SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 7, 1997
MB Software Corporation
(Exact name of registrant as specified in its charter)
Colorado 0-11808 59-2219994
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(State or other jurisdiction (Commission File (IRS Employer
incorporation) Number) Identification No.)
2225 E. Randol Mill Road Suite 305, Arlington, Texas 76011
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 817-633-9400
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Item 2. Acquisition or Disposition of Assets
a) Acquisition of Assets.
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On August 7, 1997 MB Software Corporation ("MBSC"), acquired Sandy Home Health,
a St. George, Utah based entity. The acquisition was accomplished through
Healthcare Innovations, LLC "(HI"), an entity formed by MBSC and Imagine
Investments, Inc. for the purpose of acquiring healthcare business.
b) Assets and "Business" Involved in the Acquisition.
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John Anderson, sole shareholder, sold, transferred and conveyed to Purchaser all
of the stock of Sandy Home Health, which is a home healthcare business. The
assets of Sandy Home Health include software source code and libraries owned and
licensed by Seller, medical equipment, computer equipment, furniture, customer
and prospect lists and accounts receivable as of August 1997.
c) HI will operate the business for much the same purposes as previously
operated by Sandy Home Health.
d) Consideration and Sources of Funds.
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HI acquired all of the outstanding stock of Sandy Home Health for $50,000. In
addition, HI entered into an employment agreement with John Anderson, the former
owner of Sandy Home Health. HI loaned Mr. Anderson or his affiliates the sum of
$125,000, which sum can either be repaid in two years or forgiven and treated as
income at the option of the borrower. MBSC granted Mr. Anderson options to
purchase 250,000 shares of MBSC Common Stock.
Item 7. Financial Statements and Exhibits.
Upon review of the financial information and nature of the acquisition the
Company has concluded that no pro-forms financial settlements are required to be
filed with respect to such acquisition.
The following is a list of exhibits filed as part of this Current Report on
Form 8-K.
Exhibit
Number Description of Exhibit
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2.1 Purchase Agreement dated as of August 7, by and between Sandy Home Health,
Inc., a Utah corporation and Heathcare Innovations, LLC, an Arkansas
limited liability company.
2.2 Employment Agreement between HI and John Anderson.
2.3 Commitment letter for $125,000 loan.
2.4 Option Agreement between MBSC and John Anderson.
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2.5 Press Release
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MB Software Corporation
Date: August 21, 1997
/s/Scott A. Haire
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Scott A. Haire, Chairman of the
Board, Chief Executive Officer
And President (Principal Financial
Officer)
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PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement"), dated to be effective as of
August 1, 1997, is among John E. Anderson, an individual ("Seller"), and
Healthcare Innovations, LLC, an Arkansas limited liability company
("Purchaser"),
W I T N E S S E T H :
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, all of
the outstanding shares of common stock (the "Shares") of Sandy Home Health,
Inc., a Utah corporation ("SHH");
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained, and on the terms and subject to the conditions
herein set forth, the parties hereto hereby agree as follows:
ARTICLE I
Purchase and Sale
Section 1.1. Purchase and Sale of Shares. Subject to and upon the terms and
conditions contained herein, at the Closing (as defined below), Seller shall
sell, transfer, assign, convey and deliver to Purchaser, free and clear of all
security interests, liens, claims and encumbrances of every kind, and Purchaser
shall purchase, accept and acquire from Seller, the Shares.
Section 1.2. Purchase Price. The total purchase price for the Shares, in
the aggregate, shall be $50,000, payable in cash in full on the date hereof (the
"Purchase Price").
ARTICLE II
Representations and Warranties of Seller
Except as set forth on Schedule II, Seller represents and warrants that the
following are true and correct as of the date hereof:
Section 2.1. Organization and Good Standing; Qualification. SHH is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, with all requisite corporate power and authority
to carry on the business in which it is engaged, to own the properties it owns,
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. SHH is duly qualified to do business as a foreign
corporation in
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each jurisdiction where it is required to be so qualified, except where failure
to be so qualified will not have a material adverse effect on SHH.
Section 2.2. Shares. There are currently 1,000,000 Shares issued and
outstanding. Seller owns, beneficially and of record, good and marketable title
to the Shares, which constitutes all of the issued and outstanding capital stock
of SHH, free and clear of all security interests, liens, adverse claims,
encumbrances, equities, proxies, options or shareholders' agreements. At the
Closing, Seller will convey to Purchaser good and marketable title to all of the
issued and outstanding capital stock of the Corporation, free and clear of any
security interests, liens, adverse claims, encumbrances, equities, proxies,
options, shareholders' agreements or restrictions.
Section 2.3. Capitalization. The authorized capital stock of SHH consists
of (i) 20,000,000 shares of common stock, par value $.001 per share, of which
1,000,000 shares are issued and outstanding, and (ii) 5,000,000 shares of
preferred stock, par value $.001 per share, of which no shares are issued and
outstanding, and no shares of such capital stock are held in the treasury of
SHH. All of issued and outstanding shares of capital stock of SHH are duly
authorized, validly issued, fully paid and nonassessable. There exist no
options, warrants, subscriptions or other rights to purchase, or securities
convertible into or exchangeable for, the capital stock of SHH. Neither Seller
nor SHH are parties to or bound by, nor do they have any knowledge of, any
agreement, instrument, arrangement, contract, obligation, commitment or
understanding of any character, whether written or oral, express or implied,
relating to the sale, assignment, encumbrance, conveyance, transfer or delivery
of any capital stock of SHH. No shares of capital stock of SHH have been issued
or disposed of in violation of the preemptive rights of any of SHH's
shareholders. All accrued dividends on the capital stock of SHH whether or not
declared, have been paid in full.
Section 2.4. Authorization and Validity. This Agreement and each other
agreement contemplated hereby have been duly executed and delivered by Seller,
and constitute legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. The sale
of the Shares to Purchaser will not impair the ability or authority of SHH to
carry on its business as now conducted in any respect.
Section 2.5. No Violation. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, the charter documents of SHH or
any agreement, contract, indenture or other instrument under which Seller or SHH
is bound or to which any of SHH's Assets are subject, or result in the creation
or imposition of any security interest, lien, charge or encumbrance upon any of
SHH's Assets or (ii) violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over SHH's Assets.
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Section 2.6. Consents. No consent, authorization, approval, permit or
license of, or filing with, any governmental or public body or authority, any
lender or lessor or any other person or entity is required to authorize, or is
required in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of Seller or SHH.
Section 2.7. Taxes.
(a) Filing of Tax Returns. SHH has duly and timely filed with the
appropriate governmental agencies all income, excise, corporate, franchise,
property, sales, use, payroll, tax returns (including information returns) and
reports required to be filed by the United States or any state or any political
subdivision thereof or any foreign jurisdiction. To the best knowledge of
Seller, all such tax returns or reports are complete and accurate and properly
reflect the taxes of SHH for the periods covered thereby.
(b) Payment of Taxes. SHH has paid or accrued all taxes, penalties and
interest that have become due with respect to any returns that it has filed and
any assessments of which it is aware. SHH is not delinquent in the payment of
any tax, assessment or governmental charge.
Section 2.8. Compliance with Laws. SHH has complied with all laws,
regulations and licensing requirements and has filed with the proper authorities
all necessary statements and reports. There are no existing violations by SHH of
any federal, state or local law or regulation that could affect the property or
business of SHH. To the best knowledge of Seller, SHH has, and following the
Closing will continue to have, all permits necessary for the conduct of its
business.
Section 2.9. Litigation. There are no legal actions or administrative
proceedings or investigations instituted, or to the best knowledge of Seller
threatened, against or adversely affecting, or that could adversely affect, SHH,
any of its assets, or the business of SHH.
Section 2.10. Accounts Receivable. Schedule II sets forth the accounts
receivable of SHH for services performed as of June 30, 1997 and the payments
and rights to receive payments related thereto, which is a complete and accurate
listing of all accounts receivable of SHH as of the date hereof. All such
accounts receivable have arisen from bona fide transactions in the ordinary
course of business and represent payments due from patients who have received
services from SHH or third party payors. Seller makes no representation and
warranty with respect to the collectability of such accounts receivable.
Section 2.11. Assets. SHH owns good and marketable title to all of its
assets, free and clear of all security interests, liens, claims and
encumbrances, except for liens granted with respect to equipment leases.
Section 2.12. Financial Statements. Seller has furnished to Purchaser the
unaudited balance sheet and related unaudited statements of income, retained
earnings and cash flows for the twelve-month period ended June 30, 1997,
(collectively, the "Financial Statements"). To the best
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knowledge of Seller, the Financial Statements are true, correct and complete in
all material respects, are in accordance with the books and records of SHH,
fairly present the financial condition and results of operations of SHH as of
the dates and for the periods indicated and have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis with
prior periods, to the extent applicable to financial statements compiled and
prepared without audit. Between June 30, 1997, and July 31, 1997, no events have
occurred which would result in material adverse changes to the Financial
Statements or the liabilities listed on Schedule 6.2.
Section 2.13. Liabilities and Obligations. The Financial Statements and
Schedule 6.2 reflect all liabilities of SHH, accrued, contingent or otherwise
(known or unknown and asserted or unasserted), arising out of transactions
effected or events occurring on or prior to the date hereof. All reserves shown
in the Financial Statements are appropriate, reasonable and sufficient to
provide for losses thereby contemplated. Except as set forth in the Financial
Statements and Schedule 6.2, SHH is not liable upon or with respect to, or
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture, trust or other entity, and
neither SHH nor Seller knows of any basis for the assertion of any other claims
or liabilities of any nature or in any amount.
Section 2.14. Employee Matters.
(a) Cash Compensation. Schedule II contains a complete and accurate
list of the names, titles and cash compensation, including without limitation
wages, salaries, bonuses (discretionary and formula) and other cash compensation
(the "Cash Compensation") of all employees of SHH.
(b) Compensation Plans. Schedule II contains a complete and accurate
list of all employment agreements, compensation plans, arrangements or practices
(the "Compensation Plans") with respect to SHH.
Section 2.15. Employee Benefit Plans.
(a) Identification. Schedule II contains a complete and accurate list
of all employee benefit plans (the "Employee Benefit Plans") (within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) sponsored by SHH or to which SHH contributes on behalf of its
employees and all Employee Benefit Plans previously sponsored or contributed to
on behalf of its employees within the three years preceding the date hereof.
(b) Administration. Each Employee Benefit Plan has been administered and
maintained in compliance with all laws, rules and regulations.
(c) Examinations. No Employee Benefit Plan is currently the subject of an
audit, investigation, enforcement action or other similar proceeding conducted
by any state or federal agency.
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ARTICLE III
Representations and Warranties of Purchaser
Section 3.1. Organization and Good Standing. Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the state of its formation, with all requisite power and authority
to carry on the business in which it is engaged, to own the properties it owns,
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
Section 3.2. Authorization and Validity. The execution, delivery and
performance by Purchaser of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by Purchaser. This Agreement and each other
agreement contemplated hereby have been duly executed and delivered by Purchaser
and constitute or will constitute legal, valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies.
Section 3.3. No Violation. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the Articles of Organization or
Operating Agreement of Purchaser or any agreement, indenture or other instrument
under which Purchaser is bound or (ii) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over Purchaser or
the properties or assets of Purchaser.
ARTICLE IV
Closing Deliveries
Section 4.1. Deliveries of Seller. The closing of the transactions
contemplated herein (the "Closing") shall take place simultaneously with
execution of this Agreement. Seller is hereby delivering to Purchaser a
certificate representing the Shares.
Section 4.2. Deliveries of Purchaser. Purchaser is hereby delivering funds
representing the Purchase Price to Seller.
Section 4.3. Release. Purchaser is hereby delivering to Seller a release of
Seller as guarantor of all indebtedness of SHH to MB Software Corporation, a
member of Purchaser.
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ARTICLE V
Post Closing Matters
Section 5.1. Further Instruments of Transfer; Further Payments. Following
the Closing, at the request of any party, the parties shall deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to vest in Purchaser good and marketable title to the Shares to
Purchaser. To the extent that Seller receives payment on any account receivable
of SHH, Seller shall promptly forward such payment to Purchaser at the address
set forth below.
Section 5.2. Agreement to Make Loan Payoff. Purchaser agrees to pay in full
the indebtedness of SHH to Zions as listed on Schedule 6.2, together with any
and all interest accrued thereon, on or before June 30, 1998 or earlier on the
due date of such indebtedness, if Zions will not agree to the extension of such
indebtedness without the personal guarantee of Seller. Such loan represents a
line of credit with Zions, which shall not be drawn beyond the present
outstanding principal amount of $40,000. Purchaser agrees to pay or cause SHH to
pay in full the indebtedness of SHH to Seller, as listed on Schedule 6.2,
together with any and all interest accrued thereon, on or before December 31,
1997, and Seller agrees to such modification of SHH's indebtedness to Seller.
ARTICLE VI
Remedies
Section 6.1. Indemnification by Seller. Subject to the terms and conditions
of this Article, Seller, agrees to indemnify, defend and hold Purchaser and its
directors, officers, agents, attorneys and affiliates harmless from and against
all losses, claims, obligations, demands, assessments, penalties, liabilities,
costs, damages, attorneys' fees and expenses (collectively, "Damages"), asserted
against or incurred by such indemnitees by reason of or resulting from:
(a) a breach of any representation, warranty or covenant of Seller
contained herein, or in any exhibit, schedule, or certificate delivered
hereunder, or in any agreement executed in connection with the transactions
contemplated hereby; or
(b) any failure to comply with any applicable bulk transfer laws.
Subject to the terms and conditions of this Article, Seller shall
indemnify, defend and hold Purchaser and its directors, officers, agents,
attorneys and affiliates harmless from and against all Damages in excess of
$40,000 asserted against or incurred by such indemnitees by reason of or
resulting from any claim by Medicare or other payor for repayment with respect
to past mispayments or misrepresentations based on reports filed through the
date hereof; regardless of whether such claim is in the form of an offset
against current payments or otherwise.
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Notwithstanding the foregoing, (i) Seller shall have no obligation to
Purchaser pursuant to this Section until Purchaser's claims for Damages exceeds,
in the aggregate, $10,000, at which time Purchaser shall be entitled to
indemnification for only those Damages that are in excess of $10,000; (ii)
Seller's obligations pursuant to this Section resulting from any breach of a
representation, warranty or covenant of Seller contained in Sections 2.12 and
2.13 shall not exceed $200,000, in the aggregate, and notice of any claim for
indemnification for Damages resulting from such breach must be delivered to
Seller within one year following the date hereof; (iii) Seller must be notified
of any claim for indemnification against Seller under this Section (other than
for breach of a representation, warranty or covenant of Seller contained in
Section 2.12 or Section 2.13) within two years following the date hereof; and
(iv) Seller may, at his sole option, elect to defer any indemnification
obligation arising prior to September 1, 1998 until September 2, 1998, by giving
Purchaser notice of such election in writing.
Section 6.2. Indemnification by Purchaser. Subject to the terms and
conditions of this Article, Purchaser hereby agrees to indemnify, defend and
hold Seller and his affiliates harmless from and against all Damages asserted
against or incurred by any of such indemnitees by reason of or resulting from a
breach by Purchaser of any representation, warranty or covenant of Purchaser
contained herein or in any exhibit, schedule or certificate delivered hereunder,
or in any agreement executed in connection with the transactions contemplated
hereby and with respect to any liabilities of SHH listed on Schedule 6.2,
Purchaser shall indemnify, defend and hold Seller and his affiliates from and
against all Damages asserted against or incurred by Seller and his affiliates by
reason of or resulting from a failure of SHH to pay any of the liabilities
listed on Schedule 6.2.
Section 6.3. Conditions of Indemnification. The respective obligations and
liabilities of Seller and Purchaser (the "indemnifying party") to the other (the
"party to be indemnified") under Sections 6.1 and 6.2 with respect to claims
resulting from the assertion of liability by third parties shall be subject to
the following terms and conditions:
(a) Within 20 days (or such earlier time as might be required to avoid
prejudicing the indemnifying party's position) after receipt of notice of
commencement of any action evidenced by service of process or other legal
pleading, the party to be indemnified shall give the indemnifying party written
notice thereof together with a copy of such claim, process or other legal
pleading, and the indemnifying party shall have the right to undertake the
defense thereof by representatives of its own choosing and at its own expense;
provided that the party to be indemnified may participate in the defense with
counsel of its own choice, the fees and expenses of which counsel shall be paid
by the party to be indemnified unless (i) the indemnifying party has agreed to
pay such fees and expenses, (ii) the indemnifying party has failed to assume the
defense of such action or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnifying party and the party to be
indemnified and the party to be indemnified has been advised by counsel that
there may be one or more legal defenses available to it that are different from
or additional to those available to the indemnifying party (in which case, if
the party to be indemnified informs the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
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action on behalf of the party to be indemnified, it being understood, however,
that the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the party to be indemnified, which firm shall be designated in writing
by the party to be indemnified).
(b) In the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the 10th day preceding
the day on which an answer or other pleading must be served in order to prevent
judgment by default in favor of the person asserting such claim), does not elect
to defend against such claim, the party to be indemnified will (upon further
notice to the indemnifying party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the indemnifying party and at the indemnifying party's expense, subject to
the right of the indemnifying party to assume the defense of such claims at any
time prior to settlement, compromise or final determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party shall not
settle any claim without the consent of the party to be indemnified unless such
settlement involves only the payment of money and the claimant provides to the
party to be indemnified a release from all liability in respect of such claim.
If the settlement of the claim involves more than the payment of money, the
indemnifying party shall not settle the claim without the prior consent of the
party to be indemnified.
(d) The party to be indemnified and the indemnifying party will each
cooperate with all
reasonable requests of the other.
Section 6.4. Waiver. No waiver by any party of any default or breach by
another party of any representation, warranty, covenant or condition contained
in this Agreement, any exhibit or any document, instrument or certificate
contemplated hereby shall be deemed to be a waiver of any subsequent default or
breach by such party of the same or any other representation, warranty, covenant
or condition. No act, delay, omission or course of dealing on the part of any
party in exercising any right, power or remedy under this Agreement or at law or
in equity shall operate as a waiver thereof or otherwise prejudice any of such
party's rights, powers and remedies. All remedies, whether at law or in equity,
shall be cumulative and the election of any one or more shall not constitute a
waiver of the right to pursue other available remedies.
Section 6.5. Remedies Not Exclusive. The remedies provided in this Article
shall not be exclusive of any other rights or remedies available to one party
against the other, either at law or in equity.
Section 6.6. Costs, Expenses and Legal Fees. Each party hereto shall bear
its own costs and expenses (including attorneys' fees), except that each party
hereto agrees to pay the costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the other parties in successfully (i) enforcing
any of the terms of this Agreement or (ii) proving that another party breached
any of the terms of this Agreement.
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ARTICLE VII
Miscellaneous
Section 7.1. Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto.
Section 7.2. Assignment. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by Purchaser
to an affiliate of Purchaser.
Section 7.3. Parties In Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
Section 7.4. Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
Section 7.5. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
Section 7.6. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants contained herein shall survive the
Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of Seller or Purchaser pursuant to this
Agreement shall be deemed to have been representations and warranties by Seller
or Purchaser, as the case may be, and, notwithstanding any provision in this
Agreement to the contrary, shall survive the Closing for a period of two years.
Section 7.7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED
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AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES
GOVERNING CONFLICTS OF LAWS) OF THE STATE OF UTAH.
Section 7.8. Captions. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
Section 7.9. Gender and Number. When the context requires, the gender of
all words used herein shall include the masculine, feminine and neuter and the
number of all words shall include the singular and plural.
Section 7.10. Reference to Agreement. Use of the words "herein", "hereof",
"hereto" and the like in this Agreement shall be construed as references to this
Agreement as a whole and not to any particular Article, Section or provision of
this Agreement, unless otherwise noted.
Section 7.11. Notice. Any notice or communication hereunder or in any
agreement entered into in connection with the transactions contemplated hereby
must be in writing and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person.
Such notice shall be deemed received on the date on which it is hand-delivered
or on the third business day following the date on which it is so mailed. For
purposes of notice, the addresses of the parties shall be:
If to Purchaser:
c/o Healthcare Innovations, LLC
2225 E. Randol Mill Rd.
Suite 305
Arlington, Texas 76011
Attention: Scott Haire
with a copy to:
Brad L. Whitlock
Jackson Walker L.L.P.
901 Main Street
Suite 6000
Dallas, Texas 75202
If to Seller:
John E. Anderson
1310 Casper Circle
St. George, Utah 84790
Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.
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Section 7.12. Service of Process. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in Section
7.11 and service thus made shall be taken and held to be valid personal service
upon such party by any party hereto on whose behalf such service is made.
Section 7.13. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 7.14. Attorneys Fees. Each party shall bear its own attorneys' fees
incurred in connection with this transaction; provided that in the event of a
dispute regarding any breach of the terms hereof, the prevailing party shall be
entitled to have its attorneys' fees paid by the non-prevailing party.
HEALTHCARE INNOVATIONS, LLC
By: /s/ Scott A. Haire
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Scott A. Haire,
President
/s/ John E. Anderson
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John E. Anderson
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SCHEDULE II
a. Purchaser has received a copy of SHH's employee handbook and acknowledges
the terms set forth therein.
b. SHH is subject to a Medicare audit for the fiscal year ended June 30, 1995.
It is presently anticipated that SHH will be required to pay between
$30,000 and $40,000 for over- reimbursements for the period.
c. With respect to the Medicare audit for the fiscal year ended June 30, 1996,
it is presently anticipated that SHH will be required to pay a maximum of
$10,000 for over-reimbursements for the period.
Consents
State of Utah request for agency action to reflect change of ownership.
Accounts Receivable
See Exhibit II-A attached hereto and incorporated herein by this
reference.
Employee Matters
See Exhibit II-B attached hereto and incorporated herein by this
reference.
Employee Benefit Plans
SEP - Edward Jones & Co.
Cafeteria/Flexible Benefits Plan
ValueCare Health Insurance
Disability Insurance
Matters disclosed by vehicle leases, copy machine leases, promissory notes and
related documentation with respect to liabilities disclosed on Schedule 6.2.
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<PAGE>
SCHEDULE 6.2
List of all Current Liabilities of SHH
Amounts are as of June 30, 1997 unless otherwise specified
Accounts Payable 128,810.72
A/P Other Agencies 149,315.50
Due Medicare 35,945.00
Wages payable 60,570.40
Accrued PTO Payable 34,061.90
FICA/Federal Withholding 21,733.08
State Withholding Payable 5,438.35
FUTA Payable 1,706.42
SUTA Payable 993.00
Pension Payable 24,424.81
Notes Payable-Zions 40,000.00
Employee Garnishments Payable 1,357.39
Employee Credit Union Payable 512.74
Employee Cafeteria Plan Payable (360.55)
Loan J. E. Anderson 36,321.98
Loan Payable-MB Software 60,000.00
Notes Payable-Long Term 17,675.84
Equipment, vehicle and office space leases per Exhibit 6.2-A attached hereto and
incorporated hereby by this reference
Accruals with respect to each of the foregoing through completion of sale of
shares to Purchaser.
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<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
effective as of the 1st day of August, 1997, by and between Sandy Home Health,
Inc., a Utah corporation ("Employer"), and John E. Anderson ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee as provided herein, and
Employee desires to accept such employment; and
WHEREAS, Employee shall, as an employee of Employer, have access to
confidential information with respect to Employer and its affiliates;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment. Employer hereby employs Employee and Employee hereby accepts
employment with Employer upon the terms and conditions hereinafter set forth.
2. Duties. Subject to the power of the Board of Directors of Employer to
elect and remove officers, Employee shall serve Employer as President of
Employer and shall perform, faithfully and diligently, the services and
functions relating to such office or otherwise reasonably incident to such
office as may be designated from time to time by the Board of Directors of
Employer; provided, however, that all such services and functions shall be
reasonable and within the Employee's area of expertise. Employee shall perform
his duties principally at the offices of Employer located in St. George, Utah,
with such limited travel to such other locations from time to time as the Board
of Directors of Employer may reasonably prescribe. Employee shall devote his
full time, attention, energies and business efforts to his duties hereunder and
to the promotion of the business and interests of Employer and its affiliates.
The foregoing provision shall not be construed to prohibit Employee's passive
investments; provided that such activities do not detract in any material
respect from the performance of Employee's duties hereunder.
3. Term. The term of this Agreement shall commence as of the date hereof
and shall end on June 30, 2000, unless earlier terminated pursuant to the terms
hereof, and shall be extendable to June 30, 2003, in the sole discretion of
Employer (the "Term").
4. Compensation. As compensation for his services rendered under this
Agreement, during the Term, Employee shall be entitled to receive the following:
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<PAGE>
(a) Salary. Employee shall be paid an annual salary as provided in
Exhibit A attached hereto.
(b) Vacation and Benefits. Employee shall be entitled to and shall
receive such group benefits as Employer may provide to its other employees
at comparable salaries and responsibilities of Employee.
(c) Bonus. Employee shall also be entitled to receive bonuses as
provided by the Board of Directors of the Employer.
(d) Expenses. Employer shall reimburse Employee for all reasonable and
necessary out-of-pocket travel and other expenses incurred by Employee in
rendering services required under this Agreement, on a monthly basis upon
submission of a detailed monthly statement and reasonable documentation.
(e) Additional Compensation. Such additional compensation as set forth
on Exhibit A attached hereto.
(f) Disability Insurance. Employer shall continue to pay premiums with
respect to the disability insurance of Employee during the term of this
Agreement at the current rate.
(g) Stock Options. In the event Employer's ultimate parent, MB
Software Corporation ("MB"), shall adopt a stock option plan for its
executive officers, MB shall make available to Employee options for the
common stock of MB on the terms and subject to the conditions on which such
options are made available to executive employees of MB or its affiliates
with responsibilities similar in scope to those of Employee.
5. Confidentiality.
(a) Acknowledgment of Proprietary Interest. Employee recognizes the
proprietary interest of Employer and its affiliates in any Trade Secrets
(as hereinafter defined) of Employer and its affiliates. Employee
acknowledges and agrees that any and all Trade Secrets currently known by
Employee or learned by Employee during the course of his engagement by
Employer or otherwise, whether developed by Employee alone or in
conjunction with others or otherwise, shall be and is the property of
Employer and its affiliates. Employee further acknowledges and understands
that his disclosure of any Trade Secrets will result in irreparable injury
and damage to Employer and its affiliates. As used herein, "Trade Secrets"
means all confidential and proprietary information of Employer and its
affiliates, now owned or hereafter acquired, including, without limitation,
information derived from reports, investigations, experiments, research,
work in progress, drawing, designs, plans, proposals, codes, marketing and
sales programs, client lists, client mailing lists, financial projections,
cost summaries, pricing formula, and all other concepts, ideas, materials,
or information prepared or performed for or by Employer or its affiliates
and
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<PAGE>
information related to the business, products or sales of Employer or its
affiliates, or any of their respective customers, other than information
which is otherwise publicly available; provided, however, "Trade Secrets"
does not include any information that is known or readily obtainable by
other home care providers or is otherwise known to persons not employed by
Employee.
(b) Covenant Not-to-Divulge Trade Secrets. Employee acknowledges and
agrees that Employer and its affiliates are entitled to prevent the
disclosure of Trade Secrets. As a portion of the consideration for the
employment of Employee and for the compensation being paid to Employee by
Employer, Employee agrees at all times during the Term and thereafter to
hold in strict confidence and not to disclose or allow to be disclosed to
any person, firm or corporation, other than to persons engaged by Employer
and its affiliates to further the business of Employer and its affiliates,
and not to use except in the pursuit of the business of Employer and its
affiliates, the Trade Secrets, without the prior written consent of
Employer, including Trade Secrets developed by Employee.
(c) Return of Materials at Termination. In the event of any
termination or cessation of his employment with Employer for any reason
whatsoever, Employee will promptly deliver to Employer all documents, data
and other information pertaining to Trade Secrets. Employee shall not take
any documents or other information, or any reproduction or excerpt thereof,
containing or pertaining to any Trade Secrets.
(d) Competition During Employment. Employee agrees that during the
Term, neither he, nor any of his affiliates, will directly or indirectly
compete with Employer or its affiliates in any way, and that he will not
act as an officer, director, employee, consultant, shareholder, lender, or
agent of any entity which is engaged in any business of the same nature as,
or in competition with, the businesses being conducted by Employer and its
affiliates (as used herein, a business is engaged in competition with the
business being conducted by Employer and its affiliates if it is involved
in the home health care business in the State of Utah, or any other State
where the Employer or its affiliates conduct business during the Term);
provided, however, that this Section 5(d) shall not prohibit Employee or
any of his affiliates from purchasing or holding an aggregate equity
interest of up to 1%, so long as Employee and his affiliates combined do
not purchase or hold an aggregate equity interest of more than 5%, in any
business in competition with Employer and its affiliates. Furthermore,
Employee agrees that during the Term, he will undertake no planning for the
organization of any business activity competitive with the work he performs
as an employee of Employer and Employee will not combine or conspire with
any other employees of Employer and its affiliates for the purpose of the
organization of any such competitive business activity.
6. Prohibition on Disparaging Remarks. Employee shall, from the date of
this Agreement on, refrain from making disparaging, negative or other similar
remarks concerning Employer or any of its affiliates to any third party.
Similarly, Employer and its affiliates shall from
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<PAGE>
the date of this Agreement on, refrain from making disparaging, negative or
other similar remarks concerning Employee to any third party.
7. Termination. This Agreement and the employment relationship created
hereby shall terminate upon the occurrence of any of the following events:
(a) On June 30, 2000 (unless extended by Employer);
(b) The death of Employee;
(c) The "disability" (as hereinafter defined) of Employee;
(d) Written notice to Employee from Employer of termination for "just
cause" (as hereinafter defined);
(e) Written notice to Employee from Employer of termination for any
reason other than "just cause;"
(f) 60 days prior written notice to Employer from Employee of
termination; or
(g) Breach by Employer of any provision of this Agreement.
For purposes of Section 7(c) above, the "disability" of Employee shall mean
his inability, because of mental or physical illness or incapacity, to perform
his duties under this Agreement for a continuous period of 120 days or for 120
days out of a 150-day period.
For purposes of Section 7(d) above, "just cause" shall mean (a) the failure
or inability for any reason (other than disability) of Employee to devote his
full business time to the businesses of Employer and its affiliates, except as
permitted hereby, (b) the commission by Employee of any act involving moral
turpitude or the commission by Employee of any act or the suffering by Employee
of any occurrence or state of facts, which renders Employee incapable of
performing his duties under this Agreement (other than disability), or adversely
affects or could be expected to adversely affect Employer's business reputation,
(c) Employee's being convicted of a felony, (d) any breach by Employee of any of
the terms of, or the failure to perform any material covenant contained in, this
Agreement and following notice thereof from Employer to Employee, Employee does
not cure such breach or failure within fifteen (15) days thereafter; provided,
however, that Employee will not be entitled to cure any breach or failure under
this subclause (d) more than one time in any consecutive three month period, or
(e) the violation by Employee of reasonable instructions or policies established
by Employer or its affiliates which have been communicated to Employee with
respect to the operation of their businesses and affairs or Employee's failure
to carry out the reasonable instructions of the Board of Directors of Employer
or MB or any of their affiliates and following notice thereof from Employer to
Employee, Employee does not cure any such violation or failure within fifteen
(15) days thereafter; provided, however, that Employee will not be entitled to
cure any
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<PAGE>
violation or failure under this subclause (e) more than one time in any
consecutive three month period.
Notwithstanding anything to the contrary in this Agreement, the provisions
of Sections 5 and 6 above shall survive any termination, for whatever reason, of
Employee's employment under this Agreement. In the event of the termination of
Employee's employment prior to June 30, 2000, Employee shall be entitled only to
the compensation earned by him as of the date of termination, except that if
Employee's employment is terminated pursuant to Section 7(e) or Section 7(g)
above, Employee shall be entitled to receive the compensation then payable
pursuant to Section 4(a) until June 30, 2000.
8. Remedies. Employee and Employer and their affiliates recognize and
acknowledge that in the event of any default in, or breach of any of, the terms,
conditions or provisions of this Agreement (either actual or threatened) by the
other remedies at law shall be inadequate. Accordingly, Employee and Employer
and their affiliates agree that in such event, each of them and their respective
affiliates shall have the right of specific performance and/or injunctive relief
in addition to any and all other remedies and rights at law, in equity or
provided herein, and such rights and remedies shall be cumulative.
9. Acknowledgments. Employee acknowledges and recognizes that the
enforcement of any of the provisions set forth in Section 5 and 6 above by
Employer and its affiliates will not interfere with Employee's ability to pursue
a proper livelihood. Employee recognizes and agrees that the enforcement of this
Agreement is necessary to ensure the preservation and continuity of the business
and good will of Employer and its affiliates.
10. Notices. Any notices, consents, demands, requests, approvals and other
communications to be given under this Agreement by either party to the other
shall be deemed to have been duly given if given in writing and personally
delivered or sent by facsimile transmission, courier service, overnight delivery
service or by mail, registered or certified, postage prepaid with return receipt
requested, as follows:
If to Employer: c/o MB Software Corporation
2225 E. Randol Mill Rd.
Suite 305
Arlington, Texas 76011
Attn: Scott A. Haire
Fax No.: (817) 633-9409
If to Employee: John E. Anderson
1310 Casper Circle
St. George, Utah 84790
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<PAGE>
Notices delivered personally or by facsimile transmission, courier service or
overnight delivery shall be deemed communicated as of actual receipt; mailed
notices shall be deemed communicated as of three days after the date of mailing.
11. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto and supersedes all prior agreements and understandings, oral or
written between the parties hereto. No modification or amendment of any of the
terms, conditions or provisions herein may be made otherwise than by written
agreement signed by the parties hereto.
12. Governing Law and Venue. THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE INTERPRETED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF UTAH, WITHOUT REGARD TO ITS CHOICE OF LAW PRINCIPLES.
13. Parties Bound. This Agreement and the rights and obligations hereunder
shall be binding upon and inure to the benefit of Employer and Employee, and
their respective heirs, personal representatives, successors and assigns.
Employer shall have the right to assign this Agreement to any affiliate or to
its successors or assigns. The terms "successors" and "assigns" shall include
any person, corporation, partnership or other entity that buys all or
substantially all of Employer's assets or all of its stock, or with which
Employer merges or consolidates. The rights, duties or benefits to Employee
hereunder are personal to him, and no such right or benefit may be assigned by
him. The parties hereto acknowledge and agree that Employer's affiliates are
third-party beneficiaries of the covenants and agreements of Employee set forth
in Sections 5 and 6 above.
14. Estate. If Employee dies prior to the payment of all sums owed, or to
be owed, to Employee pursuant to Section 4 above, then such sums, as they become
due, shall be paid to Employee's estate.
15. Enforceability. If, for any reason, any provision contained in this
Agreement should be held invalid in part by a court of competent jurisdiction,
then it is the intent of each of the parties hereto that the balance of this
Agreement be enforced to the fullest extent permitted by applicable law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any covenant is too broad to be enforced as written, it is the intent of each
of the parties that the court should reform such covenant to such narrower scope
as it determines enforceable.
16. Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
17. Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
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<PAGE>
18. Costs. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which he or it may be entitled.
19. Other Obligations. Employee represents and warrants that he is not
subject to any agreement which would be violated or breached as a direct or
indirect result of Employee executing this Agreement or Employee becoming an
employee of Employer.
20. Affiliate. An "affiliate" of any party hereto shall mean any person
controlling, controlled by or under common control with such party.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be produced.
22. Attorneys Fees. Each party shall bear its own attorneys' fees incurred
in connection with this transaction; provided that in the event of a dispute
regarding any breach of the terms hereof, the prevailing party shall be entitled
to have its attorneys' fees paid by the non-prevailing party.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
SANDY HOME HEALTH, INC.
By: /s/ Scott A. Haire
------------------
Its: President
/s/ John E. Anderson
--------------------
John E. Anderson
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<PAGE>
EXHIBIT A
---------
<TABLE>
<S> <C> <C>
1. Position: President/Administrator
2. Base Salary: $110,648 annually, payable in prorated bi-
weekly installments on the regularly
scheduled payday for all employees of
Employer, in accordance with the currently
effective policy of Employer, to begin with
the first regularly scheduled payday following
the date of this Agreement, subject to annual
upward adjustments as determined by the
Board of Directors.
3. Bonus Compensation: $25,000 bonus for the first year of this
agreement, payable fourteen (14) days after
execution of this Agreement.
4. Benefits: As provided in Employer's employee
handbook from time to time, and as provided
to Employer's other employees from time to
time, without reduction except with
Employee's consent, Employee to be entitled
to four weeks vacation per year, including the
first year of this Agreement.
5. Retirement: Contributions shall be made for the benefit of
Employee to any retirement plan maintained
by Employer or for the benefit of other
employees of Employer, commensurate with
the Employee's salary and position, and such
additional retirement benefit program for the
benefit of Employee as the Board of Directors
by may from time to time determine.
</TABLE>
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<PAGE>
MB SOFTWARE, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement (hereinafter the "Agreement") is made and
entered into effective as of the 1st day of August, 1997, by and between MB
SOFTWARE, INC., a Delaware corporation (hereinafter the "Corporation") and John
E. Anderson (hereinafter "Optionee").
SUMMARY
Optionee: John E. Anderson
No. of Shares: 250,000
Vesting: In full on September 1, 1998
Exercise Price: $.19 per share
AGREEMENT
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and Optionee hereby agree as follows:
1. Grant of Option. The Optionee is hereby granted the right to purchase a
total of Two Hundred Fifty Thousand (250,000) shares (the "Option Stock") of the
common stock, no par value, of the Corporation ("Common Stock"). The Option is
NOT intended by the parties hereto to be, and shall NOT be treated as an
Incentive Stock Option, as such term is defined under Section 422 of the
Internal Revenue Code of 1986 (the "Code").
2. Option Price. The price to be paid by Optionee for each share of Option
Stock shall be Nineteen Cents ($.19) per share (hereinafter the "Exercise
Price").
3. Option Term - Term. The Option may be exercised, in whole or in part as
to all or any part of the Option Stock at any time and from time to time
beginning on September 1, 1998, but not later than 12:00 A.M., Salt Lake City,
Utah, time, on September 1, 2004, (the "Expiration Date"), provided, however,
that if the Expiration Date is a day on which banking institutions are
authorized by law to close, then on the next succeeding day which is not a day
on which banking institutions are authorized by law to close (hereinafter the
"Option Period").
4. Value Guarantee. In the event that the aggregate fair market value of
the Option Stock on September 1, 1998, is less than $250,000, the Corporation
shall, at its option, either grant an option to purchase the number of
additional shares of the Common Stock without increasing the aggregate
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<PAGE>
Exercise Price for all shares of common stock for which this Option may be
exercised, in number which, with the Option Stock, shall have an aggregate fair
market value equal to $250,000 in the aggregate, or pay Optionee the difference
between $250,000 and the actual value of the Option Stock.
5. Method of Exercise. The Option will be exercisable by written notice
delivered to the Corporation by Optionee, dated and signed by Optionee, and
shall provide the following (hereinafter the "Option Notice"):
a. A statement that the Option is being exercised and the date (which
must be prospective) as of which Optionee intends exercise to be effective
(the "Exercise Date").
b. The number of shares of Option Stock for which the Option is being
exercised, and the name, address and social security number of the
Optionee.
c. Representations, warranties, and covenants with respect to the
Optionee's investment intent for the Option Stock which are acceptable to
the Corporation, in its reasonable discretion, which shall include the
following:
(1) The Optionee is the sole and true party in interest and is
not acquiring the shares of Option Stock for the benefit of any other
person.
(2) The Optionee is acquiring the shares of Option Stock for
investment purposes and not with a view to, or for resale in
connection with, any distribution or public offering thereof within
the meaning of the Securities Act of 1933, as amended.
(3) The Optionee has had access to all information and
documentation concerning the Corporation which the Optionee deems
necessary or desirable with respect to the Corporation and its
finances and operations, prior to entering into this Agreement, has
had an opportunity to ask questions of and receive answers from other
officers and the directors of the Corporation, and in all respects
deems himself satisfied as to the nature and extent of all such
information. The offer to acquire the shares of Option Stock was
directly communicated to the Optionee in such manner that the Optionee
was able to ask questions of and receive answers concerning the terms
and conditions of this transaction.
(4) The Optionee is capable of bearing the degree of economic
risk inherent in ownership of the shares of Option Stock.
6. Information. The Corporation shall provide to the Optionee such
information as Optionee may reasonably request to enable Optionee to give the
representations required in Section 5.c, above, sufficiently promptly to allow
Optionee to timely exercise the Option.
7. Payment Upon Exercise. Payment of the Exercise Price shall be in cash or
certified funds. If the Optionee fails to pay for any of the Option Stock
specified in such notice or fails to accept delivery thereof, the Optionee's
right to purchase such Option Stock may be terminated by the Corporation.
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<PAGE>
The date specified in the Optionee's notice as the date of exercise shall be
deemed the date of exercise of the Option, provided that payment in full for the
Option Stock to be purchased upon such exercise shall have been received by such
date.
8. Record Ownership. Upon receipt by the Corporation of the Option Notice
in proper form for exercise, together with payment of the Exercise Price, at the
office or agency of the Corporation or the Exercise Date, if later, the Optionee
shall be deemed to be the holder of record of the shares of Option Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Corporation shall then be closed or that certificates representing such
shares of Option Stock shall not then be actually delivered to the Optionee.
Neither the Optionee nor any other person shall have any of the rights and
privileges of a stockholder of the Corporation with respect to any shares of
Common Stock purchasable or issuable upon the exercise of the Option, in whole
or in part, prior to the date of exercise of the Option.
9. Nontransferability of Option. During the Optionee's lifetime, the Option
hereunder shall be exercisable only by the Optionee or John E. Anderson, or any
guardian or legal representative of the Optionee or John E. Anderson, and the
Option shall not be transferable except, in case of the death of the Optionee,
by will or the laws of descent and distribution, nor shall the Option be subject
to attachment, execution or other similar process. In the event of (a) any
attempt by the Optionee to alienate, assign, pledge, hypothecate or otherwise
dispose of the Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or interest hereby
conferred, the Corporation may terminate the Option by notice to the Optionee
and it shall thereupon become null and void.
10. Employment Not Affected. Neither the issuance of the Option nor its
exercise shall be construed as granting to the Optionee or any affiliate of the
Optionee any right with respect to employment or continuance of employment with
the Corporation or any subsidiary of the Corporation. Except as may otherwise be
limited by a written agreement between the Corporation and the Optionee, the
right of the Corporation to terminate at will the Optionee's employment with it
at any time (whether by dismissal, discharge, retirement or otherwise) is
specifically reserved by the Corporation and its subsidiaries, if any, and
acknowledged by the Optionee.
11. Amendment of Option. The Option may be amended by the Corporation at
any time only with the written consent of the Optionee.
12. Adjustments to the Number of Shares of Option Stock and to the Price.
The number of shares of Option Stock for which this Option may be exercised and
the Exercise Price shall be subject to adjustment from time to time as set forth
in this Section 12.
a. Stock Dividends, Subdivisions and Combinations. If at any time the
Corporation shall:
(1) pay a dividend or other distribution on its Common Stock in
shares of Common Stock or shares of any other class or series of
capital stock,
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<PAGE>
(2) subdivide its outstanding shares of Common Stock into a
larger number of shares of such Common Stock, or
(3) combine its outstanding shares of Common Stock into a smaller
number of shares of such Common Stock,
then the number of shares of Option Stock receivable upon exercise of this
Option to the extent permitted hereby immediately prior to the record date for
such dividend or distribution or the effective date of such subdivision or
combination shall be adjusted so that the holder of this Option shall thereafter
be entitled to receive upon conversion of this Option to the extent permitted
hereby the kind and number of shares of Common Stock that such holder would have
owned or have been entitled to receive immediately after such record date or
effective date had this Option been converted to the extent permitted hereby
immediately prior to such record date or effective date. An adjustment made
pursuant to this Section 12.a shall become effective immediately after the
effective date of such event, but shall be retroactive to the record date, if
any, for such event.
Upon any adjustment of the number of shares of Option Stock receivable
upon the exercise of this Option as herein provided, the Exercise Price per
share shall be adjusted by multiplying the Exercise Price immediately prior to
such adjustment by a fraction, the numerator of which shall be the number of
shares of Option Stock receivable upon the exercise of this Option immediately
prior to such adjustment and the denominator of which shall be the number of
shares of Option Stock so receivable immediately thereafter.
b. Rights; Options; Notes. If at any time the Corporation shall issue
(without payment of any consideration) to all holders of outstanding Common
Stock rights, options or warrants to subscribe for or purchase shares of
Common Stock or securities convertible into or exchangeable for Common
Stock, then the Corporation shall also distribute such rights, options,
warrants or securities to the holders of this Option as if this Option had
been converted to the extent permitted hereby immediately prior to the
record date for such distribution.
c. Distribution of Assets or Securities. If at any time the
Corporation shall make a distribution to all holders of shares of Common
Stock of any asset or security other than in connection with the
liquidation, dissolution or winding up of the Corporation, then and in each
such case, the Exercise Price shall be adjusted to equal the price
determined by multiplying the Exercise Price in effect immediately prior to
the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction (which
shall not be less than zero), the numerator of which shall be the fair
market value per share of the Common Stock on the date fixed for such
determination less the than fair market value of the portion of the assets
or securities so distributed applicable to one share of Common Stock, and
the denominator of which shall be such fair market value per share of the
Common Stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
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<PAGE>
d. Issuance of Common Stock at Less Than Exercise Price. If at any
time the Corporation shall sell or issue shares of Common Stock, or rights,
options, warrants or convertible or exchangeable securities representing
the right to subscribe for or purchase shares of Common Stock (excluding
shares subsequently issued upon conversion, exercise or exchange of rights,
options, warrants or convertible or exchangeable securities for which an
adjustment was previously made pursuant to this Section 12), (ii) the
issuance of this Option or any securities issued upon exercise thereof for
a consideration per share (on a Common Stock equivalent basis) less than
the Exercise Price in effect immediately prior to the issuance of such
capital stock, the Exercise Price in effect immediately after each such
issuance shall forthwith be adjusted to a price equal to the Exercise Price
in effect immediately prior to such issuance multiplied by a fraction, the
numerator of which is an amount equal to the sum of the total number of
shares of capital stock outstanding (on a Common Stock equivalent basis)
immediately prior to such issuance plus the number of shares of capital
stock (on a Common Stock equivalent basis) which the aggregate
consideration received by the Corporation upon such issuance would purchase
at a price equal to the Exercise Price in effect immediately prior to such
issuance per share, and the denominator of which shall be the total number
of shares of capital stock outstanding (on a Common Stock equivalent basis)
immediately after the issuance of such capital stock.
For the purposes of any adjustment of the Exercise Price pursuant to this
Section 12, the following provisions shall be applicable in the case of the
issuance of (A) options to purchase or rights to subscribe for capital stock,
(B) securities by their terms convertible into or exchangeable for capital
stock, or (C) options to purchase or rights to subscribe for such convertible or
exchangeable securities:
(1) the aggregate maximum number of shares of capital stock
deliverable upon exercise of such options to purchase or rights to
subscribe for capital stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal
to the consideration, if any, received by the Corporation upon the
issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the capital stock covered
thereby;
(2) the aggregate maximum number of shares of capital stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities, or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable
securities, and subsequent conversion or exchange thereof, shall be
deemed to have been issued at the time such securities were issued or
such options or rights were issued and for a consideration equal to
the consideration received by the Corporation for any such securities
and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any
related options or rights; and
(3) on any change in the number of shares of capital stock
deliverable upon exercise of any such options or rights or conversion
of or exchange for such convertible or exchangeable securities, or on
any change in the minimum purchase price of such options, rights or
securities, other than a change resulting from the antidilution
provisions of such options, rights or securities, the Exercise Price
shall forthwith be readjusted to such Exercise Price as would have
been obtained had the adjustment made upon (x) the issuance of such
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options, rights or securities not exercised, converted or exchanged prior
to such change, as the case may be, been made upon the basis of such change
or (y) the options or rights related to such securities not converted or
exchanged prior to such change, as the case may be, been made upon the
basis of such change.
If at any time the Corporation shall sell and issue shares of Common Stock
or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then in determining the "price per share of Common Stock" and
the "consideration received by the Corporation" for purposes of the preceding
paragraphs of this Section 12, the Board of Directors of the Corporation shall
determine, in good faith, the fair market value of said property, which
determination shall be subject to the Optionee's right to dispute such
determination under Section 12.f. There shall be no adjustment of the Exercise
Price in respect of the Common Stock pursuant to this Section 12.d. if the
amount of such adjustment shall be less than $0.001 per share of Common Stock;
provided, however, that any adjustments which by reason of this provision are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment.
e. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. If at any time the Corporation shall reorganize its
capital, reclassify its capital stock, consolidate, merge or combine with
or into another Person (where the Corporation is not the surviving
corporation or where there is any change whatsoever in, or distribution
with respect to, the outstanding Common Stock of the Corporation), or the
Corporation shall sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business to another Person,
and pursuant to the terms of such reorganization, reclassification,
consolidation, merger, combination, sale, transfer or other disposition of
assets, (i) shares of common stock of the successor or acquiring Person or
of the Corporation (if it is the surviving corporation) or (ii) any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition
to or in lieu of common stock of the successor or acquiring Person or the
Corporation ("Other Property") are to be received by or distributed to the
holders of Common Stock of the Corporation who are holders immediately
prior to such transaction, then the holder of this Option shall have the
right thereafter to receive, upon conversion of this Option to the extent
permitted hereby, the number of shares of Common Stock, common stock of the
successor or acquiring Person, and/or Other Property which holder of the
number of shares of Common Stock for which this Option is convertible
immediately prior to such event would have owned or received immediately
after and as a result of such event. In such event, the Exercise Price of
this Option shall be allocated among such securities and Other Property in
proportion to the respective fair market values of such securities and
Other Property as determined in good faith by the Board of Directors of the
Corporation.
In case of any such event, the successor or acquiring Person (if other than
the Corporation) shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Option to be
performed and observed by the Corporation and all the obligations and
liabilities hereunder, subject to such modifications as the Optionee may approve
(and as determined by resolution of the Board of Directors of the Corporation)
in order to provide for adjustments of any shares of the securities of such
successor or acquiring Person for which this Option thus becomes convertible,
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which modifications shall be as equivalent as practicable to the adjustments
provided for in this Section 12. For purposes of this Section 12.e, "common
stock of the successor or acquiring Person" shall include stock of such
corporation, or other securities if such Person is not a corporation, of any
class that is not preferred as to dividends or assets over any other class of
stock of such corporation or Person and that is not subject to redemption and
shall also include any evidences of indebtedness, shares of stock or other
securities that are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Section 12. shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers and other dispositions of assets.
f. Dissolution, Total Liquidation or Winding-Up. If at any time there
shall be a voluntary or involuntary dissolution, total liquidation or
winding-up of the Corporation, other than as contemplated by Section 12.e,
then the Corporation shall cause to be mailed (by registered or certified
mail, return receipt requested, postage prepaid) to the Optionee, at the
earliest practicable time (and, in any event, not less than 30 calendar
days before any date set for definitive action) notice of the date on which
such dissolution, liquidation or winding-up shall take place, as the case
may be. Such notice shall also specify the date as of which the holders of
the shares of record of Common Stock shall be entitled to exchange their
shares for securities, money or other property deliverable upon such
dissolution, liquidation or winding-up, as the case may be. On such date,
but only if the Optionee elects to exercise this Option (and in no event is
the Optionee obligated to exercise this Option), the Optionee shall be
entitled to receive upon exercise of this Option the cash or other
property, that the Optionee would have been entitled to receive had this
Option been exercised immediately prior to such dissolution, liquidation or
winding-up.
g. Other Dilutive Events. In case any event shall occur as to which
the other provisions of this Section 12 are not strictly applicable but as
to which the failure to make any adjustment would not protect the rights
represented by this Option in accordance with the intent and principles
hereof then, in each such case, the Optionee may appoint an independent
investment bank or firm of independent public accountants which shall give
its opinion as to the adjustment, if any, on a basis consistent with the
intent and principles established herein, necessary to preserve the rights
represented by this Option (or such Options). Upon receipt of such opinion,
the Corporation will mail (by registered or certified mail, return receipt
requested, postage prepaid) a copy thereof to the Optionee of this Option
within three business days and shall make the adjustments described
therein. The fees and expenses of such investment bank or independent
public accountants shall be borne by the Corporation.
h. Other Provisions Applicable to Adjustments Under this Section. The
following provisions shall be applicable to the adjustments provided for
pursuant to this Section 12:
(1) When Adjustments To Be Made. The adjustments required by this
Section 12 shall be made whenever and as often as any specified event
requiring such an adjustment shall occur. For the purpose of any such
adjustment, any specified event shall be deemed to have occurred at
the close of business on the date of its occurrence.
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(2) Record Date. In case the Corporation shall fix a record date
of the holders of Common Stock for the purpose of entitling them (i)
to receive a dividend or other distribution payable in shares of
Common Stock or in shares of any other class or series of capital
stock or securities convertible into or exchangeable for Common Stock
or shares of any other class or series of capital stock or (ii) to
subscribe for or purchase shares of Common Stock or such other shares
or securities, then all references in this Section 12 to the date of
the issuance or sale of such shares of Common Stock or such other
shares or securities shall be deemed to be references to such record
date.
(3) When Adjustment Not Required. If the Corporation shall fix a
record date of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or distribution or subscription
or purchase rights to which the provisions of this Section 12 would
apply, but shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(4) Certain Limitations. Notwithstanding anything herein to the
contrary, the Corporation agrees not to enter into any transaction
that, by reason of any adjustment under Section 12, would cause the
Exercise Price to be less than the par value of the Common Stock,
unless the Corporation first reduces the par value of the Common Stock
to be less than the Exercise Price that would result from such
transaction.
(5) Notice of Adjustments. Whenever the number of shares of
Common Stock into which this Option is convertible or the Exercise
Price shall be adjusted pursuant to this Section 12, the Corporation
shall forthwith prepare a certificate to be executed by the chief
financial officer of the Corporation setting forth, in reasonable
detail, the event requiring the adjustment and the method by which
such adjustment or adjustments were calculated, specifying the number
of shares of Common Stock into which this Option is convertible and
(if such adjustment or adjustments were made pursuant to Section 12.e)
describing the number and kind of any other shares of stock or Other
Property into which this Option is convertible, and any related change
in the Exercise Price, after giving effect to such adjustment or
change. The Corporation shall mail (by registered or certified mail,
return receipt requested, postage prepaid) a signed copy of such
certificate to the Holder within three business days of the event
which caused such adjustment. The Corporation shall keep at the
Designated Office copies of all such certificates and cause the same
to be available for inspection at said office during normal business
hours by the Holder or any prospective transferee of this Option
designated by the Optionee.
(6) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Corporation shall be required to make a determination
of the fair market value of any item under this Option, such
determination may be challenged by the Holder (or if the Option
initially issued under the Securities Purchase Agreement has been
divided up, the Holders of Options convertible for more than fifty
percent of the aggregate number of shares of Option Stock then
issuable upon conversion of all of the then convertible Options) and
any dispute shall be resolved promptly, but
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in no event in more than 30 calendar days, by an investment banking firm of
recognized national standing or one of the six largest national accounting firms
agreed upon by the Corporation and the Holders, and whose decision shall be
binding on the Corporation and the Holders. If the Corporation and such Holders
cannot agree on a mutually acceptable investment bank or accounting firm, then
such Holders, jointly, and the Corporation shall within five business days each
choose one such investment bank or accounting firm and the respective chosen
firms shall within five business days jointly select a third investment bank or
accounting firm, which shall make the determination promptly, but in no event in
more than 30 days. The Corporation shall pay all expenses of such investment
bank(s) or accounting firm(s), except that if the fair market value as
determined by such investment bank or accounting firm is not either greater than
or less than 5% of the fair market value as determined by the Board of
Directors, then the Holders shall pay such expenses.
(7) Independent Application. Except as otherwise provided herein,
all subsections of this Section 12 are intended to operate
independently of one another (but without duplication). If an event
occurs that requires the application of more than one subsection, all
applicable subsections shall be given independent effect without
duplication.
13. Transfer Restrictions and Legends. The option granted to Optionee
hereunder and the Option Stock subject hereto shall not be transferable except
upon the conditions specified in this Section 13, which conditions are intended
to insure compliance with the provisions of the Securities Act of 1933 and
applicable state securities laws in respect of the transfer of any shares of the
Option Stock. In particular, no transfer of the Option or the Option Stock will
be permitted unless a Registration Statement under the Securities Act of 1933 is
in effect as to such transfer, and the Option or the Option Stock has been duly
qualified for sale under applicable state securities laws, or in the opinion of
counsel to the Corporation such registration and qualification is unnecessary in
order for such transfer to comply with the Securities Act of 1933 and applicable
state securities laws. Unless a Registration Statement is in effect as to the
Option Stock, stock certificates evidencing the Option Stock shall bear such
restrictive legends as the Corporation and the Corporation's counsel deem
necessary or advisable under applicable law, including without limitation,
legends substantially in the following form:
The sale, transfer or encumbrance of this certificate and the shares
represented by this certificate is subject to an agreement dated August 1,
1997, among the Corporation and John E. Anderson. A copy of the agreement
is on file in the office of the Secretary of the Corporation. The agreement
provides, among other things, for the right of the Corporation to purchase
the shares of stock evidenced by this certificate from the holder of this
certificate for a designated purchase price. By accepting the shares of
stock evidenced by this certificate the holder agrees to be bound by said
agreement.
No sale, pledge, gift, hypothecation or other transfer of this certificate
or the securities represented hereby, or any interest therein, shall be
valid or effective unless a Registration Statement under the Securities Act
of 1933 is in effect as to such transfer, and the Option or the Option
Stock has been duly qualified for sale under applicable state securities
laws, or in the opinion of counsel to
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the Corporation such registration and qualification is unnecessary in order
for such transfer to comply with the Securities Act of 1933 and applicable
state securities laws.
14. Registration of Option Shares. The Corporation agrees that, as of
September 1, 1998, and at all times while this Option remains exercisable and
unexercised with respect to any shares of Option Stock, and for a period of one
year after the last date on which the Optionee acquires shares of Option Stock
pursuant to this Option, there shall be in effect a Registration Statement under
the Securities Act of 1933 on Form S-8 as promulgated by the U.S. Securities and
Exchange Commission as to the transfer by Optionee of any shares of the Option
Stock acquired or to be acquired by Optionee. The Corporation further agrees to
bear all expenses associated with such registration of the Option Stock, other
than underwriting fees, discounts and selling commissions.
15. INDEMNIFICATION AND CONTRIBUTION.
a. Indemnification by the Corporation. The Corporation agrees to
indemnify and hold harmless Optionee and Optionee's affiliates and agents
from and against any loss, claim, damage or liability and any action in
respect thereof to which Optionee or Optionee's affiliates or agents may
become subject under the Securities Act of 1933 or the Securities Exchange
Act of 1934 or any other statute or common law, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (1) any
untrue statement or alleged untrue statement of a material fact made in
connection with the sale of Option Stock, whether or not such statement is
contained or incorporated by reference in any registration statement or
prospectus relating to the Option Stock (as amended or supplemented if the
Corporation shall have furnished any amendments or supplements thereto) or
any preliminary prospectus, other than as would be subject to
indemnification by the Optionee under Section 15.b, (2) any omission or
alleged omission to state a material fact required to be stated in any such
registration statement or prospectus or necessary to make the statements
therein not misleading, other than as would be subject to indemnification
by the Optionee under Section 15.b, or (3) any violation by the Corporation
of any federal, state or common law, Rule or regulation applicable to the
Corporation and relating to action required of or inaction by the
Corporation in connection with such registration. The Corporation also
shall promptly, but in no event more than ten business days, pay directly
or reimburse Optionee and Optionee's affiliates and agents for any legal
and other expenses incurred by any of them in investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action. The Corporation shall either promptly, but in no event in more than
ten business days, pay directly all amounts which it is required to pay
hereunder or shall reimburse the requesting party for such amounts within
ten business days after any request for such reimbursement. The Corporation
also shall indemnify any Underwriter of the Option Shares, their officers,
affiliates, directors, partners, members and agents and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of Optionee provided in this Section.
The indemnity agreement contained in this Section shall not apply to
amounts paid in settlement of any such loss, claim, damage or liability or any
action in respect thereof if such settlement is effected without the consent of
the Corporation (which consent shall not be unreasonably withheld), nor shall
the Corporation be liable to the Optionee or Optionee's affiliates or agents in
any such case for any loss, claim, damage, liability or any action in respect
thereof to the extent that it arises solely from or is based solely upon and is
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in conformity with written information relating to Optionee furnished expressly
for use in connection with such registration by Optionee or its agents, nor
shall the Corporation be liable to Optionee for any such loss, claim, damage or
liability or any action in respect thereof to the extent it arises solely from
or is based solely upon (a) any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or prospectus relating
to Option Stock delivered by Optionee after the Corporation had provided written
notice to the Optionee that such registration statement or prospectus contained
such untrue statement or alleged untrue statement of a material fact, or (b) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading after
the Corporation had provided written notice to Optionee that such registration
statement or prospectus contained such omission or alleged omission.
b. Indemnification by Optionee. Optionee shall indemnify and hold
harmless the Corporation, its officers, directors, partners, members and
agents and each person, if any, who controls the Corporation within the
meaning of Section 15 of the Securities Act of 1933 or Section 20 of the
Securities Exchange Act of 1934 to the same extent as the foregoing
indemnity from the Corporation to Optionee, but solely with reference to
information in conformity with and related to Optionee furnished in writing
by Optionee expressly for use in any registration statement or prospectus
relating to the Option Stock, or any amendment or supplement thereto, or
any preliminary prospectus. Optionee shall also indemnify and hold harmless
any Underwriter of the Registrable Securities or shares of Common Stock,
their officers, directors, partners, members and agents and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Corporation provided in this Section; provided,
however, that in no event shall any indemnity obligation under this Section
exceed the dollar amount of the net proceeds actually received by Optionee
from the sale of Option Stock or shares of Common Stock, which gave rise to
such indemnification obligation under such registration statement or
prospectus.
c. Conduct of Indemnification Proceedings. Promptly after receipt by
any person of any notice of any loss, claim, damage or liability or any
action in respect of which indemnity may be sought pursuant to Section 15.a
or Section 15.b, such person (the "Indemnified Party") shall, if a claim in
respect thereof is to be made against any other person for indemnification
hereunder, notify such other person (the "Indemnifying Party") in writing
of the loss, claim damage, liability or action; provided, however, that the
failure by the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which the Indemnifying
Party may have to such Indemnified Party hereunder. If the Indemnified
Party is seeking Indemnification with respect to any claim or action
brought against the Indemnified Party, then the Indemnifying Party shall be
entitled to participate in such claim or action, and, to the extent that it
wishes, jointly with all other Indemnifying Parties, to assume the defense
thereof with counsel satisfactory to the Indemnified Party. After notice
from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or action, the Indemnifying Party shall
not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that in any action in which both the Indemnified Party and the
Indemnifying Party are named as defendants, the Indemnified Party shall
have the right to employ separate counsel (but no more than one such
separate counsel) to represent the Indemnified Party and its controlling
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persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, with the fees and expenses of such counsel to be paid by such
Indemnifying Party if, based upon the written opinion of counsel of such
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, consent to entry of judgment or effect any settlement of any claim or
pending or threatened proceeding in respect of which the Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such judgment or settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such claim
or proceeding.
d. Contribution. If the indemnification provided for in the foregoing
Sections 15.a, 15.b or 15.c is unavailable to any Indemnified Party in
respect of any loss, claim, damage, liability or action referred to herein,
then each such Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the
Indemnified Parties and the Indemnifying Parties in connection with the
actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable considerations. The
relative fault of any Indemnified Party and any Indemnifying Party 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 such
Indemnified Party or such Indemnifying Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 15 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of any loss, claim,
damage, liability or action referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 15.d, Optionee shall not be required to contribute
any amount in excess of the dollar amount of the net proceeds actually received
by Optionee from the sale of Registrable Securities or shares of Common Stock,
which gave rise to such contribution obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
16. Withholding. The Corporation shall have the right, before any
certificate for any shares of Option Stock is delivered pursuant to this
Option, to deduct or withhold from any other compensation payments made to
the Optionee, any Federal, state or local taxes, including transfer taxes,
required by law to be withheld, or to require the Optionee to pay any
amount, or the balance of any amount, required to be withheld as a
condition to receiving shares of Option Stock. The Corporation may, but is
not under any obligation to, permit the receipt or use of shares of Common
Stock, or the
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simultaneous sale thereof to the public, in satisfaction of or to generate funds
for the payment of such withholding.
17. Relationship to Other Benefits. This Option shall not be taken into
account in determining any benefits under any pension, retirement, group
insurance, or other employee benefit plan of the Corporation, whether now
existing or hereafter adopted. This Option shall not preclude the shareholders
of the Corporation, the Board of Directors or any committee thereof, or the
Corporation from authorizing or approving other employee benefit plans or forms
of incentive compensation, nor shall it limit or prevent the continued operation
of other incentive compensation plans or other employee benefit plans of the
Corporation.
18. No Trust or Fund Created. This Option shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Corporation and Optionee or any other person.
19. General Provisions. The following provisions are integral parts of this
Agreement:
a. Binding Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the successors, assigns, personal representatives,
heirs and legatees of the respective parties hereto, except as otherwise
expressly limited by the terms of this Agreement and any entities resulting
from the reorganization, consolidation or merger of any party hereto.
b. Supersedure. This Agreement shall supersede and fully replace,
stand in the stead of and discharge any and all agreements or obligations
of the Corporation with or for the benefit of Optionee regarding the
issuance to Optionee of any option or right to acquire shares of the
Corporation's Common Stock.
c. Captions. The headings used in this Agreement, and the Summary
appearing before the recitals on the first page hereof are inserted for
reference purposes only and shall not be deemed to define, limit, extend,
describe or affect in any way the meaning, scope or interpretation of any
of the terms or provisions of this Agreement or the intent hereof.
d. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties and supersedes all prior
agreements, representations or understandings between the parties relating
to the subject matter hereof. All preceding agreements relating to the
subject matter hereof, whether written or oral, are hereby merged into this
Agreement.
e. Counterparts. This Agreement may be signed on any number of
counterparts with the same effect as if the signature to any counterpart
were upon the same instrument.
f. Severability. The provisions of this Agreement are severable, and
should any provision hereof be void, voidable, unenforceable or invalid,
such void, voidable, unenforceable or invalid provision shall not affect
any other provision of this Agreement.
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g. Waiver of Breach. Any waiver by either party hereto of any breach
of any kind or character whatsoever by the other party, whether such be
direct or implied, shall not be construed as a continuing waiver of such
breach.
h. Cumulative Remedies. These several rights and remedies herein
expressly reserved to each of the parties shall be construed as cumulative;
and none of them shall be exclusive of, or in lieu or limitation of, any
other right, remedy, or priority allowed by law.
i. Amendment. This Agreement may not be modified except by an
instrument in writing signed by the parties hereto.
j. Time of Essence. The parties agree that time is of the essence in
the performance of all duties herein.
k. Interpretation. This Agreement shall be interpreted, construed and
enforced according to the law of the State of Colorado, except as Federal
law may apply.
l. Notices. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered personally to
the party or to an officer of the party to whom the same is directed or if sent
by registered or certified mail, postage and charges prepaid, addressed as
follows:
If to the Corporation:
MB Software, Inc.
2225 E. Randol Mill Rd., Suite 305
Arlington, TX 76011
Attn: Scott Haire
w/copy to:
Brad L. Whitlock
Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202-3797
If to Optionee, to:
John E. Anderson
1310 Casper Circle
St. George, UT 84790
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Any such notice shall be deemed to be given on the date on which
the same was deposited in a regularly maintained receptacle for the
deposit of United States mail, addressed and sent as aforesaid. The
address for notices for either party may be changed by that party
giving written notice to the other.
m. Legal Expenses. The prevailing party in any arbitration
proceeding brought by one party against all other and arising out of
this Agreement shall be entitled to reimbursement for its costs and
expenses (including arbitration costs and reasonable fees for
attorneys and expert witnesses) incurred with respect to bringing and
maintaining any such arbitration. The term "prevailing party" for the
purposes of this Section 19.m shall include a defendant who has by
motion, judgment, verdict or dismissal by the arbitrator, successfully
defended against any claims that has been asserted against it.
EXECUTED Effective the day and year first above written,
THE CORPORATION
MB SOFTWARE, INC.
By: /s/ Scott A. Haire
------------------------
Scott A. Haire, President
OPTIONEE
/s/ John E. Anderson
------------------------
John E. Anderson
