EMPLOYMENT, CONFIDENTIALITY & NON-COMPETE AGREEMENT
THIS EMPLOYMENT, CONFIDENTIALITY & NON-COMPETE AGREEMENT (the "Agreement"),is
made this 16th day of June, 1995, by and between Computer Language Research,
Inc., a Texas Corporation with its principal office located at 0000 Xxxxxx Xxxx,
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx 00000 (the "Employer"), and Xxxx X.
Xxxxxxxxx, an individual residing at 0000 Xxxxxxxx Xxxxx, Xxxxx, Xxxxx, 00000,
(the "Employee"). Employer and Employee being hereinafter jointly referred to
as the "Parties".
WHEREAS, the Parties are two of the parties to the agreement for the Purchase
and Sale of Certain Assets ("Sale of Assets Agreement") of even date herewith,
the terms of which and the Operative Documents, as defined therein, are
incorporated herein.
WHEREAS, Employee desires employment as an employee of Employer under the terms
and conditions hereof and further desires to be given access to Employer's
unique and proprietary information; and
WHEREAS, Employee understands and acknowledges that Employer would not have been
willing to enter into the Sale of Assets Agreement or to employ the Employee
unless and until it had secured from Employee the specific restriction on
disclosure of confidential information and the covenants not to compete which
are contained herein; and
WHEREAS, Employer desires to employ Employee under the terms and conditions
hereof;
NOW, THEREFORE, in consideration of the mutual covenants, promises, terms, and
conditions contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereto, intending to be bound, agree as follows:
ARTICLE ONE
DEFINITIONS
1. DEFINITIONS. For purposes of this Agreement:
(a) "AGREEMENT" is defined in the preamble.
(b) "CAUSE" shall mean the occurrence of any of the following events:
(1) Death of Employee;
(2) Commission by Employee of illegal or fraudulent acts, criminal
conduct, or willful misconduct (excluding minor traffic violations), regardless
of whether relating to the activities of Employer, including, but not limited
to, violations of any laws, rules, or regulations;
(3) Conviction of Employee for any criminal or civil acts involving
moral turpitude having an adverse effect upon Employer, including without
limitation upon its profitability, reputation, or goodwill;
(4) Any materially false statement by Employee on any resume,
transcript, employment application or the like;
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(5) Failure by Employee to perform his duties to the reasonable
satisfaction of Employer's President;
(6) Violation by Employee of any of his representations, warranties,
and covenants in this Agreement;
(7) Material violation by Employee of any of his representations,
warranties, and covenants in the Sale of Assets Agreement;
(8) Any other material breach of Employee's obligations hereunder
which he fails to cure within 10 days after receiving written notice thereof;
(9) Employee's material misrepresentation of fact or omission to
disclose a material fact, in relation to transactions occurring in the business
and financial matters of Employer entrusted to Employee;
(10) Employee's failure of any drug test required by Employer's
standard policies and procedures relating thereto; or
(11) A ruling or order by any court of competent jurisdiction
prohibiting Employee from rendering or Employer from receiving any of the duties
of Employee set forth in paragraph 2.5.
(c) A "CHANGE OF CONTROL" of the Employer shall be deemed to have occurred
upon the happening of any of the following:
(1) The acquisition of beneficial ownership (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of 50% or more of either the then-outstanding shares of Employer's common
stock or the combined voting power of the Employer's then-outstanding voting
securities entitled to vote for the election of directors by any person, entity
or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange
Act, but excluding the Employer, its subsidiaries, and any employee benefit plan
(or related trust) sponsored or maintained by the Employer or its subsidiaries),
such acquisition being other than by the Employer or pursuant to an Excluded
Transaction;
(2) The individuals who, as of the date of this Agreement, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided that any individual, nominated for election to
the Board by at least a majority of the Incumbent Board and subsequently elected
a director by vote of the Employer's shareholders, shall be considered to be a
member of the Incumbent Board.
(3) Approval by the shareholders of the Employer of (i) a
reorganization, merger, consolidation, or similar business combination, other
than an Excluded Transaction, (ii) a liquidation or dissolution of the Employer,
or (iii) the sale of all or substantially all of the assets of the Employer,
other than an Excluded Transaction.
(d) "CLIENT(S)" means any entity which is a licensee of Employer or which
has been either served, solicited, contacted, or proposed for solicitation,
contact, or service by Employer or the entities that offered the Combined
Employer Real Estate Software Products during the term of Employee's employment
and for a period of 1 year after the termination of this Agreement.
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(e) "COMBINED EMPLOYER REAL ESTATE SOFTWARE PRODUCTS" means the commercial
and residential real estate software products presently owned by Employer,
together with the commercial and residential real estate software products being
acquired pursuant to the Sale of Assets Agreement.
(f) "COMPETING BUSINESS" means:
(1) any individual, proprietorship, partnership, corporation, limited
liability company, association, or other entity which is engaged in, or is about
to be engaged in, providing hardware, software and/or services which are
alternatives to hardware, software and/or services provided or offered by
Employer, or
(2) any Client that shall seek to employ, retain or pay Employee to
develop, enhance, install, test, maintain or update any hardware, software
and/or services which are alternatives to hardware, software and/or services
provided or offered by Employer.
(g) "CONFIDENTIAL INFORMATION" means:
(1) Information, data, drawings, computer software, firmware and
hardware, financial information, marketing information, sales data, and other
records and materials disclosed to or known to Employee as a direct or indirect
consequence of or through his employment with Employer and not known prior to
Employee's employment hereunder, about any Client or Supplier or Employer's
business, methods, business plans, operations, intellectual property, including
trade secrets, including all accompanying documentation therefor, services and
products (existing and contemplated), and processes, including but not limited
to information relating to price lists, manuals, sales records, sales
literature, customer files, personnel data, research, development,
recommendations, marketing plans and strategies, merchandising, pricing
strategies, consulting sources, Client sources, supply and service resources,
programs, systems, systems analyses, flow charts, system designs, procedure
manuals, automated data programs, designs, enhancements, finances, financial
statements, financing methods, financial projections, terms and conditions of
arrangements of any business, terms and conditions of business arrangements with
Clients, Suppliers, factors, banks, or other financial institutions, supply and
service resources, names and addresses of Clients, and all other information
pertaining to Clients and Suppliers. The phrase "Employee's employment
hereunder" shall include, in addition to the period of time Employee is employed
by Employer hereunder, that period of time during which Employee was employed by
Rent Roll, Inc.
(2) Information, for which there is any reasonable basis to believe
is, or which appears to be treated by Employer as, Confidential Information,
shall be presumed to be Confidential Information hereunder.
(h) "DERIVATIVE WORK" means a work based upon one or more pre-existing
works such as a revision, modification, translation, condensation, expansion or
any other form in which such pre-existing work may be adapted, recast, or
transformed and which, if prepared by other than the owner of the pre-existing
work without the owner's authorization, would constitute an infringement of the
owner's rights.
(i) "DEVELOPMENT" is defined in paragraph 5.3.
(j) "EMPLOYEE" is defined in the preamble.
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(k) "EMPLOYER" is defined in the preamble.
(l) "EXCHANGE ACT" is defined in the definition of Change of Control.
(m) "EXCLUDED TRANSACTION" means a reorganization, merger, consolidation,
or similar business combination or the sale of all or substantially all of the
assets of the Employer (each being a "Transaction"), in each case with respect
to which persons who were the shareholders of the Employer immediately prior to
such Transaction, own directly or indirectly, immediately after such
Transaction, more than 50% of the combined voting power of the then-outstanding
securities entitled to vote for the election of directors of the Employer.
(n) "INCUMBENT BOARD" is defined in the definition of Change of Control.
(o) "PARTIES" are defined in the preamble.
(p) "PERFORMANCE BONUS" is described in Section 3.1(e).
(q) "RESTRICTED PERIODS" is defined in paragraph 5.6(b).
(r) "SALE OF ASSETS AGREEMENT" is defined in the preamble.
(s) "SUPPLIERS" means any individual, proprietorship, partnership,
corporation, association, or other entity which has provided goods or services
to Employer or Rent Roll, Inc.
(t) "TARGET PROFIT' is defined in Section 3.1(e).
(u) "TRANSACTION" is defined in the definition of Excluded Transaction.
(v) "NET OPERATING PROFIT" means the pre-tax profits of the Combined
Employer Real Estate Software Products operation computed according to General
Accepted Accounting Principles and will recognize all revenue, less expenses
associated with the generation of that revenue. The following expenditures will
not be deducted in calculating the Net Operating Profit: (i) the two Signing
Bonuses paid by Employer totaling $500,000.00 paid to Xxxx Xxxxxxxxx and
Employee pursuant to Section 3.1(a) of this Agreement and Xxxx Xxxxxxxxx'x
corresponding Agreement; (ii) the payments paid to Employee by Employer and to
Xxxx Xxxxxxxxx by Employer pursuant to the covenants not to compete made by each
pursuant to Section 5.6 of this Agreement and Xxxx Xxxxxxxxx'x corresponding
Agreement; and (iii) the amortization expense relating to intangibles arising
from the acquisition of assets from Pillar, L.C., Rent Roll, Inc. and the
commercial and residential real estate software products of Xxxxxxxx-Xxxx
Professional Software, Inc. Amortization expense relating to intangibles
arising from future acquisitions of commercial or residential real estate
software products will be included in the calculation of Net Operating Profit.
ARTICLE TWO
EMPLOYMENT AND DUTIES
2.1 EMPLOYMENT TERMS AND POSITION. Employer hereby employs Employee as a full-
time employee of Employer on the terms and conditions set forth herein.
Employee hereby accepts employment as a full-time employee of Employer on the
terms and conditions set forth herein.
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2.2 SATISFACTION OF EMPLOYER. Employee agrees that he will at all times
faithfully, promptly, and to the best of his ability, experience, and talent,
perform all of the duties that may be assigned to him, and as may be required of
him pursuant to the expressed and implied terms hereof. Such duties shall be
rendered to the reasonable satisfaction of the person to whom he reports.
2.3 TITLE. Subject to resolution of the Board of Directors at the meeting next
following the date hereof, at the next meeting of the Employer's Board of
Directors, such Board of Directors shall elect Employee an officer with the
title "Vice President".
2.4 REPORTING. Employee shall at all times during the term of this Agreement
report directly to the President of the Employer or to an individual designated
by the President of the Employer.
2.5 DUTIES. During his employment by Employer, Employee shall have such
reasonable duties and responsibilities as may be established from time to time
for Employee by the President of the Employer or the person to whom he reports.
2.6 EXTENT OF SERVICES. Employee shall devote his full time, attention,
energies, and best efforts to the business and affairs of Employer as determined
by Employer, and, except for illness and vacation and holiday periods and leaves
of absence as provided for by Employer's general policies, shall faithfully and
diligently perform his duties hereunder. Further, Employee shall not, during
the term of this Agreement, be engaged in any other business activity, whether
or not such business activity is pursued for gain, profit, or other pecuniary
advantages (reasonable civic and charitable activities excluded), unless he
first shall have obtained Employer's written consent.
2.7 PLACE OF PERFORMANCE OF DUTIES. With the exception of normal business
travel, Employee's services shall be rendered at the Corporation's principal
business offices at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000, or
such other place of business as may be designated by Employer.
2.8 MAINTENANCE OF RECORDS. Employee shall render reasonably detailed reports
and shall maintain accurate business records relating to his employment
hereunder as may from time to time be required by Employer.
2.9 LIMITATIONS ON AUTHORITY. Employee shall have no power or authority to
obligate Employer financially, contractually, or otherwise, unless such
obligation is authorized by Employer's normal business policies, practices and
guidelines or by the Employer's President in writing.
2.10 GOVERNANCE OF EMPLOYMENT RELATIONSHIP. To the extent not governed by the
specific provisions hereof, the employment relationship between Employee and
Employer shall be governed by the Employer's general rules, policies, procedures
and plans relating to employment and employee benefits.
ARTICLE THREE
COMPENSATION AND BENEFITS
3.1 COMPENSATION. For all services rendered by Employee pursuant to this
Agreement and for the confidentiality and non-compete covenants of Employee,
Employer shall compensate Employee as follows:
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(a) SIGNING BONUS. Employee shall receive a payment of $250,000.00, less
any required withholding, as a signing bonus ("Signing Bonus") on the date of
the execution of this Agreement by the Parties. The Signing Bonus shall be paid
in immediately available funds via wire transfer to an account specified by
Employee.
(b) SALARY. Employee shall be paid by Employer, a gross monthly salary of
$14,500.00, in accordance with the prevailing payroll practices of Employer.
Employee's salary shall be subject to appropriate FICA and federal, state, and
local tax withholding. The amount of such salary may be increased, but not
decreased, from time to time, in such amounts as Employer may determine
according to its standard salary administration practices. Employee shall
initially be eligible for a merit salary increase on July 1, 1996, and on each
July 1 thereafter during the term of this Agreement.
(c) ANNUAL INCENTIVE PLAN BONUS. Within 90 days of the date of this
Agreement and annually thereafter during the term of this Agreement, the Board
of Directors of Employer shall take all steps necessary to make Employee, on the
terms set forth in this sub-paragraph, a participant in the Corporation's 1989
Annual Incentive Plan (the "AIP") for senior management, or any successor
plan(s) for 1995. During 1995, Employee's AIP target incentive rate will be 30%
of base salary on a pro-rated basis for the portion of the year during which
Employee is an employee of the Corporation. During 1995, Employee's AIP maximum
incentive rate will be 60% of base salary on a pro-rated basis for the portion
of the year during which Employee is an employee of the Corporation. Employee's
1995 AIP calculation will consist of two components: Combined Employer Real
Estate Software Products performance (80%) and personal performance (20%)(1).
If, during the term of this Agreement, Employer grants any other bonuses to all
of its senior managers, Employee shall be entitled to participate on terms and
conditions no less favorable than those for other senior managers. Anything
else in this Agreement to the contrary notwithstanding, the AIP is earned and
payable only if the Employee is an employee of the Employer on the date
specified in the AIP.
(d) STOCK OPTIONS. Subject to resolution of the Board of Directors at the
meeting next following the date of execution of this Agreement, the Board of
Directors of Employer shall, pursuant to the terms and conditions of the
Computer Language Research, Inc., 1982 Stock Option Plan, as amended, grant
Employee an option to purchase twenty thousand (20,000) shares of the Employer's
common stock at 100% of the fair market value on the date of the grant (fair
market value being the mean between the "bid" and "ask" at closing on the day of
grant). The grant shall be exercisable in five equal annual increments of
twenty percent (20%); i.e., four thousand (4,000) shares each installment. The
initial exercise date shall be on or after one year from the date of the grant,
and the remaining increments shall be exercisable on or after the like day of
each succeeding year for four years. Subsequent grants of stock options, if
any, shall be provided according to Employer's then current practices and
policy.
(1) The relative percentages of these components is subject to an
annual determination by the Compensation Committee of the Board
of Directors.
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(e) PERFORMANCE BONUS. Employee may be entitled to a Performance Bonus,
conditional upon the cumulative Net Operating Profit for the four year period
beginning January 1, 1995 and ending December 31, 1998 attributable to Combined
Employer Real Estate Software Products, together with any residential or
commercial real estate software products acquired by Employer after the
execution of this Agreement ("cumulative Net Operating Profit") exceeding the
Target Profit. The Target Profit is computed for the four-year period beginning
January 1, 1995 and ending December 31, 1998, unless Employee's employment is
terminated prior to December 31, 1998 pursuant to Section 4.4 or 4.5 of this
Agreement. If the Target Profit is achieved, Employee shall receive 20% of the
amount of the cumulative Net Operating Profit in excess of the Target Profit.
The cumulative Net Operating Profit shall be determined from Employer's monthly
income reports. The Target Profit at December 31, 1995 shall be $2,000,000.00.
The cumulative Target Profit at December 31, 1996 shall be $4,300,000.00, the
cumulative Target Profit at December 31, 1997 shall be $6,945,000.00, and the
cumulative Target Profit at December 31, 1998 shall be $10,000,000.00.(2) The
comparison of the cumulative Net Operating Profit and the Target Profit shall
always be for the same period of time. Subject to the termination provisions
set forth below, the Performance Bonus will be payable no later than March 1,
1999.
3.2 FRINGE BENEFITS. Employee shall be entitled, during his employment by
Employer, to receive and participate in Employer's employee welfare benefit
plans according to the terms and conditions thereof as such from time to time as
may be amended. Employee shall be entitled to a total of 15 days of vacation,
plus three floating personal days, with full pay per calendar year during the
term of this Agreement according to the Employer's rules and policies pertaining
thereto.
3.3 TRAVEL. Employee shall be entitled, during his Employment by Employer, to
travel in accordance with the policies and procedures of Employer pertaining
thereto.
3.4 BUSINESS EXPENSES. Employee shall be entitled, during his Employment by
Employer, to be reimbursed for all and any reasonable and necessary business
expenses incurred by him on behalf of Employer in accordance with the policies
and procedures of Employer pertaining thereto.
ARTICLE FOUR
TERM AND TERMINATION
4.1 TERM OF AGREEMENT. Unless earlier terminated as provided herein or by
mutual written agreement of Employer and Employee, this Agreement shall be in
force through December 31, 1998, after which time Employer shall not be under
any obligation whatsoever to continue Employee's employment or to make any
further payments of any kind hereunder to Employee, except for the payment of
the Performance Bonus as provided herein. If Employee continues in the employ
of Employer beyond the term of this Agreement, such continuation of employment
shall be pursuant to the Employer's standard policies, plans and procedures and
shall not be pursuant to this Agreement, except to the extent that the
provisions of this Agreement relating to confidentiality and non-competition
shall remain in full force and effect according to their terms.
(2) The purpose of stating the Target Profit at the end of 1996 and 1997
is to give benchmark dates for purposes of determining the
Performance Bonus in the event Employee's employment is terminated
pursuant to Sections 4.4 or 4.5 of this Agreement.
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4.2 TERMINATION OF EMPLOYMENT FOR CAUSE. Employer shall be entitled to
terminate Employee's employment at any time for Cause. If Employer terminates
Employee's employment for Cause, Employer shall have no further obligations to
Employee under any provision(s) of this Agreement, except that Employer shall
pay to Employee the compensation described in Section 3.1(b), (c) and (e) earned
by Employee to the date of termination. The manner to determine whether the
Employee is entitled to a Performance Bonus is described in Sections 3.1(e) and
7.2. Employer shall also pay the applicable Non-Competition Payment described
in Section 5.8.
4.3 VOLUNTARY TERMINATION BY EITHER PARTY. Employee may terminate the
employment portion of this Agreement voluntarily by giving one hundred twenty
(120) days written notice of such voluntary termination. Employer may terminate
the employment portion of this Agreement for reasons other than Cause by giving
one hundred twenty (120) days written notice of such termination.
4.4 EMPLOYEE'S VOLUNTARY TERMINATION OF EMPLOYMENT. In the event the Employee
terminates the employment portion of this Agreement prior to the expiration of
the last day of the twenty-fourth (24th) calendar month following the month this
Agreement is executed, (a) Employee shall immediately refund (without right of
offset) the entire $250,000.00 Signing Bonus described in Section 3.1(a) of this
Agreement; and (b) Employer shall pay to Employee the compensation described in
Section 3.1(b), (c) and (e) earned by Employee to the date of termination. The
manner to determine whether the Employee is entitled to a Performance Bonus is
described in Sections 3.1(e) and 7.2 of this Agreement. Employer shall also pay
the applicable Non-Competition Payments described in Section 5.8.
4.5 TERMINATION BY EMPLOYER OTHER THAN FOR CAUSE. If, during the term of this
Agreement, Employer terminates Employee's employment for any reason other than
for Cause, Employer's sole obligation and liability to Employee shall be:
(a) to pay 100% of Employee's COBRA fees for 12 full months following the
month in which Employee was terminated for any reason other than for Cause or
until Employee shall have commenced other employment, whichever shall be the
earlier;
(b) to pay Employee the compensation described in Section 3.1(b), (c) and
(e) earned by Employee to the date of termination. The manner to determine
whether the Employee is entitled to a Performance Bonus is described in Sections
3.1(e) and 7.2. Employer shall also pay the applicable Non-Competition Payments
described in Section 5.8.
(c) to pay Employee a sum equal to three (3) months of Employee's salary
described in Section 3.1(b), unless the accrued Performance Bonus described in
Section 4.5(b) is greater than three months salary, in which event the three
months salary will not be paid.
4.6 CONFIDENTIALITY AND NON-COMPETITION. Regardless of the manner of
termination, Employee's covenants relating to confidential information and
covenants not to compete shall remain in full force and effect according to
their terms.
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ARTICLE FIVE
ACKNOWLEDGMENTS, REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 CONFIDENTIAL INFORMATION. Employee acknowledges that Employer has acquired
and developed a special competence in the provision of certain types of
software, hardware and services in a national market and has accumulated
proprietary information not generally known to others in the field and more and
better Confidential Information about the foregoing subjects which are of unique
value in the conduct and growth of Employer and its Client's businesses.
5.2 ACCESS TO CONFIDENTIAL INFORMATION. Employee acknowledges that he will be
employed in a unique position of trust and confidence in which he will both
receive and contribute to the Confidential Information.
5.3 INVENTIONS; DEVELOPMENTS. Employee agrees to notify Employer of any
discovery, invention, innovation, or improvement which is related to the
business of Employer or to the business of any Client and Supplier (collectively
called "Developments") conceived of or developed by Employee during the term of
Employee's employment. Developments shall include, without limitation,
developments in computer language, software and hardware, logical systems,
algorithms, and other good intellectual properties related to computer
programming, hardware design, and networking. Employee agrees that Employer
shall have all copyright and patent rights with respect to any Development and
Derivative Works discovered, created or developed under this Agreement without
regard to the origin of the Development and Derivative Works. If and to the
extent that Employee may, under applicable law, be entitled to claim any
ownership interest or moral rights in the Development and Derivative Works,
Employee hereby transfers, grants, conveys, assigns, and relinquishes
exclusively to Employer any and all right, title and interest it now has or may
hereafter acquire in and to the Development and Derivative Works under patent,
copyright, trade secret and trademark law in perpetuity or for the longest
period otherwise permitted by law. Employee further agrees as to the
Development and Derivative Works to assist Employer in every reasonable way to
obtain and, from time to time, enforce patents, copyrights, trade secrets and
other rights and protection relating to said Development and Derivative Works,
and to that end, Employee and its employees will execute all documents for use
in applying for and obtaining such patents, copyrights, trade secrets and other
rights and protection with respect to such Development and Derivative works, as
Employer may desire, together with any assignments thereof to Employer or
persons designated by it. Employee's obligations to assist Employer in
obtaining and enforcing patents, copyrights, trade secrets and other rights and
protection relating to the Development and Derivative Works shall continue
beyond the termination of this Agreement.
5.4 PROTECTION OF GOODWILL. Employee acknowledges that in the course of
carrying out, performing, and fulfilling his responsibilities to Employer,
Employee will be given access to and be entrusted with Confidential Information
relating to Employer's business, Clients, suppliers and employees and that he
will develop, on behalf of Employer, personal acquaintances with Clients,
prospective Clients and Suppliers, which acquaintances may constitute Employer's
only contact with such persons. Employee acknowledges that (i) the goodwill of
Employer depends upon, among other things, its keeping the Confidential
Information and its proprietary information confidential and that unauthorized
disclosure of such Confidential Information and proprietary information would
irreparably damage Employer, and (ii) disclosure of any Confidential Information
or proprietary information to competitors of Employer or to the media or general
public would be highly detrimental to Employer. Employee further acknowledges
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that in the course of performing his obligations to Employer, he will be a
representative of Employer to Employer's Clients, Suppliers and employees. As
such, Employee will be responsible for maintaining or enhancing the business
and/or goodwill of Employer with those Clients, Suppliers and employees.
5.5 COVENANTS REGARDING CONFIDENTIAL INFORMATION. Employee hereby covenants
and agrees as follows:
(a) NEED TO RECEIVE CONFIDENTIAL INFORMATION. Employee acknowledges that
his knowledge and experience in the areas in which Employer conducts its
business can be further enhanced by his employment with Employer. Employee
recognizes that he will be less effective and of less benefit to Employer if he
does not have access to Employer's Confidential Information. Employee further
acknowledges that, without receiving Confidential Information imparted to him by
Employer, he will be less valuable to Employer in Employer's field of endeavor.
(b) NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Except for such
Confidential Information which is or becomes generally available to the public
other than as a result of disclosure by Employee or which Employer is or becomes
compelled to disclose by judicial or administrative process (or which is
required to be disclosed by law), Employee shall not, during his employment with
Employer or at any time after termination of his employment, irrespective of the
time, manner, or cause of termination, use, disclose, copy, or assist any other
person or firm in the use, disclosure, or copying of any Confidential
Information.
(c) RETURN OF CONFIDENTIAL INFORMATION. Upon termination of Employee's
employment, irrespective of the time, manner, or reason of termination, or,
prior to such termination, upon request of Employee, Employee agrees to deliver
to Employer all Confidential Information and all copies thereof along with any
and all other property belonging to Employer, any Client, or any Suppliers
whatsoever (regardless of whether Employee in any way generated same).
5.6 COVENANTS NOT TO COMPETE.
(a) Subject to the provisions of paragraph 5.6(b), Employee, within the
territory of the United States, will not -- directly or indirectly, in any form,
fashion, or manner, either through any kind of ownership or as a stockholder,
director, officer, principal, agent, employee, employer, advisor, consultant,
partner, creditor, investor, donee, lessor or in any other form (including
waiver or forbearance) or capacity, individual or representative, whatever,
either for Employee's own benefit or for the benefit of any other person, firm,
partnership, association, corporation, or other entity, without the prior
written consent of the President of the Employer -- compete, or cause or enable
others to compete, with Employer. Without limiting the generality of the
foregoing, the Employee, during the Restricted Period shall not engage in any of
the following acts, which acts, without limitation, shall be considered
violations of this covenant not to compete and breaches of the fiduciary
obligations owed by Employee to Employer; provided, however, that nothing herein
contained shall be deemed to prevent or limit the right of Employee to invest
any of his personal funds in the securities of any competing publicly traded
corporation provided Employee owns less than one percent (1%) of such
corporation's issued and outstanding capital stock:
(1) Engage, or assist others to engage, in any Competing Business;
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(2) Directly or indirectly, design, develop, distribute, sell,
license, loan or give any product or service which is competitive with any
product or service of Employer; or
(3) Solicit, contact, or service any Clients of Employer for a
Competing Business;
(4) Give or attempt to give any person or entity assistance with
soliciting, contacting, or serving any Clients of Employer for a Competing
Business;
(5) Induce or attempt to induce any Client or any Supplier of
Employer to withdraw, curtail, divert, or cancel its business with Employer or
in any manner modify or fail to enter into any actual or potential business
relationship with Employer;
(6) Induce or attempt to induce any employee of Employer or of any
independent contractor providing services to or on behalf of Employer, to
terminate their employment or other business relationship with Employer;
(7) Employ, assist in employing, or otherwise associate in a
Competing Business with any employee or former employee of Employer; or
(8) Disclose, use or appropriate any Confidential Information in
behalf of a Competing Business.
(b) The provisions of paragraph 5.6(a) shall be applicable only as follows
(the "Restricted Periods"):
(1) During the Employee's employment by Employer;
(2) For 24 full months next following the month in which Employee
shall have been discharged by Employer;
(3) For 36 full months next following the month in which Employee
shall have voluntarily resigned his employment by Employer.
5.7 NON-COMPETE ANCILLARY TO EMPLOYMENT AGREEMENT. The provisions of this
Agreement which are covenants not to compete are ancillary to the employment
agreement herein set forth.
5.8 NON-COMPETITION PAYMENT. In consideration of the foregoing covenants not
to compete, Employer will pay Employee Three Hundred Thousand Dollars
($300,000.00) and simple interest on the accrued and unpaid balance at the rate
of six percent (6%) per annum, payable in five consecutive annual installments
of $60,000.00 (the "Non-Competition Payment"). The Non-Competition Payment
shall not be offset for any reason other than breach of the covenants described
in Section 5.6(a). The initial installment shall be payable on the day this
Agreement is executed, and each succeeding installment shall be paid on the last
day of the like anniversary month of this Agreement for each succeeding four
years provided Employee is not in breach hereunder.
5.9 TRADE SECRETS OF OTHERS. Employee represents, warrants and covenants to
Employer that (i) the terms of this Agreement and his employment by the Employer
do not and will not breach any agreement between Employee and any other entity;
(ii) that Employee will not disclose to the Employer, or to any director,
officer, employee or agent thereof, any confidential or proprietary information
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or material belonging to any other entity; and (iii) that during Employee's
employment by Employer, he will not use or attempt to use without prior
permission of the owner thereof, any confidential or proprietary information or
material belonging to any other entity in behalf of the Employer. Employee
further agrees and covenants that, during the term of this Agreement and his
employment by Employer, he will not breach any agreement to keep in confidence
proprietary information, knowledge, or data acquired by Employee in confidence
or in trust prior to employment with Employer, and Employee will not disclose to
Employer, or induce or cause Employer to use, any confidential or proprietary
information or material belonging to any previous employer or others.
5.10 OUTSIDE FEES. Employee agrees and covenants not to solicit or receive any
income or other compensation from any third party, including, without
limitation, any supplier, client, customer, or employee of Employer, in
connection with his employment with Employer.
5.11 PRIOR OBLIGATIONS OF EMPLOYEE. Employee represents and warrants that he
has not previously assumed any obligations inconsistent with those of this
Agreement.
5.12 EMPLOYEE'S INDEMNIFICATION OF EMPLOYER. Employee agrees and covenants to
indemnify and hold harmless Employer from and against any and all claims,
demands, fees (including without limitation reasonable attorneys' fees), and
expenses, arising from or in connection with a material breach by Employee of
this Agreement.
ARTICLE SIX
ENFORCEMENT OF COVENANTS
6.1 GENERAL. Regardless of whether Employee quits, retires, dies, or is
partially or permanently disabled or is otherwise terminated by Employer
(whether or not for Cause), all enforcement rights of Employer under this
Agreement shall continue in full force and effect.
6.2 RELIEF. Employee agrees that a breach on his part of any covenant
contained in this Agreement will cause such damage to Employer as will be
immediate and irreparable and for that reason, Employee further agrees that
Employer shall be entitled as a matter of right, in addition to any other remedy
available to it, to a temporary restraining order, and an injunction (temporary
and permanent) by any court of competent jurisdiction, restraining any further
violation of such covenants by Employee, his employees, partners, or agents
without the Employer being required to prove irreparable damage or lack of an
adequate remedy at law. These rights of restraint and injunction shall be
cumulative and in addition to whatever other legal and equitable remedies
Employer may have, including, specifically, recovery of damages.
6.3 EXTENSION OF RESTRICTED PERIODS FOR INJUNCTIVE RELIEF. If Employee
violates the covenants and restrictions herein and Employer brings legal action
for injunctive or other equitable relief, Employer shall not be deprived of the
benefit of the full period of the restrictive covenant as a result of the time
involved in obtaining the relief. Accordingly, Employee agrees that the
Restricted Periods shall be extended by the period of time Employee shall have
been in violation of his Restricted Periods obligations.
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6.4 REASONABLENESS OF RESTRICTIONS. Employee expressly acknowledges and agrees
that his experience and abilities are such that his observance of the covenants
and restrictive agreements contained herein are reasonable as to scope,
location, and duration and that such observation will not cause Employee undue
hardship or unreasonably interfere with Employee's ability to earn a livelihood
and practice Employee's present skills and trades. Employee has consulted with
legal counsel of his selection regarding the meaning of the covenants and
restrictions, which have been explained to his satisfaction. Employee further
agrees that such covenants and agreements shall be construed in such a manner as
to be enforceable under applicable laws in the event that a court of competent
jurisdiction determines that a more limited scope, location, or duration is
required as more fully described in Section 7.13 below.
6.5 SURVIVAL OF COVENANTS. If Employee's employment relationship with Employer
is terminated, with or without Cause, then the provisions of paragraphs 5.3,
5.4, 5.5 and 5.6 shall continue to be binding upon Employee in accordance with
their respective terms notwithstanding such termination, and, without limiting
the generality of the foregoing, (a) the covenants contained in Section 5.5
above shall survive indefinitely and (b) the covenants contained in Section 5.6
above shall (subject to extension pursuant to Section 6.3 above) survive during
the Restricted Periods or any extension thereof. During the Restricted Periods,
the covenants shall remain in full force and effect as if Employee's employment
relationship were continuing.
6.6 RIGHT OF OFFSET. In the event Employee breaches this Agreement, Employer
shall have the right of offset as to its obligations hereunder other than (i)
Employer's obligation to pay Employee for his salary as set out in Section
3.1(b) hereof and (ii) Employer's obligations under Section 5.8 of this
Agreement.
ARTICLE SEVEN
MISCELLANEOUS
7.1 EXECUTION AND DELIVERY OF SALE OF ASSETS AGREEMENT. Should the Sale of
Assets Agreement and the Operative Documents not be fully executed and delivered
contemporaneously with the execution of this Agreement, all signatures and all
deliveries of this Agreement shall be deemed to have been properly revoked and
of no force nor effect, and this Agreement shall immediately terminate without
having created any obligation or liability of any Party to any other Party.
7.2 CALCULATION OF THE TARGET PROFIT.
(a) If Employee's employment is terminated for any reason, and the period
of time for which the Employee is entitled to the Performance Bonus ends on
December 31 of a particular year, the Target Profit shall be as described in
Section 3.1(e) of this Agreement.
(b) If Employee's employment is terminated for any reason, and the period
of time for which the Employee is entitled to the Performance Bonus ends on a
month other than December, the Target Profit shall be prorated so that Employee
shall receive the applicable Performance Bonus through the end of the month
immediately preceding such termination.
7.3 NO PUBLIC NOTICE UPON DEPARTURE. Upon termination of Employee's employment
hereunder for any reason, Employee shall not provide public notice of his
departure.
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7.4 ASSIGNMENT. This Agreement and the rights hereunder shall inure to the
benefit of Employer, the assigns of Employer, and any successor of Employer by
merger or consolidation or any assignee of all or substantially all of
Employer's assets.
7.5 AGREEMENT PERSONAL TO EMPLOYEE. This is an agreement for the personal
services of Employee, and none of Employee's obligations hereunder may be
assigned.
7.6 REIMBURSEMENT OF EXPENSES. The prevailing party in any litigation between
Employer and Employee shall be reimbursed from the other party hereto for any
reasonable legal fees and all other costs incurred by such prevailing party in
enforcing this Agreement. Fees payable hereunder shall be in addition to any
other damages, fees, or amounts provided for herein.
7.7 NOTICES. All notices provided for by this Agreement shall be made in
writing either (a) by actual delivery of the notice into the hands of the party
entitled to notice or (b) by the mailing of the notice in the United States mail
to the addresses of the party entitled to notice as set forth in the Preamble,
or at the last known mailing address delivered in writing to the other party
hereto, certified mail, postage prepaid, return receipt requested. The notice
shall be deemed to be received on the date of actual delivery, in the case of
delivery as described in (a) above, or on the date such notice was deposited in
the United States mail, in the case of (b) above.
7.8 WAIVER OF BREACH. The waiver by a Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by the other Party.
7.9 MULTIPLE COUNTERPARTS. This Agreement may be executed simultaneously in
multiple counterparts, each of which for all purposes is to be deemed an
original, and all of which constitute, collectively, one agreement.
7.10 DESCRIPTIVE HEADINGS. The descriptive headings contained herein are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
7.11 ENTIRE AGREEMENT. This Agreement shall comprise the entire agreement
between the parties hereto relating to Employee's employment with Employer and
hereby supersedes, replaces, and revokes any and all other promises,
understandings or agreements, whether written or oral, between the parties
hereto.
7.12 AMENDMENT. No variation, amendment or modification hereof shall be deemed
valid unless contained in a writing with like formalities signed by each of the
parties hereto, which writing shall make express reference to this Agreement.
7.13 SAVINGS CLAUSE. The parties intend this Agreement to be valid and enforced
as written; however, if any provision, or any part hereof, is held to be
invalid, illegal, or unenforceable because of the scope, location, duration,
subject matter or geographic area covered by such provision, or for any other
reason, Employer and Employee agree that the court making such determination
shall have the power to modify or reduce the scope, location, duration, subject
matter, and/or geographical area of such provision to make such provision
enforceable to the fullest extent permitted by law, and/or to delete specific
words and phrases, and in its modified or reduced form such provision shall then
be enforceable and shall be enforced.
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7.14 GOVERNING LAW. THIS AGREEMENT, ITS VALIDITY, CONSTRUCTION, AND ENFORCEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
Dallas, Texas, as of the day and year first above written, the execution hereof
on behalf of Employer being made by a duly authorized person.
COMPUTER LANGUAGE RESEARCH, INC.
M. Xxxxx Xxxxx
-------------------------------
By: M. Xxxxx Xxxxx
Its: Group Vice President
EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD SUFFICIENT TIME TO READ THIS AGREEMENT AND
THAT HE HAS READ THIS AGREEMENT AND HAS CONSULTED WITH LEGAL COUNSEL OF HIS
CHOOSING AND UNDERSTANDS AND INTENDS TO BE BOUND BY ITS TERMS.
EMPLOYEE
Xxxx X. Xxxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxxx
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