapt, translate,
and create Derivative Works of (under sublicense or otherwise) all versions of
the Program, including all source code and object code, and to authorize others
to do some or all of the foregoing subject to the limitations set forth herein.
2.2 Documentation. Subject to termination pursuant to Section 5 below, Intercept
hereby grants Phoenix a non-exclusive worldwide, perpetual, irrevocable right
and license to translate, change, modify and distribute the Documentation.
2.3 Derivative Works. As part of the above license, Phoenix shall have the right
to create Derivative Works and Enhancements to the Program and Documentation,
including without limitation, converting the Program to run in conjunction with
the Phoenix system, the Sybase relational database, translating the Program and
Documentation into other languages as required by Phoenix's business practices,
and modifying the Program to integrate it into Phoenix's software product line.
The Program and Documentation as so modified shall be referred to herein as the
"Phoenix Products". Phoenix shall have an exclusive, worldwide, perpetual,
irrevocable right and
2
<PAGE> 3
XXX - CONFIDENTIAL TREATMENT REQUESTED
AND CONFIDENTIAL PORTIONS FILED
SEPARATELY WITH THE COMMISSION
license to use, install, market, license, sublicense, and distribute the Phoenix
Products, and to authorize others to do some or all of the foregoing, provided
however, that Phoenix may not license or provide the source code of the Program
to any third party without the written consent of Intercept. Phoenix is
authorized to use the Phoenix Products and the Program as necessary to
implement, install, train, support and maintain the Phoenix Products for
end-users and otherwise as necessary to exercise its rights hereunder.
2.4 Fee. In exchange for the foregoing rights, Phoenix shall pay Intercept a
total of $XXXXX, due and payable within 45 days following the execution of this
Agreement.
3 INTERCEPT OBLIGATIONS
3.1 Initial Deliveries. Intercept shall deliver to Phoenix one copy of the
Program (in object code and source code form) and Documentation within ten days
following the date of this Agreement.
3.2 Assistance.
(a) Intercept will provide assistance and support to Phoenix at no charge
for a twelve month period beginning on the date of this Agreement and ending
on January 15, 1999 as required by Phoenix to create the Phoenix Products,
provided that Phoenix will pay all of Intercept's reasonable travel and
lodging expenses.
(b) Intercept will provide additional assistance to Phoenix as reasonably
requested on a time and materials basis at Intercept's then current rates
for such assistance, plus reasonable travel and lodging expenses.
4 LIMITED WARRANTY AND LIMITATION OF LIABILITY
4.1 Warranty. Intercept warrants that it is the exclusive owner of all U.S., and
foreign Intellectual Property Rights in the Program, Documentation, and all
Enhancements delivered to Phoenix hereunder, and that it has all rights
necessary for the grant of rights and licenses under this Agreement.
4.2 Disclaimer. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, INTERCEPT DISCLAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, ARISING OUT OF OR RELATING TO THE PROGRAM OR
DOCUMENTATION OR ANY USE THEREOF, INCLUDING (WITHOUT LIMITATION) ANY WARRANTY
WHATSOEVER AS TO THE FITNESS FOR A PARTICULAR USE OR THE MERCHANTABILITY OF THE
PROGRAM OR DOCUMENTATION.
4.3 Limitation of Liability. In no event shall either party be liable to the
other for any indirect, special, incidental, or consequential damages (including
lost profits).
3
<PAGE> 4
5 TERMINATION; EFFECT OF TERMINATION
5.1 Agreement Termination. Intercept may terminate the licenses granted under
this Agreement upon the material breach by Phoenix of its obligations hereunder
if such breach is not cured within 30 days following notice thereof from
Intercept.
5.2 Consequences. Upon the termination of the licenses as set forth above,
Phoenix shall immediately return to Intercept all of the software and
documentation provided by Intercept. In such case, Phoenix may retain the
Phoenix Products and a license to use, modify, enhance, and distribute the
Phoenix Products as necessary to continue to provide maintenance and support for
its customers who have already licensed the Phoenix Products until all such
licenses have expired.
6 INDEMNIFICATION
6.1 Intercept Indemnification. Intercept agrees to, and does hereby, indemnify
and hold harmless Phoenix from any and all claims, demands, or actions alleging
that the Program or Documentation (including any Enhancements), in the form
delivered by Intercept, infringes or abridges any third-party Intellectual
Property Rights in violation of the warranty in Section 4.1 above.
6.2 Phoenix Indemnification. Phoenix agrees to, and does hereby, indemnify and
hold harmless Intercept from any and all claims, demands, or actions from or
relating to Phoenix Products, or use by customers of Phoenix Products, and based
on or related to Phoenix's performance, nonperformance, infringement of
third-party Intellectual Property Rights, representations or statements made, or
other actions with respect to the Phoenix Products, but only to the extent such
claims, demands or actions do not arise from any act or omission of Intercept or
from infringement of Intellectual Property Rights by the portion of the Phoenix
Products provided to Phoenix by Intercept.
6.3 Conditions. The foregoing indemnities shall be contingent upon the
following: The party seeking to enforce the indemnity against the other party
shall give written notice to the other party of any claim, demand, or action for
which indemnity is sought; shall fully cooperate in the defense or settlement of
any such claim, demand, or action; and shall obtain the prior written agreement
of the indemnifying party to any settlement or proposal of settlement.
7 CONFIDENTIALITY
7.1 Confidentiality. Both parties hereto desire to maintain the confidentiality
of the Confidential Information and are making it available only upon the terms
and conditions set forth below and they hereby agree:
(a) Not to use any portion of the Confidential Information for any purpose,
except pursuant to the rights and obligations set forth in this Agreement;
and
(b) Not to disclose any portion of the Confidential Information to any
person except the parties' respective officers, directors, employees, and
representatives who need to know such information in connection with this
letter or for the purpose of entering into a definitive agreement and who
agree to be bound by confidentiality obligations consistent with the
provisions of this Agreement.
4
<PAGE> 5
7.2 Exceptions. If either of the parties are requested or required (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information of the other, the party which is subject to such request will
provide the other party with prompt notice of such request(s) so that such other
party may seek an appropriate protective order and/or waive compliance with the
provisions of this letter agreement. If, in the absence of a protective order or
the receipt of a waiver hereunder a party is nonetheless, in the opinion of its
counsel, compelled to disclose the Confidential Information of the other party
to any tribunal or else stand liable for contempt or suffer other censure or
penalty, that party may disclose such information to such tribunal without
liability hereunder.
7.3 Remedies. As money damages would not be a sufficient remedy for any breach
of this paragraph of this letter agreement the parties hereto shall be entitled
to specific performance as a remedy for any such breach. Such remedy shall not
be deemed to be the exclusive remedy for any such breach of this letter
agreement but shall be in addition to all other remedies available at law or
equity.
8 MISCELLANEOUS
8.1 Title. It is expressly understood and agreed that, as between Intercept and
Phoenix, all right, title, and interest in and to the Program and Documentation
(including any Enhancements) and any other material furnished to Phoenix under
this Agreement vests solely and exclusively in Intercept, and Phoenix shall
neither derive nor assert any title or interest in or to such materials except
for the rights of use or licenses granted under this Agreement. Phoenix shall
own all changes in the Program and Documentation made by or at the direction of
Phoenix and shall own the Derivative Works to the extent they are different from
the Program as delivered.
8.2 Status. Nothing herein shall be construed to create a partnership, joint
venture, or agency relationship between the parties hereto.
8.3 No Conflict of Interest. Phoenix and Intercept represent and warrant that
they have full power and authority to undertake the obligations set forth in
this Agreement and that they have not entered into any other agreement that
would render them incapable of satisfactorily performing their obligations
hereunder, or that would place them in a position of conflict of interest or be
inconsistent or in conflict with their obligations hereunder.
8.4 Compliance with Law. Phoenix agrees that it shall comply with all applicable
laws and regulations of governmental bodies or agencies in its performance under
this Agreement.
8.5 No Assignment. Phoenix represents that it is acting on its own behalf and is
not acting as an agent for or on behalf of any third party and further agrees
that it may not assign its rights or obligations under this Agreement without
the prior written consent of Intercept, except that Phoenix may assign its
rights to a successor to substantially all of its business or assets or any
owner of 30% or more of its equity or any of its subsidiaries.
5
<PAGE> 6
8.6 Notices. All notices and other communications required or permitted to be
given under this Agreement shall be in writing and shall be considered effective
upon delivery when deposited with United Parcel Service, FedEx, or in the U.S.
Mail, return receipt requested, addressed to the appropriate party at the
address noted above, unless a different address shall have been designated in
writing.
8.7 No Waiver. Neither party shall by mere lapse of time, without giving notice
or taking other action hereunder, be deemed to have waived any breach by the
other party of any of the provisions of this Agreement. Further, the waiver by
either party of a particular breach of this Agreement by the other shall not be
construed or constitute a continuing waiver of such breach or of other breaches
of the same or other provisions of this Agreement.
8.8 Force Majeure. Neither party shall be in default if failure to perform any
obligation hereunder is caused solely by supervening conditions beyond that
party's control, including acts of God, civil commotion, strikes, labor
disputes, and governmental demands or requirements.
8.9 Scope of Agreement; Amendment. The parties hereto acknowledge that each has
read this Agreement, understands it, and agrees to be bound by its terms. The
parties further agree that this Agreement is the complete and exclusive
statement of agreement and supersedes all proposals (oral or written),
understandings, representations, conditions, warranties, covenants, and other
communications between the parties relating hereto. This Agreement may be
amended only by a subsequent writing that specifically refers to this Agreement
and is signed by both parties, and no other act, document, usage, or custom
shall be deemed to amend this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by respective duly authorized representatives as set forth below.
INTERCEPT SYSTEMS, INC. PHOENIX INTERNATIONAL LTD., INC.
By: /s/ John W. Collins By: /s/ Bahram Yusefzadeh
------------------------------ -----------------------------
Signature Signature
John W. Collins Bahram Yusefzadeh
- --------------------------------- --------------------------------
Print Name Print Name
Chairman and CEO Chairman and CEO
- --------------------------------- --------------------------------
Print Title Print Title
6
<PAGE> 7
EXHIBIT A
SOFTWARE DESCRIPTION
Intercept EFT Software and all associated drivers and ancillary software
7
<PAGE> 1
EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
RAJU M. SHIVDASANI
DATED AS OF MARCH 20TH, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Employment.....................................................................................1
2. Term...........................................................................................1
3. Compensation and Benefits......................................................................2
4. Termination....................................................................................3
5. Rights to Work Product.........................................................................6
6. Noncompetition, Nonsolicitation, Confidentiality and Related Matters...........................6
7. Successors; Binding Agreement..................................................................9
8. Settlement of Claims..........................................................................10
9. Fees and Expenses.............................................................................10
10. Notice........................................................................................10
11. Modification and Waiver.......................................................................10
12. Governing Law.................................................................................10
13. Severability..................................................................................10
14. Entire Agreement..............................................................................10
15. Headings......................................................................................11
16. Counterparts..................................................................................11
17. Definitions...................................................................................11
</TABLE>
i
<PAGE> 3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
Raju M. Shivdasani, an individual resident of Florida (the "Executive"), as of
this 20th day of March 1998.
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.
As of the Effective Date, this Agreement supersedes, restates and
replaces in its entirety any prior understanding of the parties, whether written
or oral, including but not limited to the Employment Agreement dated July 16,
1996 by and between the Company and the Executive. Certain terms used in this
Agreement are defined in Section 15.
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. 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; provided, however, that
either party may at any time, by written notice to the other, fix the Term
<PAGE> 4
to a finite term of three years, without further automatic extension, commencing
with the date of such notice.
3. Compensation and Benefits.
a. The Company shall pay the Executive a salary at a rate of
not less than $175,000 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 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 (if applicable) 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 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. For the fiscal
year ending December 31, 1998, the annualyzed bonus for the Executive has been
set at $85,000 provided certain performance criteria are met.
c. The Executive shall continue to participate in the 1995
Phoenix International Ltd., Inc. Employee Stock Option Plan adopted by the Board
on October 21, 1995, as amended (the "Plan"), and be eligible for the grant of
additional stock options, restricted stock and other awards thereunder. Nothing
contained in this Agreement shall be deemed to alter or amend the terms of any
outstanding grants or 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.
e. 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.
2
<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, in accordance with
applicable state and federal laws and
regulations, due to the Disability of the
Executive (meaning the inability of the
Executive to perform substantially all of
his current duties as required hereunder for
a continuous period of 90 days because of
mental or physical condition, illness or
injury) 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;
(iv) prior to a Change in Control, by the Company
without Cause upon no less than ninety (90)
days written notice to the Executive,
provided the Company satisfies the
provisions of Section 4d. hereof; and
(v) 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
3
<PAGE> 6
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 after a Change in Control either (i) by the Company without Cause or
otherwise in violation of this Agreement or (ii) by the Executive for any
reason, 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;
(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 to other
similarly situated executives who continue
in the employ of the Company during the
Continuation Period. 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 plan, 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
4
<PAGE> 7
exercisable and shall become 100% vested,
and all stock options granted to the
Executive shall become 100% vested.
d. If, prior to a Change in Control, the company terminates
the Executive without Cause, the Company shall pay the Executive in cash:
(i) within fifteen (15) days of the Termination
Date, an amount equal to all Accrued
Compensation and the Pro Rata Bonus; and
(ii) at the end of each of the thirty-six (36)
consecutive thirty (30) day periods
following the Termination Date, an amount
equal to one-twelfth (1/12) of the sum of
the Base Amount and the Bonus Amount, and
(iii) 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.
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.
5
<PAGE> 8
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 and shall be deemed to be in consideration of
the covenants made by Executive in Sections 5 and 6 of this Agreement. 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.
h. 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. Rights to Work Product. Except as expressly provided in this
Agreement, the Company alone shall be entitled to all benefits, profits and
results arising from or incidental to Executive's performance under this
Agreement. To the greatest extent possible, any work product, property, data,
documentation or information or materials prepared, conceived, discovered,
developed or created by Executive in connection with performing his employment
responsibilities during the Term ("Work Product") shall be deemed to be "work
made for hire" as defined in the Copyright Act, 17 U.S.C.A. ss. 101 et seq., as
amended, and owned exclusively and perpetually by the Company. Executive hereby
unconditionally and irrevocably transfers and assigns to the Company all
intellectual property or other rights, title and interest Executive may
currently have (or in the future may have) by operation of law or otherwise in
or to any Work Product. Executive agrees to execute and deliver to the Company
any transfers, assignments, documents or other instruments which the Company may
deem necessary or appropriate to vest complete and perpetual title and ownership
of any Work Product and all associated rights exclusively in the Company. The
Company shall have the right to adapt, change, revise, delete from, add to
and/or rearrange the Work Product or any part thereof written or created by
Executive, and to combine the same with other works to any extent, and to change
or substitute the title thereof, and in this connection Executive hereby waives
the "moral rights" of authors as that term is commonly understood throughout the
world including, without limitation, any similar rights or principles of law
which Executive may now or later have by virtue of the law of any locality,
state, nation, treaty, convention or other source. Unless otherwise specifically
agreed, Executive shall not be entitled to any compensation in addition to that
provided for in Section 3 of this Agreement for any exercise by the Company of
its rights set forth in this Section 5.
6. Noncompetition, Nonsolicitation, Confidentiality and Related
Matters.
(a) Executive acknowledges that during the course of his
employment, Executive will have significant access to, and involvement with, the
Company's Trade Secrets, Confidential Information and customers. Executive
further acknowledges that the Company has a reasonable and legitimate interest
in protecting its Trade Secrets, Confidential Information, and customer
goodwill. As a result Executive acknowledges and agrees that the covenants set
forth below are reasonable and necessary to protect and preserve the business
interests of the Company, including, but not limited to: the Company's Trade
Secrets; its
6
<PAGE> 9
Confidential Information; its relationships with its prospective or existing
customers; its customer goodwill; and the extraordinary and specialized training
that the Company has provided to the Executive. The Executive further
acknowledges and agrees that the Company would suffer great loss and irreparable
damage if the Executive should breach or violate any of the terms or provisions
of the covenants and agreements set forth in Section 5 or 6, and that money
damages will be insufficient to compensate for any breaches thereof. Executive
further acknowledges and agrees that 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 contained in this Agreement. The Executive further
acknowledges and agrees that: each of these covenants and agreements in Sections
5 and 6 is separate, distinct and severable not only from the other covenants
and agreements but also from the remaining provisions of this Agreement; and,
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 Section 5 or 6 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.
(b) Through exercise of his rights and performance of his
obligations under this Agreement, Executive will be exposed to "Trade Secrets"
and "Confidential Information" (as those terms are defined below). "Trade
Secrets" shall mean information or data of or about the Company including, but
not limited to, technical or nontechnical data, formulas, patterns,
compilations, programs, devices, methods, techniques, drawings, processes,
financial data, financial plans, products plans, or lists of actual or potential
customers, clients, distributors, or licensees, that: (i) derive 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 their disclosure or use; and (ii) are the subject of efforts that are
reasonable under the circumstances to maintain their secrecy. To the extent that
the foregoing definition is inconsistent with a definition of "trade secret"
mandated under applicable law, the latter definition shall govern for purposes
of interpreting Executive's obligations under this Agreement. Except as required
to perform his or her obligations under this Agreement or except with Company's
prior written permission, Executive shall not use, redistribute, market,
publish, disclose or divulge to any other person or entity any Trade Secrets of
the Company. The Executive's obligations under this provision shall remain in
force (during or after the Term) for so long as such information or data shall
continue to constitute a "trade secret" under applicable law. Executive agrees
to cooperate with any and all confidentiality requirements of the Company and
Executive shall immediately notify the Company of any unauthorized disclosure or
use of any Trade Secrets of which Executive becomes aware.
(c) The Executive agrees to maintain in strict confidence and,
except as necessary to perform his duties for the Company, not to use or
disclose the Company's Confidential Information, either during the term of his
employment or for a period of two years after the Executive's last date of
employment, so long as the pertinent data or information remains Confidential
Information. "Confidential Information" shall mean any non-public information of
a
7
<PAGE> 10
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
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 as Confidential Information, as
well as information which is the subject of meetings and discussions and not so
recorded; provided, however, that Confidential 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.
(d) Upon termination of employment, the Executive shall leave
with the Company all business records relating to the Company including, without
limitation, all contracts, calendars, and other materials or business records
concerning its business or customers, including all physical, electronic, and
computer copies thereof, whether or not the Executive prepared such materials or
records. Upon such termination, the Executive shall retain no copies of any such
materials.
(e) As set forth above, the Executive shall not disclose Trade
Secrets or Confidential Information. However, nothing in this provision shall
prevent the Executive from disclosing Trade Secrets or Confidential Information
pursuant to a court order or court-issued subpoena, so long as the Executive
first notifies the Company of said order or subpoena in sufficient time to allow
the Company to seek an appropriate protective order. The Executive agrees that
if he receives any formal or informal discovery request, court order, or
subpoena requesting that he disclose Trade Secrets or Confidential Information,
he will immediately notify the Company and provide the Company with a copy of
said request, court order, or subpoena.
(f) If the Executive's employment with the Company ceases for
any reason, including, but not limited to, termination or resignation, then for
a period of one year following the Executive's last day of employment with the
Company, the Executive shall not (without the prior written consent of the
Company) compete with the Company in any way. Specifically, Executive shall not
serve as an officer of, director of, employee of, or consultant to a Competing
Business in the Territory; shall not directly or indirectly form a Competing
Business in the Territory; and shall not directly or indirectly acquire more
than a 5% investment in a Competing Business in the Territory. For purposes of
section 6, subsections (f) through (h) of this Agreement, "Competing Business"
shall be defined as any business which engages in the development, marketing or
implementation of core retail banking software (the "Product") directly or
through a software service bureau to the banking or financial industry in the
Territory. The "Territory" shall be defined as the entire United States of
America, and any other country in which the Executive performed any of his job
duties on behalf of the Company, including but not limited to contacting by
telephone or correspondence
8
<PAGE> 11
customers or prospective customers within that country, during the last two
years of his employment with the Company.
(g) If the Executive's employment with the Company ceases for
any reason, including, but not limited to, termination or resignation, then for
a period of one year following the Executive's last day of employment with the
Company, the Executive shall not (without the prior written consent of the
Company) either directly or indirectly, on the Executive's own behalf or in the
service of or on behalf of others, solicit, divert, or appropriate, or attempt
to solicit, divert, or appropriate, to or for a Competing Business located in
the Territory, any person or entity that was a customer or a prospective
customer of the Company on the Executive's last date of employment.
(h) If the Executive's employment with the Company ceases for
any reason, including, but not limited to, termination or resignation, then for
a period of one year following the Executive's last day of employment with the
Company, the Executive shall not (without the prior written consent of the
Company) either directly or indirectly, on the Executive's own behalf or in the
service of or on behalf of others, solicit, divert, or hire away, or attempt to
solicit, divert, or hire away, to any Competing Business located in the
Territory, any person who was an employee of or consultant to the Company during
the period of Executive's employment. This provision shall apply to each and
every such employee or consultant of the Company, 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.
i. The Executive and the Company hereby acknowledge that it
may be necessary to amend this Agreement from time to time to modify the terms
of this Section 6, 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 6 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.
7. 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.
9
<PAGE> 12
8. Settlement of Claims. Following a Change in Control, 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
set-off, counterclaim, recoupment or defense 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.
9. 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.
10. 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.
11. 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.
12. 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 the State of Florida.
13. 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.
14. 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.
10
<PAGE> 13
15. 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.
16. 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.
17. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
a. "Accrued Compensation" shall mean any earned, accrued but
unpaid compensation, as of the Termination Date. Accrued compensation may
include, as appropriate, (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, if any.
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 15(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 Executive's annual base
salary in effect on the Termination Date. It may also include amounts of his
base salary that are deferred under the qualified and non-qualified employee
benefit plans of the Company, if those amounts are accrued and payable under the
terms of those benefit plans. Nothing in this Agreement is intended to modify or
amend those plans.
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
11
<PAGE> 14
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.
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
12
<PAGE> 15
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
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:
(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
Effective Date of this Agreement, 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
13
<PAGE> 16
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).
(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
14
<PAGE> 17
"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.
k. "Competing Business" shall mean any business which engages
in the development, marketing or implementation of core retail banking software
(the "Product"), directly or through a software service bureau to the banking or
financial industry in the Territory.
l. "Confidential 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 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 Information, as well as information which is the
subject of meetings and discussions and not so recorded; provided, however, that
Confidential 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 the inability of the Executive to
perform substantially all of his current duties as required hereunder because of
mental or physical condition, illness or injury.
o. "Effective Date" shall mean the date set forth in the
recitals.
p. "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.
15
<PAGE> 18
q. "Plan" shall mean the 1995 Phoenix International Ltd., Inc.
Employee Stock Option Plan adopted by the Board on October 21, 1995, as amended.
r. "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.
s. "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.
t. "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.
u. "Territory" shall mean the entire United States of America,
and any other country in which the Executive performed any of his job duties on
behalf of the Company, including but not limited to contracting by telephone or
correspondence customers or prospective customers within that country, during
the last two years of his employment with the company.
v. "Trade Secrets" shall mean information or data of or about
the Company, including, but not limited to, technical or non-technical data,
formulas, patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data, financial plans, product plans, or lists of
actual or potential customers, clients, distributors, or licensees, that: (i)
derive 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 their disclosure or use, and (ii) are the subject of
efforts that are reasonable under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" mandated under applicable law, the latter definition shall govern
for purposes of interpreting Executive's obligations under this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed, and the Executive has signed this Agreement, effective as of the date
first above written.
PHOENIX INTERNATIONAL LTD., INC. EXECUTIVE
By: /s/ Bahram Yusefzadeh /s/ Raju M. Shivdasani
--------------------------- -----------------------
Name: Bahram Yusefzadeh Raju M. Shivdasani
Title: Chairman & CEO
16
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
DANIEL P. BAKER
DATED: MARCH 6, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Employment ................................................................. 1
2. Term ....................................................................... 1
3. Compensation and Benefits .................................................. 1
4. Termination ................................................................ 2
5. Rights to Work Product ..................................................... 3
6. Trade Secrets, Non-Competition, Non-Solicitation, and Related Matters ...... 3
7. Noncompetition, Nonsolicitation, and Related Matters ....................... 5
8. Successors; Binding Agreement .............................................. 6
9. Notice ..................................................................... 6
10. Modification and Waiver .................................................... 7
11. Arbitration ................................................................ 7
12. Governing Law .............................................................. 8
13. Headings ................................................................... 8
14. Notices .................................................................... 8
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
15. Severability .......................................................... 9
16. Entire Agreement ...................................................... 9
17. Headings .............................................................. 9
18. Counterparts .......................................................... 9
19. Definitions ........................................................... 9
</TABLE>
ii
<PAGE> 4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
Daniel P. Baker, an individual resident of Florida (the "Employee"), as of this
6th day of March, 1998.
Certain terms used in this Agreement are defined in Section 19.
In consideration of 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 date set forth in the recitals (the "Effective Date"):
1. Employment. The Company shall employ the Employee, and the Employee
shall serve the Company, as Senior Vice President of the Research & Development
Division 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 Chief
Executive Officer (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.
3. Compensation and Benefits.
a. The Company shall pay the Employee a salary at a rate of not less
than $120,000 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 February 3rd, 1999, 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 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.
<PAGE> 5
c. The Employee shall participate in the 1995 Phoenix International
Ltd., Inc. Employee Stock Option Plan (adopted by the Board on October 21, 1995)
(hereinafter "the Plan") and shall be eligible for the grant of stock options,
restricted stock and other awards thereunder.
d. The Employee shall 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. The Company expressly reserves the right to
discontinue or otherwise change from time to time the benefits made available to
its employees.
e. The Company shall 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, in accordance with applicable state
and federal laws and regulations, due to the
Disability of the Employee (meaning the inability of
Employee to perform substantially all of his current
duties as required hereunder for a continuous period
of 90 days because of mental or physical condition,
illness or injury) upon delivery of a Notice of
Termination to the Employee;
(iii) by the Company for Cause upon delivery of a Notice of
Termination to the Employee;
(iv) by either party without Cause upon 60 days written
notice to the other party and upon delivery of a
Notice of Termination to the other party.
b. If the Employee's employment with the Company shall be terminated by
either party during the Term, 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 Compensation.
c. 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 Base Amount. The employee will not continue to participate in employee
benefit plans during this six-month period.
2
<PAGE> 6
d. The severance pay 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.
e. 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. Rights to Work Product. Except as expressly provided in this
Agreement, the Company alone shall be entitled to all benefits, profits and
results arising from or incidental to Employee's performance under this
Agreement. To the greatest extent possible, any work product, property, data,
documentation or information or materials prepared, conceived, discovered,
developed or created by Employee in connection with performing his employment
responsibilities during the Term ("Work Product") shall be deemed to be "work
made for hire" as defined in the Copyright Act, 17 U.S.C.A. ss. 101 et seq., as
amended, and owned exclusively and perpetually by the Company. Employee hereby
unconditionally and irrevocably transfers and assigns to the Company all
intellectual property or other rights, title and interest Employee may currently
have (or in the future may have) by operation of law or otherwise in or to any
Work Product. Employee agrees to execute and deliver to the Company any
transfers, assignments, documents or other instruments which the Company may
deem necessary or appropriate to vest complete and perpetual title and ownership
of any Work Product and all associated rights exclusively in the Company. The
Company shall have the right to adapt, change, revise, delete from, add to
and/or rearrange the Work Product or any part thereof written or created by
Employee, and to combine the same with other works to any extent, and to change
or substitute the title thereof, and in this connection Employee hereby waives
the "moral rights" of authors as that term is commonly understood throughout the
world including, without limitation, any similar rights or principles of law
which Employee may now or later have by virtue of the law of any locality,
state, nation, treaty, convention or other source. Unless otherwise specifically
agreed, Employee shall not be entitled to any compensation in addition to that
provided for in Section 3 of this Agreement for any exercise by the Company of
its rights set forth in this Section 5.
6. Protection of Trade Secrets and Confidential Business Information.
a. The Employee shall not, at any time either during the Term of his
employment or for a period of 10 years after the Employee's last date of
employment, use or disclose any Trade Secrets of the Company, except in
fulfillment of his duties as the Employee during his employment, so long as the
pertinent information or data remain Trade Secrets, whether or not the Trade
Secrets are in written or tangible form. "Trade Secrets" shall mean any
information, including but not limited to, scientific, technical, or commercial
information, including any design, process, procedure, list of suppliers, list
of customers, business code or improvement thereof, which, irrespective of
novelty, invention, patentability, the state of the prior
3
<PAGE> 7
art, and the level of skill in the business, art, or field to which the subject
matter pertains, is: (i) secret; (ii) of value; (iii) for use or in use by the
Company; and (iv) of advantage to the Company, or providing an opportunity to
obtain an advantage, over those who do not know or use it; when the Company
takes measures to prevent it from becoming available to persons other than those
selected by the Company to have access thereto for limited purposes.
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 at any time, either during the term of his
employment or for a period of 6 months after the Employee's last date of
employment, so long as the pertinent data or information remains Confidential
Business Information. "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.
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 concerning its business or customers, including 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.
d. As set forth above, the Employee shall not disclose Trade Secrets or
Confidential Business Information. However, nothing in this provision shall
prevent the Employee from disclosing Trade Secrets or Confidential Business
Information pursuant to a court order or court-issued subpoena, so long as the
Employee first notifies the Company of said order or subpoena in sufficient time
to allow the Company to seek an appropriate protective order. The Employee
agrees that if he receives any formal or informal discovery request, court
order, or subpoena requesting that he disclose Trade Secrets or Confidential
Business Information, he will immediately notify the Company and provide the
Company with a copy of said request, court order, or subpoena.
4
<PAGE> 8
7. Noncompetition, Nonsolicitation, and Related Matters.
a. If the Employee's employment with the Company ceases for any reason,
including, but not limited to, termination or resignation, then for a period of
one year following the Employee's last date of employment, 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.
b. If the Employee's employment with the Company ceases for any reason,
including, but not limited to, termination or resignation, then for a period of
one year following the Employee's last date of employment, the Employee shall
not (without 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 Employee's last date of employment and
is located in the Territory.
c. If the Employee's employment with the Company ceases for any reason,
including, but not limited to, termination or resignation, then for a period of
one year following the Employee's last date of employment, 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.
d. 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
Section 5, 6 or 7. 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 Section 5, 6 or 7 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.
e. The Employee acknowledges and agrees that: (i) the covenants and
agreements contained in Sections 5, 6 and 7 are the essence of this Agreement;
(ii) that the
5
<PAGE> 9
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 Sections 5, 6 and 7 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 Section 5, 6 or 7 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.
8. 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.
9. Notice. Any notice the Employee is required to provide to the
Company pursuant to this Agreement shall be made by certified mail, return
receipt requested, or by Federal Express, signature required, to the CEO of the
Company at the address shown below. Notice will be effective upon the date of
receipt by the Company. In addition, Employee shall send a copy of the notice to
Glenn W. Sturm, at the address listed below, at the same time and by the same
method of delivery as to the Company. However, the copy to Mr. Sturm shall not
constitute notice.
Notice to Company: Mr. Bahram Yusefzadeh
Chief Executive Officer
Phoenix International Ltd., Inc.
500 International Parkway
Heathrow, Florida 32746
6
<PAGE> 10
Copy to Mr. Sturm: Mr. Glenn W. Sturm
Attorney for Phoenix International Ltd., Inc.
Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza - Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
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. Arbitration. Any controversy or claim against the Company or any of
its officers, directors, employees or agents arising from, out of or relating to
this Agreement, the breach thereof (other than controversies or claims arising
from, out of or relating to the provisions in Section 5, 6 and 7 with respect to
which either party may upon 24 hours notice to the other seek injunctive and/or
other equitable relief in a court of competent jurisdiction as set forth in
Section 12), or the employment or termination thereof of Employee by the Company
which would give rise to a claim under federal, state or local law (including
but not limited to claims based in tort or contract, claims for discrimination
under state or federal law, and/or claims for violation of any federal, state or
local law, statute or regulation) ("Claims") shall be submitted to an impartial
mediator ("Mediator") selected jointly by the parties. Both parties shall attend
a medication conference and attempt to resolve any and all Claims. If they are
not able to resolve all Claims, any unresolved Claims, including any dispute as
to whether a matter constitutes a Claim which must be submitted to arbitration,
shall be determined by final and binding arbitration in Florida in accordance
with the Model Employment Dispute Resolution Rules ("Rules") of the American
Arbitration Association, by an experienced employment arbitrator licensed to
practice law in the Sate of Florida in accordance with the Rules, except as
herein specified. The arbitrator shall be selected by alternate striking from a
list of six arbitrators, half of which shall be supplied by the Company and half
by Employee. The party not initiating the arbitration shall strike first. The
process shall be repeated twice until an arbitrator is selected. If an
arbitrator is still not selected, the Mediator shall provide a list of three
names which will be alternately struck, with the party initiating the
arbitration striking first, until a selection is made.
A demand for arbitration shall be made within a reasonable time after
the Claim has arisen. In no event shall the demand for arbitration be made after
the date when institution of legal and/or equitable proceedings based on such
Claim would be barred by the applicable statute of limitations. Each party to
the arbitration will be entitled to be represented by counsel and will have the
opportunity to take one deposition of an opposing party or witness before the
arbitration hearing. By mutual agreement of the parties, additional depositions
may be taken. The arbitrator shall have the authority to hear and grant a motion
to dismiss and/or for summary judgment,
7
<PAGE> 11
applying the standards governing such motions under the Federal Rules of Civil
procedure. Each party shall have the right to subpoena witnesses and documents
for the arbitration hearing. A court reporter shall record all arbitration
proceedings.
With respect to any Claim brought to arbitration hereunder, either
party may be entitled to recover whatever damages would otherwise be available
to that party in any legal proceeding based upon the federal and/or state law
applicable to the matter and as specified by Section 12. The decision of the
arbitrator may be entered and enforced in any court of competent jurisdiction by
either the Company or Employee. Each party shall pay the fees of their
respective attorneys (except as otherwise awarded by the arbitrator), the
expenses of their witnesses and any other expenses connected with presenting
their Claim or defense. Other costs of the arbitration, including the fees of
the Mediator, the arbitrator, the cost of any record or transcript of the
arbitration, administrative fees, and other fees and costs, shall be borne
equally by the parties, one-half by Employee, on the one hand, and one-half by
the Company, on the other hand. Should Employee or the Company pursue any
dispute or matter covered by this Section by any method other than said
arbitration, the responding party shall be entitled to recover from the other
party all damages, costs, expenses, and attorneys' fees incurred as a result of
such action. The provisions contained in this Section 11 shall survive the
termination and/or expiration of this Agreement.
The parties indicate their acceptance of the foregoing arbitration
requirement by initialing below:
/s/ /s/
------------------------------ ------------------------------
For the Company Employee
12. Governing Law. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed and governed by and in accordance
with, the laws of the State of Florida. The parties hereto agree that the state
or federal courts in the State of Florida shall have personal jurisdiction over
them with respect to, and shall be the exclusive forum for the resolution of,
any matter or controversy arising from or with respect to Sections 5, 6 and 7 of
this Agreement.
13. Headings. The section and subsection headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
14. Notices. Unless otherwise agreed to in writing by the Parties
hereto, all communications provided for hereunder shall be in writing and shall
be deemed to be given when delivered if delivered in person or by telecopy or
five (5) business days after being sent by first-class mail, registered or
certified, return receipt requested, with proper postage prepaid, and
8
<PAGE> 12
15. 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.
16. 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.
17. 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.
18. 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.
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 Employee on behalf of the Company during
the period ending on the Termination Date, and (iii) bonuses and incentive
compensation .
b. "Base Amount" shall mean the Employee's annual base salary at the
rate in effect on the Termination Date 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.
c. "Bonus Amount" shall mean the most recent annual bonus paid or
payable to the Employee prior to the Termination Date.
d. "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 Employee's last date of
employment.
e. "Bylaws" shall mean the Amended and Restated Bylaws of the Company,
as amended, supplemented or otherwise modified from time to time.
f. The termination of the Employee's employment shall be for "Cause"
if it is the result of:
9
<PAGE> 13
(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.
g. "Competing Business" shall mean any business that, in whole or in
part, is the same or substantially the same as the Business.
h. "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.
i. "Effective Date" shall mean the date set forth in the recitals.
j. "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.
k. "Plan" shall mean the 1995 Phoenix International Ltd., Inc. Employee
Stock Option Plan adopted by the Board of Directors on October 21, 1995.
10
<PAGE> 14
l. "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.
m. "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.
n. "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.
o. "Territory" shall mean that area specified on Exhibit A
attached hereto.
p. "Trade Secrets" shall mean any information, including but
not limited to, scientific, technical, or commercial information, including any
design, process, procedure, list of suppliers, list of customers, business code
or improvement thereof, which, irrespective of novelty, invention,
patentability, the state of the prior art, and the level of skill in the
business, art, or field to which the subject matter pertains, is: (i) secret;
(ii) of value; (iii) for use or in use by the Company; and (iv) of advantage to
the Company, or providing an opportunity to obtain an advantage, over those who
do not know or use it; when the Company takes measures to prevent it from
becoming available to persons other than those selected by the Company to have
access thereto for limited purposes.
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/ Bahram Yusefzadeh By: /s/ Raju M. Shivdasani
------------------------------- ----------------------------
Name: Bahram Yusefzadeh Name: Raju M. Shivdasani
Title: Chairman and CEO Title: President and COO
(CORPORATE SEAL)
EMPLOYEE
/s/ Daniel P. Baker
--------------------------------
DANIEL P. BAKER
11
<PAGE> 15
EXHIBIT A
"TERRITORY"
UNITED STATES
<PAGE> 1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
JOCELYN RUGGIERO
DATED: MARCH 25, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Employment ................................................................. 1
2. Term ....................................................................... 1
3. Compensation and Benefits .................................................. 1
4. Termination ................................................................ 2
5. Rights to Work Product ..................................................... 3
6. Trade Secrets, Non-Competition, Non-Solicitation, and Related Matters ...... 3
7. Noncompetition, Nonsolicitation, and Related Matters ....................... 5
8. Successors; Binding Agreement .............................................. 6
9. Notice ..................................................................... 6
10. Modification and Waiver .................................................... 7
11. Arbitration ................................................................ 7
12. Governing Law .............................................................. 8
13. Headings ................................................................... 8
14. Notices .................................................................... 8
</TABLE>
I
<PAGE> 3
<TABLE>
<S> <C>
15. Severability ......................................................... 8
16. Entire Agreement ..................................................... 9
17. Headings ............................................................. 9
18. Counterparts ......................................................... 9
19. Definitions .......................................................... 9
</TABLE>
ii
<PAGE> 4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
Jocelyn Ruggiero, an individual resident of Florida (the "Employee"), as of this
25th day of March, 1998.
Certain terms used in this Agreement are defined in Section 19.
In consideration of 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 date set forth in the recitals (the "Effective Date"):
1. Employment. The Company shall employ the Employee, and the Employee
shall serve the Company, as Senior Vice President of the Implementation Services
Division 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 Chief
Executive Officer (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.
3. Compensation and Benefits.
a. The Company shall pay the Employee a salary at a rate of not less
than $96,000 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 March 25, 1999, 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 shall be
eligible to receive quarterly payments of the Bonus Amount based upon
achievement of targeted levels of
<PAGE> 5
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 1995 Phoenix International
Ltd., Inc. Employee Stock Option Plan (adopted by the Board on October 21, 1995)
(hereinafter "the Plan") and shall be eligible for the grant of stock options,
restricted stock and other awards thereunder.
d. The Employee shall 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. The Company expressly reserves the right to
discontinue or otherwise change from time to time the benefits made available to
its employees.
e. The Company shall 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, in accordance with applicable state
and federal laws and regulations, due to the
Disability of the Employee (meaning the inability of
Employee to perform substantially all of his current
duties as required hereunder for a continuous period
of 90 days because of mental or physical condition,
illness or injury) upon delivery of a Notice of
Termination to the Employee;
(iii) by the Company for Cause upon delivery of a Notice of
Termination to the Employee;
(iv) by either party without Cause upon 60 days written
notice to the other party and upon delivery of a
Notice of Termination to the other party.
b. If the Employee's employment with the Company shall be terminated by
either party during the Term, 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 Compensation.
c. 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
2
<PAGE> 6
following the Termination Date an amount equal to one-twelfth of the Base
Amount. The employee will not continue to participate in employee benefit plans
during this six-month period.
d. The severance pay 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.
e. 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. Rights to Work Product. Except as expressly provided in this
Agreement, the Company alone shall be entitled to all benefits, profits and
results arising from or incidental to Employee's performance under this
Agreement. To the greatest extent possible, any work product, property, data,
documentation or information or materials prepared, conceived, discovered,
developed or created by Employee in connection with performing his employment
responsibilities during the Term ("Work Product") shall be deemed to be "work
made for hire" as defined in the Copyright Act, 17 U.S.C.A. ss. 101 et seq., as
amended, and owned exclusively and perpetually by the Company. Employee hereby
unconditionally and irrevocably transfers and assigns to the Company all
intellectual property or other rights, title and interest Employee may currently
have (or in the future may have) by operation of law or otherwise in or to any
Work Product. Employee agrees to execute and deliver to the Company any
transfers, assignments, documents or other instruments which the Company may
deem necessary or appropriate to vest complete and perpetual title and ownership
of any Work Product and all associated rights exclusively in the Company. The
Company shall have the right to adapt, change, revise, delete from, add to
and/or rearrange the Work Product or any part thereof written or created by
Employee, and to combine the same with other works to any extent, and to change
or substitute the title thereof, and in this connection Employee hereby waives
the "moral rights" of authors as that term is commonly understood throughout the
world including, without limitation, any similar rights or principles of law
which Employee may now or later have by virtue of the law of any locality,
state, nation, treaty, convention or other source. Unless otherwise specifically
agreed, Employee shall not be entitled to any compensation in addition to that
provided for in Section 3 of this Agreement for any exercise by the Company of
its rights set forth in this Section 5.
6. Protection of Trade Secrets and Confidential Business Information.
a. The Employee shall not, at any time either during the Term of
his/her employment or for a period of 10 years after the Employee's last date of
employment, use or disclose any Trade Secrets of the Company, except in
fulfillment of his duties as the Employee during his employment, so long as the
pertinent information or data remain Trade Secrets, whether or not the Trade
Secrets are in written or tangible form. "Trade Secrets" shall mean any
information, including but not limited to, scientific, technical, or commercial
information,
3
<PAGE> 7
including any design, process, procedure, list of suppliers, list of customers,
business code or improvement thereof, which, irrespective of novelty, invention,
patentability, the state of the prior art, and the level of skill in the
business, art, or field to which the subject matter pertains, is: (i) secret;
(ii) of value; (iii) for use or in use by the Company; and (iv) of advantage to
the Company, or providing an opportunity to obtain an advantage, over those who
do not know or use it; when the Company takes measures to prevent it from
becoming available to persons other than those selected by the Company to have
access thereto for limited purposes.
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 at any time, either during the term of his
employment or for a period of 6 months after the Employee's last date of
employment, so long as the pertinent data or information remains Confidential
Business Information. "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.
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 concerning its business or customers, including 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.
d. As set forth above, the Employee shall not disclose Trade Secrets or
Confidential Business Information. However, nothing in this provision shall
prevent the Employee from disclosing Trade Secrets or Confidential Business
Information pursuant to a court order or court-issued subpoena, so long as the
Employee first notifies the Company of said order or subpoena in sufficient time
to allow the Company to seek an appropriate protective order. The Employee
agrees that if he receives any formal or informal discovery request, court
order, or subpoena requesting that he disclose Trade Secrets or Confidential
Business Information, he will immediately notify the Company and provide the
Company with a copy of said request, court order, or subpoena.
4
<PAGE> 8
7. Noncompetition, Nonsolicitation, and Related Matters.
a. If the Employee's employment with the Company ceases for any reason,
including, but not limited to, termination or resignation, then for a period of
one year following the Employee's last date of employment, 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.
b. If the Employee's employment with the Company ceases for any reason,
including, but not limited to, termination or resignation, then for a period of
one year following the Employee's last date of employment, the Employee shall
not (without 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 Employee's last date of employment and
is located in the Territory.
c. If the Employee's employment with the Company ceases for any reason,
including, but not limited to, termination or resignation, then for a period of
one year following the Employee's last date of employment, 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.
d. 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
Section 5, 6 or 7. 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 Section 5, 6 or 7 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.
e. The Employee acknowledges and agrees that: (i) the covenants and
agreements contained in Sections 5, 6 and 7 are the essence of this Agreement;
(ii) that the Employee has received good, adequate and valuable consideration
for each of these covenants;
5
<PAGE> 9
(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 Sections 5, 6 and 7 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 Section 5, 6 or 7 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.
8. 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.
9. Notice. Any notice the Employee is required to provide to the
Company pursuant to this Agreement shall be made by certified mail, return
receipt requested, or by Federal Express, signature required, to the CEO of the
Company at the address shown below. Notice will be effective upon the date of
receipt by the Company. In addition, Employee shall send a copy of the notice to
Glenn W. Sturm, at the address listed below, at the same time and by the same
method of delivery as to the Company. However, the copy to Mr. Sturm shall not
constitute notice.
Notice to Company: Mr. Bahram Yusefzadeh
Chief Executive Officer
Phoenix International Ltd., Inc.
500 International Parkway
Heathrow, Florida 32746
6
<PAGE> 10
Copy to Mr. Sturm: Mr. Glenn W. Sturm
Attorney for Phoenix International Ltd., Inc.
Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza - Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
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. Arbitration. Any controversy or claim against the Company or any of
its officers, directors, employees or agents arising from, out of or relating to
this Agreement, the breach thereof (other than controversies or claims arising
from, out of or relating to the provisions in Section 5, 6 and 7 with respect to
which either party may upon 24 hours notice to the other seek injunctive and/or
other equitable relief in a court of competent jurisdiction as set forth in
Section 12), or the employment or termination thereof of Employee by the Company
which would give rise to a claim under federal, state or local law (including
but not limited to claims based in tort or contract, claims for discrimination
under state or federal law, and/or claims for violation of any federal, state or
local law, statute or regulation) ("Claims") shall be submitted to an impartial
mediator ("Mediator") selected jointly by the parties. Both parties shall attend
a medication conference and attempt to resolve any and all Claims. If they are
not able to resolve all Claims, any unresolved Claims, including any dispute as
to whether a matter constitutes a Claim which must be submitted to arbitration,
shall be determined by final and binding arbitration in Florida in accordance
with the Model Employment Dispute Resolution Rules ("Rules") of the American
Arbitration Association, by an experienced employment arbitrator licensed to
practice law in the Sate of Florida in accordance with the Rules, except as
herein specified. The arbitrator shall be selected by alternate striking from a
list of six arbitrators, half of which shall be supplied by the Company and half
by Employee. The party not initiating the arbitration shall strike first. The
process shall be repeated twice until an arbitrator is selected. If an
arbitrator is still not selected, the Mediator shall provide a list of three
names which will be alternately struck, with the party initiating the
arbitration striking first, until a selection is made.
A demand for arbitration shall be made within a reasonable time after
the Claim has arisen. In no event shall the demand for arbitration be made after
the date when institution of legal and/or equitable proceedings based on such
Claim would be barred by the applicable statute of limitations. Each party to
the arbitration will be entitled to be represented by counsel and will have the
opportunity to take one deposition of an opposing party or witness before the
arbitration hearing. By mutual agreement of the parties, additional depositions
may be taken. The arbitrator shall have the authority to hear and grant a motion
to dismiss and/or for summary judgment, applying the standards governing such
motions under the Federal Rules of Civil procedure. Each
7
<PAGE> 11
party shall have the right to subpoena witnesses and documents for the
arbitration hearing. A court reporter shall record all arbitration proceedings.
With respect to any Claim brought to arbitration hereunder, either party
may be entitled to recover whatever damages would otherwise be available to that
party in any legal proceeding based upon the federal and/or state law applicable
to the matter and as specified by Section 12. The decision of the arbitrator may
be entered and enforced in any court of competent jurisdiction by either the
Company or Employee. Each party shall pay the fees of their respective attorneys
(except as otherwise awarded by the arbitrator), the expenses of their witnesses
and any other expenses connected with presenting their Claim or defense. Other
costs of the arbitration, including the fees of the Mediator, the arbitrator,
the cost of any record or transcript of the arbitration, administrative fees,
and other fees and costs, shall be borne equally by the parties, one-half by
Employee, on the one hand, and one-half by the Company, on the other hand.
Should Employee or the Company pursue any dispute or matter covered by this
Section by any method other than said arbitration, the responding party shall be
entitled to recover from the other party all damages, costs, expenses, and
attorneys' fees incurred as a result of such action. The provisions contained in
this Section 11 shall survive the termination and/or expiration of this
Agreement.
The parties indicate their acceptance of the foregoing arbitration
requirement by initialing below:
------------------------------ ------------------------------
For the Company Employee
12. Governing Law. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed and governed by and in accordance
with, the laws of the State of Florida. The parties hereto agree that the state
or federal courts in the State of Florida shall have personal jurisdiction over
them with respect to, and shall be the exclusive forum for the resolution of,
any matter or controversy arising from or with respect to Sections 5, 6 and 7 of
this Agreement.
13. Headings. The section and subsection headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
14. Notices. Unless otherwise agreed to in writing by the Parties
hereto, all communications provided for hereunder shall be in writing and shall
be deemed to be given when delivered if delivered in person or by telecopy or
five (5) business days after being sent by first-class mail, registered or
certified, return receipt requested, with proper postage prepaid, and
15. 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.
8
<PAGE> 12
16. 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.
17. 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.
18. 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.
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 Employee on behalf of the Company during
the period ending on the Termination Date, and (iii) bonuses and incentive
compensation .
b. "Base Amount" shall mean the Employee's annual base salary at the
rate in effect on the Termination Date 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.
c. "Bonus Amount" shall mean the most recent annual bonus paid or
payable to the Employee prior to the Termination Date.
d. "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 Employee's last date of
employment.
e. "Bylaws" shall mean the Amended and Restated Bylaws of the Company,
as amended, supplemented or otherwise modified from time to time.
f. 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;
9
<PAGE> 13
(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.
g. "Competing Business" shall mean any business that, in whole or in
part, is the same or substantially the same as the Business.
h. "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.
i. "Effective Date" shall mean the date set forth in the recitals.
j. "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.
k. "Plan" shall mean the 1995 Phoenix International Ltd., Inc. Employee
Stock Option Plan adopted by the Board of Directors on October 21, 1995.
l. "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.
m. "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.
10
<PAGE> 14
n. "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.
o. "Territory" shall mean that area specified on Exhibit A attached
hereto.
p. "Trade Secrets" shall mean any information, including but not
limited to, scientific, technical, or commercial information, including any
design, process, procedure, list of suppliers, list of customers, business code
or improvement thereof, which, irrespective of novelty, invention,
patentability, the state of the prior art, and the level of skill in the
business, art, or field to which the subject matter pertains, is: (i) secret;
(ii) of value; (iii) for use or in use by the Company; and (iv) of advantage to
the Company, or providing an opportunity to obtain an advantage, over those who
do not know or use it; when the Company takes measures to prevent it from
becoming available to persons other than those selected by the Company to have
access thereto for limited purposes. 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/ Clay Scarborough By: /s/ Raju M. Shivdasani
--------------------------------- ----------------------------
Name: Clay Scarborough Name: Raju M. Shivdasani
Title: CFO Title: President and COO
(CORPORATE SEAL)
EMPLOYEE
/s/ Jocelyn Ruggiero
--------------------------------
Jocelyn Ruggiero
11
<PAGE> 15
EXHIBIT A
"TERRITORY"
UNITED STATES
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FROM FORM 10-Q OF PHOENIX INTERNATIONAL FOR THE THREE MONTHS ENDED
MARCH 31, 1998 (FOR SEC USE ONLY) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 11,869,289
<SECURITIES> 21,059,478
<RECEIVABLES> 8,802,805
<ALLOWANCES> (236,200)
<INVENTORY> 0
<CURRENT-ASSETS> 31,168,878
<PP&E> 4,015,398
<DEPRECIATION> (1,195,027)
<TOTAL-ASSETS> 53,022,437
<CURRENT-LIABILITIES> 4,602,850
<BONDS> 0
0
0
<COMMON> 55,719
<OTHER-SE> 46,519,249
<TOTAL-LIABILITY-AND-EQUITY> 53,022,437
<SALES> 0
<TOTAL-REVENUES> 4,598,444
<CGS> 0
<TOTAL-COSTS> 1,766,890
<OTHER-EXPENSES> 3,213,410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (13,926)
<INCOME-PRETAX> 54,037
<INCOME-TAX> 18,913
<INCOME-CONTINUING> 35,124
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,124
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
