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EXHIBIT 10.05
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is by and between Comshare,
Incorporated, a Michigan corporation ("Comshare") and Xxxxxxx X. Xxxxxxxx, a
resident of the State of Michigan ("Xxxxxxxx").
BACKGROUND
A. The computer software business is highly competitive, and Xxxxxxxx
as a founder and senior executive of Comshare has been intimately familiar with
Comshare's products, customers, marketing practices, and business affairs;
accordingly, Xxxxxxxx'x provision of services to Comshare's direct competitors
would be extremely detrimental to Comshare's business.
B. Comshare therefore deems it important to its business that Xxxxxxxx
agree to refrain from providing services to Comshare's Direct Competitors (as
defined herein), for the period and on the terms and conditions set forth
herein.
THEREFORE, the parties agree as follows:
1. Covenant Not to Compete. For a period of five (5) years after the
date on which he ceases to be employed by Comshare (the "Non-competition
Period"), Xxxxxxxx shall not perform services anywhere in the world for a Direct
Competitor of Comshare, whether such services are provided as an officer,
director, proprietor, employee, partner, investor (other than as a holder of
less than 1 percent of the equity securities of any entity whose securities are
listed or traded on any recognized public exchange), consultant, advisor, agent,
or in any other capacity.
2. Direct Competitor. As used in this Agreement, a Direct Competitor
is defined on Exhibit A attached hereto.
3. Additional Non-compete Provisions. Notwithstanding anything in this
Agreement to the contrary, however:
(a) If Xxxxxxxx provides services to any exclusive licensee or
marketing agent of a Direct Competitor, he shall not participate in day-to-day
business operations or provide advice with respect to the Direct Competitor or
its products that directly compete with Comshare products.
(b) It shall not be a violation for Xxxxxxxx to participate in
any way in any business unit of any size,
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whether or not controlled, controlling, or under common control with a Direct
Competitor, if such business unit is not involved in the day-to-day business
operations of the Direct Competitor, provided that Xxxxxxxx does not participate
in such business operations or planning for the Direct Competitor or otherwise
advise the business unit with respect to the Direct Competitor.
(c) Xxxxxxxx may perform services for a large publicly-held
corporation (a "Purchaser") that has purchased one of the Named Companies (as
defined in Exhibit A) or its business so long as his services are provided
solely for the benefit of a portion of the Purchaser's business other than the
purchased Named Company. For purposes of this paragraph, a Purchaser is
considered "large" if its revenues are at least ten times as large as the
purchased Named Company's (or its business's as applicable) revenues for the
year in which the purchase occurs.
4. Due Deliberation. Xxxxxxxx, with advice of his counsel, has
carefully considered the nature and extent of the restrictions upon him and the
rights and remedies of Comshare contained in this Agreement and hereby
acknowledges and agrees that the same are reasonable in time and territory, are
designed to eliminate competition which otherwise would be unfair to Comshare,
do not stifle the inherent skill and experience of Xxxxxxxx, would not operate
as a bar to Xxxxxxxx'x sole means of support, and are required to protect
the legitimate interests of Comshare.
5. Judicial Amendment. It is expressly understood and agreed that,
although Xxxxxxxx and Comshare consider the restrictions contained herein
reasonable for the purpose of protecting the business of Comshare, if such
restrictive covenant is found by any court having jurisdiction to be
unreasonably broad to any extent, then the restrictions shall nevertheless
remain effective, but shall be deemed amended (solely for the purposes of
jurisdiction of such court) as may be considered to be reasonably necessary by
such court, and as so amended shall be enforced.
6. Compensation. In consideration of the covenant not to compete,
Comshare shall pay Xxxxxxxx $16,000 per month for a period of sixty (60) months,
payable the last day of each month, beginning on July 31, 1994.
7. Breach and Remedy. In the event that Xxxxxxxx breaches the covenant
not to compete, the payments under Section 6 shall cease, and Comshare shall be
entitled to recoup a portion of the payments already made, prorated according
to
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the proportion of the Non-competition Period remaining at the time of the
breach, subject to the following conditions:
(a) Comshare shall give Xxxxxxxx written notice of a breach of
the covenant not to compete. In the event Xxxxxxxx cures the breach within
thirty (30) days after receipt of notice, he shall have no liability for the
breach and the payments due under Section 6 shall not be diminished.
(b) If Xxxxxxxx is unsure whether a particular planned action
would be construed by Comshare as a breach of the covenant not to compete, he
may submit a written request to the President of Comshare for a determination.
Comshare shall respond in writing within thirty (30) days after either receipt
of the notice or receipt of such further information it has reasonably requested
in order to make a determination, whichever is later. If Comshare either states
that the action would not constitute prohibited competition or does not respond
within the prescribed time period, then Xxxxxxxx may engage in the activity
without violation of his obligations hereunder. If Comshare states that such
activity would be a breach of the covenant not to compete, then the notice and
cure provisions of Section 7(a) shall not apply, but such statement by Comshare
shall be without prejudice to Xxxxxxxx'x ability to take a contrary position.
8. Acceleration. To minimize any insecurity with respect to
payment of compensation, in the event of a change in control Xxxxxxxx shall be
entitled to receive all of any remaining payments in a lump sum within thirty
(30) days after the occurrence of a change in control, but his obligations under
the covenant not to compete shall not be diminished. "Change in control" is
defined as:
(a) the election of a Board of Directors of Comshare, a
majority of the members of which were nominees of a person (including an
individual, a corporation, partnership, joint venture, trust or other entity)
or a group of persons acting together (other than the Weyerhaeuser Family, as
designated in the corporation's proxy statement or persons who were members of
the Board of Directors or officers of the corporation as of the 1994 annual
meeting of shareholders, or an employee stock ownership plan approved by a
majority of such members of the Board of Directors), following the acquisition
by such person, group of persons or plan of ownership (directly or indirectly,
beneficially or of record) of twenty-five (25%) percent, or more, of the
outstanding common stock of the corporation;
(b) the acquisition of ownership by a person or group of
persons described in paragragh (a) above of fifty-one
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(51%) percent, or more, of the outstanding common stock of the corporation;
(c) a sale of all or substantially all of the assets of the
corporation to any entity not controlled by the Weyerhaeuser Family or by
persons who were members of the Board of Directors or officers of the
corporation as of the 1994 annual meeting of shareholders, or by any employee
stock ownership plan for the benefit of employees of the corporation; or
(d) a merger, consolidation or similar transaction between the
corporation and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Directors. The term
"Continuing Directors" means persons (i) who are members of the Board of
Directors immediately before the change in control and (ii) who also were
members of the Board of Directors of the corporation immediately following the
1994 annual meeting of shareholders or are new directors whose election by the
Board of Directors, or nomination for election by the corporation's
stockholders, was approved by a vote of at least a majority of the directors in
office at the time of such election or nomination who either were directors
immediately following the 1994 annual meeting of shareholders or whose election
or nomination for election was previously approved as provided above.
9. Dispute Resolution. If a dispute arises between the parties relating
to this Agreement, the following procedure shall be implemented before either
party pursues other available remedies:
(a) The parties shall hold a meeting promptly, to attempt in good
faith to negotiate a resolution of the dispute; provided, however, that no such
meeting shall be deemed to vitiate or reduce the obligations and liabilities of
the parties or be deemed a waiver by a party hereto of any remedies to which
such party would otherwise be entitled.
(b) If, within 30 days after such meeting (the "Negotiation
Period"), the parties have not succeeded in negotiating a resolution of the
dispute, they may agree in a writing signed by both of them to extend the time
to negotiate a resolution. If the parties do not agree in such a writing to
extend the Negotiation Period, then they agree to submit the dispute to
mediation in accordance with the then-current Model Procedure for Mediation of
Business Disputes of the Center for Public Resources and to bear equally the
costs of the mediation. A submission by either party at the end of the
Negotiation Period shall be deemed a submission by both.
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(c) The parties will jointly appoint a mutually acceptable mediator,
seeking assistance in such regard from the Center for Public Resources if they
have been unable to agree upon such appointment within 20 days from the
conclusion of the Negotiation Period.
(d) The parties agree to participate in good faith in the mediation
and negotiations related thereto for a period of 30 days (the "Mediation
Period"). If the parties are not successful in resolving the dispute through
the mediation, then the parties agree to submit the matter to binding
arbitration in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, by a sole arbitrator. The
submission by either party to arbitration at the end of the Mediation Period
shall be deemed a submission by both.
(e) Mediation or arbitration shall take place in Ann Arbor, Michigan
unless otherwise agreed by the parties. The substantive and procedural law of
the State of Michigan shall apply to the proceedings. Punitive or consequential
damages shall not be awarded. The award rendered by the arbitrator, if any,
shall be final and binding and judgment upon the award may be entered by any
court having jurisdiction thereof.
10. Entire Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof. No amendment, modification or
waiver of this Agreement shall be binding or effective for any purpose unless
it is made in a writing signed by the party against whom enforcement of such
amendment, modification or waiver is sought. A waiver of right or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right or
remedy on any other occasion.
11. Authority. This Agreement has been approved by the Board of Directors
of Comshare, and the officer signing it on behalf of the corporation has been
specifically authorized to do so.
COMSHARE, INCORPORATED XXXXXXX X. XXXXXXXX
By: X. Xxxxxxx Xxxxxxxx XXXXXXX X. XXXXXXXX
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T. Xxxxxxx Xxxxxxxx
President
Date: 8/15/94 Date: August 15, 1994
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EXHIBIT A
Direct Competitor
A "Direct Competitor" is defined as any of the companies currently
known as IMRS, Information Resources, Inc., Pilot, Cognos, SAS Institute, and
Holistic Systems (the "Named Companies"), or a parent, subsidiary, or other
entity controlling, controlled by or under common control with them, an
exclusive licensee or a marketing agent of their software (if such licensing or
marketing constitutes its primary business), or any successors to their
businesses.
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