EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 5th day of January, 1998, by and between System Software Associates, Inc., a
Delaware corporation (the "Employer"), and Xxxxxxx Xxxxx (the "Executive"),
effective upon the joint execution by the Employer and the Executive.
RECITALS
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A. The Employer desires that the Executive provide services for the
benefit of the Employer and its affiliates and the Executive desires to accept
such employment with the Employer.
B. The Employer and the Executive acknowledge that the Executive will be a
member of the senior management team of the Employer and, as such, will
participate in creating and implementing the Employer's business plan.
C. In the course of employment with the Employer, the Executive will have
access to certain confidential information that relates to or will relate to the
business of the Employer and its affiliates.
D. The Employer desires that any such information not be disclosed to
other parties or otherwise used for unauthorized purposes.
NOW, THEREFORE, in consideration of the above premises and the following
mutual covenants and conditions, the parties agree as follows:
1. Employment. The Employer shall employ the Executive as its Chief
Operating Officer through October 31, 1998. Effective November 1, 1998, subject
to approval by the Board of Directors of the Employer (the "Board"), the
Executive shall become Chief Executive Officer of the Employer. In addition to
the foregoing, the Employer covenants and agrees that, as soon as reasonably
practicable after January 5, 1998, but in no event later than thirty (30)
calendar days thereafter, the Executive will be elected as a Director of the
Employer. The Executive hereby accepts such employment and positions on the
following terms and conditions.
2. Duties. The Executive shall work for the Employer in a full-time
capacity. The Executive shall, prior to November 1, 1998, have the duties,
responsibilities, powers, and authority customarily associated with the position
of Chief Operating Officer, which duties shall include, but not be limited to,
responsibility for all field-related activities on a worldwide basis, including
all sales, marketing, services and other relationships. Effective November 1,
1998, and during the remaining term of this Agreement, the Executive shall, upon
approval by the Board, have the duties, responsibilities, powers and authority
customarily associated with the position of Chief Executive Officer, which
duties shall include those associated with the position of Chief Operating
Officer and, in addition thereto, responsibility for the overall financial
operations and
selected research and development activities of the Employer. Prior to November
1, 1998, the Executive shall report to, and follow the direction of, the Chief
Executive Officer of the Employer. In addition to, or in lieu of, the
foregoing, the Executive also shall perform such other and unrelated services
and duties as may be assigned to him from time to time by the Chief Executive
Officer or, after October 31, 1998, by the Board. The Executive shall
diligently, competently, and faithfully perform all duties, and shall devote his
entire business time, energy, attention, and skill to the performance of duties
for the Employer or its affiliates and will use his best efforts to promote the
interests of the Employer. It shall not be considered a violation of the
foregoing for the Executive to serve on corporate, industry, civic, religious,
or charitable boards or committees, so long as such activities do not
significantly interfere with the performance of the Executive's responsibilities
as an employee of the Employer in accordance with this Agreement.
3. Executive Loyalty. The Executive shall devote all of his time,
attention, knowledge, and skill solely and exclusively to the business and
interests of the Employer, and the Employer shall be entitled to all benefits
and profits arising from or incident to any and all work, services, and advice
of the Executive. The Executive expressly agrees that during the term of this
Agreement, he shall not engage, directly or indirectly, as a partner, officer,
director, stockholder, advisor, agent, employee, or in any other form or
capacity, in any other business similar to that of the Employer. The foregoing
notwithstanding, nothing herein contained shall be deemed to prevent the
Executive from investing his money in the capital stock or other securities of
any corporation whose stock or securities are publicly-owned or are regularly
traded on any public exchange, nor shall anything herein contained be deemed to
prevent the Executive from investing his money in real estate.
4. Term of Employment. Unless sooner terminated as hereinafter provided,
this Agreement shall be entered into for a period of five (5) years, commencing
on January 5, 1998 and ending on January 4, 2003.
5. Compensation.
A. Salary. The Employer shall pay the Executive an annual salary of
$500,000, payable in substantially equal installments in accordance with the
Employer's payroll policy from time to time in effect. The Executive's salary
shall be subject to any payroll or other deductions as may be required to be
made pursuant to law, government order, or by agreement with, or consent of, the
Executive.
B. Incentive Bonus. The Executive shall participate in an annual
bonus program which program shall provide the Executive with an opportunity to
achieve a targeted annual bonus of up to $300,000. The actual terms and
conditions of the annual bonus program shall be established by the Employer,
shall be memorialized in a written document to be prepared by the Employer and
which will be incorporated herein by reference, and will provide for the payment
of an annual bonus hereunder if the Employer achieves specified quarterly and
annual earnings targets and if the Executive achieves specified personal
management objectives agreed upon by the Executive and the Board prior to the
beginning of each fiscal year of the Employer.
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For the Employer's fiscal year ending October 31, 1998, the bonus criteria shall
be established on or before April 1, 1998. Any bonus earned hereunder shall be
payable no later than sixty (60) days following the end of the Employer's fiscal
year in which the bonus is earned.
C. Stock Options. Effective on the date hereof, the Employer shall
grant the Executive stock options to purchase three hundred thousand (300,000)
shares of the common stock of the Employer in accordance with and pursuant to
the terms of the Employer's Long-Term Incentive Plan. The grant of such stock
options has been memorialized in the Option Agreement attached hereto as Exhibit
A. Effective upon the Executive's appointment as Chief Executive Officer of the
Employer, the Employer shall grant the Executive stock options to purchase an
additional three hundred thousand (300,000) shares of the common stock of the
Employer in accordance with and pursuant to the terms of the Employer's Long-
Term Incentive Plan. The grant of such stock options will be memorialized in an
option agreement in substantially the form set forth in Exhibit B hereof.
D. Stock Level Bonus. Provided the closing sale price of the
Employer's common stock as reported on the Nasdaq National Market System shall
be equal to or in excess of an average of $50.00 per share, as adjusted for
stock splits, for any one hundred eighty (180) consecutive calendar days during
the period of the Executive's employment (the "Bonus Measurement Period"), the
Executive shall be entitled to a one-time bonus of $5,000,000, such bonus to be
earned only upon the initial attainment of such average during any one hundred
eighty (180) consecutive calendar day period. In addition, the Executive shall
be entitled to such bonus, if it was not otherwise earned, upon a business
combination by the Employer during the period of the Executive's employment with
any corporation or other entity through the adoption of a plan of merger or
consolidation or a sale exchange or through the sale of all or substantially all
of the capital stock or assets of the Employer, if the Board determines that
such business combination results in a value to the Employer that equals or
exceeds $50.00 per share, as adjusted for stock splits. The bonus, if earned,
shall be payable in five (5) equal annual installments of $1,000,000 each, with
the first installment to be paid within thirty (30) days of the expiration of
the Bonus Measurement Period (or the business combination, if applicable) and
the remaining four (4) installments to be paid on the first through fourth
anniversaries of the first payment hereunder. Any installment remaining due
hereunder shall be payable to the Executive regardless of whether the Executive
is employed by the Employer at the time such installment is due and payable.
E. Engagement Bonus. The Executive shall be entitled to receive a
one-time engagement bonus in recognition of his execution of this Agreement and
his resignation from IBM prior to March 31, 1998. The engagement bonus shall be
payable, at the election of the Executive, between January 5, 1998 and April 5,
1998, and shall be equal to the sum of (i) $1,050,000, plus (ii) the
appreciation in the value of the Executive's IBM options (the "IBM Option
Appreciation"). The IBM Option Appreciation shall be equal to twelve thousand
(12,000) multiplied by the excess of the fair market value of a share of IBM
stock at the close of business on January 5, 1998 over $62. The engagement bonus
shall be payable through the issuance of up to one hundred thousand (100,000)
shares of restricted Employer common stock, with the restrictions lapsing in
five (5) equal annual installments of up to 20,000 shares each on
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January 5, 1998 and the following four annual anniversaries thereof or, if
earlier, upon the Executive's termination of employment under Paragraphs 7A, 7C
or 7E. Any amount owed hereunder which exceeds the value of such shares of
Employer common stock (as determined on the date of payment) shall be payable in
a single cash payment on or before April 5, 1998.
F. Other Benefits. During the term of this Agreement, the Employer
shall:
(1) include the Executive in any life insurance, disability
insurance, medical, dental or health insurance, vacation, savings,
pension and retirement plans and other benefit plans or programs
(including, if applicable, any excess benefit or supplemental
executive retirement plans) maintained by the Employer for the benefit
of its executives; and
(2) include the Executive in such perquisites as the Employer
may establish from time to time that are commensurate with his
position and at least comparable to those received by other executives
of the Employer.
6. Expenses. The Employer shall reimburse the Executive for all
reasonable and approved business expenses, provided the Executive submits paid
receipts or other documentation acceptable to the Employer and as required by
the Internal Revenue Service to qualify as ordinary and necessary business
expenses under the Internal Revenue Code of 1986, as amended (the "Code").
7. Termination. Notwithstanding anything in Paragraph 4 of this Agreement
to the contrary, the Executive's services shall terminate upon the first to
occur of the following events:
A. Upon the Executive's date of death or the date the Executive is
given written notice that he has been determined to be disabled by the Employer.
For purposes of this Agreement, the Executive shall be deemed to be disabled if
the Executive, as a result of illness or incapacity, shall be determined to be
disabled in accordance with the terms of the Employer's Long-Term Disability
Plan, as in effect from time to time. A termination of the Executive's
employment by the Employer for disability shall be communicated to the Executive
by written notice and shall be effective on the tenth (10th) calendar day after
receipt of such notice by the Executive, unless the Executive returns to full-
time performance of his duties before such tenth (10th) calendar day.
B. On the date the Employer provides the Executive with written
notice that he is being terminated for "cause." For purposes of this Agreement,
the Executive shall be deemed terminated for cause if the Employer terminates
the Executive after the Executive:
(1) shall have been indicted (or the equivalent thereof) for any
felony including, but not limited to, a felony involving fraud, theft,
misappropriation, dishonesty, or embezzlement;
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(2) shall have committed intentional acts of gross misconduct
that materially impair the goodwill or business of the Employer or
cause material damage to its property, goodwill, or business; or
(3) shall have refused to, or willfully failed to, perform his
material duties hereunder, provided, however, that no termination
under this subparagraph (3) shall be effective unless the Executive
does not cure such refusal or failure to the Employer's satisfaction
as soon as practicable after the Employer gives the Executive written
notice identifying such refusal or failure (and, in any event, within
thirty (30) calendar days after receipt of such written notice).
No act or failure to act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that his action or omission was in the best
interests of the Employer. A termination of the Executive's employment for
Cause shall be effected in accordance with the following procedures. The
Employer shall give the Executive written notice ("Notice of Termination for
Cause") of its intention to terminate the Executive's employment for Cause,
setting forth in reasonable detail the specific conduct of the Executive that it
considers to constitute Cause and the specific provision(s) of this Agreement on
which it relies, and stating the date, time and place of the Board Meeting for
Cause. The "Board Meeting for Cause" means a meeting of the Board at which the
Executive's termination for Cause will be considered, that takes place not less
than ten (10) and not more than twenty (20) business days after the Executive
receives the Notice of Termination for Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Board Meeting for Cause.
The Executive's termination for Cause shall be effective when and if a
resolution is duly adopted at the Board Meeting for Cause by a majority vote of
the entire membership of the Board (exclusive of the Executive, who shall recuse
himself from such a vote), stating that in the good faith opinion of the Board,
the Executive is guilty of the conduct described in the Notice of Termination
for Cause, and that such conduct constitutes Cause under this Agreement.
C. On the date the Executive terminates his employment for "Good
Reason." For purposes of this Agreement, "Good Reason" means the failure of the
Executive to be appointed Chief Executive Officer of the Employer on or about
November 1, 1998.
D. On the date the Executive terminates his employment for any
reason, other than for the reason set forth in Paragraph 7C, provided that the
Executive shall give the Employer ninety (90) days written notice prior to such
date of his intention to terminate this Agreement.
E. On the date the Employer terminates the Executive's employment for
any reason, other than a reason set forth in Paragraph 7B, provided that the
Employer shall give the Executive ninety (90) days written notice prior to such
date of its intention to terminate this Agreement.
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8. Compensation Upon Termination.
A. If the Executive's services are terminated pursuant to Paragraph
7A, 7B, or 7D, the Executive shall be entitled to his salary through his final
date of active employment, plus any accrued but unused vacation pay. The
Executive also shall be entitled to any benefits mandated under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA) or required under the terms of
any death, insurance, or retirement plan, program, or agreement provided by the
Employer and to which the Executive is a party or in which the Executive is a
participant, including, but not limited to, any short-term or long-term
disability plan or program, if applicable.
B. If the Executive's services are terminated pursuant to Paragraph
7C or 7E, the Executive shall be entitled to his salary through his final date
of active employment, plus any accrued but unused vacation pay. The Executive
also shall be entitled to the continuation of his current base salary (as set
forth in Paragraph 5A) for a period of twenty-four (24) months or, if lesser,
through the end of the term of this Agreement (the "Salary Continuation
Period"), provided (a) he signs an agreement that releases the Employer from
actions, suits, claims, proceedings and demands related to the period of
employment and/or the termination of employment, and (b) the Employer shall be
permitted to offset from the severance pay hereunder any salary paid to the
Executive during the ninety (90) day written notice period, if the Executive
performs no services during such ninety (90) day written notice period. In
addition, the terms of the stock option awards, and the rights of the Executive
thereunder, shall continue to apply in the event of a termination hereunder. The
Executive also shall be entitled to any benefits mandated under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA) or required under the terms of
any death, insurance, or retirement plan, program, or agreement provided by the
Employer and to which the Executive is a party or in which the Executive is a
participant.
C. This Paragraph 8 shall not supersede or invalidate any severance
benefit agreement or other benefit plans to which the Executive is a party or in
which the Executive is a participant; provided, however, if a change in control
shall occur (as defined in Section 280G(b)(2)(a)(i) of the Code), and a
determination is made by legislation, regulation, ruling directed to the
Executive or the Employer, or court decision, that the aggregate amount of any
payment made to the Executive hereunder, or pursuant to any plan, program, or
policy of the Employer in connection with, on account of, or as a result of,
such change in control constitutes "excess parachute payments" under the Code
that are subject to the excise tax provisions of Section 4999 of the Code, or
any successor sections thereof, the Executive shall be entitled to receive from
the Employer, in addition to any other amounts payable hereunder, an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed thereon) and any excise tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the excise tax imposed. All determinations required to be made under this
Paragraph 8, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by a certified public accounting firm
designated by the Employer and reasonably acceptable to the
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Executive which is one of the four largest accounting firms in the United States
(the "Accounting Firm"), which shall provide detailed supporting calculations
both to the Employer and the Executive within fifteen (15) business days of the
receipt of notice from the Executive that there has been an excess parachute
payment, or such earlier time as is requested by the Employer. All fees and
expenses of the Accounting Firm shall be borne solely by the Employer. Any
Gross-Up Payment, as determined pursuant to this Paragraph 8 shall be paid by
the Employer to the Executive within five (5) business days of the receipt of
the Accounting Firm's determination. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Employer should have been made ("Underpayment")
consistent with the calculations required to be made hereunder. In the event
that the Employer exhausts its remedies hereunder and the Executive thereafter
is required to make a payment of any excise tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Employer to or for the benefit of the
Executive. The Executive shall notify the Employer in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Employer of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Employer of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice to the Employer (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Employer notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
(1) give the Employer any information reasonably requested by the
Employer relating to such claim;
(2) take such action in connection with contesting such claim as the
Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Employer;
(3) cooperate with the Employer in good faith in order effectively to
contest such claim; and
(4) permit the Employer to participate in any proceedings relating to
such claim;
provided, however, that the Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any excise tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provision of
this Paragraph 8C, the Employer shall control all proceedings taken in
connection with such
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contest and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Employer shall
determine. Notwithstanding anything herein to the contrary, if, after the
receipt by the Executive of an amount advanced by the Employer pursuant to this
Paragraph 8C, the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Employer's substantial
compliance with the requirements of this Paragraph 8C) promptly pay to the
Employer the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Employer pursuant to Paragraph 8C, a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Employer does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
9. Protective Covenants. The Executive acknowledges and agrees that
solely by virtue of his employment by, and relationship with, the Employer, he
will acquire "Confidential Information", as hereinafter defined, as well as
special knowledge of the Employer's relationships with its customers and
business brokers, and that, but for his association with the Employer, the
Executive will not have had access to said Confidential Information or knowledge
of said relationships. The Executive further acknowledges and agrees (i) that
the Employer has long term, near-permanent relationships with its customers and
business brokers, and that those relationships were developed at great expense
and difficulty to the Employer over several years of close and continuing
involvement; (ii) that the Employer's relationships with its customers and
business brokers are and will continue to be valuable, special and unique assets
of the Employer and that the identity of its customers and business brokers is
kept under tight security with the Employer and cannot be readily ascertained
from publicly available materials or from materials available to the Employer's
competitors; and (iii) that the Employer has the following protectable interests
that are critical to its competitive advantage in the industry and would be of
demonstrable value in the hands of a competitor: marketing strategies and
research information and benchmarks; and plans, processes, customer networks and
protocols. In return for the consideration described in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and as a condition precedent to the Employer entering into
this Agreement, and as an inducement to the Employer to do so, the Executive
hereby represents, warrants, and covenants as follows:
A. The Executive has executed and delivered this Agreement as his
free and voluntary act, after having determined that the provisions contained
herein are of a material benefit to him, and that the duties and obligations
imposed on him hereunder are fair and reasonable and will not prevent him from
earning a comparable livelihood following the termination of his employment with
the Employer;
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B. The Executive has read and fully understands the terms and
conditions set forth herein, has had time to reflect on and consider the
benefits and consequences of entering into this Agreement, and has had the
opportunity to review the terms hereof with an attorney or other representative,
if he so chooses;
C. The execution and delivery of this Agreement by the Executive does
not conflict with, or result in a breach of or constitute a default under, any
agreement or contract, whether oral or written, to which the Executive is a
party or by which the Executive may be bound;
D. The Executive agrees that, during the time of his employment and
for a period of one (1) year after the termination of the Executive's employment
hereunder for any reason whatsoever or for no reason, whether voluntary or
involuntary, the Executive will not, except on behalf of the Employer, in any
place or venue where the Employer or any affiliate, subsidiary, or division
thereof now conducts or operates, or may conduct or operate, its business prior
to the date of the Executive's termination of employment:
(1) directly or indirectly, contact, solicit or direct any
person, firm, or corporation to contact or solicit, any of the
Employer's customers, prospective customers, or business brokers (as
hereinafter defined) for the purpose of selling or attempting to sell,
any products and/or services that are the same as or similar to the
products and services provided by the Employer to its customers during
the term hereof. In addition, the Executive will not disclose the
identity of any such business brokers, customers, or prospective
customers, or any part thereof, to any person, firm, corporation,
association, or other entity for any reason or purpose whatsoever; and
(2) directly or indirectly, whether as an investor (excluding
investments representing less than five percent (5%) of the common
stock of a public company), lender, owner, stockholder, officer,
director, consultant, employee, agent, salesperson or in any other
capacity, whether part-time or full-time, become associated with any
business involved in the design, manufacture, marketing, or servicing
of products then constituting ten percent (10%) or more of the annual
sales of the Employer; and
(3) solicit or accept if offered to him, with or without
solicitation, on his own behalf or on behalf of any other person, the
services of any person who is an employee of the Employer, nor solicit
any of the Employer's employees to terminate employment with the
Employer, nor agree to hire any employee of the Employer into
employment with himself or any company, individual or other entity;
and
(4) act as a consultant, advisor, officer, manager, agent,
director, partner, independent contractor, owner, or employee for or
on behalf of any of the Employer's business brokers, customers, or
prospective customers (as hereinafter
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defined), with respect to or in any way with regard to any aspect of
the Employer's business and/or any other business activities in which
the Employer engages during the term hereof;
E. The Executive acknowledges and agrees that the scope described
above is necessary and reasonable in order to protect the Employer in the
conduct of its business and that, if the Executive becomes employed by another
employer, he shall be required to disclose the existence of this Paragraph 9 to
such employer and the Executive hereby consents to and the Employer is hereby
given permission to disclose the existence of this Paragraph 9 to such employer;
F. For purposes of this Paragraph 9, "customer" shall be defined as
any person, firm, or entity that purchased any type of product and/or service
from the Employer or is or was doing business with the Employer or the Executive
within the twelve (12) month period immediately preceding termination of the
Executive's employment. For purposes of this Paragraph 9, "prospective customer"
shall be defined as any person, firm, or entity contacted or solicited by the
Employer or the Executive (whether directly or indirectly) or who contacted the
Employer or the Executive (whether directly or indirectly) within the twelve
(12) month period immediately preceding termination of the Executive's
employment for the purpose of having such persons, firms, or entities become a
customer of the Employer. For purposes of this Paragraph 9, "business broker"
shall be defined as any person, firm, or entity who is or was doing business
with the Employer or the Executive or who was contacted or solicited by the
Employer or the Executive (whether directly or indirectly) or who contacted or
solicited the Employer or the Executive (whether directly or indirectly) within
the thirty-six (36) month period immediately preceding termination of the
Executive's employment;
G. The Executive agrees that both during his employment and
thereafter the Executive will not, for any reason whatsoever, use for himself or
disclose to any person not employed by the Employer any "Confidential
Information" of the Employer acquired by the Executive during his relationship
with the Employer. The Executive further agrees to use Confidential Information
solely for the purpose of performing duties with the Employer and further agrees
not to use Confidential Information for his own private use or commercial
purposes or in any way detrimental to the Employer. The Executive agrees that
"Confidential Information" includes but is not limited to: (1) any financial,
business, planning, operations, services, potential services, products,
potential products, technical information and/or know-how, formulas, production,
purchasing, marketing, sales, personnel, customer, broker, supplier, or other
information of the Employer; (2) any papers, data, records, processes, methods,
techniques, systems, models, samples, devices, equipment, compilations,
invoices, customer lists, or documents of the Employer; (3) any confidential
information or trade secrets of any third party provided to the Employer in
confidence or subject to other use or disclosure restrictions or limitations;
and (4) any other information, written, oral, or electronic, whether existing
now or at some time in the future, whether pertaining to current or future
developments, which pertains to the Employer's affairs or interests or with whom
or how the Employer does business. The Employer acknowledges and agrees that
Confidential Information does not include (1)
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information properly in the public domain, or (2) information in the Executive's
possession prior to the date of his employment with the Employer;
H. During and after the term of employment hereunder, the Executive
will not remove from the Employer's premises any documents, records, files,
notebooks, correspondence, computer printouts, computer programs, computer
software, price lists, microfilm, or other similar documents containing
Confidential Information, including copies thereof, whether prepared by him or
others, except as his duty shall require, and in such cases, will promptly
return such items to the Employer. Upon termination of his employment with the
Employer, all such items including summaries or copies thereof, then in the
Executive's possession, shall be returned to the Employer immediately;
I. The Executive recognizes and agrees that all ideas, inventions,
enhancements, plans, writings, and other developments or improvements (the
"Inventions") conceived by the Executive, alone or with others, during the term
of his employment, whether or not during working hours, that are within the
scope of the Employer's business operations or that relate to any of the
Employer's work or projects, are the sole and exclusive property of the
Employer. The Executive further agrees that (1) he will promptly disclose all
Inventions to the Employer and hereby assigns to the Employer all present and
future rights he has or may have in those Inventions, including without
limitation those relating to patent, copyright, trademark or trade secrets; and
(2) all of the Inventions eligible under the copyright laws are "work made for
hire." At the request of and without charge to the Employer, the Executive will
do all things deemed by the Employer to be reasonably necessary to perfect title
to the Inventions in the Employer and to assist in obtaining for the Employer
such patents, copyrights or other protection as may be provided under law and
desired by the Employer, including but not limited to executing and signing any
and all relevant applications, assignments or other instruments. Notwithstanding
the foregoing, pursuant to the Employee Patent Act, Illinois Public Act 83-493,
the Employer hereby notifies the Executive that the provisions of this Paragraph
9 shall not apply to any Inventions for which no equipment, supplies, facility
or trade secret information of the Employer was used and which were developed
entirely on the Executive's own time, unless (1) the Invention relates (i) to
the business of the Employer, or (ii) to actual or demonstrably anticipated
research or development of the Employer, or (2) the Invention results from any
work performed by the Executive for the Employer;
J. The Executive acknowledges and agrees that all customer lists,
supplier lists, and customer and supplier information, including, without
limitation, addresses and telephone numbers, are and shall remain the exclusive
property of the Employer, regardless of whether such information was developed,
purchased, acquired, or otherwise obtained by the Employer or the Executive. The
Executive agrees to furnish to the Employer on demand at any time during the
term of this Agreement, and upon termination of this Agreement, his complete
list of the correct names and places of business and telephone numbers of all of
its customers served by him, including all copies thereof wherever located. The
Executive further agrees to immediately notify the Employer of the name and
address of any new customer, and report all changes of a location of old
customers, so that upon the termination of this Agreement, the Employer will
have a complete list of the correct names and addresses of all of its customers
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with which the Executive has had dealings. The Executive also agrees to furnish
to the Employer on demand at any time during the term of this Agreement, and
upon the termination of this Agreement, any other records, notes, computer
printouts, computer programs, computer software, price lists, microfilm, or any
other documents related to the Employer's business, including originals and
copies thereof; and
K. It is agreed that any breach or anticipated or threatened breach
of any of the Executive's covenants contained in this Paragraph 9 will result in
irreparable harm and continuing damages to the Employer and its business and
that the Employer's remedy at law for any such breach or anticipated or
threatened breach will be inadequate and, accordingly, in addition to any and
all other remedies that may be available to the Employer at law or in equity in
such event, any court of competent jurisdiction may issue a decree of specific
performance or issue a temporary and permanent injunction, without the necessity
of the Employer posting bond or furnishing other security and without proving
special damages or irreparable injury, enjoining and restricting the breach, or
threatened breach, of any such covenant, including, but not limited to, any
injunction restraining the Executive from disclosing, in whole or part, any
Confidential Information. In addition to, but not in lieu of, the remedies
contained herein, the Employer and the Executive agree that for purposes of this
Agreement, damages will be difficult to assess and, in recognition thereof, the
Executive shall pay and the Employer shall accept as liquidated damages, and not
as a penalty, the sum of $250,000. The Executive acknowledges the truthfulness
of all factual statements in this Agreement and agrees that he is estopped from
and will not make any factual statement in any proceeding that is contrary to
this Agreement or any part thereof.
10. Notices. Any and all notices required in connection with this
Agreement shall be deemed adequately given only if in writing and (a) personally
delivered, or sent by first class, registered or certified mail, postage
prepaid, return receipt requested, or by recognized overnight courier, (b) sent
by facsimile, provided a hard copy is mailed on that date to the party for whom
such notices are intended, or (c) sent by other means at least as fast and
reliable as first class mail. A written notice shall be deemed to have been
given to the recipient party on the earlier of (a) the date it shall be
delivered to the address required by this Agreement; (b) the date delivery shall
have been refused at the address required by this Agreement; (c) with respect to
notices sent by mail or overnight courier, the date as of which the Postal
Service or overnight courier, as the case may be, shall have indicated such
notice to be undeliverable at the address required by this Agreement; or (d)
with respect to a facsimile, the date on which the facsimile is sent and receipt
of which is confirmed. Any and all notices referred to in this Agreement, or
which either party desires to give to the other, shall be addressed to his
residence in the case of the Executive, or to its principal office in the case
of the Employer.
11. Waiver of Breach. A waiver by the Employer of a breach of any
provision of this Agreement by the Executive shall not operate or be construed
as a waiver or estoppel of any subsequent breach by the Executive. No waiver
shall be valid unless in writing and signed by an authorized officer of the
Employer.
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12. Assignment. The Executive acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Employer under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Employer.
13. Entire Agreement. This Agreement sets forth the entire and final
agreement and understanding of the parties and contains all of the agreements
made between the parties with respect to the subject matter hereof. This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto, with respect to the subject matter hereof. No change
or modification of this Agreement shall be valid unless in writing and signed by
the Employer and the Executive. If any provision of this Agreement shall be
found invalid or unenforceable for any reason, in whole or in part, then such
provision shall be deemed modified, restricted, or reformulated to the extent
and in the manner necessary to render the same valid and enforceable, or shall
be deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by
law, as if such provision had been originally incorporated herein as so
modified, restricted, or reformulated or as if such provision had not been
originally incorporated herein, as the case may be. The parties further agree to
seek a lawful substitute for any provision found to be unlawful; provided, that,
if the parties are unable to agree upon a lawful substitute, the parties desire
and request that a court or other authority called upon to decide the
enforceability of this Agreement modify those restrictions in this Agreement
that, once modified, will result in an agreement that is enforceable to the
maximum extent permitted by the law in existence at the time of the requested
enforcement.
14. Headings. The headings in this Agreement are inserted for convenience
only and are not to be considered a construction of the provisions hereof.
15. Execution of Agreement. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one agreement.
16. Recitals. The recitals to this Agreement are incorporated herein as
an integral part hereof and shall be considered as substantive and not precatory
language.
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17. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without reference to its
conflict of law provisions. Any and all disputes arising under this Agreement,
other than a dispute arising under Paragraph 9, initially shall be referred by
the parties hereto to non-binding mediation for resolution. If such mediation is
unsuccessful in resolving the dispute (or in the context of Paragraph 9 hereof),
any court action commenced to enforce this Agreement shall have as its sole and
exclusive venue the County of Xxxx, Illinois.
IN WITNESS WHEREOF, the parties have set their signatures on the date first
written above.
EMPLOYER: EXECUTIVE:
SYSTEM SOFTWARE ASSOCIATES,
INC.,
a Delaware corporation
__________________________________
Xxxxxxx Xxxxx
By:________________________
Its:_______________________
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