<PAGE> 1
REGISTRATION NO. 333-53939
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SOFTWORKS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7372 52-1092916
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
5845 RICHMOND HIGHWAY, SUITE 400
ALEXANDRIA, VIRGINIA 22303
(703) 317-2424
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JUDY G. CARTER
CHIEF EXECUTIVE OFFICER
SOFTWORKS, INC.
5845 RICHMOND HIGHWAY, SUITE 400
ALEXANDRIA, VIRGINIA 22303
(703) 317-2424
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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<S> <C>
DAVID H. LIEBERMAN, ESQ. IRA A. GREENSTEIN, ESQ.
BLAU, KRAMER, WACTLAR & LIEBERMAN, P. C. MORRISON & FOERSTER LLP
100 JERICHO QUADRANGLE, SUITE 225 1290 AVENUE OF THE AMERICAS
JERICHO, NEW YORK 11753 NEW YORK, NEW YORK 10104
TEL: (516) 822-4820 TEL: (212) 468-8000
FAX: (516) 822-4824 FAX: (212) 468-7900
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=====================================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $.001 per share............ $48,250,000 $14,234
=====================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the distribution, all of which shall be borne by
the Company, are as follows:
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<CAPTION>
ITEM AMOUNT
---- -------
<S> <C>
SEC registration fee........................................ $14,234
NASD filing fee............................................. 5,325
NASDAQ Application.......................................... *
Blue Sky fees and expenses (including legal fees)........... *
Transfer Agent fees......................................... *
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Blue Sky fees and expense................................... *
Printing and Engraving fees................................. *
Miscellaneous............................................... *
-------
Total............................................. $ *
=======
</TABLE>
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* To be filed by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, a Delaware corporation, is empowered by Section 145 of the
Delaware General Corporation Law (the "Delaware Act"), subject to the procedures
and limitations stated therein, to indemnify certain parties. Section 145 of the
Delaware Act provides in part that a corporation shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (other than
an action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceeding had no reasonable cause to believe his
conduct was unlawful. Similar indemnity is authorized for such persons against
expenses (including attorneys' fees) actually and reasonably incurred in defense
or settlement of any threatened, pending or completed action or suit by or in
the right of the corporation, if such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and provided further that (unless a court of competent jurisdiction
otherwise provides) such person shall not have been adjudged liable to the
corporation. Any such indemnification may be made only as authorized in each
specific case upon a determination by the stockholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct. Where an officer or a director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually or reasonably incurred. Section 145 provides further that
indemnification pursuant to its provisions is not exclusive of other rights of
indemnification to which a person may be entitled under any law, agreement, vote
of stockholders or disinterested directors or otherwise.
The Company's Certificate of Incorporation and By-laws contain provisions
that limit the potential personal liability of directors for certain monetary
damages and provide for indemnity of directors and other persons. The Company
has applied for officers and directors liability insurance. The Company is
unaware of any pending or threatened litigation against the Company or its
directors that would result in any liability for which such director would seek
indemnification or similar protection.
II-1
<PAGE> 3
The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its stockholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction that involves a conflict between the interests of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions, including grossly negligent business decisions relating to
attempts to change control of the Company.
The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (stockholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance.
These provisions diminish the potential rights of action that might
otherwise be available to stockholders by limiting the liability of officers and
directors to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any stockholders derivative action. However,
the provisions do not have the effect of limiting the right of a stockholder to
enjoin a director from taking actions in breach of the director's fiduciary
duty, or to cause the Company to rescind actions already taken, although as a
practical matter courts may be unwilling to grant such equitable remedies in
circumstances in which such actions have already been taken.
The Company has entered into indemnification agreements with certain of its
officers. The indemnification agreements provide for reimbursement for all
direct and indirect costs of any type or nature whatsoever (including attorneys'
fees and related disbursements) actually and reasonably incurred in connection
with either the investigation, defense or appeal of a legal proceeding,
including amounts paid in settlement by or on behalf of an indemnitee
thereunder.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Immediately prior to the offering, the Company will effect a
reincorporation into the State of Delaware pursuant to an agreement and plan of
merger by and between the Company and SOFTWORKS, Inc., a Maryland corporation
(the "Merger"). The issuance of shares by the Company in connection with the
Merger will be exempt from registration under the Securities Act pursuant to
Section 3(a)(9) thereof.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
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EXHIBITS
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<C> <S>
1.1 Form of Underwriting Agreement
1.2 Form of Agreement Among Underwriters
1.3 Form of Selected Dealer Agreement
3.1 Certificate of Incorporation of the Registrant
3.2 By-laws of the Registrant
4.1 Specimen Common Stock Certificate*
5.1 Form of Opinion and Consent of Blau, Kramer, Wactlar &
Lieberman, P.C. regarding the legality of the securities
being registered*
9 Form of Voting Trust Agreement
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
10.1 Lease Agreement dated June 14, 1994 between the Registrant
and WHT Real Estate Limited Partnership
10.2 First Amendment to Lease Agreement
10.3 Second Amendment to Lease Agreement
10.4 1998 Long Term Incentive Plan
10.5 Employment Agreement between the Registrant and James
Cannavino*
10.6 Employment Agreement between the Registrant and C. R.
Kinsey, III*
10.7 Employment Agreement between the Registrant and Judy G.
Carter, as amended*
10.8 Employment Agreement between the Registrant and Lisa Welch*
10.9 Employment Agreement between the Registrant and Joseph
Miksch*
10.10 Employment Agreement between the Registrant and Robert
McLaughlin*
10.11 Form of Indemnification Agreement between the Company and
its officers and directors
10.12 Distribution Agreement dated July 8, 1997 between the
Registrant and Cognizant Technology Solutions Corporation
11 Computation of Earnings Per Share*
21 The following lists the Company's subsidiaries:
</TABLE>
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
------------------ -----------------------------
<S> <C>
SOFTWORKS International, Limited. United Kingdom
SOFTWORKS SAVANTECHNOLOGY
International, S.A. Spain
SOFTWORKS International, LTD, Pty Australia
SOFTWORKS SAVANTECHNOLOGY do Brazil Ltda Brazil
SOFTWORKS S.A. France
SOFTWORKS Italia S.r.1. Italy
SOFTWORKS Services Corp. Texas
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included
in Exhibit 5)*
24 Power of Attorney (included in signature page)
27.1 Financial Data Schedule*
</TABLE>
- ---------------
* To be filed by amendment
FINANCIAL STATEMENT SCHEDULES
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
For purposes of determining any liability under the Securities Act of
1933 (the "Act"), the information omitted from the form of Prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) and (4) and Rule 497(h) under the Act shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 5
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the issuer pursuant to the foregoing provisions, or otherwise,
the issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the issuer of expenses incurred or paid by a director,
officer or controlling person of the issuer in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
issuer will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
duly caused this Amendment No. 1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Alexandria,
Virginia on the 10th day of June, 1998.
SOFTWORKS, Inc.
By: /s/ JUDY G. CARTER
------------------------------------
Judy G. Carter
President (Chief Executive Officer)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below on June 10, 1998, by
the following persons in the capacities indicated.
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<CAPTION>
SIGNATURE TITLE
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<C> <S>
Chairman of the Board and Director
- -----------------------------------------------------
James A. Cannavino
/s/ JUDY G. CARTER President, Chief Executive Officer and a
- ----------------------------------------------------- Director
Judy G. Carter
/s/ C. R. KINSEY, III* Vice President and Secretary
- -----------------------------------------------------
C. R. Kinsey, III
/s/ ROBERT C. MCLAUGHLIN* Treasurer and Chief Financial Officer
- -----------------------------------------------------
Robert C. McLaughlin
/s/ DANIEL DELGIORNO, JR.* Director
- -----------------------------------------------------
Daniel DelGiorno, Jr.
/s/ ROBERT DEVINE* Director
- -----------------------------------------------------
Robert Devine
*By: /s/ JUDY G. CARTER
- -----------------------------------------------------
Judy G. Carter
Attorney-in-fact
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS PAGE
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<C> <S> <C>
1.1 Form of Underwriting Agreement
1.2 Form of Agreement Among Underwriters
1.3 Form of Selected Dealer Agreement
3.1 Certificate of Incorporation of the Registrant
3.2 By-laws of the Registrant
4.1 Specimen Common Stock Certificate*
5.1 Form of Opinion and Consent of Blau, Kramer, Wactlar &
Lieberman, P.C. regarding the legality of the securities
being registered*
9 Form of Voting Trust Agreement
10.1 Lease Agreement dated June 14, 1994 between the Registrant
and WHT Real Estate Limited Partnership
10.2 Amendment No. 1 to Lease Agreement
10.3 Amendment No. 2 to Lease Agreement
10.4 1998 Long Term Incentive Plan
10.5 Employment Agreement between the Registrant and James
Cannavino*
10.6 Employment Agreement between the Registrant and C. R.
Kinsey, III*
10.7 Employment Agreement between the Registrant and Judy G.
Carter, as amended*
10.8 Employment Agreement between the Registrant and Lisa Welch*
10.9 Employment Agreement between the Registrant and Joseph
Miksch*
10.10 Employment Agreement between the Registrant and Robert
McLaughlin*
10.11 Form of Indemnification Agreement between the Company and
its officers and directors
10.12 Distribution Agreement dated July 8, 1997 between the
Registrant and Cognizant Technology Solutions Corporation
11 Computation of Earnings Per Share*
21 The following lists the Company's subsidiaries, all of which
are wholly-owned by the Company.
</TABLE>
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
------------------ -----------------------------
<S> <C>
SOFTWORKS International, Ltd. United Kingdom
SST Technology International, S.A. Spain
SOFTWORKS International, LTD, Pty Australia
SST Technology do Brazil Ltda Brazil
SST Technology, S.A. France
SOFTWORKS Italia S.r.1. Italy
SOFTWORKS Services Corp. Texas
23.1 Consent of Arthur Andersen LLP**
23.2 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included
in Exhibit 5)*
24 Power of Attorney (included in signature page)
27.1 Financial Data Schedule*
</TABLE>
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* To be filed by amendment
** Previously filed
II-6
<PAGE> 1
Exhibit 1.1
4,200,000 Shares
SOFTWORKS INC.
COMMON STOCK
UNDERWRITING AGREEMENT
================================================================================
July __, 1998
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES, INC.
As Representatives of the several Underwriters
c/o SoundView Financial Group, Inc.
22 Gatehouse Road
Stamford, Connecticut 06902
Ladies and Gentlemen:
1. DESCRIPTION OF SHARES.
Softworks Inc., a Delaware corporation (the "Company"), and the selling
stockholders named in Schedule B attached hereto (the "Selling Stockholders")
propose to sell, upon the terms and subject to the conditions of this Agreement,
to the several underwriters named in Schedule A attached hereto (collectively,
the "Underwriters," or each an "Underwriter"), an aggregate of 4,200,000 shares
(the "Firm Shares") of the Company's common stock, par value $.001 per share
("Common Stock"). Computer Concepts Corp. ("Computer Concepts") also
proposes to sell to the Underwriters, upon the terms and subject to the
conditions of this Agreement, as set forth in Section 5, up to an aggregate of
an additional 625,000 shares of Common Stock (the "Option Shares," and,
collectively with the Firm Shares, the "Shares").
2. REGISTRATION STATEMENT AND PROSPECTUS.
A registration statement (File No. 333-53939) on Form S-1 relating to the
Shares, including a Preliminary Prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission.
The term "Preliminary Prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules
and Regulations included at
<PAGE> 2
any time as part of the registration statement. Copies of such registration
statement and amendments and of each related Preliminary Prospectus have been
delivered to the representatives of the several Underwriters hereunder
(collectively, the "Representatives"). The term "Registration Statement" means
the registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed to be included by Rule 430A or Rule 434 of the Rules and
Regulations. If the Company files a registration statement to register a portion
of the Shares and relies on Rule 462(b) of the Rules and Regulations for such
registration statement to become effective upon filing with the Commission (the
"Rule 462 Registration Statement"), then any reference to the "Registration
Statement" shall be deemed to include the Rule 462 Registration Statement, as
amended from time to time. The term "Prospectus" means the prospectus as first
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
or, if no such filing is required, the form of final prospectus included in the
Registration Statement at the Effective Date.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with, the several
Underwriters that:
(a) Securities Act Compliance. The Registration Statement conforms in all
material respects with the requirements of the Securities Act and has been filed
with the Commission under the Securities Act. The Commission has not issued or,
to the Company's knowledge, threatened to issue any order preventing or
suspending the use of any Preliminary Prospectus, and, at its date of issue,
each Preliminary Prospectus conformed in all material respects with the
requirements of the Securities Act and did not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and, when the Registration Statement
becomes effective and at all times subsequent thereto up to and including the
Closing Dates (as hereinafter defined), the Registration Statement and the
Prospectus and any amendments or supplements thereto contained and will contain
all material statements and information required to be included therein by the
Securities Act and conformed and will conform in all material respects to the
requirements of the Securities Act, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, included or will
include any untrue statement of a material fact or omitted or will omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the foregoing representations,
warranties and agreements shall not apply to information contained in or omitted
from any Preliminary Prospectus or the Registration Statement or the Prospectus
or any such amendment or supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by any Underwriter
specifically for use in the preparation thereof. There is no contract,
agreement, lease, franchise or document required to be described in the
Registration Statement or Prospectus or to be filed as an exhibit to the
2
<PAGE> 3
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
Registration Statement which is not described therein or filed therewith as
required, and all descriptions of any such contracts, agreements, leases,
franchises or documents contained in the Registration Statement are accurate and
complete descriptions of such documents in all material respects.
(b) Organization, Good Standing and Qualification. The Company and each of
its subsidiaries has been duly organized and is validly existing and in good
standing as a corporation under the laws of its jurisdiction of incorporation,
with power and authority (corporate and other) to own or lease its properties
and to conduct its business as described in the Prospectus. The Company and each
of its subsidiaries is in possession of and operating in compliance with all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of its business, all of which
are valid and in full force and effect, and is duly qualified to do business and
in good standing as a foreign corporation in all other jurisdictions where its
ownership or leasing of properties or the conduct of its business requires such
qualification. The Company and each of its subsidiaries has obtained all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public regulatory or
governmental agencies and bodies to own, lease and operate its properties and
conduct its business as now being conducted and as described in the Registration
Statement and the Prospectus, except where the failure to obtain any of the
foregoing would not have a material adverse effect on the condition (financial
or otherwise), properties, business, management, prospects, net worth or results
of operations of the Company and its subsidiaries taken as a whole ("Material
Adverse Effect"), and no such consent, approval, authorization, order,
registration, qualification, license or permit contains a materially burdensome
restriction not adequately disclosed in the Registration Statement and the
Prospectus.
(c) Subsidiaries. Except as set forth in Exhibit 21 to the Registration
Statement, the Company does not have any subsidiaries and does not own or
control, directly or indirectly, any interest in any other corporation,
association or other business entity.
(d) No Changes. Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, and except as set forth
or contemplated in the Prospectus, neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations nor entered into any
transactions not in the ordinary course of business, and there has not been any
Material Adverse Effect, or any material adverse change in the capital stock,
short-term or long-term debt of the Company and its subsidiaries taken as a
whole.
(e) Valid Issuance of the Shares. The Shares to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and nonassessable and free of any preemptive
or similar rights and will conform in all material respects to the description
thereof in the Prospectus.
3
<PAGE> 4
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(f) Authorization. The Company has the full corporate power and authority
to enter into this Agreement and to perform its obligations hereunder (including
to issue, sell and deliver the Shares), and this Agreement has been duly and
validly authorized, executed and delivered by the Company and is a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditor's rights
generally, (ii) as the enforceability of any indemnification provision may be
limited under federal or state securities laws or (iii) as the remedy of
specific forms of equitable relief may be subject to equitable defenses and the
discretion of the court before which any proceeding may be brought
(collectively, the "Enforceability Exceptions").
(g) Compliance with other Instruments. The execution, delivery and
performance of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach of any of the terms or provisions of,
constitute a default under or result in the creation of any lien under any
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties is or may be bound, the Certificate of Incorporation, By-laws or
other organizational documents of the Company or of any of its subsidiaries, or
any law, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
respective properties.
(h) Legal Compliance. The Company and each of its subsidiaries, in all
material respects, is in compliance with and conducts its business in conformity
with all applicable federal, state, local and foreign laws, rules and
regulations of any court or governmental agency or body, and, to the knowledge
of the Company, except as set forth in the Registration Statement and the
Prospectus, no prospective change in any of such federal or state laws, rules or
regulations has been adopted which, when made effective, would have a Material
Adverse Effect.
(i) Governmental Consents. No consent, approval, authorization or order of
any court or governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement, except such as may
be required by the National Association of Securities Dealers, Inc. (the "NASD")
or under federal or state securities laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(j) Financial Statements. The financial statements, together with the
related notes and schedules, set forth in the Prospectus and elsewhere in the
Registration Statement fairly present, on the basis stated in the Registration
Statement, the financial condition and the results of operations of the Company
and its subsidiaries at the respective dates or for the respective periods
therein specified. Such statements and related notes and schedules have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis,
4
<PAGE> 5
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
except as may be set forth in the Prospectus. The selected financial and
statistical data set forth in the Prospectus under the caption "Selected
Financial Data" fairly present, on the basis stated in the Registration
Statement, the information set forth therein. The Company has provided the
Representatives with all financial statements from its inception to the date
hereof that are available to the officers of the Company.
(k) Independent Auditors. Arthur Andersen LLP, who have expressed their
opinions on the audited financial statements and related schedules included in
the Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the Rules and Regulations.
(l) Capitalization. The Company's authorized and outstanding capital stock
is on the date hereof, and will be on the Closing Dates, as set forth under the
heading "Capitalization" in the Prospectus (except that such disclosure need not
reflect the issuance of the Option Shares) and conforms in all material respects
to the description thereof set forth under the heading "Description of Capital
Stock" in the Prospectus. The outstanding shares of Common Stock (including the
outstanding Shares) (i) conform in all material respects to the description
thereof in the Prospectus, (ii) have been duly authorized and validly issued and
are fully paid and nonassessable, (iii) have been issued in compliance with all
federal and state securities laws, and (iv) were not issued in violation of or
subject to any preemptive rights or similar rights to subscribe for or purchase
securities. Except as disclosed in the Prospectus and the financial statements
of the Company and related notes thereto included in the Prospectus, the Company
does not have outstanding any options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible securities
or obligations, except for options granted subsequent to the date of information
provided in the Prospectus pursuant to the Company's 1998 Long Term Incentive
Plan (the "Stock Option Plan"), as disclosed in the Prospectus. The description
of the Stock Option Plan and the options or other rights granted or exercised
thereunder, as set forth in the Prospectus, accurately and fairly presents the
information required to be disclosed with respect to such Stock Option Plan,
options and rights.
(m) Litigation. Except as set forth in the Prospectus, there is no legal
or governmental action, suit, proceeding or investigation pending to which the
Company or any of its subsidiaries or affiliates is a party or to which any
property of the Company or any subsidiary or affiliate is subject, which, if
determined adversely to the Company or any such subsidiary or affiliate, might
individually or in the aggregate (i) prevent or adversely affect the
transactions contemplated by this Agreement, (ii) suspend the effectiveness of
the Registration Statement, (iii) prevent or suspend the use of the Preliminary
Prospectus in any jurisdiction, or (iv) have a Material Adverse Effect, and, to
the best of the Company's knowledge, no such action, suit, proceeding or
investigation is threatened or contemplated against the Company or any
subsidiary or affiliate by governmental authorities or others. Neither the
Company nor any
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
of its subsidiaries is a party to and is not subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory body or
other governmental agency or body.
(n) Tax Returns and Payments. The Company has filed all necessary federal,
state, local and foreign income, payroll, franchise and other tax returns,
except where the failure to file would not have a Material Adverse Effect, and
has paid all taxes shown as due thereon or with respect to any of its
properties, and there is no tax deficiency that has been, or, to the knowledge
of the Company, is likely to be asserted against the Company, any of its
subsidiaries or any of their respective properties or assets that would have a
Material Adverse Effect. All distributions to the stockholders of the Company
prior to the date hereof have been made in compliance with applicable law and
have not exceeded the amounts to which such stockholders were legally entitled.
(o) Registration Rights. No person or entity has the right to require
registration of shares of Common Stock or other securities of the Company as a
result of the filing or effectiveness of the Registration Statement and, in any
event, except as set forth in the Prospectus, no person or entity has the right
to require registration of shares of Common Stock or other securities of the
Company.
(p) Price Stabilization and Manipulation. Neither the Company nor any of
its officers, directors, subsidiaries or affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which caused or resulted
in, or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company.
(q) Patents and Trademarks. The Company owns or otherwise possesses or has
the right to use all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights either (i) described in the Prospectus as
being owned by it or (ii) necessary for the conduct of its business as so
described, as now conducted or as proposed to be conducted. The Company is not
aware of any claim to the contrary or any challenge by any other person to the
rights of the Company with respect to the foregoing. The Company's business as
now conducted does not infringe or conflict with in any material respect any
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
U.S. patents or other intellectual property or franchise rights or, to the
Company's knowledge, foreign patents of any person. No claim has been made
against the Company alleging the infringement by the Company of any patent,
trademark, service mark, trade name, copyright, trade secret, license in or
other intellectual property right or franchise right of any person, except as
described in the Prospectus or with respect to claims which, singly or in the
aggregate, will not have a Material Adverse Effect.
(r) Material Contracts. The Company or a subsidiary of the Company, as the
case may be, has performed all material obligations required to be performed by
it under all contracts
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
required by Item 601(b)(10) of Regulation S-K under the Securities Act to be
filed as exhibits to the Registration Statement, and neither the Company nor, to
the knowledge of the Company, any other party to such contract is in default
under or in breach of any such obligations, except with respect to any defaults
or breaches which, singly or in the aggregate, will not result in a Material
Adverse Effect. Neither he Company nor any of its subsidiaries has received any
notice of such default or breach.
(s) Voting Trust Agreement. The Voting Trust Agreement, dated as of ____
__, 1998 (the "Voting Trust Agreement"), by and among the Company, Computer
Concepts Corp. ("Computer Concepts") and each of James Cannavino, Daniel
DelGiorno, Jr. and Robert Devine (collectively, the "Trustees"), has been duly
and validly authorized, executed and delivered by the Company and each of the
Trustees and is a valid and binding agreement of the Company and each of the
Trustees, enforceable against the Company and each of the Trustees in accordance
with its terms, subject to the Enforceability Exceptions.
(t) Labor Agreements and Actions. Neither the Company nor any of its
subsidiaries is involved in any labor dispute and, to the Company's knowledge,
no such dispute is threatened. The Company is not aware that (i) any executive,
key employee or significant group of employees of the Company or of any of its
subsidiaries plans to terminate employment with the Company or any of its
subsidiaries, or (ii) any such executive or key employee is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreement that would be violated by the present or proposed business activities
of the Company or of any of its subsidiaries. Neither the Company nor any of its
subsidiaries has or expects to have any liability for any prohibited transaction
or funding deficiency or any complete or partial withdrawal liability with
respect to any pension, profit sharing or other plan which is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to which
the Company or any of its subsidiaries makes or ever has made a contribution and
in which any employee of the Company or of any of its subsidiaries is or has
ever been a participant, except where such liability would not have a Material
Adverse Effect. With respect to such plans, the Company and each of its
subsidiaries are in compliance in all material respects with all applicable
provisions of ERISA, except with respect to any non-compliance with such
provisions which, singly or in the aggregate, will not have a Material Adverse
Effect.
(u) Lock-Up Agreements. Except as disclosed in the Prospectus, the Company
has obtained the written agreement, in substantially the form attached hereto as
Schedule C, from each of its officers and directors and each holder of any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for or rights to purchase or acquire shares of Common Stock, except
such written agreement will not apply to any Common Stock issuable upon exercise
of employee stock options issued in accordance with the terms of the Stock
Option Plan as in effect on the date hereof, it being understood that such
Common Stock will bear a legend prohibiting the transfer of such Common Stock
for a period of 180 days after the effective date of the Registration Statement.
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<PAGE> 8
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(v) Title to Property and Assets. The Company or a subsidiary of the
Company has and, as of the Closing Dates, will have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned or proposed to be owned by it which is material to the business
of the Company and its subsidiaries taken as a whole, in each case free and
clear of all liens, encumbrances and defects except such as are described the
Prospectus or such as would not have a Material Adverse Effect. Any real
property and buildings held under lease by the Company or any subsidiary of the
Company or proposed to be held after giving effect to the transactions described
in the Prospectus are, or will be as of the Closing Dates, held by it under
valid, subsisting and enforceable leases with such exceptions as would not have
a Material Adverse Effect, in each case except as described in or contemplated
by the Prospectus.
(w) Insurance. The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the business in which it is engaged or
proposes to engage in after giving effect to the transactions described in the
Prospectus, and the Company has no reason to believe that it will not be able to
renew any such existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect, except as
described in or contemplated by the Prospectus.
(x) Brokers. Except as may be set forth in the Prospectus, there is no
broker, finder or other party that is entitled to receive from the Company any
brokerage or finder's fee or similar fee or commission as a result of any of the
transactions contemplated by this Agreement.
(y) Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) Distribution of Offering Materials. The Company has not distributed
and will not distribute prior to the later of (i) the First Closing Date or the
Option Closing Date, as the case may be, and (ii) the completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectus, the
Prospectus, the Registration Statement and other materials, if any, permitted by
the Securities Act and the use of which has been approved in advance in writing
by the Representatives.
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<PAGE> 9
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(aa) Payment or Recipient of Funds. Except as set forth in the Prospectus,
neither the Company nor, to the Company's knowledge, any employee or agent of
the Company has made any payment of funds of the Company or received or retained
any funds in violation of any law, Rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Prospectus.
(bb) Investment Company. The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(cc) Environmental Laws. The Company and each of its subsidiaries is in
compliance with the terms and conditions of all applicable federal, state, local
and foreign laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), except where the failure to be in
compliance would not have a Material Adverse Effect. Neither the Company nor any
of its subsidiaries has received notice from any governmental authority of any
claim under any Environmental Laws which asserts a claim that could result in a
Material Adverse Effect. No property that is owned, leased or occupied by the
Company or by any of its subsidiaries has been designated as a Superfund site
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (420 U.S.C. (S) 9601 et seq.), or otherwise designated
as a contaminated site under applicable state or local laws.
(dd) Permits. The Company and each of its subsidiaries have such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease and operate its property and
to conduct its business. The Company and each of its subsidiaries have fulfilled
and performed all of its material obligations with respect to such permits and
no event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit, except events the
existence of which would not have a Material Adverse Effect, and, except as
described in the Prospectus, such permits contain no restrictions that are
materially burdensome to the Company and its subsidiaries taken as a whole.
(ee) Employment Matters. To the Company's knowledge, neither the Company
nor any of its subsidiaries has violated any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any applicable
federal or state wages and hours laws, nor any provisions of ERISA or the rules
and regulations promulgated thereunder, which in each case might have a Material
Adverse Effect.
(ff) 1934 Act Registration. The Company has filed a registration statement
pursuant to Section 12 (g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"),
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<PAGE> 10
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
which registration statement has been or will be declared effective
simultaneously with the effectiveness of the Registration Statement.
(gg) Nasdaq Listing. The Common Stock has been approved for quotation on
the Nasdaq National Market, subject to official notice of issuance.
(hh) Certificates. Each certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters pursuant to
this Agreement or in connection with the offering contemplated hereby shall be
deemed to be a representation and warranty of the Company to the Underwriters as
to the matters covered thereby.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
1. Each Selling Stockholder, severally and not jointly, represents and warrants
to, and agrees with, the several Underwriters that:
(a) Valid and Marketable Title. Such Selling Stockholder now has, and on
the Closing Dates will have, valid and marketable title to the Shares to be sold
by such Selling Stockholder, free and clear of any lien, claim, security
interest or other encumbrance, including, without limitation, any restriction on
transfer, and has full right, power and authority to enter into this Agreement,
the Power of Attorney and the Custody Agreement (each as hereinafter defined),
and each of the several Underwriters will acquire valid and marketable title to
all of the Shares being sold to the Underwriters by such Selling Stockholder,
free and clear of any liens, encumbrances, equities claims, restrictions on
transfer or other defects whatsoever.
(b) Authority. Such Selling Stockholder now has, and on the Closing Dates
will have, upon delivery of and payment for each of the Shares hereunder, full
right, power and authority, and shall have obtained any approval required by
law, to sell, transfer, assign and deliver the Shares being sold by such Selling
Stockholder hereunder.
(c) Market Stand-Off. Such Selling Stockholder has executed and delivered
to the Representatives a lock-up agreement in substantially the form attached
hereto as Schedule C (the "Lock-Up Agreement"), providing that, with certain
limited exceptions specified therein, and as provided in more detail therein,
for a period of one hundred eighty (180) days after the effective date of the
Registration Statement, and in the case of Computer Concepts, twelve (12) months
after the effective date of the Registration Statement, without the consent of
SoundView Financial Group, Inc. ("SoundView"), such Selling Stockholder will not
offer to sell, sell, contract to sell or otherwise dispose of any shares of
Common Stock, or securities convertible into or exchangeable for shares of
Common Stock, including, without limitation, shares of Common Stock which may be
deemed to be beneficially owned by such Selling Stockholders in accordance with
the Rules and Regulations, except for the Shares being sold hereunder and any
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<PAGE> 11
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
shares of Common Stock issuable upon exercise of employee stock options issued
in accordance with the terms of the Stock Option Plan as in effect on the date
hereof.
(d) Power of Attorney. Such Selling Stockholder has duly executed and
delivered a power of attorney, in substantially the form heretofore delivered to
the Representatives (the "Power of Attorney"), appointing __________ and
__________, and each of them, as attorney-in-fact (the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such Selling
Stockholder, to authorize the delivery of the Shares to be sold by such Selling
Stockholder hereunder and otherwise to act on behalf of such Selling Stockholder
in connection with the transactions contemplated by this Agreement.
(e) Custody Agreement. Such Selling Stockholder has duly executed and
delivered a custody agreement, in substantially the form heretofore delivered to
the Representatives (the "Custody Agreement"), with _______________ as custodian
(the "Custodian"), pursuant to which certificates in negotiable form for the
Shares to be sold by such Selling Stockholder hereunder have been placed in
custody for delivery under this Agreement.
(f) Binding Obligations. Such Selling Stockholder has, by execution and
delivery of each of this Agreement, the Power of Attorney, the Custody Agreement
and the Lock-Up Agreement, created valid and binding obligations of such Selling
Stockholder, enforceable against such Selling Stockholder in accordance with
their respective terms, subject to the Enforceability Exceptions.
(g) Compliance with other Instruments. The performance of this Agreement,
the Custody Agreement and the Power of Attorney, and the consummation of the
transactions contemplated hereby and thereby, will not result in a breach or
violation in any material respect by such Selling Stockholder of any of the
terms or provisions of, or constitute a default by such Selling Stockholder
under, (i) any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other material agreement or
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder or any of its properties is bound, (ii) any judgment of any court or
governmental agency or body applicable to such Selling Stockholder or any of its
properties, or any statute, decree, order, Rule or regulation of any court or
governmental agency or body applicable to such Selling Stockholder or any of its
properties, or (iii) any provisions of the charter, bylaws or other
organizational documents of such Selling Stockholder.
(h) No Revocation. Each Selling Stockholder agrees that (i) the Shares
represented by the certificates held in custody under the Custody Agreement are
for the benefit of and coupled with and subject to the interests of the
Underwriters and the Company hereunder, (ii) the arrangement for such custody
and the appointment of the Attorneys-in-Fact are irrevocable, (iii) the
obligations of such Selling Stockholder hereunder shall not be terminated by
operation of law, whether by the liquidation or dissolution of such Selling
Stockholder or any other event,
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
and (iv) if such Selling Stockholder should die or become incapacitated or is
liquidated or dissolved or any other event occurs, before the delivery of the
Shares hereunder, certificates for the Shares to be sold by such Selling
Stockholder shall be delivered on behalf of such Selling Stockholder in
accordance with the terms and conditions of this Agreement and the Custody
Agreement, and action taken by the Attorneys-in-Fact or any of them under the
Power of Attorney shall be as valid as if such liquidation or dissolution or
other event had not occurred, whether or not the Custodian, the
Attorneys-in-Fact or any of them shall have notice of such liquidation or
dissolution or other event.
(i) No Stabilization or Manipulation. Such Selling Stockholder has not
taken, and will not take, directly or indirectly, any action designed to, or
which might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares pursuant to the distribution contemplated by this
Agreement, and, other than as permitted by the Securities Act, the Selling
Stockholder has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Shares.
(j) Governmental Consents. The execution, delivery and performance of this
Agreement by such Selling Stockholder, compliance by such Selling Stockholder
with all the provisions hereof and the consummation of the transactions
contemplated hereby will not require any consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body (except as such may be required under federal or state
securities laws or by the NASD).
(k) Beneficial Ownership. The information set forth under the heading
"Principal and Selling Stockholders" in the Prospectus which specifically
relates to such Selling Stockholder does not, and will not on the Closing Dates,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of circumstances under which they were made, not misleading, and such
Selling Stockholder has agreed to immediately notify the Company if, at any time
during the period when a Prospectus is required by law to be delivered in
connection with sales of Common Stock by an Underwriter or a dealer, there is
any change in such information.
(l) Organization and Good Standing. Such Selling Stockholder, if other
than a natural person, has been duly organized and is validly existing and in
good standing under the laws of the jurisdiction of its organization as the type
of entity it purports to be.
(m) No Preemptive or Other Rights. Such Selling Stockholder does not have,
or has waived prior to the date hereof, any preemptive right, co-sale right or
right of first refusal or other similar right to purchase any of the Shares that
are to be sold by the Company or any of the other Selling Stockholders to the
Underwriters pursuant to this Agreement. Such Selling Stockholder does not have,
or has waived prior to the date hereof, any registration right or other
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
similar right to participate in the offering made by the Prospectus, other than
such rights of participation as have been satisfied by the participation of such
Selling Stockholder in the transactions to which this Agreement relates in
accordance with the terms of this Agreement. Such Selling Stockholder does not
own any warrants, options or similar rights to acquire, and does not have any
right or arrangement to acquire, any capital stock, rights, warrants, options or
other securities from the Company, other than those described in the
Registration Statement and the Prospectus.
2. Computer Concepts hereby makes to the several Underwriters the
representations and warranties of the Company set forth in Section 3 hereof. In
addition, Computer Concepts represents and warrants to, and agrees with the
several Underwriters that, the Voting Trust Agreement has been duly authorized,
executed and delivered by Computer Concepts and is a valid and binding agreement
of Computer Concepts, enforceable against Computer Concepts in accordance with
its terms, subject to the Enforceability Exceptions.
5. PURCHASE AND SALE OF THE SHARES.
The Company and the Selling Stockholders agree, severally and not jointly,
to sell to the Underwriters the Firm Shares, with the number of shares to be
sold by the Company and each Selling Stockholder being the number of Shares set
opposite his, her or its name in Schedule B attached hereto, and on the basis of
the representations, warranties, covenants and agreements herein contained, but
upon the terms and subject to the conditions herein set forth, the Underwriters
agree, severally and not jointly, to purchase the Firm Shares from the Company
and the Selling Stockholders, with the number of shares of Firm Shares to be
purchased by each Underwriter being set opposite its name in Schedule A attached
hereto, subject to adjustment in accordance with Section 14 hereof. The number
of Shares to be purchased by each Underwriter from each Selling Stockholder
hereunder shall bear the same proportion to the total number of Shares to be
purchased by such Underwriter hereunder as the number of Shares being sold by
each Selling Stockholder bears to the total number of Shares being sold by all
of the Selling Stockholders, subject to adjustment by the Representatives to
eliminate fractions.
(a) Purchase Price. The purchase price per Share to be paid by the
Underwriters to the Company and the Selling Stockholders will be $____ per share
(the "Purchase Price").
(b) Closing. The Company and the Selling Stockholders will deliver the
Firm Shares to the Representatives for the respective accounts of the several
Underwriters in the form of definitive certificates, issued in such names and in
such denominations as the Representatives may direct by notice in writing to the
Company and the Selling Stockholders given at or prior to 10:00 a.m., New York
time, on the second full business day preceding the First Closing Date (as
defined below) or, if no such direction is received, in the names of the
respective Underwriters or in such other names as SoundView may designate
(solely for the purpose of administrative convenience) and in such denominations
as SoundView may determine, against payment of the
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
aggregate Purchase Price therefor in Federal or other immediately available
funds, by certified or official bank check or checks payable to the order of the
Company and the Custodian or by wire transfer to accounts designated by the
Company and the Custodian, all at the offices of Morrison & Foerster LLP, 1290
Avenue of the Americas, New York, New York 10104. Such delivery and closing
shall occur at 10:00 a.m., New York time, on the [third/fourth] business day
after the date of this Agreement (the "First Closing Date"). The First Closing
Date and the location of delivery of, and the form of payment for, the Firm
Shares may be varied by agreement between the Company and SoundView. The First
Closing Date may be postponed pursuant to the provisions of Section 14.
(c) Certificates for the Shares. The Company and the Selling Stockholders
shall make the certificates for the Firm Shares available to the Representatives
for examination on behalf of the Underwriters not later than 12:00 p.m., New
York time, on the business day preceding the First Closing Date at such location
within New York, New York as may be designated by the Representatives. If the
Representatives so elect, delivery of the Firm Shares may be made by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by the Representatives.
(d) Payment on behalf of Underwriters. It is understood that the
Representatives, individually and not as Representatives of the several
Underwriters, may (but shall not be obligated to) make payment to the Company or
the Selling Stockholders on behalf of any Underwriter or Underwriters for the
Shares to be purchased by such Underwriter or Underwriters. Any such payment by
the Representatives shall not relieve such Underwriter or Underwriters from any
of its or their other obligations hereunder.
(e) Initial Public Offering. The several Underwriters agree to make an
initial public offering of the Firm Shares at the initial public offering price
of $____ per share as soon after the effectiveness of the Registration Statement
as, in their judgment, is advisable. The Representatives shall promptly advise
the Company and the Selling Stockholders of the making of the initial public
offering. After the initial public offering, the several Underwriters may, in
their discretion, vary the public offering price.
(f) Over-Allotment Option.
(i) Option Shares. For the purpose of covering any over-allotments
in connection with the distribution and sale of the Firm Shares as
contemplated by the Prospectus, Computer Concepts hereby grants to the
Underwriters an option (the "Option") to purchase up to 625,000 Option
Shares. The price per share to be paid for the Option Shares shall be the
Purchase Price. The Option may be exercised as to all or any part of the
Option Shares at any time, and from time to time, not more than thirty
(30) days subsequent to the effective date of this Agreement. No Option
Shares shall be sold and delivered unless the Firm Shares previously have
been, or simultaneously are, sold and
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
delivered. The right to purchase the Option Shares or any portion thereof
may be surrendered and terminated at any time upon notice by the
Underwriters to the Company and Computer Concepts.
(ii) Exercise of Option. The Option may be exercised by the
Underwriters by SoundView's giving written notice to the Company and
Computer Concepts setting forth the number of shares of the Option Shares
to be purchased by them and the date and time for delivery of and payment
for the Option Shares (the "Option Closing Date," and, collectively with
the First Closing Date, the "Closing Dates"). The Option Closing Date
shall not be earlier than the First Closing Date and shall in no event be
earlier than two (2) business days nor later than ten (10) business days
after written notice is given. Option Shares shall be purchased for the
account of each Underwriter in the same proportion as the number of Firm
Shares set forth opposite such Underwriter's name on Schedule A attached
hereto bears to the total number of Firm Shares (subject to adjustment by
the Underwriters to eliminate odd lots). Upon exercise of the Option by
the Underwriters, the Selling Stockholders agree to sell to the
Underwriters the number of Option Shares set forth in the written notice
of exercise and the Underwriters agree, severally and not jointly and upon
the terms and subject to the conditions herein set forth, to purchase the
number of such shares determined as aforesaid.
(iii) Option Closing. Computer Concepts will deliver the Option
Shares to the Underwriters (in the form of definitive certificates, issued
in such names and in such denominations as the Representatives may direct
by notice in writing to the Company and Computer Concepts given at or
prior to 10:00 a.m., New York time, on the second full business day
preceding the Option Closing Date or, if no such direction is received, in
the names of the respective Underwriters or in such other names as
SoundView may designate (solely for the purpose of administrative
convenience) and in such denominations as SoundView may determine, against
payment of the aggregate Purchase Price therefor in Federal or other
immediately available funds, by certified or official bank check or checks
payable to the order of the Custodian or by wire transfer to accounts
designated by the Custodian, all at the offices of Morrison & Foerster
LLP, 1290 Avenue of the Americas, New York, New York 10104. Computer
Concepts shall make the certificates for the Option Shares available to
the Underwriters for examination not later than 12:00 p.m., New York time,
on the business day preceding the Option Closing Date, at such location
within New York, New York as may be designated by the Representatives. If
the Representatives so elect, delivery of the Option Shares may be made by
credit through full fast transfer to the accounts at The Depository Trust
Company designated by the Representatives. The Option Closing Date and the
location of delivery of, and the form of payment for, the Option Shares
may be varied by agreement between the Company and SoundView. The Option
Closing Date may be postponed pursuant to the provisions of Section 14.
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
6. COVENANTS AND AGREEMENTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters that:
(a) Effectiveness of Registration Statement. The Company will (i) if the
Company and the Representatives have determined not to proceed pursuant to Rule
430A, use its best efforts to cause the Registration Statement to become
effective, (ii) if the Company and the Representatives have determined to
proceed pursuant to Rule 430A, use its best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
Rule 430A and Rule 424, (iii) if the Company and the Representatives have
determined to deliver Prospectuses pursuant to Rule 434, to use its best efforts
to comply with all the applicable provisions thereof, and (iv) use its best
efforts to cause any abbreviated registration statement pursuant to Rule 462(b)
of the Rules and Regulations as may be required subsequent to the date the
Registration Statement is declared effective to become effective as promptly as
possible. The Company will advise the Representatives promptly as to the time at
which the Registration Statement becomes effective, will advise the
Representatives promptly of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose, and will use its best efforts to prevent
the issuance of any such stop order and to obtain as soon as possible the
lifting thereof, if issued. The Company will advise the Representatives promptly
of the receipt of any comments of the Commission or any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for additional information and will not at any time file any
amendment to the Registration Statement or supplement to the Prospectus which
shall not previously have been submitted to the Representatives a reasonable
time prior to the proposed filing thereof or to which the Representatives shall
reasonably object in writing or which is not in compliance with the Securities
Act and the Rules and Regulations.
(b) Amendments and Reports. The Company will prepare and file with the
Commission, promptly upon the request of the Representatives, any amendments or
supplements to the Registration Statement or the Prospectus which in the opinion
of the Representatives may be necessary to enable the several Underwriters to
continue the distribution of the Shares and will use its best efforts to cause
the same to become effective as promptly as possible. The Company will promptly
file all reports and any definitive proxy or information statements required to
be filed with the Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and for so long as the delivery of
a prospectus is required in connection with the offering or sale of the Shares.
(c) Prospectus. If, at any time after the effective date of the
Registration Statement when a prospectus relating to the Shares is required to
be delivered under the Securities Act, any event relating to or affecting the
Company occurs as a result of which the Prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
under which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Securities Act, the Company will
promptly notify the Representatives thereof and will prepare an amended or
supplemented prospectus which will correct such statement or omission.
(d) Copies of Registration Statement and Prospectus. The Company will
deliver to the Representatives, at or before the Closing Dates, manually signed
copies of the Registration Statement, and each amendment thereto, including all
financial statements and exhibits thereto, and will deliver to the
Representatives such number of copies of the Registration Statement, including
such financial statements but without exhibits, and all amendments thereto, as
the Representatives may reasonably request. The Company will deliver or mail to
or upon the order of the Representatives, from time to time until the effective
date of the Registration Statement, as many copies of the Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver or mail
to or upon the order of the Representatives on the date of the initial public
offering, and thereafter from time to time during the period when delivery of a
prospectus relating to the Shares is required under the Securities Act, as many
copies of the Prospectus, in final form or as thereafter amended or supplemented
as the Representatives may reasonably request.
(e) Section 11(a) Earnings Statement. The Company will make generally
available to its Stockholders as soon as practicable, but not later than fifteen
(15) months after the effective date of the Registration Statement, an earnings
statement which will be in reasonable detail (but which need not be audited) and
which will comply with Section 11(a) of the Securities Act, covering a period of
at least twelve (12) months beginning after the "effective date" (as defined in
Rule 158 under the Securities Act) of the Registration Statement.
(f) Blue Sky Qualification. The Company will cooperate with the
Representatives to enable the Shares to be registered or qualified for offering
and sale by the Underwriters and by dealers under the securities laws of such
jurisdictions as the Representatives may reasonably request.
(g) Reports to Stockholders. So long as the Company shall be subject to
the reporting requirements of the Exchange Act, the Company will furnish to its
Stockholders annual reports containing financial statements certified by
independent public accountants and will furnish or make available to its
Stockholders quarterly summary financial information in reasonable detail, which
may be unaudited.
(h) Nasdaq National Market. The Company will use its best efforts to
maintain the listing of the Common Stock on the Nasdaq National Market for a
period of five (5) years after the effective date of the Registration Statement.
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<PAGE> 18
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(i) Transfer Agent and Registrar. The Company will maintain a transfer
agent and registrar for its Common Stock.
(j) Market Stand-Off. The Company will not offer, sell, assign, transfer,
encumber, contract to sell, grant an option to purchase or otherwise dispose of
any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock (including, without limitation, Common Stock which
may be deemed to be beneficially owned by the Company in accordance with the
Rules and Regulations) during the one hundred eighty (180) days following the
effective date of the Registration Statement, except for the Shares being sold
hereunder and any shares of Common Stock issuable upon exercise of employee
stock options issued in accordance with the terms of the Stock Option Plan as in
effect on the date hereof. In addition, during the 180 days following the
effective date of the Registration Statement, the Company will not release any
officer, director or securityholder of the Company from their obligations under
any similar agreement with the Company not to sell, transfer or dispose of
securities of the Company for the 180-day period following the effective date of
the Registration Statement (including the restrictive legends referred to in
Section 3(u) hereof).
(k) Use of Proceeds. The Company will apply the net proceeds from the sale
of the Shares substantially in conformity with the description set forth under
the heading "Use of Proceeds" in the Prospectus.
(l) SEC Correspondence. The Company will supply the Representatives with
copies of all correspondence to and from, and all documents issued to and by,
the Commission in connection with the registration of the Shares under the
Securities Act.
(m) Financial Statements. Prior to the Closing Dates the Company will
furnish to the Representatives, as soon as they have been prepared, copies of
any unaudited interim financial statements of the Company for any periods
subsequent to the periods covered by the financial statements appearing in the
Registration Statement and the Prospectus.
(n) Press Releases. Prior to the Closing Dates and during the period when
a prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company will issue no press release or other communications
directly or indirectly and hold no press conference with respect to the Company
or its financial condition, results of operation, business, prospects, assets or
liabilities, or the offering of the Shares, without the prior consent of the
Representatives, which consent shall not be unreasonably withheld.
(o) Reports to Representatives. During the period of three (3) years from
the date hereof, the Company will furnish to the Representatives, and, upon
request of the Representatives, to each of the Underwriters (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, Stockholder's equity and
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
cash flows for the year then ended and the opinion thereon of the Company's
independent public accountants, (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Report on Form 8-K or other report filed by the Company
with the Commission, Nasdaq or any securities exchange, (iii) as soon as
available, copies of any report or communication of the Company mailed generally
to holders of its Common Stock, and (iv) such other information concerning the
Company as the Representatives may reasonably request from time to time.
(p) Form S-8. The Company will not file any registration statements on
Form S-8 covering shares of Common Stock issuable under its stock option plans
for a period of one hundred eighty (180) days following the effectiveness of the
Registration Statement.
7. PAYMENT OF EXPENSES.
(a) Expenses of the Company. The Company will pay, either directly or by
reimbursement, all costs, fees and expenses incurred in connection with expenses
incident to the performance of the obligations of the Company and of the Selling
Stockholders under this Agreement, including, but not limited to, (i) all
expenses and taxes incident to the issuance and delivery of the Shares to the
Representatives, (ii) all expenses incident to the registration of the Shares
under the Securities Act, (iii) all costs of preparing stock certificates,
including printing and engraving costs, (iv) all fees and expenses of the
registrar and transfer agent of the Shares, (v) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Shares to
the Underwriters, (vi) all fees and expenses of the Company's counsel and the
Company's independent accountants, (vii) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement, each Preliminary Prospectus and the Prospectus,
including all exhibits and financial statements, and all amendments and
supplements provided for herein, the Powers of Attorney, the Custody Agreement,
the Underwriters' Questionnaire, the Blue Sky memoranda and this Agreement,
(viii) all filing fees and attorneys' fees and expenses incurred by the Company
or the Underwriters in connection with exemptions from qualifying or registering
(or obtaining qualification or registration of) all or any part of the Shares
for offer and sale and determination of its eligibility for investment under the
Blue Sky or other securities laws of such jurisdictions as the Representatives
may designate, (ix) all filing fees paid or incurred in connection with filings
made with the NASD and (x) all fees and expenses associated with the listing of
the Shares and the Common Stock on the Nasdaq National Market.
(b) Expenses of the Selling Stockholders. Each Selling Stockholder will
pay, either directly or by reimbursement, all fees and expenses incident to the
performance of such Selling Stockholder's obligations under this Agreement which
are not otherwise specifically provided for herein, including, but not limited
to, any fees and expenses of counsel for such Selling Stockholder, such Selling
Stockholder's pro rata share of fees and expenses of the Attorneys-in-
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<PAGE> 20
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
Fact and the Custodian and all expenses and taxes incident to the sale and
delivery of the Shares to be sold by such Selling Stockholder to the
Underwriters hereunder.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls such
Underwriter within the meaning of the Securities Act and the respective
officers, directors, partners, employees, representatives and agents of each of
such Underwriter and controlling person (collectively, the "Underwriter
Indemnified Parties" and, each, an "Underwriter Indemnified Party") against any
losses, claims, damages, liabilities or expenses (including the reasonable cost
of investigating and defending against any claims therefor and fees of counsel
incurred in connection therewith), joint or several, which may be based upon the
Securities Act, the Exchange Act, or any other federal, state, local or foreign
statute or regulation, or at common law, on the ground or alleged ground that
any Preliminary Prospectus, the Registration Statement or the Prospectus (or any
Preliminary Prospectus, the Registration Statement or the Prospectus as from
time to time amended or supplemented) includes or allegedly includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, unless such
statement or omission was made in reliance upon, and in conformity with, written
information furnished to the Company by any Underwriter, directly or through the
Representatives, specifically for use in the preparation thereof. The Company
will be entitled to participate at its own expense in the defense or, if it so
elects, to assume the defense of any suit brought to enforce any such liability,
but, if the Company elects to assume the defense, such defense shall be
conducted by counsel chosen by it. In the event the Company elects to assume the
defense of any such suit and retain such counsel, any Underwriter Indemnified
Parties, defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless (i) the Company shall
have specifically authorized the retaining of such counsel, or (ii) the parties
to such suit include any such Underwriter Indemnified Parties, and the Company
and such Underwriter Indemnified Parties have been advised by counsel to the
Underwriters that one or more legal defenses may be available to it or them
which may not be available to the Company, in which case the Company shall not
be entitled to assume the defense of such suit, notwithstanding its obligation
to bear the fees and expenses of such counsel. This indemnity agreement is not
exclusive and will be in addition to any liability which the Company might
otherwise have and shall not limit any rights or remedies which may otherwise be
available at law or in equity to each Underwriter Indemnified Party.
(b) Indemnification by the Selling Stockholders. Each Selling Stockholder
agrees to indemnify and hold harmless each Underwriter Indemnified Party against
any losses, claims, damages, liabilities or expenses (including, unless such
Selling Stockholder elects to assume the defense, the reasonable cost of
investigating and defending against any claims therefor and fees of counsel
incurred in connection therewith), which may be based upon the Securities Act,
the
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<PAGE> 21
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
Exchange Act, or any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground that any
Preliminary Prospectus, the Registration Statement or the Prospectus (or any
Preliminary Prospectus, the Registration Statement or the Prospectus, as from
time to time amended and supplemented) includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, unless such statement or omission
was made in reliance upon, and in conformity with, written information furnished
to the Company by any Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof; provided, however, that the
indemnification obligation arising under this Section 8(b) shall apply only to
the extent that such loss, claim, damage, liability or expense is caused by or
related to an untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
such Selling Stockholder furnished in writing to the Company by or on behalf of
such Selling Stockholder expressly for use in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendments or supplements thereto.
Such Selling Stockholder shall be entitled to participate at his own expense in
the defense, or, if he so elects, to assume the defense of any suit brought to
enforce any such liability, but, if such Selling Stockholder elects to assume
the defense, such defense shall be conducted by counsel chosen by him. In the
event that any Selling Stockholder elects to assume the defense of any such suit
and retain such counsel, the Underwriter Indemnified Parties, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) such Selling Stockholder shall have
specifically authorized the retaining of such counsel, or (ii) the parties to
such suit include such Underwriter Indemnified Parties and such Selling
Stockholder and such Underwriter Indemnified Parties have been advised by
counsel to the Underwriters that one or more legal defenses may be available to
it or them which may not be available to such Selling Stockholder, in which case
such Selling Stockholder shall not be entitled to assume the defense of such
suit notwithstanding its obligation to bear the fees and expenses of such
counsel. Subject to Section 8(e) below, this indemnity agreement is not
exclusive and will be in addition to any liability which such Selling
Stockholder might otherwise have and shall not limit any rights or remedies
which may otherwise be available at law or in equity to each Underwriter
Indemnified Party. The Company and the Selling Stockholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of such liability for which they each
shall be responsible.
(c) Indemnification by Underwriters. Each Underwriter severally agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act (collectively, the
"Company Indemnified Parties") and each Selling Stockholder and each person, if
any, who controls a Selling Stockholder within the meaning of the Securities Act
(collectively, the "Stockholder Indemnified Parties") against any losses,
claims, damages, liabilities or expenses (including, unless the Underwriter or
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<PAGE> 22
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
Underwriters elect to assume the defense, the reasonable cost of investigating
and defending against any claims therefor and fees of counsel incurred in
connection therewith), joint or several, which arise out of or are based in
whole or in part upon the Securities Act, the Exchange Act or any other federal,
state, local or foreign statute or regulation, or at common law, on the ground
or alleged ground that any Preliminary Prospectus, the Registration Statement or
the Prospectus (or any Preliminary Prospectus, the Registration Statement or the
Prospectus, as from time to time amended and supplemented) includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading, but only insofar as
any such statement or omission was made in reliance upon, and in conformity
with, written information furnished to the Company by such Underwriter, directly
or through the Representatives, specifically for use in the preparation thereof,
and the parties acknowledge and agree that the only information furnished by the
Underwriters to the Company for inclusion in any Preliminary Prospectus, the
Registration Statement or the Prospectus, as from time to time amended or
supplemented, is the information set forth in the last paragraph of the front
cover page of the Prospectus (insofar as such information relates to the
Underwriters), the information on page 2 of the Prospectus concerning
stabilization and over-allotment by the Underwriters, and the information under
the caption "Underwriting" in the Prospectus that does not describe this
Agreement; provided, however, that in no case is such Underwriter to be liable
with respect to any claims made against any Company Indemnified Party or
Stockholder Indemnified Party against whom the action is brought unless such
Company Indemnified Party or Stockholder Indemnified Party shall have notified
such Underwriter in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the Company Indemnified Party or Stockholder Indemnified Party,
but failure to notify such Underwriter of such claim shall not relieve it from
any liability which it may have to any Company Indemnified Party or Stockholder
Indemnified Party otherwise than on account of its indemnity agreement contained
in this paragraph. Such Underwriter shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it. In the
event that any Underwriter elects to assume the defense of any such suit and
retain such counsel, the Company Indemnified Parties or Stockholder Indemnified
Parties and any other Underwriter or Underwriters or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them, respectively. The Underwriter
against whom indemnity may be sought shall not be liable to indemnify any person
for any settlement of any such claim effected without such Underwriter's
consent. This indemnity agreement is not exclusive and will be in addition to
any liability which such Underwriter might otherwise have and shall not limit
any rights or remedies which may otherwise be available at law or in equity to
any Company Indemnified Party or Stockholder Indemnified Party.
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(d) Contribution. If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) or (c) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand, and the Underwriters on the other hand, from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Stockholders on the
one hand, and the Underwriters on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Stockholders on the one hand, and the Underwriters on the other
hand, shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contribution were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, defending, settling or compromising any such claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. The Underwriters' obligations to
contribute are several in proportion to their respective underwriting
obligations and not joint. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(e) Limitation of Liability. Notwithstanding any provision herein to the
contrary, (i) the indemnity agreements contained in Section 8(a) and Section
8(b) with respect to any Preliminary Prospectus shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) from whom the
person asserting any such loss, claim, damage, liability or expense purchased
the Shares which are the subject thereof if at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
(excluding the documents incorporated therein by reference), the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented), and such failure to send or deliver a copy of the Prospectus (or
the Prospectus as amended or supplemented) was not the result of the Company's
non-compliance with the provisions of Section 6(d), (ii) the liability for
indemnification under Section 8(b) of each Selling Stockholder shall not exceed
the Purchase Price of the Shares sold by such Selling Stockholder to the
Underwriters, and (iii) such liability shall be further limited for each Selling
Stockholder such that such Selling Stockholder's liability, in proportion to the
aggregate liability of all Selling Stockholders as a group, shall not exceed the
proportion that the number of Shares sold by such Selling Stockholder bears to
the aggregate number of Shares sold by all Selling Stockholders hereunder;
provided, however, that the limitation on liability set forth in the foregoing
clause (iii) shall not apply with respect to any particular Selling Stockholder
if such liability is attributable to such Selling Stockholder, as set forth in
the first sentence of Section 8(b); and, provided, further, that nothing in the
foregoing clause (iii) shall require the Underwriters to seek indemnification
from any other Selling Stockholder(s) as a condition of their being entitled to
indemnification from any particular Selling Stockholder. Notwithstanding
anything to the contrary in this Agreement, the Underwriters and their control
persons shall not seek indemnification pursuant to this Section 8 unless they
shall have first reasonably determined that the Company is unable or not
required to fully satisfy the obligations of the Selling Stockholders pursuant
to such Sections.
9. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC.
Unless this Agreement is terminated in accordance with Section 12 hereof,
the respective indemnities, covenants, agreements, representations, warranties
and other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Selling
Stockholders, the Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Shares.
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The respective obligations of the several Underwriters hereunder shall be
subject to the material accuracy, at and (except as otherwise stated herein) as
of the date hereof and at and as of the Closing Dates, of the representations
and warranties made herein by the Company and the Selling Stockholders, to
compliance at and as of the Closing Dates by the Company and the Selling
Stockholders with their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to the Closing Dates, and to the
following additional conditions:
(a) Effective Registration Statement. The Registration Statement shall
have become effective and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have been
initiated or, to the knowledge of the Company or the Representatives, shall be
threatened by the Commission, and any request for additional information on the
part of the Commission (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of the Representatives. Any filings of the Prospectus, or any
supplement thereto, required pursuant to Rule 424(b) or Rule 434 of the Rules
and Regulations, shall have been made in the manner and within the time period
required by Rule 424(b) and Rule 434 of the Rules and Regulations, as the case
may be.
(b) Changes. The Representatives shall have been reasonably satisfied that
there shall not have occurred any change prior to the Closing Dates in the
condition (financial or otherwise), properties, business, prospects, net worth
or results of operations of the Company and its subsidiaries taken as a whole,
or any material adverse change in the capital stock, short-term or long-term
debt of the Company and its subsidiaries taken as a whole, such that (i) the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact which, in the reasonable opinion
of the Representatives, is material, or omits to state a fact which, in the
reasonable opinion of the Representatives, is required to be stated therein or
is necessary to make the statements therein not misleading, or (ii) it is
impracticable in the reasonable judgment of the Representatives to proceed with
the public offering or to purchase the Shares as contemplated hereby.
(c) Litigation. The Representatives shall be satisfied that no legal or
governmental action, suit, proceeding or investigation affecting the Company or
any of its subsidiaries which may have a Material Adverse Effect or may affect
the Company's or the Selling Stockholders' ability to perform their respective
obligations under this Agreement shall have been instituted or threatened, and
there shall have occurred no material adverse development in any existing such
action, suit, proceeding or investigation.
(d) Comfort Letter. Prior to the execution of this Agreement, the
Representatives shall have received from Arthur Andersen LLP, independent
certified public accountants, a letter, dated the date hereof, in form and
substance reasonably satisfactory to the Underwriters.
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(e) Bring-Down. The Representatives shall have received from Arthur
Andersen L.L.P., independent certified public accountants, letters, dated the
Closing Dates, to the effect that such accountants reaffirm, as of the Closing
Dates, and as though made on the Closing Dates, the statements made in the
letter furnished by such accountants pursuant to Section 10(d); provided,
however, that the letter delivered on the First Closing Date shall use a
"cut-off date" not earlier than the date hereof, and the letter delivered on the
Option Closing Date shall use a "cut-off date" not more than five (5) business
days prior to such Option Closing Date.
(f) Legal Opinion of Counsel for the Company. The Representatives shall
have received from Blau, Kramer, Wactlar & Lieberman, P.C., counsel for the
Company and Computer Concepts, an opinion, dated the Closing Dates, which
opinion shall be rendered to the Underwriters at the request of the Company and
Computer Concepts (and shall so state therein) to the effect that:
(i) the Company and each of its subsidiaries has been duly
incorporated, is validly existing as corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power
and authority required to carry on its business and to own, lease and
operate its property as described in the Prospectus;
(ii) the Company and each of its subsidiaries is duly qualified and
is in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified would not have a Material Adverse Effect;
(iii) all of the outstanding shares of Common Stock (including the
Shares to be sold by the Selling Stockholders) have been duly authorized
and validly issued and are fully paid, non-assessable and not subject to
any preemptive or similar rights, except as disclosed in the Prospectus;
(iv) the Shares to be issued and sold by the Company hereunder have
been duly authorized, and when issued and delivered to the Underwriters
against payment therefor as provided by this Agreement, will have been
validly issued and will be fully paid and non-assessable, and the issuance
of such shares is not subject to any preemptive or similar rights;
(v) this Agreement has been duly and validly authorized, executed
and delivered by the Company and by Computer Concepts and is a valid and
binding agreement of the Company and Computer Concepts, enforceable
against the Company and Computer Concepts in accordance with its terms,
subject to the Enforceability Exceptions;
26
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(vi) the authorized capital stock of the Company, including the
Common Stock, conforms in all material respects to the description thereof
contained in the Prospectus;
(vii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order suspending
its effectiveness has been issued and no proceedings for that purpose are,
to the knowledge of such counsel, pending before or contemplated by the
Commission;
(viii) the Company is not in violation of its Certificate of
Incorporation or By-laws and, to such counsel's knowledge, the Company is
not in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument material
to the conduct of the business of the Company, to which the Company is a
party or by which it or its property is bound;
(ix) the execution, delivery and performance of this Agreement by
the Company and each Selling Stockholder, compliance by the Company and
each Selling Stockholder with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body (except as such may
be required under the Securities Act) and will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the Certificate of Incorporation, By-laws or other organizational
documents of the Company or of any of its subsidiaries, or any agreement,
indenture or other instrument known to such counsel to which the Company
or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective properties is bound, or, to such
counsel's knowledge, violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company or its
property;
(x) to such counsel's knowledge, there is no legal or governmental
proceeding pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of its property is subject which
is required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other document
which is required to be described in the Registration Statement or the
Prospectus or is required to be filed as an exhibit to the Registration
Statement which is not described or filed as required;
(xi) the Company is not an "investment company" or a company
"controlled" by an "investment company," as defined in the Investment
Company Act of 1940, as amended;
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(xii) to such counsel's knowledge, except otherwise set forth in the
Registration Statement, no holder of any security of the Company has any
right to require registration of shares of Common Stock or any other
security of the Company;
(xiii) to such counsel's knowledge, except as otherwise set forth in
the Registration Statement or such as are not material to the business,
prospects, financial condition or results of operation of the Company and
its subsidiaries taken as a whole, the Company and each of its
subsidiaries has good and marketable title, free and clear of all liens,
claims, encumbrances and restrictions except liens for taxes not yet due
and payable, to all property and assets described in the Registration
Statement as being owned by it;
(xiv) to such counsel's knowledge, all leases to which the Company
and each of its subsidiaries is a party are valid and binding and no
default has occurred or is continuing thereunder, with the exception of
those leases the violation of which would not, in the aggregate, have a
Material Adverse Effect;
(xv) (A) the Registration Statement (including any Registration
Statement filed under Rule 462(b) under the Securities Act, if any) and
the Prospectus and any supplement or amendment thereto (except for
financial statements, schedules and reports thereon, and other financial
and statistical data included therein, as to which no opinion need be
expressed) comply as to form in all material respects with the Securities
Act, and (B) although counsel has not undertaken to investigate or verify
independently and is not passing upon, and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Prospectus or any amendment or supplement
thereto, nothing has come to the attention of such counsel which has
caused it to believe that (except for financial statements, schedules and
reports thereon, and other financial and statistical data included therein
as aforesaid) the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, as amended or
supplemented, if applicable (except for financial statements, schedules
and reports thereon, and other financial and statistical data included
therein as aforesaid) contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(xvi) the Custody Agreement has been duly and validly authorized,
executed and delivered by Computer Concepts and is a valid and binding
agreement of Computer Concepts, enforceable against Computer Concepts in
accordance with its terms, subject to the Enforceability Exceptions;
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(xvii) Computer Concepts has full legal right, power and authority,
and any approval required by law (other than any approval imposed by the
applicable state securities and Blue Sky laws) to sell, assign, transfer
and deliver the Shares to be sold by Computer Concepts in the manner
provided in this Agreement and the Custody Agreement;
(xviii) Computer Concepts has good and valid title to the
certificates for the Shares to be sold by such Selling Stockholder and,
upon delivery thereof, pursuant hereto and payment therefor, good and
valid title will pass to the Underwriters, severally, free of all
restrictions on transfer, liens, encumbrances, security interests and
claims whatsoever; (xix) the Power of Attorney signed by Computer Concepts
appointing __________ and ___________, or either of them, as Computer
Concept's attorney-in-fact to the extent set forth therein with regard to
the transactions contemplated hereby has been duly and validly authorized,
executed and delivered by or on behalf of Computer Concepts and is a valid
and binding instrument of Computer Concepts, enforceable against Computer
Concepts in accordance with its terms, subject to the Enforceability
Exceptions; and
(xx) the Voting Trust Agreement has been duly and validly
authorized, executed and delivered by each of the parties thereto and is a
valid and binding agreement of each of the parties thereto, enforceable
against such parties in accordance with its terms, subject to the
Enforceability Exceptions.
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the States of New York or
Delaware upon opinions of local counsel, and as to questions of fact upon
representations or certificates of officers of the Company, the Selling
Stockholders or officers of the Selling Stockholders (when such Selling
Stockholder is not a natural person), and of government officials, in which case
their opinion is to state that they are so relying and that they have no
knowledge of any material misstatement or inaccuracy in any such opinion,
representation or certificate. Copies of any opinion, representation or
certificate so relied upon shall be delivered to the Representatives and to
counsel for the Underwriters.
(g) Intentionally omitted.
29
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
(h) Legal Opinion of Counsel for the Underwriters. The Representatives
shall have received from Morrison & Foerster, LLP, counsel for the Underwriters,
their opinion or opinions, dated the Closing Dates, with respect to the validity
of the Shares, the Registration Statement and the Prospectus and such other
related matters as it may reasonably request, and the Company and the Selling
Stockholders shall have furnished to such counsel such documents as they may
request for the purpose of enabling them to pass upon such matters.
(i) Officers' Certificate. The Representatives shall have received a
certificate, dated the Closing Dates, of the Chief Executive Officer of
the Company and the Chief Financial Officer of the Company to the effect
that:
(i) No stop order suspending the effectiveness of the Registration
Statement has been issued, and, to the knowledge of the signers, no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act;
(ii) Neither any Preliminary Prospectus, as of its date, nor the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, as of the time when the Registration Statement became effective
and at all times subsequent thereto up
30
<PAGE> 31
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
to the delivery of such certificate, included any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iii) The representations and warranties of the Company in this
Agreement are true and correct in all material respects at and as of the
Closing Dates, and the Company has substantially complied with all of the
agreements and substantially performed or satisfied all of the conditions
on its part to be performed or satisfied at or prior to the Closing Dates;
and
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as disclosed in
or contemplated by the Prospectus, (A) there has not been any material
adverse change or a development involving a material adverse change in the
condition (financial or otherwise), properties, business, management,
prospects, net worth or results of operations of the Company, (B) the
business and operations conducted by the Company have not sustained a loss
by strike, fire, flood, accident or other calamity (whether or not
insured) of such a character as to interfere materially with the conduct
of the business and operations of the Company, (C) no legal or
governmental action, suit, proceeding or investigation is pending or
threatened against the Company which is material to the Company, whether
or not arising from transactions in the ordinary course of business, or
which may materially and adversely affect the transactions contemplated by
this Agreement, (D) since such dates and except as so disclosed, the
Company has not incurred any material liability or obligation, direct,
contingent or indirect, made any change in its capital stock (except
pursuant to its Stock Option Plan), made any material change in its
short-term or funded debt or repurchased or otherwise acquired any of the
Company's capital stock, (E) the Company has not declared or paid any
dividend, or made any other distribution, upon its outstanding capital
stock payable to Stockholders of record on a date prior to the Closing
Dates, and (F) the Company has not entered into any material transactions
not in the ordinary course of business.
(j) Certificate of Selling Stockholders. The Representatives shall have
received a certificate or certificates, dated the Closing Dates, of the
Attorneys-in-Fact on behalf of each of the Selling Stockholders to the effect
that as of the Closing Dates its representations and warranties in this
Agreement are true and correct as if made on and as of the Closing Dates, and
that it has performed all its obligations and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Dates.
(k) Opinion of Intellectual Property Counsel. The Representatives shall
have received from Marzouk & Parry special intellectual property counsel for the
Company, an opinion,
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
dated the Closing Dates, with respect to certain intellectual property law
matters. Such opinion shall be in form and substance reasonably satisfactory to
the Underwriters.
(l) Additional Certificates. The Company and each of the Selling
Stockholders shall have furnished to the Representatives such additional
certificates as the Representatives may have reasonably requested as to the
accuracy, at and as of the Closing Dates, of the representations and warranties
made herein by them and as to compliance at and as of the Closing Dates by them
with their covenants and agreements herein contained and other provisions hereof
to be satisfied at or prior to the Closing Dates, and as to satisfaction of the
other conditions to the obligations of the Underwriters hereunder.
(m) Satisfaction. All opinions, certificates, letters and other documents
will be in compliance with the provisions hereunder only if they are reasonably
satisfactory in form and substance to the Representatives. The Company will
furnish to the Representatives such number of original and conformed copies of
such opinions, certificates, letters and other documents as the Representatives
shall reasonably request. If any of the conditions hereinabove provided for in
this Section 8 shall not have been satisfied when and as required by this
Agreement, this Agreement may be terminated by the Representatives by notifying
the Company of such termination in writing or by telegram at or prior to the
Closing Dates, but SoundView shall be entitled to waive any of such conditions.
11. EFFECTIVE DATE.
This Agreement shall become effective upon execution and delivery by all
the parties hereto and the written or oral release of notification of the
effectiveness of the Registration Statement by the Commission.
12. TERMINATION.
The Representatives shall have the right to terminate this Agreement by
giving notice to the Company as hereinafter specified at any time at or prior to
the First Closing Date or the Option Closing Date, as the case may be, (a) if
the Company or any Selling Stockholder shall have failed, refused or been unable
to perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled is
not fulfilled, including, without limitation, any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company from that set forth in the Registration Statement or Prospectus,
which, in the sole reasonable judgment of the Representatives, is material and
adverse, or (b) if additional material governmental restrictions, not in force
and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange or
in the over-the-counter market by the NASD, or trading in securities generally
shall have been suspended on either such exchange
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
or in the over-the-counter market by the NASD, or if a banking moratorium shall
have been declared by federal or New York authorities, or (c) if the Company
shall have sustained a loss by strike, fire, flood, earthquake, accident or
other calamity of such character as to interfere materially with the conduct of
the business and operations of the Company regardless of whether or not such
loss shall have been insured, or (d) if there shall have been a material adverse
change in the general political or economic conditions or financial markets as
in the reasonable judgment of the Representatives makes it inadvisable or
impracticable to proceed with the offering, sale and delivery of the Shares, or
(e) if there shall have been an outbreak or escalation of hostilities or of any
other insurrection or armed conflict or the declaration by the United States of
a national emergency which, in the reasonable opinion of the Representatives,
makes it impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus. In the event of termination pursuant
to this Section 12 the Company shall remain obligated to pay costs and expenses
pursuant to Section 7, Section 8 and Section 13 hereof. If the Company shall
elect to prevent this Agreement from becoming effective as provided in Section
11, the Company shall promptly notify the Representatives by telephone,
facsimile or telegraph, in each case confirmed by letter. If the Representatives
elect to prevent this Agreement from becoming effective as provided in Section
11 or to terminate this Agreement as provided in this Section 12, the
Representatives shall promptly notify the Company by telephone, facsimile or
telegraph, in each case confirmed by letter.
13. REIMBURSEMENT OF UNDERWRITERS.
Notwithstanding any other provisions hereof, if this Agreement shall not
become effective by reason of any election of the Company pursuant to Section 11
or shall be terminated by the Representatives under Section 10 or Section 12(a),
the Company will bear and pay the expenses specified in Section 7 hereof and, in
addition to its obligations pursuant to Section 8 hereof, the Company will
reimburse the reasonable out-of-pocket expenses of the several Underwriters
(including reasonable fees and disbursements of counsel for the Underwriters)
incurred in connection with this Agreement and the proposed purchase of the
Shares, and promptly upon demand the Company will pay such amounts to the
Representatives.
14. SUBSTITUTION OF UNDERWRITERS.
If any Underwriter or Underwriters shall default in its or their
obligations to purchase shares of Shares hereunder and the aggregate number of
shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of shares
underwritten, the other Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters shall so default and the aggregate number of shares
with respect to which such default or defaults occur is more than ten percent
(10%) of the total number of shares underwritten and arrangements satisfactory
to the Representatives and the Company for the
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate. If the remaining
Underwriters or substituted Underwriters are required hereby or agree to take up
all or part of the shares of Shares of a defaulting Underwriter or Underwriters
as provided in this Section 14, (a) the Company and the Selling Stockholders
shall have the right to postpone the Closing Dates for a period of not more than
seven (7) full business days in order that the Company and the Selling
Stockholders may effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (b) the respective numbers of shares to be purchased by the
remaining Underwriters or substituted Underwriters shall be taken as the basis
of their underwriting obligation for all purposes of this Agreement. Any action
taken under this Section 14 shall not relieve any defaulting Underwriter of its
liability to the Company, the Selling Stockholders or the other Underwriters for
damages occasioned by its default hereunder. Any termination of this Agreement
pursuant to this Section 14 shall be without liability on the part of any
non-defaulting Underwriter, the Selling Stockholders or the Company, except for
expenses to be paid or reimbursed pursuant to Section 7 and except for the
provisions of Section 8.
15. NOTICES.
All communications hereunder shall be in writing and, (a) if sent to the
Underwriters, shall be mailed, delivered, transmitted by facsimile or
telegraphed and confirmed to the Representatives, c/o SoundView, 22 Gatehouse
Road, Stamford, Connecticut 06902 (facsimile: (203) 462-7257), except that
notices given to an Underwriter pursuant to Section 8 hereof shall be sent to
such Underwriter at the address furnished by the Representatives, or (b) if sent
to the Company, shall be mailed, delivered, transmitted by facsimile or
telegraphed and confirmed to the Company, 5845 Richmond Highway, Suite 400,
Alexandria, Virginia 22303, Attn: President (facsimile: (703) 341-2424), with a
copy to Blau, Kramer, Wactlar & Lieberman, P.C. , 100 Jericho Quadrangle, Suite
225, Jericho, New York 11753, Attn: David H. Lieberman (facsimile (516)
822-4824) or (c) if sent to the Selling Stockholders, shall be mailed,
delivered, transmitted by facsimile or telegraphed and confirmed to the Selling
Stockholders, c/o the Attorneys-in-Fact, c/o the Company, 5845 Richmond Highway,
Suite 400, Alexandria, Virginia 22303, Attn: President (facsimile: (703)
341-2424), with a copy to Blau, Kramer, Wactlar & Lieberman, P.C. , 100 Jericho
Quadrangle, Suite 225, Jericho, New York 11753, Attn: David H. Lieberman
(facsimile (516) 822-4824).
16. SUCCESSORS.
This Agreement shall inure to the benefit of and be binding upon the
several Underwriters, the Company and the Selling Stockholders and their
respective successors and legal representatives. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person other
than the persons mentioned in the preceding sentence any
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
legal or equitable right, remedy or claim under or in respect of this Agreement,
or any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person, except that the
representations, warranties, covenants, agreements and indemnities of the
Company and the Selling Stockholders contained in this Agreement shall also be
for the benefit of the person or persons, if any, who control any Underwriter or
Underwriters within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, and the indemnities of the several Underwriters shall
also be for the benefit of each director of the Company, each of its officers
who has signed the Registration Statement and the person or persons, if any, who
control the Company or any Selling Stockholders within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act.
17. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles of conflicts
of laws.
18. AUTHORITY OF REPRESENTATIVES.
In connection with this Agreement, the Representatives will act for and on
behalf of the several Underwriters, and any action taken under this Agreement by
the Representatives will be binding on all the Underwriters, and any action
taken under this Agreement by any of the Attorneys-in-Fact will be binding on
all of the Selling Stockholders.
19. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
section, paragraph or provision hereof. If any section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
20. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof.
21. GENERAL.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include on another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
Agreement may be amended or modified, and the observance of any term of this
Agreement may be waived, only by a writing signed by the Company, the Selling
Stockholders and the Representatives.
22. COUNTERPARTS.
This Agreement may be signed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
23. ATTORNEY-IN-FACT.
Any person executing and delivering this Agreement as Attorney-in-Fact for
the Selling Stockholders represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
SOFTWORKS, INC.
By:
---------------------------------
Judy Carter, Chief Executive Officer
and Chief Executive Officer
SELLING STOCKHOLDERS NAMED IN SCHEDULE B
By:
---------------------------------
Name:
As Attorney-in-Fact of the Selling
Stockholders listed in Schedule B hereto.
Agreed to and accepted as of
the date first set forth above:
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SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES
JULY___, 1998
SOUNDVIEW FINANCIAL GROUP, INC.
RAYMOND JAMES & ASSOCIATES, INC.
By: SoundView Financial Group, Inc.
By:
-------------------------------------
Brian T. Bristol, Managing Director
37
<PAGE> 38
SCHEDULE A
<TABLE>
<CAPTION>
Number of Firm Number of Option
Shares to be Shares to be
Name Purchased Purchased
- -------------------------------- ----------------- ----------------
<S> <C> <C>
SoundView Financial Group, Inc.
Raymond James & Associates,
Inc.
----------------- ----------------
TOTAL
================= ================
</TABLE>
<PAGE> 39
SCHEDULE B
<TABLE>
<CAPTION>
Number of Firm Number of Option
Shares to be Shares to be
Name Sold Sold
- -------------------------------- -------------- ----------------
<S> <C> <C>
Softworks 2,000,000
Selling Stockholders:
Computer Concepts Corp.
-------------- ----------------
TOTAL
============== ================
</TABLE>
<PAGE> 40
SCHEDULE C
LOCK-UP AGREEMENT
SoundView Financial Group, Inc.
Raymond James & Associates, Inc.
c/o SoundView Financial Group, Inc.
22 Gatehouse Road
Stamford, Connecticut 06902
Ladies and Gentlemen:
The undersigned is a director, officer and/or securityholder of Softworks,
Inc. (the "Company") and wishes to facilitate the proposed initial public
offering (the "Offering") of the Company's common stock ("Common Stock")
pursuant to a registration statement on Form S-1 (the "Registration Statement")
to be filed with the Securities and Exchange Commission (the "SEC").
The undersigned recognizes and agrees that the Offering will benefit the
undersigned as a director, officer or securityholder of the Company. In
consideration of the foregoing, and in order to induce the several underwriters
to act as such in connection with the Offering, the undersigned hereby
irrevocably agrees not to, directly or indirectly, offer, sell, contract to
sell, transfer the economic risk of ownership in, make any short sale, pledge,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, as amended, grant any option to sell,
transfer or otherwise dispose of any shares of Common Stock, or any securities
convertible into or exchangeable or exercisable for or any rights to purchase or
acquire Common Stock, or publicly announce the undersigned's intention to do any
of the foregoing, without the prior written consent of SoundView Financial
Group, Inc., for a period commencing on the date hereof and terminating one
hundred eighty (180) days after the effective date of the Registration
Statement, and in the case of Computer Concepts, twelve (12) months after the
effective date of the Registration Statement (the "Lock-Up Period"); provided,
however, that shares of Common Stock purchased by the undersigned in the public
market after the Offering, and any shares of Common Stock issuable upon exercise
of employee stock options issued in accordance with the terms of the Company's
1998 Long Term Incentive Plan, as disclosed in the Registration Statement, shall
not be subject to this agreement.
Notwithstanding the foregoing, if the undersigned is an individual, he or
she may transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock either during his or her lifetime
or on death by will or intestacy to his or her immediate family or to a trust if
the beneficiaries of such trust are exclusively the undersigned and/or a member
or members of his or her immediate family; provided, however, that prior to any
such transfer each transferee shall execute an agreement, satisfactory to
SoundView Financial Group, Inc., pursuant to which each transferee shall agree
to receive and hold such shares of Common Stock, or securities convertible into
or exchangeable or exercisable for
<PAGE> 41
Soundview Financial Group, Inc.
Raymond James & Associates
May___, 1998
Page Two
Common Stock, subject to the provisions hereof, and there shall be no further
transfer except in accordance with the provisions hereof. In addition, if the
undersigned is a partnership, the partnership may transfer any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock to a partner of such partnership, to a retired partner of such
partnership, or to the estate of any such partner or retired partner, and any
such partner who is an individual may transfer such shares of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock by
gift, will or intestacy to a member or members of his or her immediate family;
provided, however, that prior to any such transfer each transferee shall execute
an agreement, satisfactory to SoundView Financial Group, Inc., pursuant to which
each transferee shall agree to receive and hold such shares of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock,
subject to the provisions hereof, and there shall be no further transfer except
in accordance with the provisions hereof. For purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor.
In addition, the undersigned agrees that, without the prior written
consent of SoundView Financial Group, Inc., the undersigned will not, during the
Lock-Up Period, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
The undersigned confirms that he or she understands that the underwriters
of the Offering and the Company will rely upon the representations set forth in
this agreement in proceeding with the Offering. The undersigned further confirms
that this agreement is irrevocable and shall be binding upon the undersigned's
heirs, legal representatives, successors and assigns so long as the closing of
the Offering occurs on or prior to ________ __, 1998. The undersigned agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of Common Stock or other securities of the Company
held by the undersigned except in compliance with this agreement.
Dated: ___________, __ 1998.
Name of Securityholder
By:
-------------------------------------
Name:
Title:
<PAGE> 1
Exhibit 1.2
MASTER AGREEMENT AMONG UNDERWRITERS
________ __, 1998
SoundView Financial Group, Inc.
22 Gatehouse Road
Stamford, Connecticut 06902
Ladies and Gentlemen:
1. General. We understand that SoundView Financial Group, Inc.
("SoundView") is entering into this Agreement in counterparts with us and other
firms who may be underwriters for issues of securities in which SoundView is
acting as the representative or one of the representatives of the several
underwriters (the "Representative" or "Representatives"). Whether or not we have
executed this Agreement, this Agreement shall apply to any offering of
securities in which we elect to act as an underwriter after receipt of an
invitation from SoundView stating the identity of the issuer, certain terms of
the securities proposed to be offered, the amount of our proposed participation,
the names of the other Representatives, if any, and stating that our
participation as an underwriter in the proposed offering shall be subject to the
provisions of this Agreement.
Your invitation will include instructions for our acceptance of such
invitation. At or prior to the time of an offering, you will advise us, to the
extent applicable, as to the expected offering date, the expected closing date,
the initial public offering price, the interest or dividend rate (or the method
by which such rate is to be determined), the conversion price, the underwriting
discount, the management fee, the selling concession and the reallowance. Such
information may be conveyed by you in one or more communications (such
communications received by us with respect to an offering being hereinafter
collectively referred to as the "Invitation"). This Agreement, as amended or
supplemented by the Invitation, shall become binding upon us and the
Representatives with respect to such offering if you receive our oral or written
acceptance and you do not receive a written communication revoking our
acceptance prior to the time and date specified in the Invitation (our unrevoked
acceptance after expiration of such time and date being hereinafter referred to
as our "Acceptance"). If we have not previously executed this Agreement, by our
Acceptance we shall be deemed to be signatories hereof with respect to the
offering to which the Acceptance relates. To the extent that any terms contained
in the Invitation are inconsistent with any provisions herein, such terms shall
supersede any such provisions. Our Acceptance will also constitute our
confirmation that, except as otherwise stated in such Acceptance, each
applicable statement included in the Master Underwriters' Questionnaire attached
as Exhibit A hereto (or otherwise furnished to us) is correct. We agree to
notify you immediately of any development before the termination of the Offering
Provisions pursuant to Section 11(a) hereof with respect to any particular
offering of Securities (as defined below) which makes untrue or incomplete any
information that we have given or are deemed to have
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<PAGE> 2
given in response to the Master Underwriters' Questionnaire. The obligations of
each underwriter shall be several and not joint. The securities offered in any
offering of securities made pursuant to this Agreement, including any guarantees
relating to such securities or any other securities into which such securities
are convertible or for which such securities are exercisable or exchangeable and
any securities that may be purchased upon exercise of an over-allotment option,
are hereinafter referred to as the "Securities." The issuer or issuers of the
Securities are hereinafter referred to as the "Company." All references herein
to "you" or the "Representatives" shall include SoundView and the other firms,
if any, which are named as Representatives in the Invitation. Except as
otherwise provided in Section 11(c), the following provisions of this Agreement
shall apply separately to each individual offering of Securities.
2. Underwriting Arrangements. The Representatives shall determine which
signatories or other parties deemed to be signatories to this Agreement will be
invited to become underwriters for the Securities. Changes may be made by the
Representatives in those who are to be underwriters and in the respective
amounts of Securities to be purchased by them, but the amount of Securities to
be purchased by us as set forth in the Invitation will not be changed without
our consent except as provided in the underwriting or purchase agreement or any
associated terms or similar agreement with the Company or any selling
securityholders or any amendment or supplement thereto (collectively, the
"Underwriting Agreement") covering the Securities. We authorize you on our
behalf to exercise and deliver the Underwriting Agreement or any agreement
between or among Underwriters (as defined below), on the one hand, and one or
more groups of underwriters for the Securities not acting as such pursuant to
this Agreement, on the other hand (an "Intersyndicate Agreement"), in such terms
as you determine and to take such action as you deem advisable in connection
with the performance of the Underwriting Agreement, any Intersyndicate Agreement
and this Agreement and the purchase, carrying, sale and distribution of the
Securities. The parties on whose behalf you execute the Underwriting Agreement
are hereinafter referred to as the "Underwriters." SoundView may waive
performance or satisfaction by the Company, any selling securityholders or any
other party to the Underwriting Agreement of certain of its or their obligations
or conditions included in the Underwriting Agreement, if, in SoundView's sole
discretion, such waiver will not have a material adverse effect upon the
interests of the Underwriters. It is understood that, if so specified in the
Invitation for the issue, arrangements may be made for the sale of Securities by
the Company or selling securityholders pursuant to delayed delivery contracts
(the "Delayed Delivery Contracts"). Such Securities are hereinafter referred to
as "Delayed Delivery Securities." Securities for which such contracts are not
entered into by the Company or selling securityholders are hereinafter referred
to as "Immediate Delivery Securities." References herein to delayed delivery and
Delayed Delivery Contracts apply only to offerings in which delayed delivery is
authorized. The term "Underwriting Obligation," as used in this Agreement with
respect to any Underwriter, shall refer to the principal amount or number of
shares or units of the Securities (plus such additional Securities as may be
required by the Underwriting Agreement to be purchased by such Underwriter in
the event of a default by one or more of the Underwriters) which such
Underwriter is obligated to purchase pursuant to the provisions of the
Underwriting Agreement, without regard to any reduction in such obligation as a
result of Delayed Delivery Contracts which are entered into by the Company.
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<PAGE> 3
If the Securities consist in whole or in part of debt obligations maturing
serially, the serial Securities being purchased by each Underwriter pursuant to
the Underwriting Agreement will consist, subject to adjustment as provided in
the Underwriting Agreement, of serial Securities of each maturity in a principal
amount that bears the same proportion to the aggregate principal amount of the
serial Securities of such maturity to be purchased by all the Underwriters as
the respective principal amount of serial Securities set forth opposite such
Underwriter's name in the Underwriting Agreement bears to the aggregate
principal amount of the serial Securities to be purchased by all Underwriters.
As compensation for your services we will pay a management fee as
specified in the Invitation for the offering (without deduction with respect to
Delayed Delivery Securities), and you may charge our account therefor. If there
is more than one Representative, such compensation will be divided among the
Representatives in such proportions as they determine.
3. Prospectus and Registration Statement; Offering Circular. We understand
that if registration of the offer and sale of the Securities as contemplated by
the Underwriting Agreement is required under the Securities Act of 1933, as
amended (the "Securities Act"), you will either provide us with the file number
or numbers of the registration statement or statements filed with the Securities
and Exchange Commission (the "Commission") with respect to the Securities or, as
soon as practicable after the later of the date of the Invitation or the date
made available to you by the Company, furnish to us (or make available for our
review in your office) a copy of such registration statement or statements
(other than any documents incorporated therein by reference and any exhibits)
and any amendments thereto. In any event you will furnish to us, as soon as
practicable after sufficient quantities thereof are made available to you by the
Company, copies of the prospectus or supplemented prospectus (excluding any
documents incorporated by reference therein) to be used in connection with the
offering of the Securities. As used herein, "Prospectus" means the form of
prospectus (including any supplement and any documents incorporated by reference
therein; provided, however, that a supplement to the Prospectus filed with the
Commission pursuant to Rule 424 under the Securities Act with respect to an
offering of Securities shall be deemed to have supplemented the Prospectus only
with respect to the offering of Securities to which it relates) authorized for
use in connection with such offering, and "Registration Statement" means the
registration statement (as amended and including any documents incorporated by
reference therein) under which the offer and sale of the Securities are
registered under the Securities Act.
We understand that if the offer and sale of the Securities are exempt from
the registration requirements of the Securities Act, no registration statement
will be filed with the Commission. In any such case involving an offering
circular or other offering materials to be used in connection with the offering
of the Securities (any such circular or materials, as it or they may be amended
or supplemented, being hereinafter referred to as the "Offering Circular"), you
will either provide us with information as to the availability of a preliminary
offering circular through a specified regulatory authority or, as soon as
practicable after the later of the date of the Invitation or the date made
available to you by the Company, furnish to us (or make available for our review
in your office) a copy of any preliminary Offering Circular or a proof of the
Offering Circular. In any event, in any such offering involving an Offering
Circular you will furnish to us,
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<PAGE> 4
as soon as practicable after sufficient quantities thereof are made available to
you by the Company, copies of the final Offering Circular. The Prospectus or
Offering Circular, as the case may be, relating to an offering of Securities is
herein referred to as the "Offering Document."
We understand that we are not authorized to give any information or make
any representations not contained in the Offering Document, as amended or
supplemented, or in any document incorporated by reference therein in connection
with the offering of the Securities. Our Acceptance of an Invitation shall
constitute our agreement that, if requested by you, we will furnish a copy of
any amendment or supplement to any preliminary or final Offering Document to
each person to whom we have furnished a previous preliminary or final Offering
Document. Our Acceptance of an Invitation relating to an offering of Securities
registered under the Securities Act shall constitute (i) our acknowledgment that
we are familiar with the Registration Statement, including the documents
incorporated by reference therein and the forms of Underwriting Agreement and
indenture or other document describing the terms of the Securities filed as
exhibits thereto or otherwise made available to us, with any preliminary
Prospectus, preliminary supplemented Prospectus or Prospectus relating to the
Securities theretofore filed with the Commission, and with the information to be
set forth in an amendment to the Registration Statement or in the Prospectus
proposed to be filed with the Commission, (ii) our confirmation that we have
delivered, and our agreement that we will deliver, all preliminary and final
Prospectuses required for compliance with the provisions of Securities Act
Release No. 4968 and Rule 15c2-8 (or any successors thereto) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (iii) our
authorization that you, with the approval of counsel for the Underwriters, may
approve on our behalf any amendments or supplements to the Registration
Statement or Prospectus. Each Underwriter shall (i) keep an accurate record of
the names and addresses of all persons to whom it delivers copies of the
Registration Statement, any amendment thereto or any preliminary Prospectus or
any document incorporated therein by reference, and (ii) upon your request,
furnish promptly to the persons who received copies of the foregoing documents,
any subsequent amendment, revised preliminary Prospectus, Prospectus, any
document incorporated by reference or any memorandum furnished to the
undersigned outlining changes in the Registration Statement or any preliminary
Prospectus. Our Acceptance of an Invitation relating to an offering of
Securities exempt from registration under the Securities Act shall constitute
(i) our acknowledgment that we are familiar with the information set forth in
any preliminary Offering Circular or proof of the Offering Circular made
available to us and with the information to be set forth in the Offering
Circular, (ii) our confirmation that we have delivered, and our agreement that
we will deliver, all preliminary and final Offering Circulars required for
compliance with the applicable federal and state laws and the applicable rules
and regulations of any regulatory body promulgated thereunder governing the use
and distribution of offering circulars by underwriters, and (iii) to the extent
consistent with such laws, rules and regulations, our confirmation that we have
delivered and our agreement that we will deliver all preliminary and final
Offering Circulars that would be required if the provisions of Securities Act
Release No. 4968 and Rule 15c2-8 (or any successor provisions thereto) under the
Exchange Act applied to such offering. Insofar as it relates to us, the
information in the Registration Statement as amended to this date and in the
final form of Offering Document does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and we are willing
to proceed with the
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<PAGE> 5
underwriting of the Securities in the manner contemplated in the Underwriting
Agreement and described in the final form of Offering Document. We consent to
being named in the Offering Document as one of the Underwriters of the
Securities, and, unless we promptly notify you in writing or otherwise, our name
as it should appear in the Offering Document and our address are as set forth on
the signature page hereof.
4. Public Offering.
(a) We authorize you, as Representatives of the several
Underwriters, to manage the underwriting and the public offering of the
Securities and to take such action in connection therewith and in connection
with the purchase of the Securities and the carrying and resale of the
Securities, including without limitation the following, as you in your sole
discretion deem appropriate or desirable:
(i) to determine the time of the initial public offering;
(ii) to determine the amount of Securities, if any, to be
purchased by the Underwriters pursuant to any over-allotment option;
(iii) to change the public offering price and the concessions
and discounts to dealers after the initial public offering;
(iv) to furnish the Company with the information to be
included in the Registration Statement or Offering Document with respect to the
terms of the offering; and
(v) to determine all matters relating to advertising and
communications with dealers or others.
Our Acceptance shall constitute our representation that we have not
advertised the offering and we agree that we will not do so until after the
earlier of the Closing Date (as defined in the Underwriting Agreement) or such
date as you shall publicly advertise the offering. We understand that any
advertisement we may then make will be our own responsibility and at our own
expense.
We also authorize you, in your discretion, to reserve for sale and to sell
to dealers and others, which may include any Underwriters, selected by you
("Selected Dealers"), and to reserve for sale pursuant to Delayed Delivery
Contracts arranged by you through Selected Dealers, all or part of the
Securities to be purchased by us, all as you shall determine. Any such sale to
Selected Dealers may be made pursuant to the terms and conditions of your Master
Selected Dealers' Agreement or otherwise, as you may determine. Each Selected
Dealer shall be a person (a "Dealer") who is (i) a broker or dealer (as defined
in the By-Laws of the National Association of Securities Dealers, Inc. (the
"NASD")) actually engaged in the investment banking or securities business and
(a) a member in good standing of the NASD that makes the representations and
agreements applicable to such a member contained in Section 18 hereof or (b) a
foreign bank, broker, dealer or other institution not eligible for membership in
the NASD (a "foreign non-member") that makes the representations and agreements
applicable to such foreign institutions
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<PAGE> 6
contained in Section 18 hereof, or (ii) a "bank" as defined in Section 3(a)(6)
of the Exchange Act (a "Bank") that is not a member of the NASD and that makes
the representations and agreements applicable to Banks contained in Section 18
hereof. Reservations for sales to Selected Dealers for our account need not be
in proportion to our Underwriting Obligation, but sales of Securities reserved
for our account for sale to Selected Dealers shall be made as nearly as
practicable in the ratio which the amount of Securities reserved for our account
bears to the aggregate amount of Securities reserved for the account of all
Underwriters, as calculated from day to day. The price to Selected Dealers
initially shall be the public offering price less a concession not in excess of
the Selected Dealers' concession set forth in the Invitation and the price to
persons other than Selected Dealers shall be the public offering price. With
your consent, the Underwriters may allow, and Selected Dealers may re-allow, a
discount on sales to Dealers in an amount not in excess of the amount set forth
in the Invitation. Upon your request, we will advise you of the identity of any
Dealer to whom we allow such a discount and any Underwriter or Selected Dealer
from whom we receive such a discount.
We also authorize you, in your discretion, to buy Immediate Delivery
Securities for our account from Selected Dealers at the public offering price
less such amount not in excess of the Selected Dealers' concession as you
determine.
At or before the time the Securities are released for sale, you shall
notify us of the amount of Securities that has not been reserved for our account
for sale to Selected Dealers and for sale pursuant to Delayed Delivery Contracts
and the amount that is to be retained by us for direct sale. After advice from
you that the Securities are released for public offering, we will offer to the
public in conformity with the terms of the offering set forth in the Offering
Document such of our Securities as you advise are not reserved, not allowing any
discounts from the public offering price except as therein or herein provided.
In connection with any offering of Securities that are registered under the
Securities Act and issued by a Company that was not, immediately prior to the
filing of the Registration Statement, subject to the requirements of Section
13(a) or 15(d) of the Exchange Act, we agree that unless otherwise advised by
you and disclosed in the Prospectus we will not make sales to any account over
which we exercise discretionary authority with respect to that sale.
We will from time to time, upon your request, report to you the amount of
Securities retained by us for direct sale that remains unsold. Upon your
request, we will deliver to you for our account, or sell to you for the account
of one or more of the Underwriters, such amount of unsold Securities as you may
designate at the public offering price less, in the case of sales or deliveries
for the account of Selected Dealers, an amount determined by you not in excess
of the concession to Selected Dealers. You may also repurchase Securities from
other Underwriters and Selected Dealers, for the account of one or more of the
other Underwriters at the public offering price less, in the case of purchases
for the account of Selected Dealers, an amount determined by you not in excess
of the concession to Selected Dealers.
You may from time to time deliver to any Underwriter, for carrying
purposes or for sale by such Underwriter, any of the Securities then reserved
for sale pursuant to Delayed Delivery Contracts or for sale to, but not
purchased and paid for by, Selected Dealers, all as above
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<PAGE> 7
provided; however, to the extent that Securities are so delivered for sale by
such Underwriter, the amount of Securities then reserved for the account of such
Underwriter shall be correspondingly reduced. Securities delivered for carrying
purposes only shall be redelivered to you upon demand.
If, in accordance with the terms of offering set forth in the Offering
Document, the offering of the Securities is not at a fixed price but at varying
prices set by individual Underwriters based on market prices or at negotiated
prices, the provisions of the first paragraph of this Section relating to your
right to change the public offering and concessions and discounts to dealers
shall not apply, and other references in this Section and elsewhere in this
Agreement to the public offering price or Selected Dealers' concession shall be
deemed to mean the prices and concessions determined by you from time to time in
your discretion.
Any Securities sold by us (otherwise than through you) which you purchase
in the open market for the account of any Underwriter will be repurchased by us
on demand at the cost of such purchase plus commissions and taxes on redelivery.
Securities delivered on such repurchase need not be the identical certificates
so purchased. In lieu of such action you may in your discretion sell the same
for our account, publicly or privately, without notice, at such prices and upon
such terms and to such persons, including any of the several Underwriters, as
you may determine, and debit or credit our account for the loss or profit
resulting from such sale, or charge our account with an amount not in excess of
the Selected Dealers' concession with respect to such Securities.
5. Delayed Delivery Arrangements. We authorize you to act on our behalf in
making all arrangements for the solicitation of offers to purchase Delayed
Delivery Securities from the Company pursuant to Delayed Delivery Contracts, and
we agree that all such arrangements will be made only through you, directly or
through Selected Dealers (including Underwriters acting as Selected Dealers) to
whom you may pay a commission as provided in the Offering Document and herein.
The obligation of each of the Underwriters to purchase and pay for
Securities as set forth in the Underwriting Agreement shall be reduced in the
proportion provided for therein, except that (i) as to any Delayed Delivery
Contract determined by you, in your discretion, to have been directed and
allocated by a purchaser to a particular Underwriter, such obligation of such
Underwriter shall be reduced by the amount of Delayed Delivery Securities
covered thereby, (ii) as to any Delayed Delivery Contracts for which
arrangements are made through Selected Dealers, such obligation of each
Underwriter shall be reduced as nearly as practicable in the proportion
determined by you that the amount of Securities of such Underwriter reserved and
sold pursuant to Delayed Delivery Contracts arranged through Selected Dealers
bears to the total Securities so reserved and sold, and (iii) such reductions
shall be rounded, as you shall determine, to the nearest $1,000 principal amount
or whole share or unit of the Securities.
The fee payable by the Company to each Underwriter with respect to Delayed
Delivery Securities pursuant to the Underwriting Agreement shall be credited to
the account of such
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<PAGE> 8
Underwriter based upon the amount by which such Underwriter's Underwriting
Obligation is reduced as specified in the preceding paragraph.
If the amount of Delayed Delivery Securities applied to reduce an
Underwriter's Underwriting Obligation and the amount of Immediate Delivery
Securities sold by or for the account of such Underwriter exceeds such
Underwriter's Underwriting Obligation, there shall be credited to such
Underwriter with respect to such excess amount of Securities only the amount of
the Selected Dealers' concession; provided, however, that no amount shall be
credited to such Underwriter with respect to such excess amount of such
Securities if such Underwriter is a Bank and the Securities do not constitute
"exempted securities" within the meaning of Section 3(a)(12) of the Exchange
Act.
The commissions payable to Selected Dealers with respect to Delayed
Delivery Contracts arranged through them shall be charged to each Underwriter in
the proportion which the amount of Securities of such Underwriter reserved and
sold pursuant to Delayed Delivery Contracts arranged through Selected Dealers
bears to the total Securities so reserved and sold.
6. Payment and Delivery. We authorize you to make payment on our behalf to
the Company or any selling securityholder of the purchase price of our
Securities, to take delivery of our Securities, and to deliver our reserved
Securities against sales. Unless notified at least one (1) full business day
prior to the date of delivery to make other arrangements, you may, in your
discretion, advise the Company or any selling securityholders to prepare each
Underwriter's certificates for the Securities to be purchased by it in the name
of such Underwriter (or in such other name as you shall designate, but such
other name shall be for administrative convenience only and shall not affect
such Underwriter's title to such Securities or the several nature of the
obligations of the Underwriters hereunder) in such denominations as you may
determine. Any payment by you in accordance with this Section will not relieve
us from any of our obligations under this Agreement or under the Underwriting
Agreement. If you have not received funds as requested, you may in your
discretion make any such payment on our behalf and we will promptly deliver
funds to you in the amount so requested. At your request, on or before such
dates and in the manner that you specify in the Invitation, we will pay you an
amount equal to the public offering price, less the selling concession, of
either our Securities or our unreserved Securities as you direct, and such
payment will be credited to our account and applied to the payment of the
purchase price. After you receive payment for reserved Securities sold for our
account, you will remit to us the purchase price (if any) paid by us for such
Securities and credit or debit our account with the difference between the sale
prices and the purchase price thereof. You will make available for delivery to
each Underwriter at the office of SoundView Financial Group, Inc., 22 Gatehouse
Road, Stamford, Connecticut 06902 (or at such other address as the Underwriter
may be notified by the Representatives) our unreserved Securities as soon as
practicable after such Securities have been delivered to the Representatives,
and our reserved but unsold Securities, against payment of the purchase price
therefor (except in the case of Securities for which payment has previously been
made), except that if the aggregate amount of reserved but unsold Securities
upon such termination does not exceed twenty percent (20%) of the total amount
of the Securities, you may in your discretion sell such reserved but unsold
Securities for
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<PAGE> 9
the accounts of the several Underwriters as soon as practicable after such
termination, at such prices and in such manner as you determine.
In the event that the Underwriting Agreement for an offering provides for
the payment of a commission or other compensation to the Underwriters, we
authorize you to receive such commission or other compensation for our account.
Notwithstanding the foregoing provisions of this Section 6, if
transactions in the Securities can be settled through the facilities of The
Depository Trust Company or any other depository or similar facility, if we are
a member, you are authorized, in your discretion, to make appropriate
arrangements for payment and/or delivery through its facilities of the
Securities to be purchased by us, or if we are not a member, settlement may be
made through a correspondent that is a member pursuant to our timely
instructions.
7. Authority to Borrow. In connection with the purchase or carrying of our
Securities or other securities purchased for our account, we authorize you, in
your discretion, to advance your funds for our account, charging current
interest rates, to arrange loans for our account, and in connection therewith to
execute and deliver any notes or other instruments and hold or pledge as
security any of our Securities or such other securities. Any lender may rely
upon your instructions in all matters relating to any such loan. Any Securities
or such other securities held by you for our account may be delivered to us for
carrying purposes, and if so delivered will be redelivered to you upon demand.
8. Stabilization and Over-Allotment. We authorize you, in your discretion,
to make purchases and sales of Securities, any other securities of the Company,
or any guarantor of the Securities (as specified in the Invitation), of the same
class and series and any other securities of the Company or any guarantor of the
Securities which you may designate in the open market or otherwise, for long or
short account, on such terms as you deem advisable, and to over-allot in
arranging sales. The existence of this provision is no assurance that the price
of the Securities will be stabilized or that stabilizing, if commenced, may not
be discontinued at any time. Such purchases and sales and over-allotments will
be made for the accounts of the Underwriters as nearly as practicable in
proportion to their respective Underwriting Obligations. It is understood that
you may have made purchases of securities of the Company or any guarantor of the
Securities for stabilizing purposes prior to the time when we become one of the
Underwriters, and we agree that any securities so purchased shall be treated as
having been purchased for the respective accounts of the Underwriters pursuant
to the foregoing authorization. We authorize you, in your discretion, to cover
any short position incurred pursuant to this Section by purchasing securities on
such terms as you deem advisable. Except as provided in this Section 8, at no
time will our net commitment under the foregoing provisions of this Section 8
exceed twenty percent (20%) of our Underwriting Obligation, excluding Securities
which may be purchased upon exercise of an over-allotment option. In the case of
our net commitment for short account, our net commitment will be computed
assuming that all Securities which may be purchased upon exercise of an
over-allotment option are acquired. We will on demand take up at cost any
Securities so purchased and deliver any Securities so sold or over-allotted for
our account, and, if any other Underwriter defaults in its corresponding
obligation and the
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Underwriting Agreement is not terminated in accordance with its terms pursuant
to such default, we will assume our proportionate share of such obligation
without relieving the defaulting Underwriter from liability. Upon request, we
will advise you of the Securities retained by us and unsold and will sell to you
for the account of one or more of the Underwriters such of our unsold Securities
and at such price, not less than the net price to Selected Dealers nor more than
the public offering price, as you determine.
If you effect any stabilizing purchase pursuant to this Section 8, you
shall promptly notify us of the date and time of the first stabilizing purchase
and the date and time when stabilizing was terminated. You shall prepare and
maintain such records as are required to be maintained by you as manager
pursuant to Rule 17a-2 under the Exchange Act.
Notwithstanding the foregoing provisions of this Section 8, you may not
make such purchases and sales and over-allotments for our account if we have
prior thereto advised you in writing that we are (i) a U.S. bank (other than a
U.S. bank which is empowered to underwrite and deal in securities of the type
being offered), (ii) a bank holding company (as defined in the United States
Bank Holding Company Act of 1956 (the "BHC Act")), (iii) a foreign bank (as
defined in Section 1(b)(7) of the United States International Banking Act of
1978 ("IBA")) that operates a branch, agency or company organized under Article
XII of the New York State Banking Law in the United States or a company of which
such a foreign bank is a subsidiary, or (iv) a company (other than a company
which has received approval under Section 4(c)(8) of the BHC Act to engage in
underwriting and dealing in securities of the type being offered) more than five
percent (5%) of any class of voting shares of which are owned or controlled,
directly or indirectly, by an entity covered in (ii) or (iii) above.
9. Open Market Transactions. Until termination of this Agreement as
provided in Section 11(a), unless this restriction is sooner terminated by you,
we agree not to bid for, purchase, sell or attempt to induce others to purchase
or sell, directly or indirectly, either before or after issuance of the
Securities, any of the Securities or securities exchangeable for, or convertible
into, or exercisable against the Securities, any security of the same class and
series as the Securities and any right to purchase or sell the Securities or any
such security, including trading in any put or call option on any such security
other than (a) as provided for in this Agreement, or in the Underwriting
Agreement or (b) as a broker in executing unsolicited orders.
We represent that we have not participated in any transaction prohibited
by the preceding paragraph and that we have at all times complied with and will
at all times comply with the provisions of Rule 139 of the Securities Act and
Regulation M of the Exchange Act, each as interpreted by the Commission.
10. Net Capital. We represent that the incurrence by us of our obligations
hereunder and under the Underwriting Agreement in connection with the offering
of the Securities will not place us in violation of Rule 15c3-1 under the
Exchange Act, if such requirements are applicable to us, or, if we are a
financial institution subject to regulation by the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency or the Federal Deposit
Insurance
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<PAGE> 11
Corporation, will not place us in violation of the capital requirements of such
regulator or any other regulator to which we are subject.
11. Termination; Amendment.
(a) With respect to each offering of Securities pursuant to this
Agreement, all limitations in this Agreement on the price at which Securities
may be sold, the last paragraph of Section 4(a) referring to repurchase from or
resale by you of our previously sold Securities, the authority to stabilize and
over-allot in the first sentence of Section 8, and the restrictions on open
market transactions contained in Section 9 (collectively, the "Offering
Provisions") will terminate at the close of business on the forty-fifth (45th)
day after the date of the initial public offering or pursuant to the
Underwriting Agreement, whichever is later, unless in either such case the
effectiveness of such Offering Provisions is extended as hereinafter provided.
You may extend the effectiveness of the Offering Provisions up to an additional
fifteen (15) days in the aggregate by notice or notices to us to the effect that
the Offering Provisions of this Agreement are extended to the date or by the
number of days indicated in such notice or notices. You may terminate any or all
of the Offering Provisions at any prior time by notice to the Underwriters. All
other provisions of this Agreement shall remain operative and in full force and
effect with respect to such offering.
(b) This Agreement may be terminated by either party hereto upon
five (5) business days' written notice to the other party; provided, however,
that with respect to any particular offering of Securities, if you receive any
such notice from us after our Acceptance for such offering, this Agreement shall
remain in full force and effect as to such offering and shall terminate with
respect to such offering and all previous offerings only in accordance with and
to the extent provided in subsection (a) of this Section 11.
(c) This Agreement may be supplemented or amended by you by notice
to us by written communication and, except for supplements or amendments set
forth in an Invitation, any such supplement or amendment to this Agreement shall
be effective with respect to any offering to which this Agreement applies after
the date of such supplement or amendment. Each reference to "this Agreement"
herein shall, as appropriate, be to this Agreement as so supplemented and
amended.
12. Expenses and Settlement. Except as otherwise provided herein, you may
charge our account with any transfer taxes on sales made by you of Securities
purchased by us under the Underwriting Agreement and with our proportionate
share (based upon our Underwriting Obligation) of all other expenses incurred by
you under this Agreement or in connection with the purchase, carrying, sale or
distribution of the Securities. The accounts hereunder will be settled as
promptly as practicable after the termination of the Offering Provisions
pursuant to Section 11(a), but you may reserve such amount as you deem advisable
for additional expenses. Your determination of the amount to be paid to or by us
will be conclusive. In the event of the default of any Underwriter in carrying
out its obligations under this Agreement, the expenses chargeable to such
Underwriter pursuant to this Agreement and not paid by it, as well as any
additional losses or expenses arising from such default, may be charged against
the other
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<PAGE> 12
Underwriters not so defaulting in proportion to the respective amounts of
Securities which such other Underwriters are obligated to purchase pursuant to
the Underwriting Agreement. You may at any time make partial distributions of
credit balances or call for payment of debit balances. Any of our funds in your
hands may be held with your general funds without accountability for interest.
Notwithstanding any settlement, we will remain liable for any taxes on transfers
for our account, and for our proportionate share (based upon our Underwriting
Obligation) of all expenses and liabilities which may be incurred by or for the
accounts of the Underwriters or in connection with the collection of the same.
13. Default by Underwriters. Default by one or more Underwriters hereunder
or under the Underwriting Agreement will not release the other Underwriters from
their obligations or affect the liability of any defaulting Underwriter to the
other Underwriters for damages resulting from such default. If one or more
Underwriters default under the Underwriting Agreement, you may arrange for the
purchase by others, including non-defaulting Underwriters, of Securities not
taken up by the defaulting Underwriter or Underwriters.
14. Position of Representatives. You, either as Representatives or
individually, will be under no liability to us for any act or omission except
for obligations expressly assumed by you herein, and no obligations on your part
will be implied hereby or inferred herefrom. You do not waive any rights that
you may have under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder. Your authority hereunder and under the
Underwriting Agreement may be exercised by you jointly or by SoundView acting
alone. Nothing will constitute the Underwriters a partnership, association or
separate entity with you or with each other, or, except as herein expressly
provided, render any Underwriter liable for the obligation of any other
Underwriter.
If for federal income tax purposes the Underwriters should be deemed to
constitute a partnership then each Underwriter elects to be excluded from the
application of Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code
of 1986, as amended. You, as Representatives of the several Underwriters, are
authorized, in your discretion, to execute on behalf of the Underwriters such
evidence of such election as may be required by the Internal Revenue Service.
Notwithstanding any settlement of accounts under this Agreement, we agree to pay
our underwriting proportion of the amount of any claim, demand or liability
which may be asserted against and discharged by the Underwriters, or any of
them, based on the claim that the Underwriters, or any of them, constitute an
association, unincorporated business or other entity, and also to pay our
underwriting proportion of expenses approved by us incurred by the Underwriters,
or any of them, in contesting any such claims, demands or liabilities.
15. Indemnification. We will indemnify and hold harmless each other
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the extent and upon the terms upon which each Underwriter agrees to indemnify
the Company, any selling securityholders and certain other persons in the
Underwriting Agreement.
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<PAGE> 13
16. Contribution. Each Underwriter (including you) will pay upon your
request, as contribution, its proportionate share, based upon its Underwriting
Obligation, of any losses, claims, damages or liabilities, joint or several,
paid or incurred by an Underwriter to any person other than an Underwriter,
arising out of or based upon any untrue statement or alleged untrue statement of
any material fact contained in the Offering Document, any amendment or
supplement thereto or any related preliminary Offering Document or any other
selling or advertising material approved by you for use by the Underwriters in
connection with the sale of the Securities, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading (other than an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by an
Underwriter through you specifically for use therein); and will pay such
proportionate share of any legal or other expenses reasonably incurred by you or
with your consent in connection with investigating or defending any such loss,
claim, damage or liability, or any action in respect thereof. In determining the
amount of any Underwriter's obligation under this Section, appropriate
adjustment may be made by you to reflect any amounts received by any one or more
Underwriters in respect of such claim from the Company, any selling
securityholder or any other person (other than an Underwriter) pursuant to the
Underwriting Agreement or otherwise. There shall be credited against any amount
paid or payable by us pursuant to this Section any loss, damage, liability or
expense which is incurred by us as a result of any such claim asserted against
us, and if such loss, claim, damage, liability or expense is incurred by us
subsequent to any payment by us pursuant to this Section 16, appropriate
provision shall be made to effect such credit, by refund or otherwise. If any
such claim is asserted, you may take such action in connection therewith as you
deem necessary or desirable, including retention of counsel for the
Underwriters, and in your discretion separate counsel for any particular
Underwriter or group of Underwriters, and the fees and disbursements of any
counsel so retained by you shall be included in the amounts payable pursuant to
this Section. In determining amounts payable pursuant to this Section, any loss,
claim, damage, liability or expense incurred by any person controlling any
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act which has been incurred by reason of such control
relationship shall be deemed to have been incurred by such Underwriter. Any
Underwriter may elect to retain at its own expense its own counsel. You may
settle or consent to the settlement of any such claim, on advice of counsel
retained by you, with the approval of a majority in interest of the
Underwriters. Whenever you receive notice of the assertion of any claim to which
the provisions of this Section 16 would be applicable, you will give prompt
notice thereof to each Underwriter, although your failure to do so will not
affect our obligations hereunder. You will also furnish each Underwriter with
periodic reports, at such times as you deem appropriate, as to the status of
such claim and the action taken by you in connection therewith. If any
Underwriter or Underwriters default in their obligation to make any payments
under this Section, each non-defaulting Underwriter shall be obligated to pay
its proportionate share of all defaulted payments, based upon such Underwriter's
Underwriting Obligation as related to the Underwriting Obligations of all
nondefaulting Underwriters.
The indemnification, contribution and reimbursement agreement of each
Underwriter contained in Section 15 and this Section 16 shall remain operative
and in full force and effect regardless of (i) any termination of this
Agreement, or (ii) any investigation made by or on behalf
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<PAGE> 14
of any Underwriter or controlling person. Any successor of any Underwriter, any
Underwriter acting as such by substitution in accordance with the Underwriting
Agreement or any controlling person shall be entitled to the benefits and
obligations contained in this Section.
17. Reports and Blue Sky Matters. We authorize you to file with the
Commission and any other governmental agency any reports required in connection
with any transactions effected by you for our account pursuant to this
Agreement, and we will furnish any information needed for such reports. We agree
to transmit to you for filing with the Commission any report required to be made
by us pursuant to the Exchange Act as a result of any transactions effected in
connection with the offering of the Securities. You will not have any
responsibility to the right of any Underwriter or other person to sell the
Securities in any jurisdiction, notwithstanding any information you may furnish
in that connection.
18. NASD Membership. You represent that you are a member in good standing
of the NASD, and we represent that we are (i) a member in good standing of the
NASD, (ii) a Bank that is not a member of the NASD, or (iii) a foreign
non-member. If we are an NASD a member we agree that in making sales of the
Securities we will comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation with Respect to Free-Riding and
Withholding (the "Interpretation") and Rule 2740 of the NASD's Conduct Rules. If
we are not a NASD member, we agree to comply as though we were a member with the
requirements of the Interpretation and Rules 2730, 2740 and 2750 of such Conduct
Rules. If we are such a foreign non-member, we agree not to offer or sell any
Securities in the United States of America, its territories or possessions or to
persons who are nationals thereof or residents therein, except through you and
as approved by you and in making sales of Securities we agree to comply with
Rule 2420 of such Conduct Rules as it applies to a non-member broker or dealer
in a foreign country. If we are such a foreign bank, we represent that, unless
otherwise notified in writing to you prior to the date hereof, we are not an
entity covered in (i), (ii) or (iii) of the last paragraph of Section 8 hereof.
If we are a Bank, we agree that we will not accept any portion of the management
fee paid by the Underwriters with respect to the offering of any Securities or,
in connection with the public offering of any Securities that do not constitute
"exempted securities" within the meaning of Section 3(a)(12) of the Exchange
Act, purchase any Securities at a discount from the offering price from any
Underwriter or Selected Dealer or otherwise accept any selling concession,
discount or other allowance from any Underwriter or Selected Dealer, which in
any such case is not permitted under such Conduct Rules, and we agree to comply
with Rule 2420 of such Conduct Rules of the Rules as though we were a member.
19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
20. Notice. All notices to us will be considered duly given if mailed or
telegraphed to our address as set forth on the signature page hereof or sent by
facsimile to the number set forth on the signature page hereof (as such address
or facsimile number may be changed by written notice to you). All notices to you
will be considered duly given if mailed or telegraphed or sent
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<PAGE> 15
by facsimile as follows: SoundView Financial Group, Inc., 22 Gatehouse Road,
Stamford, Connecticut 06902, Attn: Syndicate Department (facsimile: (203)
462-7349).
15
<PAGE> 16
Please confirm by signing and returning to us the enclosed copy of this
Agreement that your Acceptance of an Invitation with respect to an offering
shall constitute (i) acceptance of and agreement to the terms and conditions of
this Agreement (as supplemented and amended as provided herein), together with
and subject to any supplementary terms and conditions contained in the
Invitation and any other written communication from us in connection with such
offering, all of which shall constitute a binding agreement between us and you
as Representative of the Underwriters and among us and the Underwriters, (ii)
confirmation that our representations and warranties set forth herein are true
and correct at that time, (iii) confirmation that our agreements set forth
herein have been and will be performed by us to the extent and at the times
required thereby, and (iv) acknowledgment of familiarity with the Offering
Documents with respect to such offering.
Very truly yours,
----------------------------------
Name of Firm
By:
------------------------------
----------------------------------
Print Name
----------------------------------
Title
Address:
--------------------------
--------------------------
Telephone:
------------------------
Facsimile:
------------------------
Confirmed as of the date
first set forth above:
SOUNDVIEW FINANCIAL GROUP, INC.
By:
--------------------------------------
Russell D. Crabs, President and CEO
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<PAGE> 17
EXHIBIT A
MASTER UNDERWRITERS' QUESTIONNAIRE
In connection with each offering of Securities to which the foregoing
Master Agreement Among Underwriters dated as of September 12, 1997, between
SoundView Financial Group, Inc. and the Underwriter executing the same relates,
except as otherwise disclosed to the Representative(s) in a written Acceptance,
such Underwriter advises the Representative(s) as follows and authorizes the
Representative(s) to use the information furnished in response to this Master
Underwriters' Questionnaire in the Registration Statement relating to the
Securities:
(a) Neither such Underwriter nor any of its directors, officers or
partners, individually or as a part of a "group" (as that term is used in
Section 13(d)(3) of the Exchange Act) (i) has a "material" relationship (as
defined in Rule 405 under the Securities Act) with the Company or any other
seller of Securities in the Offering, (ii) is a director, officer or holder (of
record or beneficially, determined in accordance with Rule 13d-3 under the
Exchange Act) of 5% or more of any class of voting securities of the Company or
any other seller of Securities in the Offering, or (iii) other than as may be
stated in the Registration Statement, has any knowledge that more than 5% of any
class of voting securities of the Company is held or is to be held subject to
any voting trust or similar agreement;
(b) With reference to the Interpretation of the Board of Governors
of the NASD with respect to the Review of Corporate Financing, neither such
Underwriter nor any of its "related persons" (as defined by the NASD) (i) has
purchased or otherwise acquired from the Company any warrants, options or other
securities of the Company within 18 months prior to the date that the
Registration Statement was initially filed or subsequent to that date, and there
are no existing arrangements for any such purchase, or (ii) has had any dealings
with the Company (except those with respect to the Underwriting Agreement) or
any "affiliate" of the Company (as defined in Rule 405 under the Securities Act)
as to which documents or other information are required to be furnished to the
NASD pursuant to such Interpretation;
(c) Neither such Underwriter nor any of its "related persons" (as
defined by the NASD) is an "affiliate" of the Company as that term is defined in
Rule 2720 of the NASD's Conduct Rules or has a "conflict of interest" with the
Company under Rule 2710 or Rule 2720 of the NASD's Conduct Rules;
(d) Other than as stated in the Registration Statement, a copy of
which has been examined by us, the Master Agreement Among Underwriters, or the
Underwriting Agreement, such Underwriter does not know of any arrangements made
or to be made for limiting or restricting the sale of the Securities, for
stabilizing the market for the Securities, for withholding commissions or
otherwise to hold each Underwriter or dealer responsible for the distribution of
their participation in the Securities, or for any discounts or commissions to be
allowed or paid to dealers;
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(e) If the Securities are to be issued pursuant to a trust
indenture, such Underwriter is not directly or indirectly in control of,
directly or indirectly controlled by, or under direct or indirect common control
with the Trustee, any other trustee under a trust indenture relating to
securities of the Company and qualified under the Trust Indenture Act of 1939,
as amended (an "Other Trustee"), or any of their respective affiliates, and none
of said companies or affiliates, or any of their respective directors or
executive officers, is a director, officer, partner, employee, appointee or
representative of such Underwriter;
(f) If the Securities are to be issued pursuant to a trust
indenture, such Underwriter and its directors, executive officers and partners,
taken as a group, did not, on the date of the Trustee's Statement of Eligibility
and Qualification on Form T-1, own beneficially more than 1% of the outstanding
voting securities of the Trustee, the Trustee's parent, any Other Trustee or the
parent of any Other Trustee;
(g) If the Registration Statement is on Form S-1, such Underwriter
has not prepared or had prepared for it within the past twelve months any
engineering, management or similar report or memorandum relating to the broad
aspects of the business, operations or products of the Company, except for
reports solely comprising recommendations to buy, sell or hold the Company's
securities, unless such recommendations have changed within the past six months;
(h) If the Registration Statement is on either Form S-2 or Form S-3,
such Underwriter has not prepared any report or memorandum for external use by
it or by the Company in connection with the Offering;
(i) If the Company does not have any securities registered under
Section 12 of the Exchange Act and is not subject to Section 15(d) of the
Exchange Act, such Underwriter does not intend to confirm sales of the
Securities to any accounts over which it exercises discretionary authority;
(j) Such Underwriter's proposed commitment to purchase Securities
will not result in a violation by it of the financial responsibility
requirements of Rule 15c3-1 under the Exchange Act and is not prohibited or
restricted by any action of the Commission, the NASD or of any national
securities exchange applicable to such Underwriter;
(k) Such Underwriter is familiar with the rules, regulations and
releases of the Commission dealing with the dissemination of information prior
to and during registration and has not distributed nor will it distribute any
written information outside of its organization relating to the Company or its
securities other than in accordance with such rules, regulations and releases;
and
(l) If the Company is a "public utility," such Underwriter is not a
"holding company" or a "subsidiary company" or an "affiliate" of a "holding
company" or of a "public utility," each as defined in the Public Utility Holding
Company Act of 1935, as amended.
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All capitalized terms in this Questionnaire not otherwise defined herein
are used as defined in the foregoing Master Agreement Among Underwriters.
September 12, 1997
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<PAGE> 1
Exhibit 1.3
MASTER SELECTED DEALERS AGREEMENT
________ __, 1998
SoundView Financial Group, Inc.
22 Gatehouse Road
Stamford, Connecticut 06902
Ladies and Gentlemen:
1. General. We understand that SoundView Financial Group, Inc.
("SoundView") is entering into this Master Selected Dealers Agreement (the
"Agreement") in counterparts with us and other firms who may participate as
dealers in offerings of securities in which SoundView is acting as the
representative (the "Representative") of the underwriters comprising the
underwriting syndicate or as one of the "Representatives" of the underwriters.
Whether or not we have executed this Agreement, this Agreement shall apply to
any offering of securities in which we act as a selected dealer.
At or prior to the time of an offering, you will advise us, to the extent
applicable, as to the expected offering date, the expected closing date, the
initial public offering price, the interest or dividend rate (or the method by
which such rate is to be determined), the conversion price, if applicable, the
selling concession, the reallowance, the time of release of securities for sale
to the public, the time at which subscription books will be opened, the amount,
if any, of securities reserved for purchase by selected dealers, the period of
such reservation and the amount of securities to be allotted to us, and will
state that our participation as a selected dealer in the offering shall be
subject to the provisions of this Agreement and any additional terms and
provisions as may be set forth in a wire or letter sent by you in connection
with a particular offering (such communications received by us with respect to
an offering being hereinafter collectively referred to as the "Invitation"). The
information contained in the Invitation shall be deemed to be a part of this
Agreement and this Agreement shall become binding with respect to our
participation as a selected dealer in an offering of securities following our
receipt of such information. If we have not previously executed this Agreement,
by our purchase of securities in an offering covered by this Agreement we shall
be deemed to be signatories hereof with respect to such offering.
The securities to be purchased in any offering of securities in which we
agree to participate as a selected dealer pursuant to this Agreement, including
any guarantees relating to such securities or any other securities into which
such securities are convertible or for which such securities are exercisable or
exchangeable and any securities that may be purchased upon exercise of an
over-allotment option, are hereinafter referred to as the "Securities." The
issuer or issuers of the Securities are hereinafter referred to as the
"Company." The parties on whose behalf the Representatives execute the
underwriting or purchase agreement or any associated
<PAGE> 2
terms or similar agreement with the Company or any selling securityholders or
any amendment or supplement thereto (collectively, the "Underwriting Agreement")
with respect to an offering of Securities in which we agree to participate as a
selected dealer pursuant to this Agreement are hereinafter referred to as the
"Underwriters," and the parties who agree to participate in such offering as
selected dealers are hereinafter referred to as "Selected Dealers."
The following provisions of this Agreement shall apply separately to each
individual offering of Securities.
2. Acceptance and Purchase. The offer to Selected Dealers will be made on
the basis of a reservation of Securities and an allotment against subscriptions.
Any application for additional Securities will be subject to rejection in whole
or in part. Subscription books may be closed by the Representatives at any time
in the Representatives' discretion without notice and the right is reserved to
reject any subscription in whole or in part. We agree to purchase as principal
the amount of Securities allotted to us by the Representatives.
3. Offering Materials.
(a) We understand that if registration of the offer and sale of the
Securities as contemplated by the Underwriting Agreement is required under the
Securities Act of 1933, as amended (the "Securities Act"), the Representatives
will, at our request, make available to us, as soon as practicable after
sufficient quantities thereof are made available to them by the Company, copies
of the prospectus or supplemented prospectus (excluding any documents
incorporated by reference therein) to be used in connection with the offering of
the Securities in such number as we may reasonably request. As used herein,
"Prospectus" means the form of prospectus (including any supplements and any
documents incorporated by reference therein) authorized for use in connection
with such offering.
(b) We understand that if the offer and sale of the Securities are
exempt from the registration requirements of the Securities Act, no registration
statement will be filed with the Securities and Exchange Commission (the
"Commission"). In such case, the Representatives will, at our request, make
available to us, as soon as practicable after sufficient quantities thereof are
made available to them by the Company, copies in such number as we may
reasonably request of any final offering circular or other offering materials to
be used in connection with the offering of the Securities. As used herein,
"Offering Circular" means the offering circular or other offering materials, as
it or they may be amended or supplemented, authorized for use in connection with
such offering. The Prospectus or Offering Circular, as the case may be, relating
to an offering of Securities is herein referred to as the "Offering Document."
(c) We agree that in purchasing Securities we will rely upon no
statement whatsoever, written or oral, other than the statements in the Offering
Document delivered to us by the Representatives and any documents incorporated
by reference therein. We understand
2
<PAGE> 3
that we are not authorized to give any information or make any representation
not contained in the Offering Document or in any document incorporated by
reference therein, in connection with the offering of the Securities. Our
purchase of Securities shall constitute our agreement that, if requested by the
Representatives, we will furnish a copy of any amendment or supplement to any
preliminary or final Offering Document to each person to whom we have furnished
a previous preliminary or final Offering Document. Our purchase of Securities
registered under the Securities Act shall constitute our confirmation that we
have delivered, and our agreement that we will deliver, all preliminary and
final Prospectuses required for compliance with Securities Act Release No. 4968
and Rule 15c2-8 (or any successor provisions thereto) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Our purchase of
Securities exempt from registration under the Securities Act shall constitute
(i) our confirmation that we have delivered, and our agreement that we will
deliver, all preliminary and final Offering Circulars required for compliance
with the applicable federal and state laws and the applicable rules and
regulations of any regulatory body promulgated thereunder governing the use and
distribution of offering circulars by underwriters, and (ii) to the extent
consistent with such laws, rules and regulations, our confirmation that we have
delivered and our agreement that we will deliver all preliminary and final
Offering Circulars that would be required if Securities Act Release No. 4968 and
Rule 15c2-8 (or any successor provisions thereto) under the Exchange Act applied
to such offering.
4. Offering of the Securities.
(a) The offering of the Securities is made subject to the conditions
referred to in the Offering Document and to the terms and conditions set forth
in this Agreement. After the public offering of the Securities has commenced,
you may change the public offering price, the selling concession and the
reallowance to dealers. Any of the Securities purchased by us pursuant to this
Agreement are to be reoffered by us, subject to their receipt and acceptance by
the Representatives, to the public at the initial public offering price, subject
to the terms of this Agreement and the Offering Document. Except as otherwise
provided herein, the Securities shall not be offered or sold by us below the
initial public offering price before the termination of the effectiveness of
this Agreement with respect to the offering of such Securities, except that a
reallowance from the initial public offering price of not in excess of the
amount set forth in the Invitation may be allowed to any Selected Dealer that
(i) agrees that such amount is to be retained and not reallowed in whole or in
part, (ii) makes the representations contained in Section 13 herein, and (iii)
unless the Securities are "exempted securities" as defined in Section 3(a)(12)
of the Exchange Act, is not a "bank" as defined in Section 3(a)(6) of the
Exchange Act (a "Bank").
(b) The Representative as such and, with the Representatives'
consent, any Underwriter may buy Securities from, or sell Securities to, any of
the Selected Dealers or any of the Underwriters, and any Selected Dealer may buy
Securities from, or sell Securities to, any other Selected Dealer or any
Underwriter, at the initial public offering price less all or any part of
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<PAGE> 4
the concession to Selected Dealers; provided, however, that any such purchases
and sales comply with the Conduct Rules (the "Rules") of the National
Association of Securities Dealers, Inc. (the "NASD").
(c) If we have received or been credited with the Selected Dealers'
concession as to any Securities purchased by us pursuant to this Agreement,
which, prior to the later of (i) the termination of the effectiveness of this
Agreement with respect to the offering of such Securities, and (ii) the covering
by the Representatives of any short position created by the Representatives in
connection with the offering of such Securities, the Representatives may have
purchased or contracted to purchase for the account of any Underwriter (whether
such Securities have been sold or loaned by us), then we agree to pay the
Representatives on demand for the accounts of the several Underwriters an amount
equal to the Selected Dealers' concession and, in addition, the Representatives
may charge us with any broker's commission and transfer tax paid in connection
with such purchase or contract to purchase. Securities delivered on such
repurchases need not be the identical Securities originally purchased. With
respect to any such repurchased Securities as to which we have not yet received
or been credited with the Selected Dealers' concession, we shall be responsible
for any such broker's commission and transfer tax and the Representatives shall
not be obligated to pay any Selected Dealers' concession as to such Securities.
(d) No expenses shall be charged to Selected Dealers. A single
transfer tax upon the sale of the Securities by the respective Underwriters to
us will be paid by such Underwriters when such Securities are delivered to us.
However, we shall pay any transfer tax on sales of Securities by us and shall
pay our proportionate share of any transfer tax or other tax (other than the
single transfer tax described above) in the event that any such tax shall from
time to time be assessed against us and other Selected Dealers as a group or
otherwise.
5. Stabilization and Over-Allotment.
(a) The Representatives may, with respect to any offering of
Securities, be authorized to over-allot, to purchase and sell Securities for
long or short account and to stabilize or maintain the market price of the
Securities. We agree that upon the Representatives' request at any time and from
time to time prior to the termination of the effectiveness of this Agreement
with respect to an offering of Securities, we will report the amount of
Securities purchased by us pursuant to such offering which then remain unsold by
us and will, upon the Representatives' request at any such time, sell to the
Representatives for the account of one or more Underwriters such amount of such
unsold Securities as the Representatives may designate at the initial public
offering price less an amount to be determined by the Representatives not in
excess of the Selected Dealers' concession.
(b) Notwithstanding the foregoing provisions of this Section 5, you
may not make such purchases and sales and over-allotments for our account if we
have prior thereto
4
<PAGE> 5
advised you in writing that we are (i) a U.S. bank (other than a U.S. bank which
is empowered to underwrite and deal in securities of the type being offered),
(ii) a bank holding company (as defined in the United States Bank Holding
Company Act of 1956 (the "BHC Act")), (iii) a foreign bank (as defined in
Section 1(b)(7) of the United States International Banking Act of 1978 ("IBA"))
that operates a branch, agency or company organized under Article XII of the New
York State Banking Law in the United States or a company of which such foreign
bank is a subsidiary, or (iv) a company (other than a company which has received
approval under Section 4(c)(8) of the BHC Act to engage in underwriting and
dealing in securities of the type being offered) more than five percent (5%) of
any class of voting shares of which are owned or controlled, directly or
indirectly, by an entity covered in (ii) or (iii) above.
6. Open Market Transactions. Until termination of this Agreement as
provided in Section 10(a), unless this restriction is sooner terminated by you,
we agree not to bid for, purchase, sell or attempt to induce others to purchase
or sell, directly or indirectly, either before or after issuance of the
Securities, any of the Securities or securities exchangeable for, or convertible
into, or exercisable against the Securities, any security of the same class and
series as the Securities and any right to purchase or sell the Securities or any
such security, including trading in any put or call option on any such security
other than (a) as provided for in this Agreement or in the Underwriting
Agreement, or (b) as a broker in executing unsolicited orders.
We represent that we have not participated in any transaction prohibited
by the preceding paragraph and that we have at all times complied with and will
at all times comply with the provisions of Rule 139 of the Securities Act and
Regulation M of the Exchange Act, each as interpreted by the Securities and
Exchange Commission.
7. Net Capital. We represent that the incurrence by us of our obligations
hereunder in connection with the offering of the Securities will not place us in
violation of Rule 15c3-1 under the Exchange Act, if such requirements are
applicable to us, or, if we are a financial institution subject to regulation by
the Board of Governors of the Federal Reserve System, the Comptroller of the
Currency or the Federal Deposit Insurance Corporation, will not place us in
violation of the capital requirements of such regulator or any other regulator
to which we are subject.
8. Payment and Delivery.
(a) We agree that Securities purchased by us pursuant to this
Agreement shall be paid for in an amount equal to the initial public offering
price therefor or, if the Representatives shall so advise us, at such initial
public offering price less the Selected Dealers' concession with respect
thereto, at 9:00 a.m. Connecticut time on the date on which the Underwriters are
required to purchase the Securities, by delivery to the Representatives at the
offices of SoundView Financial Group, Inc., of payment in the manner and type of
funds specified in your payment instructions wired to us payable to the order of
SoundView Financial Group, Inc. If payment is made for Securities purchased by
us at the initial public offering price,
5
<PAGE> 6
the Selected Dealers' concession to which we may be entitled will be paid to us
upon termination of the effectiveness of this Agreement with respect to the
offering of such Securities. In the event that, prior to the completion of the
distribution of Securities covered by this Agreement, you purchase in the open
market or otherwise any Securities delivered to us, we agree to repay to you for
the accounts of the Underwriters the amount of the concession allowed to us plus
brokerage commissions and any transfer taxes paid in connection with such
purchase.
(b) Notwithstanding the foregoing provisions of this Section 8, if
transactions in the Securities can be settled through the facilities of The
Depository Trust Company or any other depository or similar facility, if we are
a member, you are authorized, in your discretion, to make appropriate
arrangement for payment and/or delivery through its facilities of the Securities
to be purchased by us, or, if we are not a member, settlement may be made
through a correspondent that is a member pursuant to our timely instructions.
9. Blue Sky and Other Qualifications. It is understood and agreed that the
Representatives assume no responsibility or obligation with respect to the right
of any Selected Dealer or other person to sell the Securities in any
jurisdiction, notwithstanding any information the Representatives may furnish in
that regard.
10. Termination; Amendment.
(a) Unless this Agreement or any provision hereof is earlier
terminated by you and except for provisions herein that contemplate obligations
surviving the termination of the effectiveness hereof, the terms and conditions
of this Agreement (the "Offering Provisions") will terminate at the close of
business on the forty-fifth (45th) day after the date of the initial public
offering or pursuant to the Underwriting Agreement, whichever is later, unless
in either such case the effectiveness of the Offering Provisions is extended as
hereinafter provided. You may extend the effectiveness of such Offering
Provisions up to an additional fifteen (15) days in the aggregate by notice or
notices to us to the effect that the Offering Provisions of this Agreement are
extended to the date or by the number of days indicated in such notice or
notices. Notwithstanding the termination of this Agreement, each Selected Dealer
shall remain liable to the extent provided by law for its proportionate amount
of any claim, demand or liability which may be asserted against it alone, or
against it together with other dealers purchasing Securities upon the terms of
this Agreement, or against the Representatives, based upon the claim that the
Selected Dealers, or any of them, constitute an association, an unincorporated
business or other separate entity.
(b) This Agreement may be terminated by either party hereto upon
five (5) business days' written notice to the other party; provided, however,
that with respect to any particular offering of Securities, if you receive any
such notice from us after you have advised us of the amount of Securities
allotted to us, this Agreement shall remain in full force and effect as
6
<PAGE> 7
to such offering and shall terminate with respect to such offering and all
previous offerings only in accordance with and to the extent provided in
subsection (a) of this Section 10.
(c) This Agreement may be supplemented or amended by you by notice
to us by written communication and, except for supplements or amendments
included with the Invitation, any such supplement or amendment to this Agreement
shall be effective with respect to any offering to which this Agreement applies
after the date of such supplement or amendment. Each reference to "this
Agreement" herein shall, as appropriate, be to this Agreement as so supplemented
and amended.
11. Role of the Representatives; Role of the Selected Dealers; Legal
Responsibility.
(a) The Representatives are acting as representatives of each of the
Underwriters in all matters connected with the offering of the Securities and
with the Underwriters' purchase of the Securities. Any action to be taken,
authority that may be exercised or determination to be made by the
Representatives hereunder may be taken, exercised or made by SoundView on behalf
of all Representatives. The rights and liabilities of each Underwriter of
Securities and each Selected Dealer shall be several and not joint.
(b) The Representatives, as such, shall have full authority to take
such action as they may deem advisable in all matters pertaining to the offering
of the Securities or arising under this Agreement. The Representatives will have
no liability to any Selected Dealer for any act or omission except for
obligations expressly assumed by the Representatives herein, and no obligations
on the part of the Representatives will be implied hereby or inferred herefrom.
(c) We understand and agree that we are to act as principal in
purchasing securities and we are not authorized to act as agent for the Company,
any selling securityholder or any of the Underwriters in offering the Securities
to the public or otherwise.
(d) Nothing herein contained shall constitute us an association or
partners with the other Selected Dealers, the Underwriters or Representatives,
or, except as otherwise provided herein, render us liable for the obligations of
any other Selected Dealers, the Underwriters or the Representatives. If the
Selected Dealers among themselves or with the Underwriters or the
Representatives are deemed to constitute a partnership for federal income tax
purposes, then each Selected Dealer elects to be excluded from the application
of Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as
amended, and agrees not to take any position inconsistent with such election.
The Representatives are authorized, in their discretion, to execute on behalf of
the Selected Dealer such evidence of such election as may be required by the
Internal Revenue Service.
12. Notices. Any notices from the Representatives to us shall be deemed to
have been duly given if mailed, hand-delivered, telephoned (and confirmed in
writing), telegraphed or communicated by facsimile to us at the address set
forth on the signature page of this Agreement,
7
<PAGE> 8
or at such other address as we shall have advised you in writing. Any notice
from us to the Representatives shall be deemed to have been given only if
mailed, hand-delivered, telephoned (and confirmed in writing), telegraphed or
communicated by facsimile to:
SoundView Financial Group, Inc.
22 Gatehouse Road
Stamford, Connecticut 06902
Attn: Syndicate Department
Telephone: (203) 462-7200
Facsimile: (203) 462-7349
(or to such other address, telephone number or facsimile number as we shall be
notified by the Representatives). Communications by telegram, facsimile or other
written form shall be deemed to be "written" communications.
13. NASD Membership. We represent that we are (i) a member in good
standing of the NASD, or (ii) a Bank that is not a member of the NASD or (iii) a
foreign bank, broker, dealer or other institution not eligible for membership in
the NASD (a "foreign non-member"). If we are an NASD member, we agree that in
making sales of Securities we will comply with all applicable rules of the NASD,
including, without limitation, the NASD's Interpretation with Respect to
Free-Riding and Withholding (the "Interpretation") and Rule 2740 of the NASD's
Conduct Rules. If we are not a NASD member, we agree to comply as though we were
a member with the requirements of the Interpretation and Rules 2730, 2740 and
2750 of such Conduct Rules. If we are such a foreign non-member, we agree not to
offer or sell any Securities in the United States of America, its territories or
its possessions or to persons who are nationals thereof or residents therein,
except through the Representatives and in making sales of Securities we agree to
comply with Rule 2420 of such Conduct Rules as it applies to a non-member broker
or dealer in a foreign country. If we are such a foreign bank, we represent
that, unless otherwise notified in writing to you prior to the date hereof, we
are not an entity covered in (i), (ii) or (iii) of Section 5(b) hereof. If we
are a Bank, in connection with the public offering of any Securities that do not
constitute "exempted securities" within the meaning of Section 3(a)(12) of the
Exchange Act we agree that we will not purchase any Securities at a discount
from the offering price from any Underwriter or Selected Dealer or otherwise
accept any selling concession to Selected Dealers, discount or other allowance
from any Underwriter or Selected Dealer, which in any such case is not permitted
under the Rules and we agree to comply with Rule 2420 of such Conduct Rules as
though we were a member. We agree that in selling Securities pursuant to any
offering (which agreement shall also be for the benefit of the Company or other
seller of such Securities) we will comply with all applicable laws, rules and
regulations, including the applicable provisions of the Securities Act and the
Exchange Act, the applicable rules and regulations of the Commission thereunder,
the applicable rules and regulations of any securities exchange having
jurisdiction over the offering and in the case of an offering referred to in
Section 3(b) hereof, the applicable laws, rules and regulations of any
applicable regulatory body.
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<PAGE> 9
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
9
<PAGE> 10
We confirm our agreement hereto by signing the enclosed duplicate copy
hereof in the place provided below and returning such signed duplicate copy to
you at SoundView Financial Group, Inc., 22 Gatehouse Road, Stamford, Connecticut
06902, Attention: Syndicate Department. Upon receipt thereof, this instrument
and such signed duplicate copy will evidence the agreement between us.
Very truly yours,
----------------------------------
Name of Firm
By:
------------------------------
----------------------------------
Print Name
----------------------------------
Title
Address:
--------------------------
--------------------------
Telephone:
------------------------
Facsimile:
------------------------
Confirmed as of the date
first above written:
SOUNDVIEW FINANCIAL GROUP, INC.
By:
-----------------------------------
Russell D. Crabs, President and CEO
10
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
SOFTWORKS, INC.
(A DELAWARE CORPORATION)
* * * * * *
THE UNDERSIGNED, a natural person, for the purpose of organizing
a corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly, Chapter 1, Title 8, of the Delaware Code and
the acts amendatory thereof and supplemental thereto and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation is:
SOFTWORKS, Inc.
SECOND: The location of the registered office of the Corporation
in the State of Delaware is at Corporation Trust Center, 1209 Orange Street,
City of Wilmington, County of New Castle. The name of the registered agent of
the Corporation in the State of Delaware at such address upon whom process
against the Corporation may be served is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: (a) The total number of shares of all classes of stock
which the corporation shall have authority to issue is ONE HUNDRED FIFTY-TWO
MILLION (152,000,000) shares. Of these (i) ONE HUNDRED FIFTY MILLION
(150,000,000) shares shall be shares of Common Stock of the par value of $.001
per share; and (ii) TWO MILLION (2,000,000) shares shall be shares of Preferred
Stock of the par value of $.001 per share.
(b) Subject to the rights of any holders of Preferred Stock, the
Common Stock shall be entitled to dividends out of funds legally available
therefor, when, as and if declared and paid to the holders of Common Stock, and
upon liquidation, dissolution or winding up of the
<PAGE> 2
Corporation, to share ratably in the assets of the Corporation available for
distribution to the holders of Common Stock. Except as otherwise provided herein
or by law, the holders of the Common Stock shall have full voting rights and
powers, and each share of Common Stock shall be entitled to one vote.
(c) The Preferred Stock may be issued from time to time in
classes or series and shall have such voting powers, full or limited, or no
voting powers, and such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions of the Board of Directors providing for the issuance of such stock.
FIFTH: The name and mailing address of the incorporator is as
follows:
Nancy D. Lieberman Blau, Kramer, Wactlar
& Lieberman, P.C.
100 Jericho Quadrangle
Suite 225
Jericho, New York 11753
SIXTH: (a) The number of directors of the corporation shall be
determined in the manner prescribed by the by-laws of this corporation.
(b) The Board of Directors shall be divided into three (3)
classes as nearly equal in number as possible, and no class shall include less
than one (1) director. The terms of the office of the directors initially
classified shall be as follows: that of Class I shall expire at the next annual
meeting of shareholders to be held in 1999, Class II at the second annual
meeting of shareholders to be held in 2000 and Class III at the third succeeding
annual meeting of shareholders to be held in 2001. The foregoing
notwithstanding, each director shall serve until his successor shall have been
duly elected and qualified, unless he shall resign, become disqualified,
disabled or shall otherwise be removed. Whenever a vacancy occurs on the Board
of Directors, a majority of the remaining directors have the power to fill the
vacancy by electing a successor director to fill that portion of the unexpired
term resulting from the vacancy.
(c) At each annual meeting of shareholders after such initial
classification, directors chosen to succeed those whose terms then expire at
such annual meeting shall be elected for a term of office expiring at the third
succeeding annual meeting of shareholders after their election. When the number
of directors is increased by the Board of Directors and any newly created
directorships are filled by the Board of Directors, there shall be no
classification of the additional directors until the next annual meeting of
shareholders. Directors elected, whether by the Board of Directors or by the
shareholders, to fill a vacancy, subject to the foregoing, shall hold office for
a term expiring at the annual meeting at which the term of the Class to which
they
<PAGE> 3
shall have been elected expires. Any newly created directorships or any
decrease in directorships shall be so apportioned among the classes as to make
all classes as nearly equal in number as possible.
SEVENTH: Meetings of stockholders may be held within or without
the State of Delaware as the by-laws may provide. The books of the corporation
may be kept (subject to any provision contained in the statutes) outside the
State of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the by-laws of the corporation. Election of
directors need not be by written ballot unless the by-laws of the corporation
shall so provide.
EIGHTH: Subject to the provisions contained in Article TWELFTH
hereof, the corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
NINTH: Any action required to be taken or which may be taken at
any annual or special meeting of stockholders of the corporation may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted.
TENTH: Special meetings of stockholders may be called by the
Chairman of the Board, President or a majority of the Board of Directors or at
the written request of stockholders owning at least sixty-six and two-thirds
percent (66-2/3%) of the entire voting power of the corporation's capital stock.
ELEVENTH: In the event that it is proposed that the corporation
enter into a merger or consolidation with any other corporation and such other
corporation or its affiliates singly or in the aggregate own or control directly
or indirectly fifteen (15%) percent or more of the outstanding voting power of
the capital stock of this corporation, or that the corporation sell
substantially all of its assets or business to such other corporation, the
affirmative vote of the holders of not less than sixty-six and two-thirds
(66-2/3%) percent of the total voting power of all outstanding shares of capital
stock of this corporation shall be required for the approval of any such
proposal; provided, however, that the foregoing shall not apply to any such
merger, consolidation or sale of assets or business which was approved by
resolutions of the Board of Directors of this corporation prior to the
acquisition of the ownership or control of fifteen (15%) percent of the
outstanding shares of this corporation by such other corporation or its
affiliates, nor shall it apply to any such merger, consolidation or sale of
assets or business between this corporation and another corporation, fifty (50%)
percent or more of the total voting power of which is owned by this corporation.
For the purposes hereof, an "affiliate" is any person (including a corporation,
partnership, trust, estate or individual) who directly or indirectly
<PAGE> 4
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified; and "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
TWELFTH: The provisions set forth in Articles SIXTH, NINTH,
TENTH AND ELEVENTH above may not be altered, amended or repealed in any respect
unless such alteration, amendment or repeal is approved by the affirmative vote
of the holders of not less than sixty-six and two-thirds percent (66-2/3%) of
the total voting power of all outstanding shares of capital stock of the
corporation.
THIRTEENTH: Each person who at any time is or shall have been a
director or officer of the Corporation and is threatened to be or is made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is, or he or his testator or intestate was, a director, officer,
employee or agent of the Corporation, or served at the request of the
Corporation as a director, officer, employee, trustee or agent of another
corporation, partnership, joint, venture, trust or other enterprise, shall be
indemnified against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any such threatened, pending or completed action, suit or proceeding to the
full extent authorized under Section 145 of the General Corporation Law of the
State of Delaware. The foregoing right of indemnification shall in no way be
exclusive of any other rights of indemnification to which such director,
officer, employee or agent may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors, or otherwise.
FOURTEENTH: Any and all right, title, interest and claim in or
to any dividends declared by the Corporation, whether in cash, stock, or
otherwise, which are unclaimed by the stockholder entitled thereto for a period
of six (6) years after the close of business on the payment date shall be and be
deemed to be extinguished and abandoned; such unclaimed dividends in the
possession of the Corporation, its transfer agents, or other agents or
depositaries, shall at such time become the absolute property of the
Corporation, free and clear of any and all claims for any person whatsoever.
FIFTEENTH: Any and all directors of the Corporation shall not be
liable to the Corporation or any stockholder thereof for monetary damages for
breach of fiduciary duty as director except as otherwise required by law. No
amendment to or repeal of this Article FIFTEENTH shall apply to or have any
effect on the liability or alleged liability of any director of the Corporation
for or with respect to any act or omission of such director occurring prior to
such amendment or repeal.
SIXTEENTH: The Board of Directors of the Corporation shall
expressly have the power and authorization to make, alter and repeal the By-Laws
of the Corporation, subject to the reserved power of the stockholders to make,
alter and repeal any By-Laws adopted by the Board
<PAGE> 1
Exhibit 3.2
SOFTWORKS, Inc.
BY-LAWS
* * * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the city of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held at such place as may be fixed from time to time by the
board of directors either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other
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<PAGE> 2
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the
second Thursday of September if not a legal holiday, and if a legal holiday,
then on the next secular day following, at 11:00 a.m., or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of meeting, at which they shall elect by a plurality vote
those directors whose terms have expired pursuant to the provisions of the
Certificate of Incorporation, and transact such other business as may properly
be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten nor more than fifty days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of meeting,
or, if not specified, at the place where the
-2-
<PAGE> 3
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, may be called only at the written request of the Chairman of the
Board, the President, a majority of the Board of Directors or by stockholders
owning at least sixty-six and two-thirds percent (66-2/3%) of the entire voting
power of the corporation's capital stock. Such request shall state the purpose
or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose for which the meeting is called,
shall be given not less than ten nor more than fifty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
Section 7. (A)(1) Nominations of persons for election to the board
of directors of the corporation and the proposal of business to be considered by
the stockholders may be made at an annual meeting of stockholders (a) pursuant
to the Corporation's notice of meeting, (b) by or at the direction of the board
of directors or (c) by any stockholder of the corporation who was a stockholder
of record at the time of giving of notice provided for in this By-law, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this By-law.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A) (1) of this by-law the stockholder must have given timely notice thereof in
writing to the Secretary of the corporation and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
-3-
<PAGE> 4
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the corporation not later than the close of business on the
60th day nor earlier than the close of business on the 90th day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name
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and address of such stockholder, as they appear on the Corporation's books, and
of such beneficial owner and (ii) the class and number of shares of the
corporation which are owned beneficially and of record by such stockholder and
such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A) (2) of this by-law to the contrary, in the event that the number
of directors to be elected to the board of directors of the corporation is
increased and there is no public announcement by the corporation naming all of
the nominees for director or specifying the size of the increased board of
directors at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this by-law shall also
be considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
(B) Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
board of directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the corporation's notice of meeting (a)
by or at the direction of the board of directors or (b) provided that the board
of directors has determined that directors shall be elected at such meeting, by
any stockholder of the corporation who is a stockholder of record at the time of
giving of notice provided for in this by-law, who shall be entitled to vote at
the meeting and who complies with the notice procedures set forth in this
by-law. In the event the corporation calls a special meeting of stockholders for
the purpose of electing
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one or more directors to the board of directors, any such stockholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the corporation's notice of meeting, if the
stockholder's notice required by paragraph (A) (2) of this by-law shall be
delivered to the Secretary at the principal executive offices of the corporation
not earlier than the close of business on the 90th day prior to such special
meeting and not later than the close of business on the later of the 60th day
prior to such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the board of directors to be elected at such meeting. In no
event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as described
above.
(C)(1) Only such persons who are nominated in accordance with the
procedures set forth in this by-law shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this by-law. Except as otherwise provided by law, the certificate of
incorporation or these by-laws, the Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this by-law and, if any proposed
nomination or business is not in compliance with this by-law, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this by-law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or
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comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this by-law, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this by-law. Nothing in this by-law shall be deemed to affect any
rights (i) of stockholders to request inclusion of proposals in the
corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(ii) of the holders of any series of Preferred Stock to elect directors under
specified circumstances.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
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Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation or certificates of designations, and preferences, each stockholder
shall at every meeting of the stockholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be not less than three nor more than nine. No director need be a
stockholder of the corporation. Any director may be removed from office at any
time by the affirmative vote of stockholders of record holding a majority of the
outstanding shares of stock of the corporation entitled to vote, given at a
meeting of the stockholders called for that purpose.
Section 2. The board of directors shall be divided into three
classes as nearly equal in number as possible, and no class shall include less
than two directors. The terms of office of the directors initially classified
shall be as follows: that of Class I shall expire at the next annual
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meeting of stockholders in 1999, Class II at the second succeeding annual
meeting of stockholders in 2000 and Class III at the third succeeding annual
meeting of stockholders in 2001. The foregoing notwithstanding, each director
shall serve until his successor shall have been duly elected and qualified,
unless he shall resign, become disqualified, disabled or shall otherwise be
removed. Whenever a vacancy occurs on the board of directors, a majority of the
remaining directors have the power to fill the vacancy by electing a successor
director to fill that portion of the unexpired term resulting from the vacancy.
Section 3. The business of the corporation shall be managed by its
board of directors, which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by these by-laws
directed or required to be exercised or done by the stockholders.
Section 4. The board of directors shall choose a chairman of the
board of directors who shall preside at all meetings of stockholders and
directors.
Section 5. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the
president or chairman of the board on three days' prior notice to each director,
either personally or by mail or by telegram; special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of two directors.
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Section 8. At all meetings of the board one-half of the board of
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting form time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 10. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member of any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided
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in the resolution of the board of directors, shall have and may exercise all the
powers and authority of the board of directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders of sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders of a
dissolution, or amending the by-laws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the certificate of
incorporation, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
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ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telephone.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a chairman of the board of directors, a
president, one or more vice-presidents, a secretary and a treasurer. The board
of directors may also choose additional vice-presidents, and one or more
assistant secretaries and assistant treasurers. Any number of offices may be
held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
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Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a chairman of the board of
directors, a president, one or more vice-presidents, a secretary and a
treasurer.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
CHAIRMAN OF THE BOARD
Section 6. The chairman of the board of directors shall be the chief
executive officer of the corporation. He shall preside at all meetings of
stockholders and directors. Except where by law the signature of the president
is required, the chairman of the board of directors shall possess the same power
as the president to sign all certificates, contracts, and other instruments of
the corporation which may be authorized by the board of directors. During the
absence or disability of the president, he shall exercise all powers and
discharge all duties of the president.
THE PRESIDENT
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Section 7. The president shall be the chief operating officer of the
corporation. In the absence of the chairman of the board of directors, the
president shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
Section 8. In the absence of the chairman of the board of directors
or the president or in the event of his inability or refusal to act, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designated, or in the absence of any designation, first
any vice presidents in the order of their election and then the remaining vice
presidents in the order of their election) shall perform the duties of the
chairman of the board of directors or the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the chairman
of the board of directors or the president. The vice presidents shall perform
such other duties and shall have other powers as the board of directors may from
time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
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Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all proceedings of the
meetings of the corporation and of the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors, the chairman
of the board of directors or the president, under whose supervision he shall be.
He shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries, in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
TREASURER AND ASSISTANT TREASURER
Section 11. The treasurer shall be the chief financial officer of
the corporation and shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all
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monies and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the chairman of the board of directors and
the president and board of directors, at its regular meetings, or when the board
of directors so requires, an account of all his transactions as treasurer and of
the financial condition of the corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, of if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
INDEMNIFICATION PROVISION
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Section 15. Each person who at any time is or shall have been a
director or officer of the Corporation and is threatened to be or is made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is, or he or his testator or intestate was, a director, officer,
employee or agent of the Corporation, or served at the request of the
Corporation as a director, officer, employee, trustee or agent of another
corporation, partnership, joint, venture, trust or other enterprise, shall be
indemnified against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any such threatened, pending or completed action, suit or proceeding to the
full extent authorized under Section 145 of the General Corporation Law of the
State of Delaware. The foregoing right of indemnification shall in no way be
exclusive of any other rights of indemnification to which such director,
officer, employee or agent may be entitled under the certificate of
incorporation, agreement, vote of stockholders or disinterested directors, or
otherwise.
The foregoing provisions of this Article shall be deemed to be a
contract between the corporation and each director, officer, employee or agent
who serves in such capacity at any time while this Article, and the relevant
provisions of the General Corporation Law of the State of Delaware and other
applicable law, if any, are in effect, and any repeal or modification thereof
shall not affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any action, suit or proceeding
theretofore existing or any action, suit or proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
ARTICLE VI
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CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman of the board of directors, the president or a vice president and
the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by him in
the corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitation or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock; provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
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Section 2. Where a certificate is countersigned (1) by a transfer
agent other than the corporation or its employee, or (2) by a registrar other
than the corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance hereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall required
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of
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succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining property of the corporation, or for such other purpose
as the directors shall think conducive to the interest of the corporation, and
the directors may modify or abolish any such reserve in the manner in which it
was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
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FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words, "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended, repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting.
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Exhibit 9
VOTING TRUST AGREEMENT
AGREEMENT made as of the ___ day of ________, 1998, by and among Daniel
DelGiorno, Jr., James Cannavino and Robert Devine (hereinafter sometimes
collectively referred to, together with any successor trustees, as the
"Trustees"); Softworks, Inc., a Delaware corporation (the "Company"); and
Computer Concepts Corp. (the "Parent" and, together with each "affiliate,"
within the meaning of Rule 405 promulgated under the Securities Act of 1933
(each, an "Affiliate"), of the Parent, other than the Company, that becomes a
Holder (as defined in Section 3) as provided herein, the "Stockholders").
WHEREAS, the Company is currently a majority-owned subsidiary of the
Parent;
WHEREAS, the Company and the Parent intend to conduct a public offering
(the "Public Offering") of a portion of the Company's common stock, par value
$.001 per share (the "Common Stock");
WHEREAS, immediately following the Public Offering, the Parent is expected
to continue to hold ________ shares or ______% of the outstanding shares of
Common Stock (all shares of Common Stock now or hereafter owned by the
Stockholders, to the extent that the certificates for such shares are required
to be deposited with the Trustees pursuant to this Agreement, are referred to
herein as the "Trust Shares");
WHEREAS, the Parent believes that the interests of the Company and its
interests as a holder of the Common Stock can best be served if specific
arrangements are established whereby voting power over the Trust Shares is
granted to the Trustees;
WHEREAS, for this purpose the Parent is hereby requesting the Trustees to
take and hold legal title to the Trust Shares for the purpose of creating a
voting trust; and
WHEREAS, the Trustees have consented to act under this Agreement for the
purposes hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and for other good, valuable and sufficient consideration, the receipt and
adequacy of which is hereby acknowledged by all parties hereto, the parties
hereto promise, covenant, undertake and agree as follows:
1. TRANSFER OF STOCK TO TRUSTEE. The Parent, upon execution of this
Agreement, hereby assigns and transfers to the Trustees and deposits with the
Trustees all the certificates for all Trust Shares currently held by the Parent
for the purpose of vesting in the Trustees the right to vote and act and to
exercise other rights pertaining to the Trust Shares, as and to the extent, and
upon the terms and conditions and for the period set forth, in this Agreement.
The Parent hereby represents that the Trust Shares deposited by it hereunder
represent all of the shares of Common Stock of which the Parent is the record or
beneficial owner and that the Parent is the sole record, legal and beneficial
owner of all Trust Shares deposited by it hereunder. The Parent agrees to cause
any Affiliate of the Parent other than the
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Company (each, a "Parent Affiliate") that becomes the holder of Common Stock or
other voting securities of the Company, other than shares of Common Stock issued
upon the exercise of stock options granted to Parent Affiliates in accordance
with the Company's employee stock option plans, to deposit the certificates for
such securities with the Trustees. In the event that any Stockholder or Parent
Affiliate becomes the holder of additional Trust Shares after the date hereof,
it shall, within five business days of becoming the holder of such additional
Trust Shares, deposit with the Trustees certificates representing such
additional Trust Shares or shall direct the Company to issue such Trust Shares
directly to the Trustees which Trust Shares shall thereupon be subject to the
terms of this Agreement. All such stock certificates, unless issued by the
Company directly to the Trustees, shall be so endorsed, or accompanied by such
instruments of transfer as to enable the Trustees to cause such certificates to
be transferred into the name of the Trustees and to enable the Trustees to
become the record owner of the Trust Shares represented thereby in accordance
with the terms and provisions hereof, which the Trustees shall forthwith cause
to be done as hereinafter provided. Upon receipt by the Trustees of the
certificates for any such Trust Shares and, if necessary, the transfer of the
same into the name of the Trustees, the Trustees shall hold the same subject to
the terms of this Agreement and shall thereupon issue and deliver to the
Stockholder depositing Common Stock hereunder, or for whose benefit such Common
Stock was deposited, Voting Trust Certificates representing such Stockholders'
respective interests in the Common Stock deposited pursuant to this Agreement.
All certificates for the Company's capital stock transferred and delivered to
the Trustees pursuant hereto (unless issued directly to the Trustees as set
forth above) shall be surrendered by the Trustees to the Company and cancelled
and new certificates therefor shall be issued to and held by the Trustees in
their own names "As Trustees". The Trustees may designate a bank or trust
company as custodian to hold possession of any certificate delivered to the
Trustees pursuant hereto. The Parent hereby agrees and covenants that during the
term of this Agreement, it shall remain the sole beneficial owner within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of all shares of Common Stock or other securities
deposited or to be deposited by it hereunder and all Voting Trust Certificates
issued hereunder.
2. AGREEMENT. Copies of this Agreement and of every amendment or
supplement hereto shall be provided to each person depositing stock with the
Trustees under this Agreement and to the Company, and shall be filed in the
registered office of the Company in the State of Delaware, and shall be open to
inspection by any beneficiary of the trust under this Voting Trust, daily during
business hours. All Voting Trust Certificates shall be issued, received and held
subject to all of the terms of this Agreement. All persons, firms, corporations,
trusts, or organizations for whose benefit stock is deposited hereunder who
accept a Voting Trust Certificate issued hereunder, and their transferees and
assigns, shall be bound by the provisions of this Agreement with the same effect
as if they had executed this Agreement.
3. VOTING TRUST CERTIFICATES. Each Voting Trust Certificate to be issued
and delivered by the Trustees, as hereinbefore provided, shall state the number
of Trust Shares which it represents, shall be signed by the Trustees and shall
be in substantially the same form as EXHIBIT I hereto. The Trustee shall
maintain a Voting Trust Certificate register which will identify each holder of
a Voting Trust Certificate issued under this Agreement (each such person, a
"Holder") and the number of Trust Shares represented by each Voting Trust
Certificate.
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<PAGE> 3
4. TRANSFER OF CERTIFICATES.
(a) Transfer of any Voting Trust Certificate shall be subject to any
restrictions, provisions and conditions applicable to the Common Stock which it
represents, whether imposed by law, specified on such stock certificates or
specified in this Agreement or in any other agreement. Subject to the foregoing,
the Voting Trust Certificates shall be freely transferable on the books of the
Trustees, at such office as the Trustees may designate, by the registered owner
thereof, either in person or by attorney duly authorized, upon surrender
thereof, according to the rules established for that purpose by the Trustees. If
a transfer of Voting Trust Certificates is so permitted, the Holder shall notify
the Trustee of the details of such transfer, including the name, address and
social security or tax identification number of the transferee and number of
Voting Trust Certificates being transferred, and shall surrender to the Trustee
the Voting Trust Certificate or Voting Trust Certificates being transferred,
properly endorsed for transfer. The Trustee, upon receipt of such notice and
Voting Trust Certificate(s), shall transfer the Voting Trust Certificate(s) on
the Voting Trust Certificate registry and issue a new Voting Trust Certificate
to the transferee. Until so transferred, the Trustee may treat the record Holder
as the owner of each Voting Trust Certificate for all purposes, notwithstanding
any notice to the contrary. As a condition to making any transfer or delivery of
Voting Trust Certificates, the Trustee may require compliance by the transferee
with any applicable federal or state statute and the payment of a sum sufficient
to pay for any stamp tax or other governmental charge in connection therewith.
Except as otherwise provided in this Agreement, no transfer of a Voting Trust
Certificate shall in any way remove the Trust Shares represented by such Voting
Trust Certificate from being held by the Trustee under this Agreement and any
transferee, by accepting such transfer, hereby consents to be bound by the terms
of this Agreement, and upon becoming a Holder shall be deemed to be a party
hereto as though an original signatory hereto. The Trustee shall not be required
to recognize any transfer of a Voting Trust Certificate not made in accordance
with the provisions hereof, unless the person claiming such ownership shall have
produced indicia of title satisfactory to the Trustee, and shall in addition
deposit with the Trustee indemnity satisfactory to the Trustees. Nothing set
forth herein shall be deemed to limit the ability of the Stockholders to grant a
pledge of the Voting Trust Certificates to any person.
(b) If a Voting Trust Certificate is lost, stolen, mutilated or
destroyed, the Trustees, in their discretion, may issue a duplicate of such
certificate upon receipt of: (a) evidence of such fact satisfactory to the
Trustees; (b) indemnity satisfactory to the Trustees; (c) the existing
certificate, if mutilated; and (d) the Trustees' reasonable fees and expenses in
connection with the issuance of a new trust certificate. The Trustees shall not
be required to recognize any transfer of a Voting Trust Certificate not made in
accordance with the provisions hereof, unless the person claiming such ownership
shall have produced indicia of title satisfactory to the Trustees and shall, in
addition, deposit with the Trustees indemnity satisfactory to them.
5. WITHDRAWAL OF COMMON STOCK IN ORDER TO EFFECT A SALE. Under the limited
circumstances set forth in this Section 5, shares of Common Stock represented by
Voting Trust Certificates may be withdrawn from this Voting Trust in order to
permit such shares to be sold (i) through NASDAQ or the principal national
securities exchange or automated quotation system upon which or through which
shares of Common Stock are then listed or quoted or (ii) in a private
transaction to a person or entity which is not a Parent Affiliate. At any
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time after the earlier of (i) one year after the closing of the Public Offering
or (ii) the date that SoundView Financial Group, Inc., the representative of the
underwriters of the Public Offering, releases such Holder from its "lock-up"
restrictions, such Holder who desires to sell shares of Common Stock represented
by its Voting Trust Certificates in accordance with the preceding sentence shall
direct the Trustees in writing to make such a sale on its behalf ("Sale
Notice"). The Trustees shall thereafter obtain a stock certificate for Common
Stock from the Company in the appropriate denomination and shall sell the shares
represented by such certificate, subject to any conditions relating to minimum
sales price or other matters which shall be set forth in the Sale Notice. If any
such conditions cannot be satisfied, the Holder shall be so advised, and the
Trustees shall be under no further obligation to make such a sale until a
subsequent Sale Notice is received. If the Trustees are successful in making the
requested sale, all net sale proceeds shall be remitted to the Holder upon
presentation and surrender of the Voting Trust Certificate or portion thereof
representing an interest in such sold shares, accompanied by properly executed
assignments thereof to the Trustees. Such sold shares shall no longer be
considered Trust Shares and shall no longer be subject to this Voting Trust,
except to the extent that such shares are acquired by Parent Affiliates.
6. TERMINATION PROCEDURE. Upon the termination of the Voting Trust at any
time as provided in Section 15, the Trustees shall mail within five business
days of such termination written notice of such termination to the registered
Holders at the addresses appearing on the transfer books of the Trustees. From
the date specified in any such notice (which date shall be fixed by the Trustees
in accordance with the provisions of this Agreement) the Voting Trust
Certificates shall cease to have any effect, and the Holders shall have no
further rights under this Voting Trust other than to receive certificates for
Trust Shares of stock of the Company or other property distributable under the
terms hereof upon the surrender of such Voting Trust Certificates. Within ten
business days after surrender for cancellation of Voting Trust Certificates by a
registered Holder, properly endorsed or accompanied by properly endorsed
instruments of transfer, if appropriate, at the place designated by the
Trustees, the Trustees shall deliver to such Holder, stock certificates for the
number of shares of such class or classes of the Company's capital stock or
other securities represented thereby as to which such Holder shall be entitled.
At any time subsequent to 30 days after the termination of this Agreement, the
Trustees may deposit certificates with Company representing the number of shares
of such class or classes of the Company's capital stock or other securities
represented by the Voting Trust Certificates then outstanding, with authority in
writing to Company to deliver such certificates in exchange for Voting Trust
Certificates. Upon such deposit all further liability of the Trustee for the
delivery of such certificates and the delivery or payment of dividends upon
surrender of the Voting Trust Certificates shall cease, and the Trustee shall
not be required to take any further action hereunder.
7. DIVIDENDS.
(a) If any dividend or distribution in respect of the Trust Shares
or other securities deposited with the Trustees is paid, in whole or in part, in
securities of the Company having voting powers of any nature, the Trustees shall
likewise hold, subject to the terms of this Agreement, the securities which are
received by it on account of such dividend or distribution (such securities,
together with the Trust Shares, the "Trust Securities"), and the Holder of each
Voting Trust Certificate representing securities on which such dividend or
distribution has been
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<PAGE> 5
paid shall be entitled to receive a Voting Trust Certificate issued under this
Agreement representing such Trust Securities. Holders entitled to receive the
dividends or distributions referred to above shall be those registered as such
on the transfer books of the Trustees at the close of business on the day fixed
by the Company or by law for the taking of a record to determine those holders
of the Company's stock entitled to receive such dividends or distributions.
(b) If any dividend or distribution in respect of the Trust
Securities is paid other than in securities of the Company having voting powers
of any nature, then the Trustees shall promptly distribute the same among the
Holders registered as such at the close of business on the day fixed by the
Company or by law for the taking of a record to determine the holders of stock
entitled to receive such dividend or distribution. Such distribution shall be
made to such Holders ratably, in accordance with the number of Trust Securities
represented by their respective Voting Trust Certificates.
(c) Until the termination of this Agreement, each Holder shall be
entitled to receive from the Trustees payments equal to all cash dividends or
distributions upon the Trust Securities. In lieu of receiving such cash
dividends or distributions and paying the same to the Holders pursuant to the
provisions of this Agreement, the Trustees may instruct the Company in writing
to pay such dividends or distributions directly to the Holders of the Voting
Trust Certificates specified by the Trustees. Upon receipt of such written
instructions, the Company shall pay such dividends or distributions directly to
the Holders. The Trustees may at any time before such payment revoke such
instructions and by written notice to the Company direct it to make dividend or
distribution payments to the Trustees. The Company shall not be liable to any
Holder or any person claiming to be entitled to any such dividends or
distributions by reason of adhering to any written instructions by the Trustees.
8. SUBSCRIPTION RIGHTS. If any stock or other securities of the Company
are offered for subscription to the Holders of the Trust Securities, the
Trustees promptly, upon receipt of notice of such offer, shall mail a copy
thereof to each of the Holders. Upon receipt by the Trustees, at least three
days prior to the last day fixed by the Company for subscription and payment
(but in no event affording the Holder less than 10 days to consider such
subscription offer), of a request from any such Holder to subscribe in his
behalf (accompanied when due in accordance with the terms of the subscription
offer by the sum of money required to pay for such stock or securities), the
Trustees shall make such subscription and payment, and upon receipt from the
Company of the certificates for Trust Shares or securities so subscribed for,
shall issue to such Holder a Voting Trust Certificate in respect thereof if the
same be stock having voting powers of any nature, but if the same be securities
other than stock having voting powers of any nature, the Trustees shall mail or
deliver such securities to the Holder in whose behalf the subscription was made,
or may instruct the Company to make delivery directly to the Holder entitled
thereto.
9. DISSOLUTION OF THE COMPANY. In the event of the dissolution or total or
partial liquidation of the Company, whether voluntary or involuntary, the
Trustees shall receive the moneys, securities, rights, or property to which the
Holders are entitled, and shall distribute the same among the Holders in
proportion to their interests, as shown by the transfer books of the Trustees,
or the Trustees may in its discretion deposit such moneys, securities, rights,
or property
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with any bank or trust company as the Trustees may select, with authority and
instructions to distribute the same as above provided, and upon such deposit,
all further obligations or liabilities of the Trustees in respect of such
moneys, securities, rights, or property so deposited shall cease.
10. REORGANIZATION OR RECAPITALIZATION OF COMPANY. In the event Company is
merged into or consolidated with another corporation, or all or substantially
all of the assets of Company are transferred to another corporation pursuant to
a plan requiring Company's assets to be distributed in liquidation, or all the
Common Stock of Company is to be exchanged in connection with a reorganization
or recapitalization of Company, then in connection with such transaction or
series of transactions the term "Company" for all purposes of this Agreement
shall be taken to include any successor entity, and the Trustees shall receive
and hold under this Agreement any stock of, or other interests in, such
successor entity received on account of the ownership, as Trustees hereunder, of
the Trust Securities held hereunder prior to such merger, consolidation,
transfer, reorganization or recapitalization. Voting Trust Certificates issued
and outstanding under this Agreement at the time of such merger, consolidation,
transfer, reorganization or recapitalization may remain outstanding, or the
Trustee shall have the discretion to substitute for such Voting Trust
Certificates new Voting Trust Certificates in appropriate form, and the terms
"stock," "Common Stock" and "capital stock" as used herein shall be taken to
include any stock or evidence of an interest which may be received by the
Trustees in lieu of all or any part of the capital stock of Company.
In case any reduction of the Trust Shares or reorganization affecting
Trust Shares shall have been duly authorized, the Trustees are hereby authorized
to make such surrender of Trust Shares held by the Trustees hereunder, pro rata
on behalf of all Holders, as may be required under the terms pursuant to which
such reduction or reorganization is to be effected, and to receive and hold any
and all Common Stock or other securities of Company issued in exchange for such
surrendered Trust Shares. Following any such action, the Voting Trust
Certificates issued and outstanding pursuant hereto shall be deemed to represent
proportionately the number of Trust Securities resulting from such reduction or
reorganization.
11. RIGHTS, POWERS AND DUTIES OF TRUSTEES.
(a) Until the actual delivery to the Holders of stock certificates
in exchange for Voting Trust Certificates, and until the surrender of the Voting
Trust Certificates for cancellation, title to all the Company's stock deposited
hereunder shall be vested in the Trustees, and the Trustees shall have the
right, acting as hereinafter provided, to exercise, in person or by their
nominees or proxies, all stockholders' rights and powers in respect of all stock
deposited hereunder, including the right to vote thereon and to take part in or
consent to any corporate or stockholders' action of any kind whatsoever, whether
ordinary or extraordinary, to the extent they relate to any of the Approval
Actions (as defined below). The Holders, and not the Trustees, will have the
right to vote for the election of directors and all other matters submitted for
stockholder vote except for the Approval Actions, except that, if an independent
Trustee leaves office for any reason (including upon the expiration of his or
her term of office as a director) or is required to resign as a director of the
Company in accordance with Section 12 hereof due to such Trustee's failure to
remain "independent" (as such term is defined in Section 12(a) hereof), the
remaining independent Trustee or Trustees will have the right to vote for the
election of a successor director, which Trustee or Trustees will take direction
from the holders of
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a majority of the shares of the Common Stock not held by the Stockholders.
(b) The Company agrees that the following actions (the "Approval
Actions") will not be taken without the approval of the Trustees:
(i) the sale, lease, encumbrance, assignment, transfer or
conveyance of all or substantially all of the assets or capital stock of the
Company to an acquiring party, or the merger or consolidation of the Company
into or with another corporation, if the Parent or a Parent Affiliate is a party
to such transaction;
(ii) any filing by the Company or a subsidiary for relief as a
debtor under any bankruptcy, insolvency, reorganization or similar law, any
application by the Company or a subsidiary for the appointment of a receiver,
trustee, custodian or similar fiduciary for a substantial portion of the
consolidated assets of the Company and its subsidiaries, or the consent by the
Company or a subsidiary to any petition or application seeking similar relief
which is filed against the Company or the subsidiary, or the voluntary
liquidation, dissolution or winding up of the Company;
(iii) the declaration or payment of any dividends on any
capital stock of the Company;
(iv) the incurrence of any lien upon any significant portion
of the property of the Company, except (a) liens for taxes or (b) any statutory
lien;
(v) the acquisition of any equity security, or any right to
acquire any equity security, of any other corporation, other than the Company's
formation of one or more wholly-owned subsidiaries (or subsidiaries in which a
de minimis number of shares are held by a third party in order to comply with
local law), if such other corporation is the Parent or a Parent Affiliate;
(vi) the acquisition of assets from the Parent or a Parent
Affiliate;
(vii) except as set forth in this Agreement, any transaction
or proposed transaction between the Company and any "person," as such term is
used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, or any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company), pursuant to which such person becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;
(viii) any transaction or proposed transaction between the
Company and an Affiliate or any transaction or proposed transaction between the
Company and the Parent for an aggregate consideration in excess of $1 million
unless a fairness opinion is obtained from SoundView Financial Group, Inc. or
any other independent investment banking institution of national standing
appointed by the Company; or
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(ix) any other transaction which requires stockholder approval
under Delaware law to the extent that any of the parties hereto have been
advised in writing by counsel that the transaction presents an actual conflict
of interest between the Stockholders and the other holders of the Common Stock.
(c) The Trustees shall not be responsible with respect to any action
taken pursuant to, or act committed or omitted to be done under this Agreement,
including without limitation, voting or giving written consents with respect to
the Trust Shares of stock held by it hereunder, provided such action or
commission or omission does not amount to gross negligence or willful misconduct
on their part. No Trustee shall be responsible for any vote or act committed or
omitted to be done by any predecessor or successor Trustee or otherwise except
for his own individual gross negligence or willful misconduct. No Trustee shall
be responsible for (i) management of the Company or (ii) any actions taken by
any person elected as a director of the Company or by the Company pursuant to
any vote cast or consent given by the Trustees. The Trustees may, in their
discretion, consult with legal counsel, who may also be legal counsel to the
Company, and any action taken in good faith by the Trustees in reliance upon the
advice of legal counsel shall be conclusive in favor of the Trustees against all
Holders and all other interested parties.
(d) Unless otherwise agreed by the Trustees, action by the Trustees
shall be taken at a meeting of Trustees or by a unanimous written consent in
lieu of a meeting. Meetings of the Trustees shall be held whenever called by any
Trustee. Any Trustee may participate in any meeting of the Trustees, be counted
for the purpose of determining a quorum thereof and exercise all rights and
privileges to which such Trustee might be entitled if such Trustee was
personally in attendance, including the right to vote, or any other rights
attendant to presence in person at such meeting, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. A majority of the Trustees
shall be necessary to constitute a quorum for the transaction of business and,
subject to the next paragraph, the acts of a majority of the Trustees shall be
the acts of the Trustees under this Voting Trust Agreement.
(e) A certificate signed by the Trustees shall be conclusive
evidence to all persons as to who are then serving as Trustees and as to any
action taken by the Trustees.
12. SUCCESSOR TRUSTEES.
(a) Any Trustee may resign effective 30 days after delivery of
written notice to all Holders and the Company. In the event of the death, legal
incapacity or resignation of [Parent trustee] or his successor, the Parent may
select and appoint a successor Trustee. If a successor is not selected within 20
days following the delivery of the notice referred to in the first sentence of
this Section 12 or the death or determination of legal incapacity of a Trustee,
as the case may be, a majority of the independent directors of the Company shall
select and appoint a successor Trustee. All Trustees selected and appointed
pursuant to this Section 12 must be directors of the Company. "Independent"
means any director of the Company who does not derive in excess of $60,000 of
compensation from the Parent or any Parent Affiliate. The Company covenants that
it will use is best efforts to insure that there are at least two independent
directors at any given time.
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(b) If at any time either James Cannavino or Robert Devine or a
successor to either of them ceases to be independent, any such Trustee shall
resign as a Trustee and as a director of the Company. To the extent that any
such resignation is not tendered, a majority of any remaining independent
directors of the Company shall remove such Trustee in its capacity as Trustee.
In addition, a majority of any remaining independent directors of the Company
shall appoint a successor Trustee to replace any such Trustee who has resigned,
been removed, died or been declared legally incapable. The removal of a Trustee
and appointment of a successor Trustee shall each be effective 30 days after
delivery of written notice to all Holders and the Company.
(c) Each Trustee shall affix his or her signature to this Agreement
and each successor Trustee shall accept appointment or election hereunder by
affixing his or her signature to this Agreement, or a counterpart hereof, within
the 30-day period referred to in subsection (a) or (b), as applicable, of this
Section 12. By affixing its signatures to this Agreement, the Trustees and each
successor Trustee agree to be bound by the terms hereof.
13. INDEMNIFICATION OF TRUSTEE. The Trustees shall be entitled to be fully
indemnified by the Company to the fullest extent permitted by law, against all
costs, charges, expenses, loss, liability and damage (other than those for which
it is responsible under Section 13 hereof) incurred by it in the administration
of the Voting Trust or in the exercise of any power conferred upon the Trustees
by this Agreement. The Stockholders, and each of them, hereby covenant with the
Trustees that in the event that the assets of the Company or the proceeds of
insurance policies then in effect, if any, are insufficient to indemnify the
Trustees in accordance with the preceding sentence, the Stockholders, and each
of them, will in proportion to the amount of their respective Trust Shares of
capital stock subject to this Agreement, hold harmless and keep indemnified the
Trustees of and from all loss or damage which the Trustees may sustain or be put
to by reason of anything it may lawfully do in the execution of this Trust other
than as a result of its gross negligence or willful misconduct.
14. COMPENSATION AND REIMBURSEMENT OF TRUSTEE. The Trustee shall serve
without compensation, but it is expressly agreed that the Trustee shall have the
right to incur and pay such reasonable expenses and charges, to employ and pay
such agents, attorneys, and counsel as the Trustee may deem necessary and proper
with respect to the Trustee carrying out any of the Trustee's anticipated
activities or duties under this Agreement or interpreting or exercising any of
the Trustee's powers under this Agreement. Any such expenses or charges incurred
by and due to the Trustee that are paid by Company, where Company deems it
appropriate to its interests, may be deducted pro rata in the discretion of the
Trustee from the dividends or other moneys or property received by the Trustee
on the stock deposited hereunder. Nothing herein contained shall disqualify the
Trustee or successor Trustees, or incapacitate any of them from serving the
Company or any of its subsidiaries as officer or director, or in any other
capacity, and in any such capacity receiving compensation.
15. TERMINATION. This Agreement shall terminate upon the first to occur
of:
(i) the Stockholders ceasing to collectively hold 25% or more of the
Common Stock or other voting capital stock of the Company;
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(ii) any person other than the Stockholders or their Affiliates acquiring
a greater percentage of the Common Stock or other voting capital
stock of the Company than is then held by the Stockholders; or
(iii) the date that is 10 years after the date hereof.
16. SALE AND TRANSFER OF COMPANY'S STOCK. Except as otherwise provided in
this Agreement, the Trustees shall not sell, hypothecate, pledge, assign or
otherwise transfer the stock of the Company, or any interest whatsoever therein,
held pursuant to this Agreement.
17. NOTICES; DISTRIBUTIONS. Unless otherwise specifically provided in this
Agreement, any notice to or communication with the Holders hereunder shall be
deemed to be sufficiently given or made if (i) personally delivered or mailed,
postage prepaid, to such Holders at their respective addresses appearing on the
Voting Trust Certificate registry, which shall in all cases be deemed to be the
addresses of Holders for all purposes under this Agreement or (ii) sent by
facsimile to the facsimile number set forth on the Voting Trust Certificate
registry and confirmed by letter sent to the appropriate address set forth in
clause (i) above.
Any notice to the Trustees or Company hereunder shall be sufficient if
personally delivered or mailed, postage prepaid, by certified or registered
mail, at the following addresses, or sent by facsimile to the following
facsimile numbers and confirmed by letter:
The Trustees:
The Company:
Any party to this Agreement may change his or its address or facsimile
number for the giving of notices by giving notice of such changed address or
facsimile number in the manner set forth above. All notices given hereunder
shall be deemed given as of the date of personal delivery or two days after the
date of mailing, as the case may be, except that any notice of change of address
or any notice delivered by facsimile shall be deemed given when received.
All distributions of cash, securities, or other property hereunder by the
Trustees to the Holders may be made, in the discretion of the Trustees, by mail
(regular, registered or certified mail, as the Trustees may deem advisable), in
the same manner as hereinabove provided for the giving of notices to the
Holders.
18. MISCELLANEOUS.
(a) BINDING NATURE OF AGREEMENT; NO ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the parties hereto, including future
Holders, and their respective heirs, personal representatives, successors and
assigns. No party may sell, assign, transfer or encumber such party's rights or
obligations under this Agreement, the Voting Trust Certificates or the Trust
Securities represented thereby, without the prior written consent of the other
parties hereto, except to the extent expressly permitted in this Agreement.
Neither the death, disability nor incapacity of a Holder shall in any way remove
the Trust Securities represented by such Holder's Voting Trust Certificate from
the Voting Trust or the
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terms of this Agreement.
(b) ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties and supersedes any prior understanding and
agreements between them respecting the subject matter hereof. There are no
representations, agreements, arrangements, or understandings, oral or written,
between or among the parties hereto relating to the subject matter of this
Agreement which are not fully expressed herein.
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument. The
execution by any one party of any counterpart shall be sufficient execution by
that party, whether or not the same counterpart has been executed by any other
party.
(d) GOVERNING LAW. The validity of this Agreement or any part
hereof, and the interpretation and enforcement of all provisions hereof, shall
be governed by and construed and enforced in accordance with the laws of the
State of Delaware.
(e) INVALIDITY. The invalidity of any term or provision of this
Agreement shall not affect the validity of the remainder of this Agreement and
this Agreement shall be enforced to the greatest extend permitted by law.
IN WITNESS WHEREOF, the parties hereof have executed this Agreement under
seal, all as of the day and year first above written.
-----------------------------
Daniel DelGiorno, Jr.
-----------------------------
James Cannavino
-----------------------------
Robert Devine
SOFTWORKS, INC.
By:
--------------------------
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[Name]
[Title]
COMPUTER CONCEPTS CORP.
By:
--------------------------
[Name]
[Title]
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EXHIBIT I
FORM OF VOTING TRUST CERTIFICATE
SOFTWORKS, INC.
VOTING TRUST CERTIFICATE NUMBER ____
_____________Shares
This certifies that the undersigned Trustees have received a certificate
or certificates in the name of ____________________ evidencing ownership of
________ shares of the Common Stock, $.001 par value per share, of SOFTWORKS,
INC. (the "Company "), a Delaware corporation, and that said shares are held
subject to all of the terms and conditions of a certain Voting Trust Agreement
dated as of the __ day of __________, 1998, by and among the Company, Daniel
DelGiorno, Jr., James Cannavino and Robert Devine (hereinafter sometimes
collectively referred to, together with any successor trustees, as the
"Trustees") and certain stockholders of the Company (the "Agreement") and are
entitled to all of the benefits set forth in the Agreement. Copies of the
Agreement and of every amendment and supplement thereto are on file at the
office of the Company and shall be available for the inspection of every
beneficiary thereof during normal business hours. The holder of this
certificate, which is issued, received and held under the Agreement, by
acceptance hereof, assents to and is bound by the Agreement.
This Voting Trust Certificate has not been registered under the Securities
Act of 1933, as amended, and may not be sold or otherwise transferred unless (a)
covered by an effective registration statement under the Securities Act of 1933,
as amended, or (b) the Trustees and the Company have been furnished with an
opinion of counsel satisfactory to them to the effect that no registration is
legally required for such transfer.
Subject to the provisions of the foregoing, this certificate is
transferable only on the books of the Trustees, by the registered holder in
person or his duly authorized attorney, and the holder hereof, by accepting this
certificate, manifests his consent that the Trustees may treat the registered
holder hereof as the true owner for all purposes, except the delivery of stock
certificates, which delivery shall not be made without the surrender of this
certificate or otherwise pursuant to the aforesaid Voting Trust Agreement.
IN WITNESS WHEREOF, the Trustees have hereunto executed this certificate
as of the _____ day of ________, 1998.
---------------------------------
Daniel DelGiorno, Jr., as Trustee
---------------------------------
James Cannavino, as Trustee
---------------------------------
Robert Devine, as Trustee
13
<PAGE> 1
Exhibit 10.1
AGREEMENT OF LEASE
OFFICE BUILDING
THIS AGREEMENT OF LEASE, made as of the 14th day of June, 1994, by and between
WHT REAL ESTATE LIMITED PARTNERSHIP, a Delaware Limited Partnership (hereinafter
called "Landlord"), and SOFTWORKS, INC., incorporated in the State of Maryland
(hereinafter called "Tenant").
WITNESSETH:
1. Basic Terms.
(a) Address of Landlord: WHT Real Estate Limited Partnership
c/o WHT Investors, Inc., general partner
Lawrence A. Corson
Assistant Vice President
600 East Las Colinas Blvd.
Suite 1900
Irving, Texas 75039
or such other address as may from time to time be designated by
Landlord in writing.
(b) Address of Tenant: Softworks, Inc.
7700 Old Branch Avenue
Clinton, Maryland
or such other address as may from time to time be designated by
Landlord in writing.
(c) Premises: Suite No. 300 and 400 located on the entire third (3rd)
and fourth (4th) floors consisting of approximately 24,786 rentable
square feet of area in the Building as shown on Exhibit "A" attached
hereto.
(d) Building: The Building in which the Premises are located, the common
address of which is 5845 Richmond Highway, Alexandria, Virginia
22303. The legal description of the parcel of land on which the
Building is situated is attached hereto as Exhibit "B".
(e) Property: The Building, the parcel of land upon which the Building
is situated and any other improvements thereon.
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(f) Guarantor(s): Not applicable.
(g) Lease Term: This Lease shall be in full force and effect from the
date it has been executed by both Landlord and Tenant. Subject to
adjustment as provided in Paragraph 5 hereof, the term of this Lease
shall be for a period seven (7) years commencing on September 1,
1994 (the "Commencement Date"), and ending on August 31, 2001 (the
"Expiration Date"), unless this Lease shall be sooner terminated as
set forth herein.
(h) Rent: All sums, moneys, payments, costs and expenses required to be
paid by Tenant to Landlord pursuant to this Lease.
(i) Minimum Annual Rent: $297,432.00; See Addendum to Agreement of
Lease, Paragraph 1(i).
(j) Monthly Rent Installment: $24,786.00; See Addendum to Agreement of
Lease, Paragraph 1(j).
(k) Base Amount: Base Calendar Year 1994, See Addendum to Agreement of
Lease, Paragraph 1(k).
(l) Tenant's Share of Annual Operating Costs: 26.5%; See Addendum to
Agreement of Lease, Paragraph 1(k).
(m) Security Deposit: $24,786.00; See Addendum to Agreement of Lease,
Paragraph 4.
(n) Permitted Uses: General office.
(o) Broker(s): The Carey Winston Company and Barnes, Morris, Pardoe &
Foster, Inc.
(p) Tenant Improvement Plans Due: See Exhibit C.
2. Effect of Reference to Basic Terms. Each reference in this Lease to any of
the Basic Terms contained in Paragraph 1 shall be construed to incorporate
into such reference all of the definitions set forth in Paragraph 1.
3. Lease of Premises. Landlord, in consideration of the Rent to be paid and
the covenants and agreements to be performed by Tenant, does hereby lease
unto Tenant the Premises, as designated in Item (c) of Basic Terms,
constructed in accordance with the lease plans and specifications showing
interior improvements to be constructed by Tenant as set forth on Exhibit
"C" attached hereto, together with the non-exclusive right and easement to
use the parking areas and other common facilities in or on the Building
and the Property (including without limitation the driveways, sidewalks,
loading and parking areas, lobbies, and hallways) which may from time to
time be furnished by Landlord in
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<PAGE> 3
common with Landlord and the tenants and occupants (their agents,
employees, customers and invitees) of the Building. Tenant agrees that
Tenant's consent shall not be required for any additions, reductions, or
modifications of such common area facilities including the construction of
free-standing buildings on any portions of the common areas. Any
additions, reductions, or modifications of such common area facilities
and/or free standing buildings shall be done in good and workmanlike
manner by Landlord or Landlord's contractors and shall comply at the time
of completion with all applicable laws, ordinances, regulations and orders
of federal, state, county or other governmental authorities having
jurisdiction thereof. Tenant acknowledges and agrees that Landlord shall
have the right to make reasonable rules and regulations governing the
location and use of all parking areas and common facilities, and Tenant
shall be governed thereby.
4. Completion by Tenant. The Premises shall be completed by Tenant in
accordance with the plans and specifications attached hereto or to be
attached hereto as Exhibit "C" (hereinafter called the "Tenant Improvement
Work Agreement"). If the Tenant Improvement Plans have not been attached
upon execution hereof, Tenant shall submit same no later than the date
specified in Item (p) of Basic Terms. All necessary construction shall be
commenced promptly and shall, subject to Paragraph 5 hereof, be
substantially completed ready for use and occupancy by Tenant on the
Commencement Date set forth in Item (g) of Basic Terms; provided, however,
that the time for substantial completion of the Premises shall be extended
for additional periods of time equal to the time lost by Tenant or
Tenant's contractors, subcontractors or suppliers (such additional periods
not to exceed, in the aggregate, sixty (60) days) due to strikes or other
labor troubles, governmental restrictions and limitations, scarcity,
unavailability or delays in obtaining fuel, labor or materials, war or
other national emergency, accidents, floods, defective materials, fire
damage or other casualties, weather conditions, or any cause similar or
dissimilar to the foregoing that is beyond the control of Tenant. If
Tenant is unable to substantially complete all necessary construction or
deliver possession of the Premises to Tenant on the Commencement Date
because Tenant has failed to deliver its Tenant Improvement Plans by the
date specified in Item (p) of Basic Terms, or because Tenant has requested
changes in the Tenant Improvement Plans submitted to Landlord, or because
Tenant has requested changes in the Tenant Improvement Plans submitted to
Landlord, or because of other causes attributable to Tenant, then the
Lease Term shall commence, and Tenant shall pay all Rent due hereunder, as
of the Commencement Date designated in Item (g) of Basic Terms, even
though Tenant has not taken possession of the Premises by such date. All
construction shall be done in good and workmanlike manner by Tenant or
Tenant's contractors and shall comply at the time of completion with all
applicable laws, ordinances, regulations and orders of the federal, state,
county or other governmental authorities having jurisdiction thereof.
Except as may result from its enforcement of the provisions of the Tenant
Improvement Work Agreement, Landlord shall not interfere with or delay the
work to be performed hereunder by Tenant, or the contractors and workmen
engaged in the work to be performed hereunder by Tenant, and Tenant shall
have obtained furnishings or equipment. Tenant will be responsible for all
costs resulting from any work provided for on Exhibit "C", including but
not limited to architectural and engineering charges, change orders,
materials and supplying, etc.
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<PAGE> 4
5. Term. The Lease Term, as designated in Item (g) of Basic Terms, shall
commence on the Commencement Date, as designated in Item (g) of Basic
Terms, Landlord anticipates the delivery of the Premises to Tenant on June
1, 1994. In the event Landlord fails to deliver the Premises because the
previous occupant of the Premises is holding over, or for any other cause
beyond Landlord's control, Landlord shall not be liable to Tenant for any
damages as a result of Landlord's delay in delivering the Premises, nor
shall any delay affect the validity of this Lease, and the Commencement
Date of this Lease shall be postponed until ninety (90) days after receipt
of written notice by Landlord of the third (3rd) floor availability for
Tenant Improvement Work. Notwithstanding the foregoing, Landlord shall
deliver the Premises not later than July 1, 1994. The Lease Term shall
commence without regard to the work that is incomplete. Unless sooner
terminated in accordance with the terms hereof, the Lease Term shall end
without the necessity for notice from either party to the other at 12:01
a.m. local time on the Expiration Date designated in Item (g) of Basic
Terms, provided however that in the event of any postponement of the
Commencement Date as provided in this Paragraph 5, the Lease Term shall
remain the same, but the Expiration Date shall be extended for the same
number of days the Commencement Date was postponed. If the permission is
given to Tenant to enter into possession of the Premises, or to occupy
premises other than the Premises, prior to the Commencement Date of the
Lease Term, Tenant covenants and agrees that such occupancy shall be
deemed to be under all the terms, conditions and provisions of this Lease.
Tenant shall complete and furnish to Landlord, on or before occupancy of
the premises, the First Amendment to Lease attached hereto as Exhibit "D",
which shall acknowledge the actual Commencement Date and Expiration Date
of the Lease.
6. Use of Premises. Tenant shall occupy the Premises throughout the Lease
Term and shall use the same for and only for the non-residential purpose
or purposes set forth in Item (n) of Basic Terms and for no other purposes
whatsoever without the written consent of Landlord, which consent shall
not be unreasonably withheld. Tenant shall not use or occupy the Premises
for any unlawful purpose or in any manner that will constitute waste,
nuisance or unreasonable annoyance to Landlord or other tenants of the
Building. Tenant shall comply with all the present and future laws,
ordinances (including zoning ordinances, and environmental and land use
requirements), regulations, and orders of the United States of America,
the Commonwealth of Virginia, the County of Fairfax, and any other public
or quasi-public authority having jurisdiction over the Premises,
concerning the use, occupancy and condition of the Premises and all
machinery, equipment and furnishings therein.
7. Rent.
(a) Minimum Annual Rent. Tenant shall pay the Minimum Annual Rent
designated in Item (i) of Basic Terms in equal monthly installments,
as designated in Item (j) of Basic Terms, in advance, on the first
day of each calendar month during the Lease Term; provided, however,
that the minimum rent for the first full months shall be paid upon
the signing of this Lease. If the Commencement Date shall fall
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<PAGE> 5
on a day other than the first day of a calendar month, the rent
shall be apportioned pro rata on a per-diem basis for the period
between the Commencement Date and the first day of the following
calendar month and such apportioned sum shall be paid on the
Commencement Date. In addition, tenant shall pay Landlord without
setoff the additional rent as hereinafter set forth. Unless
otherwise specifically provided, all sums shall be paid to Landlord
at the address designated in Item (a) of Basic terms or at such
other address as Landlord shall designate in writing to Tenant.
(b) Additional Rent.
(i) Annual Operating Costs. As used herein, the term "Annual
Operating costs" shall mean the costs to Landlord of operating
and maintaining the Property during each calendar year of the
Lease Term. Such costs shall include by way of example rather
than limitation: all real estate taxes and assessments,
general or special, ordinary or extraordinary, imposed upon
the Property (including all improvements thereto), all
insurance premiums, fees, impositions, costs for repairs,
maintenance, service contracts, management fees, governmental
permits, overhead expenses, costs of furnishing water, sewer,
gas, fuel, electricity and other utility services, janitorial
service, trash removal, and the costs of any other items
attributable to operating or maintaining any or all of the
Property excluding any costs which under generally accepted
accounting principles are capital expenditures; provided,
however, that Annual Operating Costs shall also include the
annual amortization (over the anticipated useful life) of the
cost of a capital improvement, plus any interest or financing
charges thereon, falling within any of the following
categories: (i) a labor-saving or energy-saving device or
improvement which eliminates any other component of Annual
Operating Costs or which reduces any such Annual Operating
Costs from the costs that would have been incurred had such
device or improvement not been installed; (ii) an installation
or improvement required by reason of any law, ordinance or
regulation, which requirement did not exist on the date of
this Lease and is generally applicable to similar office
buildings; or (iii) an installation or improvement which
directly enhances safety of tenants in the Building generally.
If Landlord shall receive an abatement of any real estate
taxes or assessments imposed upon the Property, Landlord shall
promptly pay or credit to Tenant an amount equal to Tenant's
share of the proceeds of such abatement, after deducting
Landlord's cost in obtaining the same. If, due to a future
change in the method of taxation, any other tax, however
designated, is imposed in substitution for or in addition to
real estate taxes, then such other tax shall be included
within Annual Operating Costs. The cost of all goods,
services, labor and materials supplied or furnished by
Landlord at the written request of Tenant solely for the
benefit of Tenant and/or the Leased Premises shall not be
included within Annual Operating Costs and shall be paid by
Tenant promptly upon being billed therefor. See Addendum to
Agreement of Lease, Paragraph 3.(a).
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<PAGE> 6
(ii) Base Amount. In addition to the Minimum Annual Rent and annual
adjustments thereto, Tenant shall pay annually as additional
rent the Base Amount set forth in Item (k) of Basic Terms. The
Base Amount shall be payable in equal monthly installments
concurrent with and in the same manner as Tenant's payment of
the Minimum Annual Rent and adjustments thereto. The Base
amount represents Landlord's estimate of Tenant's share of the
Annual Operating Costs for the first year of this Lease; to
the extent the Base Amount is less than Tenant's share of the
Annual Operating Costs as calculated for any given calendar
year, Landlord shall credit such excess to Tenant's account
for the following month, and in the event the Base Amount is
less than Tenant's share of the Annual Operating Costs as
calculated for any given calendar year, Tenant shall, within
ten (10) days of the certification of said Annual Operating
Costs, as provided in subparagraph (iv) below, pay to Landlord
the amount of such deficiency.
(iii) Computation of Tenant's Share of Annual Operating Costs. See
Addendum to Agreement of Lease, Paragraph 3.(b).
(iv) Payments. Tenant, promptly upon being billed therefor, shall
pay to Landlord as additional rent the amount by which
Tenant's share of the Annual Operating Costs exceeds the Base
Amount (it being the intention that by virtue of Tenant's
payment of the Base Amount and the amount set forth in this
subsection (b)(iv), Tenant will pay each year its share of the
total Annual Operating Costs). If only part of any calendar
year shall fall within the Lease Term, the amount computed as
additional rent with respect to such calendar year under the
foregoing provisions shall be prorated in proportion to the
portion of such calendar year falling within the Lease Term.
The expiration of the Lease Term prior to the end of such
calendar year shall not impair Tenant's obligation to pay such
prorated portion as aforesaid. Notwithstanding the foregoing
provisions of this Paragraph 7 to the contrary, Landlord shall
have the right, at its option, to make from time to time
during the Lease Term a reasonable estimate of the additional
rent which may become due hereunder with respect to any
calendar year, and to require Tenant to pay to Landlord, at
the time the monthly installments of Minimum Annual Rent are
payable, the amount obtained by dividing such estimate of
additional rent by the number of months remaining in such
year. Landlord shall cause the actual amount of Tenant's share
of the Annual Operating Costs to be computed and certified to
Tenant within one hundred and twenty (120) days following the
end of each calendar year (or as soon thereafter as may be
practicable), and Tenant shall within ten (10) days of receipt
of the certification thereof pay to Landlord the amount of any
deficiency or Landlord shall credit any overpayment to
Tenant's account for the following month, as the case may be.
Tenant shall have the right to inspect the books and records
used by Landlord in calculating the Annual Operating Costs
within sixty (60) days of receipt of the certification during
regular business hours after having
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<PAGE> 7
given Landlord written notice at least forty-eight (48) hours
prior thereto; provided, however, that Tenant shall make all
payments of additional rent without delay, and that Tenant's
obligation to pay such additional rent shall not be contingent
on any such right.
(v) Late Payment. If Tenant shall fail to pay, when the same is
due and payable, any Minimum Annual Rent or any additional
rent, or any other charges or payments designated as Rent in
Item (i) of Basic Terms, such unpaid amounts shall bear
interest from the due date thereof to the date of payment at
the rate per annum which is two percent (2%) higher than the
"reference rate", "base rate" or "prime rate", or similar rate
announced as such by Chase Manhattan Bank, but in no event
higher than the legal limit.
8. Security Deposit. See Addendum to Agreement of Lease, Paragraph 4.
9. Insurance and Indemnification.
(a) Insurance by Landlord. Landlord shall at all times during the Lease
Term carry, at its own expense, a policy of insurance which insures
the Building, including the Premises, against loss or damage by fire
or other casualty (namely, the perils against which insurance is
afforded by a standard fire insurance policy and extended coverage
endorsement including, without limitation, rental interruption
coverage for all leased space in the Building); provided, however,
that Landlord shall not be responsible for, and shall not be
obligated to insure against, any loss of or damage to any personal
property of Tenant, or which Tenant may have in the Building or the
Premises or any trade fixtures installed by or paid for by Tenant on
the Premises or any additional improvements after the Commencement
Date which Tenant may construct on the Premises, and Landlord,
unless due to Landlord's gross negligence or willful misconduct,
shall not be liable for any loss or damage to such property,
regardless of cause. If any alterations or improvements after the
Commencement Date are made by Tenant pursuant to Paragraph 17 hereof
result in an increase of the premiums charges during the Lease Term
on the casualty insurance carried by Landlord on the Building, then
the cost of such increase in insurance premiums shall be borne by
Tenant, who shall reimburse Landlord for the same as additional rent
after being separately billed therefor. The annual cost of all such
insurance maintained by Landlord shall be considered as a part of
the annual Operating Costs of the Property. If requested in writing
by Tenant, Landlord shall promptly deliver to Tenant certified
copies or other written evidence of such policies and written
evidence that all policies are in effect.
(b) Insurance by Tenant. Tenant shall, at all times during the Lease
Term, at Tenant's cost, obtain and keep in effect the following
insurance insuring Tenant, Landlord and all mortgagees and any other
person or entity designated by Landlord as having an interest in the
Property (as their interest may appear):
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<PAGE> 8
(i) Insurance upon all property situated in the Premises owned by
Tenant or for which Tenant is legally liable and on fixtures
and improvements installed in the Premises by or on behalf of
Tenant. Such polices shall be for an amount of not less than
100% of the full replacement cost with coverage against at
least fire with standard extended coverage, vandalism,
malicious mischief, sprinkler leakage and water damage. If
there is a dispute as to the replacement cost amount, the
decision of Landlord shall be conclusive.
(ii) Business interruption insurance in an amount sufficient to
reimburse Tenant for direct or indirect loss of earnings
attributable to prevention of access to the Building or
Premises as a result of such perils;
(iii) Commercial General Liability insurance including fire, legal
liability and contractual liability insurance coverage with
respect to the Building and the Premises. The coverage is to
include activities and operations conducted by Tenant and any
other person in the Premises and Tenant and any other person
performing work on behalf of Tenant and those for whom Tenant
is by law responsible in any other party of the Building. Such
insurance shall be written on a comprehensive basis with
inclusive limits of not less than $2,000,000 for each
occurrence for bodily injury and property damage or such
higher limits as Landlord, acting reasonably, may require from
time to time, provided, however, that such higher limits are
commercially reasonable. The limit of said insurance shall
not, however, limit the liability of Tenant hereunder.
Landlord shall be named on all liability policies maintained
by Tenant.
(iv) Worker's Compensation insurance for all Tenant's employees
working in the Premises in an amount sufficient to comply with
applicable laws or regulations;
(v) Any other form of insurance as Tenant, Landlord or its
mortgagee, may reasonably require from time to time. Such
insurance shall be in form, amounts and for the risks which a
prudent Tenant would insure.
All policies of insurance maintained by Tenant shall be in a form acceptable to
Landlord; issued by an insurer acceptable to Landlord, which acceptability shall
not be unreasonably withheld; and licensed to do business in the state in which
the Property is located; and require at least thirty (30) days written notice to
Landlord of termination or material alteration and waive, to the extent
available, any right of subrogation against Landlord. All policies shall provide
that the interests of Landlord, its mortgagee or those names insured designated
by Landlord shall not be invalidated because of any breach or violation of any
warranties, representations, declarations or conditions contained in the
policies. All policies must contain a severability of interest clause, a
cross-liability clause and shall be primary and shall not provide for
contribution of any other insurance available to Landlord, its mortgagee, or
those named insureds designated by Landlord. If requested by Landlord, Tenant
shall, upon the Commencement Date designated in Item (g) of Basic Terms, and
thereafter within fifteen(15) days prior to the expiration date of each such
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<PAGE> 9
policy, promptly deliver to Landlord certified copies or other written evidence
of such policies and written evidence satisfactory to Landlord that all premiums
have been paid and all policies are in effect. If Tenant fails to secure or
maintain any insurance coverage required by Landlord, or should insurance
secured not be approved by Landlord and such failure or approval not be
corrected within 48 hours after written notice from Landlord, Landlord may,
without obligation, purchase such required insurance coverage at Tenant's
expense. Tenant shall promptly reimburse Landlord for any monies so expended as
additional rent.
(c) Tenant's Contractor's Insurance. Tenant shall require any contractor
of Tenant permitted to perform work in, on or about the Premises to
obtain and maintain the following insurance coverage at no expense
to Landlord:
(i) Commercial General Liability Insurance, including a Broad Form
General Liability Endorsement, in the amount of $1,000,000,
naming Landlord and Tenant as insured.
(ii) Workers Compensation Insurance for all contractor's employees
working in the premises in an amount sufficient to comply with
applicable laws or regulations.
(iii) Employers Liability Insurance in an amount not less than
$100,000.
(iv) Any other insurance as Tenant, Landlord or its mortgagee may
require from time to time.
(d) Indemnification. Tenant, at Tenant's sole cost and expense, shall
indemnify and hold harmless Landlord from all loss, claim, demand,
damage, liability or expense, including attorneys' fees, resulting
from any injury to or death of any person or any loss of or damage
to any property caused by or resulting from any act, omission or
negligence of Tenant or any officer, employee, agent, contractor,
licensee, guest, invitee or visitor of Tenant in or about the
Premises or the Building, but the foregoing provision shall not be
construed to make Tenant responsible for loss, damage, liability or
expense resulting from injuries to third parties caused by any act,
omission or negligence of Landlord or of any officer, employee,
agent, contractor, invitee, licensee or visitor of Landlord.
Landlord shall not be liable for any loss or damage to person,
property or Tenant's business sustained by Tenant, or other persons,
which may be caused by the Building or the Premises, or any
appurtenances thereto, being out of repair or by the bursting or
leakage of any water, gas, sewer or steam pipe, or by theft or by
any act of neglect of any tenant or occupant of the Building, or any
other person, unless due to Landlord's negligence or willful
misconduct.
(e) Waiver of Subrogation. Landlord and Tenant each agree that neither
Landlord nor Tenant (and their successors and assigns) will have any
claim against the other for any loss, damage or injury which is
covered by insurance carried by either party and for which recovery
from such insurer is made, notwithstanding the negligence of either
party in causing the loss. This release shall act valid only
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<PAGE> 10
if the insurance policy in question expressly permits waiver of
subrogation or if the insurer agrees in writing that such waiver of
subrogation will not affect coverage under said policy. Each party
agrees to use its best efforts to obtain such an agreement from its
insurer if the policy does not expressly permit a waiver of
subrogation.
(f) Increase of Premiums. Tenant will not do anything or fail to do
anything which will cause the cost of Landlord's insurance to
increase or which will prevent Landlord from procuring policies
(including but not limited to public liability) from companies and
in a form satisfactory to Landlord. If any breach of this Paragraph
9(f) by Tenant shall cause the rate of fire or other insurance to be
increased, Tenant shall pay the amount of such increase as
additional rent promptly upon being billed therefor.
(g) Tenant's Additional Insurance. Landlord makes no representation that
the limits of liability specified to be carried by Tenant under the
terms of this Lease are adequate to protect Tenant against Tenant's
undertaking under this Paragraph 9, and in the event Tenant believes
that any such insurance coverage called for under this Lease is
insufficient, Tenant shall provide, at its own expense, such
additional insurance as Tenant deems adequate.
10. Damage by Fire or Other Casualty; Casualty Insurance.
(a) Obligation to Repair or Rebuild. If the Premises or Building shall
be damaged or destroyed by fire or other casualty, Tenant shall
promptly notify Landlord of any damage or destruction to the
Premises, and Landlord, subject to the mortgagee's consent and to
the conditions set forth in this Paragraph 10, shall repair, rebuild
or replace such damage and restore the Premises and/or the Building,
subject to subparagraph (f) below, to substantially the same
condition in which they were immediately prior to such damage or
destruction; provided, however, that Landlord shall only be
obligated to restore such damage which is covered by the fire and
other extended coverage insurance policies.
(b) Commencement and Completion of Work. The work shall be commenced
promptly and completed with due diligence, taking into account the
time required by Landlord to effect a settlement with, and procure
insurance proceeds from, the insurer and for delays beyond
Landlord's reasonable control.
(c) Application of Proceeds. The net amount of any insurance proceeds
(excluding proceeds received pursuant to the rental interruption
coverage obtained by Landlord in accordance with Paragraph 9(a)
hereof), recovered by reason of the damage or destruction of the
Building in excess of the cost of adjusting the insurance claim and
collecting the insurance proceeds (such excess amount being
hereinafter called the "net insurance proceeds") shall be applied
towards the reasonable cost of restoration. If in Landlord's sole
opinion the net insurance proceeds will not be adequate to complete
such restoration, Landlord shall have
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<PAGE> 11
the right to terminate this Lease and all the unaccrued obligations
of the parties hereto by sending a written notice of such
termination to Tenant, the notice to specify a termination date no
less than ten (10) days after its transmission; provided, however,
that if the damage relates only to the Premises and occurs prior to
the last two (2) years of the Lease Term, Tenant, subject to
subparagraph (f) below, may require Landlord to withdraw the notice
of termination by agreeing to pay the cost of restoration in excess
of the net insurance proceeds and by giving Landlord adequate for
such payment prior to the termination date specified in Landlord's
notice of termination. If the net insurance proceeds are more than
adequate, the amount by which the net insurance proceeds exceed the
cost of restoration will be retained by Landlord.
(d) Tenant's Fixtures and Improvements. Landlord's obligation or
election to restore the Premises under this Paragraph 10 shall not
include the repair, restoration or replacement of the fixtures,
improvements, alterations, furniture or any other property owned,
installed, made by, or in the possession of Tenant.
(e) Abatement of Rent. Tenant will receive an abatement of its Minimum
Annual Rent and Additional Rent to the extent and during the time
the Premises are rendered untenantable due to casualty, such rent to
abate in such proportion as the part of the Premises thus destroyed
or rendered untenantable bears to the total Premises while such
repairs are being made. If the Premises are so slightly damaged by
such fire or other casualty as not to be rendered untenantable,
Landlord shall make the repairs its deems necessary with reasonable
promptness and the payment of rent shall not be affected thereby.
Landlord shall reasonably judge as to whether such destruction or
damage has caused the Building or the Premises to be untenantable or
whether the same cannot be rendered tenantable within the one
hundred twenty (120) day period set forth in subparagraph (f) below.
Tenant shall, at its own cost and expense, remove such of its
furniture and furnishings and other belongings from the Premises as
Landlord shall require in order to repair and restore the Premises.
(f) Landlord's Option Not to Restore. Notwithstanding the foregoing
provisions, if there is substantial destruction of the Building, or
if, in the reasonable judgment of Landlord, such damage cannot be
repaired and the Premises cannot be made tenantable within one
hundred twenty (120) days of such damage, Landlord shall have the
option not to restore, and may elect to terminate this Lease by
sending notice as referred to in subparagraph (c) above, without
giving Tenant the right to cause the notice of termination to be
withdrawn. Landlord shall notify Tenant in writing within forty-five
(45) days after the date of such damage or destruction of Landlord's
estimate of the period of time required to repair and restore the
Premises to tenantable condition. If such period of time exceeds one
hundred and fifth (150) days, Tenant shall also have the right to
terminate this Lease by written notification to Landlord of such
termination within fifteen (15) days of delivery of Landlord's
notice to Tenant.
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<PAGE> 12
11. Condemnation.
(a) Termination. (i) If all of the Premises are covered by a
condemnation; or (ii) if any part of the Premises is covered by a
condemnation and the remainder thereof is insufficient for the
reasonable operation therein of Tenant's business; or, (iii) if any
of the Property is covered by a condemnation and, if Landlord's
reasonable opinion, it would be impractical or the condemnation
proceeds are insufficient to restore the remainder of the Property;
then, in any such event, this Lease shall terminate and all
obligations hereunder shall cease as of the date upon which
possession is taken by the condemnor and the Rent herein reserved
shall be apportioned and paid in full by Tenant to Landlord to that
date and all Rent prepaid for periods beyond that date shall
forthwith be repaid by Landlord to Tenant.
(b) Partial Condemnation. If there is a partial condemnation and this
Lease has not been terminated pursuant to subparagraph (a) hereof,
Landlord shall restore the Building and the improvements which are
part of the Building to a condition and size as nearly comparable as
reasonably possible to the condition and size thereof immediately
prior to the date upon which possession shall have been taken by the
condemnor. If the condemnation proceeds are more than adequate to
cover the cost of restoration and Landlord's expenses in collecting
the condemnation proceeds, any excess proceeds shall be retained by
Landlord. If there is a partial condemnation and this Lease has not
been terminated by the date upon which the condemnor shall have
obtained possession, the obligations of Landlord and Tenant under
this Lease shall be unaffected by such condemnation except that
there shall be an equitable abatement of the Minimum Annual Rent in
direct proportion to the amount of the Premises so taken.
(c) Award. In the event of a condemnation affecting Tenant, Tenant shall
have the right to make a separate claim against the condemnor for
removal and relocation costs and expenses and the taking of Tenant's
tangible property; provided and to the extent, however, that such
claims or payments do not reduce the sums otherwise payable by the
condemnor to Landlord. Except as aforesaid, Tenant hereby waives all
claims against Landlord and against the condemnor, and Tenant hereby
assigns to Landlord all claims against the condemnor including,
without limitation, all claims for leasehold damages and diminution
in value of Tenant's leasehold interest.
(d) Temporary Taking. If the condemnor should take only the right to
possession of the Premises for a fixed period of time or for the
duration of an emergency or other temporary condition, then,
notwithstanding anything hereinabove provided, this Lease shall
continue to full force and effect without any abatement of Rent, but
the amounts payable by the condemnor with respect to any period of
time prior to the expiration or sooner termination of this Lease
shall be paid by the condemnor to Landlord and the condemnor shall
be considered a subtenant of Tenant. Landlord shall apply the amount
received from the condemnor applicable to the Rent due hereunder net
of costs to Landlord for the collection thereof, or as
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<PAGE> 13
much thereof as may be necessary for the purpose, toward the amount
due from Tenant as Rent for that period; and Tenant shall pay to
Landlord any deficiency between the amount thus paid by the
condemnor and the amount of the Rent, or Landlord shall credit to
future rental payments due from Tenant any excess of the amount of
the award over the amount of the Rent.
12. Non-Abatement of Rent. Except as otherwise expressly provided as to damage
by fire or by any other casualty in subparagraph (e) of Paragraph 10 and
as to condemnation in subparagraphs (a) and (b) of Paragraph 11, and as
otherwise provided under this Lease, there shall be no abatement or
reduction of the minimum rent, additional rent or other sums payable
hereunder for any cause whatsoever, and this Lease shall not terminate,
and Tenant shall not be entitled to surrender or abandon the Premises.
13. Repairs and Maintenance.
(a) Tenant's Obligations. Tenant, at its sole cost and expense and
throughout the Lease Term and any renewals or extensions thereof,
shall keep and maintain the Premises in a neat, safe and orderly
condition and shall make all necessary non-structural repairs
thereto. Tenant shall not use or permit the use of any portion of
the common areas for other than their intended use. Upon the
expiration of the Lease Term, Tenant shall yield and deliver up the
Premises in like condition as when taken, reasonable use and wear
thereof and repairs required to be made by Landlord excepted.
Anything hereinabove to the contrary notwithstanding, from and after
the date Tenant has taken occupancy of the Premises, any repairs,
additions or alterations to the Premises which are required by OSHA
shall be promptly made by Tenant, at its sole expense, if or to the
extent that such repairs, additions or alterations are required only
with respect to the Premises, and any such repairs, additions and/or
alterations made by Tenant shall be subject to the provisions of
this Paragraph 13 and Paragraph 17 hereof.
(b) Landlord's Obligations. Landlord, subject to subparagraph (c) below,
throughout the Lease Term and any renewals or extensions thereof,
shall make all necessary structural repairs to the Building and any
necessary repairs to the mechanical, HVAC, electrical and plumbing
systems in or servicing the Premises, excluding repairs to any such
systems or components thereof which are not of, the same type and
nature as those provided by Landlord as part of the Building
standard improvements; provided, however, that Landlord shall have
no responsibility to make any repairs unless and until Landlord
receives written notice of the need for such repair. Except as
otherwise provided herein, the cost of all such repairs shall be
borne by Landlord and included as part of Annual Operating Expenses.
Tenant shall within a reasonable time report in writing to Landlord
any defective condition known to Tenant in the demised premises
which Landlord is required to repair. Failure to so report shall
make Tenant responsible for the additional damages resulting from
such failure to so report. Landlord shall not be liable for any
failure to make repairs or to perform any maintenance or to initiate
the
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<PAGE> 14
process to make such repairs and maintenance unless such failure
shall persist for an unreasonable time after written notice of the
need for such repairs or maintenance is received by Landlord from
Tenant. Landlord shall keep repaired and maintain all common areas
of the Property and any sidewalks, parking areas, curbs and access
ways adjoining the Property in a clean and orderly condition.
(c) Interference with Use of Premises; No Release from Obligations. In
the event that Landlord shall deem it necessary, or be required by
any governmental authority, to repair, alter, remove, reconstruct or
improve any part of the Premises or the Building (unless the same
result from Tenant's act, neglect, default or mode of operation, in
which event Tenant shall make all such repairs, alterations and
improvements), then the same shall be made by Landlord with best
efforts and should the making of such repairs, alterations or
improvements cause any interference with Tenant's use of the
Premises, such interference shall not relieve Tenant from the
performance of its obligations hereunder, nor shall such
interference be deemed an actual or constructive eviction or partial
eviction or result in an abatement of Rent, except as otherwise
provided in Paragraph 14(d) below. Notwithstanding the foregoing,
Tenant shall, at its own cost and expense, make all repairs and
provide all maintenance in connection with any alterations,
additions or improvements made by Tenant pursuant to Paragraph 17
hereof.
14. Utilities and Services.
(a) Utilities and Services Furnished by Landlord. Provided Tenant is not
in default hereunder, Landlord agrees to furnish or cause to be
furnished to the Premises, the utilities and services described
below, subject to the conditions and in accordance with the
standards set forth in this Paragraph 14.
(i) Landlord shall provide automatic elevator facilities Monday
through Friday from 8 a.m. to 6 p.m., and on Saturday from 9
a.m. to 1 p.m. At least one elevator shall be available for
use at all other times;
(ii) Landlord shall furnish heat or air conditioning Monday through
Friday from 8 a.m. to 6 p.m. and on Saturdays from 9 a.m. to 1
p.m., when, in the judgment of Landlord, it is required for
the comfortable occupancy and use of the Premises. Upon
request, Landlord shall make available, at Tenant's expense,
after-hours heat or air conditioning. The minimum use of
after-hours heat or air conditioning and the cost thereof
shall be determined from time to time by Landlord and
confirmed in writing to Tenant;
(iii) Landlord shall furnish to the Premises, subject to
interruptions beyond Landlord's control, such electricity as
is required for the use of the office lighting and electrical
outlets 24 hours per day, 365 days per year as provided in
building standard;
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<PAGE> 15
(iv) Landlord shall furnish water for drinking; cleaning and
lavatory purposes only;
(v) Landlord shall provide cleaning and janitorial services to the
Premises, as described in Exhibit "E" attached hereto and made
a part hereof.
(b) Special and Additional Usage. Landlord may impose a reasonable
charge for any utilities and services, including without limitation,
air conditioning, electricity, and water, provided by Landlord by
reason of: (i) any use of the Premises at any time other than the
hours set forth above; (ii) any use beyond what Landlord agrees
herein to furnish; or (iii) special electrical, cooling and
ventilating needs created by Tenant's telephone equipment,
computers, electronic data processing equipment and other similar
equipment or uses. Landlord, at its option, may require installation
of metering devices, at Tenant's expense, for the purpose of
metering Tenant's utility consumption.
(c) Cooperation; Payment of Charges, Approval of Special Equipment
Usage. Tenant agrees to cooperate fully at all times with Landlord
and to abide by all regulations and requirements which Landlord may
prescribe for the use of the above utilities and services. Tenant
agrees to pay any charge imposed by Landlord pursuant to Paragraph
(b) above and any failure to pay any excess costs as described above
shall constitute a breach of the obligation to pay Rent under this
Lease and shall entitle Landlord to the rights herein granted for
such breach. Tenant's use of electricity shall at no time exceed the
capacity of the service to the Premises or the electrical risers or
wiring installation. Tenant shall not install or use or permit the
installation or use of any computer or electronic data processing
equipment in the Premises, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld.
(d) Failure, Stoppage or Interruption of Service; No Release from
Obligations. Landlord shall not be liable for, and Tenant shall not
be entitled to any abatement or reduction of Rent by reason of,
Landlord's failure to furnish any of the foregoing services when
such failure is caused by accident, breakage, repairs, riots,
strikes, lockouts or other labor disturbance or labor dispute of any
character, governmental regulation, moratorium or other governmental
action, inability by exercise of reasonable diligence to obtain
electricity, water or fuel, or by any other cause beyond Landlord's
immediate control or for stoppage or interruptions of any such
services for the purpose of making necessary repairs or
improvements. Failure, stoppage or interruption of any such service
shall not be construed as an actual or constructive eviction or as a
partial eviction against Tenant, or release Tenant from the prompt
and punctual performance by Tenant of the covenants contained
herein. However, if there is an interruption in utilities or
services, beyond Landlord's control, and said interruption continues
for five (5) consecutive business days, Tenant will be entitled to
rent abatement of the period such service is not provided to the
extent that such interruption interferes with Tenant's use of the
Premises. If interruption continues for sixty (60) days, Tenant
shall have the option, unless Landlord is demonstrating best efforts
to cure any of
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<PAGE> 16
the above, to terminate this Lease. Notwithstanding anything
hereinabove to the contrary, Landlord reserves the right from time
to time to make reasonable and nondiscriminatory modifications to
the above standards for utilities and services.
(e) Limitation and Unavailability of Service. Anything hereinabove to
the contrary notwithstanding, Landlord and Tenant agree that
Landlord's obligation to furnish heat, electricity, air conditioning
and/or water to the Premises shall be subject to and limited by all
laws, rules, and regulations of any governmental authority affecting
the supply, distribution, availability, conservation or consumption
of energy, including, but not limited to, heat, electricity, gas,
oil and/or water. Landlord shall abide by all such governmental
laws, rules and regulations and, in so doing, Landlord shall not be
in default in any manner whatsoever under the terms of this Lease,
and Landlord's compliance therewith shall not affect in any manner
whatsoever Tenant's obligation to pay the full Rent set forth in
this Lease.
(f) Lighting Fixtures and Lamps. Landlord shall replace building
standard fluorescent tubes throughout the initial Lease term when
necessary.
(g) Load Bearing Capacity. Tenant shall not place a loan upon any floor
of the Premises which exceeds the load per square foot which such
floor was designed to carry and which is allowed by law. Landlord
reserves the right to prescribe in a reasonable manner the weight
and position of all safes and heavy installations which Tenant
wishes to place in the Premises so as to properly distribute the
weight thereof. Any cost of structural analysis shall be borne by
Tenant.
(h) Unreasonable Noise or Vibration. Business machines and mechanical
equipment belonging to Tenant which cause unreasonable noise or
vibration that may be transmitted to the structure of the Building
or to any lease space to such a degree as to be objectionable to
Landlord or to any tenants in the Building shall be placed and
maintained by Tenant, at Tenant's expense, on vibration eliminators
or other devices sufficient to eliminate such unreasonable noise or
vibration.
15. Governmental Regulations. Tenant shall not violate any laws, ordinances,
notices, orders, rules, regulations or requirements, including without
limitation those pertaining to environmental matters, of any federal,
state or municipal government or any department, commission, board or
office thereof, or of the National Board of Fire Underwriters or any other
body exercising similar functions, relating to the Premises or to the use
or manner of use of the Property, nor shall Tenant perform any acts or
carry on any practices which may injure the Property or the Premises or be
a nuisance, disturbance or menace to any other tenants of the Building.
Upon breach of this Paragraph 15, Landlord shall have the right to
terminate this Lease forthwith and to re-enter and repossess the Premises,
but Landlord's right to damages shall survive.
16. Directory; Signs. Landlord will place Tenant's name and suite number on
the Building standard directory. Except for signs which are located wholly
within the interior of the Premises and which are not visible from the
exterior of the Premises, and except for signs
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<PAGE> 17
on office doors with size, design, lettering and text approved by
Landlord, which approval shall not be unreasonably withheld, no signs
shall be placed, erected, maintained or painted by Tenant at any place
upon the Premises or the Property.
17. Alterations and Additions. After Tenant's initial build-out, Tenant shall
not do any painting or decorating, erect any partitions, or make any
alterations, additions, changes or repairs (hereinafter referred to as
"Alterations and Additions") to the Premises without obtaining in each
instance Landlord's prior written consent which approval shall not be
unreasonably withheld. All Alterations and Additions shall be performed by
Landlord or Landlord's contractors, or shall be performed under Landlord's
regulation. In the event Alterations and Additions are not performed by
Landlord or Landlord's contractors, Tenant shall pay to Landlord a
reasonable fee, for its regulation of such Alterations and Additions. All
Alterations and Additions shall remain upon and be surrendered with the
Premises unless, prior to or upon the expiration or termination of this
Lease, Landlord shall give written notice to Tenant to remove the same, in
which event Tenant will remove such Alterations and Additions within ten
(10) days after the expiration or termination of this Lease, and repair
and restore any damage to the Premises caused by the installation or
removal thereof. Landlord shall state upon receipt of Tenant's plans and
specifications for any proposed alterations whether Tenant will be
required to remove the alterations at the expiration or earlier
termination of the Lease. If Tenant does not remove said Alterations and
Additions within said ten (10) day period, Landlord may remove the same
and Tenant shall pay the cost of such removal to Landlord upon demand.
Tenant hereby agrees to protect, defend, indemnify and hold harmless
Landlord, its agents and employees, with respect to the Premises and the
Property, from any and all liabilities of every kind and description which
may arise out of or be connected in any way with said Alterations and
Additions. Any mechanic's lien filed against the Premises or the Property
or any notice which is received by either Landlord or Tenant for work
claimed to have been furnished to Tenant, and performed other than by
Landlord or Landlord's contractors, shall be released and discharged
within ten (10) days after such filing or receipt, whichever is
applicable, at Tenant's expense. Alterations and Additions permitted to be
performed other than by Landlord or Landlord's contractors shall be
performed in a manner so as not to annoy or disturb other tenants or
occupants of the Building, and shall be performed only during such hours
and under such conditions as shall be designated by Landlord. Upon
completion of Alterations and Additions performed other than by Landlord
or Landlord's contractors, Tenant shall furnish Landlord with contractors'
affidavits and full and final waivers of lien and receipted bills covering
all labor and materials expended and used. All Alterations and Additions
shall comply with all insurance requirements and with all applicable laws,
statutes, ordinances and regulations. All Alterations and Additions shall
be constructed in a good and workmanlike manner and only first-class
material shall be used. The performance of any Alterations and Additions
to the Premises by either Landlord or Landlord's contractors on behalf of
Tenant shall not be deemed or construed by the parties hereto, or by any
third party, as creating the relationship of principal and agent or of
partnership, or of joint venture, by and between the parties hereto, it
being understood and agreed that no provision contained in this Paragraph
17 or elsewhere in this Lease nor any acts of the
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<PAGE> 18
parties hereto shall be deemed to create any relationship other than the
relationship of Landlord and Tenant.
18. Landlord's Right to Entry.
(a) Right of Entry; No Release from Obligations. Tenant shall permit
Landlord and the authorized representatives of Landlord and of any
mortgage or any prospective mortgagee to enter the Premises at all
reasonable times upon reasonable notice (except in case of
emergency), for the purpose of (i) inspecting the Premises or (ii)
making any necessary repairs thereto or to the Property and
performing any work therein. During the progress of any work on the
Premises or the Property, Landlord will use best efforts not to
inconvenience Tenant, but shall not be liable for inconvenience,
annoyance, disturbance, loss of business or other damage to Tenant
by reason of making any repair or by bringing or storing materials,
supplies, tools and equipment in the Premises during the performance
of any work, and the obligations of Tenant under this Lease shall
not be thereby affected in any manner whatsoever.
(b) Sale; Mortgage; Prospective Tenants. Landlord shall have the right
at all reasonable times and with reasonable notice to enter and to
exhibit the Premises for the purpose of sale or mortgage, and,
during the last nine (9) months of the Lease Term, to enter and to
exhibit the Premises to any prospective tenant.
19. Quite Enjoyment. Tenant, upon paying the minimum rent, additional rent and
other charges herein provided for, and observing and keeping all
covenants, agreements and conditions of this Lease on its part to be kept,
shall quietly have and enjoy the Premises during the Lease Term without
hindrance or molestation by anyone claiming by or through Landlord,
subject, however, to the exceptions, reservations and conditions of this
Lease. Landlord hereby reserves the right to prescribe, at its sole
discretion, reasonable rules and regulations (herein called the "Rules and
Regulations") having uniform applicability to all similarly situated
tenants of the Building and governing the use and enjoyment of the
Premises and the remainder of the Property; provided that the Rules and
Regulations shall not materially interfere with Tenant's use and enjoyment
of the Premises in accordance with the provisions of this Lease for the
permitted uses. Tenant shall adhere to the Rules and Regulations and shall
cause its agents, employees, invitees, visitors and guests to do so. A
copy of the Rules and Regulations in effect on the date hereof is attached
hereto as Exhibit "F".
20. Assignment and Subletting. Tenant for itself; its successors and assigns,
expressly covenants that it shall not by operation of law or otherwise
assign, sublet hypothecate, encumber or mortgage this Lease, or any part
thereof, or permit the Premises to be used by others without the prior
written consent of Landlord in each instance. Any attempt by Tenant to
assign, sublet, encumber or mortgage in contravention of the provisions of
this Lease shall be null and void. However, Tenant shall have the right to
assign its leasehold interest hereunder or sublease all or any portion of
the Premises to an Affiliate of Tenant
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<PAGE> 19
or to any corporation successor (by merger, operation of law or
acquisition of substantially all the operating assets of Tenant) or
Tenant, without the consent or approval of Landlord; provided, that (a)
each such assignee (other than in the case of a merger of other transfer
where no former assignment of the Lease is involved) shall assume all
obligations of Tenant to be thereafter performed hereunder, and (b) each
such sublessee shall agree that its sublease shall be subject and
subordinate to this Lease. As used herein, the term "Affiliate" shall mean
any corporation or other entity or person with controls, is controlled by
or is under common control with Tenant, with the term "control" being
deemed to mean beneficial ownership of more than twenty percent (20%) of
the voting power of such entity. The consent by Landlord to any
assignment, mortgage, hypothecation, encumbrance, subletting or use of the
Premises by others, shall not constitute a waiver of Landlord's right to
withhold its consent to any other or further assignment, subletting,
mortgage, encumbrance or use of the Premises by others. Without the prior
written consent of Landlord, this Lease and the interest therein of any
assignee of Tenant herein, shall not pass by operation of law or
otherwise, and shall not be subject to garnishment or sale under execution
in any suit or proceeding which may be brought against or by Tenant or any
assignee of Tenant. Notwithstanding any provisions of this Lease to the
contrary, the provisions of this section shall not apply to, and no
approval of Landlord shall be required in the case of (i) any sale,
exchange, or other transfer of stock or other interest in Tenant to an
entity whose net worth is equal to or greater than Tenant's net worth, or
(ii) the occupancy of any space within the Premises by any licensee or
invitee of Tenant on a temporary basis. The absolute and unconditional
prohibitions contained in this Paragraph 20 and Tenant's agreement thereto
are material inducements to Landlord to enter into this Lease with Tenant
and any breach thereof shall constitute a material default hereunder
permitting Landlord to exercise all remedies provided for herein or by law
or in equity on a default of Tenant. If Tenant requests Landlord's consent
to an assignment of this Lease or subletting of all or any part of the
Premises, Tenant shall submit to Landlord: (1) the name of the proposed
assignee or subtenant; (2) the terms of the proposed assignment or
subletting together with a conformed or photostatic copy of the proposed
assignment or sublease; (3) the nature of business of the proposed
assignee or subtenant's business and its proposed use of the Premises; (4)
such reasonable information as to its financial responsibility and general
reputation as Landlord may require; and (5) a summary of plans and
specifications for revising the floor layout of the Premises.
Upon the receipt of such information from Tenant, Landlord shall have the
option, to be exercised in writing within thirty (30) days after such
receipt, to cancel and terminate this Lease if the request is to assign
this Lease or sublet more than fifty percent (50%) of the Premises or, if
the request is to sublet a portion of the Premises only, to cancel and
terminate this Lease with respect to such portion, in each case as of the
date set forth in Landlord's notice of exercise of such option.
If Landlord shall cancel this Lease, Tenant shall surrender possession of
the Premises, or the portion of the Premises which is the subject of the
request, as the case may be, on the date set forth in such notice in
accordance with the provisions of this Lease relating to surrender of the
Premises. If this Lease shall be canceled as to a portion of the Premises
only, the Minimum Annual Rent and all Additional Rent payable by Tenant
hereunder
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<PAGE> 20
shall be abated proportionately according to the ratio that the number of
square feet in the portion of space surrendered (as computed by Landlord)
bears to the rentable area of the Premises.
If Landlord shall fail to exercise its option to cancel and terminate this
Lease with respect to all or part of the Premises as above provided,
Landlord shall not thereby be deemed to have consented to the proposed
assignment or subletting.
Landlord shall not unreasonably withheld its approval to any proposed
assignment of this Lease on sublease of all or any parties of the Premises
for which Landlord's approval is required under this Paragraph 20.
Landlord's approval shall be deemed to be unreasonably withheld if (i) the
proposed use of the Premises by the proposed assignee or sublessee is
permitted under the provisions of Paragraph 1 (n) (Permitted Uses) and
(ii) either the proposed assignee or sublessee has a net worth determined
substantially in accordance with generally accepted accounting principles,
consistently applied, of two million dollars ($2,000,000.00) or more.
Landlord's approval of any such assignment or sublease shall be
conclusively deemed given if not denied in writing within twenty (20)
business days after receipt of Tenant's request for such approval.
If Landlord shall consent to a sublease or an assignment pursuant to the
request from Tenant, Tenant shall cause to be executed by its assignee or
subtenant an agreement to perform faithfully and to assume and be bound by
all of the terms, covenants, conditions, provisions and agreements of this
Lease for the period covered by the assignment or sublease and to the
extent of the space sublet or assigned. An executed counterpart of each
sublease or assignment and assumption of performance by the sublessee or
assignee, in form and substance approved by Landlord, shall be delivered
to Landlord within five (5) days prior to the commencement of occupancy
set forth in such assignment or sublease; no such assignment or sublease
shall be binding on Landlord until Landlord has received such counterpart
as required herein.
If Landlord shall give its consent to any assignment of this Lease or to
any sublease, Tenant shall in consideration therefor pay to Landlord as
additional rent the following amounts less the actual expenses incurred by
Tenant in connection with such assignment or subletting including legal
fees, brokerage commissions and costs of making alterations, as the case
may be:
(i) In the case of an assignment, an amount equal to fifty percent
(50%) of all sums and other considerations paid to Tenant by
the assignee for or by reason of such assignment (including,
but not limited to, sums paid for the sale of Tenant's
fixtures, leasehold improvements, equipment, furniture,
furnishings or other personal property less the then net
unamortized or undepreciated cost thereof determined on the
basis of Tenant's federal income tax returns); and
(ii) In the case of a sublease, fifty percent (50%) of any rents,
additional charge or other consideration payable under the
sublease to Tenant by the subtenant which is in excess of the
minimum rent and all additional rent
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<PAGE> 21
accruing during the term of the sublease in respect of the
subleased space (at the rate per square foot payable by Tenant
hereunder) pursuant to the terms hereof (including, but not
limited to, sums paid for the sale or rental of Tenant's
fixtures, leasehold improvements, equipment, furniture,
furnishings or other personal property, less the then net
unamortized or undepreciated cost thereof determined on the
basis of Tenant's federal income tax returns).
The sums payable as set forth above shall be paid to Landlord as
additional rent as and when paid by the assignee or subtenant to Tenant.
Notwithstanding the language contained herein, Tenant shall not sublease
more than 6200 square feet, unless such sublease is with an affiliate.
In no event (except in the event the assignee has a net worth of at least
ten million dollars ($10,000,000.00), as determined substantially in
accordance with generally accepted accounting principles, consistently
applied) shall any assignment or subletting to which Landlord may consent,
release or relieve Tenant from its obligations to fully observe or perform
all of the terms, covenants and conditions of this Lease on its part to be
observed or performed.
Where evidence of net worth is required under this Paragraph 20, the most
recent annual (or other current) financial statements of the entity shall
in all cases be deemed sufficient if prepared and audited by an
independent certified public accounting firm of national standing; in the
absence of such audited financial statements, other reasonable evidence
may be supplied.
21. Subordination. Landlord reserves the right to subject and subordinate this
Lease at all times to the lien of any first mortgage now or hereafter
placed upon Landlord's interest in the Premises, the Building and/or the
Property, and to any second mortgage with the consent of the first
mortgagee, and Tenant shall executed and deliver any and all documents
necessary to evidence such subordination. Tenant hereby irrevocably
appoints Landlord the Attorney-in-Fact of Tenant to execution and deliver
any such instrument or instruments for and in the name of Tenant as may be
necessary to effect such subordination; provided, however, no default by
Landlord under any such mortgage(s) shall affect Tenant's rights hereunder
so long as Tenant is not in default under this Lease. Tenant shall, in the
event any proceedings are brought for the foreclosure of any such
mortgage(s), attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as Landlord under this Lease.
22. Tenant's Certificate. Tenant, at any time and from time to time and within
ten (10) days after Landlord's written request, shall execute, acknowledge
and deliver to Landlord a written instrument in recordable form certifying
that this Lease is unmodified and in full force and effect (or, if there
have been modifications, that it is in full force and effect as modified
and stating the modifications); stating that the improvements required by
Paragraph 4 hereof have been completed by Tenant; certifying that Tenant
has accepted
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<PAGE> 22
possession of the Premises; stating the date on which the Lease Term
commenced and the dates to which minimum rent, additional rent and other
charges have been paid in advance, if any; stating that to the best
knowledge of the signer of such instrument Landlord is not in default of
this Lease (or if there are defaults alleged by Tenant, setting forth in
detail the nature of such alleged defaults); stating any other fact or
certifying any other condition reasonably requested by Landlord or
required by any mortgagee or prospective mortgagee or purchaser of the
Property or any interest therein; and stating that it is understood that
such instrument may be relied upon by any mortgagee or prospective
mortgagee or purchaser of the Property or any interest therein or by any
assignee of Landlord's interest in this Lease or by any assignee of any
mortgagee. The foregoing instrument shall be addressed to Landlord and to
any mortgagee, prospective mortgagee, purchaser or other party specified
by Landlord. Said instrument shall be in the form of Exhibit "G" attached
hereto.
23. Surrender.
(a) Condition of Premises. Subject to the terms of Paragraph 13 and
subparagraph (c) of Paragraph 10 hereof, at the expiration or
earlier termination of the Lease Term, Tenant shall promptly yield
up, clean and neat, and in the same condition, order and repair in
which they are required to be kept throughout the term hereof, the
Premises and all improvements, alterations and additions thereto,
and all fixtures and equipment servicing the Building, ordinary wear
and tear excepted.
(b) Holding Over. If Tenant, or any person claiming through Tenant,
shall continue to occupy the Premises after the expiration or
earlier termination of the Lease Term or any renewal thereof, such
occupancy shall be deemed to be under a month-to-month tenancy under
the same terms and conditions set forth in this Lease; except,
however, that the Monthly Rent Installments for each month during
such continued occupancy shall be one hundred fifty percent (150%)
the amount set fort in Item (j) of Basic Terms. Anything to the
contrary notwithstanding, any holding over by Tenant without
Landlord's prior written consent shall constitute a default
hereunder and shall be subject to all the remedies set forth in
Paragraph 24 hereof.
24. Defaults - Remedies.
(a) Defaults. It shall be an event of default: (i) if Tenant does not
pay in full when due and without demand any and all installments of
minimum rent or additional rent or any other charges or payments
designated as Rent in Item (h) of Basic Terms; or (ii) If Tenant
violates or fails to perform or otherwise breaches any agreement,
term, covenant or condition herein contained; (iii) or if Tenant
vacates or abandons any portion of the Premises, or fails to occupy
the Premises for a period of thirty (30) days or if substantially
all of Tenant's assets in or on the Premises or Tenant's interest in
this Lease is attached or levied upon under execution (and Tenant
does no discharge same within sixty (60) days thereafter);
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<PAGE> 23
or if Tenant removes or attempts to remove Tenant's goods or
property therefrom other than in the ordinary course of business
without having first paid to Landlord in full all minimum rent,
additional rent and other charges that may have become due as well
as all which will become due thereafter; or (iv) If Tenant becomes
insolvent or bankrupt in any sense or makes an assignment for the
benefit of creditors or offers a composition or settlement to
creditors, under any federal or state law, or if a petition in
bankruptcy or for reorganization or for an arrangement with
creditors under any federal or state law is filed by or against
Tenant, or Tenant is adjudicated insolvent pursuant to the
provisions of any present or future insolvency law of any state
having jurisdiction, or a bill in equity or other proceeding for the
appointment of a receiver, trustee, liquidator, custodian,
conservator or similar official for any of Tenant's assets is
commenced, under any federal or state law by reason of Tenant's
inability to pay its debts as they become due or otherwise, or if
Tenant's estate by this Lease or any real or personal property of
Tenant shall be levied or executed upon by any sheriff, marshall or
constable; or by other process of law; provided, however, that any
proceeding brought by anyone other than the parties to this Lease
under any bankruptcy, reorganization, arrangement, or insolvency,
readjustment, receivership or similar law shall not constitute a
default until such proceeding, decree, judgement or order has
continued unstayed for more than sixty (60) consecutive days. If
this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, or any similar provisions of any
future federal bankruptcy law, (the "Bankruptcy Code"), any and all
monies or other considerations payable or otherwise to be delivered
in connection with such assignment shall be paid or delivered to
Landlord, shall be and remain the exclusive property of Landlord and
shall not constitute property of Tenant or of the estate of Tenant
within the meaning of the Bankruptcy Code. Any and all monies or
other considerations constituting Landlord's property under the
preceding sentence not paid or delivered to Landlord shall be held
in trust for the benefit of Landlord and be promptly paid to or
turned over to Landlord; or (v), If any of the events enumerated in
this subparagraph (a) shall happen to any guarantor of this Lease.
(b) Remedies. Upon the occurrence of an event of default, and the
expiration of the applicable grace period as hereinafter provided,
Landlord shall have the following rights: (i) To accelerate the
whole or any part of the Rent for the entire unexpired balance of
the Lease Term, and any Rent if so accelerated shall, in addition to
any and all installments of Rent already due and payable and in
arrears, be deemed due and payable as if, by the terms and
provisions of this Lease, such accelerated Rent was on that date
payable in advance. For such purposes, all items of Rent due
hereunder, which are not then capable of precise determination,
shall be estimated by Landlord, in Landlord's reasonable judgement,
for the balance of the then current term; (ii) To enter the Premises
and without further demand or notice proceed to distress and sale of
the goods, chattels and personal property there found, to levy the
Rent, and Tenant shall pay all reasonable costs and officers'
commissions which are permitted by law, including watchmen's wages
and sums chargeable to Landlord, and further including five percent
(5%) commission(s) to the officer or other person making the levy,
and in such case all costs, officers'
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<PAGE> 24
commissions and other charges shall immediately attach and become
part of the claim of Landlord for Rent, and any tender of Rent
without said costs, commissions and charges made after the issuance
of a warrant of distress, shall not be sufficient to satisfy the
claim of Landlord; (iii) To re-enter the Premises, together with all
additions, alterations and improvements, and, at the option of
Landlord, remove all persons and all or any property therefrom,
either by summary dispossess proceedings or by any suitable action
or proceeding at law or by force or otherwise, without being liable
for prosecution or damages therefor, and repossess and enjoy the
Premises. Upon recovering possession of the Premises by reason of or
based upon or arising out of a default on the part of Tenant,
Landlord may, at Landlord's option, either terminate this Lease or
Tenant's right of possession, and in either such event, make such
alterations and repairs as may be necessary in order to relet the
Premises and thereafter relet the Premises or any part or parts
thereof, either in Landlord's name or otherwise, for a term or terms
which may, at Landlord's option, be less than or exceed the period
which would otherwise have constituted the balance of the Lease Term
and at such rent or rents and upon such other terms and conditions
as in Landlord's reasonable discretion may seem advisable and to
such person or persons as may in Landlord's reasonable discretion
seem best; upon each such reletting all rents received by Landlord
from such reletting shall be applied first, to the payment of any
costs and expenses of such reletting, including the portion of
brokerage fees and reasonable attorneys' fees and all costs of such
alterations which are applicable to the remaining term of the Lease;
second, to the payment of any indebtedness other than Rent due
hereunder from Tenant to landlord; third, to the payment of Rent due
and unpaid hereunder; and the residue, if any, shall be held by
Landlord and applied in payment of future Rent as it may become due
and payable hereunder. At the time rent obligations have been
satisfied, any residuals shall be refunded to Tenant. If such
rentals received from such reletting during any month shall be less
than that to be paid during that month by Tenant, Tenant shall pay
any such deficiency to Landlord. Such deficiency shall be calculated
and paid monthly. No such re-entry or taking possession of the
Premises or the making of alterations or improvements thereto or the
reletting thereof shall be construed as an election on the part of
Landlord to terminate this Lease unless written notice of such
intention be given to Tenant. Landlord shall in no event be liable
in any way whatsoever for failure to relet the Premises or, in the
event that the Premises or any part or parts thereof are relet, for
failure to collect the Rent thereof under such reletting so long as
Landlord uses best efforts to relet said premises. Tenant, for
Tenant and Tenant's successors and assigns, hereby irrevocably
constitutes and appoints Landlord Tenant's and their agent to
collect the rents due and to become due under all subleases of the
Premises or any parts thereof without in any way affecting Tenant's
obligation to pay any unpaid balance of Rent due or to become due
hereunder. Notwithstanding any such reletting without termination,
Landlord may at any time thereafter elect to terminate this Lease
for such previous breach; (iv) To terminate this Lease and the Lease
Term without any right on the part of Tenant to waive the forfeiture
by payment of any sum due or by other performance of any condition,
term or
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<PAGE> 25
covenant broken, whereupon Landlord shall be entitled to recover, in
addition to any and all sums and damages for violation of Tenant's
obligations hereunder in existence at the time of such termination,
damages for Tenant's default in an amount equal to the amount of the
Rent reserved for the balance of the Lease Term, discounted at the
rate of six percent (6%) per annum to its then present worth, less
the fair rental value of the Premises for the remainder of said
term, also discounted at the rate of six percent (6%) per annum to
its then present worth, plus the cost of making Building standard
improvements and a standard commission for re-leasing the Premises,
all of which amount shall be immediately due and payable from Tenant
to Landlord.
(c) Non-Waiver. No waiver by Landlord of any breach by Tenant or any of
Tenant's obligations, agreements or covenants herein shall be a
waiver of any subsequent breach or of any obligation, agreement or
covenant, nor shall any forbearance by Landlord to seek a remedy for
any breach by Tenant be a waiver by Landlord of any rights and
remedies with respect to such or any subsequent breach.
(d) Tenant Cure Period. Notwithstanding anything hereinabove stated,
except in the case of emergency, and except in the event of
abandonment or vacation of the Premises by Tenant or any default
enumerated in subparagraphs (a) (iii), (iv) and (v) of this
Paragraph 24, Landlord will not exercise any right or remedy
provided for in this Lease or allowed by law unless, with respect to
any default by Tenant in the payment of minimum rent or additional
rent or any other charges or payments herein included as Rent,
Tenant does not cure the default within ten (10) days after written
demand for payment by Landlord or its authorized agent of such Rent
or unless, with respect to any other default by Tenant in the prompt
and full performance of any other provision of this Lease, Tenant
does not cure same within thirty (30) days after written demand by
Landlord or its authorized agent that the default be cured.
(e) Rights and Remedies Cumulative. No right or remedy herein conferred
upon or reserved to Landlord is intended to be: exclusive of any
other right or remedy provided herein or by law, but each shall be
cumulative and in addition to every other right or remedy given
herein or now or hereafter existing at law or in equity or by
statute.
(f) Rights of Mortgagee. In the event of any default by act or omission
by Landlord which would give Tenant the right to terminate this
Lease or to claim a partial or total evicting. Tenant shall not
exercise any such right until it has notified in writing the holder
of any mortgage which at the time shall be a mortgage lien on all or
any portion of the Property (if the name and address of such holder
shall previously have been furnished by written notice to Tenant) of
such default, and until a reasonable period for curing such default
shall have elapsed following the giving of such notice, during which
period the holder shall have failed to commence and continue to cure
such default or to cause the same to be remedies or cured.
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<PAGE> 26
(g) Curing Tenant's Defaults. If Tenant shall be in default in the
performance of any of its obligations hereunder, Landlord, without
any obligation to do so, in addition to any other rights it may have
in law or equity, may elect (but shall not be obligated) to cure
such default on behalf of Tenant after written notice (except in the
case of emergency) to Tenant. Tenant shall reimburse Landlord upon
demand for any sums paid or costs incurred by Landlord in curing
such default, including interest thereon from the respective dates
of Landlord's making the payments and incurring such costs, at the
rate set forth in subparagraph (b)(v) of Paragraph 7, which sums and
costs together with interest thereon shall be deemed additional rent
payable promptly upon being billed therefor.
25. Bankruptcy or Insolvency, Assumption; Adequate Protection. The following
shall apply in the event of the bankruptcy or insolvency of Tenant:
(i) If a petition if filed by, or an order for relief is entered
against Tenant under Chapter 7 of the Bankruptcy Code and the
trustee of Tenant elects to assume this Lease for the purpose
of assigning it, the election or assignment, or both, may be
made only, if all of the terms and conditions of subparagraphs
(ii) and (iv) below are satisfied. If the trustee fails to
elect to assume this Lease for the purpose of assigning it
within ninety (90) days after his appointment, this Lease will
be deemed to have been rejected. To be effective, an election
to assume this Lease must be in writing and addressed to
Landlord and, in Landlord's business judgment, all of the
conditions hereinafter stated, which Landlord and Tenant
acknowledge to be commercially reasonable, must have been
satisfied. Landlord shall then immediately be entitled to
possession of the Premises without further obligation to
Tenant or the trustee, and this Lease will be canceled.
Landlord's right to be compensated for damages in the
bankruptcy proceeding, however, shall survive.
(ii) If Tenant files a petition for reorganization under chapters
11 or 13 of the Bankruptcy Code or a proceeding that is filed
by or against Tenant under any other chapter of the Bankruptcy
Code is converted to a chapter 11 or 13 proceeding and
Tenant's trustee or Tenant as a debtor-in-possession fails to
assume this Lease within ninety (90) days from the date of the
filing of the petition or the conversion, the trustee or the
debtor-in-possession will be deemed to have rejected this
Lease. To be effective, an election to assume this Lease must
be in writing and addressed to Landlord and, in Landlord's
business judgment, all of the following conditions, which
Landlord and Tenant acknowledge to be commercially reasonable,
must have been satisfied:
(a) The trustee or the debtor-in-possession has cured or has
provided to Landlord adequate assurance, as defined in this
subparagraph (ii), that:
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(1) The trustee will cure all monetary defaults under this
Lease within ten (10) days from the date of the
assumption; and
(2) The trustee will cure all non-monetary defaults under
this Lease within thirty (30) days from the date of the
assumption.
(b) The trustee or the debtor-in-possession has compensated
Landlord, or has provided to Landlord adequate assurance, as
defined in this subparagraph (ii), that within ten (10) days
from the date of the assumption Landlord will be compensated
for any pecuniary loss it incurred arising from the default of
Tenant, the trustee, or the debtor-in-possession as received
in Landlord's written statement of pecuniary loss sent to the
trustee or the debtor-in-possession.
(c) The trustee or the debtor-in-possession has provided Landlord
with adequate assurance of the future performance of each of
Tenant's obligations under the Lease; provided, however, that:
(1) The trustee or debtor-in-possession will also deposit
with Landlord, as security for the timely payment of
Rent, an amount equal to three months' minimum rent and
other monetary charges accruing under this Lease.
(2) If not otherwise required by the terms of this Lease, the
trustee or the debtor-in-possession will also pay in
advance, on each day that the minimum rent is payable,
one-twelfth of Tenant's annual obligations under the
lease for the Base Amount.
(3) From and after the date of the assumption of this Lease,
the trustee or the debtor-in-possession will pay the
Minimum Annual Rent payable under this Lease in advance
in equal monthly installments on each day that the
Minimum Annual Rent is payable.
(4) The obligations imposed upon the trustee or the
debtor-in-possession will continue for Tenant after the
completion of bankruptcy proceedings.
(d) Landlord has determined that the assumption of this Lease will
not:
(1) Breach any provision in any other lease, mortgage,
financing agreement, or other agreement by which Landlord
is bound relating to the Property; or
(2) Disrupt, in Landlord's judgment, the tenant mix of the
Building or any other attempt by Landlord to provide a
specific variety of tenants in the Building that, in
Landlord's judgment, would be most beneficial to all of
the tenants of the Building and would enhance the image,
reputation, and profitability of the Building.
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<PAGE> 28
(e) For purposes of this subparagraph (ii), "adequate assurance"
means that:
(1) Landlord will determine that the trustee or the
debtor-in-possession has, and will continue to have,
sufficient unencumbered assets after the payment of all
secured obligations and administrative expenses to
assure Landlord that the trustee or the
debtor-in-possession will have sufficient funds to
fulfill Tenant's obligations under this Lease and to
keep the Premises properly staffed with sufficient
employees to conduct a fully operational, actively
promoted business on the Premises; and
(2) An order will have been entered segregating sufficient
cash payable to Landlord and/or a valid and preferred
first lien and security interest will have been granted
in property of Tenant, trustee, or debtor-in-possession
that is acceptable for value and kind to Landlord, to
secure to Landlord the obligation of the trustee or
debtor-in-possession to cure the monetary or nonmonetary
defaults under this Lease within the time periods set
forth above.
(iii) In the event that this Lease is assumed by a trustee appointed
for Tenant or by Tenant as debtor-in-possession under the
provisions of subparagraph (ii) above and, thereafter, Tenant
is either adjudicated a bankrupt or files a subsequent
petition for arrangement under chapter 11 of the Bankruptcy
Code, then Landlord may terminate, at its option, this Lease
and all Tenant's rights under it, by giving written notice of
Landlord's election to terminate.
(iv) If the trustee or the debtor-in-possession has assumed the
Lease, under the terms of subparagraph (i) or (ii) above, and
elects to assign Tenant's interest under this Lease or the
estate created by that interest to any other person, that
interest or estate may be assigned only if Landlord
acknowledges in writing that the intended assignee has
provided adequate assurance, as defined in this subparagraph
(iv), of future performance of all of the terms, covenants,
and conditions of this Lease to be performed by Tenant.
(a) For the purposes of this Paragraph 25, "adequate assurance of
future performance" means that Landlord has ascertained that
each of the following conditions has been satisfied:
(1) The assignee has submitted a current financial statement,
audited by a certified public accountant, that shows a
net worth and working capital in amounts determined by
Landlord to be sufficient to assure the future
performance by the assignee of Tenant's obligations under
this Lease;
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<PAGE> 29
(2) If requested by Landlord, the assignee will obtain
guarantees, in form and substance satisfactory to
Landlord from one or more persons who satisfy Landlord's
standards of credit worthiness;
(3) Landlord has obtained all consents or waivers from any
third party required under any lease, mortgage, financing
arrangement, or other agreement by which Landlord is
bound, to enable Landlord to permit the assignment;
(4) When, pursuant to the Bankruptcy Code, the trustee or the
debtor-in-possession is obligated to pay reasonable use
and occupancy charges for the use of all or part of the
Premises, the charges will not be less than the minimum
rent as defined in this Lease and additional rent and
other monetary obligations of Tenant included herein as
Rent.
(v) Neither Tenant's interest in the Lease nor any estate of
Tenant created in the Lease will pass to any trustee,
receiver, assignee for the benefit of creditors, or any other
person or entity, or otherwise by operation of law under the
laws of any state having jurisdiction of the person or
property of Tenant unless Landlord consents in writing to the
transfer. Landlord's acceptance of Rent or any other payments
from any trustee, receiver, assignee, person, or other entity
will not be deemed to have waived, or waive, the need to
obtain Landlord's consent or Landlord's right to terminate
this Lease for any transfer of Tenant's interest under this
Lease without that consent.
26. Interpretation.
(a) Captions. The captions in this lease are for convenience only and
are not a part of this lease and do not in any way define, limit,
describe or amplify the terms and provisions of this lease or the
scope or intent thereof.
(b) Entire Agreement. This lease represents the entire agreement between
the parties hereto and there are no collateral or oral agreements or
understandings between Landlord and Tenant with respect to the
Premises or the Property. This Lease supersedes all prior
negotiations, agreements, informational brochures, letters,
promotional information and other statements and materials made or
furnished by Landlord or its agents. The submission of this Lease by
Landlord, its attorneys or agents, for examination or for execution
by Tenant, does not constitute a reservation of (or option for) the
Premises in favor of Tenant; and Tenant shall have no right or
interest in the Premises, and Landlord shall have no liability
hereunder, unless and until this Lease is executed and delivered by
Landlord. No rights, easements or licenses are acquired in the
Property or and land adjacent to the Property by Tenant by
implication or otherwise except as expressly set forth in the
provisions of this Lease. This Lease shall not be modified in any
manner except by an instrument in writing executed by the parties.
The masculine (or
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<PAGE> 30
neuter) pronoun, singular number, shall include the masculine,
feminine and neuter genders and the singular and plural number.
(c) Exhibits. Each writing or plan referred to herein as being attached
hereto as an Exhibit or otherwise designated herein as an Exhibit
hereto is hereby made a part hereof.
(d) Interest. Wherever interest is required to be paid hereunder, such
interest shall be at the rate set forth in subparagraph (b)(v) of
Paragraph 7.
27. Definition of Landlord; Landlord's Liability. The word "Landlord" is used
herein to include the Landlord named above as well as its successors and
assigns, each of whom shall have the same rights, remedies, powers,
authorities and privileges as it would have had, had it originally signed
this Lease as Landlord. Any such person, whether or not named herein,
shall have no liability hereunder after it ceases to hold title to the
Premises except for obligations which may have therefore accrued. Neither
Landlord nor any principal of Landlord nor any owner of the Property,
whether disclosed or undisclosed, shall have any personal liability with
respect to any of the provisions of this Lease or the Premises, and if
Landlord is in breach or default with respect to Landlord's obligations
under this Lease or other-wise. Notwithstanding anything contained herein
to the contrary, the extent of Landlord's liability shall not exceed
$500,000.00.
28. Notices. All notices, demands, requests, consents, certificates and
waivers required or permitted hereunder from either party to the other
shall be in writing and sent by United States certified mail, return
receipt requested, postage prepaid. Notices to shall be addressed to
Tenant at the address designated in Item (b) of Basic Terms or, after the
Commencement Date, to the Premises. Notices to Landlord shall be addressed
to Landlord at the address designated in Item (a) of Basic Terms, with a
copy to the Carey Winston Company, 8605 Westwood Center Drive, Suite 500,
Vienna, Virginia 22182, with a further copy to any mortgagee or other
party designated by Landlord. Either party may at any time, in the manner
set forth for giving notices to the other, specify a different address to
which notices to it shall be sent.
29. Brokerage. Landlord and Tenant represents and warrants that they have not
had any dealings with any realtors, brokers, or agents in connection with
the negotiation of this Lease other than as set forth in Item (o) of Basic
Terms. Tenant and Landlord will defend, hold harmless and indemnify the
other from and against any claims with respect to the negotiation or
procurement of this Lease by any other realtor, broker or agent. 30.
Guarantee. In the event a guarantee is executed in connection with this
Lease, said guarantee shall be deemed a part of this Lease.
IN WITNESS WHEREOF, and in consideration of the mutual entry into this
Lease and for other good and valuable consideration, and intending to be legally
bound, each party hereto
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<PAGE> 31
has caused this Agreement of Lease to be duly executed as of the day and year
first above written.
ATTEST: LANDLORD:
WHT REAL ESTATE
LIMITED PARTNERSHIP
By: WHT Investors, Inc., general
partner
By: By: /s/ Lawrence A. Corson
-------------------------- --------------------------
Its: Assistant Vice President
--------------------------
WITNESSES: TENANT:
SOFTWORKS, INC.
By: /s/ Judy S. Carter
-------------------------- --------------------------
Its: Chief Executive Officer
-------------------------- --------------------------
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<PAGE> 32
ADDENDUM TO AGREEMENT OF LEASE
THIS ADDENDUM TO AGREEMENT OF LEASE ("Lease Addendum"), make this
_____________ day of _______________, 1994, by and between WHT REAL ESTATE
LIMITED PARTNERSHIP, as Landlord, and SOFTWORKS, INC., incorporated in the State
of Maryland, as Tenant, for space on the third (3rd) and fourth (4th) floors of
the Huntwood Plaza Building, 5845 Richmond Highway, Alexandria, Virginia 22303,
is attached to and made a part of said Agreement of Lease (sometimes
collectively referred to as the "Lease") and sets forth additional and modified
terms agreed upon by Landlord and Tenant. Unless otherwise provided, capitalized
terms herein shall have the meanings ascribed thereto in the Agreement of Lease.
In the event of any conflict between any provisions of this Lease Addendum and
any of the provisions of the Agreement of Lease, the provisions of this Lease
Addendum shall control.
1. Under Paragraph 1, titled "Basic Terms," items (i), (j), and (k) are
hereby amended and restated, respectively, as follows:
(i) Minimum Annual Rent: $297,432.00 during the first year of the
Lease Term. During the Lease Term, on each annual anniversary
of the Commencement Date, the then effective Minimum Annual
Rent shall be increased by three percent (3%) per annum.
(j) Monthly Rent Installment: $24,786.00 during the first year of
the Lease Term and recalculated thereafter to equal the then
effective Minimum Annual Rent divided by twelve (12).
(k) Base Amount: Commencing August 1, 1995, and continuing on
August 1 of each year thereafter, Landlord shall estimate the
Annual Operating costs to be incurred during such calendar
year ("Projected Costs") and, if such Projected Costs are
greater than Annual Operating Costs incurred by Landlord
during calendar year 1994 (the "Base Year"), Tenant shall be
responsible for its pro-rata share of the Building (which is
currently measured at 93,670 gross rentable square feet), or
26.5% of the amount by which the Projected Costs exceed the
Annual Operating Costs for the Base Year (the "Base Amount"),
subject to final adjustment as provided in paragraph
7.(b)(ii).
2. The paragraph which comprises Paragraph 5 is hereafter designated as
paragraph 5(a) and the following paragraph 5(b) is added to
Paragraph 5:
5(b) Lease Term Extension: Tenant shall have the option to extend
the Lease Term for one (1) period of five (5) years, provided
that Tenant is not in default of any of the terms or
conditions of the Lease at the time of the exercise of the
option to extend or at the time of commencement of the
extension term.
(i) The extension period shall be executed upon the same terms,
covenants and conditions as provided in this Lease, except
that the Minimum Annual
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<PAGE> 33
Rent (and concomitantly, the Monthly Rent Installment) shall
be adjusted as hereinafter provided.
(ii) Notwithstanding anything to the contrary contained herein, the
Minimum annual rent at the commencement of the extension
period and for each Lease year during the extension period
shall equal to ninety-five percent (95%) of the fair market
rental rate prevailing for a lease of an equivalent amount of
comparable commercial office space in a Building, similarly
improved, for and over a term of five (5) years, commencing as
of the commencement date of the extension period. In
determining fair market rental rate for purposes of this
Paragraph, the parties shall consider, among other relevant
factors, annual rental rates per rentable square foot, the
type of escalation clauses (including, without limitation,
operating expenses stop and real estate tax adjustments),
floor location and prominence, tenant improvements or
allowances and rental abatement concessions; provided,
however, that no reduction or increase in rent shall be
granted for the presence or absence of a brokerage commission.
(iii) Such opinion to extend shall be exercised by the Tenant giving
written notice to the Landlord not later than one hundred
twenty (120) days prior to the expiration of the Lease Term.
Landlord shall within thirty (30) days after the date it
receives notice of Tenant's election to exercise its option to
extend, notify Tenant of the Minimum Annual Rent to be charged
at the commencement of the extension period and the applicable
annual escalation factor(s). Tenant shall have thirty (30)
days after the date of Landlord's notification of the Minimum
annual Rent and escalators to be charged to nullify its
exercise of the option by providing Landlord written notice of
the same. If Tenant nullifies its exercise of this option to
extend, this option shall terminate and be of no further force
and effect, and the Lease Term shall not be extended.
(iv) Tenant agrees to accept the Premises in the condition then
existing as of the date of commencement of the extension term
of this Lease. Landlord shall not be responsible for
performing any work, furnishing any materials or providing any
allowances for improvements to the Premises.
3.(a) The following paragraphs are added to the end of Paragraph 7(b)(i):
Operating Expenses shall not include (a) payments of
principal, interest, ground rent or any other financing costs on any
mortgages, deeds of trust, ground leases or other encumbrances upon
the Building or any penalties or late charges relating thereto or
related to any unsecured financing; (b) compensation paid to
officers, executives or partners of Landlord; (c) leasing or selling
commissions; (d) any and all taxes, property or otherwise, to the
extent Landlord is reimbursed by any tenant; (e) costs of repairs or
other work occasioned by any casualty which cost is reimbursed by
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insurance; (f) legal fees or other expenses incurred in connection
with negotiations or disputes with tenants, other occupants or
prospective tenants of the Building; (g) costs of renovating or
otherwise improving, painting, decorating, planning designing space
or vacant space for prospective tenants, tenants or other occupants
of the Building; (h) costs of electricity (including engineer and
overhead) and other services sold to tenants of the Building by
Landlord for which Landlord is entitled to direct reimbursement, by
such tenants as an additional charge; (i) expenses, costs or fees
incurred by Landlord relating to any violation by Landlord or any
other tenant of the terms and conditions of any lease of space in
the Building; (j) all items and services for which Tenant reimburses
Landlord; (k) costs relating to maintaining Landlord's existence,
either as a corporation, partnership or other entity; (l) any and
all cost associated with purchasing artwork in the building.
The Tenant shall have certain rights to contest the Real
Estate Taxes as provided herein. Tenant may, at it's sole cost and
expense, contest any Real Estate Tax on the Building or the Land (in
Tenant's name or in the name of the Landlord, or both, as Landlord
may deem appropriate), but only in the event that (i) Landlord does
not contest such taxes, and (ii) the Tenant obtains the written
consent of tenants in the Building who occupy at least seventy
percent (70%) of the office space in the Building. If Landlord shall
contest such taxes, Tenant shall have the right to participate in
such proceeding in a manner to be reasonably determined by Landlord
and Tenant. In any such case Tenant's share of the disputed tax
actually paid by Tenant as part of the Operating Expenses and later
refunded or forgiven to Landlord by the taxing authority less costs
incurred by Landlord will be, in turn, refunded by Landlord to
Tenant within thirty (30) days of refund to the Landlord. If Tenant
is contesting the tax, Landlord shall cooperate with Tenant in any
such contest, shall execute any instrument reasonably required to be
executed by Landlord under the circumstances and pay Tenant the
reasonable cost of such contest out of any refund (within thirty
(30) days of the refund or forgiveness but not in excess of Tenant's
pro rata share of the refund or forgiveness).
3.(b) Paragraph 7(b)(iii) is amended and restated in its entirety as
follows:
(iii) Computation of Tenant's Share of Annual Operating Cost. After
the end of each calendar year of the Lease Term, Landlord shall
compute Tenant's share of the Annual Operating Costs described in
Paragraph 7(b)(i) incurred during such calendar year by [A]
calculating an appropriate adjustment, using generally
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accepted accounting principles, to avoid allocating to Tenant or to
any other tenant (as the case may be) those specific costs which
Tenant or any other tenant has agreed to separately pay; [B]
calculating an appropriate adjustment, using generally accepted
accounting principles, to avoid allocating to any occupied space
those tenant specific costs which were not incurred for such space;
and [C] determining the amount by which, if any, that the adjusted
Annual Operating Costs for the subject calendar year exceeds the
adjusted Annual Operating Costs for Base Calendar Year 1994 and
multiplying such amount by that percentage constituting Tenant's
Share of Annual Operating Costs, which percentage is based on the
proportion of the rentable area of the Premises to the rentable area
of the Building.
4. Paragraph 8, titled "Security Deposit" is amended and restated in
its entirety as follows:
8. Security Deposit. At the time of signing this Lease Tenant shall
deposit with Landlord an amount equal to twenty four thousand seven
hundred eighty-six dollars and 00/100 ($24,786.00). Such sums (the
"Security Deposit") will be retained by Landlord as cash security
for the faithful performance and observance by Tenant of the
covenants, agreements and conditions of this Lease. Notwithstanding
anything to the contrary contained in any law or statute now
existing or hereafter passed (i) Tenant shall not be entitled to any
interest whatever on the Security Deposit, (ii) Landlord shall not
be obligated to hold the Security Deposit in trust or in a separate
account, and (iii) Landlord shall have the right to commingle the
Security Deposit with its other funds. Landlord may use, apply or
retain the whole or any part of the Security Deposit to the extent
required for the payment of any minimum rent, any additional rent or
any other sums payable hereunder as to which Tenant is in default or
to the extent required for the reimbursement to Landlord of any sum
which Landlord may expend or may be required to expend by reason of
Tenant's default with respect to any of the covenants, agreements or
conditions of this Lease. If Tenant shall fully and faithfully
comply with all of the covenants, agreements and conditions of this
Lease, the Security Deposit shall be returned to Tenant after the
date fixed as the expiration of the Lease Term and surrender of the
premises to Landlord. If the Premises are sold to a bona fide
purchaser, Landlord shall have the right to transfer the aforesaid
Security Deposit to such purchaser, by which transfer Landlord shall
be released from all liability for the return thereof, and Tenant
shall look solely to the new Landlord for the return thereof.
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5. Landlord agrees that the Tenant's equipment listed on Exhibit A-1
attached hereto shall not be deemed to have "special electrical"
needs allowing the imposition by Landlord of additional charges
therefor.
6. The terms of this Agreement of Lease shall not be altered by the
subsequent sale of the building.
7. Neither Tenant nor any principals of Tenant, whether disclosed or
undisclosed, shall have any personal liability with respect to any
of the provisions of this Lease or the Premises.
Witness the following signatures as of the date first above written.
LANDLORD:
WHT REAL ESTATE
LIMITED PARTNERSHIP
By: WHT Investors, Inc., general
partner
By: /s/ Lawrence A. Corson
-----------------------------
Title: Assistant Vice President
--------------------------
TENANT:
SOFTWORKS, INC.
By: /s/ Judy S. Carter
-----------------------------
Title: Chief Executive Officer
--------------------------
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<PAGE> 37
(Landlord's Acknowledgement)
STATE OF TEXAS )
) SS:
COUNTY OF DALLAS )
On this 13th day of June, 1994, before me appeared Lawrence A. Corson, to me
personally known, who being by me duly sworn, did say that he is the Assistant
Vice President of WHT Investors, Inc., general partner of WHT REAL ESTATE
LIMITED PARTNERSHIP, a Delaware limited partnership, the entity that executed
the within and foregoing instrument and that said instrument was signed and
sealed in behalf of said entity, and that the seal affixed is the seal of said
entity and said Lawrence A. Corson acknowledged said instrument to be the free
act and deed of said entity.
/s/ Deborah Wetzelnatheny, Dallas
-----------------------------------
NOTARY PUBLIC, County,
My commission expires: 12/4/96
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<PAGE> 38
(Tenant's Corporate Acknowledgement)
STATE OF MARYLAND )
) SS: 02011143
COUNTY OF PRINCE GEORGE'S )
On this 23rd day of March, 1994, before me appeared JUDY G. CARTER, to me
personally known, who being by me duly sworn, did say that (he) (she) is the
CHIEF EXECUTIVE OFFICER of SOFTWORKS, INC., the corporation that executed the
within and foregoing instrument and that said instrument was signed and sealed
in behalf of said corporation by authority of its Board of Directors, and that
the seal affixed is the corporate seal of said corporation and said JUDY G.
CARTER acknowledged said instrument to be the free act and deed of said
corporation.
/s/ Lawrence T. Beverly PG
--------------------------------
NOTARY PUBLIC, County,
My commission expires:________________
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<PAGE> 39
EXHIBIT "A"
FLOOR PLANS
[Drawings of floor plans of the leased premises.]
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EXHIBIT "A-1"
COMPUTER/EQUIPMENT INVENTORY
<TABLE>
<CAPTION>
Quantity Description
-------- -----------
<S> <C>
100 Personal Computers (various manufacturers and models)
20 Printers (various manufacturers and models)
10 Faxes
4 Copiers
1 IBM ES9000 Main Frame Computer and Peripherals
</TABLE>
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<PAGE> 41
EXHIBIT "B"
DESCRIPTION OF PROPERTY
All of that certain lot or parcel of land situate, lying and being in
Fairfax County, Virginia, and more particularly described as follows:
PARCEL I:
BEGINNING at a point on the southerly side of Jefferson Davis Highway
(U.S. Route 1, or Richmond Highway), said point being a common northerly
corner between the land herein described and that of Socony Mobile Oil
Company, Inc.; thence running along the southerly side of said highway N
62 degrees 10' 01" E 191.83 feet to a point, said point being the
northwesterly corner of the land of Amoco Oil Company; thence departing
Jefferson Davis Highway and running first along the westerly boundary and
thence the southerly boundary of said Amoco Oil Company, and thence the
southerly line of the land of Universal Motor Lodge (Howard Johnson's), et
al, S 28 degrees 28' 26" E, 100.00 feet to a point; thence S 85 degrees
55' 50" E 465.00 feet to a point, and S 28 degrees 27' 07" E 50.00 feet to
a point on the northerly line of the Bell Haven Country Club; thence
running along same S 61 degrees 32' 53" W, 636.61 feet to point and N 85
degrees 47' 29" W, 163.49 feet to the northeasterly corner of the Fairfax
Country Water Authority; thence running along the northerly boundary of
said land N 85 degrees 31' 43" W 110.99 feet to a point on the easterly
side of Fort Hunt Road (Route 629); thence running with the easterly side
of said road N 04 degrees 36' 12" E, 79.03 feet to a point; thence N 85
degrees 23' 48" W, 37.00 feet to a point; and N 04 degrees 36' 12" E,
32.04 feet to the southwesterly corner of the aforementioned land of
Socony Mobile Oil Company, Inc.; thence departing Fort Hunt Road and
running along with southerly and thence easterly boundary of said land N
49 degrees 56' 13" E, 191.21 feet to a point and N 04 degrees 45' 38" E
121.61 feet to the point of beginning and containing 4.81367 acres, more
or less.
PARCEL II:
The following non-exclusive easements as granted by Easement Agreement for
Access, Driveway and Parking dated May 30, 1985 and recorded among the
Fairfax County, Virginia Land Records on October 17, 1985 in Deed Book
6246 at Page 1052, as corrected and re-recorded among the aforesaid Land
Records in Deed Book 6498 at Page 1283, SUBJECT HOWEVER, to any terms,
reservations and limitations provided for in said Easement Agreement:
a. A non-exclusive easement and right of way of access for vehicles and
pedestrians as granted by Universal to TDC-Harwood in paragraph 1 of
said Easement Agreement;
b. A non-exclusive perpetual parking easement as granted by
Universal to TDC-Harwood in paragraph 2(b) of said Easement
Agreement;
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c. A non-exclusive perpetual easement and right of way of access for
persons, vehicles and equipment for the purpose of making and/or
maintaining landscaping improvements as granted by Universal to
TDC-Harwood in paragraph 6 of said Easement Agreement.
PARCEL III:
A perpetual non-exclusive ingress and egress easement as granted in
paragraph 1 of Easement Agreement executed by the Fairfax County Water
Authority, et al, dated October 15, 1985 and recorded among the Fairfax
County, Virginia Land Records on October 17, 1985 in Deed Book 6246 at
Page 1081, corrected and re-recorded in Deed Book 6448 at Page 1366;
SUBJECT HOWEVER, to the terms and limitations provided for in said
Easement Agreement.
PARCEL IV:
A ten foot (10') temporary grading easement as granted in paragraph 2 of
Easement Agreement executed by the Fairfax County Water Authority, et al,
dated October 15, 1985 and recorded among the Fairfax County, Virginia
Land Records on October 17, 1985 in Deed Book 6246 at Page 1081, corrected
and re-recorded in Deed Book 6448 at Page 1366; SUBJECT HOWEVER, to the
terms, limitations, termination provision, and other limitations provided
for in said Easement Agreement.
PARCEL V:
A perpetual non-exclusive ingress and egress easement as granted in
paragraph 1 of Easement Agreement executed by Belle Haven Country Club,
Inc., et al, dated October 15, 1985 and recorded among the Land Records of
Fairfax County, Virginia on October 17, 1985 in Deed Book 6246 at Page
1074, corrected and re-recorded in Deed Book 6448 at Page 1360; SUBJECT
HOWEVER, to the terms and limitations provided for in said Easement
Agreement.
PARCEL VI:
A ten foot (10') temporary grading easement as granted in paragraph 2 of
Easement Agreement executed by Belle Haven Country Club, Inc., et al,
dated October 15, 1985 and recorded among the Land Records of Fairfax
County, Virginia on October 17, 1985 in Deed Book 6246 at Page 1074,
corrected and re-recorded in Deed Book 6448 at Page 1360; SUBJECT HOWEVER,
to any termination provisions and other limitations provided for in said
Easement Agreement.
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EXHIBIT "C"
TENANT IMPROVEMENT WORK AGREEMENT
ARTICLE 1
DEFINITIONS
The terms defined in Article 1 of this Exhibit C, for all purposes of this
Exhibit C, shall have the meanings herein specified, and, in addition to the
terms defined herein, the definitions in the Basic Terms section of this Lease
and otherwise in this Lease shall also apply to this Exhibit C.
1.01. "Architectural Plans" shall mean one hundred percent (100%) fully
coordinated and complete, accurate architectural working drawings and
specifications for the tenant improvements for the Premises prepared by Tenant's
Architect including all architectural dimensioned plans showing wall layouts,
wall and door locations, power and telephone locations and reflected ceiling
plans and further including elevations, details, specifications and schedules
according to accepted AIA standards.
1.02. "Landlord's Designer" shall mean the architect or space planner
engaged by Landlord to review the Plans for Tenant's Work as contemplated by
Article 2 hereof.
1.03. "MEP Plans" shall mean one hundred percent (100%) fully coordinated
and complete mechanical, electrical an plumbing plans, schedules and
specifications for the tenant improvements for the Premises, prepared by
Tenant's MEP Engineers in accordance and in compliance with the requirements of
applicable building, plumbing, and electrical codes and the requirements of any
authority having jurisdiction over or with respect to such plans, schedules and
specifications, which are complete, accurate, consistent and fully coordinated
with and implement and carry out the Architectural Plans.
1.04. "Plans" (also known as "Tenant Improvement Plans") shall mean the
Architectural Plans together with the MEP Plans, and if applicable, the
Structural Plans.
1.05. "Structural Plans" shall mean one hundred percent (100%) fully
coordinated and complete structural plans, schedules and specifications, if any,
for the tenant improvements for the Premises, prepared by Tenant's Structural
Engineers in accordance and in compliance with the requirements of any authority
having jurisdiction over or with respect to such plans, schedules and
specifications, which are complete, accurate, consistent and fully coordinated
with and implement and carry out the Architectural Plans.
1.06. "Tenant's Architect" shall mean Zinzer & Dunn.
1.07. "Tenant's Contractor" shall mean any person or firm selected by
Tenant and approved by Landlord, such approval not to be unreasonably withheld,
conditioned or delayed, to perform Tenant's Work in the Premises.
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<PAGE> 44
1.08. "Tenant's MEP Engineers" shall mean the engineers engaged by Tenant
and approved by Landlord, such approval not to be unreasonably withheld,
conditioned or delayed, to prepare the MEP Plans.
1.09. "Tenant's Structural Engineers" shall mean the engineers engaged by
Tenant and approved by Landlord, such approval not to be unreasonably withheld,
conditioned or delayed, to prepare the Structural Plans.
1.10. "Tenant's Work" means the tenant improvements which are supplied,
installed, and finished by Tenant and/or Tenant's authorized representative, as
provided for hereinbelow. The design of Tenant's Work shall be consistent with
sound architectural and construction practice in first class office buildings.
ARTICLE 2
COMPLETION OF PREMISES
2.01. Tenant acknowledges that Landlord has furnished Tenant, at
Landlord's cost and expense, one (1) set of base building plans pertaining to
the Premises to assist Tenant in preparing the Plans. It is understood and
agreed that Landlord in no way warrants the accuracy of such base building plans
and Landlord shall not have any liability to Tenant, or anyone claiming through
Tenant as a result of such plans. Tenant shall perform a field verification to
independently determine the existing conditions, specifications and dimensions
of the Premises.
2.02. On or before June ___, 1994, Tenant, at Tenant's expense, shall
prepare and deliver to landlord the Architectural Plans, the MEP Plans, and if
structural work is required, the Structural Plans, stamped for permit filing,
together with any underlying detailed information Landlord may require in order
to evaluate the Plans. Tenant shall deliver any and all Plans, and all revisions
thereto to Landlord prior to submitting any of such Plans for permits. Tenant
shall promptly apply for and pay the cost of obtaining all permits and
certificates for Tenant's Work. Landlord and Tenant shall meet prior to such
delivery to discuss the schedule for completion of Tenant's Work. After
Landlord's receipt of the Plans, Landlord shall notify Tenant in writing as to
whether Landlord approves or disapproves such Plans within (5) business days of
receipt of such Plans and such approval shall not be unreasonably withheld or
conditioned. All reasonable third party costs incurred by Landlord, including
the professional fees of Landlord's Designer, which are related to the review of
the Plans shall be paid by Tenant to Landlord within ten (10) days after receipt
by Tenant of a statement of such costs.
2.03. On or before May 31, 1994, Tenant shall inform Landlord of the
general contractors from whom Tenant desires to solicit bids for Tenant's Work.
Each general contractor from whom Tenant desires to solicit a bid shall be
subject to Landlord's reasonable approval. Landlord shall notify Tenant of its
approval or disapproval of each general contractor on Tenant's list within five
(5) business days of receipt of such list. The selected general contractor (i.e.
Tenant's Contractor) shall contract directly with Tenant, but shall perform such
work in coordination with Landlord and Landlord's Designer.
2.04. If there are any significant changes in the tenant improvements
caused by Tenant from the work as reflected in the final working drawings, each
such significant change must
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<PAGE> 45
receive the prior written approval of Landlord, and, in the event of any such
approved change in the working drawings, Tenant shall, upon completion of
Tenant's Work, furnish Landlord with an accurate "as drawn" plan of Tenant's
Work as constructed, which plans shall be incorporated into this Exhibit C by
this reference for all intents and purposes. Landlord reserves the right to
inspect and to be present during the performance of Tenant's Work solely for the
purpose of protecting Landlord's interest in the Property, but Landlord will
have no obligation to so inspect or be present and, if Landlord elects to so
inspect or to be present during the performance of all or any portion of
Tenant's Work, neither such inspection nor such presence shall give rise to any
liability by Landlord to Tenant or to any other person or entity.
2.05. Under no circumstances whatsoever will Tenant, or Tenant's
authorized representative, ever alter or modify or in any manner disturb any
system or installation of the Building, including the Base Building plumbing
system, Base Building electrical system, Base Building heating, ventilating, and
air conditioning systems, Base Building fire protection and fire alert systems,
Base Building maintenance systems, Base Building structural systems, elevators,
and anything located within the central core of the Building. Only under
Landlord's express written permission and under direct supervision of Landlord
or Landlord's authorized representative shall Tenant or Tenant's authorized
representative alter or modify or in any manner disturb any system or
installation of the Building which is located within the Premises, including
electrical, heating, ventilating, and air conditioning systems, and fire
protection and alert systems. For the purposes of this Section, "Base Building"
shall be defined as that portion of any Building system or component which is
within the core and/or common to and/or serves or exists for the benefit of
other tenants in the Building. Any Tenant's Work relating to Building fire and
life safety systems shall be performed by a fire and life safety subcontractor
named by Landlord and such fire and life safety subcontractor shall be employed
as a subcontractor by Tenant's Contractor, at Tenant's sole cost and expense.
2.06. All design, construction, and installation in connection with
Tenant's Work shall conform to the requirements of applicable building,
plumbing, and electrical codes and the requirements of any authority having
jurisdiction over, or with respect to, such work. Tenant and Tenant's Contractor
shall perform Tenant's Work in strict compliance with the Lease, this Exhibit C
and the Plans.
2.07. Tenant shall pay the cost of all Tenant's Work, including all work
performed by Tenant's Contractor.
ARTICLE 3
TENANT'S WORK
3.01. Tenant accepts the Premises "AS IS".
3.02. Prior to Tenant's occupancy of all or any portion of the Premises,
Tenant, at its sole cost and expense, shall:
(a) Furnish evidence reasonably satisfactory to Landlord that all Tenant's
Work has been completed and paid for in full (and such work has been reasonably
accepted by Landlord) or provide evidence that any and all liens therefor that
have been or might be filed have been
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<PAGE> 46
discharged of record (by payment, bond, order of a court of competent
jurisdiction or otherwise) or waived, and that no security interests relating to
Tenant's Work are outstanding and provide final lien waivers from Tenant's
Contractor and all subcontractors;
(b) Furnish to Landlord a copy of the nonresidential Certificate of
Occupancy and all other certifications and approvals with respect to Tenant's
Work that may be required from any governmental authority and/or any board or
fire underwriters or similar body for the use and/or occupancy of the Premises;
(c) Furnish to Landlord proof of the insurance required by Paragraph 9 of
the Lease;
(d) Furnish an affidavit from Tenant's Architect certifying that all work
performed in the Premises has been completed substantially in accordance with
the Plans approved by Landlord;
3.03. Within thirty (30) days after Tenant's occupancy of all or any
portion of the Premises, Tenant, at its sole cost and expense, shall:
(a) Furnish Landlord with one (1) set of mylar transparent reproducible
"as built" drawings of the Premises;
(b) Furnish an HVAC air balancing report (reasonably satisfactory to
Landlord);
(c) Furnish Landlord with copies of all guaranties and/or warranties; and
(d) Furnish Landlord with copies of all O&M information, manuals, etc.
3.04. It shall be Tenant's responsibility to cause Tenant's Contractor and
each of Tenant's Contractor's subcontractors, to adhere to the rules and
procedures set forth in Exhibit C-1 attached hereto, and it shall be the
responsibility of Tenant's Contractor to comply with the insurance requirements
described in Exhibit C-2 attached hereto, and Tenant shall be responsible for
any violations thereof.
3.05. Tenant's Contractor shall, at no cost to Landlord, maintain and keep
in full force and effect, the insurance required under Exhibit C-2, with such
companies, and in such form and amounts as Landlord may reasonably require.
Tenant shall, at no cost to Landlord, maintain and keep in full force and
effect, the insurance required of Tenant under paragraph 9 of the Lease. Prior
to commencement of construction of the tenant improvements, Landlord shall be
provided with copies of insurance certificates indicating that coverages as
required by Exhibit C-2 hereof are in full force and effect, and copies of the
construction contract pursuant to which Tenant's Contractor is engaged in the
construction of the tenant improvements. Tenant shall provide Landlord with a
list of all subcontractors Tenant's Contractor will use in connection with the
performance of Tenant's Work as such subcontractors are selected to assist in
the performance of Tenant's Work. At such reasonable times and upon reasonable
advance oral notice to Tenant from landlord and/or at such times as any
regulatory agencies deem necessary, landlord or Landlord's agent or
representatives of such governmental agencies may enter the Premises to make
inspection of Tenant's Work. Tenant agrees to pay for any charges levied by
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<PAGE> 47
governmental and/or other regulatory inspecting agencies as such charges are
levied in connection with Tenant's Work.
3.06. In connection with Tenant's rights and obligations under this
Exhibit C, Tenant will not obstruct or interfere with the rights of, or
otherwise annoy or injure, other tenants of the Building.
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<PAGE> 48
EXHIBIT C-1
TENANT CONTRACTOR REQUIREMENTS
A. General
1. Any demolition, removal or other types of work, which may significantly
inconvenience other tenants or disturb building operations, must be
scheduled and performed before or after normal working hours. The property
management office shall be notified at least 24 hours prior to
commencement of such work.
2. All fire alarms testing must be performed after normal working hours
unless otherwise required by Fairfax County, Virginia, or as otherwise
approved by Landlord.
B. Prior to Commencement of Work
1. Tenant shall deliver to Landlord, for Landlord's approval, which will not
be unreasonably withheld, conditioned or delayed, a list of all the
contractors and subcontractors who will be performing the work.
2. The general contractor must submit to Landlord insurance certificates
including an indemnity hold harmless clause in accordance with the
attached insurance requirements.
3. The general contractor shall be required to obtain a performance and
payment bond for the project. Bonding companies shall be licensed in the
jurisdiction in which the Building is located. The bond premium shall be
included in all bids. Bond form and agent shall be submitted for Landlord
review prior to the start of construction.
4. Tenant shall deliver to Landlord two (2) complete sets of permit plans and
specifications properly stamped by a registered architect or professional
engineer and shall deliver to Landlord any and all subsequent revisions to
such plans and specifications.
5. It is Tenant's responsibility to obtain approval of plans and required
permits from jurisdictional agencies. Tenant must submit copies of all
approved plans and permits to the property management office and post the
original permit on the Premises prior to commencement of any work. All
work performed by a contractor or subcontractor shall be subject to
inspection by the Landlord.
C. Requirements and Procedures
1. Under no circumstances will the Tenant, or the Tenant's authorized
representatives or Tenant's contractor, ever alter or modify or in any
manner disturb any building system or its installation, including the Base
Building plumbing system, Base Building electrical system, Base Building
heating, ventilating, and air conditioning system, Base Building
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fire protection and fire alarm system, Base Building maintenance system,
Base Building structural systems, elevators, or anything located within
the central core of the building without the Landlord's express written
permission or direct supervision of the Landlord or the Landlord's
authorized representatives.
2. All design, construction, and installation shall conform to the
requirements of applicable building, plumbing and electrical codes and the
requirements of any authority having jurisdiction over such work.
3. The Landlord shall be entitled to supervise all demolition.
4. Tenant is responsible for installation of the Tenant's telecommunication
systems.
5. At such time as other tenants shall occupy the Building, core drilling or
cutting shall be permitted only between the hours of 6:00 p.m. and 8:00
a.m. Monday through Friday and 1:00 p.m. on Saturday through 8:00 a.m. on
Monday. All core drilling/cutting must be approved by the Base Building
structural engineer. X-rays of areas may be required at the Landlord's
engineer's discretion. The property management office must be notified at
least twenty-four (24) hours prior to commencement of such work.
6. Prior to the initiation of any other tenant construction activity in the
Building, Tenant shall make arrangements for use of the loading area and
elevators with the property management office. Upon initiation of
construction activity by any other tenant in the Building, Tenant shall
make arrangements for use of the loading area and elevators with the
property management office. Notwithstanding the foregoing, Tenant shall
not have a priority over future tenants and/or their contractors in the
use of the elevators and loading area. No material or equipment shall be
carried under or on top of the elevators. If the building manager deems an
elevator operator is required, such operator shall be provided by the
general contractor at the general contractor's expense.
7. Tie-in of either fire alarm or sprinkler/fire suppression systems shall
not occur until all other work related to such systems has been completed.
Only Landlord's contractor or designer (or a Landlord approved sprinkler
subcontractor) shall make the tie-in to the Base Building fire alarm and
sprinkler/fire suppression system.
8. If a shutdown of risers and mains for electric, HVAC sprinkler, fire
protection and plumbing work is required, work shall be scheduled with
twenty-four (24) hour advance notice. Drain downs or fill-ups of the
sprinkler system or any other work to the fire protection system which may
set off an alarm, must be accomplished between the hours of 6:00 p.m. and
8:00 a.m. Monday through Friday and 1:00 p.m. on Saturday through 8:00
a.m. on Monday.
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9. The general contractor must:
(a) Properly supervise construction on the Premises at all times.
(b) Police the job at all times, continually keeping the Premises and
Property orderly. All Tenant materials are to be reasonably neatly
stacked.
(c) Maintain cleanliness and protection of all areas, including elevator
and lobbies.
(d) Supply I.D. badges to all construction workers. Any construction
worker without a valid badge will be escorted from the building.
(e) If other tenants occupy the building, provide the property
management office with a list of those who are expected on the job
after hours or during a weekend. Tenant shall use its best efforts
to submit such list by noon on the day in which after hours work is
scheduled.
(f) Arrange for telephone service if necessary. The property management
and security telephones will not be available for use by
contractors.
(g) Block off supply and return grills, diffusers and ducts to keep dust
from entering into the Building air system.
(h) Avoid and prevent the disturbance of other tenants.
10. If Tenant's general contractor is negligent in any of its
responsibilities, Landlord shall give Tenant notice of such negligence and
a reasonable opportunity to cure such negligence (except in the case of
emergencies or potential harm to persons or damage to property) at
Tenant's sole expense. If Tenant fails to timely cure such negligence,
Landlord may elect to correct the same and the Tenant shall be charged for
the corrective work.
11. All equipment and material installation must be equal to the standards of
workmanship and quality established for the Building.
12. Upon completion of the work, the Tenant shall submit to the property
management office properly executed forms or other documents indicating
approval by all relevant agencies of the local government having
jurisdiction over the Building whose approval is required for Tenant's use
and occupancy of the Premises.
13. The Tenant shall submit to the property management office a final
"as-built" set of drawings showing all items of work in full detail.
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<PAGE> 51
14. Contractors who require security for the Premises during construction
shall provide same at their sole expense. The Landlord will not be liable
for any stolen items from the Tenant's work area. It is suggested that the
contractor and subcontractors use only tools and equipment bearing an
identification mark denoting the contractor and subcontractor's name.
15. All contractors/subcontractors/employees will enter and exit through the
loading area, and use the freight elevator. Building passenger elevators
may not be used.
16. All contractors are advised of the following: If any part of a
contractor's work depends for proper execution or result upon the work of
any other separate contractor, the contractor shall inspect and promptly
report to the property management office any apparent discrepancies or
defects in such work that render it unsuitable for such proper execution
and results. Failure of a contractor to so inspect and report shall
constitute an acceptance of the other contractor's work as fit and proper
to receive his work.
17. Prior to the commencement of construction, Landlord and Tenant will
inspect the Building and Tenant will prepare and deliver to Landlord a
memorandum setting forth any pre-construction damages to the Building. Any
damage caused by the contractor to existing work of others shall be
repaired or replaced at the sole cost and expense of the contractor to the
satisfaction of the Landlord.
18. The contractor shall be responsible for the protection of finished
surfaces of public areas (floors, walls, ceiling, etc.).
19. In the event Landlord deems Tenant's Work to be excessive in electrical
usage, Landlord may at any time during the performance of Tenant's Work,
require that Tenant install, at Tenant's sole cost and expense, electric
submeters on each floor of the Premises. All electric power to Tenant's
contractor and subcontractors' tools shall be powered through such
submeters. Tenant shall pay Landlord for use of such electric power within
ten (10) days after written demand. If Tenant requests that Landlord
provide central heating or air conditioning, Tenant shall be charged the
then prevailing hourly rate for such central heating or air conditioning
service.
20. Contractors will be permitted to use restroom facilities only on the floor
which construction services are being provided. Any damages to these
facilities will be repaired by the contractor at its sole cost and
expense. Landlord will provide no janitorial services to such restrooms.
21. The contractor must arrange to have freight or stock received by its own
forces. Contractors and subcontractors are required to request loading
area space for offloading
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<PAGE> 52
materials and/or equipment required to construct the Tenant's space. All
requests are to include the name of the supplier/hauler, time of expected
arrival and departure from the Landlord's loading area, name of
contractors and subcontractors designated to accept delivery, and the
location that the materials/equipment will be transported by the
contractor/subcontractor. Disregard for this requirement will result in
those vehicles being moved at the vehicle owner's expense. Under no
circumstances will a vehicle be parked and left in the loading area. The
contractor must provide for storage and removal of all trash at the
contractor's expense. The contractor is not allowed to use the building
trash dumpster under any circumstances. Notwithstanding the foregoing,
prior to the Commencement Date, Tenant's contractors and subcontractors
may only park in the parking area on the Premises specifically designated
by Landlord. Subsequent to the Commencement Date, Tenant's contractors and
subcontractors may only park in parking areas specifically designated by
Landlord. Any building materials left in the loading area, service
corridor, stairwell, on the site, etc. will be removed from the Property
at the contractor's expense. Upon delivery of materials to the loading
area, tools, supplies, equipment, etc., the transport vehicle must be
removed from the loading area prior to the materials being carried to the
work-site.
D. Completion of the Work
1. Before construction can be considered complete, the contractor must submit
the following to the property management office:
(a) Copies of all required certificates from the governmental or
regulatory authorities.
(b) Copies of all guaranties and/or warranties.
(c) An HVAC air balancing report.
(d) A final release and waiver of lien (contractor, subcontractor,
suppliers, etc.)
(e) As built drawings.
(f) Copies of all O&M information, manuals, etc.
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<PAGE> 53
EXHIBIT C-2
INSURANCE REQUIREMENTS
The contractor shall, throughout the duration of any contract or any work
authorized under contract, at its expense, carry and from time to time renew
Worker's Compensation Insurance, Public Liability Insurance in the amount of
$2,000,000, single limit covering both Bodily Injury and Property Damage,
including coverage for the below noted indemnity agreement in such amounts as
may be approved by the Landlord. An insurance certificate in the customary form,
naming WHT Investors, Inc. and Landlord as additional insured and evidencing
that premiums therefore have been paid, shall be delivered to Landlord
simultaneously with the execution of any contract and prior to performing any
work authorized under a contract and within thirty (30) days prior to expiration
of such insurance a like certificate shall be delivered to Landlord evidencing
the renewal of such together with evidence satisfactory to Landlord of payment
of the premium. All certificates must contain a provision that if such policies
are canceled or changed during the periods of coverage as stated therein, in
such a manner as to affect this certificate, written notice will be mailed to
the Landlord by registered mail ten (10) days prior to such cancellation or
change.
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<PAGE> 54
EXHIBIT "D"
FIRST AMENDMENT TO LEASE
THIS AGREEMENT, made this ____ day of ____________, 1994 by and between
WHT REAL ESTATE LIMITED PARTNERSHIP, a Delaware Limited Partnership,
(hereinafter referred to as "Landlord") and SOFTWORKS, INC., incorporated in the
State of Maryland, hereinafter referred to as ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant did enter into that certain Lease Agreement,
dated ______________, for the demise of Suite 300 and Suite 400, located at 5845
Richmond Highway, Alexandria, Virginia 22303, ("Premises"), which said Premises,
and any and all improvements located thereon are more particularly described
therein (hereinafter the "Lease"); and
WHEREAS, all terms defined in the lease shall have the same meanings when
referred to herein; and
WHEREAS, Landlord has requested that Tenant acknowledge the "Commencement
Date" of the Lease, pursuant to and in accordance with Paragraph 5 thereof, and
Landlord has further requested Tenant to acknowledge and confirm (i) its
obligations attendant upon such Commencement Date, and (ii) the Expiration Date
of the Lease, pursuant to and in accordance with Paragraph 5 thereof; and
WHEREAS, Tenant has agreed to acknowledge said Lease commencement and
expiration dates.
NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants herein contained, Landlord and Tenant hereby agree as follows:
1. The Commencement Date of the Lease shall be _____________, and the
Expiration Date of the Lease shall be ______________, and such
respective dates of commencement and expiration of the Lease shall,
if different from the dates designated in Item (g) of Basic Terms of
the Lease, be substituted therefor. It is understood and agreed by
Landlord and Tenant that any and all of Tenant's covenants and
obligations as by the Lease provided shall become effective as of
the said Commencement Date, including, but not limited to, the
payment of Minimum Annual Rent, additional rent, insurance, and any
and all other Rent as designated in Item (h) of Basic Terms of the
Lease.
2. The pro-rated monthly rent due for the first partial month's
occupancy (September 12 through September 30) shall be equal to
$15,697.80 and shall be due and payable on October 1, 1994. Landlord
hereby acknowledges receipt of the first full month's Rent due under
the terms of
<PAGE> 55
this Lease, which Rent shall be applied toward rent due for October.
Thereafter all monthly Rent shall be due and payable in advance on
the first day of each month during the Term of the Lease. In
addition, all annual increases shall commence beginning on October
1, 1995 and continue each year thereafter as defined in the Lease.
3. EXCEPT as hereby modified and amended, all other terms, provisions,
covenants and conditions of the Lease shall remain in full force and
effect.
IN WITNESS WHEREOF, Landlord and Tenant have caused this First Amendment to
lease to be executed by their duly authorized representatives on the day and
year above written.
WITNESS: LANDLORD:
WHT REAL ESTATE
LIMITED PARTNERSHIP
By: WHT Investors, Inc., general
partner
By: By:
------------------------
Its:
TENANT:
WITNESS: SOFTWORKS, INC.
By: By:
------------------------ ---------------------------
Its:
---------------------------
55
<PAGE> 56
EXHIBIT "E"
CLEANING AND JANITORIAL SERVICES
I. MAIN LOBBIES, ELEVATOR LOBBIES, STAIRWAYS, ELEVATORS
Nightly Services (Five nights per week)
1. Gather all wastepaper and place for disposal. Replace liner bags from
customer's stock or provide and back charge.
2. Dust mop title or hard surfaced floors.
3. Vacuum all carpet
4. Spot clean all carpet.
5. Empty and wash all ashtrays.
6. Wash entrance door glass, spot clean partition glass.
7. Dust all horizontal surfaces. Spot wash to remove spillage.
8. Vacuum all walk-on mats.
9. Clean and polish elevator doors, tracks, cab stainless or brass. Vacuum
carpet and spot clean.
10. Damp mop tile or hard surfaced floors.
11. Spray buff tile or hard surfaced floors.
12. Spot clean all wall surfaces to remove smudges and hand prints.
13. Wash and sanitize drinking fountains.
Weekly Services (One time per week)
1. Dust mop and damp mop stairways.
2. Dust down banisters and risers in stair-ways.
3. Bonnet clean carpeted lobbies.
Monthly Services
1. Wash both sides of all interior and exterior glass (except for the
interior of glass in leased space).
Semi Annual Services (Two times per year)
1. Strip, thoroughly rinse, and apply two coats of sealer, and two coats of
finish to tile and hard surfaced floors.
<PAGE> 57
II. GENERAL OFFICE AREA
Nightly Services (Five nights per week)
1. Gather all wastepaper and place for disposal. Replace liner bags from
customer's stock or provide and back charge.
2. Empty and wash all ashtrays.
3. Dust mop all tile and hard surfaced floors.
4. Vacuum all carpeted traffic pattern areas.
5. Spot clean carpeted areas.
6. Dust desks, chairs, tables, file cabinets, and telephones.
7. Remove fingerprints from doors, light switches, and partition glass.
8. Wash all drinking fountains.
Weekly Services (one time per week)
1. Dust low and high horizontal and vertical surfaces.
2. Detail vacuum corners, edges, and hard to reach areas not vacuumed
nightly.
3. Dust mop, damp mop, and spray buff tile floors.
4. Vacuum all fabric office furniture, including chairs and couches.
Monthly Services (Every two months)
1. Refinish all tile floors with one (1) coat of floor finish.
2. Vacuum draperies and ceiling vents.
Quarterly Services
1. Wash both sides of all exterior glass.
Annual Services (Where applicable)
1. Strip, thoroughly rinse, and apply two (2) coats of sealer and two (2)
coats of finish to tile floors.
2. Wash ceiling lights to include lenses, bulbs, and pans.
57
<PAGE> 58
III. RESTROOMS
Nightly Services (Five nights per week)
1. Clean and sanitize wash basins, toilets, and urinals.
2. Clean and polish dispensers, chrome fittings, mirrors, and entrance doors.
3. Dust mop and wet mop floors using a disinfectant mopping soap.
4. Dust ledges and partitions.
5. Fill dispensers from stock. Towels, tissue, sanitary napkins, and hand
soap to be furnished by customer or provided and back charged.
6. Report any fixture not working properly to building management.
Weekly Services (one time per week)
1. Spot wash partitions, walls and doors.
Monthly Services (One time per month)
1. Machine scrub ceramic tile floors.
2. Dust ceiling vents.
3. Hand wash all ceramic walls.
IV. LUNCHROOM
Nightly Services (Five nights per week)
1. Empty trash receptacles and damp wipe outside of container.
2. Dust mop tile or hard surfaced floors.
3. Damp mop spills from tile or hard surfaced floors.
4. Vacuum carpet and spot clean.
5. Remove spots from walls in eating area.
6. Dust chairs and counters.
7. Wash table tops to remove spillage.
8. Empty and wash ashtrays.
Weekly Services (One time per week)
1. Dust mop, damp mop, and spray buff tile or hard surfaced floors.
58
<PAGE> 59
Semi Monthly (Six times per year)
1. Refinish all tile or hard surfaced floors with one (1) coat of floor
finish.
Annual Services (one time; per year)
1. Strip, thoroughly rinse, apply two (2) coats of sealer and two (2) coats
of floor finish to tile or hard surfaced floors.
59
<PAGE> 60
EXHIBIT "F"
RULES AND REGULATIONS
This Exhibit "F" is attached to and made a part of that Agreement of Lease
dated _______________, 1994 (the "Lease"), between WHT REAL ESTATE LIMITED
PARTNERSHIP, a Delaware Limited Partnership ("Landlord"), and SOFTWORKS, INC.,
("Tenant"). Unless the context otherwise requires, the terms used in this
Exhibit that are defined in the Lease shall have the same meaning as provided in
the Lease.
The following rules and regulations have been formulated for the safety
and well-being of all tenants of the Building and to insure compliance with
governmental and other requirements. Strict adherence to these rules and
regulations is necessary to guarantee that each and every tenant will enjoy a
safe and undisturbed occupancy of its premises in the Building. Any continuing
violation of these rules and regulations by Tenant shall constitute a default by
Tenant under the Lease.
Landlord may, upon request of any tenant, waive the compliance by such
tenant of any of the following rules and regulations, provided that (i) no
waiver shall be effective unless signed by Landlord's authorized agent, (ii) any
such waiver shall not relieve such tenant from the obligation to comply with
such rule or regulation in the future unless otherwise agreed to by Landlord,
(iii) no waiver granted to any tenant shall relieve any other tenant from the
obligation of complying with these rules and regulations, unless such other
tenant has received a similar written waiver from Landlord, and (iv) any such
waiver shall not relieve such tenant from any liability to Landlord from any
loss or damage occasioned as a result of such tenant's failure to comply.
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stair-ways, corridors, roof, halls and other parts of the Building
not exclusively occupied by any tenant shall not be obstructed or
encumbered by any tenant or used for any purpose other than ingress
and egress to and from each tenant's premises. Landlord shall have
the right to control and operate the public portions of the
Building, and the facilities furnished for common use of the
tenants, in such manner as Landlord deems best for the benefit of
the tenants generally. No tenant shall permit the visit to its
premises of persons in such numbers or under such conditions as to
interfere with the use and enjoyment of the entrance, corridors,
elevators and other public portions or facilities of the Building by
other tenants.
2. No awnings or other projections shall be attached to the outside
walls of the Building without the prior written consent of Landlord.
No drapes, blinds, shades or screens shall be attached to or hung
in, or used in connection with, any window or door of the Premises,
without the prior written consent of Landlord which consent shall
not be unreasonably withheld. All awnings, projections, curtains,
blinds, shades, screens and
<PAGE> 61
other fixtures must be of a quality, type, design and color, and
attached in the manner approved by Landlord.
3. No showcases or other articles shall be put in front of or affixed
to any part of the exterior of the Building or any tenant's
premises, nor placed in the halls, corridors or vestibules without
the prior written consent of Landlord.
4. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were
constructed, and no debris, rubbish, rags or other substances shall
be thrown therein. All damage resulting from any misuse of the
fixtures shall be borne by the tenant who, or whose servants,
employees, agents, visitors or licensees, shall have cause the same.
5. There shall be no marking, painting, drilling into or defacement of
the Building or any part of any tenant's premises that is visible
from public areas of the Building. Tenants shall not construct,
maintain, use or operate within their respective premises any
electrical device, wiring or apparatus in connection with a loud
speaker system or other sound system, except as reasonably required
as part of a communication system approved prior to the installation
thereof by Landlord. No such loud speaker or sound system shall be
constructed, maintained, used or operated outside the premises of
any tenant.
6. No bicycles or vehicles and no animals, or pets of any kind (except
a bird can be allowed entry for a period of one day every other week
provided it is confined and attended to at all times while in the
Building) shall be brought into or kept in or about the Building or
any tenant's premises, except that this rule shall not prohibit the
parking of bicycles or vehicles in areas specifically designated
therefor by Landlord. No cooking or heating of food prepared in
portable microwave ovens (provided that no odors are emitted). No
tenant shall cause or permit any unusual or objectionable odors to
be produced upon or permeate from its premises. Vending machines
shall be permitted with Landlord's prior written consent.
7. No space in the Building shall be used for the manufacture of goods
for sale in the ordinary course of business, or for the sale at
auction of merchandise, goods or property of any kind. Furthermore,
the use of its premises by any tenant shall not be changed without
the prior approval of Landlord.
8. No tenant shall make any unseemly or disturbing noises or disturb or
interfere with the occupants of the Building or neighboring
buildings or premises or those having business with them, whether by
the use of any musical instrument, radio, talking machine,
whistling, singing, or in any
61
<PAGE> 62
other way. No tenant shall throw anything out of the doors or
windows or into or down the corridors or stairs of the Building.
9. No flammable, combustible or explosive fluid, chemical or substance
shall be brought into or kept upon the Premises.
10. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any tenant, nor shall any changes be made in
any existing locks or the locking mechanism therein, without
Landlord's approval. The doors leading to the corridors or main
halls shall be kept closed during business hours except as they may
be used for ingress or egress. Each tenant shall, upon the
termination of its tenancy, restore to Landlord all keys of stores,
offices, storage and toilet rooms either furnished to, or otherwise
procured by, such tenant, and in the event of the loss of any keys
so furnished, such tenant shall pay to Landlord the replacement cost
thereof. Tenant's key system, shall be separate from that for the
rest of the Building.
11. Landlord reserves the right to inspect all freight to be brought
into the Building and to exclude from the Building all freight which
violates any of these rules and regulations of the Lease.
12. No tenant shall pay for any employees on its premises, except those
actually working for such tenant's premises.
13. Landlord reserves the right to exclude from the Building at all
times any person who is not known or does not properly identify
himself or herself to the Building management or watchman on duty.
Landlord may, at its option, require all persons admitted to or
leaving the Building between the hours of 6:00 p.m. and 7:00 a.m.,
Monday through Friday, and at any hour on Saturdays, Sundays and
legal holidays, to register. Each tenant shall be responsible for
all persons for whom it authorizes entry in the Building, and shall
be liable to Landlord for all acts or omissions of such persons.
14. The Premises shall not, at any time, be used for lodging or sleeping
or for any immoral or illegal purposes.
15. Tenant assumes full responsibility for protecting the Premises from
theft, and each tenant, before closing and leaving the Premises at
any time, shall see that all doors and windows are closed and
locked, and all lights turned off.
16. Landlord's employees shall not perform any work or do anything
outside of their regular duties, unless under special instruction
from the management of the Building. The requirements of tenants
will be attended to only upon application to Landlord, and any such
special requirements shall be billed to Tenant and paid when the
next installment of rent is due) in accordance with the schedule of
charges maintained by Landlord from
62
<PAGE> 63
time to time or at such charge as is agreed upon in advance by
Landlord and Tenant.
17. Canvassing, soliciting and peddling in the Building and on the
Property are prohibited and each tenant shall cooperate to prevent
the same. Peddlers, solicitors and beggars shall be reported to the
Building manager or as Landlord otherwise requests.
18. There shall not be used in any space, or in the public halls of the
Building, either by any tenant or by jobbers or others in the
delivery or receipt of merchandise, any hand trucks, except those
equipped with rubber tires and side guards. Tenant shall be
responsible to Landlord for any loss or damage resulting from any
deliveries made by or for Tenant to the Building.
19. Mats, trash or other objects shall not be placed in the public
corridors of the Building.
20. Landlord does not maintain suite finishes which are non-standard,
such as kitchens, bathrooms, wallpaper, special lights, etc.
However, should the need arise for repair of items not maintained by
Landlord, Landlord will arrange for the work to be done at Tenant's
expense.
21. Drapes installed by Landlord for the use of Tenant or drapes
installed by Tenant, with Landlord's approval, which are visible
from the exterior of the Building, must by cleaned by Tenant at
least once a year, without notice, at the tenant's own expense.
22. The Building directory located in the Building lobby as provided by
Landlord shall be available to Tenant solely to display its name and
location in the Building, which display shall be as directed by
Landlord.
23. Tenant shall not cause any unnecessary janitorial labor or services
by reason of Tenant's carelessness or indifference in the
preservation of good order and cleanliness.
24. Tenant shall not install linoleum, tile, carpet or other floor
covering so that the same shall be affixed to the floor of the
Premises in any manner except as approved by Landlord, which
approval shall not be unreasonably withheld.
25. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators,
except between such hours and in such elevators and other such other
conditions as shall be designated by Landlord.
26. Tenant shall not waste heat or air-conditioning and shall cooperate
fully with Landlord to assure the most effective operation of the
Building's
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<PAGE> 64
heating and air-conditioning, and shall refrain from attempting to
adjust any controls other than room thermostats installed for
Tenant's use.
27. Landlord shall have sole power and discretion to control the
quantity, size, location, and design of all tenant identification
signage. No such signage shall be erected without Landlord's written
consent.
28. The loading dock area is exclusively reserved for authorized traffic
and Tenant shall not use same for temporary parking.
29. No eating, drinking, sleeping, or loitering shall be permitted in
the lobby areas.
30. Landlord may from time to time alter or amend these Rules and
Regulations, and Tenant shall comply with the Amended Rules and
Regulations.
64
<PAGE> 65
EXHIBIT "G"
TENANT ESTOPPEL CERTIFICATE
TO: ______________________________________
RE: Property Address: ____________________
Lease Date: __________________________
Between: _____________________________, Landlord
and __________________________________, Tenant
Rentable Area Leased: ________________
Suite No. ____________________________
Floor: _______________________________
The undersigned, Tenant under the above-referenced lease ("Lease"),
certifies to ____________________, the following:
1. The above-described Lease has not been canceled, modified, assigned,
extended or amended except as follows:
_________________________________________________________________________
2. There is no prepaid rent, except $__________ and the amount of security
deposit is $____________.
3. We took possession of the Premises on ______________ and commenced (or
will commence) to pay Rent on __________________, 19 , and has been paid
through ___________________________.
4. The Lease terminates on _______________ and we have the following
renewal option(s) _______________________________________________________.
5. All work to be performed for us under the Lease has been performed as
required and has been accepted by us, except ___________________________.
6. The Lease is: (a) in full force and effect; (b) free from default; and
(c) we have no claims against the Landlord or offsets against Rent.
7. The undersigned has received no notice of prior sale, transfer or
assignment, hypothecation or pledge of the Lease or of the Rent secured
therein other than to you, except, ____________________________________.
8. That the Premises as let are being used for the purpose as described in
the Lease.
<PAGE> 66
If we are a corporation, the undersigned is a duly appointed officer of
the corporation signing this certificate and is the incumbent in the office
indicated under (his) (her) name.
In any event, the undersigned individual(s) (is) (are) duly authorized to
execute this certificate.
Dated this ________ day of ________________, 19__.
TENANT:
___________________________
66
<PAGE> 67
INDEX
Page
----
1. Basic Terms
2. Effect of Reference to Basic Terms
3. Lease of Premises
4. Completion by Tenant
5. Term
6. Use of Premises
7. Rent
8. Security Deposit
9. Insurance and Indemnification
10. Damage by Fire or Other Casualty; Casualty Insurance
11. Condemnation
12. Non-abatement of Rent
13. Repairs and Maintenance
14. Utilities and Services
15. Governmental Regulations
16. Directory; Signs
17. Alterations and Additions
18. Landlord's Right of Entry
19. Quiet Enjoyment
20. Assignment and Subletting
21. Subordination
22. Tenant's Certificate
23. Surrender
24. Defaults; Remedies
25. Bankruptcy or Insolvency; Assumption; Adequate Protection
26. Interpretation
27. Definition of Landlord; Landlord's Liability
28. Notices
29. Brokerage
30. Relocation of Tenant
31. Guarantee
Addendum to Agreement of Lease
SCHEDULE OF EXHIBITS
"A" Floor Plans
"A-1" Computer/Equipment Inventory
"B" Description of Property
"C" Tenant Improvement Work Agreement
"D" First Amendment to Lease
"E" Cleaning and Janitorial Services
"F" Rules and Regulations
"G" Tenant Estoppel Certificate
<PAGE> 1
Exhibit 10.2
FIRST AMENDMENT TO LEASE
THIS AGREEMENT, made this ____ day of ____________, 1994 by and between
WHT REAL ESTATE LIMITED PARTNERSHIP, a Delaware Limited Partnership,
(hereinafter referred to as "Landlord") and SOFTWORKS, INC., incorporated in the
State of Maryland, hereinafter referred to as ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant did enter into that certain Lease Agreement,
dated June 14, 1994, for the demise of Suite 300 and Suite 400, located at 5845
Richmond Highway, Alexandria, Virginia 22303, ("Premises"), which said Premises,
and any and all improvements located thereon are more particularly described
therein (hereinafter the "Lease"); and
WHEREAS, all terms defined in the lease shall have the same meanings when
referred to herein; and
WHEREAS, all terms defined in the lease shall have the same meanings when
referred to herein; and,
WHEREAS, Landlord has requested that Tenant acknowledge the "Commencement
Date" of the Lease, pursuant to and in accordance with Paragraph 5 thereof, and
Landlord has further requested Tenant to acknowledge and confirm (i) its
obligations attendant upon such Commencement Date, and (ii) the Expiration Date
of the Lease, pursuant to and in accordance with Paragraph 5 thereof; and
WHEREAS, Tenant has agreed to acknowledge said Lease commencement and
expiration dates.
NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants herein contained, Landlord and Tenant hereby agree as follows:
1. The Commencement Date of the Lease shall be September 12, 1994, and
the Expiration Date of the Lease shall be September 30, 2001, and
such respective dates of commencement and expiration of the Lease
shall, if different from the dates designated in Items (g) of Basic
Terms of the Lease, be substituted therefor. It is understood and
agreed by Landlord and Tenant that any and all of Tenant's covenants
and obligations as by the Lease provided shall become effective as
of the said Commencement Date, including, but not limited to, the
payment of Minimum Annual Rent, additional rent, insurance, and any
and all other Rent as designated in Item (h) of Basic Terms of the
Lease.
<PAGE> 2
2. The pro-rated monthly rent due for the first partial month's
occupancy (September 12 through September 30) shall be equal to
$15,697.80 and shall be due and payable on October 1, 1994. Landlord
hereby acknowledges receipt of the first full month's Rent due under
the terms of this Lease, which Rent shall be applied toward rent due
for October. Thereafter all monthly Rent shall be due and payable in
advance on the first day of each month during the Term of the Lease.
In addition, all annual increases shall commence beginning on
October 1, 1995 and continue each year thereafter as defined in the
Lease. 3. EXCEPT as hereby modified and amended, all other terms,
provisions, covenants and conditions of the Lease shall remain in
full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have caused this First Amendment
to lease to be executed by their duly authorized representatives on the day and
year above written.
WITNESS: LANDLORD:
WHT REAL ESTATE
LIMITED PARTNERSHIP
By: WHT Investors, Inc., general partner
By: By: /s/ Lawrence A. Corson
------------------------ --------------------------------
Its: Assistant Vice President
--------------------------------
TENANT:
WITNESS: SOFTWORKS, INC.
By: By: /s/ Judy G. Carter
------------------------ --------------------------------
Its: Chief Executive Officer
--------------------------------
2
<PAGE> 1
Exhibit 10.3
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE ("Agreement") is made as of ____________,
1998 by and between HUNTWOOD OFFICE PARTNERS L.P., a Delaware limited
partnership, with offices c/o DPM, Inc., One Penn Plaza, 40th Floor, New York,
New York 10119 ("Landlord") and SOFTWORKS, INC., a Maryland corporation, with
offices at 5845 Richmond Highway, Alexandria, Virginia 22303 ("Tenant").
W I T N E S S E T H :
WHEREAS:
1. Landlord's predecessor-in-interest, WHT Real Estate Limited Partnership
("WHT"), and Tenant entered into a lease agreement dated June 14, 1994 affecting
certain space known as Suite 300 and Suite 400 consisting of 24, 786 rentable
square feet (the "Premises") in the building known as 5845 Richmond Highway,
Alexandria, Virginia 22303 (the "Building"), which lease was thereafter amended
by a first amendment to lease dated ______, 1994 (such lease as amended
hereinafter referred to as the "Lease");
2. Landlord has succeeded to the interests of WHT as landlord under the
Lease; and
3. Landlord and Tenant desire to modify the Lease to provide for
additional space to be demised to Tenant, and to modify certain other terms of
the Lease as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, it is agreed that:
1. The Added Space
Effective as of March 30, 1998 (the "Effective Date"), and for and
throughout the Expiration Date of the Lease, there shall be added to and
included in the Premises the following additional space, to wit:
That portion of the first (1st) floor of the Building known as
suite 100, consisting of 1,396 rentable square feet
substantially as shown on the floor plan annexed hereto as
Exhibit A (hereinafter called the "Added Space"),
<PAGE> 2
so that the term "Premises" as defined in the Lease shall from and after the
Effective Date mean, collectively, Suite 300, Suite 400 and the Added Space,
consisting of an aggregate total of 26,182 rentable square feet.
Notwithstanding the generality of the foregoing, if Landlord shall
be unable to give possession of the Added Space or any portion thereof on the
Effective Date because of the holding over or retention of possession of any
tenant, undertenant, or occupant of such space, then Landlord shall not be
subject to any liability for failure to give possession on such Effective Date
and the validity of this Agreement shall not be impaired under such
circumstances nor shall the same be construed in any way to extend the Lease
Term; and the Effective Date shall be delayed and shifted until the date upon
which Landlord has tendered possession thereof by giving notice to Tenant that
such space is ready for Tenant's occupancy.
2. Modification of Lease
From the Effective Date through and inclusive of September 30, 2001:
(i) The "Minimum annual Rent" shall be increased by the following
amounts, which amounts are attributable to the inclusion in the
Premises of the Added Space: (a) $26,524.00 per annum ($2,210.33 per
month) during the period from the Effective Date through March 31,
1999; (b) $27,319.72 per annum ($2,276.64 per month) during the
period from April 1, 1999 through March 31, 2000; (c) $28,139.31 per
annum ($2,344.94 per month) during the period from April 1, 2000
through March 31, 2001; and (d) $28,983.49 per annum ($2,415.29 per
month) during the period from April 1, 2001 through September 30,
2001;
(ii) "Tenant's Share of Annual Operating Costs" attributable in the
Added Space shall mean 1.49%; and
(iii) The Base Amount attributable to the Added Space shall be equal
to the Actual Operating Costs incurred by Landlord for the 1998
calendar year, accordingly, commencing on January 1, 1999, Tenant
shall be responsible for Tenant's Share of Annual Operating Costs
attributable to the Added Space in excess of the Base Amount
attributable to the Added Space.
3. Condition of Added Space
The Added Space shall be delivered to Tenant in "as is" "where is"
condition, and Landlord makes no warranty or representation as to the condition
of the Added Space; Tenant has examined the Added Space and accepts the same in
its condition and state of repair existing as of the date of this Agreement.
Notwithstanding the generality of the foregoing, Tenant shall be
required, at its sole cost and expense (except for "Landlord's Contribution" as
set forth below) and in accordance with Article 17 of the Lease ("Alteration and
Additions"), to perform
2
<PAGE> 3
certain improvements to the Added Space in order to prepare the same for its
initial occupancy ("Tenant's Work"). Tenant's Work shall be accomplished in the
six week period ("Tenant's Work Period") commencing as of the day Landlord
delivers the Added Space to Tenant.
Upon completion of Tenant's Work, Tenant shall furnish Landlord with
full and final waivers of liens and contractors' and architects' affidavits and
statements, in such form as may be reasonably required by Landlord, from all
parties performing labor or supplying materials or service in connection with
Tenant's Work showing that all of said parties have been compensated in full and
waiving all liens in connection with the Added Space and Building. Tenant shall
submit to Landlord a detailed breakdown of Tenant's total construction costs,
together with such evidence of payment as is reasonably satisfactory to
Landlord.
Upon completion of the Tenant's Work and Tenant's satisfaction of
all requirements set forth in this Agreement, Landlord shall make a dollar
contribution in the amount of $4,188 ("Landlord's Contribution") (which is $3.00
per square foot of space within the Added Space) for application to the extent
thereof to the cost of Tenant's Work. If the cost of Tenant's Work exceeds
Landlord's Contribution, Tenant shall have sole responsibility for the payment
of such excess cost. If the cost of Tenant's Work is less than Landlord's
Contribution, Landlord shall be entitled to any payment or credit for such
excess amount. Notwithstanding anything herein to the contrary, Landlord agrees
that Landlord's Contribution shall include the so-called "soft costs" of
Tenant's work, such as, but not limited to, permit fees, architectural and
engineering fees, and any utility service fees.
4. Notices
From and after the date hereof, all notices to Landlord shall be
addressed to Huntwood Office Partners, L.P., c/o DPM, Inc., One Penn Plaza, 40th
Floor, New York, New York 10119, Attention: Chief Executive Officer, with a copy
in like manner delivered to the Law Offices of David Skrilow, 551 Fifth Avenue,
Suite 1114, New York, New York 10176, Attn: David Skrilow, Esq., or such other
persons or addresses as Landlord shall direct in writing.
5. Broker
Tenant represents and warrants that it has not dealt with any real
estate broker in connection with this Agreement except for Landlord's agent, The
Carey Winston Company; and Tenant agrees to indemnify and hold Landlord harmless
for any loss, cost, liability or expense incurred by Landlord as a result of a
claim for brokerage commissions or finder's fee from any other broker based on
the act or omission of Tenant in breach of the foregoing warranty.
6. Miscellaneous
This Agreement shall be binding upon the parties hereto, their
heirs, successors and assigns. Except as specifically set forth herein, the
Lease and all of its
3
<PAGE> 4
terms, covenants and conditions are hereby ratified and confirmed and of full
force and effect. Effective as of the date hereof, Exhibit C of the Lease shall
be deemed deleted therefrom and of no further force or effect. Except as
modified hereby, there shall be no other changes or modifications to this
Agreement or to the Lease unless in writing and executed by the parties hereto.
Any capitalized term used herein shall have the same meaning ascribed to it in
the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Second
Amendment to Lease Agreement, by their duly authorized officers, as of the date
and year first above written.
WITNESS: LANDLORD:
HUNTWOOD OFFICE PARTNERS L.P.
/s/ Maria Santora By: /s/ Joseph Wenk
- ------------------------ -----------------------------
Title: President
--------------------------
TENANT:
SOFTWORKS, INC.
By: /s/ R.C. McLaughlin
- ------------------------ -----------------------------
Title: Chief Financial Officer
--------------------------
4
<PAGE> 1
Exhibit 10.4
SOFTWORKS, Inc.
1998 Long-Term Incentive Plan
1. PURPOSE.
The purpose of the 1998 Long-Term Incentive Plan (the "Plan") is to
advance the interests of SOFTWORKS, Inc. a Delaware corporation (the "Company"),
and its shareholders by providing incentives to certain key employees of the
Company and its affiliates and to certain other key individuals who perform
services for these entities, including those who contribute significantly to the
strategic and long-term performance objectives and growth of the Company and its
affiliates.
2. ADMINISTRATION.
(a) The Plan shall be determined solely by the Long-Term Incentive Plan
Administrative Committee (the "Committee") of the Board of Directors (the
"Board") of the Company, as such Committee is from time to time constituted, or
any successor committee the Board may designate to administer the Plan; provided
that if at any time Rule 16b-3 or any successor rule ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), so permits
without adversely affecting the ability of the Plan to comply with the
conditions for exemption from Section 16 of the Exchange Act (or any successor
provision) provided by Rule 16b-3, the Committee may delegate the administration
of the Plan in whole or in part, on such terms and conditions, and to such
person or persons as it may determine in its discretion. The membership of the
Committee or such successor committee shall be constituted so as to comply at
all times with the applicable requirements of Rule 16b-3. No member of the
Committee shall be eligible or have been eligible within one year prior to his
appointment to receive awards under the Plan ("Awards") or to receive awards
under any other plan, program or arrangement of the Company or any of its
affiliates if such eligibility would cause such member to cease to be a
"Non-employee director" under Rule 16b-3; provided that if at any time Rule
16b-3 so permits without adversely affecting the ability of the Plan to comply
with the conditions for exemption from Section 16 of the Exchange Act (or any
successor provision) provided by Rule 16b-3, one or more members of the
Committee may cease to be "Non-employee directors."
(b) The Committee has all the powers vested in it by the terms of the Plan
set forth herein, such powers to include exclusive authority (except as may be
delegated as permitted herein) to select the key employees and other key
individuals to be granted Awards under the Plan, to determine the type, size and
terms of the Award to be made to each individual selected, to modify the terms
of any Award that has been granted, to determine the time when awards will be
granted,
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<PAGE> 2
to establish performance objectives, to make any adjustments necessary or
desirable as a result of the granting of Awards to eligible individuals located
outside the United States and to prescribe the form of the instruments embodying
Awards made under the Plan. The Committee is authorized to interpret the Plan
and the Awards granted under the Plan, to establish, amend and rescind any rules
and regulations relating to the Plan, and to make any other determination, which
it deems necessary or desirable for the administration of the Plan. The
Committee (or its delegate as permitted herein) may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent the Committee deems necessary or desirable to carry it
into effect. any decision of the Committee (or its delegate as permitted herein)
in the interpretation and administration of the Plan, as described herein, shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. The Committee may act only by a majority of
its members in office, except that the members thereof may authorize any one or
more of their members or any officer of the Company to execute and deliver
documents or to take any other ministerial action on behalf of the Committee
with respect to Awards made or to be made to Plan participants. No member of the
Committee and no officer of the Company shall be liable for anything done or
omitted to be done by him, by any other member of the Committee or by any
officer of the Company in connection with the performance of duties under the
Plan, except for his own willful misconduct or as expressly provided by statute.
Determinations to be made by the Committee under the Plan may be made by its
delegates.
3. PARTICIPATION.
(a) Affiliates. If an Affiliate (as hereinafter defined) of the
Company wishes to participate in the Plan and its participation shall have been
approved by the Board upon the recommendation of the Committee, the board of
directors or other governing body of the Affiliate shall adopt a resolution in
form and substance satisfactory to the Committee authorizing participation by
the Affiliate in the Plan with respect to its key employees or other key
individuals performing services for it. As used herein, the term "Affiliate"
means any entity in which the Company has a substantial direct or indirect
equity interest or which has a substantial direct or indirect equity interest in
the Company, as determined by the Committee in its discretion.
An Affiliate participating in the Plan may cease to be a
participating company at any time by action of the Board or by action of the
board of directors or other governing body of such Affiliate, which latter
action shall be effective not earlier than the date of delivery to the Secretary
of the Company of a certified copy of a resolution of the Affiliate's board of
directors or other governing body taking such action. If the participation in
the Plan of an Affiliate shall terminate, such termination shall not relieve it
of any obligations theretofore incurred by it, except as may be approved by the
Committee in its discretion.
(b) Participants. Consistent with the purposes of the Plan, the
Committee shall have exclusive power (except as may be delegated as permitted
herein) to select the key employees and other key individuals performing
services for the Company, including consultants or independent contractors and
others who perform services for the Company and its Affiliates who
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<PAGE> 3
may participate in the Plan and be granted Awards under the Plan. Eligible
individuals may be selected individually or by groups or categories, as
determined by the Committee in its discretion. In no event may a corporation be
eligible to receive an Award of incentive stock options under the Plan.
4. AWARDS UNDER THE PLAN.
(a) Types of Awards. Awards under the Plan may include, but need not
be limited to, one or more of the following types, either alone or in any
combination thereof: (i) "Stock Options," (ii) "Stock Appreciation Rights,"
(iii) "Restricted Stock," (iv) "Performance Grants" and (v) any other type of
Award deemed by the Committee in its discretion to be consistent with the
purposes of the Plan (including but not limited to, Awards of or options or
similar rights granted with respect to unbundled stock units or components
thereof, and Awards to be made to participants who are foreign nationals or are
employed or performing services outside the United States). Stock Options, which
include "Non-Qualified Stock Options" and "Incentive Stock Options" or
combinations thereof, are rights to purchase common shares of the Company and
stock of any other class into which such shares may thereafter be changed (the
"Common Shares"). Non-Qualified Stock Options and Incentive Stock Options are
subject to the terms, conditions and restrictions specified in Paragraph 5.
Stock Appreciation Rights are rights to receive (without payment to the Company)
cash, Common Shares, other Company securities (which may include, but need not
be limited to, unbundled stock units or components thereof, debentures,
preferred stock, warrants, securities convertible into Common Shares or other
property, and other types of securities including, but not limited to, those of
the Company or an Affiliate, or any combination thereof ("Other Company
Securities") or property, or other forms of payment, or any combination thereof,
as determined by the Committee, based on the increase in the value of the number
of Common Shares specified in the Stock Appreciation Right. Stock Appreciation
Rights are subject to the terms, conditions and restrictions specified in
Paragraph 6. Shares of Restricted Stock are Common Shares which are issued
subject to certain restrictions pursuant to Paragraph 7. Performance Grants are
contingent awards subject to the terms, conditions and restrictions described in
Paragraph 8, pursuant to which the participant may become entitled to receive
cash, Common Shares, Other Company Securities or property, or other forms of
payment, or any combination thereof, as determined by the Committee.
(b) Maximum Number of Shares that May Be Issued. There may be issued
under the Plan (as Restricted Stock, in payment of Performance Grants, pursuant
to the exercise of Stock Options or Stock Appreciation Rights, or in payment of
or pursuant to the exercise of such other Awards as the Committee, in its
discretion, may determine) an aggregate of not more than 4,310,000 Common
Shares, subject to adjustment as provided in Paragraph 15. Common Shares issued
pursuant to the Plan may be either authorized but unissued shares, treasury
shares, reacquired shares, or any combination thereof. If any Common Shares
issued as Restricted Stock or otherwise subject to repurchase or forfeiture
rights are reacquired by the Company pursuant to such rights, or
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<PAGE> 4
if any Award is cancelled, terminates or expires unexercised, any Common Shares
that would otherwise have been issuable pursuant thereto will be available for
issuance under new Awards.
(C) Rights with Respect to
Common Shares and Other Securities.
(i) Unless otherwise determined by the Committee in its
discretion, a participant to whom an Award of Restricted Stock has been
made (and any person succeeding to such a participant's rights pursuant to
the Plan) shall have, after issuance of a certificate or copy thereof for
the number of Common Shares awarded and prior to the expiration of the
Restricted Period or the earlier repurchase of such Common Shares as
herein provided, ownership of such Common Shares, including the right to
vote the same and to receive dividends or other distributions made or paid
with respect to such Common Shares (provided that such Common Shares, and
any new, additional or different shares, or Other Company Securities or
property, or other forms of consideration which the participant may be
entitled to receive with respect to such Common Shares as a result of a
stock split, stock dividend or any other change in the corporate or
capital structure of the Company, shall be subject to the restrictions
hereinafter described as determined by the Committee in its discretion),
subject, however, to the options, restrictions and limitations imposed
thereon pursuant to the Plan. Notwithstanding the foregoing, unless
otherwise determined by the Committee in its discretion, a participant
with whom an Award agreement is made to issue Common Shares in the future
shall have no rights as a shareholder with respect to Common Shares
related to such agreement until issuance of a certificate to him.
(ii) Unless otherwise determined by the Committee in its
discretion, a participant to whom a grant of Stock Options, Stock
Appreciation Rights, Performance Grants or any other Award is made (and
any person succeeding to such a participant's rights pursuant to the Plan)
shall have no rights as a stockholder with respect to any Common Shares or
as a holder with respect to other securities, if any, issuable pursuant to
any such Award until the date of the issuance of a stock certificate to
him for such Common Shares or other instrument of ownership, if any.
Except as provided in Paragraph 15, no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities, other property or other
forms of consideration, or any combination thereof) for which the record
date is prior to the date such stock certificate or other instrument of
ownership, if any, is issued.
5. STOCK OPTIONS.
The Committee may grant Stock Options either alone, or in
conjunction with Stock Appreciation Rights, Performance Grants or other Awards,
either at the time of grant or by amendment thereafter, provided that an
Incentive Stock Option may be granted only to an eligible
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<PAGE> 5
employee of the Company or its parent or subsidiary corporation. Each Stock
Option (referred to herein as an "Option") granted under the Plan shall be
evidenced by an instrument in such form as the Committee shall prescribe from
time to time in accordance with the Plan and shall comply with the following
terms and conditions, and with such other terms and conditions, including, but
not limited to, restrictions upon the Option or the Common Shares issuable upon
exercise thereof, as the Committee, in its discretion, shall establish:
(a) The option price may be less than, equal to, or greater than,
the fair market value of the Common Shares subject to such Option at the time
the Option is granted, as determined by the Committee, but in no event will such
option price be less than 85% of the fair market value of the underlying Common
Shares at the time the Option is granted; provided, however, that in the case of
an Incentive Stock Option granted to such an employee, the option price shall
not be less than the fair market value of the Common Shares subject to such
Option at the time the Option is granted, or if granted to such an employee who
owns stock representing more than ten percent of the voting power of all classes
of stock of the Company or of its parent or subsidiary (a "Ten Percent
Employee"), such option price shall be not less than 110% of such fair market
value at the time the Option is granted; provided, further that in no event will
such option price be less than the par value of such Common Shares.
(b) The Committee shall determine the number of Common Shares to be
subject to each option. The number of Common Shares subject to an outstanding
Option may be reduced on a share-for-share or other appropriate basis, as
determined by the Committee, to the extent that Common Shares under such Option
are used to calculate the cash, Common Shares, Other Company Securities or
property, or other forms of payment, or any combination thereof, received
pursuant to exercise of a Stock Appreciation Right attached to such Option, or
to the extent that any other Award granted in conjunction with such Option is
paid.
(c) The Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and
distribution, and shall be exercisable during the grantee's lifetime only by
him. Unless the Committee determines otherwise, one-half of the Option shall not
be exercisable for at least twelve months after the date of grant, unless the
grantee ceases employment or performance of services before the expiration of
such twelve-month period by reason of his disability as defined in Paragraph 12
or his death.
(d) The Option shall not be exercisable:
(i) in the case of any Incentive Stock Option granted to a Ten
Percent Employee, after the expiration of five years from the date it is
granted, and, in the case of any other Option, after the expiration of ten
years from the date it is granted. Any Option may be exercised during such
period only at such time or times and in such installments as the
Committee may establish;
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<PAGE> 6
(ii) unless payment in full is made for the shares being
acquired thereunder at the time of exercise, such payment shall be made in
such form (including, but not limited to, cash, Common Shares, promissory
notes of which 80% of the required payment, excluding interest, may be
non-recourse, or the surrender of another outstanding Award under the
Plan, or any combination thereof) as the Committee may determine in its
discretion; and
(iii) unless the person exercising the Option has been, at all
times during the period beginning with the date of the grant of the Option
and ending on the date of such exercise, employed by or otherwise
performing services for the Company or an Affiliate, or a corporation, or
a parent or subsidiary of a corporation, substituting or assuming the
Option in a transaction to which Section 424(a) of the Internal Revenue
Code of 1986, as amended, or any successor statutory provisions thereto
(the "Code"), is applicable, except that:
(A) in the case of any Non-Qualified Stock Option, if
such person shall cease to be employed by or otherwise performing
services for the Company or an Affiliate solely by reason of a
period of related Employment as defined in Paragraph 14, he may,
during such period of Related Employment, exercise the Non-Qualified
Stock Option as if he continued such employment or performance of
service; or
(B) if such person shall cease such employment or
performance of services by reason of his disability as defined in
Paragraph 12 or early, normal or deferred retirement under an
approved retirement program of the Company or an Affiliate (or such
other plan or arrangement as may be approved by the Committee, in
its discretion, for this purpose) while holding an option which has
not expired and has not been fully exercised, such person, at any
time within three months (or such other period determined by the
Committee) after the date he ceased such employment or performance
of services (but in no event after the Option has expired), may
exercise the Option with respect to any shares as to which he could
have exercised the Option on the date he ceased such employment or
performance of services, or with respect to such greater number of
shares as determined by the Committee; or
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<PAGE> 7
(C) if such person shall cease such employment or
performance of services for reasons other than Related Employment,
disability, early, normal or deferred retirement or death (as
provided elsewhere) while holding an Option which has not expired
and has not been fully exercised, such person may exercise the
Option at any time within three months (or such other period
determined by the Committee) after the date he ceased such
employment or performance of services (but in no event after the
Option has expired), but only to the extent such Option is
exercisable on the date of such termination, or with respect to such
greater number of shares as determined by the Committee; or
(D) if any person to whom an Option has been granted
shall die holding an Option which has not expired and has not been
fully exercised, his executors, administrators, heirs or
distributees, as the case may be, may, at any time within one year
(or such other period determined by the Committee) after the date of
death (but in no event after the Option has expired), exercise the
Option with respect to any shares as to which the decedent could
have exercised the Option at the time of his death, or with respect
to such greater number of shares as determined by the Committee.
(E) In the case of an Incentive Stock Option, the amount
of aggregate fair market value of Common Shares (determined at the
time of grant of the Option pursuant to subparagraph 5(a) of the
Plan) with respect to which incentive stock options are exercisable
for the first time by an employee during any calendar year (under
all such plans of his employer corporation any calendar year (under
all such plans of his employer corporation and its parent and its
parent and subsidiary corporations) shall not exceed $100,000.
(F) It is the intent of the Company that Non-Qualified
Stock Options granted under the Plan not be classified as Incentive
Stock Options, that the Incentive Stock Options granted under the
Plan be consistent with and contain or be deemed to contain all
provisions required under Section 422(b) and other appropriate
provisions of the Code and any implementing regulations (and any
successor provisions thereof), and that any ambiguities in
construction shall be interpreted in order to effectuate such
intent. The Agreements providing Non-Qualified Stock Options shall
provide that such Options are not "incentive stock options" for the
purposes of Section 422(b) of the Code.
6. STOCK APPRECIATION RIGHTS.
The Committee may grant Stock Appreciation Rights either alone, or
in conjunction with Stock Options, Performance Grants or other Awards, either at
the time of grant or by amendment thereafter. Each Award of Stock Appreciation
Rights granted under the Plan shall be evidenced by an instrument in such form
as the Committee shall prescribe from time to time in accordance with the Plan
and shall comply with the following terms and conditions, and with such
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<PAGE> 8
other terms and conditions, including, but not limited to, restrictions upon the
Award of Stock Appreciation Rights or the Common Shares issuable upon exercise
thereof, as the Committee in its discretion shall establish:
(a) The Committee shall determine the number of Common Shares to be
subject to each Award of Stock Appreciation Rights. The number of Common Shares
subject to an outstanding Award of Stock Appreciation Rights may be reduced on a
share-for-share or other appropriate basis, as determined by the Committee, to
the extent that Common Shares under such Award of Stock Appreciation Rights are
used to calculate the cash, Common Shares, Other Company Securities or property,
or other forms of payment, or any combination thereof, received pursuant to
exercise of an Option attached to such Award of Stock Appreciation Rights, or to
the extent that any other Award granted in conjunction with such Award of Stock
Appreciation Rights is paid.
(b) The Award of Stock Appreciation Rights may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, except by
will or the laws of the descent and distribution, and shall be exercisable
during the grantee's lifetime only by him. Unless the Committee determines
otherwise, the Award of Stock Appreciation Rights shall not be exercisable for
at least six months after the date of grant, unless the grantee ceases
employment or performance of services before the expiration of such six-month
period by reason of his disability as defined in Paragraph 12 or his death.
(c) The Award of Stock Appreciation Rights shall not be exercisable:
(i) in the case of any Award of Stock Appreciation Rights that
are attached to an Incentive Stock Option granted to a Ten Percent Employee,
after the expiration of five years from the date it is granted, and, in the case
of any other award of Stock Appreciation Rights, after the expiration of ten
years from the date it is granted. Any Award of Stock Appreciation Rights may be
exercised during such period only at such time or times and in such installments
as the Committee may establish;
(ii) unless the Option or other Award to which the Award of
Stock Appreciation Rights is attached is at the time exercisable; and
(iii) unless the person exercising the Award of Stock
Appreciation Rights has been, at all times during the period beginning with the
date of the grant thereof and ending on the date of such exercise, employed by
or otherwise performing services for the Company or an Affiliate, except that
(A) in the case of any Award of Stock Appreciation Rights
(other than those attached to an Incentive Stock Option), if such
person shall cease to be employed by or otherwise performing
services for the Company or an Affiliate solely by reason of a
period of Related Employment as defined in Paragraph 14,
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<PAGE> 9
he may, during such period of Related Employment, exercise the Award
of Stock Appreciation Rights as if he continued such employment or
performance of services; or
(B) if such person shall cease such employment or performance
of services by reason of his disability as defined in Paragraph 12
or early, normal or deferred retirement under an approved retirement
program of the Company or an Affiliate (or such other plan or
arrangement as may be approved by the Committee, in its discretion,
for this purpose) while holding an Award of Stock Appreciation
Rights which has not expired and has not been fully exercised, such
person may, at any time within three years (or such other period
determined by the Committee) after the date he ceased such
employment or performance of services (but in no event after the
Award of Stock Appreciation Rights has expired), exercise the Award
of Stock Appreciation Rights with respect to any shares as to which
he could have exercised the Award of Stock Appreciation Rights on
the date he ceased such employment or performance of services, or
with respect to such greater number of shares as determined by the
Committee; or
(C) if such person shall cease such employment or performance
of services for reasons other than Related Employment, disability,
early, normal or deferred retirement or death (as provided
elsewhere) while holding an Award of Stock Appreciation Rights which
has not expired and has not been fully exercised, such person may
exercise the Award of Stock Appreciation Rights at any time during
the period, if any, which the Committee approves (but in no event
after the Award of Stock Appreciation Rights expires) following the
date he ceased such employment or performance of services with
respect to any shares as to which he could have exercised the Award
of Stock Appreciation Rights on the date he ceased such employment
or performance of services or as otherwise permitted in the
Committee's discretion; or
(D) if any person to whom an Award of Stock Appreciation
Rights has been granted shall die holding an Award of Stock
Appreciation Rights which has not expired and has not been fully
exercised, his executors, administrators, heirs or distributees, as
the case may be, may, at any time within one year (or such other
period determined by the Committee) after the date of death (but in
no event after the Award of Stock Appreciation Rights has expired),
exercise the Award of Stock Appreciation Rights with respect to any
shares as to which the decedent could have exercised the Award of
Stock Appreciation Rights at the time of his death, or with respect
to such greater number of shares as determined by the Committee.
(d) An Award of Stock Appreciation Rights shall entitle the holder
(or any person entitled to act under the provisions of subparagraph 6(c)(iii)(D)
hereof) to exercise such Award or
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<PAGE> 10
to surrender unexercised the option (or other Award) to which the Stock
Appreciation Rights is attached (or any portion of such Option or other Award)
to the Company and to receive from the Company in exchange therefor, without
payment to the Company, that number of Common Shares having an aggregate value
equal to the excess of the fair market value of one share, at the time of such
exercise, over the exercise price (or Option Price, as the case may be) per
share, times the number of shares subject to the Award or the Option (or other
Award), or portion thereof, which is so exercised or surrendered, as the case
may be. The Committee shall be entitled in its discretion to elect to settle the
obligation arising out of the exercise of a Stock Appreciation Right by the
payment of cash or Other Company Securities or property, or other forms of
payment, or any combination thereof, as determined by the Committee, equal to
the aggregate value of the Common Shares it would otherwise be obligated to
deliver. Any such election by the Committee shall be made as soon as practicable
after the receipt by the Committee of written notice of the exercise of the
Stock Appreciation Right. The value of a Common Share, Other Company Securities
or property, or other forms of payment determined by the Committee for this
purpose shall be the fair market value thereof on the last business day next
preceding the date of the election to exercise the Stock Appreciation Right,
unless the Committee, in its discretion, determines otherwise.
(e) A Stock Appreciation Right may provide that it shall be deemed
to have been exercised at the close of business on the business day preceding
the expiration date of the Stock Appreciation Right or of the related Option (or
other Award), or such other date as specified by the Committee, if at such time
such Stock Appreciation Right has a positive value. Such deemed exercise shall
be settled or paid in the same manner as a regular exercise thereof as provided
in subparagraph 6(d) hereof.
(f) No fractional shares may be delivered under this Paragraph 6,
but in lieu thereof a cash or other adjustment shall be made as determined by
the Committee in its discretion.
7. RESTRICTED STOCK.
Each Award of Restricted Stock under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions as the Committee, in its
discretion, shall establish:
(a) The Committee shall determine the number of Common Shares to be
issued to a participant pursuant to the Award, and the extent, if any, to which
they shall be issued in exchange for cash, other consideration, or both.
(b) Common Shares issued to a participant in accordance with the
Award may not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, except by will or the laws of descent and distribution, or as
otherwise determined by the Committee, for such period as the Committee shall
determine, from the date on which the Award is granted (the "Restricted
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<PAGE> 11
Period"). The Company will have the option, at the Committee's discretion, to
repurchase the shares subject to the Award at such price as the Committee shall
have fixed or to provide for forfeiture to the Company of the shares subject to
the Award, which option or forfeiture may be exercisable (i) if the
participant's continuous employment or performance of services for the Company
and its Affiliates shall terminate for any reason, except solely by reason of a
period of Related Employment as defined in Paragraph 14, or except as otherwise
provided in subparagraph 7(c), prior to the expiration of the Restricted Period,
(ii) if, on or prior to the expiration of the Restricted Period or the earlier
lapse of such forfeiture option, the participant has not paid to the Company an
amount equal to any federal, state, local or foreign income or other taxes which
the Company determines is required to be withheld in respect of such shares, or
(iii) under such other circumstances as determined by the Committee in its
discretion. Such repurchase option or forfeiture shall be exercisable on such
terms, in such manner and during such period as shall be determined by the
Committee when the Award is made or as amended thereafter, except as otherwise
determined in the Committee's discretion. Each certificate for Common Shares
issued pursuant to a Restricted Stock Award shall bear an appropriate legend
referring to the foregoing repurchase option or forfeiture and other
restrictions and to the fact that the shares are partly paid, shall be deposited
by the award holder with the Company, together with a stock power endorsed in
blank, or shall be evidenced in such other manner permitted by applicable law as
determined by the Committee in its discretion. Any attempt to dispose of any
such Common Shares in contravention of the foregoing repurchase and forfeiture
options and other restrictions shall be null and void and without effect. If
Common Shares issued pursuant to a Restricted Stock Award shall be repurchased
or forfeited pursuant to the repurchase option described above, the participant,
or in the event of his death, his personal representative, shall forthwith
deliver to the Secretary of the Company the certificates for the Common Shares
awarded to the participant, accompanied by such instrument of transfer, if any,
as may reasonably be required by the Secretary of the Company.
(c) If a participant who has been in continuous employment or
performance of services for the Company or an Affiliate since the date on which
a Restricted Stock Award was granted to him shall, while in such employment or
performance of services, die, or terminate such employment or performance of
services by reason of disability as defined in Paragraph 12 or by reason of
early normal or deferred retirement under an approved retirement program of the
Company or an Affiliate (or such other plan or arrangement as may be approved by
the Committee in its discretion, for this purpose) and any of such events shall
occur after the date on which the Award was granted to him and prior to the end
of the Restricted Period of such Award, the Committee may determine to cancel
the repurchase option or forfeiture (and any and all other restrictions) on any
or all of the Common Shares subject to such Award; and the repurchase option or
forfeiture shall become exercisable at such time as to the remaining shares, if
any.
8. PERFORMANCE GRANTS.
The Award of a Performance Grant ("Performance Grant") to a
participant will entitle him to receive a specified amount determined by the
Committee (the "Actual Value"), if the
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terms and conditions specified herein and in the Award are satisfied. Each Award
of a Performance Grant shall be subject to the following terms and conditions,
and to such other terms and conditions, including but not limited to,
restrictions upon any cash, Common Shares, Other Company Securities or property,
or other forms of payment, or any combination thereof, issued in respect of the
Performance Grant, as the Committee, in its discretion, shall establish, and
shall be embodied in an instrument in such form and substance as is determined
by the Committee.
(a) The Committee shall determine the value or range of values of a
Performance Grant to be awarded to each participant selected for an award and
whether or not such a Performance Grant is granted in conjunction with an Award
of Options, Stock Appreciation Rights, Restricted Stock or other Award, or any
combination thereof, under the Plan (which may include, but need not be limited
to, deferred Awards) concurrently or subsequently granted to the participant
(the "Associated Award"). As determined by the Committee, the maximum value of
each Performance Grant (the "Maximum Value") shall be: (i) an amount fixed by
the Committee at the time the award is made or amended thereafter, (ii) an
amount which varies from time to time based in whole or in part on the then
current value of a Common Share, Other Company Securities or property, or other
securities or property, or any combination thereof, or (iii) an amount that is
determinable from criteria specified by the Committee. Performance Grants may be
issued in different classes or series having different names, terms and
conditions. In the case of a Performance Grant awarded in conjunction with an
Associated Award, the Performance Grant may be reduced on an appropriate basis
to the extent that the Associated Award has been exercised, paid to or otherwise
received by the participant, as determined by the Committee.
(b) The award period ("Award Period") in respect of any Performance
Grant shall be a period determined by the Committee. At the time each Award is
made, the Committee shall establish performance objectives to be attained within
the Award Period as the means of determining the Actual Value of such a
Performance Grant. The performance objectives shall be based on such measure or
measures of performance, which may include, but need not be limited to, the
performance of the participant, the Company, one or more of its subsidiaries or
one or more of their divisions or units, or any combination of the foregoing, as
the Committee shall determine, and may be applied on an absolute basis or be
relative to industry or other indices, or any combination thereof. The Actual
Value of a Performance Grant shall be equal to its Maximum Value only if the
performance objectives are attained in full, but the Committee shall specify the
manner in which the Actual Value of Performance Grants shall be determined if
the performance objectives are met in part. Such performance measures, the
Actual Value or the Maximum Value, or any combination thereof, may be adjusted
in any manner by the Committee in its discretion at any time and from time to
time during or as soon as practicable after the Award Period, if it determines
that such performance measures, the Actual Value or the Maximum Value, or any
combination thereof, are not appropriate under the circumstances.
(c) The rights of a participant in Performance Grants awarded to him
shall be provisional and may be cancelled or paid in whole or in part, all as
determined by the Committee, if the participant's continuous employment or
performance of services for the Company and its
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<PAGE> 13
Affiliates shall terminate for any reason prior to the end of the Award Period,
except solely by reason of a period of Related Employment as defined in
Paragraph 14.
(d) The Committee shall determine whether the conditions of
subparagraph 8(b) or 8(c) hereof have been met and, if so, shall ascertain the
Actual Value of the Performance Grants. If the Performance Grants have no Actual
Value, the Award and such Performance Grants shall be deemed to have been
cancelled and the Associated Award, if any, may be cancelled or permitted to
continue in effect in accordance with its terms. If the Performance Grants have
any Actual Value and:
(i) were not awarded in conjunction with an Associated Award, the
Committee shall cause an amount equal to the actual Value of the Performance
Grants earned by the participant to be paid to him or his beneficiary as
provided below; or
(ii) were awarded in conjunction with an Associated Award, the Committee
shall determine, in accordance with criteria specified by the Committee (A) to
cancel the Performance Grants, in which event no amount in respect thereof shall
be paid to the participant or his beneficiary, and the Associated Award may be
permitted to continue in effect in accordance with its terms, (B) to pay the
Actual Value of the Performance Grants to the participant or his beneficiary as
provided below, in which event the Associated Award may be cancelled or (C) to
pay to the participant or his beneficiary as provided below, the Actual Value of
only a portion of the Performance Grants, in which a complimentary portion of
the Associated Award may be permitted to continue in effect in accordance with
its terms or be cancelled, as determined by the Committee.
Such determination by the Committee shall be made as promptly as
practicable following the end of the Award Period or upon the earlier
termination of employment or performance of services, or at such other time or
times as the Committee shall determine, and shall be made pursuant to criteria
specified by the Committee.
Payment of any amount in respect of the Performance Grants which the
Committee determines to pay as provided above shall be made by the Company as
promptly as practicable after the end of the Award Period or at such other time
or times as the Committee shall determine, and may be made in cash, Common
Shares, Other Company Securities or property, or other forms of payment, or any
combination thereof or in such other manner, as determined by the Committee in
its discretion. Notwithstanding anything in this Paragraph 8 to the contrary,
the Committee may, in its discretion, determine and pay out the Actual Value of
the Performance Grants at any time during the Award Period.
9. DEFERRAL OF COMPENSATION.
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<PAGE> 14
The Committee shall determine whether or not an Award shall be made
in conjunction with deferral of the participant's salary, bonus or other
compensation, or any combination thereof, and whether or not such deferred
amounts may be
(i) forfeited to the Company or to other participants, or any
combination thereof, under certain circumstances (which may include, but
need not be limited to, certain types of termination of employment or
performance of services for the Company and its Affiliates),
(ii) subject to increase or decrease in value based upon the
attainment of or failure to attain, respectively, certain performance
measures and/or
(iii) credited with income equivalents (which may include, but need
not be limited to, interest, dividends or other rates of return) until the
date or dates of payment of the Award, if any.
10. DEFERRED PAYMENT OF AWARDS.
The Committee may specify that the payment of all or any portion of
cash, Common Shares, Other Company Securities or property, or any other form of
payment, or any combination thereof, under an Award shall be deferred until a
later date. Deferrals shall be for such periods or until the occurrence of such
events, and upon such terms, as the Committee shall determine in its discretion.
Deferred payments of Awards may be made by undertaking to make payment in the
future based upon the performance of certain investment equivalents (which may
include, but need not be limited to, government securities, Common Shares, other
securities, property or consideration, or any combination thereof), together
with such additional amounts of income equivalents (which may be compounded and
may include, but need not be limited to, interest, dividends or other rates of
return, or any combination thereof) as may accrue thereon until the date or
dates of payment, such investment equivalents and such additional amounts of
income equivalents to be determined by the Committee in its discretion.
11. AMENDMENT OR SUBSTITUTION OF AWARDS UNDER THE PLAN.
The terms of any outstanding Award under the Plan may be amended
from time to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not limited to, acceleration of the date of exercise
of any Award and/or payments thereunder, or reduction of the Option Price of an
Option or exercise price of an Award of Stock Appreciation Rights); provided,
that no such amendment shall adversely affect in a material manner any right of
a participant under the Award without his written consent, unless the Committee
determines in its discretion that there have occurred or are about to occur
significant changes in the participant's position, duties or responsibilities,
or significant changes in economic, legislative, regulatory, tax,
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<PAGE> 15
accounting or cost/benefit conditions which are determined by the Committee in
its discretion to have or to be expected to have a substantial effect on the
performance of the Company, or any subsidiary, affiliate, division or department
thereof, on the Plan or an any Award under the Plan. The Committee may, in its
discretion, permit holders of Awards to surrender outstanding Awards as a
condition precedent to the grant of new Awards under the Plan.
12. DISABILITY.
For the purposes of this Plan, a participant shall be deemed to have
terminated his employment or performance of services for the Company and its
Affiliates by reason of disability if the Committee shall determine that the
physical or mental condition of the participant by reason of which such
employment or performance of services terminated was such at that time as would
entitle him to payment of monthly disability benefits under any disability plan
of the Company or an Affiliate in which he is a participant. If the participant
is not eligible for benefits under any disability plan of the Company or an
Affiliate, he shall be deemed to have terminated such employment or performance
of services by reason of disability if the Committee shall determine that he is
permanently and totally disabled within the meaning of Section 22(e)(3) of the
Code.
13. TERMINATION OF A PARTICIPANT.
For all purposes under the Plan, the Committee shall determine
whether a participant has terminated employment by or the performance of
services for the Company or an Affiliate, provided that transfers between the
Company and an Affiliate or between Affiliates, and approved leaves of absence
shall not be deemed such a termination.
14. RELATED EMPLOYMENT.
For the purposes of this Plan, Related Employment shall mean the
employment or performance of services by an individual for an employer that is
neither the Company nor an Affiliate, provided that (i) such employment or
performance of services is undertaken by the individual at the request of the
Company or an Affiliate, (ii) immediately prior to undertaking such employment
or performance of services, the individual was employed by or performing
services for the Company or an Affiliate or was engaged in Related Employment as
herein defined, and (iii) such employment or performance of services is in the
best interests of the Company and is recognized by the Committee, in its
discretion, as Related Employment for purposes of this Paragraph 14. The death
or disability of an individual during a period of Related Employment as herein
defined shall be treated, for purposes of this Plan, as if the death or onset of
disability had occurred while the individual was employed by or performing
services for the Company or an Affiliate.
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<PAGE> 16
15. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding Common Shares of the
Company by reason of any stock split, stock dividend, split-up, split-off,
spin-off, recapitalization, merger, consolidation, rights offering, share
offering, reorganization, combination or exchange of shares, a sale by the
Company of all or part of its assets, any distribution to shareholders other
than a normal cash dividend, or other extraordinary or unusual event, if the
Committee shall determine, in its discretion, that such change equitably
requires an adjustment in the terms of any Award or the number of Common Shares
available for Awards, such adjustment may be made by the Committee and shall be
final, conclusive and binding for all purposes of the Plan.
16. DESIGNATION OF BENEFICIARY BY PARTICIPANT.
A participant may name a beneficiary to receive any payment to which
he may be entitled in respect of any Award under the Plan in the event of his
death, on a written form to be provided by and filed with the Committee, and in
a manner determined by the Committee in its discretion. The Committee reserves
the right to review and approve beneficiary designations. A participant may
change his beneficiary from time to time in the same manner, unless such
participant has made an irrevocable designation. Any designation of beneficiary
under the Plan (to the extent it is valid and enforceable under applicable law)
shall be controlling over any other disposition, testamentary or otherwise, as
determined by the Committee in its discretion. If no designated beneficiary
survives the participant and is living on the date on which any amount becomes
payable to such participant's beneficiary, such payment will be made to the
legal representatives of the participant's estate, and the term "beneficiary" as
used in the Plan shall be deemed to include such person or persons. If there is
any question as to the legal right of any beneficiary to receive a distribution
under the Plan, the Committee in its discretion may determine that the amount in
question be paid to the legal representatives of the estate of the participant,
in which event the Company, the Board and the Committee and the members thereof
will have no further liability to anyone with respect to such amount.
17. CHANGE IN CONTROL.
(a) Upon any Change in Control:
(i) each Stock Option and Stock Appreciation Right that is
outstanding on the date of such Change in Control shall be exercisable in
full immediately;
(ii) all restrictions with respect to Restricted Stock shall
lapse immediately, and the Company's right to repurchase or forfeit any
Restricted Stock outstanding on the date of such Change in Control shall
thereupon terminate and the
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<PAGE> 17
certificates representing such Restricted Stock and the related stock
powers shall be promptly delivered to the participants entitled thereto;
and
(iii) All Award Periods for the purposes of determining the
amounts of Awards of Performance Grants shall end as of the end of the
calendar quarter immediately preceding the date of such Change in Control,
and the amount of the Award payable shall be the portion of the maximum
possible Award allocable to the portion of the Award Period that had
elapsed and the results achieved during such portion of the Award Period.
(b) For this purpose, a Change in Control shall be deemed to occur
when and only when any of the following events first occurs:
(i) any person who is not currently such becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding voting securities; or
(ii) three or more directors, whose election or nomination for
election is not approved by a majority of the Incumbent Board (as
hereinafter defined), are elected within any single 24-month period to
serve on the Board of Directors; or
(iii) members of the Incumbent Board cease to constitute a
majority of the Board of Directors without the approval of the remaining
members of the Incumbent Board; or
(iv) any merger (other than a merger where the Company is the
survivor and there is no accompanying Change in Control under
subparagraphs (i), (ii) or (iii) of this paragraph (b)), consolidation,
liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur pursuant to subparagraph (i) of this paragraph (b) solely because 25% or
more of the combined voting power of the Company's outstanding securities is
acquired by one or more employee benefit plans maintained by the Company or by
any other employer, the majority interest in which is held, directly or
indirectly, by the Company. For purposes of this Section 17, the terms "person"
and "beneficial owner" shall have the meaning set forth in Sections 3(a) and
13(d) of the Exchange Act, and in the regulations promulgated thereunder, as in
effect on _______________; and the term "Incumbent Board" shall mean (A) the
members of the Board of Directors of the Company on _______________, to the
extent that they continue to serve as members of the Board of Directors, and (B)
any individual who becomes a member of the Board of Directors after
________________, if his election or nomination for election as a director was
approved by a vote of at least three-quarters of the then Incumbent Board.
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<PAGE> 18
18. MISCELLANEOUS PROVISIONS.
(a) No employee or other person shall have any claim or right to be
granted an Award under the Plan. Determinations made by the Committee under the
Plan need not be uniform and may be made selectively among eligible individuals
under the Plan, whether or not such eligible individuals are similarly situated.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee or other person any right to continue to be employed by or perform
services for the Company or any Affiliate, and the right to terminate the
employment of or performance of services by any participant at any time and for
any reason is specifically reserved.
(b) No participant or other person shall have any right with respect
to the Plan, the Common Shares reserved for issuance under the Plan or in any
Award, contingent or otherwise, until written evidence of the Award shall have
been delivered to the recipient and all the terms, conditions and provisions of
the Plan and the Award applicable to such recipient (and each person claiming
under or through him) have been met.
(c) Except as may be approved by the Committee where such approval
shall not adversely affect compliance of the Plan with Rule 16b-3 under the
Exchange Act, a participant's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise (except in the event of a
participant's death) including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner; provided,
however, that any Option or similar right (including, but not limited to, a
Stock Appreciation Right) offered pursuant to the Plan shall not be transferable
other than by will or the laws of descent and distribution and shall be
exercisable during the participant's lifetime only by him.
(d) No Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment shall be issued hereunder with
respect to any Award unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable federal, state, local and foreign
legal, securities exchange and other applicable requirements.
(e) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 under the Exchange Act, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3.
(f) The Company and its Affiliates shall have the right to deduct
from any payment made under the Plan, any federal, state, local or foreign
income or other taxes required by law to be withheld with respect to such
payment. It shall be a condition to the obligation of the Company to issue
Common Shares, Other Company Securities or property, other securities or
property, or other forms of payment, or any combination thereof, upon exercise,
settlement or
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<PAGE> 19
payment of any Award under the Plan, that the participant (or any beneficiary or
person entitled to act) pay to the Company, upon its demand, such amount as may
be requested by the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If the amount
requested is not paid, the Company may refuse to issue Common Shares, Other
Company Securities or property, other securities or property, or other forms of
payment, or any combination thereof. Notwithstanding anything in the Plan to the
contrary, the Committee may, in its discretion, permit an eligible participant
(or any beneficiary or person entitled to act) to elect to pay a portion or all
of the amount requested by the Company for such taxes with respect to such
Award, at such time and in such manner as the Committee shall deem to be
appropriate including, but not limited to, by authorizing the Company to
withhold, or agreeing to surrender to the Company on or about the date such tax
liability is determinable, Common Shares, Other Company Securities or property,
other securities or property, or other forms of payment, or any combination
thereof, owned by such person or a portion of such forms of payment that would
otherwise be distributed, or have been distributed, as the case may be, pursuant
to such Award to such person, having a fair market value equal to the amount of
such taxes.
(g) The expenses of the Plan shall be borne by the Company. However,
if an Award is made to an individual employed by or performing services for an
Affiliate:
(i) if such Award results in payment of cash to the
participant, such Affiliate shall pay to the Company an amount equal to
such cash payment unless the Committee shall otherwise determine in its
discretion;
(ii) if the Award results in the issuance by the Company to
the participant of Common Shares, Other Company Securities or property,
other securities or property, or other forms of payment, or any
combination thereof, such Affiliate shall, unless the Committee shall
otherwise determine in its discretion, pay to the Company an amount equal
to the fair market value thereof, as determined by the Committee, on the
date such Common Shares, other Company Securities or property, other
securities or property, or other forms of payment, or any combination
thereof, are issued (or in the case of the issuance of Restricted Stock or
of Common Shares, Other Company Securities or property, or other
securities or property, or other forms of payment subject to transfer and
forfeiture conditions, equal to the fair market value thereof on the date
on which they are no longer subject to applicable restrictions), minus the
amount, if any, received by the Company in respect of the purchase of such
Common Shares, Other Company Securities or property, other securities or
property or other forms of payment, or any combination thereof, all as the
Committee shall determine in its discretion; and
(iii) the foregoing obligations of any such Affiliate entity
shall survive and remain in effect and binding on such entity even if its
status as an Affiliate of the Company should subsequently cease, except as
otherwise agreed by the Company and the entity.
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<PAGE> 20
(h) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under the Plan, and rights to the
payment of Awards shall be no greater than the rights of the Company's general
creditors.
(i) By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any
action taken by the Company, the Board or the Committee or its delegates.
(j) Fair market value in relation to Common Shares, Other Company
Securities or property, other securities or property or other forms of payment
of Awards under the Plan or any combination thereof, as of any specific time
shall mean such value as determined by the Committee in accordance with
applicable law.
(k) The masculine pronoun includes the feminine and the singular
includes the plural wherever appropriate.
(l) The appropriate officers of the Company shall cause to be filed
any reports, returns or other information regarding Awards hereunder or any
Common Shares issued pursuant hereto as may be required by Section 13 or 15(d)
of the Exchange Act (or any successor provision) or any other applicable
statute, rule or regulation.
(m) The validity, construction, interpretation, administration and
effect of the Plan, and of its rules and regulations, and rights relating to the
Plan and to Awards granted under the Plan, shall be governed by the substantive
laws, but not the choice of law rules, of the State of Delaware.
19. PLAN AMENDMENT OR SUSPENSION.
The Plan may be amended or suspended in whole or in part at any time
and from time to time by the Board, but no amendment shall be effective unless
and until the same is approved by shareholders of the Company where the failure
to obtain such approval would adversely affect the compliance of the Plan with
Rule 16b-3 under the Exchange Act and with other applicable law. No amendment of
the Plan shall adversely affect in a material manner any right of any
participant with respect to any Award theretofore granted without such
participant's written consent, except as permitted under Paragraph 11.
20. PLAN TERMINATION.
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<PAGE> 21
This Plan shall terminate upon the earlier of the following dates or
events to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
(b) ten years from the date the Plan is initially approved and
adopted by the shareholders of the Company in accordance with Paragraph 21
hereof; provided, however, that the Board may, prior to the expiration of such
ten-year period, extend the term of the Plan for an additional period of up to
five years for the grant of Awards other than Incentive Stock Options. No
termination of the Plan shall materially alter or impair any of the rights or
obligations of any person, without his consent, under any Award theretofore
granted under the Plan except that subsequent to termination of the Plan, the
Committee may make amendments permitted under Paragraph 11.
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Exhibit 10.11
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT, made and entered into as of the __ day of
May, 1998 ("Agreement"), by and between SOFTWORKS, Inc., a Delaware corporation
(the "Corporation", which term shall include any one or more of its subsidiaries
where appropriate), and ____________________________ ("Indemnitee"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or as officers or in other capacities
unless they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to, and activities on behalf of, such corporations;
and
WHEREAS, the statutes and judicial duties regarding the duties of officers
and directors are often difficult to apply, ambiguous or conflicting and
therefore fail to provide such directors and officers with adequate and reliable
knowledge of legal risks to which they are exposed or information regarding the
proper cause of action to take; and
WHEREAS, the current impracticability of obtaining adequate insurance and
the uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Corporation (the "Board of
Directors") has determined that the difficulty in attracting and retaining such
persons is detrimental to the best interests of the Corporation's stockholders
and that the Corporation should act to assure such persons that there will be
increased certainty of such protection in the future; and
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WHEREAS, the Corporation believes it is unfair for the directors and
officers to assume the risk of huge judgments and other expenses which may occur
in cases in which the director or officer acted in good faith; and
WHEREAS, Section 145 of the General Corporation law of Delaware ("Section
145") under which the Corporation is organized, empowers the Corporation to
indemnify its officers and directors by agreement and expressly provides that
the indemnification provided by Section 145 is not exclusive; and
WHEREAS, it is reasonable, prudent and necessary for the Corporation
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Corporation free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and/or to take
on additional service for or on behalf of the Corporation on the condition that
he be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
1. DEFINITIONS FOR PURPOSES OF THIS AGREEMENT:
(a) "Change in Control" means a change in control of the Corporation
of a nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A (or in response to any similar item or similar
schedule or form) promulgated under the Securities Exchange Act of 1934 (the
"Act"), whether or not the Corporation is then subject to such reporting
requirement; provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of
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the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then outstanding
securities without the prior approval of at least two-thirds of the members of
the Board of Directors in office immediately prior to such person attaining such
percentage interest; (ii) the Corporation is a party to a merger, consolidation,
sale of assets or other reorganization, or a proxy contest, as a consequence of
which members of the Board of Directors in office immediately prior to such
transaction or event constitute less than two-thirds of the Board of Directors
thereafter; (iii) during any period of twenty-four (24) consecutive months,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Corporation's stockholders was approved by a vote
of at least two-thirds of the directors then still in office who were directors
at the beginning of such period) cease for any reason to constitute at least
two-thirds of the Board of Directors; or (iv) the stockholders of the
Corporation approve a plan of complete liquidation of the Corporation or an
agreement for the sale or disposition by the Corporation (in one transaction or
a series of transactions) of all or substantially all of the Corporation's
assets.
(b) "Potential Change in Control" shall be deemed to have occurred
if (i) the Corporation enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control; (ii) a person (including the
Corporation) publicly announces a legitimate intention to take or to consider
taking actions which if consummated would constitute a Change in Control; (iii)
any person, other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or a corporation owned, directly or
indirectly, by the shareholders of the Corporation in substantially the same
proportions as their ownership of stock of the
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Corporation, who is or becomes the beneficial owner, directly or indirectly, of
securities of the Corporation representing 9.5% or more of the combined voting
power of the Corporation's then outstanding Voting Securities, increases his
beneficial ownership of such securities by five percentage points or more over
the percentage so owned by such person; or (iv) the Board of Directors adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(c) "Corporate Status" describes the status of a person who is or
was or has agreed to become a director of the Corporation, or is or was an
officer of the Corporation.
(d) "Disinterested Director" means a director of the Corporation who
is not and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.
(e) "Proceeding" includes any threatened, pending or completed
inquiry, action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative, except one initiated by an Indemnitee
pursuant to Section 12(a) of this Agreement to enforce his rights under this
Agreement.
(f) "Expenses" includes all direct and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys' fees and
related disbursements, other out-of-pocket costs and reasonable compensation for
time spent by the Indemnitee for which he is not otherwise compensated by the
Corporation or any third party, provided that the rate of compensation and
estimated time involved is approved in advance by the Board of Directors),
actually and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a Proceeding (including amounts paid in
settlement by or on behalf of
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Indemnitee), or the prosecution of an action or proceeding, including appeals,
to establish or enforce a right to indemnification under this Agreement, Section
145 or otherwise. Expenses as defined herein, shall not include any judgments,
fines or penalties actually levied against the Indemnitee.
(g) "Independent Counsel" means (i) any law firm or member of a law
firm which the Board of Directors may designate from time to time provided that
the law firm or member of the law firm so designated is experienced in matters
of corporation law and neither presently is, nor in the past five years has
been, retained to represent: (A) the Corporation or Indemnitee in any matter
material to either such party, or (B) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the foregoing,
the term "Independent Counsel" shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Corporation or Indemnitee in an
action to determine Indemnitee's rights under this Agreement arising on or after
the date of this Agreement, regardless of when the Indemnitee's act or failure
to act occurred.
2. SERVICES BY INDEMNITEE.
Indemnitee agrees to serve or continue to serve as a _______________
of the Corporation so long as he is duly appointed or elected and qualified in
accordance with the applicable provisions of the By-Laws of the Corporation or
the By-Laws of any subsidiary of the Corporation or until such time as he
tenders his resignation in writing. This Agreement shall not impose any
obligation on the Indemnitee or the Corporation to continue the Indemnitee's
position with the Corporation beyond any period otherwise applicable, nor to
create any right to continued employment of the Indemnitee in any capacity.
3. GENERAL.
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The Corporation shall indemnify, and shall advance Expenses to
Indemnitee as provided in this Agreement and to the fullest extent permitted by
law.
4. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE
CORPORATION.
Indemnitee shall be entitled to the rights of indemnification
provided in this Section 4 if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to any Proceeding, other than a Proceeding by or
in the right of the Corporation. Pursuant to this Section 4, Indemnitee shall be
indemnified against Expenses, including amounts paid in settlement, as well as
any judgments, fines and penalties levied or awarded against him in connection
with such Proceeding or any claim, issue or matter therein, if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Corporation, and, with respect to any criminal Proceeding,
had no reasonable cause to believe his conduct was unlawful.
5. PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION.
Indemnitee shall be entitled to the rights of indemnification
provided in this Section 5, if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to any threatened, pending or completed
Proceeding brought by or in the right of the Corporation to procure a judgment
in its favor. Pursuant to this Section, Indemnitee shall be indemnified against
Expenses actually incurred by him or on his behalf in connection with such
Proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation. Notwithstanding
the foregoing, no indemnification against such Expenses shall be made in respect
of any claim, issue or matter as to which Indemnitee shall have been adjudged to
be liable to the Corporation if such indemnification is not permitted by the
laws of the State of
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Delaware or other applicable law; provided, however, that indemnification
against Expenses nevertheless shall by made by the Corporation in such event to
the extent that the Court of Chancery of the State of Delaware, or the court in
which such Proceeding shall have been brought or is pending, shall determine.
6. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL.
Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Corporation shall
indemnify Indemnitee against all Expenses actually incurred by him or on his
behalf in connection with each successfully resolved claim, issue or matter. For
purposes of this Section, but without limitation, the termination of any claim,
issue or matter in such a Proceeding by dismissal or withdrawal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
7. ADVANCE OF EXPENSES.
The Corporation shall advance all reasonable Expenses incurred by or
on behalf of Indemnitee in connection with any Proceeding within twenty days
after the receipt by the Corporation of a statement or statements from
Indemnitee requesting such advance or advances from time to time, whether prior
to or after final disposition of such Proceeding. Such statement or statements
shall evidence or reflect the Expenses incurred by Indemnitee and shall include
or be
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preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay
any Expenses advanced if it is determined ultimately that Indemnitee is not
entitled to be indemnified against such Expenses.
8. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. Promptly upon receipt of such a request for
indemnification, the Secretary of the Corporation shall advise the Board of
Directors in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant
to Section 8(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in the specific case
as follows: (i) if a Change in Control shall have occurred, by Independent
Counsel in a written opinion to the Board of Directors, a copy of which shall be
delivered to Indemnitee (unless Indemnitee shall request that such determination
be made by the Board of Directors, in which case the determination shall be made
in the manner provided below in clauses (ii) or (iii)); (ii) if a Change of
Control shall not have occurred, (A) by the Board of Directors by a majority
vote of a quorum consisting of Disinterested Directors, or (B) if a quorum of
the Board of Directors consisting of Disinterested Directors is not obtainable
or, even if obtainable, if such quorum of Disinterested Directors so directs, by
Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; (iii) as
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provided in Section 9(b) of this Agreement; and, if it is determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall cooperate with
the person, persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or Expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating shall be borne by the
Corporation (regardless of the determination as to Indemnitee's entitlement to
indemnification) and the Corporation hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement,
and no counsel shall have been designated previously by the Board of Directors
or the Independent Counsel so designated is unwilling or unable to serve, then,
(i) if no Change of Control shall have occurred, the Independent Counsel shall
be selected by the Board of Directors and the Corporation shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected; (ii) if a Change of Control shall have occurred, the Independent
Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the
Corporation advising it of the identity of the Independent Counsel so selected.
In either event, Indemnitee or the Corporation, as the case may be, may, within
7 days after such written notice of selection shall have been given, deliver to
the Corporation or to Indemnitee, as the case may be, a written objection to
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such selection. Such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirement of "Independent
Counsel" as defined in this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, the Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such objection is without merit.
If, within 20 days after submission by Indemnitee of a written request for
indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall
have been selected or if selected, shall have been objected to, in accordance
with this Section 8(c), either the Corporation or Indemnitee may petition the
Court of Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have been made by the
Corporation or Indemnitee to the other's selection of Independent Counsel and/or
for the appointment as Independent Counsel of a person selected by the Court or
by such other person as the Court shall designate, and the person with respect
to whom an objection is favorably resolved or the person so appointed shall act
as Independent Counsel under Section 8(b) hereof. The Corporation shall pay any
and all reasonable fees and expenses of Independent Counsel incurred by such
Independent Counsel in connection with the performance of his responsibilities
pursuant to Section 8(b) hereof, and the Corporation shall pay all reasonable
fees and Expenses incident to the implementation of the procedures of this
Section 8(c), regardless of the manner in which such Independent Counsel was
selected or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 12 of this Agreement, Independent Counsel shall
be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
9. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
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(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person, persons or entity making such determination shall presume that the
Indemnitee is entitled to indemnification under this Agreement if the Indemnitee
has submitted a request for indemnification in accordance with Section 8(a) of
this Agreement, and the Corporation shall have the burden of proof to overcome
that presumption in connection with the making of any determination contrary to
that presumption by any person, persons or entity.
(b) If within 30 days after receipt by the Corporation of the
request for indemnification, the Board shall not have made a determination under
Section 8(b)(i) or 8(b)(ii)(A) with regard thereto, the requisite determination
of entitlement to indemnification shall be deemed to have been made in favor of
the Indemnitee who then shall be entitled to such indemnification. The foregoing
provisions of this Section 9(b) shall not apply if the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 8(b)(i) or 8(b)(ii)(B) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or
matter therein by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of the
Indemnitee to indemnification or create a presumption that the Indemnitee did
not act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of the Corporation or, with respect to any
criminal Proceeding, that the Indemnitee had reasonable cause to believe that
his conduct was unlawful.
10. ASSUMPTION OF DEFENSE.
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In the event the Corporation shall be obligated to pay the Expenses
of any Proceeding against the Indemnitee, the Corporation, if appropriate, shall
be entitled to assume the defense of such Proceeding, with counsel reasonably
acceptable to the Indemnitee, upon the delivery to the Indemnitee of written
notice of its election to do so. After delivery of such notice, approval of such
counsel by the Indemnitee and the retention of such counsel by the Corporation,
the Corporation will not be liable to the Indemnitee under this Agreement for
any fees of counsel subsequently incurred by the Indemnitee with respect to the
same Proceeding, provided that (i) the Indemnitee shall have the right to employ
his counsel in such Proceeding at the Indemnitee's expense; and (ii) if (a) the
employment of counsel by the Indemnitee has been previously authorized in
writing by the Corporation, (b) the Corporation shall have reasonably concluded
that there may be a conflict of interest between the Corporation and the
Indemnitee in the conduct of any such defense, or (c) the Corporation shall not,
in fact, have employed counsel to assume the defense of such Proceeding, the
fees and Expenses of the Indemnitee's counsel shall be at the expense of the
Corporation.
11. ESTABLISHMENT OF A TRUST.
(a) In the event of a Potential Change in Control, the Corporation,
upon written request by the Indemnitee, shall create a trust for the benefit of
the Indemnitee and from time to time upon written request of the Indemnitee
shall fund such trust in an amount sufficient to satisfy any and all Expenses
which at the time of each such request it is reasonably anticipated will be
incurred in connection with a Proceeding for which the Indemnitee is entitled to
rights of indemnification under Section 4 or 5 hereof, and any and all
judgments, fines, penalties and settlement amounts of any and all proceedings
for which the Indemnitee is entitled to rights of
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indemnification under Section 4 or 5 from time to time actually paid or claimed,
reasonably anticipated or proposed to be paid. The amount or amounts to be
deposited in the trust pursuant to the foregoing funding obligation shall be
determined by the party who would be required to make the determination of the
Indemnitee's right to indemnification under Section 8(b) hereof (the "Reviewing
Party"). The terms of the trust shall provide that upon a Change in Control (i)
the trust shall not be revoked or the principal thereof invaded, without the
written consent of the Indemnitee, (ii) the trustee shall advance, within two
business days of a request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby agrees to reimburse the trust under the
circumstances under which the Indemnitee would be required to reimburse the
Corporation under Section 7 hereof), (iii) the trust shall continue to be funded
by the Corporation in accordance with the funding obligation set forth above,
(iv) the trustee shall promptly pay to the Indemnitee all amounts for which the
Indemnitee shall be entitled to indemnification pursuant to this Agreement or
otherwise, and (v) all unexpended funds in such trust shall revert to the
Corporation upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that Indemnitee has been fully
indemnified under the terms of this Agreement. The trustee shall be an
institutional trustee with a highly regarded reputation chosen by the
Indemnitee. Nothing in this Section 11 shall relieve the Corporation of any of
its obligations under this Agreement.
(b) Nothing contained in this Section 11 shall prevent the Board of
Directors of the Corporation in its discretion at any time and from time to
time, upon request of the Indemnitee, from providing security to the Indemnitee
for the Corporation's obligations hereunder through an irrevocable line of
credit, funded trust as described in Section (a) above, or other collateral. Any
such security, once provided to the Indemnitee, may not be revoked or released
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without the prior consent of the Indemnitee.
12. REMEDIES OF INDEMNITEE.
(a) In the event that any one or more of the following events shall
have occurred: (i) a determination is made pursuant to Section 8 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement; (ii) Expenses are not advanced timely in accordance with Section 7 of
this Agreement; (iii) the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 8(b) of this Agreement and
such determination shall not have been made and delivered in a written opinion
within 90 days after receipt by the Corporation of the request for
indemnification; (iv) payment of indemnification is not made pursuant to Section
6 of this Agreement within ten days after receipt by the Corporation of a
written request therefor; (v) payment of indemnification is not made within ten
days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 9(b) of this Agreement; and/or (vi) the Corporation fails to comply with
its obligations under Section 11(a) with regard to the establishment or funding
of a trust for Expenses, the Indemnitee shall be entitled to an adjudication of
his entitlement to such indemnification, advancement of Expenses or the
establishment and funding of the trust in an appropriate court of the State of
Delaware, or in any other court of competent jurisdiction. Alternatively,
Indemnitee, at his option, may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the rules of the American Arbitration Association.
Indemnitee shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the
right to commence such proceeding pursuant to this Section 12. The Corporation
shall not oppose Indemnitee's right to seek any such adjudication or award in
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arbitration.
(b) Whenever a determination is made pursuant to Section 8 of this
Agreement that Indemnitee is not entitled to indemnification, the judicial
proceeding or arbitration commenced pursuant to this Section 12 shall be
conducted in all respects as a de novo trial, or arbitration, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. If a
Change of Control shall have occurred, the Corporation shall have the burden of
proving that Indemnitee is not entitled to indemnification or advancement of
Expenses, as the case may be, in any judicial proceeding or arbitration
commenced pursuant to this Section 12.
(c) If a determination shall have been made or deemed to have been
made pursuant to Section 8 of this Agreement that Indemnitee is entitled to
indemnification, the Corporation shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 12 absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Corporation shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 12 that
the procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Corporation is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 12 seeks
a judicial adjudication or an award in arbitration to enforce his rights under,
or to recover damages for breach
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of, this Agreement, Indemnitee shall be entitled to recover from the
Corporation, and shall be indemnified by the Corporation against, any and all
expenses (of the types described in the definition of Expenses in this
Agreement) actually incurred by him in connection with obtaining such judicial
adjudication or arbitration, but only if he prevails therein. If it shall be
determined in said judicial adjudication or arbitration that Indemnitee is
entitled to receive part but not all of the indemnification or advancement of
Expenses sought, the Expenses incurred by Indemnitee in connection with such
judicial adjudication or arbitration shall be appropriately prorated.
13. NON-EXCLUSIVITY; DURATION OF AGREEMENT; INSURANCE: SUBROGATION.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Corporation's certificate of incorporation or by-laws, any other
agreement, a vote of stockholders or a resolution of directors, or otherwise.
This Agreement shall continue until and terminate upon the later of: (a) 10
years after the date that Indemnitee shall have ceased to serve as an officer or
director of the Corporation, or (b) the final termination of all pending
Proceedings in respect of which Indemnitee is granted rights of indemnification
or advancement of Expenses hereunder and of any proceeding commenced by
Indemnitee pursuant to Section 12 of this Agreement relating thereto. This
Agreement shall be binding upon the Corporation and its successors and assigns
and shall inure to the benefit of Indemnitee and his heirs, executors and
administrators.
(b) (i) To the extent that the Corporation maintains an insurance
policy
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or policies providing liability insurance for directors and officers of the
Corporation, Indemnitee shall be covered by such policy or policies in
accordance with the terms thereof to the maximum extent of the coverage
available for any such director or officer under such policy or policies. The
Corporation shall take all necessary or appropriate action to cause such
insurers to pay on behalf of the Indemnitee all amounts payable as a result of
the commencement of a proceeding in accordance with the terms of such policy.
(ii) For a period of three years after the date the Indemnitee
shall have ceased to serve as an officer or director of the Corporation, the
Corporation will provide officers and directors liability insurance for
Indemnitee on terms no less favorable than the terms of the liability insurance
which the Corporation then provides to the current officers and directors,
provided that the Corporation provides officers and directors liability
insurance to its current officers and directors, and provided further that the
annual premiums for the liability insurance to be provided to the Indemnitee do
not exceed by more than 50% the premium charged for the coverage available for
any of the Corporation's current officers and directors.
(c) In the event of any payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and take
all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Corporation to bring suit to enforce
such rights.
(d) The Corporation shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee otherwise actually has received such payment under any insurance
policy, contract, agreement or otherwise.
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14. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible the
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
15. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES.
Except as otherwise provided specifically herein, Indemnitee shall
not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any Proceeding, or any claim herein, brought or made
by him against the Corporation.
16. HEADINGS.
The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof.
17. MODIFICATION AND WAIVER.
This Agreement may be amended from time to time to reflect changes
in Delaware law or for other reasons. No supplement, modification or amendment
of this Agreement
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shall be binding unless executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
18. NOTICE BY INDEMNITEE.
Indemnitee agrees promptly to notify the Corporation in writing upon
being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any Proceeding or matter which may be
subject to indemnification or advancement of Expenses covered hereunder;
provided, however, that the failure to give any such notice shall not disqualify
the Indemnitee from indemnification hereunder.
19. NOTICES.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (i) delivered
by hand to the party to whom said notice or other communication shall have been
directed, or (ii) mailed by certified or registered mail with postage prepaid.
(a) If to Indemnitee, to:
(b) If to the Corporation, to:
SOFTWORKS, Inc.
5845 Richmond Highway
Suite 400
Alexandria, VA 22303
or to such other address as may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.
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20. GOVERNING LAW.
The parties agree that this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ATTEST: SOFTWORKS, Inc.
By:
- ------------------------ -------------------------
INDEMNITEE:
----------------------------
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<PAGE> 1
Exhibit 10.12
SOFTWARE DISTRIBUTION AGREEMENT
BETWEEN SOFTWORKS, INC. AND
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
This Software Distribution Agreement ("Agreement") is entered into this
8th day of July, 1997, by and between Softworks, Inc., a Maryland corporation,
having its principal offices at 2845 Richmond Highway, Suite 400, Alexandria,
Virginia 22303 ("Softworks"), and Cognizant Technology Solutions Corporation, a
Delaware corporation, having its principal offices at 1700 Broadway, New York,
NY 10019 ("Cognizant").
The capitalized terms in this Agreement shall be defined as set forth in
Exhibit A hereto.
RECITALS:
WHEREAS, Softworks desires to license from Cognizant, and Cognizant
desires to license to Softworks, the Technology and the Current Products, as
defined in Exhibit 1 and below, upon the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and the mutual promises
contained herein, the parties, intending to be legally bound, agree as follows:
1. Appointment
a. Grant of Rights--Modifications. Subject to Subsection 1.c below,
Cognizant grants Softworks the exclusive, perpetual, irrevocable right to modify
in any manner the Technology, to create derivative works that are based upon the
Technology and to incorporate and integrate the Technology, as well as
modifications of and works derived from the Technology, in and with other
computer programs for the purpose of creating Products for distribution pursuant
to Subsection 1.b below.
b. Grant of Rights--Distribution. Subject to Subsections 1.c and 1.d
below, Cognizant grants Softworks and the Authorized Distributors the exclusive,
perpetual, irrevocable right to distribute, market and license Products
throughout the world.
c. Exceptions to Exclusivity
i. Notwithstanding the terms of Subsections 1.a and 1.b above, the
rights granted to Softworks by such subsections shall be non-exclusive
with respect to
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use of the Technology for software applications not related to Year 2000
analysis and conversion.
ii. Notwithstanding the terms of Subsections 1.a and 1.b above, the
rights granted to Softworks by such subsections shall be non-exclusive
with respect to use of the Technology (A) by Cognizant, its subsidiaries,
parents and affiliated sister companies (collectively, "Affiliates") in
providing services using the Technology to Cognizant's and its
Affilitiates' clients ("Clients"), (B) by third parties in providing
services using the Technology to Clients, provided that such third
parties, by written agreement, have access to the Technology solely for
providing services using the Technology to specifically identified Clients
and that such third parties have not compensated directly Cognizant for
use of the Technology, and (C) by Clients to whom Cognizant is providing
services using the Technology.
d. Limitation on Distribution. Softworks agrees not to license, directly
or indirectly, Products to the organizations identified in Exhibit 2 to this
Agreement, unless Softworks obtains the prior written approval of Cognizant,
which approval shall not be unreasonably withheld.
2. Obligations of Cognizant
a. Delivery. Immediately upon execution of this Agreement, Cognizant shall
deliver to Softworks all code and documentation related to the Technology and
Current Products as set forth in Exhibit 1 to this Agreement.
b. Commercially Reasonable Efforts. Cognizant shall use commercially
reasonable efforts to assist Softworks to market the Current Products. Cognizant
recognizes and agrees that time is of the essence for bringing the Current
Products to market.
c. Contact person. Cognizant shall designate a single person to serve as
the primary point-of-contact between Cognizant and Softworks.
d. Enhancements. Cognizant shall promptly provide Softworks with all
updates and enhancements for the Technology and the Current Products related to
Year 2000 analysis, conversion and testing, during the Royalty Term.
e. Services
(i) Cognizant will provide Softworks training, consulting and
technical-level support ("Services") for the Technology and Current
Products as required by Softworks at Cognizant's then current time and
materials rates, provided that Cognizant shall provide Softworks with
sixty (60) days notice prior to any
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<PAGE> 3
change to such rates. As of the Effective Date of this Agreement, the
rates are as follows:
(A) Services provided in
the United States: $50.00 to 70.00 per hour
(depending upon level of
expertise required and
nature of the work)
(B) Services provided outside
of the United States: $30.00 per hour
Softworks shall reimburse Cognizant for reasonable expenses, including
travel and lodging expenses, incurred while providing such Services,
subject to Softworks' prior approval and Cognizant's compliance with
Softworks' expense policies.
ii. Prior to performing any Services, Cognizant shall obtain the
prior written authorization of Softworks. Such authorization shall specify
the Services to be performed.
f. Verification. Cognizant shall keep reasonable records with respect to
use of the Technology. An independent accountant, at Softwork's expense and upon
reasonable notice during normal working hours, shall have access annually to
such records to the extent reasonably necessary to verify Cognizant's compliance
with the terms of this Agreement.
3. Obligations of Softworks
a. Commercially Reasonable Efforts. Softworks shall use commercially
reasonable efforts to commence marketing of the Current Products promptly.
Softworks recognizes and agrees that time is of the essence for bringing the
Current Products to market.
b. Contact person. Softworks shall designate a single person to serve as
the primary point-of-contact between Softworks and Cognizant.
c. Marketing Materials. Softworks agrees to prepare marketing materials
and a revised user manual.
d. Records. Softworks shall keep full, clear and accurate financial and
other records with respect to all Products licensed and agreements with
licensees of Products.
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e. Copyright Notice. Softworks agrees to place a copyright notice
identifying Cognizant as the copyright owner of the Technology on all copies of
the Current Products, including computer programs and written documentation,
distributed by Softworks.
4. Pricing, Royalty and Payment
a. Pricing.
i. Softworks shall have the sole right to determine the applicable
license and maintainance fees for the Current Products.
ii. Notwithstanding the terms of Subsection 4.a.i. above, Softworks
agrees that the license fee for Products licensed to Year 2000 service
providers shall be based primarily upon the number of lines of code with
respect to which such service provider uses the Product, unless Softworks
obtains the prior written approval of Cognizant, which approval shall not
be unreasonably withheld
b. Invoicing. Softworks and the Authorized Distributors shall invoice the
licensees and collect the licensee fees due for the Current Products.
c. Monthly Royalty
i. During Royalty Term. Softworks shall pay Cognizant an amount for
each month within the Royalty Term calculated as follows: the Revenue
invoiced during the month, minus any Credits, times the applicable Royalty
Percentage pursuant to Exhibit 3.
ii. During Extended Royalty Term. Softworks shall pay Cognizant an
amount for each month during the Extended Royalty Term calculated as
follows: the Revenue invoiced during the month with respect to licenses
for Current Products that were (A) signed by the licensee during the
Royalty Term or (B) delivered to the licensee within the Royalty Term,
minus any Credits, times the applicable Royalty Percentage pursuant to
Exhibit 3.
iii. "Royalty" shall mean the sum of the amounts calculated pursuant
to Subsections 4.c.i and 4.c.ii for any specified time period.
d. Royalty for New Products. In the event that Softworks develops a
New Product, upon commencement of licensing of the New Product Softworks shall
pay Cognizant royalties therefor as agreed to by the parties, taking into
account (i) the intent of this Agreement regarding royalties, as evidenced by
the terms of this Section, and (ii) the additional work and investment required
by Softworks to create and market the New Product; provided, however, that if
Softworks develops any New Product which competes directly with the Technology,
including but not limited to HotDate
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<PAGE> 5
2000/Discover or HotDate 2000/Convert for Year 2000-related applications, the
amount of the royalties paid to Cognizant for such New Products shall not be
reduced to reflect any additional work and investment required by Softworks for
such product. If for any reason the parties do not reach agreement with respect
to the royalties for a New Product, Softworks' rights under Subsection 1.b above
shall not be restricted in any manner and the amount of the royalty shall be
submitted to arbitration pursuant to Section 16.g below for a final
determination.
e. Acquisition of Cognizant. If within three (3) years of the commencement
of the Royalty Term Cognizant is acquired and Cognizant and any parties
obtaining rights to the Technology through Cognizant use the Technology for Year
2000 applications for the benefit of more than fifty (50) clients, each Royalty
Goal, beginning with the period within which such acquisition occurs, shall be
reduced by fifty percent (50%). For purposes of this Subsection, "acquired"
shall mean a change of ownership in Cognizant's common stock such that more than
fifty percent (50%) of such common stock is owned by a third party other than
Cognizant Corporation or an entity controlled by Cognizant Corporation.
f. Payment Terms. Softworks shall remit the amounts due Cognizant pursuant
to Subsection 4.c above within twenty one (21) days after the close of the month
in which (i) with respect to licenses between Softworks and a licensee,
Softworks provides the invoice for the license fee or maintenance fee to the
licensee of the Current Products, and (ii) with respect to licenses between an
Authorized Distributor of Softworks, such entity provides Softworks notice of
such an invoice.
g. Royalty Report. Within twenty one (21) days after the close of each
month within the Royalty Term and each month within the Extended Royalty Term
for which an invoice is provided to a licensee or any other reportable
transaction occurs, Softworks shall provide Cognizant a Royalty Report in a form
mutually agreed to by the parties.
h. Taxes. Softworks and the Authorized Distributors shall pay all taxes,
fees, and other assessments levied by federal, state, local and other
governments related to the license, maintenance and support of the Products
under this Agreement, except for any taxes based on Cognizant's net income.
i. Verification. An independent accountant, at Cognizant's expense and
upon reasonable notice and during normal business hours, shall have access
annually to Softworks' financial and other records to the extent reasonably
necessary to verify Softworks' compliance with the terms of this Agreement.
j. Interest. If Softworks fails to pay any undisputed amounts when due,
Softworks shall pay Cognizant interest on the unpaid amount at the rate of
twelve percent (12%) per annum.
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<PAGE> 6
5. Penalty
a. Calculation. In the event that the Actual Royalties are less that the
Royalty Goal for a period set forth in Exhibit 4 (the "Royalty Goal Schedule"),
Softworks shall pay to Cognizant within thirty one (31) days of the end of each
such period an amount equal to the Royalty Goal for the period minus the Actual
Royalties for the period (the "Penalty"). If the aggregate Actual Royalties to
date exceed the aggregate Royalty Goal to date, no Penalty shall be owed.
b. Offset for Penalty Payments. If during a period set forth in Exhibit 4,
the Actual Royalties are greater than the applicable Royalty Goal for such
period, then any Penalty amounts previously paid by Softworks (reduced by the
amount of any prior offset under this Subsection 5.b), shall reduce the amount
of Actual Royalties thereafter owed, on a dollar for dollar basis, during the
remainder of such period. If during the Extended Royalty Term Actual Royalties
are accrued and there remain Penalty amounts previously paid by Softworks
(reduced by the amount of any prior offset under this Subsection 5.b), then such
Penalty amounts shall reduce the amount of Actual Royalties thereafter owed, on
a dollar for dollar basis.
6. Limitation of Liability
In no event shall either party be liable for any indirect, special or
consequential damages (including but not limited to loss of anticipated profits)
in connection with or arising out of this Agreement or the furnishing,
functioning, use, distribution or marketing of the Products or any related item
or service provided by Cognizant or Softworks.
7. Term and Termination
a. In General. This Agreement commences upon execution by both parties and
shall remain in effect until terminated in accordance with this Section.
b. Termination by Either Party. Except as set forth in Subsection 7.c
below, either party may terminate this Agreement with no liability if the other
party breaches any representation or warranty in this Agreement.
c. Termination by Cognizant. This Agreement shall terminate, at the
election of Cognizant, in the event that Softworks fails timely to make a
payment to Cognizant; provided, however, that (i) Cognizant provides Softworks
written notice of such default and intent to terminate no sooner than forty five
(45) days after the due date for such payment, and (ii) Softworks fails to cure
such default within forty five (45) days of its receipt of Cognizant's notice.
The Agreement shall thereupon terminate unless, prior to the end of Softworks'
cure period, Softworks gives notice to Cognizant stating that (i) Softworks has
not obtained payment from a specified licensee, (ii) Softworks has tried in good
faith to collect the amount owed by such licensee, and (iii) Softworks'
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<PAGE> 7
cash balance would be severely constrained by paying the corresponding royalty
amount. If such notice is provided, Softworks shall have an additional thirty
(30) days to cure the default.
d. Rights Upon Termination. In the event of termination of this Agreement,
Softworks shall retain all responsibilities and obligations associated with the
continued support of existing licensees and all other obligations to the
licensees of Products. Each licensee, existing as of the effective date of
termination of this Agreement, shall have the right to continue to use the
Products under its existing license(s) after such termination, so long as its
license remains in force and the licensee is not in violation thereof. Cognizant
shall retain its rights to collect from Softworks any Royalty payments due from
licenses sold by Softworks prior to the termination of this Agreement.
e. Return of Software. Upon termination of this Agreement, Softworks shall
deliver to Cognizant all copies of the Technology , including code and
documentation, and any other material related to the Technology, destroy or
erase any versions of such material which cannot be returned to Cognizant, and
provide a written certification, signed by the President of Softworks, that
Softworks has complied with this Subsection. Softworks shall not thereafter make
any use whatsoever of such material or any confidential information therein.
8. Representations and Warranties of Cognizant
a. To induce Softworks to enter into and perform under this Agreement,
Cognizant represents and warrants that:
i. Cognizant is a corporation duly organized and validly existing
under the laws of the State of Delaware.
ii. This Agreement has been duly and validly authorized by the
Cognizant, and is a valid and binding agreement of Cognizant enforceable
in accordance with its terms.
iii. The Technology and the Current Products are not subject to any
security interest, mortgage, pledge, lien, claim, encumbrance, dispute or
charge.
iv. No claim for copyright or patent infringement, trade secret
misappropriation or other wrongful use of intellectual property has been
asserted or threatened against Cognizant based upon or related to the
Technology or the Current Products.
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<PAGE> 8
v. No consent of any third party or entity, not affiliated with
Cognizant, is needed to effect the licenses contemplated by this Agreement
and, if required, Cognizant has the consent of any Affiliated party or
entity.
vi. Items listed in Exhibit 1 to this Agreement will operate without
material defects or design errors which will prevent the Technology from
being used for its original purpose.
b. The representation and warranty listed in Subsection 8.a.vi. shall
survive only through September 15, 1997. Cognizant shall provide Softworks with
up to $100,000 of offshore services at the rates described in Section 2.f.i.B to
cure any violation of Section 8.a.vi. identified after September 15, 1997 as its
sole remedy for any such violation.
c. THE LIMITED WARRANTIES SET FORTH IN THIS AGREEMENT ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
d. In the event of any breach by Cognizant of its representations and
warranties set forth above, excluding Section 8.a.vi. that is not cured within
30 days of notice thereof given by Softworks to Cognizant, Softworks sole remedy
shall be its termination rights under Section 7.b., or in the event of a breach
of Section 8.a.vi. by Cognizant that is not cured within 90 days of notice
thereof given by Softworks to Cognizant, Softworks sole remedy shall be its
termination rights under Section 7.b., subject to the fees payable to Cognizant
for services provided to Softworks prior to termination of this Agreement and
Royalties payable to Cognizant for Revenue prior to termination of this
Agreement.
e. Notwithstanding Section 7.b., in the event that Cognizant either (1)
fails to cure any breach of Section 8 within the timeframe described in Section
8.d. above, or (2) notifies Softworks of its intention not to cure the breach
within the time described in Section 8.d. above, Softworks shall have a 30 day
period in which to terminate this Agreement beginning the earlier of (1) the
date of Cognizant's failure to cure any breach of Section 8 within the timeframe
described in Section 8.d. above, or (2) Cognizant's notfication to Softworks of
its intention not to cure the breach within the time described in Section 8.d.
above. In the event that Softworks does not terminate this Agreement during the
30 days, Softworks shall forfeight any rights to terminate this Agreement under
Sections 7.b or 8.d.
9. Representations and Warranties of Softworks
To induce Cognizant to enter into and perform under this Agreement,
Softworks represents and warrants that:
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<PAGE> 9
a. Softworks is a corporation duly organized and validly existing under
the laws of the State of Maryland.
b. This Agreement has been duly and validly authorized by Softworks, and
is a valid and binding agreement of Softworks enforceable in accordance with its
terms.
10. Referrals
Cognizant agrees to refer to Softworks, wherever practical and
appropriate, potential business related to the Technology. If Cognizant enters
into a consulting agreement with a third party and such third party was referred
to Cognizant by Softworks, Cognizant will use reasonable efforts to use
Softworks Professional Services for staff augmentation resources, where
applicable and appropriate, at agreed upon rates.
11. Proprietary Rights
a. Ownership by Cognizant. The parties agree that Cognizant (i) owns all
proprietary rights, including copyrights, patents and trade secrets, in and to
the Technology as delivered to Softworks, and (ii) if not the owner with respect
to any component of the Technology, has the full right and authority to grant
the rights and licenses hereunder. In addition, the parties agree that Cognizant
shall own all proprietary rights, including copyrights, in any modifications to
the Technology made by Cognizant, directly or through a subcontracting
arrangement, whether on its own behalf or on behalf of a third party, including
Softworks, regardless of whether Cognizant receives compensation (all of the
foregoing defined as "Cognizant Modifications" herefor). The parties agree that
this Agreement does not transfer ownership of any of these rights to Softworks.
b. Ownership by Softworks. Softworks shall own all proprietary rights,
including copyrights, in any modifications to the Technology (EXCLUDING any
Cognizant Modifications), any Current Products, any New Products, any marketing
materials for Products created for Softworks, and any documentation, including
user manuals, created for Softworks, in any case whether created by Softworks or
a third party (except for Cognizant Modifications) on behalf of Softworks.
c. Trademark. Softworks and Cognizant agree that Softworks shall own all
proprietary rights in all trademarks and service marks developed and used by
Softworks to identify, distribute and market the Technology and Products.
12. Confidentiality
Softworks agrees that the Technology contains proprietary information,
including trade secrets, know-how and confidential information, that is the
property of Cognizant. During the period this Agreement is in effect and at all
times after its
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termination, Softworks and its Authorized Distributors shall maintain the
confidentiality of the Technology to the same extent that Softworks maintains
the confidentiality of proprietary information of the same nature and character
owned by Softworks. Likewise, Cognizant may have access to proprietary
information of Softworks, and in such event, agrees to maintain the same
standard of confidentiality.
13. Indemnification
Subject to Section 6 hereof, Cognizant shall indemnify and hold harmless
Softworks against any and all liability, suits, claims, losses, damages and
judgments, and shall pay all costs (including reasonable attorneys' fees) and
damages to the extent that such liability, costs or damages arise from a claim
that the Technology infringes, misappropriates or violates any third party's
patent, copyright, trade secret, or other intellectual property right, including
rights under any contract. Cognizant, at its option, may defend or settle any
such action, or any part thereof brought against Softworks arising from a claim
that such infringement, misappropriation or violation as described herein has
occurred. Cognizant's obligations under this Section are conditioned upon its
being given (i) prompt notice of each such claim received in writing by
Softworks and (ii) the right to control and direct the investigation, defense
and settlement of each such claim. The provisions of this Section shall survive
any termination of this Agreement.
14. Acquisition of Other Technology
a. Inspection. If and when Cognizant determines the Other Technology to be
appropriately stable and tested, Cognizant grants Softworks the right to examine
and inspect the Other Technology in accordance with procedures mutually agreed
to by the parties.
b. Right of First Refusal. In the event that any third party, not
affiliated with Cognizant, offers to acquire or license from Cognizant the
rights set forth in Subsection 1.b with respect to the Other Technology for uses
related to Year 2000 analysis, conversion and testing, Cognizant hereby grants
Softworks an option to acquire such interest on the same terms as offered by the
third party. Upon receiving a written, binding offer from a third party,
Cognizant shall provide written notice of such offer to Softworks. Such notice
shall (i) state the name and address of such third party, (ii) state the
complete terms of the offer, including the price and payment terms, and (iii)
include a statement signed by such third party acknowledging such party's
binding agreement to perform in accordance with the terms of its offer, subject
to the provisions of this Section. Within twenty (20) days of receipt of such
offer, Softworks shall provide written notice to Cognizant stating either (i)
Softworks' intent not to exercise the option, or (ii) Softworks' intent to
exercise the option. In the event Softworks elects to exercise the option, the
parties agree that the closing shall take place within twenty (20) days of
Softworks giving notice of its intent to exercise the option.
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15. Publicity
The parties agree that both Softworks and Cognizant may issue press
releases announcing the relationship set forth in this Agreement; provided,
however, that prior to public distribution of any such press release, the
issuing party shall provide a reasonable opportunity for the other party to
review and consent to the press release, which consent shall not be unreasonably
withheld.
16. General Provisions
a. Notices. All notices under this Agreement are to be delivered by (i)
depositing the notice in the mail, using registered mail, return receipt
requested, addressed to the address below or to any other address as the party
may designate by providing notice, (ii) overnight delivery service addressed to
the address below or to any other address as the party may designate by
providing notice, or (iii) hand delivery to the individual designated below or
to any other individual as the party may designate by providing notice. The
notice shall be deemed delivered (i) if by registered mail, four (4) days after
the notice's deposit in the mail, (ii) if by overnight delivery service, on the
day of delivery, and (iii) if by hand delivery, on the date of hand delivery.
Softworks: Lisa Welch
Softworks
5845 Richmond Highway
Suite 400
Alexandria, VA 22303
(703) 317-2424 (tel)
(703) 317-2429 (fax)
Cognizant: Gordon Coburn
Cognizant Technology Solutions Corporation
200 Nyala Farms
Westport, CT 06880
(203) 222-4329 (tel)
(203) 222-4592 (fax)
b. Relationship of the Parties. Neither Cognizant nor Softworks are
authorized to oblige the other party or act in the name of the other party other
than as stated in this Agreement. The Agreement does not create a joint venture,
partnership or association.
c. Binding. This Agreement shall inure to the benefit of and be binding
upon the parties and their successors and assigns.
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d. Entire Agreement; Amendment. This Agreement, together with all its
exhibits, set forth the entire understanding of the parties with respect to the
subject matter of this Agreement and supersede all prior agreements,
understandings and negotiations with respect to the subject matter hereof. Any
amendment to this Agreement must be in writing and signed by both parties.
e. Governing Law. This Agreement is to be construed in accordance with the
law of the State of Virginia.
f. Limitations. No action under this Agreement, unless involving death or
personal injury, may be brought by either party against the other more than one
(1) years after the cause of action arises.
g. Arbitration. The parties shall settle any controversy arising out of
this Agreement by arbitration in the Washington, D.C. metropolitan area in
accordance with the rules of the American Arbitration Association. The decision
of the arbitrator shall be final and binding upon the parties hereto. Judgment
upon the award rendered in the arbitration may be entered for enforcement in any
court of competent jurisdiction. All expenses, including attorneys' fees, of
each party shall be borne by such party and the cost of the arbitrator shall be
borne equally by the parties, unless the arbitrator directs any other allocation
among the parties of such expenses and costs.
h. Waiver. Failure by either party to enforce at any time or for any
period of time the provisions of this Agreement shall not be construed as a
waiver of such provisions, and shall in no way affect such party's right to
later enforce such provisions.
i. Severability. If any part of this Agreement is determined by any court
or tribunal of competent jurisdiction to be wholly or partially unenforceable
for any reason, such unenforceability shall not affect the balance of this
Agreement.
j. Headings. All section and subsection headings or captions contained in
this Agreement are for convenience only and shall not be deemed part of this
Agreement.
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AGREED:
COGNIZANT:
/s/ Gordon Coburn
- ----------------------------------------------
Signature
Gordon Coburn
- ----------------------------------------------
Name
Vice President
- ----------------------------------------------
Title
1700 Broadway, New York, NY 10019
- ----------------------------------------------
Address
July 10, 1997
- ----------------------------------------------
Date
SOFTWORKS:
/s/ Judy Carter
- ----------------------------------------------
Signature
Judy Carter
- ----------------------------------------------
Name
President & Chief Executive Officer
- ----------------------------------------------
Title
5845 Richmond Highway, Alexandria, VA 22303
- ----------------------------------------------
Address
July 10, 1997
- ----------------------------------------------
Date
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Exhibit A
Definitions
1. "Technology" shall mean the source code and documentation identified in
Exhibit 1 to this Agreement.
2. "Products" shall mean computer programs which in any manner incorporate
or integrate with other computer programs (a) the Technology or (b) any computer
programs that result from modifying or creating derivative works based upon the
Technology.
3. "Authorized Distributors" shall mean (a) any subsidiaries or affiliates
of Softworks, and (b) any party authorized by Softworks, in writing, to
distribute the Products.
4. "Current Products" shall mean the Products known as HotDate
2000/DISCOVER and HotDate2000/CONVERT.
5. "New Products" shall mean any software products developed by Softworks
that are based upon the Technology, incorporate and integrate the Technology, or
consist of modifications of or are derived from the Technology.
6. "Effective Date" shall mean the date Softworks' accepts the Current
Products.
7. "Revenue" attributable to Current Products shall mean the invoice
amount, as set forth on invoices provided by Softworks and its Authorized
Distributors to licensees of the Current Products, for the license fee and for
the maintenance fee for the first twelve (12) months. In the event that the
license agreement provides for multi-year payment terms, "Revenue" attributable
to the Current Products shall include the amount when invoiced by Softworks and
its Authorized Distributors to the licensee in subsequent years for the license
fee and for the maintenance fee, to the extent that the maintenance fee is for a
period of service within the Royalty Term. With respect to Revenue derived from
Authorized Distributors not located in the United States, the term "the invoice
amount" shall be deemed to mean only the portion of the license fee or
maintenance fee owed to Softworks.
8. "Credits" shall mean any amount previously treated as Revenue for the
purpose of calculating the Monthly Revenue with respect to which the applicable
licensee (a) has not paid Softworks or an Authorized Distributor within three
(3) months of the invoice for the Current Products, and (b) the licensee is not
using the Current Products and has provided a certificate of destruction or has
returned to Softworks or the Authorized Distributors any Current Products,
including computer code and documentation.
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"Credits" shall also include any maintenance credits, related solely to
maintenance revenue previously treated as Revenue for the purpose of calculating
the Monthly Revenue, issued to customers by Softworks as a result of material
defects or design errors which prevent the Products from being used for their
original purpose.
9. "Royalty Term" shall mean the period commencing on the Effective Date
and ending on the date five (5) years thereafter.
10. "Extended Royalty Term" shall mean the period commencing on the first
day after the end of the Royalty Term and shall be invoked only to the extent
necessary to take into account multi-year payment plans commencing within the
Royalty Term.
11. "Actual Royalties" shall mean, for the period applicable to such
Actual Royalties, the sum of (a) Royalties paid to Cognizant by Softworks during
such period, (b) amounts paid to Cognizant by Softworks during such period for
royalties on New Products, and (c) amounts paid to Cognizant by Softworks during
such period for training, consulting and technical support services (excluding
expense reimbursement) pursuant to Subsection 2.f of this Agreement, but
excluding any such amounts for services provided by Cognizant to third parties
either directly or on behalf of Softworks or an Authorized Distributor.
12. "Other Technology" shall mean the source code and documentation
identified in Exhibit 1 to this Agreement.
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Exhibit 1
1. The term "Technology" shall mean:
a. Source code for the following technology tools on the indicated
technology platforms:
i. Impact Analysis Tools for MVS
(supporting COBOL, PL/1, and Assembler)
ii. Code Changer Tools for MVS
(supporting COBOL)
iii. JCL Scanner for MVS
iv. Impact Analysis Tools for UNIX
(supporting WIN32, COBOL, C and Powerbuilder)
v. Code Changer for UNIX (supporting COBOL)
b. Documentation for the above listed technology tools on the
indicated technology platforms:
--------------------------------------------
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Exhibit 1A
2. The term "Other Technology" shall mean the then current source code and
documentation for for the following existing technology tools on the indicated
technology platforms:
i. Impact Analysis for UNIX (supporting C++, Visual C++)
ii. Test Coverage Analyzer
iii. Code Changer for MVS (supporting PL/1)
iv. Data Migration Program Generator
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Exhibit 2
Limitations on Distribution
o The "Big Six"
o Arthur Anderson
o Coopers & Lybrand
o Deloite & Touche
o Earnst & Young
o KPMG
o Price Waterhouse
o Computer Sciences Corporation
o excluding transactions where CSC acts as purchasing agent for
its customer(s) and Products will be used by customer and not
CSC, and
o excluding Technology listed Subsections 1.a.i and 1.a.iii. of
Exhibit 1
o Howard Systems
o Computer Horizns
o Keane
o Offshore Competitors
o Information Management Resources
o Mastech
o Complete Business Solutions
o Tata Consulting
o HCL Consulting
o WIPRO
o Tata Unisys
o Pentafour
o Silverline
o Infosys
o Fujitsu-ICIM
o Square D
o Patni
o Satyam Computer Services
o Key existing customers
o First Data Corporation
o Aetna Insurance
o Northwest Airlines
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Exhibit 3
Calculation of Royalty Percentage
<TABLE>
<CAPTION>
Phases Start Up Growth Maturity
<S> <C> <C> <C>
Cumulative Revenue* 0 - $3M $3M - $9M $9M +
- ---------------------------------------------------------------
Royalty % 17% 25% 33%
- ---------------------------------------------------------------
SOFTWORKS Revenue $3,000,000 $6,000,000
Royalty to Cognizant $ 510,000 $1,500,000 **
</TABLE>
* Cumulative revenue represents worldwide Revenue of the Current Products
during the Royalty Term.
** Royalty amount paid at 33% royalty rate determined by cumulative worldwide
sales of the Products in excess of $9 million during the Royalty Term.
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Exhibit 4
Royalty Goal Schedule
Cumulative Royalty Goal = $2.8 million
<TABLE>
<CAPTION>
<S> <C>
1997 $ 100,000
1998 $ 900,000
1999 $1,400,000
2000 $ 400,000
2001 $ 0
----------
Total $2,800,000
</TABLE>
20
