<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-KSB/A NO. 2
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1997.
Commission File Number: 0-25338
INTIME SYSTEMS INTERNATIONAL, INC.
(Name of small business issuer in its charter)
DELAWARE 65-0480407
- ------------------------------- (I.R.S. Employer
(State or other jurisdiction of Identification No.)
incorporation or organization)
1601 Forum Place, West Palm Beach, FL 33401
- ------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (561) 478-0022
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities registered under Section 12(g) of the Exchange Act:
Units consisting of 1 share of Class A Common Stock and 1 Class A Warrant
Class A Common Stock
Class A Warrants
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
------ ------
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
Revenues for its most recent fiscal year. $13,881,632.
The aggregate market value of the voting stock held by non-affiliates based on
the closing price quoted by NASDAQ on March
<PAGE>
14, 1997: $13,254,654. (Includes the value of Class A Common Stock. See Item
11).
Number of shares outstanding of each of the issuer's classes of common equity,
as of March 18, 1998:
Class A Common Stock 4,516,496 Shares
2,360,000 Class A Warrants
Documents incorporated by reference: NONE
Transitional Small Business Disclosure Format (check one):
YES NO X
----- -----
2
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PART III
--------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of the Company are as follows:
NAME Age Positions
- ---- --- ---------
William E. Berry 65 President, Secretary and Chairman of the Board
Michael D. Matte 39 Chief Financial Officer, Treasurer and Director
John E. Steiner 57 Director
Paul Piper 53 Director
Corine C. Goldkiller 51 Senior Vice President - Oracle
WILLIAM E. BERRY has been the Company's president, secretary and a director
of the Company since January 1994. In September, 1997, Mr. Berry became the
Company's chairman of the board of directors. Mr. Berry co-founded The
Consulting Team, Inc. ("TEAM"), a subsidiary of the Company. Mr. Berry has been
chairman and chief executive officer of TEAM from its inception in 1985. In
addition to his duties as president and chief executive officer of the Company,
Mr. Berry is directly involved in the Company's marketing of the Company's
consulting services and its software product. Mr. Berry is the founder and past
president of the South Florida Chapter of the Association of Human Resource
Systems Professionals ("HRSP" now known as the International Association of
Human Resource Information Management ("IHRIM")) and served on the national
IHRIM Board of Directors from 1988 to 1993. Mr. Berry received the IHRIM "Summit
Award" for processional excellence in 1996. Mr. Berry also served on the SHRM
National Committee on Human Resource Information Systems from 1990-1991.
MICHAEL D. MATTE joined the Company as its chief financial officer in
October 1996, was appointed its treasurer in September 1997 and was elected a
director in October 1997. He also assumed substantial operational duties in
September 1997. Prior to joining the Company, Mr. Matte served as chief
financial officer for Torwest, Inc., a United States holding company of a
Canadian conglomerate from 1992 through October 1996. Prior to that, he served
as a senior manager and in other capacities with Price Waterhouse LLP. Mr. Matte
is a CPA and a member of the American and Florida Institutes of Certified Public
Accountants.
3
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PAUL PIPER was appointed to the Company's board of directors in November
1997. In 1981 Mr. Piper co-founded Business Information Technology, Inc.
("BIT"), a human resources systems company. Mr. Piper was BIT's president and
chairman of the board from its inception until its acquisition in 1995 by a
large publicly held company. Mr. Piper retired after BIT's acquisition.
JOHN E. STEINER has been a director of the Company since January 1994 and
co-founded TEAM with Mr. Berry. Prior to September 1997, Mr. Steiner served as
the Company's executive vice president and chairman of the board of directors
from January 1994 and was president of TEAM since its inception in 1985.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC"). To the best of the Company's knowledge based
solely on its review of copies of such forms received or filed by it, or written
representations from certain reporting persons, all filings of Form 3, 4 and 5
required to be made with the SEC have been made.
ITEM 10. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's chief executive officer, its
two other executive officers and two former executive officers (the "Named
Executive Officers") whose total annual salaries and bonuses exceeded $100,000
for the fiscal year ended December 31, 1997.
4
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SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (g) (i)
Long-Term
Compensation
Awards
----------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary($) Bonus($) Compensation($) Options/SARs(#) Compensation($)
- ---------------------- ------- ----------- ----------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
EXECUTIVE OFFICERS
- ------------------
William E. Berry, President 1997 $225,270 $ 1,500(1) $11,320(2) 75,000(3)/0 $4,863(4)
(Chief Executive Officer) 1996 $196,795 $ 0 $12,000(2) 0 $4,863(4)
and Chairman of the Board... 1995 $188,800 $ 5,665(5) $ 7,132(2) 0 $ 0
Michael Matte, Vice President
of Finance (Chief Financial
Officer), Treasurer and 1997 $126,250 $ 0 $ 0 100,000/0 $ 0
Director..................... 1996 $ 28,127 $ 0 $ 0 25,000/0 $ 0
1997 $142,292 $10,000(6) $ 0 0 $ 0
Corine C. Goldkiller, Senior 1996 $118,757 $ 0 $ 0 25,000/0 $ 0
Vice President............... 1995 $103,425 $ 7,500(7) $ 0 0 $ 0
FORMER EXECUTIVE OFFICERS
- -------------------------
John E. Steiner, Executive 1997 $214,226 $ 1,500(1) $11,988(2) 75,000(3)/0 $1,521(4)
Vice President and 1996 $196,795 $ 0 $12,000(2) 0 $2,629(4)
Director(8).................. 1995 $188,800 $ 5,665(5) $ 4,893(2) 0 $ 0
1997 $130,000 $ 0 $ 0 0 $ 0(5)
James C. Dean, Vice 1996 $127,500 $ 0 $ 0 0 $ 0
President(8)................. 1995 $120,000 $20,000(7) $ 0 10,000/0 $ 0
</TABLE>
- ------------------------------
(1) Pursuant to their employment agreements, Messrs. Berry and Steiner were
paid bonuses of approximately $1,500 in 1997 based on the Company's net
income in 1996.
(2) Represents compensation in the form of a car allowance and related
expenses. Also includes life insurance payments in 1995.
(3) The Options vest and become exercisable only if the Escrowed Shares held by
them are forfeited and cancelled. The forfeiture and cancellation of the
Escrowed Shares are a condition to consummation of the Merger disclosed in
Item 11 (the "Merger"). See Item 11 "Securities Ownership of Certain
Beneficial Owners and Management-Change in Control". Messrs. Berry and
Steiner will forfeit and cancel their respective Escrowed Shares
immediately prior to the closing of the Merger. At the time of vesting of
these Options, The Company will recognize compensation expense related to
these Options of approximately $520,000.
5
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(4) Represents life insurance payments.
(5) Represents bonuses paid on 1994 net income in accordance with Messrs. Berry
and Steiner's employment agreements.
(6) Represents bonus granted in 1997 for performance in 1996.
(7) Represents bonuses related to performance.
(8) Messrs. Steiner and Dean's status as executive officers and employees
ceased in September, 1997, although they received (or will receive)
compensation through January 15, 1998 and May 31, 1998, respectively. Such
compensation was accrued in the fiscal quarter September 30, 1997.
The following table sets forth certain information with respect to stock
option grants to the Named Executive Officers during the fiscal year ended
December 31, 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees Base Price Expiration
Name Granted in Fiscal Year ($/S(1) Date
- --------------------------- ------------------- ------------------ --------------- --------------
<S> <C> <C> <C> <C>
William E. Berry 75,000/0 22% $5.75(2)/0 07/01/2007(3)
John E. Steiner(4) 75,000/0 22% $5.75(2)/0 07/01/2007(3)
Michael Matte 100,000(5)/0 29% $4.52(6)/0 05/20/2007(3)
Corine C. Goldkiller 0/0 0% $ 0/0 0
James C. Dean(4) 0/0 0/0 0/0 0
</TABLE>
- ------------------------------
(1) All Options were granted at 100% of fair market value.
(2) Originally granted at an exercise price of $6.50 and repriced in January
1998.
(3) These Options vest and become exercisable only if the Escrowed Shares held
by them are forfeited and cancelled. The forfeiture and cancellation of the
Escrowed Shares are a condition to consummation of the Merger. Messrs.
Berry and Steiner will forfeit and cancel their respective Escrowed Shares
immediately prior to the closing of the Merger. At the time of vesting of
these Options, The Company will recognize compensation expense related to
these Options of approximately $520,000.
(4) Messrs. Steiner and Dean's status as executive officers ceased in September
1997.
(5) Options are not exercisable until the Escrowed Shares are forfeited, and
they become fully vested upon a change in control. Due to the proposed
Merger, the Escrowed Shares will be forfeited and the Options will become
fully vested. Such events will trigger the recognition of compensation
expense of approximately $466,000, pursuant to the terms of the option
grant.
6
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(6) Mr. Matte's Options were originally exercisable at $6.50 and were
repriced in January 1998 based upon a provision in his employment
agreement providing for repricing if the trading price of the Common
Stock closes at least 25% below the exercise price for a period of
time.
The following table sets forth certain information with respect to the
exercise of options to purchase common stock and SARs during the fiscal year
ended December 31, 1997, and the unexercised options held and the value thereof
at that date, for each Named Executive Officer.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired on Value Options/SARs at FY-End(#) Options/SARs at FY-End($)
Name Exercise(#) Realized($) Exercisable/Unexercisable(1) (Exercisable/Unexercisable(2)(3)
- ------------------ ----------- ----------- ---------------------------- --------------------------------
<S> <C> <C> <C> <C>
William E. Berry 0 0 0/75,000(4) $0/$0
John E. Steiner 0 0 0/75,000(4) $0/$0
Michael D. Matte 0 0 12,500/112,500(5) $0/$0
Corine C. Goldkiller 0 0 21,309/16,068 $0/$0
James C. Dean(6) 7,738 44,493 0/0 $0/$0
</TABLE>
- ------------------------------
(1) Exercisable Options include all currently vested Options without
restrictions. Unexercisable Options include unvested Options, Options
which are held in escrow and Options which have certain vesting and/or
exercisability restrictions.
(2) Based upon a fair market value at fiscal year end of $4.875 per share
minus the exercise price.
(3) None of the options were in-the-money.
(4) The Options vest and become exercisable only if the Escrowed Shares
held by them are forfeited and cancelled. The forfeiture and
cancellation of the Escrowed Shares are a condition to consummation of
the Merger. Messrs. Berry and Steiner will forfeit and cancel their
respective Escrowed Shares immediately prior to the closing of the
Merger. At the time of vesting of these Options, The Company will
recognize compensation expense related to these Options of
approximately $520,000.
(5) Options are not exercisable until the Escrowed Shares are forfeited,
and they become fully vested upon a change in control. Due to the
proposed Merger, the Escrowed Shares will be forfeited and the Options
will become fully vested. Such events will trigger the recognition of
compensation expense of approximately $466,000, pursuant to the terms
of the Option grant.
7
<PAGE>
(6) Mr. Dean's status as an employee ceased on September 15, 1997. Accordingly,
all of Mr. Dean's options were cancelled effective December 15, 1997.
EMPLOYMENT AND CONSULTING AGREEMENTS
On November 25, 1997, the Company entered into a new three-year employment
agreement with Mr. William E. Berry, its president, expiring in November 2000.
The agreement with Mr. Berry provides for a base annual salary of $250,000
subject to cost of living increases and an incentive bonus equal to 10% of the
Company's net pretax income above $500,000 (without resort to any consumer price
increase) up to 100% of his salary. Mr. Berry may terminate his agreement if:
(i) his duties are substantially modified, (ii) the Company materially breaches
such agreement or (iii) if any entity or person not currently an executive
officer or stockholder of the Company either individually or as part of a group
becomes the beneficial owner of 30% or more of the Class A Common Stock of the
Company (the "Voluntary Termination Provisions"). In such an event, Mr. Berry
may elect to either: (a) receive full compensation and benefits payable under
his employment agreement for the remainder of the term of the agreement, or (b)
a release from the non-competition provisions of his agreement. The effect of
such provisions may discourage a hostile takeover even if in the best interest
of all other stockholders. The agreement also provides for a $500,000 key man
life insurance policy, the proceeds to be assigned as Mr. Berry directs. Mr.
Berry is also subject to non-competition and non solicitation of customers
provisions in favor of the Company.
In May 1997, the Company entered into a three-year written employment
agreement with Mr. Michael D. Matte, its chief financial officer, replacing his
then current agreement and providing a substantially higher compensation
package. The board of directors took this action to retain Mr. Matte after he
announced his resignation eight months after commencement of employment. The
board provided the new compensation package in order to induce Mr. Matte to
reject an offer from a company about to effect an initial public offering, which
offer contained substantial equity incentives. Mr. Matte's new agreement
provides for an annual salary of $130,000, subject to cost of living increases
and an incentive bonus equal to 10% of the Company's net pretax income above
$500,000 limited to 100% of his salary (without resort to any consumer price
increase). Mr. Matte was also granted 100,000 Options exercisable at $6.50 per
share repriced in January 1998 to $4.52, as discussed above. Such Options will
vest upon the forfeiture and cancellation of the Escrowed Shares. Such Options
are also subject to forfeiture provisions and vest bi-annually in equal
increments over a three year term commencing June 30, 1997. Such Options shall
immediately vest upon sale by the principal stockholders of all or 90% of the
Company's Class A Common Stock owned by them or partial sale of the Company's
assets or a sale of a subsidiary. In certain circumstances involving a sale of
the Company as defined in the employment agreement, Mr. Matte is entitled to
receive a cash payment, of $900,000 either from the Company's principal
stockholders or from the Company.
8
<PAGE>
Mr. Matte's employment agreement has provision whereby if he voluntarily
terminates or is terminated without cause, he shall receive severance equal to
three times his salary for the last fiscal year. The 100,000 Options under his
current agreement will become exercisable and the $900,000 additional bonus will
not be earned as a result of the Merger. Upon termination of Mr. Matte's
previous employment agreement, Mr. Matte will receive the severance payments
described above. Additionally, in January 1998 the Company was authorized by its
board of directors to pay Mr. Matte, a bonus in 1998 of up to $40,000, subject
to meeting performance criteria established by Mr. Berry, in view of Mr. Matte's
substantial new duties.
One of the conditions of the Merger "Merger Agreement" (with ARIS
Corporation ("ARIS")) is that the existing employment agreement of Mr. Berry
will be terminated and that a proposed new agreement be executed. Mr. Berry's
proposed new agreement is for a two-year term at an annual salary of $175,000
per year (without costs-of living increases) and provides for a maximum annual
bonus of $25,000. Additionally, Mr. Berry shall receive a $150,000 signing bonus
and 10,000 ARIS Options vesting over a two-year period. The Voluntary
Termination Provisions in Mr. Berry's proposed new agreement have been modified
and apply only if there is a material breach by ARIS.
The Merger Agreement further provides that Mr. Matte will enter into a new
employment agreement immediately following the closing of the Merger. Mr.
Matte's proposed new agreement is for a one-year term at the same base salary
($130,000 per year). Mr. Matte shall receive a $25,000 signing bonus and 8,000
ARIS Options vesting annually over a four-year term. His maximum bonus shall be
$25,000. His proposed new agreement eliminates all compensation arrangements
arising in the event of a change of control, partial sale or sale.
In fiscal 1997, Ms. Corine C. Goldkiller, the Company's senior vice
president of human resources consultant, received a salary increase from
$125,000 per annum to $150,000 per annum as an incentive increase. Additionally,
Ms. Goldkiller was granted a $10,000 bonus for her efforts in fiscal 1996.
DIRECTORS' COMPENSATION
The Company's outside directors receive $1,250 for each meeting attended,
as cash compensation for serving on the Board of Directors in addition to
reimbursement of reasonable expenses incurred in attending meetings. Pursuant to
the Company's 1994 Stock Option Plan (the "Plan"), directors who are not
employees receive a grant of 12,000 10-year Options which vest in 1/6 increments
every June 30 and December 31 provided the director is still serving in that
capacity. The 1994 initial grant of directors' options to the Company's outside
directors fully vested in December 1996. Accordingly, they each automatically
received a new grant of 12,000 Options on January 1, 1997, exercisable at $7.25
per share. In accordance with the Plan, Mr. Paul Piper, who
9
<PAGE>
became a director in November 1997, received a grant of 12,000 Options
exercisable at $7.00 per share, of which 2,000 Options are vested. Directors who
are employees of the Company or its subsidiaries do not receive any compensation
for their services as directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 15, 1998 certain information
relating to the beneficial ownership of the Company's Class A Common Stock by
any person (including any "group") known by the Company (i) to be the beneficial
owner of more than 5% of such securities, (ii) each director and nominee, (iii)
each Named Executive Officer in the Summary Compensation Table, and (iv) all
executive officers and directors as a group. In January of 1998, all holders of
the Company's Class B Common Stock agreed to convert those securities to Class A
Common Stock, thereby eliminating "super-voting rights" previously in existence.
The table below gives effect to the conversion.
<TABLE>
<CAPTION>
Amount and
Nature of Percentage of
Name and Address Beneficial Outstanding Securities
Title of Class Beneficial Owner Ownership(1) Owned(1)(2)
- ---------------------------- --------------------------------- ------------------- --------------------------
<S> <C> <C> <C>
Class A Common Stock William E. Berry 1,220,626(2)(3)(4) 27%
1601 Forum Place
West Palm Beach, FL 33041
Class A Common Stock John E. and Carol E. Steiner 1,220,626(2)(4) 27%
1116 Grand Cay Drive
Palm Beach Gardens, FL 33418
Class A Michael D. Matte 12,500(4) *
Common Stock 1601 Forum Place
and Vested Options West Palm Beach, FL 33041
Class A Common Stock Corine C. Goldkiller 29,044(5) *
and Vested Options 1601 Forum Place
West Palm Beach, FL 33041
Class A Common Stock and Paul Piper 2,500(6) *
Unvested Options 6 Snug Hill Court
Hockessin, DE 19707
Class A Common Stock and All Directors and Executive 2,485,296 54%
Vested Options Officers of the Company as a group
(five persons)(2)(3)(4)(5)(6)
</TABLE>
10
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- ------------------------------
* Less than 1%
(1) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all
securities beneficially owned by them. Except as otherwise indicated, each
beneficial owner's percentage ownership is determined by assuming that
Options, warrants and convertible securities that are held by such person
(but not those held by any other person) and which are exercisable or
convertible within 60 days have been exercised or converted.
(2) Includes 929,603 Escrowed Shares beneficially owned each by Messrs. Steiner
and Berry.
(3) Includes 2,000 shares of Class A Common Stock owned by Mr. Berry and
1,218,626 shares of Class A Common Stock held in the name of William E.
Berry, Declaration of Trust U/A which is controlled by William E. Berry,
Trustee.
(4) Includes shares of Class A Common Stock underlying 12,500 vested Options
exercisable at $6.50 per share granted to Mr. Michael Matte, the Company's
chief financial officer.
(5) Includes 12,378 shares of Class A Common Stock (of which 7,735 are Escrowed
Shares) and 16,666 shares of Class A Common Stock underlying vested Options
exercisable at $1.76 and $7.25 per share, respectively.
(6) Includes 2,000 shares of Class A Common Stock underlying vested Options,
which the Company granted to Mr. Piper exercisable at $7.00 per share.
CHANGES IN CONTROL
The Company entered into a Merger Agreement on April 26, 1998 with ARIS,
located in Bellevue, Washington. The Merger is subject to approval by the
Company's stockholders, effectiveness of a registration statement, which was
filed on Tuesday May 5, 1998 with the SEC and certain other conditions. Under
the terms of the Merger, ARIS will be the surviving corporation. None of the
Company's current directors and executive officers shall be directors or
executive officers of ARIS. ARIS shall exchange 0.266 shares of its common
stock for each share of the Company's Class A Common Stock (assuming conversion
of all Class B Common Stock) subject to adjustment as described in the
registration statement.
11
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information concerning the Company's employment agreements with its
officers, see Item 10. Executive Compensation - Employment and Consulting
Agreements.
In January 1998, the Company repriced all existing employee and management
Options which were "out-of-the money" to an exercise price of $5.75 per share.
Included in this repricing were 75,000 Options granted to each of Messrs.
William E. Berry and John E. Steiner in July 1997 (originally exercisable at
$6.50 per share) and 25,000 Options granted to Mr. Michael Matte when he joined
the Company in October 1996 (originally exercisable at $6.75 per share). Mr.
Matte's 100,000 Options (originally exercisable at $6.50 per share) were also
repriced in January 1998 to $4.52 per share pursuant to a provision in his
employment agreement as described above. In January 1998, the Company granted
new immediately exercisable Options to employees who held Options (exercisable
at $1.76 per share) that had been escrowed pursuant to the Escrow Agreement. A
condition of this grant, however, was the cancellation of the escrowed Options.
Ms. Goldkiller, one of these employees receiving new Options, received a new
grant of 7,735 Options exercisable at $5.75 per share and agreed to the
cancellation of her escrowed Options.
During 1997, the Company employed three of Mr. John E. Steiner's adult
children in various non-management positions. One of these individuals reported
to Mr. Steiner. The aggregate compensation paid to Mr. Steiner's children in
1997 was $89,257. Currently, the Company employs one of Mr. Steiner's adult
children.
In connection with Mr. Steiner's move to West Palm Beach, Florida caused by
the moving of the Company's administrative offices from South Carolina, the
Company agreed to reimburse him for housing, relocation expenses and other
expenses up to $65,000. To date, the Company has reimbursed Mr. Steiner $14,149
for such expenses. Additionally, in connection with Mr. Steiner's early
termination without cause in September 1997, the Company paid Mr. Steiner three
months' severance aggregating $54,951, including unused vacation time, health
and dental premiums following expiration of his employment agreement in February
1998. Such amounts were accrued at time of termination.
In June 1997, the Company engaged Mr. Sherman Drusin, then an outside
director to act as a management and sales consultant to its consulting services
business. In November 1997, Mr. Drusin resigned as a director and consultant.
During fiscal 1997, the Company paid Mr. Drusin $97,228 in connection with his
consulting services.
In connection with Mr. James Dean's termination in September 1997, the
Company paid him $44,587, equal to four months salary including health insurance
payments.
12
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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.0 By-laws of InTime Systems International, Inc., as amended*
3.1 Certificate of Incorporation*
3.2 Amendment No. 1 to Certificate of Incorporation*
4. Escrow Agreement*
10. Employment Agreement of William E. Berry
10.1 Employment Agreement of Michael Matte
10.2 1994 Stock Option Plan*
10.3 Amendment to 1994 Stock Option plan**
10.4 Second Amendment to 1994 Stock Option Plan****
10.5 Third Amendment to 1994 Stock Option Plan***
21. Subsidiaries of InTime Systems International, Inc.****
23. Consent of Price Waterhouse LLP*****
* Contained in Registration Statement on Form SB-2 filed on December 16,
1994.
** Contained in the Registration Statement on Form S-8 filed on December 29,
1995.
*** Contained in the Registration Statement on Form S-8 filed on April 18,
1997.
**** Contained in Amendment No. 2 to the Registration Statement on Form SB-2
filed on February 15, 1995.
***** Contained in Form 10-KSB filed on or about March 30, 1998.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the period covered by this report.
13
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTIME SYSTEMS INTERNATIONAL, INC.
-----------------------------------------
Registrant
By: /s/ William E. Berry
--------------------------------------
William E. Berry
President, (Chief Executive Officer)
14
<PAGE>
Exhibits
3.0 By-laws of InTime Systems International, Inc., as amended*
3.1 Certificate of Incorporation*
3.2 Amendment No. 1 to Certificate of Incorporation*
4. Escrow Agreement*
10. Employment Agreement of William E. Berry
10.1 Employment Agreement of Michael Matte
10.2 1994 Stock Option Plan*
10.3 Amendment to 1994 Stock Option plan**
10.4 Second Amendment to 1994 Stock Option Plan****
10.5 Third Amendment to 1994 Stock Option Plan***
21. Subsidiaries of InTime Systems International, Inc.****
23. Consent of Price Waterhouse LLP*****
* Contained in Registration Statement on Form SB-2 filed on December 16,
1994.
** Contained in the Registration Statement on Form S-8 filed on December 29,
1995.
*** Contained in the Registration Statement on Form S-8 filed on April 18,
1997.
**** Contained in Amendment No. 2 to the Registration Statement on Form SB-2
filed on February 15, 1995.
***** Contained in Form 10-KSB filed on or about March 30, 1998.
<PAGE>
EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of this 23 day of June 1994,
between InTime Systems International, Inc. (the "Company"), and William E.
Berry (the "Executive").
WHEREAS, the Company desires to employ Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth in this Agreement, and intending to be legally bound, the Company and
the Executive agree as follows:
1. Term of Employment.
(a) Term. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for a period commencing on the
effective date of the Company's initial public offering and ending three
years thereafter.
(b) Continuing Effect. Notwithstanding any termination of this
Agreement except for termination under Section 5(c), at the end of the Term
or otherwise, the provisions of Sections 6 and 7 shall remain in full force
and effect and the provisions of Section 7 shall be binding upon the legal
representatives, successors and assigns of the
<PAGE>
Executive.
2. Duties.
(a) General Duties. The Executive shall serve as president and chief
executive officer of the Company, with duties and responsibilities that are
customary for such executives. The Executive will also perform services
for such subsidiaries as may be necessary. The Executive will use his best
efforts to perform his duties and discharge his responsibilities pursuant
to this Agreement competently, carefully and faithfully. In determining
whether or not the Executive has used his best efforts hereunder, the
Executive's and the Company's delegation of authority and all surrounding
circumstances shall be taken into account and the best efforts of the
Executive shall not be judged solely on the Company's earnings or other
results of the Executive's performance.
(b) Devotion of Time. Subject to the last sentence of this Section
2(b), the Executive shall devote all of his time, attention and energies
during normal business hours (exclusive of periods of sickness and
disability and of such normal holiday and vacation periods as have been
established by the Company) to the affairs of the Company. The Executive
shall not enter the employ of or serve as a consultant to, or in any way
perform any services with or without compensation to, any other persons,
business or organization without the
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prior consent of the board of directors of the Company; provided, that the
Executive shall be permitted to devote a limited amount of his time,
without compensation, to professional, charitable or similar organizations.
3. Compensation and Expenses.
(a) Salary. For the services of the Executive to be rendered under
this Agreement, the Company shall pay the Executive an annual salary of
$188,000 subject to increase for cost of living increases based upon the
Consumer Price Index calculated upon the commencement of each year of the
agreement using the prior month as the measuring month published by the
Bureau of Labor Statistics (or similar successor index). Such increase
shall operate as follows:
Commencing with the one year anniversary of this Agreement and the
beginning of each year thereafter during the term of this Agreement, the
Executive's annual salary shall be adjusted in accordance with the Consumer
Price Index, all Urban Consumers issued by the Bureau of Labor Statistics
of the U.S. Department of Labor using the years 1982-84 as a base of 100
(the "Index"). At the commencement of the second year, and of each year
thereafter, the Executive's salary shall be multiplied each year by a
fraction, the numerator of which shall be the published Index number for
the month preceeding the commencement of the new year, i.e. May, and the
denominator of which shall be the
3
<PAGE>
published Index number for the month of May 1994 which is 147.5. The
resulting increase to the Executive's annual salary, if any, shall be added
to the prior year's annual salary and become a part thereof for the
succeeding year. In the event that the Index herein referred to ceases to
be published during the term of this Agreement, or if a substantial change
is made in the method of establishing such Index, then the determination of
the adjustment in the Executive's compensation shall be made with the use
of such conversion factor, formula or table as may be published by the
Bureau of Labor Statistics, or if none is available, the parties shall
accept comparable statistics on the cost of living in the United States as
shall then be computed and published by an agency of the United States, or
if not by a respected financial periodical selected by the Executive.
(b) Expenses. In addition to any compensation received pursuant to
Section 3(a) and (c), the Company will reimburse or advance funds to the
Executive for all reasonable travel, entertainment and miscellaneous
expenses incurred in connection with the performance of his duties under
this Agreement, provided that the Executive properly accounts for such
expenses to the Company in accordance with the Company's practices. Such
reimbursement or advances will be made in accordance with policies and
procedures of the Company in effect from time to time relating to
reimbursement of or advances to executive officers.
4
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(c) Management Bonus. During the term of this Agreement, as further
consideration for the services to be rendered pursuant to this Agreement,
the Company shall grant to Executive a management bonus based on the
Company's annual net income. In 1994, the Executive will receive a bonus
equal to 3.5% of net income if the Company's net income is a minimum of 80%
of the Company's 1994 projected net income of $863,000. If actual net
income in 1994 is less than 80% of projected net income, Executive will
receive a bonus equal to 2.5% of the actual net income. During 1995 and
1996, Executive will receive a bonus equal to 2.5% of net income. Such
bonus shall be payable within 10 days after the earlier of (i) the
Company's receipt of an opinion for its audited financial statements for
the prior fiscal year; or (ii) the date the Company files its Form 10-KSB
(or Form 10-K) with the Securities and Exchange Commission for the prior
fiscal year.
4. Benefits.
(a) Vacation. For each 12-month period during the Term, the
Executive will be entitled to six weeks of vacation without loss of
compensation or other benefits to which he is entitled under this
Agreement, to be taken at such times as the Executive may select and the
affairs of the Company may permit. Any unused vacation will be paid for by
the Company in addition to regular salary at the annual rate in effect
during 12 month period.
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(b) Employee Benefit Programs. The Executive is entitled to
participate in any pension, 401(k), insurance or other employee benefit
plan that is maintained by the Company for its executive officers,
including programs of life and medical insurance and reimbursement of
membership fees in civic, social and professional organizations.
(c) Insurance. The Company shall provide to Executive a $500,000 key
man life insurance policy issued by Jackson National Life Insurance
Company. The Company shall pay the premiums on the policy and cause The
Consulting Team, Inc. to assign the benefits of the policy to those
person(s) or entity(ies) Executive directs as beneficiary(ies). Also, the
Company shall provide to Executive and pay premiums on the Company's
medical insurance policy covering Executive and Executive's dependents.
(d) Car Allowance. The Executive is entitled to the sum of $1,000
per month for a car allowance.
5. Termination.
(a) Termination for Cause. The Company may terminate the Executive's
employment pursuant to the terms of this Agreement at any time for cause by
giving written notice of termination. Such termination will become
effective upon the giving of such notice. Upon any such termination for
cause, the Executive shall have no right to compensation, bonus or
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<PAGE>
reimbursement under Section 3, or to participate in any employee benefit
programs under Section 4, except as provided by law, for any period
subsequent to the effective date of termination. For purposes of this
Section 5(a), "cause" shall mean: (i) the Executive is convicted of a
felony which is related to the Executive's employment or the business of
the Company; (ii) the Executive, in carrying out his duties hereunder, has
been found in a civil action to have committed gross negligence or
intentional misconduct resulting in either case in material harm to the
Company; or (iii) the Executive materially breaches any provision of
Section 6 or Section 7.
(b) Death or Disability. Except as otherwise provided in this
Agreement, it shall terminate upon the death, or disability of the
Executive. For purposes of this Section 5(b), "disability" shall mean that
for a period of four consecutive months in any 12-month period the
Executive is incapable of substantially fulfilling the duties set forth in
Section 2 because of physical, mental or emotional incapacity resulting
from injury, sickness or disease. In the event of Executive's disability,
the Executive will be paid compensation, benefits and bonus which may
accrue for a total of 18 months, or for the remainder of this Agreement,
whichever time is greater, for the time off for sickness, illness, or
disability. In the event of death of the Executive, the Executive's
spouse, if living, will receive the Executive's compensation and benefits
for the remainder
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<PAGE>
of this Agreement.
(c) Special Termination. In the event that (i) the Executive, with
or without change in title or formal corporate action, shall no longer
exercise all of the duties and responsibilities and shall no longer possess
substantially all the authority set forth in Section 2; or (ii) the Company
materially breaches this Agreement or the performance of its duties and
obligations hereunder; or (iii) any entity or person not now an executive
officer of the Company becomes either individually or as part of a group
the beneficial owner of 40% or more of the Company's common stock, in any
such event the Executive, by written notice to the Company, may elect to
deem the Executive's employment hereunder to have been terminated by the
Company without cause, in which event the Executive shall be entitled to
the compensation, reimbursement and benefits payable pursuant to Sections 3
and 4 herein for the remaining term of this Agreement and all Executive's
remaining unvested options shall vest immediately upon such termination. In
such event, the Executive, by written notice to the Company, may elect to
refuse all further obligations of the Company under Sections 3 and 4 and to
release the Company with respect thereto, in which event the Company shall
release the Executive from the provisions of Section 6.
6. Non-competition Agreement.
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(a) Competition with the Company. Until termination of his
employment and for a period of 12 months commencing on the date of
termination, the Executive, directly or indirectly, in association with or
as a stockholder, director, officer, consultant, employee, partner, joint
venturer, member or otherwise of or through any person, firm, corporation,
partnership, association or other entity, will not compete with the Company
or any of its affiliates in the offer, sale or marketing of products or
services that are competitive with the products or services offered by the
Company, within any metropolitan area in the United States or elsewhere in
which the Company is then engaged in the offer and sale of competitive
products or services; provided, however, the foregoing shall not prevent
Executive from accepting employment with an enterprise engaged in two or
more lines of business, one of which is the same or similar to the
Company's business (the "Prohibited Business") if Executive's employment is
totally unrelated to the Prohibited Business; provided, further, the
foregoing shall not prohibit Executive from owning up to 5% of the
securities of any publicly-traded enterprise provided Executive is not an
employee, director, officer, consultant to such enterprise or otherwise
reimbursed for services rendered to such enterprise.
(b) Solicitation of Customers. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly or
indirectly, will not seek Prohibited
9
<PAGE>
Business from any Customer (as defined below) on behalf of any enterprise
or business other than the Company, refer Prohibited Business from any
Customer to any enterprise or business other than the Company or receive
commissions based on sales or otherwise relating to the Prohibited Business
from any Customer, or any enterprise or business other than the Company.
For purposes of this Section 6(b), the term "Customer" means any person,
firm, corporation, partnership, association or other entity to which the
Company or any of its affiliates sold or provided goods or services during
the 24-month period prior to the time at which any determination is
required to be made as to whether any such person, firm, corporation,
partnership, association or other entity is a Customer.
(c) No Payment. The Executive acknowledges and agrees that no
separate or additional payment will be required to be made to him in
consideration of his undertakings in this Section 6.
7. Nondisclosure of Confidential Information. The Executive acknowledges
that during his employment he will learn and will have access to confidential
information regarding the Company and its affiliates, including without
limitation (i) confidential or secret plans, programs, documents, agreements or
other material relating to the business, services or activities of the Company
and its affiliates and (ii) trade secrets, market reports, customer
investigations, customer lists and other similar
10
<PAGE>
information that is proprietary information of the Company or its affiliates
(collectively referred to as "Confidential Information"). The Executive
acknowledges that such Confidential Information as is acquired and used by the
Company or its affiliates is a special, valuable and unique asset. All records,
files, materials and Confidential Information obtained by the Executive in the
course of his employment with the Company are confidential and proprietary and
shall remain the exclusive property of the Company or its affiliates, as the
case may be. The Executive will not, except in connection with and as required
by his performance of his duties under this Agreement, for any reason use for
his own benefit or the benefit of any person or entity with which he may be
associated or disclose any such Confidential Information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
without the prior written consent of the board of directors of the Company,
unless such Confidential Information previously shall have become public
knowledge through no action by or omission of the Executive.
8. Equitable Relief.
(a) The Company and the Executive recognize that the services to be
rendered under this Agreement by the Executive are special, unique and of
extraordinary character, and that in the event of the breach by the
Executive of the terms and conditions of this Agreement or if the
Executive, without the prior consent of the board of directors of the
Company, shall
11
<PAGE>
leave his employment for any reason and take any action in violation of
Section 6 or Section 7, the Company will be entitled to institute and
prosecute proceedings in any court of competent jurisdiction referred to in
Section 8(b) below, to enjoin the Executive from breaching the provisions
of Section 6 or Section 7. In such action, the Company will not be required
to plead or prove irreparable harm or lack of an adequate remedy at law.
Nothing contained in this Section 8 shall be construed to prevent the
Company from seeking such other remedy in arbitration in case of any breach
of this Agreement by the Executive, as the Company may elect.
(b) Any proceeding or action must be commenced in Palm Beach County,
Florida where the Company maintains its principal offices. The Executive
and the Company irrevocably and unconditionally submit to the exclusive
jurisdiction of such courts and agree to take any and all future action
necessary to submit to the jurisdiction of such courts. The Executive and
the Company irrevocably waive any objection that they now have or hereafter
irrevocably waive any objection that they now have or hereafter may have to
the laying of venue of any suit, action or proceeding brought in any such
court and further irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum. Final judgment against the Executive or the Company in any such
suit shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment, a certified or true copy of which shall
12
<PAGE>
be conclusive evidence of the fact and the amount of any liability of the
Executive or the Company therein described, or by appropriate proceedings
under any applicable treaty or otherwise.
9. Assignability. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the securities or assets and business of the Company.
The Executive's obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
10. Severability.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are
reasonable in light of the circumstances as they exist on the date hereof.
Should a decision, however, be made at a later date by a court of competent
jurisdiction that the character, duration or geographical scope of such
provisions is unreasonable, then it is the intention and the agreement of
the Executive and the Company that this Agreement shall be construed by the
court in such a manner as to impose only those restrictions on the
Executive's conduct that are reasonable in the light of the circumstances
and as are necessary to assure to the Company the benefits of this
Agreement. If, in any judicial
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<PAGE>
proceeding, a court shall refuse to enforce all of the separate covenants
deemed included herein because taken together they are more extensive than
necessary to assure to the Company the intended benefits of this Agreement,
it is expressly understood and agreed by the parties hereto that the
provisions of this Agreement that, if eliminated, would permit the
remaining separate provisions to be enforced in such proceeding shall be
deemed eliminated, for the purposes of such proceeding, from this
Agreement.
(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be
considered divisible as to such provision and such provision shall be
inoperative in such state or jurisdiction and shall not be part of the
consideration moving from either of the parties to the other. The
remaining provisions of this Agreement shall be valid and binding and of
like effect as though such provision were not included.
11. Notices and Addresses. All notices, offers, acceptance and any other
acts under this Agreement (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressees in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:
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To the Company: InTime Systems International, Inc.
1655 Palm Beach Lakes Blvd
Suite 200
West Palm Beach, FL 33401
With a Copy to: Michael D. Harris, Esq.
Cohen, Chernay, Norris, Morici,
Weinberger & Harris
712 U.S. Highway One, 4th Floor
North Palm Beach, FL 33408
To the Executive: Mr. William E. Berry
InTime Systems International, Inc.
1655 Palm Beach Lakes Blvd, Suite 200
West Palm Beach, Florida 33401
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
13. Arbitration. Any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application, implementation,
breach or enforcement which the parties are unable to resolve by mutual
agreement, shall be
15
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settled by submission by either party of the controversy, claim or dispute to
binding arbitration in West Palm Beach, Florida (unless the parties agree in
writing to a different location), before a single arbitrator in accordance with
the rules of the American Arbitration Association then in effect. In any such
arbitration proceeding the parties agree to provide all discovery deemed
necessary by the arbitrator. The decision and award made by the arbitrator shall
be final, binding and conclusive on all parties hereto for all purposes, and
judgment may be entered thereon in any court having jurisdiction thereof.
14. Attorney's Fees. In the event that there is any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof, and any action or proceeding is commenced to enforce the
provisions of this Agreement, the prevailing party shall be entitled to a
reasonable attorney's fee, costs and expenses.
15. Governing Law. This Agreement and any dispute, disagreement, or issue
of construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed or interpreted according to the internal laws of the State of
Delaware without regard to choice of law considerations.
16. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to
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<PAGE>
the subject matter hereof. Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, except by a statement in
writing signed by the party or parties against which enforcement or the change,
waiver discharge or termination is sought.
17. Additional Documents. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
18. Section and Paragraph Headings. The section and paragraph headings in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
19. Prior Agreement. The prior Employment Agreement between the Company
and the Executive dated June 23, 1994 is null and void.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
INTIME SYSTEMS INTERNATIONAL, INC.
_________________________
_________________________ By:____________________________
John E. Steiner, Executive
Vice President
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_________________________
_________________________ By:____________________________
William E. Berry
18
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this __ day
of May 1997, between InTime Systems International, Inc. (the "Company"), and
Michael Matte (the "Executive"). All references to the Company shall also
include The Consulting Team, Inc., a wholly-owned subsidiary of the Company.
WHEREAS, the Company desires to employ the Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth in this Agreement, and intending to be legally bound, the Company and
the Executive agree as follows:
1. Term of Employment.
(a) Term. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for a period commencing on the
date of this Agreement and ending three years hereafter (the "Term"). This
Agreement supersedes any other agreement between the Company or its
subsidiaries including The Consulting Team, Inc. and the Executive.
(b) Continuing Effect. Notwithstanding any termination of this
Agreement at the end of the Term or otherwise, the provisions of Sections 6
and 7 shall remain in full force and effect and the provisions of Section 7
shall be binding upon the legal representatives, successors and assigns of
the Executive.
2. Duties.
(a) General Duties. The Executive shall serve as the Company's Chief
Financial Officer in charge of all financial and accounting operations of
the Company including but not limiting to those duties customarily held by
chief financial and accounting officers of public companies and supervision
of the Company's employees working in the finance and accounting areas. In
addition to all of the foregoing, the Executive shall be a signatory on all
of the Company's banking accounts. The Executive shall report directly to
the Company's Chief Executive Officer. The Executive shall also perform
such services for such subsidiaries as may be necessary. The Executive
shall use his best efforts to
<PAGE>
perform his duties and discharge his responsibilities pursuant to this
Agreement competently, carefully and faithfully.
(b) Devotion of Time. The Executive shall devote all of his time,
attention and energies during normal business hours (exclusive of periods
of sickness and disability and of such normal holiday and vacation periods
as have been established by the Company) to the affairs of the Company.
The Executive shall not enter the employ of or serve as a consultant to, or
in any way perform any services with or without compensation to, any other
persons, business or organization without the prior consent of the Board of
Directors (the "Board") of the Company; provided, that the Executive shall
be permitted to devote a limited amount of his time, without compensation,
to professional charitable or similar organizations.
(c) Location of Office. Except for customary business travel, the
Executive's principal office shall be in the West Palm Beach, Florida area.
3. Compensation and Expenses.
(a) Salary. For the services of the Executive to be rendered under
this Agreement, the Company shall pay the Executive an annual salary of
$130,000 during the Term which shall be subject to increase at the
discretion of the Board based on performance. The Company shall pay the
Executive his annual compensation in equal installments no less frequently
than monthly in accordance with the normal payroll practices of the
Company. Commencing with the one year anniversary of this Agreement and
beginning on each year thereafter during the Term of this Agreement, the
Executive's annual salary shall be adjusted in accordance with the Consumer
Price Index, all Urban Consumers, issued by the Bureau of Labor Statistics
of the U.S. Department of Labor using the year 1982-84 as a base of 100
(the "Index"). At the commencement of the second year, and of each year
thereafter, the Executive's salary shall be multiplied each year by a
fraction, the numerator of which shall be the published Index number for
the month preceding the commencement of the new year, i.e., April, and the
denominator of which shall be the published Index number for the month of
April 1997. The resulting increase to the Executive's annual salary, if
any, shall be added to the prior year's annual salary and become a part
thereof for the succeeding year. In the event that the Index herein
referred to ceases to be published during the term of this Agreement, or if
a substantial change is made in the method of establishing such Index, then
the determination of the
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<PAGE>
adjustment in the Executive's compensation shall be made with the use of
such conversion factor, formula or table as may be published by the Bureau
of Labor Statistics, or if none is available, the parties shall accept
comparable statistics on the cost of living in the United States as shall
then be computed and published by an agency of the United States, or if not
by a respected financial periodical selected by the Executive.
(b) Incentive Bonus. If the Company's net pretax income for fiscal
1997, 1998 or 1999 is between $500,000 and $1,000,000, the Company shall
pay a bonus to the Executive of 10% of such net pretax income. For any net
pretax income in excess of $1,000,000 but not more than $2,000,000, there
shall be no additional bonus paid to the Executive. For any net pretax
income in excess of $2,000,000, the Company shall pay an additional bonus
to the Executive of 10% of such additional net pretax income in excess of
$2,000,000, but in no event shall the total bonus paid to the Executive
exceed 100% of his base salary for such fiscal year. In determining the
Company's annual net pretax income, there shall be excluded therefrom (A)
the results of operations of any subsidiary or business acquired by the
Company during the Term, (B) any extraordinary income including income
caused by FASB 109, (C) any extraordinary expenses, and (D) any charges to
income resulting from the release of Escrow Shares and Escrow Property
pursuant to that certain Escrow Agreement dated February 16, 1995 by and
among American Stock Transfer and Trust Company, the Company and certain
stockholders and optionholders (the "Escrow Agreement"). The bonus shall
be paid within five days after the Company has received audited financial
statements for the appropriate year. Provided, however, if there is a Sale
of the Company, as defined, no bonus shall be paid following the Sale
unless (i) owed for a completed year, or (ii) pursuant to Section 3(e)
hereof.
(c) Expenses. In addition to any compensation received pursuant to
Section 3(a), the Company shall reimburse or advance funds to the Executive
for all reasonable travel, entertainment and miscellaneous expenses
incurred in connection with the performance of his duties under this
Agreement, provided that the Executive properly accounts for such expenses
to the Company in accordance with the Company's practices. Such
reimbursement or advances shall be made in accordance with policies and
procedures of the Company in effect from time to time relating to
reimbursement of or advances to executive officers.
(d) Stock Options. The stock options previously granted to the
Executive prior to the date of this Agreement shall not be affected by this
Agreement. The Company shall
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issue to the Executive 100,000 non-qualified 10-year options pursuant to
the Company's 1994 Stock Option Plan exercisable at $6.50 per share (the
"Exercise Price") as provided in such Plan. The options shall not be
exercisable until termination of the Escrow Agreement.
(i) Repricing. The Exercise Price of the 100,000 options shall
be adjusted by the Board of Directors (or Stock Option Committee) at
any time the average closing price of the Company's Class A Common
Stock for a period of five consecutive trading days is at least 25%
less than the then current Exercise Price.
(ii) Vesting. The 100,000 options shall vest as follows: 16,667
options on June 30, 1997, December 31, 1997, June 30, 1998 and
December 31, 1998, and 16,666 options on June 30, 1999 and December
31, 1999, subject to continued employment on each applicable vesting
date. However, except for a Sale of the Company, as defined, in the
event of (A) sale by both of the Company's principal stockholders of
all or substantially all (90%) of the Company's Class A Common Stock
owned by them excluding shares held in escrow pursuant to the Escrow
Agreement; or (B) sale not in the ordinary course of business of the
Company's software or consulting business, the 100,000 options shall
all vest upon consummation of such change in control or partial sale.
(iii) Forfeiture of Options. In the event of a Sale of the
Company, as defined herein, the 100,000 options shall terminate and be
forfeited.
As used in this Agreement, the term "Sale" means a transaction or
series of transactions in which all or substantially all of the assets of
the Company have been sold to a non-affiliated third party, a merger or
other form of reorganization in which control of the Company has been
acquired by a non-affiliated third party or a sale by both of the Company's
principal stockholders of all or substantially all (90%) of the Company's
Class A Common Stock owned by them excluding shares held in escrow pursuant
to the Escrow Agreement. In the event the Executive desires to exercise
his options, the Company shall, at its option, pay the Executive the
difference between the fair market value of its Class A Common Stock and
the exercise price of the options or assist the Executive in arranging for
a cashless exercise.
(e) Severance Benefits. The Company shall pay the Executive three
times his salary for the last fiscal year if the Executive's employment is
terminated (i) without cause
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<PAGE>
during the Term, or (ii) within a period ending three years following
expiration of the Term as long as the Executive continues to perform his
duties on behalf of the Company in consideration for payment to the
Executive of the same base salary and benefits that he will receive
pursuant to this Agreement without any incentive bonus (other than
participation, if any, in any management incentive compensation plan),
stock options or compensation upon Sale of the Company regardless of
whether such compensation is pursuant to an oral period-to-period
employment agreement or a written employment agreement.
(f) Compensation Upon Sale of Company. If during the Term of this
Agreement, there is a Sale of the Company, the Executive shall receive a
minimum of $900,000 payable either from a separate agreement with the
Company's principal stockholders, a form of which is annexed as Exhibit A
to this Agreement, or to the extent the compensation paid by the Company's
principal stockholders is less than $900,000, as an additional bonus from
the Company.
4. Benefits.
(a) Vacation. For each 12-month period during the Term, the
Executive shall be entitled to three weeks of vacation without loss of
compensation or other benefits to which he is entitled under this
Agreement, to be taken at such times as the Executive may select and the
affairs of the Company may permit.
(b) Employee Benefit Programs. The Executive is entitled to
participate in any pension, 401(k) insurance or other employee benefit plan
that is maintained by the Company for its executive officers, including
programs of life and medical insurance.
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5. Termination.
(a) Termination for Cause. The Company may terminate the Executive's
employment pursuant to the terms of this Agreement at any time for cause by
giving written notice of termination. Such termination shall become
effective upon the giving of such notice, except that termination based
upon clause (v) below shall not become effective unless the Executive shall
fail to correct such breach (as determined by the Company's Board) within
15 days of receipt of written notice thereof provided pursuant to the
preceding sentence. Upon any such termination for cause, the Executive
shall have no right to compensation, commission, bonus or reimbursement
under Section 3, or to participate in any employee benefit programs under
Section 4, except as provided by law, for any period subsequent to the
effective date of termination. For purposes of this Section 5(b), "cause"
shall mean: (i) the Executive is convicted of any felony, or is convicted
of a misdemeanor which is related to the Executive's employment or the
business of the Company; (ii) the Executive, in carrying out his duties
hereunder, has been found in a civil action to have committed any act,
including negligent conduct, resulting in harm to the Company; (iii) the
Executive misappropriates Company funds or otherwise defrauds the Company;
(iv) the Executive materially breaches any provision of Section 6 or
Section 7; (v) the Executive fails to perform his duties or performs such
duties in a manner not customary for an executive of similar status and
compensation; and (vi) the Executive suffers from alcoholism or drug
addiction or otherwise uses alcohol to excess or uses drugs in any form
except strictly in accordance with the recommendation of a physician or
dentist.
(b) Death or Disability. Except for the conditions and obligations
contained in this Section 5(b), this Agreement and the obligations of the
Company hereunder shall terminate upon the death or disability of the
Executive. For purposes of this Section 5(b), "disability" shall mean that
for a period of four consecutive months in any 12-month period the
Executive is incapable of substantially fulfilling the duties set forth in
Section 2 because of physical, mental or emotional incapacity resulting
from injury, sickness or disease. However, the use of alcohol or drugs as
referred to in Section 5(a)(vi) above shall not fall under the definition
of a "disability".
Upon termination by death or disability, the Company shall pay the
Executive or his legal representative, as the case may be, his unpaid
salary at such time pursuant to Section 3(a) through the date of such
termination of employment. Such sums shall be paid upon the same terms and
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conditions as if this Agreement were in full force and effect.
(c) Continuing Effect. Notwithstanding any termination of the
Executive's employment as provided in this Section 5 or otherwise, the
provisions of Sections 6 and 7 shall remain in full force and effect.
6. Non-Competition Agreement.
(a) Competition with the Company. For a period of 12 months
commencing on the date of termination of the Executive's employment with
the Company, the Executive shall not, directly or indirectly, compete with
the Company by acting as chief financial officer or similar management
position for a business which offers human resources or payroll consulting
services; provided, however, the foregoing shall not prevent Executive from
accepting employment with an enterprise engaged in two or more lines of
business, one of which is the same or similar to the Company's business
(the "Prohibited Business") if Executive's employment is totally unrelated
to the Prohibited Business; provided, further, the foregoing shall not
prohibit Executive from owning up to 5% of the securities of any publicly-
traded enterprise provided Executive is not an employee, director, officer,
consultant to such enterprise or otherwise reimbursed for services rendered
to such enterprise.
(b) Solicitation of Customers. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly or
indirectly, shall not seek Prohibited Business from any Customer (as
defined below) on behalf of any enterprise or business other than the
Company, refer Prohibited Business from any Customer to any enterprise or
business other than the Company or receive commissions based on sales or
otherwise relating to the Prohibited Business from any Customer, or any
enterprise or business other than the Company. For purposes of this
Section 6(b), the term "Customer" means any person, firm, corporation,
partnership, association or other entity to which the Company or any of its
subsidiaries sold or provided goods or services during the 24-month period
prior to the time at which any determination is required to be made as to
whether any such person, firm, corporation, partnership, association or
other entity is a Customer.
(c) No Payment. The Executive acknowledges and agrees that no
separate or additional payment shall be required to be made to his in
consideration of his undertakings in this Section 6.
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7. Non-Disclosure of Confidential Information. The Executive
acknowledges that during his employment he shall learn and shall have access to
confidential information regarding the Company and its affiliates, including
without limitation (i) confidential or secret plans, programs, documents,
agreements or other material relating to the business, services or activities of
the Company and its affiliates and (ii) trade secrets, market reports, customer
investigations, customer lists and other similar information that is proprietary
information of the Company or its affiliates (collectively referred to as
"Confidential Information"). The Executive acknowledges that such Confidential
Information as is acquired and used by the Company or its affiliates is a
special, valuable and unique asset. All records, files, materials and
Confidential Information obtained by the Executive in the course of his
employment with the Company are confidential and proprietary and shall remain
the exclusive property of the Company or its affiliates, as the case may be.
The Executive shall not, except in connection with and as required by his
performance of his duties under this Agreement, for any reason use for his own
benefit or the benefit of any person or entity with which he may be associated
or disclose any such Confidential Information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever without the
prior written consent of the board of directors of the Company, unless such
Confidential Information previously shall have become public knowledge through
no action by or omission of the Executive.
8. Equitable Relief.
(a) The Company and the Executive recognize that the services to be
rendered under this Agreement by the Executive are special, unique and of
extraordinary character, and that in the event of the breach by the
Executive of the terms and conditions of this Agreement or if the
Executive, without the prior consent of the board of directors of the
Company, shall leave his employment for any reason and take any action in
violation of Section 6 or Section 7, the Company shall be entitled to
institute and prosecute proceedings in any court of competent jurisdiction
referred to in Section 8(b) below, to enjoin the Executive from breaching
the provisions of Section 6 or Section 7. In such action, the Company
shall not be required to plead or prove irreparable harm or lack of an
adequate remedy at law. Nothing contained in this Section 8 shall be
construed to prevent the Company from seeking such other remedy in
arbitration in case of any breach of this Agreement by the Executive, as
the Company may elect.
(b) Any proceeding or action must be commenced in Florida where the
Company maintains its principal offices.
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The Executive and the Company irrevocably and unconditionally submit to the
jurisdiction of such courts and agree to take any and all future action
necessary to submit to the jurisdiction of such courts. The Executive and
the Company irrevocably waive any objection that they now have or hereafter
irrevocably waive any objection that they now have or hereafter may have to
the laying of venue of any suit, action or proceeding brought in any such
court and further irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum. Final judgment against the Executive or the Company in any such suit
shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and the amount of any liability of the Executive or
the Company therein described, or by appropriate proceedings under any
applicable treaty or otherwise.
9. Assignability. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the assets and business of the Company. The Executive's
obligations hereunder may not be assigned or alienated and any attempt to do so
by the Executive shall be void.
10. Severability.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are
reasonable in light of the circumstances as they exist on the date hereof.
Should a decision, however, be made at a later date by a court of competent
jurisdiction that the character, duration or geographical scope of such
provisions is unreasonable, then it is the intention and the agreement of
the Executive and the Company that this Agreement shall be construed by the
court in such a manner as to impose only those restrictions on the
Executive's conduct that are reasonable in the light of the circumstances
and as are necessary to assure to the Company the benefits of this
Agreement. If, in any judicial proceeding, a court shall refuse to enforce
all of the separate covenants deemed included herein because taken together
they are more extensive than necessary to assure to the Company the
intended benefits of this Agreement, it is expressly understood and agreed
by the parties hereto that the provisions of this Agreement that, if
eliminated, would permit the remaining separate provisions to be enforced
in such proceeding shall be deemed eliminated, for the purposes of such
proceeding, from this Agreement.
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(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be
considered divisible as to such provision and such provision shall be
inoperative in such state or jurisdiction and shall not be part of the
consideration moving from either of the parties to the other. The
remaining provisions of this Agreement shall be valid and binding and of
like effect as though such provision were not included.
11. Notices and Addresses. All notices, offers, acceptance and any other
acts under this Agreement (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressees in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:
To the Company: InTime Systems International, Inc.
1601 Forum Place, 5th Floor
West Palm Beach, FL 33401
With a Copy to: Michael D. Harris, Esq.
Cohen, Chernay, Norris,
Weinberger & Harris
712 U.S. Highway One, 4th Floor
North Palm Beach, FL 33408
To the Executive: Michael Matte
1601 Forum Place, 5th Floor
West Palm Beach, FL 33401
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
13. Arbitration. Except as provided in Section 8 hereof, any controversy,
dispute or claim arising out of or relating to this Agreement, or its
interpretation, application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled by
submission by
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either party of the controversy, claim or dispute to binding arbitration in West
Palm Beach, Florida (unless the parties agree in writing to a different
location), before a single arbitrator in accordance with the rules of the
American Arbitration Association then in effect. In any such arbitration
proceeding the parties agree to provide all discovery deemed necessary by the
arbitrator. The decision and award made by the arbitrator shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
14. Attorney's Fees. In the event that there is any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof, and any action or proceeding including an arbitration
proceeding is commenced to enforce the provisions of this Agreement, the
prevailing party shall be entitled to an award by the court or arbitrator, as
appropriate, of reasonable attorney's fees, costs and expenses.
15. Governing Law. This Agreement and any dispute, disagreement, or issue
of construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed or interpreted according to the internal laws of the State of
Delaware without regard to choice of law considerations.
16. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.
17. Additional Documents. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
18. Section and Paragraph Headings. Section headings herein have been
inserted for reference only and shall not be deemed to limit or otherwise
affect, in any matter, or be deemed to interpret in whole or in part any of the
terms or provisions of this Agreement.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
WITNESSES: INTIME SYSTEMS INTERNATIONAL, INC.
____________________________
____________________________ By: _______________________________
William E. Berry, President
____________________________ _______________________________
Michael Matte
____________________________
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