PROPHET 21, INC.
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CHANGE IN CONTROL SEVERANCE PAY AGREEMENT
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THIS CHANGE IN CONTROL SEVERANCE PAY AGREEMENT (the "Agreement") is made as
of the 25 day of July, 2000, by and between Prophet 21, Inc., a Delaware
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corporation with its principal place of business at 19 West College Avenue,
Yardley, PA 19067 (the "Company"), and Charles L. Boyle, III, an employee of the
Company (the "Employee").
Recitals:
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1. The Company is a Delaware corporation. The Employee is currently employed
by the Company as President and Chief Executive Officer.
2. The Company and the Employee desire to provide for the payment, in certain
instances, of severance pay to the Employee in the event of the termination
of his or her employment following a change of control of the Company, on
the terms and conditions set forth in this Agreement:
Agreement:
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In consideration of the premises and the mutual covenants and conditions
set forth herein, the Company and the Employee agree as follows:
Section 1. Operation of Agreement. This Agreement shall be effective
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immediately upon its execution, but the provisions hereof shall not be operative
unless and until a "Change in Control" (as such term is defined in Section 2
hereof) has occurred. The provisions of this Agreement shall not be operative
and shall not apply to any termination of employment, for any reason, which
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occurs before the period beginning three months and one day prior to a Change in
Control or which occurs after the period beginning three years and one day after
a Change in Control.
Section 2. Change in Control. The term "Change in Control" as used in this
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Agreement shall mean the date on or before December 31, 2000, upon which any
person (other than the Employee), group of associated persons acting in concert
(none of whom is the Employee) or corporation becomes a direct or indirect
beneficial owner of shares of stock of the Company representing an aggregate of
more than fifty percent (50%) of the votes then entitled to be cast at an
election of directors of the Company; provided however, that this shall not be
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applicable to a transaction or series of transactions in which a person, group
of associated persons acting in concert or corporation acquires such ownership
in excess of fifty percent (50%) on or after January 1, 2001.
Section 3. Severance Pay Upon Termination by Company Without Cause or By
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Employee for Good Reason. If, during the three-month period immediately
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preceding a Change in Control or during the three-year period immediately
following a Change in Control, the Employee's employment with the Company is
terminated:
(a) By the Company for no reason or for any reason other than "Cause" as
defined in (i) through (iv) below:
(i) death;
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(ii) disability (in the event that the Employee shall be unable to
perform his or her duties for a period of ninety (90) consecutive
calendar days or for a period of 120 calendar days in any twelve month
period by reason of disability as a result of illness, accident or
other physical or mental incapacity or disability);
(iii) Misappropriating any funds or property of the Company,
attempting to willfully obtain any personal profit from any
transaction in which the Employee has an interest which is adverse to
the interests of the Company, and/or any other act of fraud or
embezzlement; or
(iv) Conviction of a felony, or a plea of "guilty" or "no contest"
to, a felony or a crime involving moral turpitude or commission of
the acts constituting such a crime; or
(b) By the Employee for "Good Reason" as a result of, or within 30 days
of, any of the following:
(i) Failure to maintain the Employee in the position of President
and Chief Executive Officer of the Company or in a position
commensurate therewith in the event of a merger of the Company;
(ii) The assignment to the Employee of any duties inconsistent with
the Employee's position, authority, duties or responsibilities, or any
other action by the Company which results in a diminution of such
position, authority, duties or responsibilities, excluding for this
purpose any isolated action not taken in bad faith and which is
promptly remedied by the Company after receipt of notice thereof given
by the Employee;
(iii) The failure to elect the Employee to the Board of Directors of
the Company, unless there is a merger of the Company, in which event
the failure to elect the Employee to the board shall not be Good
Reason; or
(iv) Reduction by the Company of the Employee's Base Salary as in
effect on the Effective Date, or as the same shall be increased from
time to time.
then, the Company shall provide the Employee the following Severance Benefits
(hereinafter defined):
(a) an amount equal to three times the base salary (at the highest rate in
effect in the twelve months immediately preceding and including the
termination date), to be paid in one lump sum payment within 30 days of the
occurrence of the Change in Control or in the event such termination
occurred during the three-year period following the occurrence of the
Change in Control, the Company shall pay the Employee the Severance Amount,
within thirty (30) days after the effective date of the Employee's
termination;
(b) continuation of all health care benefits the Employee and/or his
dependents were receiving at the time of such termination for 36 months;
and
(c) all of the Employee's outstanding restricted stock will immediately
become vested and distributed and all of the Employee's outstanding stock
options shall become fully vested and exercisable, subject to the terms of
applicable Stock Option Agreements executed by the
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<PAGE>
Company and the Employee, except that the Employee shall have until the
remainder of any term of any stock option grant to exercise any such
option.
The Company may withhold from any such severance compensation any federal,
state, city, county or other taxes. In addition, notwithstanding any contrary
provision of this Agreement, the Company shall not be required to make any
payment or property transfer to, or for the Employee's benefit (under this
Agreement or otherwise) that would subject Employee to the excise tax described
in section 4999 of the Code. If the Severance Benefits under this Agreement,
when combined with any other payments that Employee has the right to receive,
exceed the "parachute amount" described in Code Section 280G (generally a
present value of three times annual compensation), then the Severance Benefits
will be reduced. The Severance Benefits will be reduced so that the present
value of the total amount received by the Employee is $1.00 less than the
parachute amount. All determinations under this Paragraph shall be made by
independent auditors retained by the Company on information supplied by the
Company and the Employee, and shall be binding on the Company and the Employee.
All fees and expenses of the Auditors shall be paid the Company.
Section 4. No Severance Pay Upon Any Other Termination. Upon any
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termination of the Employee's employment with the Company other than as set
forth in Section 3, the sole obligation hereunder of the Company shall be to pay
the Employee's regular compensation up to the effective date of termination. The
severance pay provisions hereunder do not, however, impact in any way the rights
of the Employee or the obligations of the Company under any employment agreement
or any other agreement for the payment of employment compensation between the
Employee and the Company, whether such agreement(s) are in existence now or come
into existence hereafter; except, however, (i) that if such employment agreement
provides for severance pay which would be applicable under circumstances that
would also obligate the Company to make similar payments under this Agreement,
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then this Agreement shall not be deemed as additive but shall be construed so
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that the obligations hereunder when applied in conjunction with the employment
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agreement, do not require the Company to make such payments in excess of the
amount or time set forth herein, and (ii) with regard to the acceleration of
options the employee may elect to substitute the acceleration provision of this
Agreement in place of any provision dealing specifically with acceleration in
the employment agreement. If the basis of the severance amount were calculated
differently in the employment agreement, then the Employee would receive the
greater of the amount(s) due either under the employment agreement or the
Severance Benefit under this Agreement.
Section 5. Entire Obligation. Payment to the Employee pursuant to Sections
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3 or 4 of this Agreement shall constitute the entire obligation of the Company
to the Employee and full settlement of any claim under law or equity that the
Employee might otherwise assert against the Company, or any of its employees,
officers or directors on account of the Employee's termination.
Section 6. No Obligation to Continue Employment. This Agreement does not
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create any obligation on the part of the Company to continue to employ the
Employee following a Change in Control or in the absence of a Change in Control.
Section 7. Term of Agreement. This Agreement shall terminate and no longer
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be in effect on the earlier of: (i) the termination date of employment agreement
between the Company and the Employee, if any; (ii) the date upon which the
Employee ceases to be an employee of the Company, unless a Change in Control
occurs within three months after such termination date; or (iii) if a Change in
Control occurs while the Employee is employed by the Company, until the date
three years following the Change in Control.
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<PAGE>
Section 8. Severability. Should any clause, portion or section of this
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Agreement be unenforceable or invalid for any reason, such unenforceability or
invalidity shall not affect the enforceability or validity of the remainder of
the Agreement.
Section 9. Assignment: Successors in Interest. This Agreement, being
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personal to the Employee, may not be assigned by the Employee. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, and the heirs, executors and personal
representatives of the Employee.
Section 10. Waiver. Failure to insist upon strict compliance with any of
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the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
Section 11. Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of Pennsylvania applicable in
the case of agreements made and to be performed entirely within such State.
Section 12. Arbitration. Any controversy or claim arising out of or in
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connection with this Agreement shall be settled by arbitration in accordance
with the rules of the American Arbitration Association then in effect in the
State of Pennsylvania and judgment upon such award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The arbitration shall
be held in the State of Pennsylvania. The arbitration award shall include
attorneys' fees and costs to the prevailing party.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned as of
the date first above written.
Prophet 21, Inc.
By: /s/ John Meggitt
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John Meggitt
Chariman of the Board
The Employee
/s/ Charles L. Boyle, III
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Charles L. Boyle, III
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