KEY-MAN EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter "Agreement") is made in Monterey,
California, dated and effective September 21, 1994, by and between THINKING
TOOLS, INC., a California Corporation (hereinafter the "Company'), and XXXX
XXXXX (hereinafter "Executive").
Recitals
A. Executive has participated in the organization of the Company
and its business.
B. Executive is expected to continue to make a major contribution
to the profitability, growth and financial strength of the
Company.
C. The Company considers the continued services of the Executive to be in the
best interest of the Company and its shareholders and desires to assure the
continued services of the Executive on behalf of the Company on an objective and
impartial basis and without distraction or conflict of interest in the event of
an attempt to obtain control of the Company.
D. Executive is willing to remain in the employ of the Company under the terms
and conditions hereof and upon the understanding that the Company will provide
him with the income security herein if his employment is terminated by the
Company without cause or if he voluntarily terminates his employment for good
reason.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, the
parties to this Agreement hereby agree as follows:
Agreement
1. Employment. The Company hereby agrees to employ Executive as President and
Chief Executive Officer of the Company. Executive accepts such employment and
agrees to be subject to the general supervision, orders, advice and direction of
the Board of Directors of the Company in a manner consistent with the Articles
of Incorporation and By-Laws of the Company.
2. Terms of Employment and Compensation. Executive's term of
employment (the "Employment Term") hereunder shall start on the
date first written above and continue until such employment
terminates pursuant to Section 7 hereof. In consideration for providing services
hereunder Executive shall be compensated through the salary and bonus provisions
of Section 3.
3. Salary and Bonus. Executive's salary for the first year hereunder shall be
equivalent to that paid to Executive from the period of January 1, 1994 to the
date hereof, or greater, as is determined in good faith by the Board of
Directors. Thereafter
during the Employment Term, Executive's salary may be increased at the
discretion of the Company's Board of Directors. Executive's salary shall be
payable on the Company's regular salary payment dates. In addition, within 90
days after the end of each fiscal year during the Employment Term, Executive may
receive a bonus, at the discretion of the Board of Directors. The salary and
bonus payments hereunder shall be subject to withholding and any other
applicable tax law.
4. Salary Guarantee. The Company shall pay to Executive the salary set forth in
Section 3 for the full Employment Term or any extensions thereof pursuant to
Section 7(a) (or a pro rata portion thereof in the event the Executive's
employment is terminated pursuant to Section 7 (b) or 7 (c) hereof prior to the
completion of the full Employment Term or any extension thereof). All such
salary payments are hereinafter referred to as the "Guaranteed Payments."
a. None of the Guaranteed Payments described in this Section shall prevent the
Executive from receiving the Termination Benefits described in Section 13 of the
Agreement.
b. All Guaranteed Payments described in this Section 4 and payable to the
Executive shall be payable to the Executive's estate in the event of death of
Executive.
c. In the event of death or any physical or mental disability which renders
Executive unable to fulfill his duties pursuant to Section 1 of this Agreement,
all Guaranteed Payments shall be made to Executive's spouse, his attorney in
fact, his personal representative, his guardian, or any other such person
legally authorized to receive monetary payments due and owing to Executive.
Further, in the event of death, any physical or mental disability which renders
Executive unable to fulfill his duties hereunder or involuntary termination of
Executive by the Company, without cause, the Company shall, in good faith,
liquidate Executive's investment in the Company and payment therefore shall be
made to Executive, Executive's spouse, his attorney in fact, his personal
representative, his guardian, or any other such person legally authorized to
receive monetary payments due and owing to Executive. If the Company does not
possess sufficient funds to make a good-faith liquidation, then the Company
shall use its best efforts to find a buyer for the stock. The definition of
"cause" shall include, but not be limited to, the definition of "cause. in the
California Labor Code, and shall also include Executive's failure to submit to
the general supervision, orders, advice and direction of the Board of Directors
of the Company, and shall include failure of performance, within the sole
discretion of the Board of Directors; provided, however, that "cause" shall not
include termination because of an acquisition of the Company, which is provided
for in paragraph 8 hereinbelow.
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5. Reimbursement for Expenses. The Company shall, during the Employment Term,
reimburse Executive for all reasonable travel, business entertainment and other
business expenses incurred by Executive in rendering services under this
Agreement. Such reimbursement shall be subject to compliance with the applicable
policies and procedures established by the Company.
6. Fringe Benefits. During the Employment Term, Executive shall be entitled to
participate in the Company's corporate, medical and disability insurance plans.
Executive shall be entitled to all other fringe benefits generally provided for
salaried employees of the Company upon attaining eligibility as provided under
such fringe benefit programs.
7. Termination. The Employment Term shall terminate on the first
to occur of the following:
(a) the second anniversary of the date on which the Employment Term commenced;
provided, however, that after such second anniversary, the Employment Term shall
be extended each year thereafter for an additional one year period unless either
party gives the other written notice at least 90 days before such extension of
its intention not to renew the Agreement
(b) the 90th day after notice from the Company to Executive that Executive is
considered to be permanently disabled due to his inability to perform his duties
or fulfill his responsibilities hereunder, which inability existed for a period
of 90 days or more before such notice; or
(c) the 90th day after Executive provides written notice to the Company
terminating his employment by the Company.
Upon termination of Executive's employment pursuant to Section 7(c) hereof,
Executive (or his estate) shall receive (i) any unpaid salary payments with
respect to periods prior to the date of termination, and (ii) any termination,
disability or death benefits to which he is entitled up until such termination
under any employee benefit plan of the Company which is in effect at the time
of, the termination of his employment. In other events of termination including
death, disability or involuntary termination by the Company, without cause,
executive shall continue to receive the Guaranteed Payments as if such
termination had not occurred. Upon termination of Executive's employment by the
Company with cause, Executive shall receive (i) any unpaid salary payments with
respect to periods prior to the date of termination, and (ii) any termination,
disability or death benefits to which he is entitled up until such termination
under any employee benefit plan of the Company which is in effect at the time
of, the termination of his employment. The definition of "cause" shall include,
but not be limited to, the definition of "cause" in the California Labor Code,
and shall also include Executive's failure to submit to the general supervision,
orders, advice and direction of the Board of
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Directors of the Company, and shall include failure of performance, within the
sole discretion of the Board of Directors; provided, however, that cause" shall
not include termination because of an acquisition of the Company, which is
provided for in paragraph 8 hereinbelow.
8. Termination Benefits for Acquisition of the Company. In addition to the
payments Executive shall receive under Section 4 hereof in the event of the
termination of his employment, the Company agrees to pay to the Executive the
Termination Benefits specified in Section 9 hereof if (a) control of the Company
is acquired (as defined in Section 10 (a) hereof) and (b) within three years
after the acquisition of control occurs the Company terminates the employment of
Executive for any reason other than pursuant to Section 7(b) or 7(c) hereof.
9. Termination Benefits. If Executive is entitled to termination benefits
pursuant to section 8 hereof, the Company agrees to pay to Executive as
termination compensation in a lump sum payment within five calendar days of the
termination of Executive's employment an amount to be computed by multiplying
(a) two (2) by (b) Executive's average annual salary payable by the Company
hereunder in each of the most recent five calendar years ending coincident with
or immediately before the date on which control of the Company is acquired (or
such portion of such period during which Executive was an employee of the
Company). For purposes of this Agreement, employment and compensation paid by
any direct or indirect subsidiary of the Company, if any, will be deemed to be
employment and compensation paid by the Company.
a. The Termination Benefits described in this section are payable to the
Executive regardless of any determination by the Company's independent public
accountants that payments made pursuant to this section are or would be
non-deductible by the Company for federal income tax purposes because of Section
280G of the Internal Revenue Code of 1986 or any subsequent revisions in the
Internal Revenue Code.
10. Definitions.
(a) As used in this Agreement, "acquisition of control" means attaining
ownership of more than 50% of the shares of voting stock of the Company by any
person or group (other than a person or group including Executive or with whom
or which Executive is affiliated or who or which is an affiliate or subsidiary
of the Company).
(b) As used in this Agreement, "cause" shall include, but not be limited to, the
definition of "cause" in the California Labor Code, and shall also include
Executive's failure to submit to the general supervision, orders, advice and
direction of the Board of Directors of the Company, and shall include failure of
performance, within the sole discretion of the Board of Directors;
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provided, however, that "cause" shall not include termination because of an
acquisition of the Company, which is provided for in paragraph 8 hereinabove.
11. Additional Provisions Relating To Termination
(a) The Company shall not be entitled to set off against the amounts payable to
Executive after termination of his employment with the Company any amounts
earned by Executive in other employment after termination of his employment with
the Company, or any amounts which might have been earned by Executive in other
employment had he sought such other employment. Executive shall have no duty or
obligation to mitigate the compensation due to him under this Agreement.
(b) Any purported termination by the Company or by Executive shall be
communicated by written Notice Of Termination to the other party hereto in
accordance with this Agreement. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of his
Employment under the provision so indicated. For purposes of this Agreement, no
such purported termination shall be effective without such Notice of
Termination.
12. Duty To Devote Full Time and To Avoid Conflict of Interest. Executive agrees
that during the period of this agreement, Executive shall devote full-time
efforts to his or her duties as an Executive of the Company. During the period
of this agreement, Executive further agrees not to (i) solely or jointly with
others undertake or join any planning for or organization of any business
activity competitive with the business activities of the Company, and (ii)
directly or indirectly, engage or participate in any other activities in
conflict with the best interests of the Company.
13. Confidentiality.
a. Definition. During the term of this agreement with the Company, Executive
will develop and will have access to and become acquainted with various trade
secrets and other proprietary and confidential information which are owned by
the Company and which are used in the operation of the Company's business.
"Trade secrets and other proprietary and confidential information" consist of,
for example, and not intending to be inclusive, (i) software (source and object
code), algorithms, computer processing systems, techniques, methodologies,
formulae, processes, compilations of information, drawings, proposals, job
notes, reports, records, and specifications, and (ii) information concerning any
matters relating to the business of the Company, any of its customers, customer
contacts, licenses, the prices it obtains or has obtained for the licensing of
its software products
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and services, or any other information concerning the business of
the Company and Company's good will.
b. No Disclosure. Executive shall not disclose or use in any manner, directly or
indirectly, any such trade secrets and other proprietary and confidential
information either during the term of this Agreement or at any time thereafter,
except as required in the course of employment with the Company.
14. Return of Material. Executive agrees that, upon request of the Company or
upon termination of employment, Executive shall turn over to the Company all
documents, disks or other computer media, or other material in his possession or
under his control that (i) may contain or be derived from ideas, concepts,
creations, or trade secrets and other proprietary and confidential information
as set forth in paragraph 13 above, or (ii) connected with or derived from
Executive's services to the Company.
15. Covenant Not To Compete.
a. Restriction. Executive agrees that he or she will not, during the course of
employment or for a period-of two (2) years commencing upon the expiration of
employment, voluntarily or involuntarily, directly or indirectly, anywhere in
the world develop, or assist others to develop, software product(s) with
functionality similar to the functionality of any software product(s) developed
or under development by the Company. The term "develop software product(s)"
shall mean design, create general or detailed functional or technical
specifications for, create or write code for, enhance, debug or otherwise modify
code for, or otherwise participate in the creation or modification of software
product(s), including simulations and object oriented technology.
b. Executive's Acknowledgments and Agreements. Executive acknowledges and agrees
that the software developed by the Company is or is intended to be marketed and
licensed to customers worldwide. Executive further acknowledges and agrees to
the reasonableness of this covenant not to compete and the reasonableness of the
geographic area and duration of time which are a part of said covenant. Company
also acknowledges and agrees that this covenant will not preclude Executive from
becoming gainfully employed following termination of employment with the
Company.
16. Inducing Employees To Leave The Company; Employment of Employees. Any
attempt on the part of Executive to induce others to leave the Company's employ,
or any effort by Executive to interfere with the Company's relationship with its
employees would be harmful and damaging to the Company. Executive agrees that
during the term of employment and for a period of two (2) years thereafter,
Executive will not in any way, directly or indirectly (i) induce or attempt to
induce any employee of the Company to quit employment with the Company; (ii)
otherwise interfere with or
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disrupt the Company's relationship with its employees; (iii) solicit, entice, or
hire away any Executive of the Company; or (iv) hire or engage any employee of
the Company or any former employee of the Company whose employment with the
Company ceased less than one (1) year before the date of such hiring or
engagement.
17. Nonsolicitation of Business. For a period of two (2) years from the date of
termination of employment, Executive will not divert or attempt to divert from
the Company any business the Company had enjoyed or solicited from its customers
during the term of Executive's employment by the Company.
18. Remedies - Injunction. In the event of a breach or threatened breach by
Executive of any of the provisions of this Agreement, Executive agrees that the
Company -- in addition to and not in limitation of any other rights, remedies,
or damages available to the Company at law or in equity -- shall be entitled to
a permanent injunction in order to prevent or restrain any such breach by
Executive or by Executive's partners, agents, representatives, servants,
Executives, and/or any and all persons directly or indirectly acting for or with
Executive.
19. Severability. In the event that any of the provisions of this Agreement
shall be held to be invalid or unenforceable in whole or in part, those
provisions to the extent enforceable and all other provisions shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
parts had not been included in this Agreement. In the event that any provision
relating to the time period or scope of restriction shall be declared by a court
of competent jurisdiction to exceed the maximum time period or scope such court
deems reasonable and enforceable, then the time period or scope of restriction
deemed reasonable and enforceable by the court shall become and shall thereafter
be the maximum time period.
20. Governing Law. This Agreement shall be construed and enforced
according to the laws of the State of California. All legal
actions arising under this Agreement shall be instituted in, and
both the Company and Executive consent to jurisdiction in,
California.
21. Expenses Any legal fees and expenses incurred by reason of any dispute
between the parties as to the enforceability of the terms contained in this
Agreement shall be the sole responsibility of the party incurring such fees and
expenses, provided, that each party agrees to comply with the terms of any final
judgement of a court of competent jurisdiction finding such party liable for the
legal fees and expenses incurred by the other party in connection with any such
dispute.
22. Entire Agreement. This Agreement contains the entire agreement
of the parties relating to the employment of Executive by the
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Company, superseding any and all prior such agreements, and cannot be amended,
modified, or supplemented in any respect except by subsequent written agreement
entered into by the parties.
23. Benefit. Executive acknowledges that the services to be rendered by him are
unique and personal; accordingly Executive may not assign any of his rights or
delegate duties or obligations under this Agreement. The rights and obligations
of the Company under this Agreement shall inure to the benefit of, and be
binding upon, the legal representatives, successors and assigns of the Company.
24. Agreement, Read, Understood and Fair. Executive has carefully
read and considered all provisions of this Agreement and agrees
that all of the restrictions set forth are fair and reasonable and
are reasonably required for the protection of the interests of the
Company.
AGREED:
The Company:
Signature
Name
Title
Date
Executive:
Signature /s/ Xxxx X. Xxxxx
Name Xxxx X. Xxxxx
Date 9-27-94
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