EMPLOYMENT AGREEMENT
Great Plains Software, Inc. ("Great Plains") and Ray August
("Executive"), Vice President, Research and Development ("VPRD") of Great
Plains, enter into this Employment Agreement ("Agreement") with respect to the
terms and conditions of Executive's employment with Great Plains.
WHEREAS, Executive has served as the VPRD of Great Plains;
WHEREAS, Executive desires to continue his employment as VPRD of Great
Plains and to obtain the new rights in the terms and conditions of his
employment set forth in this Agreement;
WHEREAS, GS Capital Partners, L.P. and certain other affiliates of The
▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, L.P. (collectively, "▇▇▇▇▇▇▇ Sachs") have agreed to make a
substantial capital investment into Great Plains by purchasing certain Great
Plains convertible preferred stock in reliance on the acknowledgments and
promises Executive has made in this Agreement and because Executive has agreed
to assume the contractual obligations set forth in this Agreement;
NOW THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Great Plains and
Executive agree as follows:
I. DESCRIPTION OF DUTIES.
Executive shall perform all duties normally attendant to his position
and such duties as Great Plains may from time-to-time prescribe. Throughout the
period of employment, Executive shall devote his full-time efforts during normal
business hours to the business and affairs of Great Plains, and shall perform
his assigned duties diligently, faithfully and to the full extent of his
abilities. Executive shall at all times perform his duties with undivided
loyalty and shall not knowingly perform any act contrary to Great Plains' best
interests.
II. TERM OF EMPLOYMENT.
A. Subject to the provisions of Section VI of this Agreement, Great
Plains shall employ Executive as VPRD of Great Plains from the date of execution
of this Agreement to and including June 1, 1997. This period shall hereinafter
be
referred to as the "Term". Unless a party hereto shall give notice of non-
renewal to the other party hereto prior to April 30, 1997, the Term shall be
automatically extended to June 1, 1999.
B. Executive acknowledges that this Term of employment constitutes a
valuable benefit of employment to which he was not entitled prior to execution
of this Agreement.
III. EXCLUSIVITY OF EMPLOYMENT.
Executive represents and warrants that there are no agreements or
arrangements, whether written or oral, in effect which would prevent him from
rendering exclusive services to Great Plains during the Term hereof, and that he
has not made and will not make any commitment, agreement or arrangement, or do
any act in conflict with this Agreement. Executive shall devote his full
employment energies, interest, abilities and time to the performance of
obligations hereunder. Executive shall not, without the prior written consent
of the Board of Directors of Great Plains render to others any service of any
kind for compensation, or engage in any business activity that interferes with
Executive's performance of his duties or in any other way conflicts with
Employer's best interests, regardless of whether it is pursued for gain or
profit.
IV. COMPENSATION.
A. Provided that Executive has kept and performed all of his
obligations hereunder, Great Plains shall pay to Executive a Base Salary
(adjusted as provided below, the "Base Salary") in the amount of One Hundred
Fifty Thousand and no/100 dollars ($150,000.00) per annum during the Term of
this Agreement, to be paid in accordance with Great Plains' normal payroll
practices and subject to such deductions or withholdings as are required by law
for taxes and similar charges. Executive shall receive the above-named salary
at his regular rate of pay for all hours worked by him in a week regardless of
the number of hours he may work. Great Plains' Chief Executive Officer, after
consultation with Executive, may provide Executive with an annual raise in the
Base Salary and/or bonus consistent with Great Plains' annual raise and/or bonus
practices and subject to the performance of Executive.
B. The compensation herein provided for Executive shall constitute
full payment for the services of Executive rendered to Great Plains. Executive
shall not receive any additional compensation for extraordinary services unless
such services, prior to their rendition, are authorized by the Board of
Directors of Great Plains in writing.
2
C. Employer shall pay Executive Four Hundred and No/100 Dollars
($400.00) per month as reasonable costs associated with the use of an automobile
for performance of his duties under this Agreement.
D. Employer shall annually afford Executive four (4) weeks of paid
vacation available to the Executive at the beginning of each fiscal year.
V. EXECUTIVE BENEFITS AND EXPENSE REIMBURSEMENT.
A. Executive shall be eligible to participate in Great Plains'
benefits plans for salaried executives including, but not limited to, medical,
life, accidental death and dismemberment and short and long term disability
insurance. Great Plains retains the right to cancel, alter, or amend any of its
employee benefit plans and other fringe benefits which Executive may receive or
may have received.
B. Executive shall be entitled to reimbursement for expenses
reasonably incurred by Executive in connection with the performance of his
duties during the Term, upon presentation of evidence reasonably satisfactory to
Great Plains of the amounts and nature of such expenses.
VI. TERMINATION.
A. Great Plains may terminate this Agreement upon a decision of the
Chief Executive officer of Great Plains (1) on Executive's death; (2) after
fourteen-days advance written notice, upon Executive's incapacity or inability
to perform his assigned duties and responsibilities for ninety (90) consecutive
days because of an impairment of Executive's physical or mental health that
prevents him from performing any of the essential functions of his job; or (3)
after fourteen-days advance written notice, for "cause". "Cause" shall mean:
(a) Executive's material breach of any of the terms of this
Agreement;
(b) Executive's refusal or failure to comply with reasonable lawful
orders or directives issued by the Board of Directors or the
President of Great Plains consistent with this Agreement, if such
refusal or failure is repeated after notice of refusal or
failure;
(c) Executive's commission of a felony or any act or crime of theft,
dishonesty or moral turpitude; or
(d) Executive's material violation of any statutory or common law
duty of loyalty to Great Plains.
3
B. If Great Plains terminates this Agreement upon Executive's death,
upon his incapacity or inability, or for "cause" as defined in this Section, or
if Executive voluntarily resigns from his employment with Great Plains during
the Term of this Agreement, Executive and his beneficiaries shall not be
entitled to any continued Base Salary, bonus, or benefits except as required
under the law or under the terms of the benefits plans as existing on the date
of termination or resignation.
C. Employer may terminate this Agreement at any time without "cause"
as defined in this Section before expiration of the Term of this Agreement,
provided that if Great Plains terminates this Agreement without "cause" and not
because of Executive's death or incapacity or inability as defined in this
Section, Great Plains shall pay to Executive the following for two (2) years
following written notice of termination: the Base Salary as set forth in Section
IV of this Agreement less any earned income ("Earned Income") that Executive
receives from any other source (other than investment income or reimbursement
for expenses) during such two-year period. Such payments shall be made in
accordance with Great Plains' normal payroll practices as if Great Plains
continues to employ Executive. In the event that Executive is entitled to
compensation under this Paragraph No. VI.C., Great Plains may reasonably require
that Executive certify his employment and income status on a monthly basis
during the two-year period after his employment with Great Plains ends.
VII. Confidential Information.
A. Executive acknowledges that the successful development,
distribution and marketing of Great Plains' current and future products,
including but not limited to its current and future financial accounting
software products, require substantial time and expense. Such efforts generate
for Great Plains secret information and other valuable and proprietary
information (collectively, "Confidential Information") which gives Great Plains
significant business advantages over others in the software industry who do not
have such information. Confidential Information includes, but is in no way
limited to, the following:
(1) Information relating to the software source and object code, source
code design and configuration, algorithms, user-interface design and
lay-out, development plans, development tools and development
techniques and methods of Great Plains' current and future software
products;
(2) Information relating to the development, lay-out and design of user
manuals and documentation for Great Plains' current and future
software products;
4
(3) Information relating to the advertising and marketing plans, and
pricing plans and formulae for Great Plains' current and future
products;
(4) Contracts and negotiation strategies and practices involved in the
sale and distribution of Great Plains' current and future products;
(5) Information relating to current and prospective value-added resellers
and other distribution intermediaries (collectively, "Partners") with
which Great Plains has developed, or will attempt to develop, a
business relationship, including but not limited to lists of Partners
and Partner contacts;
(6) Information relating to current and prospective user-customers of
Great Plains, including but not limited to user-customer lists and
user-customer service and support data; and
(7) Processes, techniques, methods, policies and practices involved in the
training and development of the personnel of Great Plains.
B. Executive acknowledges that during the course of his employment
with Great Plains he has used and obtained, and will continue to use and obtain,
knowledge of such Confidential Information. Executive acknowledges that Great
Plains has significant business advantages over its competitors in the software
industry due to Great Plains' Confidential Information and relationships with
its Partners.
VIII. RELATIONSHIPS WITH PARTNERS.
Executive acknowledges that Great Plains has undertaken substantial
time and expense in developing its business relationship with its Partners, that
Great Plains has obtained valuable and proprietary information relating to each
of its Partners' unique needs, wishes and concerns, and that Great Plains has
developed substantial goodwill with its Partners as a result of these efforts.
Executive additionally acknowledges that he has obtained and used this valuable
and proprietary information and has participated in, and/or directly supervised,
the development of Great Plains' relationships with its Partners.
IX. PROTECTION OF CONFIDENTIAL INFORMATION.
Executive agrees to undertake the following obligations which he
acknowledges to be reasonably designed to protect Great Plains' legitimate
business interests without restricting or
5
restraining his post-employment professional, trade and business opportunities:
A. In the event that his employment with Great Plains ends for any
reason and whether voluntarily or involuntarily, Executive will
immediately turn over to Great Plains all of its property,
whether in original or copied form, including but not limited to
files, lists, contracts, notes, manuals, reports, records, tapes,
films, graphics, charts, computer programs and other forms of
computer media, or other documents or things containing, in any
form in whole or in part, any of Great Plains' Confidential
Information;
B. During his employment with Great Plains, and after the voluntary
or involuntary cessation of his employment with Great Plains for
any reason, Executive agrees forever
(1) to hold in confidence; and
(2) not at any time, in any way, directly or indirectly, to use
for his own benefit or the benefit of some other person,
firm, corporation or other entity, or to divulge, disclose
or communicate to any person, firm, corporation or other
entity;
any Confidential Information unless with the written consent of
Great Plains or unless at that time the information has become
generally and lawfully known to Great Plains' competitors. This
provision shall in no way be interpreted to preclude Executive
from using, divulging, disclosing or communicating Confidential
Information as required in the fulfillment of his duties as an
employee of Great Plains.
C. Executive agrees that after the date of cessation of his
employment with Great Plains (hereinafter, the "Cessation Date"),
whatever the reason for such cessation of employment, whether
voluntarily or involuntarily and whether before or after the
expiration of the Term, he will not during the Non Competition
Period (as such period is defined below):
(1) Control or own (directly or indirectly) more than 2% of any
outstanding capital stock of any corporation other than
Great Plains which has engaged, is engaged, or which intends
to become engaged, in the business of developing, producing,
manufacturing, marketing and/or selling in the United
States, Canada or the United Kingdom any financial
accounting software product; or
6
(2) Serve as
(a) an officer, director, contractor, agent, advisor or
employee of any corporation wherever located; or
(b) a member, contractor, agent, advisor or employee of any
partnership wherever located; or
(c) an owner, contractor, agent, advisor or employee of any
other business entity wherever located
which has engaged, is engaged, or which intends to become
engaged, in the business of designing, developing,
producing, manufacturing, marketing, selling and/or
supporting in the United States, Canada or the United
Kingdom any financial accounting software product. However,
if a company has divisions or subsidiaries that do not
engage as described above in the business of financial
accounting software products, Executive may work for that
division or subsidiary.
As used in this Agreement, the term "Non-Competition Period"
shall mean (i) if the Cessation Date occurs during the Term, two
years; and (ii) if the Cessation Date occurs after the Term, such
period of time, not to exceed two years, as Great Plains
continues to pay Executive the Base Salary less any Earned
Income.
X. NON-SOLICITATION OF EMPLOYEES.
Executive acknowledges that Great Plains has devoted considerable time
and expense to the training and development of its employees. He also
acknowledges that Great Plains, employees use and have substantial exposure to
Great Plains' Confidential Information. Accordingly, in the event that his
employment with Great Plains ends for any reason and whether voluntarily or
involuntarily, he will not for a period of two (2) years after the cessation of
his employment induce, or assist in the inducement of, any management or other
key employee away from Great Plains or from the faithful discharge of any of the
employee's contractual, fiduciary or other obligations to serve Great Plains
with undivided loyalty.
XI. PROTECTION OF NEW IDEAS.
Executive acknowledges that any and all inventions, discoveries,
improvements and patentable or copyrightable works
7
(collectively, "New Ideas") that are initiated, conceived or made by him during
his employment with Great Plains and that relate to the business or activities
of Great Plains are the property solely of Great Plains, whether or not reduced
to writing or practice during the period of his employment. Executive agrees
that he has disclosed as of the date of execution of this Agreement, and he will
continue promptly to disclose, to Great Plains all New Ideas that he initiated,
conceived or made, either alone or in conjunction with others. Executive agrees
that he will assign to Great Plains all of his rights and interest in any such
New Ideas and will, upon request by Great Plains, and at its expense, execute
any and all applications, assignments or other instruments that Great Plains may
deem necessary to apply for and obtain patents of the United States or any
foreign country or to protect otherwise and keep protected the interest of Great
Plains in any New Ideas. Executive's obligations under this paragraph shall
continue until fulfilled, shall not be affected by the cessation of his
employment with Great Plains and shall be binding on his assigns, executors,
administrators and/or other legal representatives to the extent that any of them
can fulfill those left unfulfilled by Executive.
XII. REMEDIES.
A. Executive agrees that the services to be rendered by him pursuant
to this Agreement, and the acknowledgments, rights and privileges granted to
Great Plains by him pursuant to this Agreement, are of a special, unique,
extraordinary and intellectual character, which gives them a peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in any
action at law, and that a breach by him of any of the terms of this Agreement
will ca-use great and irreparable injury and damage to Great Plains.
Accordingly, Executive agrees that, in the event that he breaches any term of
this Agreement, Great Plains shall have a right to equitable relief, including,
but not limited to a temporary restraining order, preliminary injunction,
permanent injunction and/or order of specific performance, as a remedy to
enforce this Agreement. Executive agrees that Great Plains shall be entitled to
the remedies of injunction, specific performance and other equitable relief as
available under applicable law to prevent a threatened or potential breach of
this Agreement by him. Executive and Great Plains agree to reimburse the
prevailing party in any legal proceeding for all costs and expenses including
reasonable attorneys' fees incurred in connection with the enforcement of his or
its rights under any provision of this Agreement.
B. Executive agrees that Great Plains may file any litigation
relating to the enforcement of this Agreement in the Fourth Judicial District
Minnesota District Court or the United States District Court for the District of
Minnesota. For purposes of the enforcement of this Agreement, Executive
consents
8
to the personal jurisdiction of the federal and state courts within the State of
Minnesota.
XIII. ASSIGNS AND SUCCESSORS.
Executive agrees that Great Plains' rights under this Agreement shall
inure to the benefit of and shall be binding upon its successors and assigns.
In the event of the merger or consolidation of Great Plains with any other
corporation or corporations, the sale by Great Plains of a major portion of its
assets, or-of its business and good will, or any other corporate reorganization
involving Great Plains, this Agreement may be assigned and transferred to such
successor in interest as an asset of Great Plains.
XIV. INTEGRATION AND MODIFICATION OF AGREEMENT.
This Agreement and the Stock Option Agreements dated October 29, 1992,
and July 14, 1993, contain the entire understanding of the parties and supersede
all other written or oral agreements, representations or understandings. This
Agreement may be modified only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension, or
discharge is sought.
XV. WAIVER.
Great Plains, failure to insist upon strict compliance with any of the
terms, conditions or covenants expressed in this Agreement shall not be deemed a
waiver of such term, condition or covenant, or any other term, condition or
covenant, nor shall any waiver or relinquishment of any right or power under
this Agreement at one time or times be deemed a waiver or relinquishment of such
right or power or any other right or power at any other time or times.
XVI. INTERPRETATION OF TERMS.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
9
Executive's claim to the American Arbitration Association or the Center for
Public Resources for nonbinding mediation prior to the expiration of such 30-day
period, Executive may not institute legal proceedings until the earlier or: (A)
the completion of mediation efforts with the good faith participation of
Executive in such efforts; or B) 90 days after the date on which Great Plains
received written notice of Executive's claim.
* * *
The parties have read, understand, and freely accept all of the
provisions in this Agreement. The parties represent that each has sought and
received independent legal advice from an attorney of its or his choice with
respect to the meaning of the provision in this Agreement.
RAY AUGUST GREAT PLAINS SOFTWARE, INC.
/s/ ▇▇▇▇▇▇▇ August By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------- --------------------------
Dated: June 24, 1994 Dated: June 24, 1994
---------------------- -----------------------
Moorhead, Minnesota Moorhead, Minnesota
10
