FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended: May 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ________ to ________
Commission file number 1-11869
FACTSET RESEARCH SYSTEMS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3362547
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE GREENWICH PLAZA
GREENWICH, CT 06830
(203) 863-1500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 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 60 days. Yes X - No
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.
Title of each class Outstanding at May 31, 1996
- ------------------- ---------------------------
Common Stock, par value $.01 9,526,300
FACTSET RESEARCH SYSTEMS INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Statement of
Financial Condition
May 31, 1996 and August 31, 1995............................... 3
Consolidated Statements of Income
for the three months ended and
the nine months ended May 31, 1996 and 1995.................... 4
Condensed Consolidated Statements of Cash Flows
for the nine months ended May 31, 1996 and 1995................ 5
Notes to the Condensed Consolidated Financial Statements....... 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.................... 7
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings................................................ 11
ITEM 2 - Changes In Securities............................................ 11
ITEM 3 - Submission of Matters to a vote of Security Holders.............. 11
ITEM 4 - Other Information................................................ 11
ITEM 5 - Reports on Form 8-K.............................................. 11
Signatures................................................................ 12
ITEM 6 - Exhibits......................................................... 13
ITEM 1
FactSet Research Systems Inc.
Consolidated Statement of Financial Condition
(in thousands)
(Unaudited)
May 31, August 31,
1996 1995
------- ----------
ASSETS
Cash and cash equivalents $11,906 $11,588
Investments 1,364 1,137
Receivable from clients and
clearing brokers 5,023 4,102
Receivable from officers and
employees 4,302 4,182
Prepaid expenses 210 132
Prepaid taxes 251 0
Deferred taxes 1,864 1,600
-------- ---------
Total current assets 24,920 22,741
Furniture, equipment, and
leasehold improvements, net 6,751 4,946
Deferred taxes 353 379
Other assets 873 597
------- -------
Total assets $32,897 $28,663
======= =======
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable and accrued
expenses $ 1,080 $ 1,629
Accrued compensation payable 790 980
Accrued ESOP contribution 435 480
Deferred fees and commissions 3,611 2,851
Current taxes payable 0 768
Deferred rent 118 118
------- -------
Total current liabilities 6,034 6,826
Deferred Rent 367 464
------- -------
Total liabilities 6,401 7,290
------- -------
Stockholders' Equity:
Common stock 96 95
Capital in excess of par
value 1,537 1,235
Retained earnings 24,885 20,188
Treasury stock (164) (162)
Unrealized gain on
investments, net of taxes 142 17
------- -------
Total stockholders'
equity 26,496 21,373
------- -------
Total liabilities and
stockholders' equity $32,897 $28,663
======= =======
The accompanying notes are an integral part of these
condensed consolidated financial statements.
FactSet Research Systems Inc.
Consolidated Statement of Income
(unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
May 31, May 31,
1996 1995 1996 1995
------- ------- ------- -------
Commission 6,022 5,317 17,262 16,016
Fee income 5,414 3,752 14,872 10,651
------- ------- ------- -------
Total revenues 11,436 9,069 32,134 26,667
Employee compensation costs 3,407 2,787 9,869 8,164
Clearing costs 1,131 1,101 3,242 3,199
Data costs 872 784 2,477 2,295
Communication costs 677 534 2,106 1,761
Computer equipment 793 564 2,083 1,649
Promotion 668 475 1,668 1,299
Occupancy 609 539 1,729 1,516
Other expenses 470 337 1,294 823
------- ------- ------- -------
Total costs and expenses 8,627 7,121 24,468 20,706
------- ------- ------- -------
Income from operations 2,809 1,948 7,666 5,961
Other income 145 175 576 416
------- ------- ------- -------
Income before provision
for income taxes 2,954 2,123 8,242 6,377
Provision for income taxes 1,279 913 3,545 2,723
------- ------- ------- -------
Net income 1,675 1,210 4,697 3,654
======= ======= ======= =======
Net income per share 0.16 0.11 0.44 0.36
======= ======= ======= =======
Weighted average number of
common shares outstanding 10,750 10,679 10,761 10,125
======= ======= ======= =======
FactSet Research Systems Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Nine Months Ended
May 31,
1996 1995
------ ------
Cash flows from operating
activities:
Net Income 4,697 3,654
Adjustments to reconcile net
income to net cash provided
by operating activities 2,181 1,823
Depreciation and amortization
(Gain) loss on disposal of
equipment (104) 42
Changes in assets and liabilities:
Receivable from clients and
clearing brokers (921) (288)
Receivable from officers and
employees (119) (526)
Prepaid expenses (78) (88)
Prepaid taxes (251) 131
Other assets (513) (311)
Accounts payable and accrued
expenses (314) 113
Accrued compensation payable (190) 175
Deferred fees and commissions 761 (657)
Taxes payable (768) 231
Deferred rent (98) 17
------ ------
Net cash provided by
operating activities 4,283 4,316
------ ------
Cash flows from investing activities:
Net (Increase) Decrease In Investments (96) 814
Purchase of furniture, equipment,
and leasehold improvements (4,123) (1,382)
Proceeds from disposal of equipment 240 170
------ ------
Net cash used in investing
activities (3,979) (398)
Cash flows from financing activities:
Repurchase of common stock from
employees (2) (12)
Proceeds from exercise of stock
options 16 0
------ ------
Net cash provided by (used) in
financing activities 14 (12)
------ ------
Increase in cash and case equivalents 318 3,906
Cash and cash equivalents, beginning of
period 11,588 5,265
------ ------
Cash and cash equivalents, end of
period 11,906 9,171
====== ======
The accompanying notes are an integral part of these
condensed consolidated financial statements.
FactSet Research Systems Inc.
Notes To The Consolidated Financial Statements
May 31, 1996
1. Summary of Accounting Principles
The accompanying consolidated financial statements
include the accounts of FactSet Research Systems Inc. ("the
Company") and its subsidiaries. All significant intercompany
activity and balances have been eliminated from the consolidated
financial statements.
The consolidated financial statements of the Company
presented herein have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form
10-Q and do not include all of the information and note
disclosures required by generally accepted accounting principles.
These financial statements should be read in conjunction with the
Company's consolidated financial statements and notes thereto for
the year ended August 31, 1995 and the six months ended February
29, 1996 included in the Company's prospectus dated June 27,
1996. In the opinion of management, the accompanying unaudited
consolidated financial statements include all adjustments,
consisting of only normal recurring adjustments, necessary to
present fairly the consolidated financial position, results of
operations and cash flows of the Company and its subsidiaries.
Quarterly operating results are not necessarily indicative of the
results which would be expected for the full year.
2. Initial Public Offering
On June 28, 1996, the Company completed an initial
public offering of 3,593,750 shares of its common stock, which
included 468,750 shares granted to the underwriters upon exercise
of their over-allotment option. The shares were sold by certain
stockholders of the Company for gross proceeds of $61,093,750.
The Company did not receive any of the proceeds from the
offering. The Company has agreed to pay certain expenses of the
Offering in an amount estimated at $290,000 of which $193,000 has
been recorded against Stockholders' Equity.
ITEM 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
The Company's revenue is derived from subscription
charges. Solely at the option of each client, these charges may
be paid either in the form of commissions on securities
transactions (in which case subscription revenue is recorded as
Commissions) or on a cash basis (in which case subscription
revenue is recorded as Fees).
Subscription revenue paid in commissions is based on
securities transactions introduced and cleared on a fully
disclosed basis through two clearing brokers, Bear, Stearns & Co.
and Broadcort Capital Corp. (an affiliate of Merrill Lynch &
Co.). Clearance is performed by these two brokers pursuant to
annually renewable contracts at volume discounted rates.
Over the last several years, there has been a trend by
both existing and new clients toward payment of subscription
charges on a cash rather than commission basis. As a percentage
of total revenue, commissions represented 66.8%, 61.1%, 59.6% and
53.7%, respectively, for the three fiscal years ended August 31,
1993, 1994 and 1995, and the nine month period ended May 31,
1996.
Subscription charges are quoted to clients on an annual
basis, but are earned as services are provided on a month to
month basis. Subscription revenue recorded as Commissions and
subscription revenue recorded as Fees are each recorded as earned
each month, based on one-twelfth of the annual subscription
charge quoted to each client. Amounts that have been earned but
not yet paid through the receipt of commissions on securities
transactions or through cash payments are reflected on the
consolidated statement of financial condition as receivable from
clients. Amounts that have been received through commissions on
securities transactions or through cash payments that are in
excess of a client's earned subscription revenue are reflected on
the consolidated statement of financial condition as deferred
fees and commissions.
Operating expenses included employee compensation and
benefits, clearing fees, data costs, communication costs,
computer equipment expenses, occupancy expenses, promotional
costs and other expenses.
Employee compensation and benefits expenses include, in
addition to employee salaries and bonuses, payroll taxes, the
Company's ESOP contributions, health insurance costs and costs
associated with the Company's key-man life insurance policies.
Clearing fees are directly related to commission
revenue. Clearing fees for executed transactions are recorded on
trade date basis as securities transactions occur, with clearing
fees related to commissions receivable recorded simultaneously
with the related receivable.
Data costs consist of fees and royalties paid by the
Company to database suppliers. Under agreements with certain
database suppliers, the Company collects database fees from
clients and pays those fees to the database supplier on the
clients' behalf. In many cases, however, clients pay database
suppliers directly for access to databases. Such payments are not
reflected on the Company's financial statements.
Communication costs are charges paid by the Company for
clients' communication with the FactSet system, including long
distance telephone charges, charges associated with the Company's
WAN and Internet access charges.
Computer equipment expenses consist of non-capitalized
equipment acquisition costs and depreciation expense relating to
the Company's mainframe computers and other related equipment,
including communications equipment. The cost of communications
equipment provided to clients for use at client sites is
classified as an expense.
Occupancy expense includes costs related to the
Company's leased facilities in Greenwich, Connecticut, New York,
New York, San Mateo, California, London, England and Tokyo,
Japan, as well as amortization expense relating to leasehold
improvements at those facilities.
Promotional expenses consist primarily of the cost of
travel for the Company's marketing personnel and consultants,
costs associated with the printing of operations manuals and
promotional literature and expenses relating to Company
participation at industry trade shows and conventions.
Other expenses include professional expenses, office
expenses and other miscellaneous expenses.
Other income consists primarily of interest income.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(continued)
Results of Operations
Subscription revenue. Subscription revenue for the
third quarter and nine months ending May 31, 1996 were $11.4
million and $32.1 million, respectively. These represent 26.1%
and 20.5% increases over the same periods in fiscal 1995.
FactSet's revenue growth resulted from an increase in the number
of new clients as well as increased penetration among existing
clients. The number of clients increased 13.4% from 374 at May
31, 1995 to 424 at May 31, 1996. New clients consist of new
international clients, United States investment managers and
United States investment banks. Revenue growth from existing
clients was attributable to an increase in the number of
authorized workstations and the addition of new applications,
databases and service offerings.
Employee compensation and benefits. Employee
compensation and benefits for the third quarter 1996 were $3.4
million (29.8% of revenues) and $2.8 million (30.7% of revenues)
in the third quarter ending May 31, 1995. On a year-to-date basis
for 1996, employee compensation and benefits were $9.9 million
(30.7% of revenues) compared to $8.2 million (30.6% of revenues)
in 1995. This increase was primarily due to the addition of new
employees to support FactSet's continued growth and expansion in
existing as well as new industry segments and regions, such as
Europe and the Pacific Rim, which are in the early stages of
business development. To a lesser extent, the increases were due
to increases in compensation and benefit costs for existing
personnel.
Clearing fees. Clearing fees for the third quarter 1996
and 1995 remained relatively constant at $1.1 million. On a
year-to-date basis, clearing fees also remained constant at $3.2
million for fiscal 1996 and 1995. Clearing fees, as a percentage
of revenue, decreased from 12.1% in the third quarter 1995 period
to 9.9% in the third quarter 1996 period. This decrease reflects
a decrease in clearing fees per transaction as well as a shift in
payment form by clients from a commission basis to a fee basis.
Data costs. Data costs for the third quarter 1996
increased to $0.9 million from $0.8 millions in the same period
last year. On a year-to-date basis, data costs were $2.5 million
in 1996 and $2.3 million in 1995. As a percentage of revenue,
data costs decreased from 8.6% in the third quarter 1995 period
to 7.7% in the third quarter 1996 period. This decrease reflects
improved terms from certain database providers and economies of
scale achieved from a larger client base, partially offset by the
higher data costs associated with additional databases.
Communication costs. Communication costs for the third
quarter 1996 increased to $0.7 million from $0.5 million in the
same period last year. On a year-to-date basis, communications
costs were $2.1 million in 1996 and $1.8 million in 1995. This
increase is primarily due to increased usage by new and existing
clients, partially offset by the implementation of the WAN at an
increasing number of clients. Communication costs, as a
percentage of revenue, remained constant at 5.9% in the third
quarter 1995 period and in the 1996 period.
Computer equipment. Computer equipment costs for the
third quarter 1996 increased to $0.8 million from $0.6 million in
the same period last year. Year-to-date, computer equipment costs
have increased to $2.1 million in 1996 compared with $1.6 million
in 1995. As a percentage of revenue, computer equipment costs for
the third quarter increased from 6.2% in the 1995 period to 6.9%
in the 1996 period. The increase was primarily due to the higher
depreciation expense associated with increased capital
expenditures as well as a greater proportion of computer assets
with shorter depreciable lives.
Occupancy. Occupancy costs for the third quarter 1996
increased to $0.6 million from $0.5 in the 1995 period. On a
year-to-date basis, occupancy expense was $1.7 million in 1996
and $1.5 million in 1995. As a percentage of revenue, occupancy
costs decreased from 5.9% in the third quarter 1995 to 5.3% in
the 1996 period. This decrease reflects improved operating
leverage from FactSet's revenue growth, partially offset by the
costs associated with the expansion of its Greenwich, Connecticut
facilities to accommodate the growth in its business and
personnel.
Promotional costs. Promotional costs for the third
quarter 1996 increased to $0.7 million from $0.5 million in the
same period in 1995. Year-to-date, promotional costs have
increased to $1.7 million in 1996 from $1.3 million in 1995. In
the third quarter promotional costs, as a percentage of revenue,
increased to 5.8% in the 1996 period from 5.2% in the 1995
period. This increase was due to increased travel expenses
associated with marketing to new industry segments and geographic
regions as well as increased promotional expenses.
Other expenses. Other expenses for the third quarter
1996 increased to $0.5 million from $0.3 million in the 1995
period. On a year-to-date basis, other expenses have increased to
$1.3 million in 1996 from $0.8 million in 1995. As a percentage
of revenue, other expenses increased to 4.1% in the third quarter
1996 from 3.7% in the 1995 period. The increase was primarily due
to increases in expenses for professional services as well as
increases in office expense. To a lesser extent the increase was
due to higher miscellaneous taxes and other miscellaneous
expenses.
Operating income. Operating income for the third
quarter increased to $2.8 million from $1.9 million in the 1995
period. On a year-to-date basis, operating income increased to
$7.7 million in 1996 from $6.0 million in 1995. As a percentage
of revenue, operating income increased to 24.6% in the third
quarter 1996 from 21.5% in the 1995 period.
Other income. Other income decreased to $0.1 million in
the third quarter 1996 from $0.2 million in 1995. The decrease in
other income was due to a timing difference in the accrual of
certain interest income. Year-to-date, other income has increased
to $0.6 million in 1996 from $0.4 in 1995.
Income taxes. Income taxes for the third quarter 1996
increased to $1.3 million from $0.9 million in the same period
last year. Year-to-date, income taxes increased to $3.5 million
in 1996 from $2.7 million in 1995. This increase is due to higher
income before taxes.
Net income. Net income for the third quarter and nine
months ending May 31, 1996 was $1.7 million and $4.7 million
respectively. These represent 38.4% and 28.5% increases over the
same periods in fiscal 1995. As a percentage of revenue, net
income increased to 14.6% in the third quarter 1996 from 13.3% in
the 1995 period.
Liquidity and Capital Resources
The Company's cash, cash equivalents and investments
balance was $13.3 million at May 31, 1996, as compared to $12.7
million at August 31, 1995, an increase of $600,000. Net cash
provided by operating activities remained constant at roughly
$4.3 million for the nine months ended May 31,1996 and May 31,
1995, due primarily to an increase in accounts receivable
associated with revenue growth as well as the timing of tax
payments. Net cash used for investing activities for the nine
months ended May 31, 1996 was $4.0 million, due primarily to the
increased purchases of equipment and leasehold improvements.
The Company believes that its current cash balances and
funds anticipated to be generated from operations, will be
sufficient to satisfy working capital and capital expenditure
requirements for the next twelve months.
Part II - Other Information
Item 1 - Legal Proceedings: None
Item 2 - Changes in Securities: None
Item 3 - Submission of Matters to a vote of Security Holders: None
Item 4 - Other Information: None
Item 5 - Exhibits and Reports on Form 8-K:
10.1 Registration Rights Agreements among the Company,
Howard E. Wille and Charles J. Snyder
10.2 Employment Agreement between the Company and Howard E. Wille
10.3 Employment Agreement between the Company and Charles J. Snyder
FACTSET RESEARCH SYSTEMS INC.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FactSet Research Systems Inc.
(Registrant)
Date: July 29, 1996 /s/ Ernest S. Wong
----------------------
Ernest S. Wong
Senior Vice President
Chief Financial Officer
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT dated as
of June 27, 1996, between each of HOWARD E.
WILLE and CHARLES J. SNYDER, (herein referred
to collectively as the "Stockholders" and
individually as a "Stockholder"), and FACTSET
RESEARCH SYSTEMS INC. (the "Company").
The Stockholders are the beneficial owners of cer- tain
shares of Common Stock, par value $.01 per share, of the Company
(the "Common Stock"). In connection with the execution and
delivery of this Agreement, the Stockholders are selling in an
underwritten public offering a number of shares of Common Stock
(the "Initial Public Offering"). At any time and from time to
time hereafter, the Stockholders may acquire other classes of
securities or additional shares of Common Stock (all such
securities of the Company, including the Common Stock, being
included in the term the "Securities", which term has the meaning
assigned thereto in Section 8(c) hereof).
In consideration of the foregoing and in order to
specify certain provisions relating to the sale by means of
domestic or foreign public offerings of Securities owned by
the Stockholders, the parties agree as follows:
1. Registration and Listing Rights.
(a) Registration. If a Stockholder shall, at any time and
from time to time, request the Company in writing to
register under the Securities Act of 1933 (the "Act") any
Securities held by it (whether for purposes of a public
offering, an exchange offer or otherwise), the Company shall
use all reasonable efforts to cause the prompt registration
of all Securities specified in such request, and in
connection therewith shall prepare and file on such
appropriate form as the Company, in its reasonable
discretion, shall determine, a registration statement under
the Act to effect such registration and shall take such
actions as shall be necessary or appropriate, in the
Company's reasonable discretion, to have such Securities
listed or approved for trading on any securities exchange or
through any facility on which or through which Securities of
such class are already traded. If a Stockholder shall so
request, the Company will register such Securities for
offering on a delayed or continuous basis pursuant to Rule
415 (or any successor rule or rules to similar effect) under
the Act. Notwithstanding the foregoing, the Company shall be
entitled to postpone for a reasonable period of time, but
not in excess of 90 calendar days, the filing of any
registration statement otherwise required to be prepared and
filed by it under this paragraph (a) if (i) the Company
determines in good faith that the filing of such
registration statement would interfere with any pending
financing, acquisition, corporate reorganization or any
other corporate development involving the Company or any of
its subsidiaries or would require premature disclosure
thereof and (ii) the Company so notifies the requesting
Stockholder within 10 days after the Stockholder so
requests.
(b) Other Offers and Sale. If a Stockholder shall,
at any time and from time to time, request the Company in
writing to take such actions as shall be necessary or
appropriate to permit any Securities held by it to be
publicly or privately offered and sold in compliance with
the securities laws or other relevant laws or regulations of
any foreign jurisdiction, the Company shall use all reason-
able efforts to take such actions in any such foreign juris-
diction (including listing such Securities on any foreign
securities exchange on which such listing is requested by
the Stockholder and on which Securities of the same class
are already traded) and shall otherwise cooperate in a
timely manner in such offering. Any request under this
paragraph (b) may be made separately or in conjunction with
any request under paragraph (a). Notwithstanding the fore-
going, the Company shall be entitled to postpone for a
reasonable period of time, but not in excess of 90 calendar
days, the taking of any actions otherwise required under
this paragraph (b) if (i) the Company determines in good
faith that the filing of such registration statement would
interfere with any pending financing, acquisition, corporate
reorganization or any other corporate development involving
the Company or any of its subsidiaries or would require
premature disclosure thereof and (ii) the Company so
notifies the requesting Stockholder within 10 days after the
Stockholder so requests.
(c) Written Notice. Any request by a Stockholder
pursuant to paragraph (a) or (b) of this Section 1 shall (i)
specify the number and class of shares or the principal
amount, as the case may be, of Securities which the Stock-
holder intends to offer and sell, (ii) express the intention
of the Stockholder to offer or cause the offering of such
Securities, (iii) describe the nature or method of the
proposed offer and sale thereof and state whether such offer
shall be made domestically or abroad, or both, and, if
abroad, the country or countries in which such offer shall
be made, (iv) specify any securities exchange or trading
facility on which or through which the Stockholder requests
that such Securities be listed or approved for trading, (v)
contain the undertaking of the Stockholder to provide all
such information regarding its holdings and the proposed
manner of distribution thereof as may be required in order
to permit the Company to comply with all applicable laws and
regulations, foreign or domestic, and all requirements of
the Securities and Exchange Commission (the "SEC"), any
other applicable United States or foreign regulatory or self
regulatory body and any other body having jurisdiction and
any securities exchange or trading facility on which or
through which the Securities are to be listed or traded and
to obtain acceleration of the effective date of any regis-
tration statement filed in connection therewith and (vi) in
the case of an underwritten public offering made
domestically or abroad, or both, specify the managing under-
writer or underwriters of such Securities, which shall be
selected by the requesting Stockholder.
(d) Condition to Exercise of Rights. The obliga-
tions of the Company under paragraphs (a) and (b) of this
Section 1 shall be subject to the limitations that the
Company shall not be obligated to register, take other
specified actions with respect to, or cooperate in the
offering of, Securities upon the request of a Stockholder,
(i) more than twice in any 12-month period and (ii) unless,
in the case of a class of equity Securities, the number of
shares specified in such request pursuant to Section 1(c)(i)
shall be greater than 3% of the total number of shares of
such class at the time issued and outstanding (provided that
a stockholder owing less than 3% of the total number of
shares of a class outstanding may request the registration
of all shares the held by such stockholder), or, in the case
of a class of debt Securities, the principal amount
specified in such request pursuant to Section 1(c)(i) shall
be at least $1,000,000. Notwithstanding the foregoing, the
failure of a Stockholder to own the minimum number or per-
cent or principal amount of Securities referred to in the
preceding sentence at any time shall not affect the ability
of the Stockholder to exercise its rights under this Agree-
ment at any subsequent time when the Stockholder again owns
such minimum number or percent or principal amount.
(e) Incidental Registration. If the Company shall,
at any time and from time to time after the Initial Public
Offering, propose an underwritten offering for cash of any
Securities, whether pursuant to a registration state- ment
under the Act or otherwise, the Company shall give written
notice as promptly as practicable of such proposed
registration or offering to the Stockholders and shall use
its best efforts to include in such offering and, if such
offering is pursuant to a registration statement under the
Act, in such registration, any of the same class of such
Securities held by a Stockholder as a Stockholder shall re-
quest within 20 calendar days after the giving of such
notice, upon the same terms (including the method of distri-
bution) as such offering; provided, however, that (i) the
Company shall not be required to give such notice or include
any such Securities in any offering pursuant to a registra-
tion statement filed on Form S-8 or Form S-4 (or such other
form or forms as shall be prescribed under the Act for the
same purposes as such forms) or any registration statement
for a dividend reinvestment or employee stock purchase plan
and (ii) the Company may at any time prior to the
effectiveness of any such registration statement or
commencement of any such offering not pursuant to a
registration statement, in its sole discretion and without
the consent of Stockholders, abandon the proposed offering
in which a Stockholder had requested to participate.
Notwithstanding the foregoing, the Company shall not be
obligated to include such Securities in such offering if the
Company is advised in writing by its managing underwriter or
underwriters (with a copy to each requesting Stockholder
within 5 days after the delivery of any such request
pursuant to this paragraph (e) that such offering would in
its or their opinion be materially adversely affected by
such inclusion; provided, however, that the Company shall in
any case be obligated to include such number or amount of
Securities in such offering as such managing underwriter or
underwriters shall determine will not materially adversely
affect such offering.
2. Covenants of the Company. In connection with
any offering of Securities pursuant to this Agreement, the
Company shall:
(a) furnish to a Stockholder such number of copies
of any prospectus (including any preliminary prospectus),
registration statement, offering memorandum or other
offering document (including any exhibits thereto or docu-
ments referred to therein) as a Stockholder may reasonably
request and a copy of any and all transmittal letters or
other correspondence with the SEC or any other governmental
agency or self-regulatory body or other body having juris-
diction (including any securities exchange or trading facil-
ity) relating to such offering of Securities;
(b) take such reasonable action as may be neces-
sary to qualify such Securities for offer and sale under the
securities, "blue sky" or other similar laws of such juris-
dictions (including any foreign country or political subdi-
vision thereof) as a Stockholder or any underwriter shall
request;
(c) enter into an underwriting agreement (or
equivalent document in any foreign jurisdiction) containing
representations, warranties, indemnities, contribution
provisions and agreements then customarily included by an
issuer in underwriting agreements (or such equivalent docu-
ments) in the form customarily used by the lead underwriter
with respect to secondary distributions;
(d) furnish unlegended certificates representing
ownership of the Securities being sold in such denominations
as shall be requested by a Stockholder or the lead under-
writer;
(e) in the case of any offering of equity Secu-
rities, instruct the transfer agent and registrar to release
any stop transfer orders with respect to the equity Securi-
ties being sold;
(f) promptly inform each requesting Stockholder
(i) in the case of any domestic offering of Securities in
respect of which a registration statement is filed under the
Act, of the date on which such registration statement or any
post-effective amendment thereto becomes effective (and, in
the case of an offering abroad of Securities, of the date
when any required filing under the securities and other laws
of such foreign jurisdictions shall have been made and when
the offering may be commenced in accordance with such laws)
and (ii) of any request by the SEC, any securities exchange,
government agency, self-regulatory body or other body having
jurisdiction for any amendment of or supplement to any
registration statement or preliminary prospectus or prospec-
tus included therein or any offering memorandum or other
offering document relating to such offering;
(g) upon any registration statement becoming
effective pursuant to any registration under the Act pursu-
ant to this Agreement, file any necessary amendments or
supplements to such registration statement and otherwise use
its best efforts to keep such registration statement current
for such period as a Stockholder shall request;
(h) take such reasonable actions as may be
necessary to have such Securities listed on or traded
through any securities exchange or trading facility on which
or through which a Stockholder shall request such listing or
approval pursuant to the notice delivered by the Stockholder
under Section 1(c) hereof;
(i) promptly notify each requesting Stockholder of
the happening of any event as a result of which any
registration statement or any preliminary prospectus or
prospectus included therein or any offering memorandum or
other offering document includes an untrue statement of a
material fact or omits to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances
then existing, and prepare and furnish to such Stockholders
as many copies of a supplement to or amendment of such
offering document which shall correct such untrue statement
or eliminate such omission, as such Stockholders shall
reasonably request;
(j) appoint a trustee or fiscal agent (in the case
of debt Securities) and any transfer agent, registrar,
depositary, authentication agent or other agent as may be
reasonably requested by a Stockholder; and
(k) take such other actions and execute and
deliver such other documents as may be necessary or reason-
ably requested by a Stockholder in order to give full effect
to the rights of the Stockholder under this Agreement.
3. Expenses. (a) In connection with the first
three exercises by a Stockholder of his rights under Section
1(a) or (b), the Company shall pay all expenses incurred in
complying with Section 1(a) or (b) hereof, including,
without limitation, all registration and filing fees
(including all expenses incident to any filing with the
National Association of Securities Dealers, Inc. or listing
on or approval for trading through any securities exchange
or trading facility), fees and expenses of complying with
securities and "blue sky" laws (including those of counsel
retained to effect such compliance), printing expenses and
any stamp, duty or transfer tax (collectively, "Registration
Expenses"). In connection with each subsequent exercise by a
Stockholder of his rights under Section 1(a) or (b), the
Company and the Stockholder shall each pay one-half of the
Registration Expenses. Notwithstanding the foregoing, (i) a
Stockholder shall pay all underwriting discounts and commis-
sions, (ii) the Company shall pay (x) the fees and disburse-
ments of its independent public accountants (including any
such fees and expenses incurred in performing any special
audits required in connection with any such offering and
incurred in connection with the preparation of pro forma
financial statements and comfort letters for any such offer-
ing), (y) transfer agents', trustees', fiscal agents',
depositories' and registrars' fees and the fees of any other
agent appointed in connection with such offering and (z) all
security engraving and printing expenses and (iii) each
party shall pay the fees and expenses of its counsel.
(b) All expenses incurred in complying with
Section 1(e) hereof, including, without limitation, any
Registration Expenses, shall be paid by the Company, except
that (i) a Stockholder shall pay all underwriting discounts,
commissions and expenses specifically attributable to the
inclusion in the offering under said Section 1(e) of the
Securities being sold by such Stockholder and (ii) each
party shall pay the fees and expenses of its counsel.
4. Indemnification. (a) Company Indemnity. In
the case of any offering or sale of Securities covered by
this Agreement, the Company shall indemnify and hold harm-
less the Stockholders, and each person affiliated with or
retained by the Stockholders and who may be subject to lia-
bility under any applicable foreign securities laws, against
any and all losses, claims, damages or liabilities to which
they or any of them may become subject under the Act or any
other statute or common law of the United States of America
or any other country or political subdivision thereof, or
otherwise, including any amount paid in settlement of any
litigation commenced or threatened (including any amounts
paid pursuant to or in settlement of claims made under the
indemnification or contribution provisions of any underwrit-
ing or similar agreement entered into by the Stockholders in
connection with any offering or sale of Securities covered
by this Agreement), and shall promptly reimburse them, as
and when incurred, for any legal or other expenses incurred
by them in connection with investigating any claims and
defending any actions, insofar as any such losses, claims,
damages, liabilities or actions shall arise out of or shall
be based upon any untrue statement or alleged untrue state-
ment of a material fact contained in the registration state-
ment (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering
document relating to the offering and sale of such Securi-
ties, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading or any violation
or alleged violation by the Company of the Act, any "blue
sky" laws, securities laws or other applicable laws of any
jurisdiction relating to any actual or alleged action or
inaction required of the Company in connection with such
offering; provided, however, that the indemnification agree-
ment contained in this Section 4 shall not apply to such
losses, claims, damages, liabilities or actions to the
extent that such losses, claims, damages, liabilities or
actions shall arise out of or shall be based upon any such
untrue statement or alleged untrue statement, or any such
omission shall have been made in reliance upon and in con-
formity with information jointly identified in writing by
the Company and a Stockholder as concerning such Stockholder
and its security holdings in the Company and so identified
for use in connection with the preparation of the
registration statement or any preliminary prospectus or
prospectus contained in the registration statement, any
offering memorandum or other offering document, or any
amendment thereof or supplement thereto. Notwithstanding the
foregoing, no underwriter or selling or placement agent
shall be entitled to indemnification under this Agreement if
such person shall have entered into a separate underwriting,
agency or indemnification agreement with the Company that
pertains to the same transaction.
(b) Stockholder Indemnity. In the case of each
offering or sale of Securities covered by this Agreement,
the requesting Stockholder shall, in the same manner and to
the same extent as set forth in paragraph (a) of this
Section 4, indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning
of Section 15 of the Act, and each person affiliated with or
retained by the Company and who may be subject to liability
under any applicable foreign securities laws, its directors
and those officers of the Company who shall have signed any
registration statement, offering memorandum or other offer-
ing document with respect to any statement in or omission
from such registration statement, any preliminary prospectus
or prospectus contained in such registration statement or
from such offering memorandum or other offering document, as
amended or supplemented, if such statement or omission shall
have been made in reliance upon and in conformity with
information jointly identified in writing by the Company and
the Stockholder as concerning the Stockholder and its secu-
rity holdings in the Company and so identified for use in
connection with the preparation of such registration state-
ment, any preliminary prospectus or prospectus contained in
such registration statement, any offering memorandum or
other offering document, or any amendment thereof or supple-
ment thereto.
(c) Procedure for Indemnification. Each party
indemnified under paragraph (a) or (b) of this Section 4, or
under Section 8(f) hereof, shall, promptly after receipt of
notice of the commencement of any action against such indem-
nified party in respect of which indemnity may be sought,
notify the indemnifying party in writing of the commencement
thereof. The omission of any indemnified party so to notify
an indemnifying party of any such action shall not relieve
the indemnifying party from any liability in respect of such
action which it may have to such indemnified party on
account of the indemnity agreement contained in para-
graph (a) or (b) of this Section 4, or under Section 8(f)
hereof, except to the extent that the indemnifying party was
prejudiced by such omission, and in no event shall relieve
the indemnifying party from any other liability which it may
have to such indemnified party. In case any such action
shall be brought against any indemnified party and such
indemnified party shall notify an indemnifying party of the
commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it
may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party. If the
indemnifying party so assumes the defense thereof, it may
not agree to any settlement of any such action as the result
of which any remedy or relief, other than monetary damages
for which the indemnifying party shall be responsible here-
under, shall be applied to or against the indemnified party,
without the prior written consent of the indemnified party.
If the indemnifying party does not assume the defense
thereof, it shall be bound by any settlement to which the
indemnified party agrees, irrespective of whether the indem-
nifying party consents thereto. If any settlement of any
claim is effected by the indemnified party prior to com-
mencement of any action relating thereto, the indemnifying
party shall be bound thereby only if it has consented in
writing thereto. In any action hereunder, the indemnified
party shall continue to be entitled to participate in the
defense thereof, with counsel of its own choice, even if the
indemnifying party has assumed the defense thereof, and the
indemnifying party shall not be relieved of the obligation
hereunder to reimburse the indemnified party for the costs
thereof.
5. Transfer of Rights. (a) Subject to para-
graph (b) below, the rights of a Stockholder under this
Agreement with respect to any Security may be transferred to
any one or more transferee of such Security if such trans-
feree (i) is the estate or personal representative of such
Stockholder, (ii) is controlled by such Stockholder or (iii)
acquires, either individually or when aggregated with other
transferees, at least 25% of the aggregate number of shares
of any class of equity Securities held by such Stockholder
on the date the Stockholder first acquired any of such
equity Securities (which for purposes of the Common Stock
shall be the time immediately after the initial public
offering by the Company of the Common Stock) or 25% in
principal amount of any issue of debt Securities held by
such Stockholder at the date the Stockholder first acquired
any of such debt Securities. Any transfer of registration
rights pursuant to this Section 5 shall be effective only
upon receipt by the Company of written notice from the
Stockholder stating the name and address of any transferee
and identifying the Securities with respect to which the
rights under this Agreement are being transferred.
(b) The rights of a transferee under para- graph
(a) above shall be the same rights granted to a Stockholder
under this Agreement, except that (i) such transferee shall
only have the right to make one request under paragraph (a)
or (b) of Section 1, which may be a simultaneous request
under paragraphs (a) and (b), and two requests under
paragraph (e) of Section 1, (ii) all rights referred to in
the foregoing clause (i) with respect to any particular
Securities shall expire on the third anniversary of the
receipt of such Securities by the transferee and (iii) such
transferee shall be required to pay all (or in the case of a
request under Paragraph 1(e) such transferee's proportionate
share of) the stamp, duty or transfer taxes and underwriting
discounts and commissions.
6. Termination of Obligations. Section 1 of this
Agreement shall terminate and cease to be of any force and
effect in respect of a Stockholder at such time as the
Stockholder shall first cease beneficially to own any of the
outstanding Common Stock (the "Termination Date"); provided,
however, that such termination shall not affect the rights
of any transferee under Section 5 with regard to any Securi-
ties transferred prior to the Termination Date.
7. Representations and Warranties. As an
inducement to enter into this Agreement, (a) the Company
represents and warrants that:
(i) it is a corporation duly organized, val-
idly existing and in good standing under the laws
of the State of Delaware and has all requisite
corporate power to own, lease and operate its
properties, to carry on its business as presently
conducted and to carry out the transactions con-
templated by this Agreement;
(ii) it has duly and validly taken all corpo-
rate action necessary to authorize the execution,
delivery and performance of this Agreement and the
consummation of the transactions contemplated
hereby;
(iii) this Agreement has been duly executed and
delivered by it and constitutes its legal, valid
and binding obligation enforceable in accordance
with its terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganiza-
tion, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights
generally from time to time in effect, and subject
to equitable limitations on the availability of
the remedy of specific performance); and
(iv) none of the execution and delivery of
this Agreement, the consummation of the transac-
tions contemplated hereby or the compliance with
any of the provisions of this Agreement will (x)
conflict with or result in a breach of any
provision of its corporate charter or by-laws, (y)
breach, violate or result in a default under any
of the terms of any agreement or other instru-
ment or obligation to which it is a party or by
which it or any of its properties or assets may be
bound, or (z) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to
it or affecting any of its properties or assets;
and (b) each Stockholder represents and warrants that:
(i) this Agreement has been duly executed and
delivered by such Stockholder and constitutes a
legal, valid and binding obligation of the Stock-
holder enforceable in accordance with its terms
(subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting the
enforcement of creditors' rights generally from
time to time in effect, and subject to equitable
limitations on the availability of the remedy of
specific performance); and
(ii) none of the execution and delivery of
this Agreement, the consummation of the transac-
tions contemplated hereby or the compliance with
any of the provisions of this Agreement will (x)
breach, violate or result in a default under any
of the terms of any agreement or other instru-
ment or obligation to which such Stockholder is a
party or by which such Stockholder or such
Stockholder's properties or assets may be bound or
(y) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to such
Stockholder or affecting any of its properties or
assets.
8. Certain Agreements and Definitions.
(a) Calculation of Amounts. For purposes of this
Agreement, the amount of any Securities outstanding at any
time (and the amount of any Securities then beneficially
owned by a Stockholder or any other person) shall be
calculated on the basis of the information contained in the
Company's most recent report filed with the SEC. For pur-
poses of calculating the amount of Securities outstanding at
any time (and the amount of Securities then beneficially
owned by a Stockholder or any other person) all outstanding
securities convertible into or exchangeable for such
Securities shall be deemed to have been fully converted at
such time.
(b) "person"; "affiliate". As used in this
Agreement, the term "person" shall mean any individual,
partnership, corporation, trust or other entity. As used in
this Agreement, the term "affiliate" shall mean, with
respect to any specified person, any other person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control
with, such specified person.
(c) "Securities". As used in this Agreement, the
term "Securities" shall include any security of the Company
now owned or hereafter acquired by the Stockholders, whether
acquired in any transaction with the Company or another
person, in any recapitalization of the Company, as a divi-
dend or other distribution, as a result of any "split" or
"reverse split", upon conversion or exercise of another
security of the Company or any other person, or otherwise.
(d) No Legend. No Security held or to be sold by a
Stockholder shall bear any legend, nor shall the Company
cause or permit any transfer agent or registrar appointed by
the Company with respect to such Security to refuse or fail
to effect a transfer or registration with respect to such
Security, provided that the Stockholder provides to the
Company a certificate of such Stockholder in connection with
such transfer or registration to the effect that such trans-
fer or registration is not in violation of any applicable
securities or other law.
(e) Stock Books. Except as otherwise provided by
law for all holders of securities, the Company will not
close its stock books or other registries against the trans-
fer of any Security held by a Stockholder.
(f) Securities Exchange Act of 1934. The Company
shall at all times timely file such information, documents
and reports as the SEC may require or prescribe under the
Securities Exchange Act of 1934 (the "Exchange Act") and
shall provide each Stockholder with two copies of each
thereof or any other communication with or from the SEC.
The Company shall, whenever requested by a Stockholder,
notify such Stockholder in writing whether the Company has,
as of the date specified by the Stockholder, complied with
the Exchange Act reporting requirements to which it is
subject for such period to such date as shall be specified
by the Stockholder. The Company acknowledges and agrees
that one of the purposes of the requirements contained in
this Section 8(f) is to enable the Stockholders to comply
with the current public information requirements contained
in Paragraph (c) of Rule 144 under the Act (or any corre-
sponding rule hereafter in effect) should a Stockholder ever
wish to dispose of any Securities without registration under
the Act in reliance upon Rule 144. In addition, the Company
shall take such other measures and file such other informa-
tion, documents and reports as shall hereafter be required
by the SEC as a condition to the availability of Rule 144.
The Company covenants, represents and warrants that all such
information, documents and reports filed with the SEC shall
not contain any untrue statement of a material fact or fail
to state therein a material fact required to be stated
therein or necessary to make the statements contained there-
in not misleading, and the Company shall indemnify and hold
each Stockholder and each broker, dealer, underwriter or
other person acting for a Stockholder (and any controlling
person of any of the foregoing) harmless from and against
any and all claims, liabilities, losses, damages, expenses
and judgments and shall promptly reimburse them, as and when
incurred, for any legal or other expenses incurred by them
in connection with investigating any claim and defending any
actions insofar as such claims, liabilities, losses, damage
expenses and judgments arise out of or based upon any breach
of the foregoing covenants, representations or warranties.
The procedure for indemnification set forth in Section 4(c)
hereof shall apply to the indemnification provided under
this Section 8(f).
(g) Listing. Once initially listed or approved for
trading, the Company shall maintain in effect any list- ing
of Securities on any securities exchange or approved for
trading through a trading facility, shall make all filings
and take all other actions required under the rules of such
exchange or facility and any applicable agreement, shall
provide each Stockholder with two copies of each such filing
or any other communication with such exchange or facility at
the time at which such filing is made, and shall notify each
Stockholder of any proceeding or other action taken by such
exchange or facility or any other person which might have
the effect of terminating or otherwise changing the status
of such listing, forthwith upon the occurrence thereof.
Notwithstanding the foregoing, the Company shall be entitled
at any time to terminate any securities exchange listing or
approval for trading through any trading facility for the
entirety of any class of Securities.
(h) Limitation on Other Securities To Be
Registered. In case of any registration, offering or sale
contemplated by paragraph (a) or (b) of Section 1, the
Company shall not, without the consent of the requesting
Stockholder, include in such registration, offering or sale
any Securities other than those beneficially owned by such
Stockholder. In case of any registration, offering or sale
contemplated by paragraph (e) of Section 1, the Company
shall be entitled to include in such registration, offering
or sale any Securities other than those being offered by the
Company and a Stockholder, pro rata, on the basis of the
amounts of securities covered by all requests of
stockholders received by the Company. In the case of a
transferee under Section 5, the Company shall be entitled to
include in any registration, offering or sale contemplated
by Section 1, all transferees making a request under such
section and at the option of the Company other persons
making similar requests, pro rata, on the basis of the
number of shares or principal amount of securities covered
by any such request.
9. Miscellaneous. (a) Severability. If any
term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provi-
sions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto
shall use their best efforts to find and employ an alterna-
tive means to achieve the same or substantially the same
result as that contemplated by such term, provision, cove-
nant or restriction. It is hereby stipulated and declared 3
to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and
restrictions without including any of such which may be
hereafter declared invalid, void or unenforceable.
(b) Assignment. Except as provided otherwise in
Section 5 hereof, and except by operation of law or in
connection with the sale of all or substantially all the
assets of a party hereto, this Agreement shall not be as-
signable, in whole or in part, directly or indirectly, by
either party hereto without the prior written consent of the
other, and any attempt to assign any rights or obligations
arising under this Agreement without such consent shall be
void; provided, however, that the provisions of this Agree-
ment shall be binding upon, inure to the benefit of and be
enforceable by the Stockholders and the Company (including,
solely for purposes of Section 4 hereof, their officers and
directors) and their respective successors and permitted
assigns.
(c) Further Assurances. Subject to the specific
terms of this Agreement, each of the Stockholders and the
Company shall make, execute, acknowledge and deliver such
other instruments and documents, and take all such other
actions, as may be reasonably required in order to
effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the spe-
cific terms of this Agreement, each of the Stockholders and
the Company shall, in connection with entering into this
Agreement, performing its obligations hereunder and taking
any and all actions relating hereto, comply with all appli-
cable laws, regulations, orders and decrees, obtain all
required consents and approvals and make all required fil-
ings with any governmental agency, other regulatory or
administrative agency, commission or similar authority and
promptly provide the other with all such information as the
other may reasonably request in order to be able to comply
with the provisions of this sentence.
(d) Parties in Interest. Except as herein other-
wise specifically provided, nothing in this Agreement
expressed or implied is intended or shall be construed to
confer any right or benefit upon any person, firm or corpo-
ration other than the Stockholders and the Company and their
respective successors and permitted assigns.
(e) Waivers, Etc. No failure or delay on the
part of a Stockholder or the Company in exercising any power
or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or
power. No modification or waiver of any provision of this
Agreement nor consent to any departure by a Stockholder or
the Company therefrom shall in any event be effective unless
the same shall be in writing, and then such waiver or con-
sent shall be effective only in the specific instance and
for the specific purpose for which given.
(f) Setoff. All payments to be made by either
party under this Agreement shall be made without setoff,
counterclaim or withholding, all of which are expressly
waived.
(g) Changes of Law. If, due to any change in
applicable law or regulations or the interpretation thereof
by any court of law or other governing body having juris-
diction subsequent to the date of this Agreement, perfor-
mance of any provision of this Agreement or any transaction
contemplated hereby shall become impracticable or impossi-
ble, the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such
provision.
(h) Confidentiality. Subject to any contrary
requirement of law and the right of a party to enforce its
rights hereunder in any legal action, each party shall keep
strictly confidential and shall cause its employees and
agents to keep strictly confidential, any information which
it or any of its agents or employees may acquire pursuant
to, or in the course of performing its obligations under,
any provision of this Agreement; provided, however, that
such obligations to maintain confidentiality shall not apply
to information which (i) at the time of disclosure was in
the public domain not as a result of acts by the receiving
party or (ii) was in the possession of the receiving party
at the time of disclosure.
(i) Entire Agreement. This Agreement contains the
entire understanding of the parties with respect to the
transactions contemplated hereby.
(j) Headings. Descriptive headings are for con-
venience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
(k) Counterparts. For the convenience of the
parties, any number of counterparts of this Agreement may be
executed by the parties hereto, and each such executed
counterpart shall be, and shall be deemed to be, an original
instrument.
(l) Notices. All notices, consents, requests,
instructions, approvals and other communications provided
for herein shall be validly given, made or served, if in
writing and delivered personally, by telegram or sent by
registered mail, postage prepaid, to:
he Company at: One Greenwich Plaza
Greenwich, CT 06830
the Stockholders at: One Greenwich Plaza
Greenwich, CT 06830
Attention of Mr. Howard E. Wille
or
One Greenwich Plaza
Greenwich, CT 06830
Attention of Mr. Charles J. Snyder
or to such other address as any party may, from time to
time, designate in a written notice given in a like manner.
Notice given by telegram shall be deemed delivered when
received by the recipient. Notice given by mail as set out
above shall be deemed delivered five calendar days after the
date the same is mailed.
(n) Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with
the laws of the State of Connecticut applicable to contracts
made and to be performed therein.
IN WITNESS WHEREOF, the Stockholder and the
Company have duly executed this Agreement as of the day and
year first above written.
/s/ Howard E. Wille
-------------------------
HOWARD E. WILLE
/s/ Charles J. Snyder
--------------------------
CHARLES J. SNYDER
FACTSET RESEARCH SYSTEM INC.,
by
/s/ Ernest S. Wong
-------------------------
Name: Ernest S. Wong
Title: Senior Vice
President and
Chief Financial
Officer
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made this 27th day of
June, 1996, between FactSet Research
Systems Inc., a Delaware corporation
(the "Company"), and Howard E. Wille
(the "Executive").
The Executive is presently employed by the Company
as Chairman of the Board of Directors and Chief Executive
Officer.
The Board of Directors of the Company (the
"Board") recognizes that the Executive's contribution to the
growth and success of the Company has been substantial. The
Board desires to provide for the continued employment of the
Executive and to make certain changes in the Executive's
employment arrangements with the Company which the Board has
determined will reinforce and encourage the continued
attention and dedication to the Company of the Executive as
a member of the Company's management, in the best interest
of the Company and its shareholders. The Executive is
willing to commit himself to continue to serve the Company,
on the terms and conditions herein provided.
In order to effect the foregoing, the Company and
the Executive wish to enter into an employment agreement on
the terms and conditions set forth below. Accordingly, in
consideration of the premises and the respective covenants
and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto
agree as follows:
SECTION 1. Employment. The Company hereby agrees
to continue to employ the Executive, and the Executive
hereby agrees to continue to serve the Company, on the terms
and conditions set forth herein.
SECTION 2. Term. The employment of the Executive
by the Company as provided in Section 1 will commence on
September 1, 1996 and end on August 31, 1999 unless further
extended or sooner terminated as hereinafter provided.
Commencing on September 1, 1999, and each September 1
thereafter, the term of the Executive's employment shall
automatically be extended for one additional year to,
respectively August 31, 2000, and each August 31 thereafter,
unless, not later than one year prior to the end of the term
(as may be extended for one-year additional periods as
provided herein), either party hereunder shall have given
notice to the other party that it does not wish to extend
this Agreement. If the Company gives the Executive notice
that it does not wish to extend this Agreement, the
Executive shall be entitled to the termination benefits
provided in Section 8(d) hereof.
SECTION 3. Position and Duties. The Executive
shall serve as Chairman of the Board and Chief Executive
Officer of the Company and shall have such responsibilities,
duties and authority as he may have as of the date hereof
(or any position to which he may be promoted after the date
hereof) and as may from time to time be assigned to the
Executive by the Board that are consistent with such
responsibilities, duties and authority. The Executive shall
devote substantially all his working time and efforts to the
business and affairs of the Company.
SECTION 4. Place of Performance. In connection
with the Executive's employment by the Company, the
Executive shall be based at the principal executive offices
of the Company in the New York City Metropolitan area
(including, but not limited to, Greenwich, Connecticut),
except for required travel on the Company's business to an
extent substantially consistent with present business travel
obligations.
SECTION 5. Compensation and Related Matters. (a)
Salary. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive an annual
base salary at a rate of $300,000, such salary to be paid in
substantially equal installments in accordance with the
Company's payroll practices for its executives. This salary
may be increased from time to time in accordance with normal
business practices of the Company and, if so increased,
shall not thereafter during the term of this Agreement be
decreased. Compensation of the Executive by salary payments
shall not be deemed exclusive and shall not present the
Executive from participating in any other compensation or
benefit plan of the Company. The salary payments (including
any increased salary payments) hereunder shall not in any
way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of
the Company to pay the Executive's salary hereunder.
(b) Bonus Compensation. The Executive shall be
entitled to receive annual bonus compensation in an amount
determined by the Board in its discretion; provided,
however, that if any such bonus (or portion thereof) will
fail to be deductible by the Company by reason of section
162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), the payment of such bonus (or portion thereof) will
be deferred until the first date that the payment of such
bonus can be paid without failing to be deductible by the
Company.
(c) Expenses. During the term of the Executive's
employment hereunder, the Executive shall be entitled to
receive prompt reimbursement for all reasonable and
customary expenses incurred by the Executive in performing
services hereunder, including all expenses of travel and
living expenses while away from home on business or at the
request of and in the service of the Company, provided that
such expenses are incurred and accounted for in accordance
with the policies and procedures established by the Company.
(d) Other Benefits. The Company shall maintain in
full force and effect, and the Executive shall be entitled
to continue to participate in, all of the employee benefit
plans and arrangements in effect on the date hereof in which
the Executive participates or plans or arrangements
providing the Executive with at least equivalent benefits
thereunder (including, without limitation, each retirement
plan, supplemental and excess retirement plans, employee
stock ownership plans' annual and long-term incentive
compensation plans, stock option and purchase plans, group
life insurance and accident plan, medical and dental
insurance plans, and disability plan), provided that the
Company shall not make any changes in such plans or
arrangements that would adversely affect the Executive's
rights or benefits thereunder; provided, however, that, such
a change may be made, including termination of such plans or
arrangements if it occurs pursuant to a program applicable
to all executives of the Company and does not result in a
proportionately greater reduction in the rights of or
benefits to the Executive as compared with any other
executive of the Company. The Executive shall be entitled to
participate in or receive benefits under any employee
benefit plan or arrangement made available by the Company in
the future to its executives and key management employees,
subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and
arrangements. Nothing paid to the Executive under any plan
or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable
to the Executive pursuant to paragraph (a) of this Section.
Any payments or benefits payable to the Executive hereunder
in respect of any calendar year during which the Executive
is employed by the Company for less than the entire such
year shall, unless otherwise provided in the applicable plan
or arrangement be prorated in accordance with the number of
days in such calendar year during which he is so employed.
(e) Vacations. The Executive shall be entitled to
no less than the number of vacation days in each calendar
year, and to compensation in respect of earned but unused
vacation days, determined in accordance with the Company's
vacation policy as in effect on the date hereof. The
Executive shall also be entitled to all paid holidays and
personal days given by the Company to its executives.
(f) Services Furnished. The Company shall furnish
the Executive with office space, stenographic assistance and
such other facilities and services as shall be suitable to
the Executive's position and adequate for the performance of
his duties as set forth in Section 3 hereof.
SECTION 6. Offices. Subject to Sections 3 and 4,
the Executive agrees to serve without additional
compensation, if elected or appointed thereto, as a director
of the Company and any of its subsidiaries and in one or
more executive offices of any of the Company's subsidiaries,
provided that the Executive is indemnified for serving in
any and all such capacities on a basis no less favorable
than is currently provided by the Company to any other
director of the Company or any of its subsidiaries.
SECTION 7. Termination. The Executive's employment
hereunder may be terminated without any breach of this
Agreement only under the following circumstances:
(a) Death. The Executive's employment
hereunder shall terminate upon his death.
(b) Disability. If, as a result of the
Executive's incapacity due to physical or mental
illness, the Executive shall have been absent from
his duties hereunder on a full-time basis for the
entire period of six consecutive months, and
within thirty (30) days after written notice of
termination is given (which may occur before or
after the end of such six
month period) shall not have returned to the
performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's
employment hereunder.
(c) Cause. The Company may terminate the
Executive's employment hereunder for Cause. For
purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment
hereunder upon (i) the willful and continued
failure by the Executive to substantially perform
his duties hereunder (other than any such failure
resulting from the Executive's incapacity due to
physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice
of Termination, as defined in Section 7(e), by the
Executive for Good Reason, as defined in Section
7(d)(ii)), after demand for substantial
performance is delivered by the Company that
specifically identifies the manner in which the
Company believes the Executive has not
substantially performed his duties, or (ii) the
willful engaging by the Executive in misconduct
which is materially injurious to the Company,
monetarily or otherwise (including, but not
limited to, conduct that constitutes Competitive
Activity, as defined in Section 10). For purposes
of this paragraph, no act, or failure to act, on
the Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his
action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been
terminated for Cause without (1) reasonable notice
to the Executive setting forth the reasons for the
Company's intention to terminate for Cause, (2) an
opportunity for the Executive, together with his
counsel, to be heard before the Board, and (3)
delivery to the Executive of a Notice of
Termination, as defined in subsection (e) hereof,
from the Board finding that in the good faith
opinion of three-quarters (3/4) of the Board the
Executive was guilty of conduct set forth above in
clause (i) or (ii) hereof, and specifying the
particulars thereof in detail.
(d) Termination by the Executive. (i) The
Executive may terminate his employment hereunder
(A) for Good Reason or (B) if his health should
become impaired to an extent that makes his
continued perfor-
mance of his duties hereunder hazardous to his
physical or mental health or his life, provided
that the Executive shall have furnished the
Company with a written statement from a qualified
doctor to such effect and provided, further, that,
at the Company's request, the Executive shall
submit to an examination by a doctor selected by
the Company and such doctor shall have concurred
in the conclusion of the Executive's doctor.
(ii) For purposes of this Agreement,
"Good Reason" shall mean (A) a failure by the
Company to comply with any material provision
of this Agreement which has not been cured
within ten (10) days after notice of such
noncompliance has been given by the Executive
to the Company, or (B) any purported
termination of the Executive's employment
which is not effected pursuant to a Notice of
Termination satisfying the requirements of
paragraph (e) hereof (and for purposes of
this Agreement no such purported termination
shall be effective).
(e) Notice of Termination. Any termination of
the Executive's employment by the Company or by
the Executive (other than termination pursuant to
subsection (a) hereof) shall be communicated by
written Notice of Termination to the other party
hereto in accordance with Section 12. For purposes
of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific
termination provision in this Agreement relied
upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis
for termination of the Executive's employment
under the provision so indicated.
(f) Date of Termination. "Date of
Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of
his death, (ii) if the Executive's employment is
terminated pursuant to subsection (b) above,
thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have
returned to the performance of his duties on a
full-time basis during such thirty (30)-day
period), (iii) if the Executive's employment is
terminated pursuant to subsection (c) above, the
date specified in the Notice of Termination, and
(iv) if the Executive's
employment is terminated for any other reason, the
date on which a Notice of Termination is given;
provided, however, that, if within thirty (30)
days after any Notice of Termination is given the
party receiving such Notice of Termination
notifies the other party that a dispute exists
concerning the termination, the Date of
Termination shall be the date on which the dispute
is finally determined, either by mutual written
agreement of the parties, by a binding and final
arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no
appeal having been perfected).
SECTION 8. Compensation Upon Termination or During
Disability. (a) During any period that the Executive fails
to perform his duties hereunder as a result of incapacity
due to physical or mental illness ("disability period"), the
Executive shall continue to receive his full salary at the
rate then in effect for such period until his employment is
terminated pursuant to Section 7(b) hereof, provided that
payments so made to the Executive during the first 180 days
of the disability period shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the
time of any such payment under disability benefit plans of
the Company or under the Social Security disability
insurance program, and which amounts were not previously
applied to reduce any such payment.
(b) If the Executive's employment is terminated by
his death, the Company shall pay any amounts due to the
Executive under Section 5 through the date of his death in
accordance with Section 11(b).
(c) If the Executive's employment shall be
terminated by the Company for Cause or by the Executive for
other than Good Reason, the Company shall pay the Executive
his full salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given and the
Company shall have no further obligations to the Executive
under this Agreement.
(d) If (A) in breach of this Agreement, the
Company shall terminate the Executive's employment other
than for disability pursuant to Section 7(b) or for Cause
(it being understood that a purported termination for
disability pursuant to Section 7(b) or for Cause which is
disputed and finally determined not to have been proper
shall be a termination by the Company in breach of this
Agreement), including any failure by the Company to extend
the term of this Agreement for any additional one year
period as provided in Section 2 hereof, or (B) the Executive
shall terminate his employment for Good Reason, then
(i) the Company shall pay the Executive his
full salary through the Date of Termination at the
rate in effect at the time Notice of Termination
is given and all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of
Termination under any compensation plan or program
of the Company, at the time such payments are due;
(ii) in lieu of any further salary payments
to the Executive for periods subsequent to the
Date of Termination, the Company shall pay as
liquidated damages to the Executive an amount
equal to three times the sum of (1) the
Executive's annual salary rate in effect as of the
Date of Termination and (2) the highest annual
amount payable to the Executive under the
Company's annual and long-term incentive
compensation plans during the three calendar years
which are the calendar year prior to the year in
which such Date of Termination occurs and the
immediately preceding two calendar years; such
payment to be made in a lump sum on or before the
fifth day following the Date of Termination;
(iii) if termination of the Executive's
employment arises out of a breach by the Company
of this Agreement, the Company shall pay all other
damages to which the Executive may be entitled as
a result of such breach, including damages for any
and all loss of benefits to the Executive under
the Company's employee benefit plans which the
Executive would have received if the Company had
not breached this Agreement and had the
Executive's employment continued for the full term
provided in Section 2 hereof, and including all
legal fees and expenses incurred by him as a
result of such termination, including the fees and
expenses of enforcing the terms of this Agreement.
(e) If the Executive shall terminate his
employment under clause (B) of subsection 7(d)(i) hereof,
the Company shall pay the Executive his full salary through
the Date of Termination at the rate in effect at the time
Notice of Termination is given.
(f) Unless the Executive is terminated for Cause,
the Company shall maintain in full force and effect, for the
continued benefit of the Executive for the greater of the
number of years (including partial years) remaining in the
term of employment hereunder or the number three (3), all
employee benefit plans and programs in which the Executive
was entitled to participate immediately prior to the Date of
Termination provided that the Executive's continued
participation is possible under the general terms and
provisions of such plans and programs. In the event that the
Executive's participation in any such plan or program is
barred, the Company shall arrange to provide the Executive
with benefits substantially similar to those which the
Executive would otherwise have been entitled to receive
under such plans and programs from which his continued
participation is barred.
(g) In the event that the Executive becomes
entitled to the payments provided in clauses (i)-(iii) of
Section 8(d) (the "Severance Payments"), if any of the
Severance Payments will be subject to the excise tax imposed
under section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the
Severance Payments and any Federal, state and local income
and employment tax and Excise Tax upon the payment provided
for by this Section 8(g), shall be equal to the Severance
Payments. For purposes of determining whether any of the
Severance Payments will be subject to the Excise Tax and the
amount of such Excise Tax, (i) any other payments or
benefits received or to be received by the Executive in
connection with a change in ownership or control (within the
meaning of section 280G of the Code and the regulations
promulgated thereunder) of the Company or the Executive's
termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement
with the Company, any person whose actions result in a
change in control or any Person affiliated with the Company
or such Person) shall be treated as "parachute payments"
within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payment" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by
the Company's independent auditors and reasonably acceptable
to the Executive such other payments or benefits (in whole
or in part) do not constitute parachute payments, including
by reason of
Section 280G(b)(4)(A) of the Code, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the
meaning of section 280G(b)(4)(B) of the Code, in excess of
the "base amount" allocable to such reasonable compensation,
or are otherwise not subject to the Excise Tax, (ii) the
amount of the Severance Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Severance Payments or (B) the
amount of excess parachute payments within the meaning of
section 280(G)(b)(1) of the Code (after applying clause (i),
above), and (iii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay Federal income taxes at
the highest marginal rate of Federal income taxation in the
calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the
Executive's residence on the Date of Termination, net of the
maximum reduction in Federal income taxes which could be
obtained from deduction of such state and local taxes.
SECTION 9. No Mitigation. The Executive shall have
no duty to mitigate damages by seeking other employment. The
Company shall have no right of offset hereunder with respect
to any compensation or benefits received by the Executive
from or in connection with any employment subsequent to his
employment termination with the Company.
SECTION 10. Noncompetition. During the period of
the Executive's employment hereunder and for two years
thereafter, the Executive shall not, directly or indirectly,
own, manage, operate, join or control, be employed by or
participate in the ownership, management, operation or
control of, or be a consultant to or connected in any other
manner with, any business, firm or corporation which is
similar to or competes with a principal business of the
Company or its subsidiaries (a "Competitive Activity"). For
these purposes, the Executive's ownership of securities or a
public company not in excess of one percent of any class of
such securities shall not be considered to be competition
with the Company or its subsidiaries.
SECTION 11. Successors; Binding Agreement. (a) The
Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory
to the Executive, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company
in the same amount and on the same terms as he would be
entitled to hereunder if he terminated his employment for
Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used
in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business
and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 11 or which otherwise
becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had
continued to live, all such amount unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the
Executive's estate.
SECTION 12. Notice. For the purposes of this
Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or
registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Howard E. Wille
291 Round Hill Road
Greenwich, CT 06831
If to the Company:
FactSet Research Corporation
One Greenwich Plaza
Greenwich, CT 06830
Attn: Corporate Secretary
or to such other address as any party may have furnished to
the others in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
SECTION 13. Miscellaneous. No provisions of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing
signed by the Executive and such officer of the Company as
may be specifically designated by the Board. No waiver by
either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
Connecticut without regard to its conflicts of law
principles.
SECTION 14. Validity. The invalidity or
unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in
full force and effect.
SECTION 15. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will
constitute one and the same instrument.
SECTION 16. Arbitration. Any dispute or
controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in New York,
New York, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Company shall be
entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation
of any violation of the provisions of Section 10 of the
Employment Agreement and the Executive hereby consents that
such restraining order or injunction may be granted without
the necessity of the Company's posting any bond, and
provided further that the Executive shall be entitled to
seek specific performance of his right to be paid until the
Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this
Agreement. The expense of such arbitration shall be borne by
the Company.
SECTION 17. Entire Agreement. This Agreement sets
forth the entire agreement of the parties hereto in respect
of the subject matter contained herein and supersedes all
prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral
or written, by any officer, employee or representative of
any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
FACTSET RESEARCH SYSTEMS INC.
by /s/ Ernest S. Wong
-------------------------
Name: Ernest S. Wong
Title: Senior Vice
President and
Chief Financial
Officer
EXECUTIVE
/s/ Howard E. Wille
-------------------------
Howard E. Wille
Attest:
/s/ Ernest S. Wong
--------------------
by Ernest S. Wong
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made this 27th day of
June, 1996, between FactSet Research
Systems Inc., a Delaware corporation
(the "Company"), and Charles J. Snyder
(the "Executive").
The Executive is presently employed by the Company
as President, Chief Technology Officer and Director.
The Board of Directors of the Company (the
"Board") recognizes that the Executive's contribution to the
growth and success of the Company has been substantial. The
Board desires to provide for the continued employment of the
Executive and to make certain changes in the Executive's
employment arrangements with the Company which the Board has
determined will reinforce and encourage the continued
attention and dedication to the Company of the Executive as
a member of the Company's management, in the best interest
of the Company and its shareholders. The Executive is
willing to commit himself to continue to serve the Company,
on the terms and conditions herein provided.
In order to effect the foregoing, the Company and
the Executive wish to enter into an employment agreement on
the terms and conditions set forth below. Accordingly, in
consideration of the premises and the respective covenants
and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto
agree as follows:
SECTION 1. Employment. The Company hereby agrees
to continue to employ the Executive, and the Executive
hereby agrees to continue to serve the Company, on the terms
and conditions set forth herein.
SECTION 2. Term. The employment of the Executive
by the Company as provided in Section 1 will commence on the
September 1, 1996 and end on August 31, 1999, unless further
extended or sooner terminated as hereinafter provided.
Commencing on September 1, 1999, and each September 1
thereafter, the term of the Executive's employment shall
automatically be extended for one additional year to,
respectively August 31, 2000, and each August 31 thereafter,
unless, not later than one year prior to the end of the term
(as may be extended for one-year additional periods as
provided herein), either party hereunder shall have given
notice to the other party that it does not wish to extend
this Agreement. If the Company gives the Executive notice
that it does not wish to extend this Agreement, the
Executive shall be entitled to the termination benefits
provided in Section 8(d) hereof.
SECTION 3. Position and Duties. The Executive
shall serve as President, Chief Technology Officer and
Director of the Company and shall have such
responsibilities, duties and authority as he may have as of
the date hereof (or any position to which he may be promoted
after the date hereof) and as may from time to time be
assigned to the Executive by the Board that are consistent
with such responsibilities, duties and authority. The
Executive shall devote substantially all his working time
and efforts to the business and affairs of the Company.
SECTION 4. Place of Performance. In connection
with the Executive's employment by the Company, the
Executive shall be based at the principal executive offices
of the Company in the New York City Metropolitan area
(including, but not limited to, Greenwich, Connecticut),
except for required travel on the Company's business to an
extent substantially consistent with present business travel
obligations.
SECTION 5. Compensation and Related Matters. (a)
Salary. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive an annual
base salary at a rate of $300,000, such salary to be paid in
substantially equal installments in accordance with the
Company's payroll practices for its executives. This salary
may be increased from time to time in accordance with normal
business practices of the Company and, if so increased,
shall not thereafter during the term of this Agreement be
decreased. Compensation of the Executive by salary payments
shall not be deemed exclusive and shall not present the
Executive from participating in any other compensation or
benefit plan of the Company. The salary payments (including
any increased salary payments) hereunder shall not in any
way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of
the Company to pay the Executive's salary hereunder.
(b) Bonus Compensation. The Executive shall be
entitled to receive annual bonus compensation in an amount
determined by the Board in its discretion; provided,
however, that if any such bonus (or portion thereof) will
fail to be deductible by the Company by reason of section
162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), the payment of such bonus (or portion thereof) will
be deferred until the first date that the payment of such
bonus can be paid without failing to be deductible by the
Company.
(c) Expenses. During the term of the Executive's
employment hereunder, the Executive shall be entitled to
receive prompt reimbursement for all reasonable and
customary expenses incurred by the Executive in performing
services hereunder, including all expenses of travel and
living expenses while away from home on business or at the
request of and in the service of the Company, provided that
such expenses are incurred and accounted for in accordance
with the policies and procedures established by the Company.
(d) Other Benefits. The Company shall maintain in
full force and effect, and the Executive shall be entitled
to continue to participate in, all of the employee benefit
plans and arrangements in effect on the date hereof in which
the Executive participates or plans or arrangements
providing the Executive with at least equivalent benefits
thereunder (including, without limitation, each retirement
plan, supplemental and excess retirement plans, employee
stock ownership plans' annual and long-term incentive
compensation plans, stock option and purchase plans, group
life insurance and accident plan, medical and dental
insurance plans, and disability plan), provided that the
Company shall not make any changes in such plans or
arrangements that would adversely affect the Executive's
rights or benefits thereunder; provided, however, that, such
a change may be made, including termination of such plans or
arrangements if it occurs pursuant to a program applicable
to all executives of the Company and does not result in a
proportionately greater reduction in the rights of or
benefits to the Executive as compared with any other
executive of the Company. The Executive shall be entitled to
participate in or receive benefits under any employee
benefit plan or arrangement made available by the Company in
the future to its executives and key management employees,
subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and
arrangements. Nothing paid to the Executive under any plan
or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable
to the Executive pursuant to paragraph (a) of this Section.
Any payments or benefits payable to the Executive hereunder
in respect of any calendar year during which the Executive
is employed by the Company for less than the entire such
year shall, unless otherwise provided in the applicable plan
or arrangement be prorated in accordance with the number of
days in such calendar year during which he is so employed.
(e) Vacations. The Executive shall be entitled to
no less than the number of vacation days in each calendar
year, and to compensation in respect of earned but unused
vacation days, determined in accordance with the Company's
vacation policy as in effect on the date hereof. The
Executive shall also be entitled to all paid holidays and
personal days given by the Company to its executives.
(f) Services Furnished. The Company shall furnish
the Executive with office space, stenographic assistance and
such other facilities and services as shall be suitable to
the Executive's position and adequate for the performance of
his duties as set forth in Section 3 hereof.
SECTION 6. Offices. Subject to Sections 3 and 4,
the Executive agrees to serve without additional
compensation, if elected or appointed thereto, as a director
of the Company and any of its subsidiaries and in one or
more executive offices of any of the Company's subsidiaries,
provided that the Executive is indemnified for serving in
any and all such capacities on a basis no less favorable
than is currently provided by the Company to any other
director of the Company or any of its subsidiaries.
SECTION 7. Termination. The Executive's employment
hereunder may be terminated without any breach of this
Agreement only under the following circumstances:
(a) Death. The Executive's employment
hereunder shall terminate upon his death.
(b) Disability. If, as a result of the
Executive's incapacity due to physical or mental
illness, the Executive shall have been absent from
his duties hereunder on a full-time basis for the
entire period of six consecutive months, and
within thirty (30) days after written notice of
termination is given (which may occur before or
after the end of such six month period) shall not
have returned to the performance of his duties
hereunder on a full-time
basis, the Company may terminate the Executive's
employment hereunder.
(c) Cause. The Company may terminate the
Executive's employment hereunder for Cause. For
purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment
hereunder upon (i) the willful and continued
failure by the Executive to substantially perform
his duties hereunder (other than any such failure
resulting from the Executive's incapacity due to
physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice
of Termination, as defined in Section 7(e), by the
Executive for Good Reason, as defined in Section
7(d)(ii)), after demand for substantial
performance is delivered by the Company that
specifically identifies the manner in which the
Company believes the Executive has not
substantially performed his duties, or (ii) the
willful engaging by the Executive in misconduct
which is materially injurious to the Company,
monetarily or otherwise (including, but not
limited to, conduct that constitutes Competitive
Activity, as defined in Section 10). For purposes
of this paragraph, no act, or failure to act, on
the Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his
action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been
terminated for Cause without (1) reasonable notice
to the Executive setting forth the reasons for the
Company's intention to terminate for Cause, (2) an
opportunity for the Executive, together with his
counsel, to be heard before the Board, and (3)
delivery to the Executive of a Notice of
Termination, as defined in subsection (e) hereof,
from the Board finding that in the good faith
opinion of three-quarters (3/4) of the Board the
Executive was guilty of conduct set forth above in
clause (i) or (ii) hereof, and specifying the
particulars thereof in detail.
(d) Termination by the Executive. (i) The
Executive may terminate his employment hereunder
(A) for Good Reason or (B) if his health should
become impaired to an extent that makes his
continued performance of his duties hereunder
hazardous to his physical or mental health or his
life, provided that the
Executive shall have furnished the Company with a
written statement from a qualified doctor to such
effect and provided, further, that, at the
Company's request, the Executive shall submit to
an examination by a doctor selected by the Company
and such doctor shall have concurred in the
conclusion of the Executive's doctor.
(ii) For purposes of this Agreement,
"Good Reason" shall mean (A) a failure by the
Company to comply with any material provision
of this Agreement which has not been cured
within ten (10) days after notice of such
noncompliance has been given by the Executive
to the Company, or (B) any purported
termination of the Executive's employment
which is not effected pursuant to a Notice of
Termination satisfying the requirements of
paragraph (e) hereof (and for purposes of
this Agreement no such purported termination
shall be effective).
(e) Notice of Termination. Any termination of
the Executive's employment by the Company or by
the Executive (other than termination pursuant to
subsection (a) hereof) shall be communicated by
written Notice of Termination to the other party
hereto in accordance with Section 12. For purposes
of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific
termination provision in this Agreement relied
upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis
for termination of the Executive's employment
under the provision so indicated.
(f) Date of Termination. "Date of
Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of
his death, (ii) if the Executive's employment is
terminated pursuant to subsection (b) above,
thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have
returned to the performance of his duties on a
full-time basis during such thirty (30)-day
period), (iii) if the Executive's employment is
terminated pursuant to subsection (c) above, the
date specified in the Notice of Termination, and
(iv) if the Executive's employment is terminated
for any other reason, the date on which a Notice
of Termination is given; provided,
however, that, if within thirty (30) days after
any Notice of Termination is given the party
receiving such Notice of Termination notifies the
other party that a dispute exists concerning the
termination, the Date of Termination shall be the
date on which the dispute is finally determined,
either by mutual written agreement of the parties,
by a binding and final arbitration award or by a
final judgment, order or decree of a court of
competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been
perfected).
SECTION 8. Compensation Upon Termination or During
Disability. (a) During any period that the Executive fails
to perform his duties hereunder as a result of incapacity
due to physical or mental illness ("disability period"), the
Executive shall continue to receive his full salary at the
rate then in effect for such period until his employment is
terminated pursuant to Section 7(b) hereof, provided that
payments so made to the Executive during the first 180 days
of the disability period shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the
time of any such payment under disability benefit plans of
the Company or under the Social Security disability
insurance program, and which amounts were not previously
applied to reduce any such payment.
(b) If the Executive's employment is terminated by
his death, the Company shall pay any amounts due to the
Executive under Section 5 through the date of his death in
accordance with Section 11(b).
(c) If the Executive's employment shall be
terminated by the Company for Cause or by the Executive for
other than Good Reason, the Company shall pay the Executive
his full salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given and the
Company shall have no further obligations to the Executive
under this Agreement.
(d) If (A) in breach of this Agreement, the
Company shall terminate the Executive's employment other
than for disability pursuant to Section 7(b) or for Cause
(it being understood that a purported termination for
disability pursuant to Section 7(b) or for Cause which is
disputed and finally determined not to have been proper
shall be a termination by the Company in breach of this
Agreement), including any failure by the Company to extend
the term of this Agreement for any additional one year
period as provided in Section 2 hereof, or (B) the Executive
shall terminate his employment for Good Reason, then
(i) the Company shall pay the Executive his
full salary through the Date of Termination at the
rate in effect at the time Notice of Termination
is given and all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of
Termination under any compensation plan or program
of the Company, at the time such payments are due;
(ii) in lieu of any further salary payments
to the Executive for periods subsequent to the
Date of Termination, the Company shall pay as
liquidated damages to the Executive an amount
equal to three times the sum of (1) the
Executive's annual salary rate in effect as of the
Date of Termination and (2) the highest annual
amount payable to the Executive under the
Company's annual and long-term incentive
compensation plans during the three calendar years
which are the calendar year prior to the year in
which such Date of Termination occurs and the
immediately preceding two calendar years; such
payment to be made in a lump sum on or before the
fifth day following the Date of Termination;
(iii) if termination of the Executive's
employment arises out of a breach by the Company
of this Agreement, the Company shall pay all other
damages to which the Executive may be entitled as
a result of such breach, including damages for any
and all loss of benefits to the Executive under
the Company's employee benefit plans which the
Executive would have received if the Company had
not breached this Agreement and had the
Executive's employment continued for the full term
provided in Section 2 hereof, and including all
legal fees and expenses incurred by him as a
result of such termination, including the fees and
expenses of enforcing the terms of this Agreement.
(e) If the Executive shall terminate his
employment under clause (B) of subsection 7(d)(i) hereof,
the Company shall pay the Executive his full salary through
the Date of Termination at the rate in effect at the time
Notice of Termination is given.
(f) Unless the Executive is terminated for Cause,
the Company shall maintain in full force and effect, for the
continued benefit of the Executive for the greater of the
number of years (including partial years) remaining in the
term of employment hereunder or the number three (3), all
employee benefit plans and programs in which the Executive
was entitled to participate immediately prior to the Date of
Termination provided that the Executive's continued
participation is possible under the general terms and
provisions of such plans and programs. In the event that the
Executive's participation in any such plan or program is
barred, the Company shall arrange to provide the Executive
with benefits substantially similar to those which the
Executive would otherwise have been entitled to receive
under such plans and programs from which his continued
participation is barred.
(g) In the event that the Executive becomes
entitled to the payments provided in clauses (i)-(iii) of
Section 8(d) (the "Severance Payments"), if any of the
Severance Payments will be subject to the excise tax imposed
under section 4999 of the Code (the "Excise Tax"), the
Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the
Severance Payments and any Federal, state and local income
and employment tax and Excise Tax upon the payment provided
for by this Section 8(g), shall be equal to the Severance
Payments. For purposes of determining whether any of the
Severance Payments will be subject to the Excise Tax and the
amount of such Excise Tax, (i) any other payments or
benefits received or to be received by the Executive in
connection with a change in ownership or control (within the
meaning of section 280G of the Code and the regulations
promulgated thereunder) of the Company or the Executive's
termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement
with the Company, any person whose actions result in a
change in control or any Person affiliated with the Company
or such Person) shall be treated as "parachute payments"
within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payment" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by
the Company's independent auditors and reasonably acceptable
to the Executive such other payments or benefits (in whole
or in part) do not constitute parachute payments, including
by reason of
Section 280G(b)(4)(A) of the Code, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the
meaning of section 280G(b)(4)(B) of the Code, in excess of
the "base amount" allocable to such reasonable compensation,
or are otherwise not subject to the Excise Tax, (ii) the
amount of the Severance Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Severance Payments or (B) the
amount of excess parachute payments within the meaning of
section 280(G)(b)(1) of the Code (after applying clause (i),
above), and (iii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay Federal income taxes at
the highest marginal rate of Federal income taxation in the
calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the
Executive's residence on the Date of Termination, net of the
maximum reduction in Federal income taxes which could be
obtained from deduction of such state and local taxes.
SECTION 9. No Mitigation. The Executive shall have
no duty to mitigate damages by seeking other employment. The
Company shall have no right of offset hereunder with respect
to any compensation or benefits received by the Executive
from or in connection with any employment subsequent to his
employment termination with the Company.
SECTION 10. Noncompetition. During the period of
the Executive's employment hereunder and for two years
thereafter, the Executive shall not, directly or indirectly,
own, manage, operate, join or control, be employed by or
participate in the ownership, management, operation or
control of, or be a consultant to or connected in any other
manner with, any business, firm or corporation which is
similar to or competes with a principal business of the
Company or its subsidiaries (a "Competitive Activity"). For
these purposes, the Executive's ownership of securities or a
public company not in excess of one percent of any class of
such securities shall not be considered to be competition
with the Company or its subsidiaries.
SECTION 11. Successors; Binding Agreement. (a) The
Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory
to the Executive, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company
in the same amount and on the same terms as he would be
entitled to hereunder if he terminated his employment for
Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used
in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business
and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 11 or which otherwise
becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had
continued to live, all such amount unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the
Executive's estate.
SECTION 12. Notice. For the purposes of this
Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or
registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Charles J. Snyder
700 Waverly Road
Ridgewood, N.J. 07450
If to the Company:
FactSet Research Corporation
One Greenwich Plaza
Greenwich, CT 06830
Attn: Corporate Secretary
or to such other address as any party may have furnished to
the others in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
SECTION 13. Miscellaneous. No provisions of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing
signed by the Executive and such officer of the Company as
may be specifically designated by the Board. No waiver by
either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
Connecticut without regard to its conflicts of law
principles.
SECTION 14. Validity. The invalidity or
unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in
full force and effect.
SECTION 15. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will
constitute one and the same instrument.
SECTION 16. Arbitration. Any dispute or
controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in New York,
New York, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Company shall be
entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation
of any violation of the provisions of Section 10 of the
Employment Agreement and the Executive hereby consents that
such restraining order or injunction may be granted without
the necessity of the Company's posting any bond, and
provided further that the Executive shall be entitled to
seek specific performance of his right to be paid until the
Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this
Agreement. The expense of such arbitration shall be borne by
the Company.
SECTION 17. Entire Agreement. This Agreement sets
forth the entire agreement of the parties hereto in respect
of the subject matter contained herein and supersedes all
prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral
or written, by any officer, employee or representative of
any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter
contained herein is hereby terminated and cancelled.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
FACTSET RESEARCH SYSTEMS INC.
by
/s/ Ernest S. Wong
--------------------------
Name: Ernest S. Wong
Title: Senior Vice
President and
Chief Financial
Officer
EXECUTIVE
/s/ Charles J. Snyder
-------------------------
Charles J. Snyder
Attest:
/s/ Ernest S. Wong
--------------------
by Ernest S. Wong