MB SOFTWARE, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement (hereinafter the "Agreement") is made and
entered into effective as of the 1st day of August, 1997, by and between MB
SOFTWARE, INC., a Delaware corporation (hereinafter the "Corporation") and John
E. Anderson (hereinafter "Optionee").
SUMMARY
Optionee: John E. Anderson
No. of Shares: 250,000
Vesting: In full on September 1, 1998
Exercise Price: $.19 per share
AGREEMENT
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and Optionee hereby agree as follows:
1. Grant of Option. The Optionee is hereby granted the right to purchase a
total of Two Hundred Fifty Thousand (250,000) shares (the "Option Stock") of the
common stock, no par value, of the Corporation ("Common Stock"). The Option is
NOT intended by the parties hereto to be, and shall NOT be treated as an
Incentive Stock Option, as such term is defined under Section 422 of the
Internal Revenue Code of 1986 (the "Code").
2. Option Price. The price to be paid by Optionee for each share of Option
Stock shall be Nineteen Cents ($.19) per share (hereinafter the "Exercise
Price").
3. Option Term - Term. The Option may be exercised, in whole or in part as
to all or any part of the Option Stock at any time and from time to time
beginning on September 1, 1998, but not later than 12:00 A.M., Salt Lake City,
Utah, time, on September 1, 2004, (the "Expiration Date"), provided, however,
that if the Expiration Date is a day on which banking institutions are
authorized by law to close, then on the next succeeding day which is not a day
on which banking institutions are authorized by law to close (hereinafter the
"Option Period").
4. Value Guarantee. In the event that the aggregate fair market value of
the Option Stock on September 1, 1998, is less than $250,000, the Corporation
shall, at its option, either grant an option to purchase the number of
additional shares of the Common Stock without increasing the aggregate
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Exercise Price for all shares of common stock for which this Option may be
exercised, in number which, with the Option Stock, shall have an aggregate fair
market value equal to $250,000 in the aggregate, or pay Optionee the difference
between $250,000 and the actual value of the Option Stock.
5. Method of Exercise. The Option will be exercisable by written notice
delivered to the Corporation by Optionee, dated and signed by Optionee, and
shall provide the following (hereinafter the "Option Notice"):
a. A statement that the Option is being exercised and the date (which
must be prospective) as of which Optionee intends exercise to be effective
(the "Exercise Date").
b. The number of shares of Option Stock for which the Option is being
exercised, and the name, address and social security number of the
Optionee.
c. Representations, warranties, and covenants with respect to the
Optionee's investment intent for the Option Stock which are acceptable to
the Corporation, in its reasonable discretion, which shall include the
following:
(1) The Optionee is the sole and true party in interest and is
not acquiring the shares of Option Stock for the benefit of any other
person.
(2) The Optionee is acquiring the shares of Option Stock for
investment purposes and not with a view to, or for resale in
connection with, any distribution or public offering thereof within
the meaning of the Securities Act of 1933, as amended.
(3) The Optionee has had access to all information and
documentation concerning the Corporation which the Optionee deems
necessary or desirable with respect to the Corporation and its
finances and operations, prior to entering into this Agreement, has
had an opportunity to ask questions of and receive answers from other
officers and the directors of the Corporation, and in all respects
deems himself satisfied as to the nature and extent of all such
information. The offer to acquire the shares of Option Stock was
directly communicated to the Optionee in such manner that the Optionee
was able to ask questions of and receive answers concerning the terms
and conditions of this transaction.
(4) The Optionee is capable of bearing the degree of economic
risk inherent in ownership of the shares of Option Stock.
6. Information. The Corporation shall provide to the Optionee such
information as Optionee may reasonably request to enable Optionee to give the
representations required in Section 5.c, above, sufficiently promptly to allow
Optionee to timely exercise the Option.
7. Payment Upon Exercise. Payment of the Exercise Price shall be in cash or
certified funds. If the Optionee fails to pay for any of the Option Stock
specified in such notice or fails to accept delivery thereof, the Optionee's
right to purchase such Option Stock may be terminated by the Corporation.
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The date specified in the Optionee's notice as the date of exercise shall be
deemed the date of exercise of the Option, provided that payment in full for the
Option Stock to be purchased upon such exercise shall have been received by such
date.
8. Record Ownership. Upon receipt by the Corporation of the Option Notice
in proper form for exercise, together with payment of the Exercise Price, at the
office or agency of the Corporation or the Exercise Date, if later, the Optionee
shall be deemed to be the holder of record of the shares of Option Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Corporation shall then be closed or that certificates representing such
shares of Option Stock shall not then be actually delivered to the Optionee.
Neither the Optionee nor any other person shall have any of the rights and
privileges of a stockholder of the Corporation with respect to any shares of
Common Stock purchasable or issuable upon the exercise of the Option, in whole
or in part, prior to the date of exercise of the Option.
9. Nontransferability of Option. During the Optionee's lifetime, the Option
hereunder shall be exercisable only by the Optionee or John E. Anderson, or any
guardian or legal representative of the Optionee or John E. Anderson, and the
Option shall not be transferable except, in case of the death of the Optionee,
by will or the laws of descent and distribution, nor shall the Option be subject
to attachment, execution or other similar process. In the event of (a) any
attempt by the Optionee to alienate, assign, pledge, hypothecate or otherwise
dispose of the Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or interest hereby
conferred, the Corporation may terminate the Option by notice to the Optionee
and it shall thereupon become null and void.
10. Employment Not Affected. Neither the issuance of the Option nor its
exercise shall be construed as granting to the Optionee or any affiliate of the
Optionee any right with respect to employment or continuance of employment with
the Corporation or any subsidiary of the Corporation. Except as may otherwise be
limited by a written agreement between the Corporation and the Optionee, the
right of the Corporation to terminate at will the Optionee's employment with it
at any time (whether by dismissal, discharge, retirement or otherwise) is
specifically reserved by the Corporation and its subsidiaries, if any, and
acknowledged by the Optionee.
11. Amendment of Option. The Option may be amended by the Corporation at
any time only with the written consent of the Optionee.
12. Adjustments to the Number of Shares of Option Stock and to the Price.
The number of shares of Option Stock for which this Option may be exercised and
the Exercise Price shall be subject to adjustment from time to time as set forth
in this Section 12.
a. Stock Dividends, Subdivisions and Combinations. If at any time the
Corporation shall:
(1) pay a dividend or other distribution on its Common Stock in
shares of Common Stock or shares of any other class or series of
capital stock,
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(2) subdivide its outstanding shares of Common Stock into a
larger number of shares of such Common Stock, or
(3) combine its outstanding shares of Common Stock into a smaller
number of shares of such Common Stock,
then the number of shares of Option Stock receivable upon exercise of this
Option to the extent permitted hereby immediately prior to the record date for
such dividend or distribution or the effective date of such subdivision or
combination shall be adjusted so that the holder of this Option shall thereafter
be entitled to receive upon conversion of this Option to the extent permitted
hereby the kind and number of shares of Common Stock that such holder would have
owned or have been entitled to receive immediately after such record date or
effective date had this Option been converted to the extent permitted hereby
immediately prior to such record date or effective date. An adjustment made
pursuant to this Section 12.a shall become effective immediately after the
effective date of such event, but shall be retroactive to the record date, if
any, for such event.
Upon any adjustment of the number of shares of Option Stock receivable
upon the exercise of this Option as herein provided, the Exercise Price per
share shall be adjusted by multiplying the Exercise Price immediately prior to
such adjustment by a fraction, the numerator of which shall be the number of
shares of Option Stock receivable upon the exercise of this Option immediately
prior to such adjustment and the denominator of which shall be the number of
shares of Option Stock so receivable immediately thereafter.
b. Rights; Options; Notes. If at any time the Corporation shall issue
(without payment of any consideration) to all holders of outstanding Common
Stock rights, options or warrants to subscribe for or purchase shares of
Common Stock or securities convertible into or exchangeable for Common
Stock, then the Corporation shall also distribute such rights, options,
warrants or securities to the holders of this Option as if this Option had
been converted to the extent permitted hereby immediately prior to the
record date for such distribution.
c. Distribution of Assets or Securities. If at any time the
Corporation shall make a distribution to all holders of shares of Common
Stock of any asset or security other than in connection with the
liquidation, dissolution or winding up of the Corporation, then and in each
such case, the Exercise Price shall be adjusted to equal the price
determined by multiplying the Exercise Price in effect immediately prior to
the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction (which
shall not be less than zero), the numerator of which shall be the fair
market value per share of the Common Stock on the date fixed for such
determination less the than fair market value of the portion of the assets
or securities so distributed applicable to one share of Common Stock, and
the denominator of which shall be such fair market value per share of the
Common Stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
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d. Issuance of Common Stock at Less Than Exercise Price. If at any
time the Corporation shall sell or issue shares of Common Stock, or rights,
options, warrants or convertible or exchangeable securities representing
the right to subscribe for or purchase shares of Common Stock (excluding
shares subsequently issued upon conversion, exercise or exchange of rights,
options, warrants or convertible or exchangeable securities for which an
adjustment was previously made pursuant to this Section 12), (ii) the
issuance of this Option or any securities issued upon exercise thereof for
a consideration per share (on a Common Stock equivalent basis) less than
the Exercise Price in effect immediately prior to the issuance of such
capital stock, the Exercise Price in effect immediately after each such
issuance shall forthwith be adjusted to a price equal to the Exercise Price
in effect immediately prior to such issuance multiplied by a fraction, the
numerator of which is an amount equal to the sum of the total number of
shares of capital stock outstanding (on a Common Stock equivalent basis)
immediately prior to such issuance plus the number of shares of capital
stock (on a Common Stock equivalent basis) which the aggregate
consideration received by the Corporation upon such issuance would purchase
at a price equal to the Exercise Price in effect immediately prior to such
issuance per share, and the denominator of which shall be the total number
of shares of capital stock outstanding (on a Common Stock equivalent basis)
immediately after the issuance of such capital stock.
For the purposes of any adjustment of the Exercise Price pursuant to this
Section 12, the following provisions shall be applicable in the case of the
issuance of (A) options to purchase or rights to subscribe for capital stock,
(B) securities by their terms convertible into or exchangeable for capital
stock, or (C) options to purchase or rights to subscribe for such convertible or
exchangeable securities:
(1) the aggregate maximum number of shares of capital stock
deliverable upon exercise of such options to purchase or rights to
subscribe for capital stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal
to the consideration, if any, received by the Corporation upon the
issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the capital stock covered
thereby;
(2) the aggregate maximum number of shares of capital stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities, or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable
securities, and subsequent conversion or exchange thereof, shall be
deemed to have been issued at the time such securities were issued or
such options or rights were issued and for a consideration equal to
the consideration received by the Corporation for any such securities
and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any
related options or rights; and
(3) on any change in the number of shares of capital stock
deliverable upon exercise of any such options or rights or conversion
of or exchange for such convertible or exchangeable securities, or on
any change in the minimum purchase price of such options, rights or
securities, other than a change resulting from the antidilution
provisions of such options, rights or securities, the Exercise Price
shall forthwith be readjusted to such Exercise Price as would have
been obtained had the adjustment made upon (x) the issuance of such
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options, rights or securities not exercised, converted or exchanged prior
to such change, as the case may be, been made upon the basis of such change
or (y) the options or rights related to such securities not converted or
exchanged prior to such change, as the case may be, been made upon the
basis of such change.
If at any time the Corporation shall sell and issue shares of Common Stock
or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then in determining the "price per share of Common Stock" and
the "consideration received by the Corporation" for purposes of the preceding
paragraphs of this Section 12, the Board of Directors of the Corporation shall
determine, in good faith, the fair market value of said property, which
determination shall be subject to the Optionee's right to dispute such
determination under Section 12.f. There shall be no adjustment of the Exercise
Price in respect of the Common Stock pursuant to this Section 12.d. if the
amount of such adjustment shall be less than $0.001 per share of Common Stock;
provided, however, that any adjustments which by reason of this provision are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment.
e. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. If at any time the Corporation shall reorganize its
capital, reclassify its capital stock, consolidate, merge or combine with
or into another Person (where the Corporation is not the surviving
corporation or where there is any change whatsoever in, or distribution
with respect to, the outstanding Common Stock of the Corporation), or the
Corporation shall sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business to another Person,
and pursuant to the terms of such reorganization, reclassification,
consolidation, merger, combination, sale, transfer or other disposition of
assets, (i) shares of common stock of the successor or acquiring Person or
of the Corporation (if it is the surviving corporation) or (ii) any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition
to or in lieu of common stock of the successor or acquiring Person or the
Corporation ("Other Property") are to be received by or distributed to the
holders of Common Stock of the Corporation who are holders immediately
prior to such transaction, then the holder of this Option shall have the
right thereafter to receive, upon conversion of this Option to the extent
permitted hereby, the number of shares of Common Stock, common stock of the
successor or acquiring Person, and/or Other Property which holder of the
number of shares of Common Stock for which this Option is convertible
immediately prior to such event would have owned or received immediately
after and as a result of such event. In such event, the Exercise Price of
this Option shall be allocated among such securities and Other Property in
proportion to the respective fair market values of such securities and
Other Property as determined in good faith by the Board of Directors of the
Corporation.
In case of any such event, the successor or acquiring Person (if other than
the Corporation) shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Option to be
performed and observed by the Corporation and all the obligations and
liabilities hereunder, subject to such modifications as the Optionee may approve
(and as determined by resolution of the Board of Directors of the Corporation)
in order to provide for adjustments of any shares of the securities of such
successor or acquiring Person for which this Option thus becomes convertible,
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which modifications shall be as equivalent as practicable to the adjustments
provided for in this Section 12. For purposes of this Section 12.e, "common
stock of the successor or acquiring Person" shall include stock of such
corporation, or other securities if such Person is not a corporation, of any
class that is not preferred as to dividends or assets over any other class of
stock of such corporation or Person and that is not subject to redemption and
shall also include any evidences of indebtedness, shares of stock or other
securities that are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Section 12. shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers and other dispositions of assets.
f. Dissolution, Total Liquidation or Winding-Up. If at any time there
shall be a voluntary or involuntary dissolution, total liquidation or
winding-up of the Corporation, other than as contemplated by Section 12.e,
then the Corporation shall cause to be mailed (by registered or certified
mail, return receipt requested, postage prepaid) to the Optionee, at the
earliest practicable time (and, in any event, not less than 30 calendar
days before any date set for definitive action) notice of the date on which
such dissolution, liquidation or winding-up shall take place, as the case
may be. Such notice shall also specify the date as of which the holders of
the shares of record of Common Stock shall be entitled to exchange their
shares for securities, money or other property deliverable upon such
dissolution, liquidation or winding-up, as the case may be. On such date,
but only if the Optionee elects to exercise this Option (and in no event is
the Optionee obligated to exercise this Option), the Optionee shall be
entitled to receive upon exercise of this Option the cash or other
property, that the Optionee would have been entitled to receive had this
Option been exercised immediately prior to such dissolution, liquidation or
winding-up.
g. Other Dilutive Events. In case any event shall occur as to which
the other provisions of this Section 12 are not strictly applicable but as
to which the failure to make any adjustment would not protect the rights
represented by this Option in accordance with the intent and principles
hereof then, in each such case, the Optionee may appoint an independent
investment bank or firm of independent public accountants which shall give
its opinion as to the adjustment, if any, on a basis consistent with the
intent and principles established herein, necessary to preserve the rights
represented by this Option (or such Options). Upon receipt of such opinion,
the Corporation will mail (by registered or certified mail, return receipt
requested, postage prepaid) a copy thereof to the Optionee of this Option
within three business days and shall make the adjustments described
therein. The fees and expenses of such investment bank or independent
public accountants shall be borne by the Corporation.
h. Other Provisions Applicable to Adjustments Under this Section. The
following provisions shall be applicable to the adjustments provided for
pursuant to this Section 12:
(1) When Adjustments To Be Made. The adjustments required by this
Section 12 shall be made whenever and as often as any specified event
requiring such an adjustment shall occur. For the purpose of any such
adjustment, any specified event shall be deemed to have occurred at
the close of business on the date of its occurrence.
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(2) Record Date. In case the Corporation shall fix a record date
of the holders of Common Stock for the purpose of entitling them (i)
to receive a dividend or other distribution payable in shares of
Common Stock or in shares of any other class or series of capital
stock or securities convertible into or exchangeable for Common Stock
or shares of any other class or series of capital stock or (ii) to
subscribe for or purchase shares of Common Stock or such other shares
or securities, then all references in this Section 12 to the date of
the issuance or sale of such shares of Common Stock or such other
shares or securities shall be deemed to be references to such record
date.
(3) When Adjustment Not Required. If the Corporation shall fix a
record date of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or distribution or subscription
or purchase rights to which the provisions of this Section 12 would
apply, but shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(4) Certain Limitations. Notwithstanding anything herein to the
contrary, the Corporation agrees not to enter into any transaction
that, by reason of any adjustment under Section 12, would cause the
Exercise Price to be less than the par value of the Common Stock,
unless the Corporation first reduces the par value of the Common Stock
to be less than the Exercise Price that would result from such
transaction.
(5) Notice of Adjustments. Whenever the number of shares of
Common Stock into which this Option is convertible or the Exercise
Price shall be adjusted pursuant to this Section 12, the Corporation
shall forthwith prepare a certificate to be executed by the chief
financial officer of the Corporation setting forth, in reasonable
detail, the event requiring the adjustment and the method by which
such adjustment or adjustments were calculated, specifying the number
of shares of Common Stock into which this Option is convertible and
(if such adjustment or adjustments were made pursuant to Section 12.e)
describing the number and kind of any other shares of stock or Other
Property into which this Option is convertible, and any related change
in the Exercise Price, after giving effect to such adjustment or
change. The Corporation shall mail (by registered or certified mail,
return receipt requested, postage prepaid) a signed copy of such
certificate to the Holder within three business days of the event
which caused such adjustment. The Corporation shall keep at the
Designated Office copies of all such certificates and cause the same
to be available for inspection at said office during normal business
hours by the Holder or any prospective transferee of this Option
designated by the Optionee.
(6) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Corporation shall be required to make a determination
of the fair market value of any item under this Option, such
determination may be challenged by the Holder (or if the Option
initially issued under the Securities Purchase Agreement has been
divided up, the Holders of Options convertible for more than fifty
percent of the aggregate number of shares of Option Stock then
issuable upon conversion of all of the then convertible Options) and
any dispute shall be resolved promptly, but
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in no event in more than 30 calendar days, by an investment banking firm of
recognized national standing or one of the six largest national accounting firms
agreed upon by the Corporation and the Holders, and whose decision shall be
binding on the Corporation and the Holders. If the Corporation and such Holders
cannot agree on a mutually acceptable investment bank or accounting firm, then
such Holders, jointly, and the Corporation shall within five business days each
choose one such investment bank or accounting firm and the respective chosen
firms shall within five business days jointly select a third investment bank or
accounting firm, which shall make the determination promptly, but in no event in
more than 30 days. The Corporation shall pay all expenses of such investment
bank(s) or accounting firm(s), except that if the fair market value as
determined by such investment bank or accounting firm is not either greater than
or less than 5% of the fair market value as determined by the Board of
Directors, then the Holders shall pay such expenses.
(7) Independent Application. Except as otherwise provided herein,
all subsections of this Section 12 are intended to operate
independently of one another (but without duplication). If an event
occurs that requires the application of more than one subsection, all
applicable subsections shall be given independent effect without
duplication.
13. Transfer Restrictions and Legends. The option granted to Optionee
hereunder and the Option Stock subject hereto shall not be transferable except
upon the conditions specified in this Section 13, which conditions are intended
to insure compliance with the provisions of the Securities Act of 1933 and
applicable state securities laws in respect of the transfer of any shares of the
Option Stock. In particular, no transfer of the Option or the Option Stock will
be permitted unless a Registration Statement under the Securities Act of 1933 is
in effect as to such transfer, and the Option or the Option Stock has been duly
qualified for sale under applicable state securities laws, or in the opinion of
counsel to the Corporation such registration and qualification is unnecessary in
order for such transfer to comply with the Securities Act of 1933 and applicable
state securities laws. Unless a Registration Statement is in effect as to the
Option Stock, stock certificates evidencing the Option Stock shall bear such
restrictive legends as the Corporation and the Corporation's counsel deem
necessary or advisable under applicable law, including without limitation,
legends substantially in the following form:
The sale, transfer or encumbrance of this certificate and the shares
represented by this certificate is subject to an agreement dated August 1,
1997, among the Corporation and John E. Anderson. A copy of the agreement
is on file in the office of the Secretary of the Corporation. The agreement
provides, among other things, for the right of the Corporation to purchase
the shares of stock evidenced by this certificate from the holder of this
certificate for a designated purchase price. By accepting the shares of
stock evidenced by this certificate the holder agrees to be bound by said
agreement.
No sale, pledge, gift, hypothecation or other transfer of this certificate
or the securities represented hereby, or any interest therein, shall be
valid or effective unless a Registration Statement under the Securities Act
of 1933 is in effect as to such transfer, and the Option or the Option
Stock has been duly qualified for sale under applicable state securities
laws, or in the opinion of counsel to
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the Corporation such registration and qualification is unnecessary in order
for such transfer to comply with the Securities Act of 1933 and applicable
state securities laws.
14. Registration of Option Shares. The Corporation agrees that, as of
September 1, 1998, and at all times while this Option remains exercisable and
unexercised with respect to any shares of Option Stock, and for a period of one
year after the last date on which the Optionee acquires shares of Option Stock
pursuant to this Option, there shall be in effect a Registration Statement under
the Securities Act of 1933 on Form S-8 as promulgated by the U.S. Securities and
Exchange Commission as to the transfer by Optionee of any shares of the Option
Stock acquired or to be acquired by Optionee. The Corporation further agrees to
bear all expenses associated with such registration of the Option Stock, other
than underwriting fees, discounts and selling commissions.
15. INDEMNIFICATION AND CONTRIBUTION.
a. Indemnification by the Corporation. The Corporation agrees to
indemnify and hold harmless Optionee and Optionee's affiliates and agents
from and against any loss, claim, damage or liability and any action in
respect thereof to which Optionee or Optionee's affiliates or agents may
become subject under the Securities Act of 1933 or the Securities Exchange
Act of 1934 or any other statute or common law, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (1) any
untrue statement or alleged untrue statement of a material fact made in
connection with the sale of Option Stock, whether or not such statement is
contained or incorporated by reference in any registration statement or
prospectus relating to the Option Stock (as amended or supplemented if the
Corporation shall have furnished any amendments or supplements thereto) or
any preliminary prospectus, other than as would be subject to
indemnification by the Optionee under Section 15.b, (2) any omission or
alleged omission to state a material fact required to be stated in any such
registration statement or prospectus or necessary to make the statements
therein not misleading, other than as would be subject to indemnification
by the Optionee under Section 15.b, or (3) any violation by the Corporation
of any federal, state or common law, Rule or regulation applicable to the
Corporation and relating to action required of or inaction by the
Corporation in connection with such registration. The Corporation also
shall promptly, but in no event more than ten business days, pay directly
or reimburse Optionee and Optionee's affiliates and agents for any legal
and other expenses incurred by any of them in investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action. The Corporation shall either promptly, but in no event in more than
ten business days, pay directly all amounts which it is required to pay
hereunder or shall reimburse the requesting party for such amounts within
ten business days after any request for such reimbursement. The Corporation
also shall indemnify any Underwriter of the Option Shares, their officers,
affiliates, directors, partners, members and agents and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of Optionee provided in this Section.
The indemnity agreement contained in this Section shall not apply to
amounts paid in settlement of any such loss, claim, damage or liability or any
action in respect thereof if such settlement is effected without the consent of
the Corporation (which consent shall not be unreasonably withheld), nor shall
the Corporation be liable to the Optionee or Optionee's affiliates or agents in
any such case for any loss, claim, damage, liability or any action in respect
thereof to the extent that it arises solely from or is based solely upon and is
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in conformity with written information relating to Optionee furnished expressly
for use in connection with such registration by Optionee or its agents, nor
shall the Corporation be liable to Optionee for any such loss, claim, damage or
liability or any action in respect thereof to the extent it arises solely from
or is based solely upon (a) any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or prospectus relating
to Option Stock delivered by Optionee after the Corporation had provided written
notice to the Optionee that such registration statement or prospectus contained
such untrue statement or alleged untrue statement of a material fact, or (b) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading after
the Corporation had provided written notice to Optionee that such registration
statement or prospectus contained such omission or alleged omission.
b. Indemnification by Optionee. Optionee shall indemnify and hold
harmless the Corporation, its officers, directors, partners, members and
agents and each person, if any, who controls the Corporation within the
meaning of Section 15 of the Securities Act of 1933 or Section 20 of the
Securities Exchange Act of 1934 to the same extent as the foregoing
indemnity from the Corporation to Optionee, but solely with reference to
information in conformity with and related to Optionee furnished in writing
by Optionee expressly for use in any registration statement or prospectus
relating to the Option Stock, or any amendment or supplement thereto, or
any preliminary prospectus. Optionee shall also indemnify and hold harmless
any Underwriter of the Registrable Securities or shares of Common Stock,
their officers, directors, partners, members and agents and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Corporation provided in this Section; provided,
however, that in no event shall any indemnity obligation under this Section
exceed the dollar amount of the net proceeds actually received by Optionee
from the sale of Option Stock or shares of Common Stock, which gave rise to
such indemnification obligation under such registration statement or
prospectus.
c. Conduct of Indemnification Proceedings. Promptly after receipt by
any person of any notice of any loss, claim, damage or liability or any
action in respect of which indemnity may be sought pursuant to Section 15.a
or Section 15.b, such person (the "Indemnified Party") shall, if a claim in
respect thereof is to be made against any other person for indemnification
hereunder, notify such other person (the "Indemnifying Party") in writing
of the loss, claim damage, liability or action; provided, however, that the
failure by the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which the Indemnifying
Party may have to such Indemnified Party hereunder. If the Indemnified
Party is seeking Indemnification with respect to any claim or action
brought against the Indemnified Party, then the Indemnifying Party shall be
entitled to participate in such claim or action, and, to the extent that it
wishes, jointly with all other Indemnifying Parties, to assume the defense
thereof with counsel satisfactory to the Indemnified Party. After notice
from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or action, the Indemnifying Party shall
not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that in any action in which both the Indemnified Party and the
Indemnifying Party are named as defendants, the Indemnified Party shall
have the right to employ separate counsel (but no more than one such
separate counsel) to represent the Indemnified Party and its controlling
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persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, with the fees and expenses of such counsel to be paid by such
Indemnifying Party if, based upon the written opinion of counsel of such
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, consent to entry of judgment or effect any settlement of any claim or
pending or threatened proceeding in respect of which the Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such judgment or settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such claim
or proceeding.
d. Contribution. If the indemnification provided for in the foregoing
Sections 15.a, 15.b or 15.c is unavailable to any Indemnified Party in
respect of any loss, claim, damage, liability or action referred to herein,
then each such Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the
Indemnified Parties and the Indemnifying Parties in connection with the
actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable considerations. The
relative fault of any Indemnified Party and any Indemnifying Party shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
Indemnified Party or such Indemnifying Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 15 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of any loss, claim,
damage, liability or action referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 15.d, Optionee shall not be required to contribute
any amount in excess of the dollar amount of the net proceeds actually received
by Optionee from the sale of Registrable Securities or shares of Common Stock,
which gave rise to such contribution obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
16. Withholding. The Corporation shall have the right, before any
certificate for any shares of Option Stock is delivered pursuant to this
Option, to deduct or withhold from any other compensation payments made to
the Optionee, any Federal, state or local taxes, including transfer taxes,
required by law to be withheld, or to require the Optionee to pay any
amount, or the balance of any amount, required to be withheld as a
condition to receiving shares of Option Stock. The Corporation may, but is
not under any obligation to, permit the receipt or use of shares of Common
Stock, or the
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simultaneous sale thereof to the public, in satisfaction of or to generate funds
for the payment of such withholding.
17. Relationship to Other Benefits. This Option shall not be taken into
account in determining any benefits under any pension, retirement, group
insurance, or other employee benefit plan of the Corporation, whether now
existing or hereafter adopted. This Option shall not preclude the shareholders
of the Corporation, the Board of Directors or any committee thereof, or the
Corporation from authorizing or approving other employee benefit plans or forms
of incentive compensation, nor shall it limit or prevent the continued operation
of other incentive compensation plans or other employee benefit plans of the
Corporation.
18. No Trust or Fund Created. This Option shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Corporation and Optionee or any other person.
19. General Provisions. The following provisions are integral parts of this
Agreement:
a. Binding Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the successors, assigns, personal representatives,
heirs and legatees of the respective parties hereto, except as otherwise
expressly limited by the terms of this Agreement and any entities resulting
from the reorganization, consolidation or merger of any party hereto.
b. Supersedure. This Agreement shall supersede and fully replace,
stand in the stead of and discharge any and all agreements or obligations
of the Corporation with or for the benefit of Optionee regarding the
issuance to Optionee of any option or right to acquire shares of the
Corporation's Common Stock.
c. Captions. The headings used in this Agreement, and the Summary
appearing before the recitals on the first page hereof are inserted for
reference purposes only and shall not be deemed to define, limit, extend,
describe or affect in any way the meaning, scope or interpretation of any
of the terms or provisions of this Agreement or the intent hereof.
d. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties and supersedes all prior
agreements, representations or understandings between the parties relating
to the subject matter hereof. All preceding agreements relating to the
subject matter hereof, whether written or oral, are hereby merged into this
Agreement.
e. Counterparts. This Agreement may be signed on any number of
counterparts with the same effect as if the signature to any counterpart
were upon the same instrument.
f. Severability. The provisions of this Agreement are severable, and
should any provision hereof be void, voidable, unenforceable or invalid,
such void, voidable, unenforceable or invalid provision shall not affect
any other provision of this Agreement.
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g. Waiver of Breach. Any waiver by either party hereto of any breach
of any kind or character whatsoever by the other party, whether such be
direct or implied, shall not be construed as a continuing waiver of such
breach.
h. Cumulative Remedies. These several rights and remedies herein
expressly reserved to each of the parties shall be construed as cumulative;
and none of them shall be exclusive of, or in lieu or limitation of, any
other right, remedy, or priority allowed by law.
i. Amendment. This Agreement may not be modified except by an
instrument in writing signed by the parties hereto.
j. Time of Essence. The parties agree that time is of the essence in
the performance of all duties herein.
k. Interpretation. This Agreement shall be interpreted, construed and
enforced according to the law of the State of Colorado, except as Federal
law may apply.
l. Notices. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered personally to
the party or to an officer of the party to whom the same is directed or if sent
by registered or certified mail, postage and charges prepaid, addressed as
follows:
If to the Corporation:
MB Software, Inc.
2225 E. Randol Mill Rd., Suite 305
Arlington, TX 76011
Attn: Scott Haire
w/copy to:
Brad L. Whitlock
Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202-3797
If to Optionee, to:
John E. Anderson
1310 Casper Circle
St. George, UT 84790
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Any such notice shall be deemed to be given on the date on which
the same was deposited in a regularly maintained receptacle for the
deposit of United States mail, addressed and sent as aforesaid. The
address for notices for either party may be changed by that party
giving written notice to the other.
m. Legal Expenses. The prevailing party in any arbitration
proceeding brought by one party against all other and arising out of
this Agreement shall be entitled to reimbursement for its costs and
expenses (including arbitration costs and reasonable fees for
attorneys and expert witnesses) incurred with respect to bringing and
maintaining any such arbitration. The term "prevailing party" for the
purposes of this Section 19.m shall include a defendant who has by
motion, judgment, verdict or dismissal by the arbitrator, successfully
defended against any claims that has been asserted against it.
EXECUTED Effective the day and year first above written,
THE CORPORATION
MB SOFTWARE, INC.
By: /s/ Scott A. Haire
------------------------
Scott A. Haire, President
OPTIONEE
/s/ John E. Anderson
------------------------
John E. Anderson