KEY EXECUTIVE RETENTION AGREEMENT
This Agreement is dated effective as of April 24, 2001 and is entered
into by and between Timberline Software Corporation, an Oregon corporation
("TIMBERLINE") having its principle place of business at 00000 XX Xxxxxxxxxx
Xxxxxxx, Xxxxxxxxx, Xxxxxx and Xxxxxx X. Xxxxx (the "Executive").
Recitals
WHEREAS, TIMBERLINE considers the retention of its chief executive
officer to be essential to protecting and enhancing the best interests of
TIMBERLINE and its shareholders; and
WHEREAS, the Executive has made and is expected to make, due to
Executive's intimate knowledge of the business and affairs of TIMBERLINE, its
policies, methods, personnel and problems, a significant contribution to the
profitability, growth and financial strength of TIMBERLINE; and
WHEREAS, TIMBERLINE, as a publicly held corporation, recognizes that
the possibility always exists that a Change in Control may occur and that such
possibility, and the uncertainty and questions which it may raise, particular
for that person serving as the chief executive officer of a publicly held
corporation, may result in the departure or distraction of the Executive in
the performance of the Executive's duties to the detriment of TIMBERLINE and
its shareholders; and
WHEREAS, Executive is willing to remain in the employ of TIMBERLINE
upon the understanding that TIMBERLINE will provide income security if a
Change of Control occurs under certain terms and conditions set forth in this
Agreement; and
WHEREAS, it is in the best interests of TIMBERLINE and its
shareholders to reinforce and encourage the continued attention and dedication
of the Executive, to his assigned duties without distraction and to ensure the
continued availability to TIMBERLINE of the Executive in the event of a Change
in Control.
Agreement
THEREFORE, in consideration of the foregoing and other respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. DEFINITIONS. As used herein:
(a) Change in Control means and is limited to a transaction of
series of related transactions (including open-market
purchases) pursuant to which a "person" (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934
as amended) becomes the beneficial owner (as such term is
used in Section 13(d) of the Securities Exchange Act of
1934, as amended) of either:
(i) at least fifty percent (50%) of the combined voting
power of TIMBERLINE's then outstanding securities;
or
(ii) at least twenty percent (20%) of the combined
voting power of TIMBERLINE's then outstanding
securities, followed by a change of a majority of
the members of the Board of Directors.
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(b) Board of Directors means:
(i) individuals who on the date hereof constitute the
Board of TIMBERLINE, and
(ii) any new director who subsequently was elected or
nominated for election by a majority of the
directors who held such office immediately prior to
a Change in Control.
(c) Base Salary means the Executive's annual salary as of the
Change in Control, excluding performance or other bonuses.
(d) Cause means, and is limited to:
(i) the conviction of the Executive by a court of
competent jurisdiction for felony criminal conduct
or criminal conduct involving moral turpitude,
(ii) dishonesty, gross negligence, or deliberate
misconduct by the Executive in the performance of
his duties to TIMBERLINE where such action results
in material financial harm to TIMBERLINE,
(iii) willful and material breach of any agreement
between the Executive and TIMBERLINE which
continues uncorrected for thirty days following
written notice of such breach from TIMBERLINE to
the Executive,
(iv) inappropriate personal conduct by the Executive
which materially damages the reputation, good name
or financial viability of TIMBERLINE which
continues uncorrected for thirty days following
written notice from TIMBERLINE to the Executive, or
(v) participation by the Executive for his personal
benefit in the affairs of an entity that is a
competitor of TIMBERLINE that continues for thirty
days following written notice from TIMBERLINE to
the Executive.
(e) Good Reason means, and is limited to:
(i) a reduction in the duties or the scope of
responsibility of the Executive below being
primarily responsible for all of TIMBERLINE's
product as of the time of the Change in Control but
not if such reduction results from a shift of
administrative responsibilities or title,
(ii) a reduction in the Executive's annual salary, or
(iii) the relocation of the Executive, without the
Executive's consent, to a primary place of
employment outside of the Portland, Oregon
metropolitan area.
2. TERM OF AGREEMENT. This Agreement shall commence on the date hereof and
shall continue in effect until the earlier of (A) the date that any and all
benefits due to Executive under this Agreement upon the happening of the
events set forth herein have been paid and satisfied and all obligations of
TIMBERLINE to the Executive have been performed or (B) the date the Executive
and TIMBERLINE agree in writing to terminate this Agreement.
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3. PAYMENTS UPON THE OCCURRENCE OF A CHANGE IN CONTROL. Upon the occurrence of
a Change in Control, TIMBERLINE shall pay to the Executive the amounts
described below.
One hundred percent (100%) of his annual Base Salary as follows:
(i) Fifty percent (50%) upon the occurrence of the
Change of Control, and
(ii) Fifty percent (50%) paid in equal monthly payments
over the twelve months following the Change in
Control.
4. CONTINGENT PAYMENTS FOLLOWING THE OCCURRENCE OF A CHANGE IN CONTROL.
Following the occurrence of a Change in Control, TIMBERLINE shall, subject to
the conditions describe below, pay (in addition to the amounts provided for by
Section 3 above) to the Executive the amounts described below:
Two hundred percent (200%) of his annual Base Salary as follows:
(i) If the Executive continues to work for TIMBERLINE
for the twenty-four months following the Change in
Control, in one lump-sum payment at the end of such
period, or
(ii) If the Executive's employment with TIMBERLINE is
terminated either without Cause or with Good
Reason, in equal monthly payments from the date of
such termination through the end of the twenty-four
month period following the Change in Control.
The Executive shall forfeit the right to the receive any further payments
described in this Section 4 if:
(i) The Executive's employment in terminated by
TIMBERLINE for Cause;
(ii) The Executive terminates his employment by
TIMBERLINE without Good Reason, or
(iii) The Executive breaches any of the non-solicitation
and confidentiality provisions contained in Section
9 of this Agreement.
5. TERMINATION OF EXECUTIVE'S EMPLOYMENT BY REASON OF DEATH OR DISABILITY. In
the event of the Executive's death or disability during the Term of this
Agreement but prior to the occurrence of a Change of Control, this Agreement
shall terminate and the Executive shall only be entitled to such benefits
provided under any policy, plan or program governing death or disability
maintained by TIMBERLINE and covering the Executive. The determination of
disability and the amount and entitlement of benefits shall be governed by the
terms of such policy, plan or program. In the event of the Executive's
disability, the Executive's Date of Termination shall be the date on which
Executive becomes unable, by reason of physical or mental disability, to
perform the services required of him for his position, even with reasonable
accommodation, for the period of time indicated in TIMBERLINE's group long
term disability plan (in which the Executive is a participant) during which a
participant must be disabled before benefits become payable. In connection
with the Executive's termination due to disability, a qualified physician must
certify the disability and TIMBERLINE shall at all times comply with the
Americans With Disabilities Act and any other applicable disability
discrimination law. In the event of the Executive's death or disability
following the occurrence of a Change of Control, the termination of
Executive's employment shall for purposes of this Agreement be treated the
same as if TIMBERLINE had terminated the Executive's employment without cause
and all amounts due under this Agreement shall be paid to the Executive or his
estate, representative or heirs as such amounts become due.
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6. ADDITIONAL BENEFITS. The benefits provided to the Executive under this
Agreement are intended to be in addition to and supplement any benefits to
which the Executive may otherwise be entitled to receive under any retirement,
pension, profit sharing, stock option, stock incentive or similar compensation
plan provided by TIMBERLINE to its executive officers.
7. REDUCTION OF PAYMENTS IN ORDER TO AVOID EXCISE TAXES. The amount of any
payments otherwise payable by TIMBERLINE to the Executive under this Agreement
shall be reduced to the extent that such payments, together with any other
payments to be made to the Executive as a result of a Change of Control are
determined, in the reasonable determination of the Compensation Committee of
TIMBERLINE's Board of Directors to constitute "excess parachute payments"
subject to excise tax pursuant to Section 4999 of the Internal Revenue Code of
1986, as may be amended, or any successor or similar provision thereto.
8. NO MITIGATION. The Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by with employer after the Date of Termination provided that the
Executive otherwise fully complies with all of the terms and conditions of
this Agreement.
9. RESTRICTIVE COVENANTS.
(a) NON-SOLICITATION. During his employment and for a period of
twenty-four months following the termination of the
Executive's employment for any reason, whether initiated by
TIMBERLINE or by the Executive, Executive shall not directly
or indirectly, employ or solicit, entice, or induce any
individual who is an employee of TIMBERLINE at such time to
become employed by or provide services to any other person
or entity.
(b) CONFIDENTIALITY. The Executive further agrees and
acknowledges his existing obligation that at all times
during and subsequent to his employment with TIMBERLINE, to
not disclose or use for any purpose other than furthering
the interests of TIMBERLINE any trade secret or confidential
information or knowledge pertaining to the business of
TIMBERLINE, any of its subsidiaries or any of its customers
or suppliers, obtained during his employment by TIMBERLINE
or any of its subsidiaries.
10. SUCCESSORS; BINDING AGREEMENT.
(a) SUCCESSORS. Any successor to TIMBERLINE (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
TIMBERLINE shall assumed all obligations of TIMBERLINE under
this Agreement and shall inure to all rights of TIMBERLINE
under this Agreement in the same manner and to the same
extent that TIMBERLINE would be required to perform and be
entitled to the benefits of this Agreement if no such
succession had taken place.
(b) BINDING AGREEMENT. This Agreement shall inure to the benefit
of and be enforceable by the Executive's personal or legal
representatives, successors, heirs, and designated
beneficiaries. If the Executive should die while any amount
would still be payable to the Executive hereunder if the
Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's designated
beneficiaries or, if there is no such designated
beneficiary, to the Executive's estate.
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11. NOTICE.
(a) FORM AND DELIVERY. All notices and other communications
provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed
by United States registered or certified mail, return
receipt requested, postage prepaid, addressed to the last
known residence address of the Executive or in the case of
TIMBERLINE, to its principal office to the attention of its
corporate Secretary, or to such other address as either
party may have furnished to the other in writing in
accordance herewith, except that notice of change of address
shall be effective only upon receipt.
(b) NOTICE OF TERMINATION. Any termination of Executive's
employment by TIMBERLINE or by Executive shall be
communicated by written Notice of Termination to the other
party hereto, which shall indicate (I) in the case of
termination by TIMBERLINE, either that such termination is
with "Cause" as such term is defined in this Agreement or
that such terminations is without "Cause", or (ii) in the
case of termination by Executive, either that such
termination is with "Good Reason" as such term is defined in
this Agreement or that such termination is without "Good
Reason." Unless the party receiving any Notice of
Termination notifies the party who gave such notice within
10 days of receipt of the Notice of Termination that a
dispute exists concerning the nature of such termination,
the existence or non-existence "Cause" or "Good Reason"
shall be conclusive.
12. ARBITRATION. Any dispute arising under or in connection with this
Agreement (including without limitation, the existence of "Cause" or "Good
Reason" shall be resolved by final and binding arbitration to be held in
Portland, Oregon in accordance with the rules and procedures of the American
Arbitration Association. The parties shall select a mutually acceptable single
arbitrator to resolve the dispute or if they fail or are unable to do so, each
side shall within the following ten business days select a single arbitrator
and the two so selected shall select a third arbitrator within the following
ten business days and the three arbitrators so selected shall conduct such
arbitration with the final arbitrator acting as the chair of the arbitration
panel. The arbitrator(s) shall have no power to award any punitive or
exemplary damages. The arbitrator(s) may construe or interpret, but shall not
ignore or vary the terms of this Agreement, and shall be bound by controlling
law. The arbitration award or other resolution may be entered as a judgment at
the request of the prevailing party by any court of competent jurisdiction in
Oregon or elsewhere.
13. Miscellaneous.
(a) MODIFICATION AND WAIVER. Except as otherwise specifically
provided in this Agreement, no provision of this Agreement
may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed
by the parties. No waiver by either party hereto at any time
of any breach by the other party to this Agreement of, or
compliance with, any other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same
or at any prior or similar time.
(b) ENTIRE AGREEMENT. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
expressly set forth in this Agreement.
(c) GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by
Oregon law.
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(d) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
IN WITNESS WHEREOF, TIMBERLINE, through its authorized agent, and the
Executive have executed this Agreement as of the day and date first above
written.
THE EXECUTIVE TIMBERLINE SOFTWARE CORPORATION
/s/ Xxxxxx X. Xxxxx By:/s/ Xxxx X. Xxxx
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Xxxxxx X. Xxxxx Xxxx X. Xxxx, Senior Vice President/
Finance and Chief Financial Officer
