0000950135-01-503240.txt : 20011101
0000950135-01-503240.hdr.sgml : 20011101
ACCESSION NUMBER: 0000950135-01-503240
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 4
CONFORMED PERIOD OF REPORT: 20011031
ITEM INFORMATION: Other events
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011031
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: DELANO TECHNOLOGY CORP
CENTRAL INDEX KEY: 0001100043
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389]
STATE OF INCORPORATION: A6
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 333-94505
FILM NUMBER: 1771132
BUSINESS ADDRESS:
STREET 1: 302 TOWN CENTRE BLVD.
STREET 2: MARKHAM, ONTARIO, L3R OE8
CITY: ONTARIO CANADA
STATE: A6
ZIP: 00000
BUSINESS PHONE: 905-947-2222
MAIL ADDRESS:
STREET 1: 302 TOWN CENTRE BLVD
STREET 2: MARKHAM
CITY: ONTARIO
STATE: A6
ZIP: 00000
8-K
1
b41027dte8-k.txt
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): October 31, 2001
Delano Technology Corporation
(Exact Name of Registrant as Specified in Charter)
Ontario, Canada 333-94505 98-0206122
(State or Other Jurisdiction of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
302 Town Centre Boulevard
Markham, Ontario, Canada L3R 0E8
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (905) 947-2222
Item 5. OTHER EVENTS.
On October 31, 2001, Delano Technology Corporation (the "Company")
announced that the Company has named Vikas Kapoor as the Chief Executive Officer
of the Company and certain subsidiaries of the Company. Mr. Kapoor has served as
a member of the Company's Board of Directors since July 2001. Prior to accepting
the position of CEO of the Company, Mr. Kapoor was Chairman and Chief Executive
Officer of Opera Ventures, a privately held firm which specializes in
turnarounds and restructurings. As an essential inducement to his employment,
the Company granted Mr. Kapoor 4,230,000 common shares, which vest over 30
months, subject to accelerated vesting in the event of a business combination
and upon other events specified in the Restricted Share Agreement. Copies of the
related press release and the relevant agreements entered into between the
Company and Mr. Kapoor are attached as an exhibits hereto and are incorporated
by reference herein.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
99.1 Press Release dated October 31, 2001.
99.2 Employment Agreement by and between the Company and Vikas
Kapoor, dated as of October 5, 2001.
99.3 Restricted Share Agreement by and between the Company and
Vikas Kapoor, dated as of October 5, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be signed on its behalf by
the undersigned authorized officer.
DELANO TECHNOLOGY CORPORATION
Toronto, Ontario
October 31, 2001
By:/s/ David Lewis
_____________________________
David Lewis
Vice President, Legal &
General Counsel
-2-
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release dated October 31, 2001.
99.2 Employment Agreement by and between the Company and
Vikas Kapoor, dated as of October 5, 2001.
99.3 Restricted Share Agreement by and between the Company
and Vikas Kapoor, dated as of October 5, 2001.
-3-
EX-99.1
3
b41027dtex99-1.txt
PRESS RELEASE DATED 10/31/2001
[DELANO LOGO]
Exhibit 99.1
EMBARGOED FOR RELEASE FOR
6:30 A.M. EST, WEDNESDAY
OCTOBER 31, 2001
Contact: Thomas Hearne Contact: Andre Fuochi
Chief Financial Officer Media Relations Contact
Delano Technology Corporation Maverick Public Relations
T: 905-947-2136 T: 416-640-5519
E: thearne@delanotech.com E:andref@maverickpr.com
DELANO ANNOUNCES IMPROVED OPERATING RESULTS
KAPOOR BECOMES CEO
Toronto - October 31, 2001 - Delano Technology Corporation (NASDAQ: DTEC, TSE:
DLN) today announced a solid quarter in terms of operating performance -
including substantial revenue gains and pro forma operating profitability.
In fiscal Q2, ended September 30, 2001, Delano recorded nearly $4.0 million in
revenue, a 30% increase over Q1. The signing of several blue chip companies
drove the revenue increase.
"We are the fastest and lowest cost way for a business to get up-and-running
with a CRM solution," said Vikas Kapoor, the new CEO of Delano. "Delano's value
proposition plays well at any time, but particularly in today's down market, and
has allowed us to achieve revenue growth during a difficult period for the
software industry."
In addition, the company broke even on a pro forma operating cash basis. "We
made very tough restructuring choices in July that have helped Delano achieve
this positive result sooner than expected. We are now ready to invest to fuel
future growth, " continued Kapoor.
CEO Appointment
Delano's board also announced that Kapoor has become Delano's CEO. "Vikas has
the vision and experience to build a world-class company," said Dennis Bennie,
Chairman of Delano. "He knows Delano well through his work on our board and
brings deep operational strength to the running of the company."
Since July, the company has slashed costs and re-focused resources to position
Delano as the low-cost provider of customized CRM solutions. "A lot of hard work
remains to be done, but we are turning the corner and I am optimistic about our
outlook," said Kapoor.
"Delano's roots as a premier provider of email marketing solutions will serve us
well as that market continues to grow. I am eager to leverage that foothold and
position Delano as a broader provider of innovative marketing solutions, "
concluded Kapoor.
"Vikas is a superb strategic thinker and we have enormous confidence in his
vision for the future of the business," concluded Bennie.
Kapoor previously served as President and CEO of Walker Digital in Stamford, CT,
an incubator of marketing-oriented, internet-based businesses. Prior to that, he
co-founded and built the Mitchell Madison Group, a global consulting firm with
$200 million in revenues.
Kapoor has an undergraduate degree from Princeton and an MBA from Harvard
Business School, where he was a Baker Scholar.
Operating Results
Highlights of the company's operating results include:
- Pro forma net income, excluding the recovery of deferred stock-based
compensation, restructuring charges, asset impairment and depreciation
for the quarter was $30,000, compared to a pro forma net loss
(excluding the same items and in-process research and development) of
$7.3 million or ($0.24) per share for the same period in the prior
year and a pro forma net loss (excluding the same items) of ($0.32)
cents per share in the June 2001 quarter.
- Revenues in Q2 were nearly $4.0 million compared to revenues of $3.0
million in the June, 2001 quarter.
- The company had cash on hand of $12.4 million on September 30, 2001
and approximately $14 million as of October 30, 2001.
- The Company will add to its deferred stock-based compensation charge
in future quarters related to Kapoor's compensation package that
includes a grant of 4,230,000 common shares, which vest over 30 months
subject to accelerated vesting in certain circumstances.
Analysts and Investors Call
An analysts and investors conference call to discuss the details of this
announcement will take place on October 31, 2001 at 8:00 a.m. EST.
Dial in: (416) 695-5806
Live Web cast: www.delanotech.com/investors
A replay of the call will be available for one week, and will be accessible at
(416) 695-5800, access code 956521.
ABOUT DELANO TECHNOLOGY CORPORATION
Delano is a CRM software company that provides an enterprise with the most
flexible and effective way to intelligently manage the customer interactions
that maximize customer value and enhance corporate profitability. The company's
marketing and customer service applications combine advanced analytics with rich
interaction capabilities to enable marketing intelligent, two-way dialogues
between an enterprise and its customers. Delano's customers include
industry-leading new economy, Fortune 500 and Global 2000 enterprises including
Compaq, Charles Schwab, Warner Music Group, Nortel Networks, Ericsson, and i2
Technologies. The Company is headquartered in Toronto, Canada. For additional
information, contact Delano Technology Corporation, 302 Town Centre Boulevard,
Markham, ON, L3R OE8; www.delanotech.com
Delano is a trademark of Delano Technology International SRL. All other company
and product names mentioned are the trademarks or registered trademarks of their
respective companies.
This press release contains forward-looking statements, including statements
which are made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995, regarding the Company's financial performance for
the quarter ended September 30, 2001 and regarding the Company's expected
financial performance for the following fiscal quarters, expected future
customer demand, the Company's ability to adapt to changing market conditions
and to compete and the Company's future cash requirements. These statements are
neither promises nor guarantees, but are subject to risks and uncertainties that
could cause actual results to differ materially from those contained in the
forward-looking statements, including without limitation risks relating to: the
change in the Company's limited operating history and its history of losses, the
Company's relatively fixed operating expenses, rapid technological change in the
Company's marketplace, the Company's dependence on sales of its e-Business
Interaction Suite and product enhancements, integration of the Company's recent
acquisitions, increased levels of competition with the Company's industry and
the level of demand for the Company's products and services. A more detailed
discussion of these and other important risk factors can be found in the
Company's filings with the SEC, including the Company's Form 10-K for the period
ending March 31, 2001 and the company's Form 10-Q for the period ending June 30,
2001. Readers should not place undue reliance on any such forward-looking
statements, which speak only as of the date they are made. The Company disclaims
any obligation to publicly update or revise any such statements to reflect any
change in Company expectations or in events, conditions, or circumstances on
which any such statements may be based, or that may affect the likelihood that
actual results will differ from those set forth in such forward-looking
statements.
###
DELANO TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
SEPTEMBER 30, MARCH 31,
2001 2001
-------- -----------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents.................................... $ 12,378 $ 34,209
Short-term investments....................................... -- 1,155
Accounts receivable trade.................................... 5,347 8,099
Prepaid expenses and other................................... 1,297 3,674
------------ -----------
Total current assets....................................... 19,022 47,137
Property and equipment.......................................... 3,324 11,300
Goodwill and identifiable intangibles, net ..................... -- 5,217
Other assets ................................................... 263 985
------------ -----------
Total assets.................................................... $ 22,609 $ 64,639
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities..................... $ 3,092 $ 8,960
Current portion of restructuring charge accrual.............. 2,813 2,411
Deferred revenue............................................. 704 1,975
Current portion of obligations under capital leases.......... 145 182
------------ -----------
Total current liabilities.................................. 6,754 13,528
Long-term liabilities:
Obligations under capital leases............................. -- 49
Restructuring accrual........................................ 2,516 1,121
------------ -----------
Total liabilities............................................... 9,270 14,698
Shareholders' equity:
Capital stock................................................ 222,331 230,647
Warrant...................................................... 496 496
Deferred stock-based compensation............................ (2,218) (8,464)
Accumulated other comprehensive losses....................... (340) (340)
Deficit...................................................... (206,930) (172,398)
------------- ------------
Total shareholders' equity................................. 13,339 49,941
------------ -----------
Total liabilities and shareholders' equity...................... $ 22,609 $ 64,639
============ ===========
DELANO TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
Three months ended Six months ended
September 30, September 30,
2001 2000 2001 2000
---------- ---------- ---------- ----------
Revenues:
License $ 2,058 $ 7,009 $ 3,259 $ 12,370
Service 1,902 1,025 3,737 1,682
-------- -------- -------- --------
Total revenues 3,960 8,034 6,996 14,052
-------- -------- -------- --------
Cost of revenues:
License 309 122 386 181
Service 1,041 1,169 2,868 1,970
-------- -------- -------- --------
Total cost of revenues 1,350 1,291 3,254 2,151
-------- -------- -------- --------
Gross profit 2,610 6,743 3,742 11,901
-------- -------- -------- --------
Operating expenses:
Sales and marketing 1,405 11,116 9,554 21,504
Research and development 1,315 3,856 6,247 6,176
General and administrative 467 1,142 1,902 2,140
Amortization (recovery) of deferred
stock-based compensation (925) 856 (2,144) 2,480
In process research and development -- 360 -- 360
Amortization of goodwill and identifiable
intangibles -- -- 287 --
Impairment of goodwill -- -- 4,930 --
Asset impairment 7,026 -- 7,026 --
Restructuring charges 6,654 -- 10,889 --
-------- -------- -------- --------
Total operating expenses 15,942 17,330 38,691 32,660
-------- -------- -------- --------
Operating loss (13,332) (10,587) (34,949) (20,759)
Interest and other income, net 218 1,384 563 2,926
Equity in loss of associated company (80) -- (146) --
-------- -------- -------- --------
Loss before income taxes (13,194) (9,203) (34,532) (17,833)
Income taxes -- -- -- --
-------- -------- -------- --------
Net loss (13,194) (9,203) (34,532) (17,833)
-------- -------- -------- --------
Basic and diluted loss per common share $ (0.35) $ (0.30) $ (0.92) $ (0.59)
======== ======== ======== ========
Shares used in computing basic and diluted
loss per common share (in thousands) 37,594 30,264 37,436 30,112
======== ======== ======== ========
Pro forma basic and diluted income (loss)
(excluding restructuring charges,
asset impairment, impairment and
amortization of goodwill and identifiable
intangibles, amortization (recovery) of
deferred stock-based compensation and
depreciation) $ 30 $ (7,288) $(11,831) $(13,918)
======== ======== ======== ========
Pro forma basic and diluted income (loss)
per common share (excluding restructuring
charges, asset impairment, impairment and
amortization of goodwill and identifiable
intangibles, amortization (recovery) of deferred
stock-based compensation and depreciation) $ 0.00 $ (0.24) $ (0.32) $ (0.46)
======== ======== ======== ========
DELANO TECHNOLOGY CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS)
SIX MONTHS ENDED
SEPTEMBER 30,
2001 2000
------- -------
Cash provided by (used in):
Operating activities:
Loss for the period $(34,532) $(17,833)
Depreciation and amortization which does not involve cash 1,897 984
Amortization (recovery) of deferred stock-based compensation (2,144) 2,480
Impairment of goodwill 4,930 --
Equity in loss of associated company 146 --
Non-cash charges 7,001 360
Changes in non-cash operating working capital:
Accounts receivable trade 2,752 (4,699)
Prepaid expenses and other assets 2,352 (1,164)
Accounts payable and accrued liabilities (5,804) 3,998
Restructuring charge accrual 1,797 --
Deferred revenue (1,271) 80
------- -------
Net cash used in operating activities (22,876) (15,794)
Financing activities:
Issuance of common shares and warrants 74 1,061
Payment on notes payable -- (745)
Repayment of obligations under capital leases (88) (88)
------- -------
Net cash provided by (used in) financing activities (14)
Investing activities:
Sale of short-term investments 1,155 28,012
Additions to property and equipment (234) (8,124)
Cash used in acquisition -- (1,451)
Proceeds on sale of fixed assets 175 --
------- -------
Cash provided by investing activities 1,096 18,437
Effect of currency translation of cash balances (37) (37)
------- -------
Increase (decrease) in cash and cash equivalents (21,831) 2,834
Cash and cash equivalents, beginning of period 34,209 82,370
------- -------
Cash and cash equivalents, end of period $ 12,378 $ 85,204
======== ========
EX-99.2
4
b41027dtex99-2.txt
EMPLOYMENT AGREEMENT
Exhibit 99.2
EMPLOYMENT AGREEMENT (the "Agreement") made as of October 5, 2001, (the
"Effective Date") by and between Delano Technology Corporation, an Ontario
corporation ("Delano" or the "Company") and Vikas Kapoor ("Kapoor").
WHEREAS, the Company desires to induce Kapoor to accept employment with
the Company and one or more of its subsidiaries as Chief Executive Officer and
Kapoor desires to be employed by the Company and one or more of the Company's
subsidiaries as Chief Executive Officer pursuant to the terms of this agreement;
AND WHEREAS as an essential inducement to Kapoor's employment with the
Company, the Company and Kapoor are entering into a Restricted Share Agreement
whereby the Company will grant common shares to Kapoor
AND WHEREAS this Employment Agreement, together with the Restricted
Share Agreement, is intended by the Company and Kapoor to constitute a written
compensation contract for purposes of the definition of "Employment Benefit
Plan" in Rule 405 under the U.S. Securities Act of 1933.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. TERM.
(a) The Company hereby agrees to employ Kapoor and Kapoor
hereby agrees to accept employment with the Company, in the positions set forth
in Section 2 below, for the Term (as defined below), subject to the terms and
conditions of this Agreement.
(b) The term (the "Term") of this Agreement shall
commence as of the Effective Date and shall continue until terminated pursuant
to section 4.
2. POSITIONS; DUTIES AND RESPONSIBILITIES.
(a) During the Term, Kapoor shall serve the Company as
President and Chief Executive Officer and as a member of the Board of Directors.
Kapoor shall have such duties and responsibilities as are incidental to, or
reasonably requested in connection with, such positions, as well as such other
comparable duties and responsibilities as may be reasonably assigned to him by
Delano's Board of Directors or an authorized committee of the Board of
Directors. Kapoor shall be located in New York, and shall travel to such other
cities as may be required in his reasonable discretion.
(b) During the Term, Kapoor shall serve the Company
faithfully, diligently and to the best of Kapoor's ability, and shall devote
substantially all of his business time and efforts to his employment with the
Company; provided, however, that nothing in this Agreement shall preclude Kapoor
from engaging in personal investment opportunities and one ongoing project which
has been disclosed to the Company, referred to as the "Mergent Project;"
provided that, (i) the time devoted by Kapoor to the Mergent Project and his
personal
investment opportunities shall not materially and substantially interfere with
or derogate from his material obligations under this Agreement on an ongoing
basis, and (ii) Kapoor will not pursue or participate in a personal investment
which creates a conflict of interest between Kapoor, the Company or any customer
or potential customer of the Company, or which may materially adversely affect
the goodwill of the Company.
3. COMPENSATION.
(a) Base Salary. During the Term, the Company shall pay
to Kapoor a base salary at the rate of $500,000 per year ("Base Salary"),
subject to increase in the discretion of the Compensation Committee of the Board
of Directors and payable in accordance with the regular payroll practices of the
Company.
(b) Bonus. A bonus will be paid to Kapoor from time to
time, as may be determined in the discretion of the Compensation Committee of
the Board of Directors.
(c) Benefits. Subject to any contribution therefore
generally required of senior executives of Delano, Kapoor shall be entitled to
participate in all employee benefits plans, including Delano's health and dental
plans, as adopted by the Board of Directors and in effect for the most senior
executives of the Company. Such participation shall be subject to (a) the terms
of the applicable plan documents, (b) generally applicable Company policies and
(c) the discretion of the Board or any administrative or other committee
provided for in or contemplated by such plans. The Company may alter, modify,
add to, or delete its employee benefits plans at any time as the Company, in its
sole judgment, determines to be appropriate. Kapoor shall be entitled to 15 days
of annual vacation, in accordance with applicable Company policies. Kapoor shall
be entitled to expense reimbursement for any expenses reasonably incurred in
performing his duties on behalf of the Company, prior to any termination.
(d) Restricted Shares. Issue From Treasury - Delano shall
grant to Kapoor, pursuant to the terms of a separate agreement (the "Restricted
Share Agreement"), an aggregate of 4,230,000 common shares of the Company (the
"Restricted Shares") which Restricted Shares shall be granted as at the
Effective Date, subject to the restrictions and rights as set out in the
Restricted Share Agreement. An 83(b) election may be made by Kapoor and, in such
event, both Kapoor and the Company agree to make all appropriate filings in such
connection. The Restricted Shares shall vest and become freely tradable by
Kapoor to the extent of 1/6 of the aggregate number of shares immediately upon
the Effective Date, and monthly in equal numbers of shares thereafter for thirty
(30) months following the Effective Date, at which time, subject to the terms
herein and the Restricted Share Agreement, one hundred percent (100%) of the
Restricted Shares shall be vested and fully tradable. The Restricted Shares
shall fully vest and become fully tradable on an accelerated basis upon: (i) a
"Business Combination," as defined in Exhibit A to the Restricted Share
Agreement; (ii) death or disability as hereinafter provided; or (iii) the
termination of Kapoor's employment without Cause by the Company or by Kapoor for
Good Reason, as hereinafter provided. To the extent of any conflict between this
Agreement and the Restricted Share Agreement, the terms of this Agreement shall
control.
4. TERMINATION OF EMPLOYMENT.
(a) Termination Due to Death or Disability. Upon the
termination of Kapoor's employment under this Agreement during the Term due to
Kapoor's death or Kapoor's Disability (as defined in Section 5(b)), Company
shall provide to Kapoor, or Kapoor's legal representative, within ten (10) days
of such termination, (i) payment of any Base Salary earned through the date of
the termination of Kapoor's employment with the Company; (ii) payment of
additional salary equal to one (1) year Base Salary; (iii) reimbursement of
expenses incurred by Kapoor up through the date of such termination; and (iv)
payment of the earned but unpaid Bonus, if any. In such event, all theretofore
unvested Restricted Shares shall vest in accordance with the terms of the
Restricted Share Agreement.
(b) Termination by the Company for Cause. If Kapoor's
employment is terminated by the Company for Cause (as defined in Section 5(a))
during the Term, Kapoor shall be entitled to any Base Salary earned and expenses
not reimbursed through the date of the termination of Kapoor's employment with
the Company. Kapoor shall be entitled to no other or additional payments under
this Agreement.
(c) Termination Without Cause. If, during the Term, Kapoor's
employment is terminated by the Company without Cause or he resigns for Good
Reason (as hereinafter defined), which he shall have the right to do upon
written notice to the Company, Company shall provide to Kapoor, within ten (10)
days of such termination: (i) payment of any Base Salary earned through the date
of the termination of Kapoor's employment with the Company; (ii) payment of
additional salary equal to one (1) year Base Salary; (iii) reimbursement of
expenses incurred by Kapoor up through the date of such termination; and (iv)
payment of the earned but unpaid Bonus, if any. In such event, all theretofore
unvested Restricted Shares shall vest in accordance with the terms of the
Restricted Share Agreement. Kapoor shall be entitled to no other or additional
payments under this Agreement. Notwithstanding the foregoing, if Kapoor elects
not to terminate his services hereunder by reason of a Business Combination (as
defined in paragraph 5(d)) then in such event Kapoor shall be entitled to the
acceleration of unvested Restricted Shares as provided hereunder but not to the
payments provided for in paragraphs 4(c) (ii). Termination without Cause and
termination for Good Reason, shall not include a termination pursuant to
Sections 4(a), (b), or (d).
(d) Voluntary Termination. Kapoor may voluntarily
terminate his employment at any time upon written notice to the Board of
Directors of the Company. After Kapoor gives notice, Company may terminate
Kapoor's employment at any time with or without Cause, and the termination will
for purposes of this Agreement be treated as a Voluntary Termination under this
paragraph (d). In the event of a Voluntary Termination, Kapoor shall be entitled
to any Base Salary earned and unreimbursed expenses incurred through the date of
the termination of Kapoor's employment with the Company. Kapoor shall be
entitled to no other or additional payments under this Agreement.
5. DEFINITIONS.
For purposes of the Agreement, the following terms shall be defined as
set forth below:
(a) Kapoor may be terminated by the Company for "Cause" for:
(i) a material breach or material default by Kapoor of
the performance of his duties with the Company which,
if curable, has not been cured within 30 days of
detailed written notice thereof from the Company;
(ii) gross negligence in the performance of Kapoor's
duties, willful misfeasance in connection with
Kapoor's work or a breach of fiduciary duty by
Kapoor; (no act or omission shall be considered
willful unless done or omitted in bad faith or
without reasonable belief that the action or omission
was in the interest of the Company);
(iii) the commission by Kapoor of an act of fraud,
embezzlement or any other illegal conduct in
connection with Kapoor's performance of his duties;
(iv) Kapoor's conviction of a felony (or the equivalent in
Canada).
(b) "Disability" means Kapoor's inability, for a period
of 90 consecutive days, to perform, with or without reasonable accommodation,
the essential functions of his position by reason of mental or physical
disability, whether resulting from illness, accident or otherwise.
(c) "Voluntary Termination" means a termination of
employment during the Term by Kapoor on Kapoor's own initiative delivered by
written notice to the Company, other than a termination for death or Disability
under Section 4(a) or for Good Reason under Section 4(e).
(d) "Good Reason" shall mean: (i) the breach by the
Company of this Agreement, which, if curable, has not been cured within 30 days
of detailed written notice thereof from Kapoor, (ii) a diminution which, if
curable, has not been cured within 30 days of detailed written notice thereof
from Kapoor, in the title, compensation or responsibilities of Kapoor (unless
approved in writing by Kapoor) (iii) appointment of any other person to an
executive position at or above the position of President or CEO, or which
otherwise requires Kapoor to report to such other person or position (iv) a
"Business Combination" as defined in Exhibit A of the Restricted Share
Agreement, or (v) a filing by the Company for bankruptcy or receivership, an
adjudication that the Company is insolvent or bankrupt, an admission by the
Company that it is unable to pay its debts as they mature, a failure by the
Company to make payroll for two (2) consecutive weeks or an initiation by the
Company of liquidation proceedings or acts tantamount to the same (e.g.,
disposition or distribution of material assets of the Company, or portions
thereof).
6. NON-COMPETITION.
As a condition of this Agreement, and in consideration for the payments
set forth herein, Kapoor agrees that, during the Term, Kapoor will not become an
officer, director or employee of, maintain a consulting or other professional
relationship with, or acquire any securities (other than publicly-traded
securities aggregating less than 1% of the outstanding shares) of, any
enterprise that is engaged in any material respect in any business (including
business under active development) that is competitive with a business being
conducted or actively developed by Delano (or a subsidiary) at the date hereof
or at the time during the Term.
7. CONFIDENTIALITY.
Kapoor shall continue to be bound by the terms of the Confidentiality
Agreement that was signed in conjunction with the Opera Ventures Agreement.
8. INDEMNIFICATION.
Kapoor shall be entitled to indemnification from the Company to the
fullest extent permitted by law. Delano agrees to name Kapoor as an additional
named insured on its general liability and E&O policies, and D&O policies then
in force from time to time during the term.
9. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the Company and
Kapoor concerning Kapoor's employment by the Company and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between them with respect to the subject matter herein. Kapoor
and the Company agree to keep the terms of this Agreement strictly confidential,
subject to legal disclosure obligations.
10. AMENDMENT OR WAIVER.
This Agreement cannot be changed, modified or amended without the
consent in writing of both Kapoor and the Company. No waiver by either the
Company or Kapoor at any time of any breach by the other party of any condition
or provision of this Agreement shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or at any prior or subsequent
time. Any waiver must be in writing and signed by Kapoor or an authorized
officer of the Company, as the case may be (other than Kapoor).
11. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
12. SURVIVAL.
Sections 3, 4, 5, 7, 12, 14 and 15 and other provisions to the extent
such are necessary to the intended preservation of rights and obligations, shall
survive any termination of this Agreement.
13. GOVERNING LAW AND JURISDICTION; ARBITRATION.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the New York without reference to principles of
conflict of laws. Any dispute, controversy or claim arising out of or in
connection with this Agreement shall be exclusively subject to arbitration
before the American Arbitration Association ("AAA") in New York City, before a
single arbitrator in accordance with the AAA's then current Employment
Arbitration Rules. Both parties hereby consent to such jurisdiction and venue.
Judgment upon any
arbitration award may be entered in any court of competent jurisdiction. All
parties shall cooperate in the process of arbitration for the purpose of
expediting discovery and completing the arbitration proceedings. Nothing
contained in this section or elsewhere in this Agreement shall in any way
deprive either party of its right to obtain injunctive or other equitable relief
in a court of competent jurisdiction. The parties hereto consent to the
exclusive jurisdiction of the Courts of New York County in connection herewith.
Each party hereto shall be responsible for their own costs and fees (including
legal fees), provided that if any payment provided for hereunder is not timely
paid to Kapoor and Kapoor engages counsel to recover the same, Delano shall be
responsible for all reasonable costs and fees (including legal fees) incurred by
Kapoor to recover the same.
14. NOTICES.
Any notice given to either party shall be in writing and shall be
deemed to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested, duly addressed to
the party concerned, if to the Company, addressed to the Board of Directors at
the Company principal executive offices, with a copy to the Chairman at his last
known address, and if to Kapoor, at the address of Kapoor shown on the Company's
records, with a copy to Levine Plotkin & Menin, LLP, 1740 Broadway, 22nd Floor,
New York, New York 10019, Attn: Geoffrey D. Menin, Esq., facsimile: 212/245-8683
or at such other address as such party may give written notice of.
15. MISCELLANEOUS.
(a) The headings of the Sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
(b) This Agreement may be executed in two or more counterparts.
(c) The Company shall make such deductions and withhold such amounts
from each payment and benefit made or provided to Kapoor hereunder, as may be
required from time to time by applicable law, governmental regulation or order.
(d) All dollar amounts set out in this Agreement shall be United States
dollars.
16. ASSIGNMENT; SUCCESSORS.
This Agreement is personal in its nature and none of the parties hereto
shall, without the consent of the others, assign or transfer this Agreement or
any rights or obligations hereunder, provided that, in the event of the merger,
consolidation, transfer, or sale of all or substantially all of the assets or
stock of the Company, this Agreement shall be binding upon and inure to the
benefit of such successor of the Company and such successor shall assume in
writing all executory obligations to Kapoor hereunder and shall discharge and
perform all the promises, covenants, duties, and obligations of the Company
hereunder, and all references herein to the "Company" shall refer to such
successor.
IN WITNESS WHEREOF the parties have duly executed this Agreement as of
the date first set out above.
DELANO TECHNOLOGY CORPORATION
By:/s/ Dennis Bennie
--------------------------------
Title: Chairman
Witness ) VIKAS KAPOOR
)
)
) /s/ Vikas Kapoor
-----------------------------------
) Name: Vikas Kapoor
---------------------------
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EX-99.3
5
b41027dtex99-3.txt
RESTRICTED SHARE AGREEMENT
Exhibit 99.3
RESTRICTED SHARE AGREEMENT
THIS AGREEMENT is made effective as of the fifth day of
October 2001, between Delano Technology Corporation, an Ontario corporation (the
"Company"), and Vikas Kapoor (the "Grantee").
WHEREAS, the Company desires to induce the Grantee to accept employment
with the Company and one or more of its subsidiaries as Chief Executive Officer;
WHEREAS, the Grantee has represented to the Company that he will not
accept employment with the Company without the grant of common shares
contemplated by this Agreement and that, accordingly, the grant of common shares
contemplated by this Agreement is an essential inducement to his employment with
the Company;
WHEREAS, as of the date hereof, the Company and the Grantee are
entering into an Employment Agreement in connection with the Grantee's
employment with the Company and one or more of its subsidiaries (the "Employment
Agreement"); and
WHEREAS, this Restricted Share Agreement, together with the Employment
Agreement, is intended by the Company and the Grantee to constitute a written
compensation contract for purposes of the definition of "Employment Benefit
Plan" in Rule 405 under the Securities Act.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. GRANT OF RESTRICTED SHARES. The Company hereby grants to
the Grantee 4,230,000 common shares on the terms and subject to the conditions
set forth herein (the "Restricted Shares"). The Restricted Shares granted
hereunder shall be registered in the Grantee's name, but the certificates
evidencing such Restricted Shares shall be retained by the Company during the
period prior to the vesting of such shares as set forth in Section 3 hereof (the
"Restriction Period"). The Grantee shall execute a stock power, in blank, with
respect to such Restricted Shares and deliver the same to the Company. The
Company will retain custody of all dividends and distributions made or declared
on the Restricted Shares until such time, if ever, as such Restricted Shares
vest and the Restriction Period with respect thereto lapses. Such retained
dividends or distributions shall not bear interest. If any such dividend or
distribution is taxable to the Grantee, the Company shall release to the Grantee
a portion of such retained dividend or distribution sufficient to pay the taxes
payable thereon (at the highest marginal rate to which Grantee is subject) at
the time such taxes become payable. The Grantee shall not be entitled to vote
any Restricted Share until the Restriction Period with respect thereto lapses.
2. NON-TRANSFERABILITY. During the Restriction Period, the
Grantee may not sell, transfer, pledge or otherwise encumber or dispose of
Restricted Shares which have not then vested. Any attempted sale, transfer,
assignment or other disposition of Restricted Shares shall be null and void and
of no effect.
3. LAPSE OF RESTRICTIONS; FORFEITURE.
(a) Except as otherwise provided in this Section 3, the
Restricted Shares granted hereunder shall vest, and the Restriction Period shall
lapse as follows:
On the date hereof 705,000 shares
On the 1st day of each month hereafter, 117,500 additional shares
commencing November 1, 2001
Except as otherwise provided in this Section 3, at the end of 30 months from the
date hereof, the Restricted Shares shall be fully vested and the Restriction
Period imposed thereon shall have fully lapsed.
(b) If the Grantee dies or becomes Disabled (as defined in the
Employment Agreement), the Restriction Period shall lapse with respect to all
previously unvested Restricted Shares on the date of death or Disability. Upon
an event of Business Combination (as defined in Exhibit A hereto), the
Restriction Period shall lapse with respect to all previously unvested
Restricted Shares as of the consummation of the event which results in the
Business Combination.
(c) If the Grantee voluntarily terminates his employment with
the Company or the Company terminates his employment for Cause (as defined in
the Employment Agreement), the Restricted Shares, to the extent not vested prior
to such termination, shall be immediately forfeited to the Company and the
Grantee shall have no further rights with respect to such unvested shares. If
the Grantee terminates his employment with the Company for Good Reason (as
defined in the Employment Agreement) or the Company terminates the Grantee's
employment without Cause, the Restriction Period shall lapse with respect to all
Restricted Shares immediately upon termination of employment.
4. DELIVERY OF SHARE CERTIFICATES. Promptly following the
execution and delivery hereof, certificate(s) evidencing 705,000 of the
Restricted Shares shall be delivered to the Grantee. Upon the vesting of any of
the other Restricted Shares granted hereunder, the certificates evidencing such
Restricted Shares shall be delivered promptly to the Grantee. In the case of the
Grantee's death, such certificates will be delivered to the beneficiary
designated in writing by the Grantee pursuant to a form of designation provided
by the Company or to the Grantee's executors or personal representatives, as the
case may be.
5. REGISTRATION. The Company will promptly prepare, file and
use reasonable best efforts to cause to be effective with the Securities and
Exchange Commission on
Form S-8 a registration statement that will enable Grantee to publicly resell
the Restricted Shares granted hereunder. The Company shall maintain such
registration statement in effect until all such shares have been resold. If, for
any reason, Form S-8 is not available with respect to the Restricted Shares, the
Company will promptly prepare and file and use reasonable best efforts to cause
to be effective with the Securities and Exchange Commission on Form F-3 (or
other comparable form) a re-sale registration statement relating to the
Restricted Shares.
6. BINDING EFFECT. This Agreement shall be binding upon and
inure the benefit of the heirs, executors, administrators and successors of the
parties hereto.
7. GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the laws of the Province of Ontario without
reference to rules relating to conflicts of law.
8. HEADINGS. Headings are for the convenience of the parties
and are not deemed to be a part of this Agreement.
9. NO EMPLOYMENT GUARANTEE. Nothing in this Agreement shall be
construed to confer upon the Grantee any right to continued employment with the
Company (it being understood that the Employment Agreement governs the Grantee's
employment relationship with the Company). --
10. WITHHOLDING TAXES. If the Company has any withholding tax
obligation with respect to the grant of Restricted Shares contemplated hereby,
upon the Company's request, the Grantee shall immediately pay to the Company in
cash the amount of such withholding tax.
11. LEGENDS. The certificates for the Restricted Shares
granted hereunder shall bear such legends relating to the provisions of this
Agreement and applicable securities law as the Company reasonably determines.
Any such legend relating to the provisions of this Agreement shall be removed at
the time of transfer of the applicable certificate(s) to the Grantee. Any such
legend relating to applicable securities law shall be removed in accordance with
applicable law and customary practice.
12. PLAN. This Agreement, together with the Employment
Agreement, is intended by the Company and the Grantee to constitute a written
compensation contract for purposes of the definition of "Employment Benefit
Plan" in Rule 405 under the Securities Act.
13. 83(b) ELECTION. In the event an 83(b) election is made in
connection with the grant of Restricted Shares hereunder, the Company shall
promptly deliver to Grantee appropriate documentation reflecting a fair market
value of $0.11 per share, consisting of publicly available information on the
Company's trading prices as of the date hereof, it being understood by the
parties that the closing price on this date was $0.11.
EXECUTED effective as of the day and year first written above.
DELANO TECHNOLOGY CORPORATION
By:/s/ Dennis Bennie
---------------------------------------
Name: Dennis Bennie
Title: Chairman
GRANTEE:
/s/ Vikas Kapoor
---------------------------------------
Vikas Kapoor
EXHIBIT A
Business Combination. For purposes of this Agreement, an event
of "Business Combination" shall be deemed to have occurred if: (i) there shall
have been consummated any merger or other business combination of the Company in
which the voting shareholders of the Company, prior to such merger or other
business combination, end up with less than 66.67% of the voting shares of the
new or combined entity as the case may be following the consummation of such
merger or other business combination, a sale or transfer of all or substantially
all of the Company's consolidated assets or a combination of the foregoing
transactions (a "Transaction") other than a Transaction involving only the
Company and one or more of its Subsidiaries; or (ii) any person (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to
time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof,
including any "group" as defined in Section 13(d)(3) thereof (a "Person"), but
excluding the Company, any majority owned subsidiary of the Company (a
"Subsidiary") and any employee benefit plan sponsored or maintained by the
Company or any Subsidiary (including any trustee of such plan acting as
trustee)), becomes the beneficial owner of securities of the Company having at
least 33% of the total voting power represented by all then outstanding voting
securities of the Company, or has the power or ability to elect or cause the
election of directors then consisting of a majority of the Board of Directors of
the Company.