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EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this ____ day of ________,
1994, to be effective on February 1, 1994 by and between POLICY
MANAGEMENT SYSTEMS CORPORATION, a South Carolina corporation
(hereinafter referred to as "Employer"), and TIMOTHY V. WILLIAMS a
resident of South Carolina (hereinafter referred to as "Employee").
W I T N E S S E T H:
WHEREAS, Employer is a corporation engaged in business in the State
of South Carolina and throughout the United States;
WHEREAS, Employer desires to employ Employee in the capacity of
Chief Financial Officer and Executive Vice President, upon the
terms and conditions hereinafter set forth; and
WHEREAS, Employee is willing to enter into this Agreement with
respect to his employment and services upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, Employer hereby employs Employee and
Employee hereby accepts such employment upon the terms and
conditions hereinafter set forth:
1. Term of Employment. The term of employment under this
Agreement shall be for a period commencing on the date set
forth above, and terminating on December 31, 1998, unless such
employment is terminated or extended prior to the expiration
of said period as hereinafter provided.
2. Duties of Employee. Employee agrees that during the term of
this Agreement, he will devote his full professional and
business-related time, skills and best efforts to the
businesses of Employer in the capacity of Chief Financial
Officer and Executive Vice President, or such other capacity
as Employer and Employee may agree upon. If there are major
significant changes in the duties or responsibilities of
Employee from those listed as Prohibited Activities on Exhibit
A hereto, that are not mutually agreed upon, Employee may
terminate his employment within sixty (60) days of any such
change. In addition, Employee shall devote all necessary time
and his best efforts in the performance of any other duties as
may be assigned to him from time to time by the Board of
Directors of Employer
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including, but not limited to, serving on Employer's Board of
Directors if elected. Employee shall devote his full professional
and business skills to Employer as his primary responsibility.
Employee may engage in personal, passive investment activities
provided such activities do not interfere with the performance of
his duties hereunder and violate the non-competition and
nondisclosure provisions set forth herein.
3. Compensation. For all the services rendered by Employee under
this Agreement, Employer shall pay Employee a base salary of
not less than two hundred seventy-five thousand dollars
($275,000.00) per annum (or fraction for portions of a year).
Said base salary will be adjusted from time to time in
accordance with then current standard salary administration
guidelines of Employer. Said payments shall be made in
installments consistent with Employer's payroll practices.
In addition to the base salary, Employee shall participate in
a bonus program as determined from time to time by Employer
which shall provide an opportunity for Employee to earn
additional annual compensation equal to not less than forty
percent (40%) of his base salary under a program of defined
goals, including personal and/or unit and/or group, and/or
corporate.
Employee shall also be eligible to receive at least 25,000
PMSC stock options annually under the PMSC Stock Option Plan.
Employee shall also be elected to Employer's Executive Council
and shall be entitled to participate in the Long-Term
Incentive Plan of Executives in accordance with the terms of
such Plan in effect during his employment.
4. Fringe Benefits. The terms of this Agreement shall not
foreclose Employee from participating with other employees of
Employer in such fringe benefit or incentive compensation
plans as may be authorized and adopted from time to time by
Employer; provided, however, that Employee must meet any and
all eligibility provisions required under said fringe benefit
or incentive compensation plans. Employee shall also be
entitled to perquisites substantially similar to those other
Executive Vice Presidents are receiving as of the effective
date of this Agreement, including the use of an automobile
selected by Employer.
5. Vacation. Employee shall be entitled during each calendar
year to vacation with pay at such times and for such periods
as are consistent with the policies of Employer.
6. Working Facilities. Employee shall be furnished an office,
personal secretary and such other facilities and services
suitable to his position and adequate for the performance of
his duties, which shall be substantially similar to those of
other Executive Vice Presidents and consistent with the
policies of Employer.
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7. Sick Leave and Disability.
(a) As determined by Employer, Employee shall be entitled to
a number of days sick leave with full pay as is
consistent with the uniform employment policies of
Employer.
(b) Should Employee become totally and permanently disabled
as a result of sickness or accident and be unable to
adequately perform his regular duties prescribed under
this Agreement, his employment hereunder shall be deemed
terminated, but Employee shall be entitled to the
continuation of his base salary for a period of six (6)
months thereafter, as well as any bonus to which he may
be entitled under his bonus program. In addition,
Employee shall be entitled to such benefits as are
provided under any long-term disability plan instituted
or maintained by Employer on behalf of Employee.
For the purposes of this Agreement, the term "totally
and permanently disabled" shall mean total and permanent
disability for purposes of receiving benefits under
Employer's long-term disability plan or insurance
policy. If Employer does not have such a plan or policy
in existence at the time, the term "totally and
permanently disabled" shall mean Employee's inability,
mentally or physically, on account of sickness or
accident to regularly engage in or adequately perform
his duties hereunder. It is understood that Employee's
occasional sickness or other incapacity of short
duration may not result in his being or becoming
"totally and permanently disabled"; however, an illness
or incapacity may lead to Employee being or becoming
totally and permanently disabled if the illness or
incapacity is prolonged or recurring. For purposes of
this Agreement, in the event Employer and Employee
cannot agree at any time as to whether Employee is
totally and permanently disabled, a final decision shall
be made by a committee composed of three (3) physicians
licensed by the State of South Carolina, one of whom
shall be appointed by Employer, one of whom shall be
appointed by Employee and the third shall be appointed
by the physicians appointed by Employer and Employee.
The finding of such committee of physicians shall be
conclusive upon all parties and they shall be bound by
any statement signed by two (2) or more members of such
committee.
8. Death During Employment. If Employee dies during the term of
his employment, or if Employee was employed by Employer at the
beginning of his last illness, Employer shall continue to pay
Employee's base salary to the estate of Employee for a period
of six (6) months thereafter. Also, Employer shall pay to the
estate of Employee any bonuses to which Employee may be
entitled under his bonus program.
9. Termination of Employment. Employee and Employer shall have
the right to terminate the employment relationship described
herein at any time by mutual agreement in writing.
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Employer shall have the right to terminate the employment
relationship hereunder, for cause, by serving notice on
Employee. For the purposes hereof, cause for termination
shall be deemed to exist upon a good faith finding of two-
thirds of the Board of Directors of Employer (excluding
Employee if he is a member of the Board of Directors) of the
following: negligence, intemperance which interferes with the
performance of his duties, dishonesty involving Employer,
willful shortage in accounts under Employee's direct
supervision and control, refusal or material failure by
Employee to perform his duties hereunder. Employee and/or his
representative shall have the right to appear before the Board
of Directors.
In the event that Employer breaches the terms of this
Agreement, Employee shall have the right to terminate the
employment relationship hereunder.
10. Other Agreements. This Agreement shall be separate and apart
from, and shall be deemed to alter the terms of, any executive
compensation agreements, deferred compensation agreements,
bonus agreements, general employment benefits plans, stock
option plans and any other plans or agreements entered into
between Employee and Employer pursuant to which Employee has
been granted specific rights, benefits or options.
11. Non-Competition. Employee agrees that, during his employment
with Employer and for a period of two (2) years from the date
of the termination of Employee's employment with Employer, he
will not directly or indirectly compete with Employer by
engaging in the activities set forth on Exhibit "A" which is
attached hereto and incorporated herein by reference (the
"Prohibited Activities") within the geographic area which is
set forth on Exhibit "B" hereto (the "Restricted Area"). For
purposes of this Section 11, Employee recognizes and agrees
that Employer conducts and will conduct business in the entire
Restricted Area and that Employee will perform his duties for
Employer within the entire Restricted Area. Employee shall be
deemed to be engaged in and carrying on said Prohibited
Activities if he engages in said activities in any capacity
whatsoever, including, but not limited to, by or through a
partnership of which he is a general or limited partner or an
employee engaged in said activities, or by or through a
corporation or association of which he owns five percent (5%)
or more of the stock or of which he is an officer, director,
employee, member, representative, joint venturer, independent
contractor, consultant or agent who is engaged in said
activities. Employee agrees that during the two (2) year
period described above, he will notify Employer of the name
and address of each employers with whom he has accepted
employment during said period. Such notification shall be
made in writing within five (5) days after Employee accepts
any employment or new employment by certified mail, return
receipt requested.
12. Confidential Data. Employee further agrees that, during his
employment with Employer and upon his termination of
employment for any cause, he will keep confidential and not
divulge to any one nor appropriate for his own benefit any
confidential information described in Exhibit "C" which is
attached hereto and incorporated by this reference herein
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(the "Confidential Data"). Employee hereby acknowledges and agrees
that the prohibition against disclosure of confidential data
recited herein is in addition to and, not in lieu of, any rights or
remedies which Employer may have available pursuant to the laws of
any jurisdiction or at common law to prevent the disclosure of
trade secrets, and the enforcement by Employer of its rights and
remedies pursuant to this Agreement shall not be construed as a
waiver or any other rights or available remedies which it may
possess in law or equity absent this Agreement.
13. Non-Solicitation of Employees. Employee covenants that during
his employment and during the one (1) year period immediately
following the termination thereof, either by expiration of the
term of this Agreement or under any of the provisions of
Section 9 above, Employee will neither directly nor indirectly
induce or attempt to induce any employee of Employer to
terminate his or her employment. Nor will Employee, without
prior written consent of Employer, offer employment either on
behalf of himself or on behalf of any other individual or
entity to any employee of Employer or to any terminated
employee of Employer during the term of Employee's employment
and during the one (1) year period following the termination
of his employment.
14. Property of Employer. Employee acknowledges that from time to
time in the course of providing services pursuant to this
Agreement he shall have the opportunity to inspect and use
certain property, both tangible and intangible, of Employer
and Employee hereby agrees that said property shall remain the
exclusive property of Employer, and Employee shall have no
right or proprietary interest in such property, whether
tangible or intangible, including, without limitation,
Employee's customer and supplier lists, contract forms, books
of account, computer programs and similar property.
15. Equitable Relief. Employee acknowledges that the services to
be rendered by him are of a special, unique, unusual,
extraordinary, and intellectual character, which gives them a
peculiar value, and the loss of which cannot reasonably or
adequately be compensated in damages in an action at law; and
that a breach by him of any of the provisions contained in
this Agreement will cause Employer irreparable injury and
damage. Employee further acknowledges that he possesses
unique skills, knowledge and ability and that competition by
him in violation of this Agreement or any other breach of the
provisions of this Agreement would be extremely detrimental to
Employer. By reason thereof, Employee agrees that Employer
shall be entitled, in addition to any other remedies it may
have under this Agreement or otherwise, to injunctive and
other equitable relief to prevent or curtail any breach of
this Agreement by him.
16. "Change of Control". In the event: (1) Employer becomes a
subsidiary of another corporation or is merged or consolidated
into another corporation or substantially all of the assets of
Employer are sold to another corporation; or (2) any person,
corporation, partnership or other entity, either alone or in
conjunction with its "affiliates" as that term is defined in
Rule 405 of the General Rules and Regulations under the
Securities Act of
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1933, as amended, or other group of persons, corporations,
partnerships or other entities who are not "affiliates" but who are
acting in concert, becomes the owner of record or beneficially of
securities of Employer which represent thirty-three and one-third
percent (33 1/3%) or more of the combined voting power of
Employer's then outstanding securities entitled to elect Directors;
or (3) the Board of Directors of Employer or a Committee thereof
makes a determination in its reasonable judgment that a "Change of
Control" of Employer has taken place (a "Change of Control"), the
term during which this Agreement shall be effective shall include
the term of this Employment Agreement following the date of the
Change of Control plus one (1) year, and Employee's compensation
for such period shall be based on the following formula, shall be
subject to the following conditions and shall be in lieu of the
compensation provided for under Section 3 of this Agreement:
(a) Employee shall be paid an annual salary for the term of
Employee's Employment Agreement plus one (1) year
consisting of one hundred fifty percent (150%) of the
average amount of total cash compensation, excluding
payments made under Employer's Long-Term Incentive Plan
for Executives and tax benefit bonuses paid upon the
lapse of resale restrictions on common stock for certain
officers of Employee for the two (2) calendar years
prior to the time such control was acquired.
(b) Employee shall be paid an annual amount for the term of
Employee's Employment Agreement plus one (1) year in
consideration of the non-competition covenant of Section
11 of this Agreement consisting of fifty percent (50%)
of the average amount of total cash compensation,
excluding payments made under Employer's Long-Term
Incentive Plan for Executives and tax benefit bonus paid
upon the lapse or resale restrictions on common stock
for certain officers, of Employee for the two (2)
calendar years prior to the time such control was
acquired. Said annual amounts shall be paid quarterly
in advance.
(c) Notwithstanding any of the provisions of this Agreement,
the amount of all payments to be made pursuant to this
section after a Change of Control shall not exceed one
dollar ($1.00) less than that amount which would cause
any such payment to be deemed a "parachute payment" as
defined in Section 280G of the Internal Revenue Code of
1986 (the "Code"), as amended, and as said statute is
then in effect at the time of such payment.
(d) Any payments made to Employee following a Change of
Control that shall be disallowed, in whole or in part,
as a deductible expense to Employer for Federal income
tax purposes by the Internal Revenue Service on the
basis that Section 280G of the Code prohibits such
deduction shall be reimbursed by Employee to the full
extent of said disallowance within six (6) months after
the date of which the amount of said disallowance has
been finally determined and Employer has paid the
deficiency with respect to said disallowance. Employer
shall legally defend any proposed disallowance by the
Internal Revenue Service and the amount required to be
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reimbursed by Employee shall be the amount determined by an
appropriate court in a final, nonappealable decision that is
actually disallowed as a deduction. In lieu of payment to Employer
by Employee, Employer may, in its discretion, withhold amounts from
Employee's future compensation payments until the amount owed to
Employer has been fully recovered. No such withholding shall occur
prior to the date on which Employee would be required to make
reimbursement as provided herein.
(e) If the limitation set forth in (c) may at any time
become applicable to the amounts otherwise due pursuant
to paragraphs (a) and (b), then Employer shall continue
to pay Employee all amounts as provided under paragraphs
(a) and (b) until such time as cumulative payments equal
the aggregate amount as limited by paragraph (c) and
Employee may terminate his employment on three (3)
months notice at any time within the last twelve (12)
months of the time period during which the payments
described in this subparagraph will be paid without
affecting his rights to receive said payments.
(f) Employer shall have no obligation to pay the amounts set
forth in (a) and (b) as limited by (c) if there is
reasonable proof that the non-competition or
confidential data provisions of Sections 11 and 12 of
this Agreement are being violated.
(g) In the event of termination of employment of Employee
for Cause, as hereinafter defined, following a Change of
Control, Employer shall not be obligated to make any
further payments of the compensation amounts provided
for in this Agreement. Notwithstanding any other
provision of this Agreement, except for (e) and (j)
hereinafter which shall control in the event Employee
terminates employment as provided in (e) and (j), in the
event Employee voluntarily terminates employment
following a Change of Control for other than Good
Reason, as defined hereinafter, compensation amounts set
forth in (a) and (b) shall be payable only for a one (1)
year period following termination of employment.
"Cause" for the purposes of this Section is defined to
mean: (1) willful failure to substantially perform
prescribed duties other than as a result of disability;
or (2) willful engagement in misconduct significantly
detrimental to Employer.
"Good Reason" to terminate employment with Employer
occurs if: (1) duties are assigned that are materially
inconsistent with previous duties; (2) duties and
responsibilities are substantially reduced; (3) base
compensation is reduced not as part of an across the
board reduction for all senior officers or executives;
(4) participation under compensation plans or
arrangements generally made available to persons at
Employee's level of responsibility at Employer is
denied; (5) a successor fails to assume this Agreement;
or (6) termination is made without compliance with
prescribed procedures.
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(h) In the event Employee is involuntarily terminated by
Employer without Cause or Employee voluntarily
terminates employment for Good Reason, Employer's
obligation to pay the compensation amounts provided in
this Section shall survive termination of employment.
(i) Further, in the event of termination of employment
during the pendency of a "Potential Change of Control",
as hereinafter defined, the provisions of (g) and (h)
shall apply as if an actual Change of Control had taken
place. A Potential Change of Control shall be deemed to
have occurred if: (1) Employer has entered into an
agreement or letter of intent the consummation of which
would result in a Change of Control; (2) any person
publicly announces an intention to take or to consider
taking actions which if consummated would constitute a
Change of Control; or (3) the Board of Directors of
Employer or a Committee thereof in its reasonable
judgment makes a determination that a Potential Change
of Control for purposes of this Agreement has occurred.
A Potential Change of Control remains pending for
purposes of receiving payments under this Agreement
until the earlier of the occurrence of a Change of
Control or a determination by the Board of Directors or
a committee thereof (at any time) that a Change of
Control is no longer reasonably expected to occur.
(j) Notwithstanding anything contained in this Agreement to
the contrary, Employee and Employer or the person,
corporation, partnership or other entity acquiring
control of Employer, with the concurrence of the Chief
Executive Officer and Compensation Committee of the
Board of Directors of Employer, may mutually agree that
Employee, with three (3) months' notice, may terminate
his employment and receive a lump sum payment equal to
the present value of remaining payments under this
Agreement discounted by the then current Treasury Bill
rate for the remaining term of this Agreement.
17. Successors Bound. This Agreement shall be binding upon
Employer and Employee, their respective heirs, executors,
administrators or successors in interest, including without
limitation, any corporation into which Employer may be merged
or by which it may be acquired.
18. Severability. In the event that any one or more of the
provisions of this Agreement or any word, phrase, clause,
sentence or other portion thereof (including without
limitation the geographical and temporal restrictions
contained herein) shall be deemed to be illegal or
unenforceable for any reason, such provision or portion
thereof shall be modified or deleted in such a manner so as to
make this Agreement as modified legal and enforceable to the
fullest extent permitted under applicable laws. The validity
and enforceability of the remaining provisions or portions
thereof shall not be construed as a waiver of any subsequent
breach of the same or any other covenants, term or provision.
If the geographical or temporal restrictions contained in
Sections 11 and 13 hereof are so deleted, no such modification
or deletion will be made which is less favorable to Employee
without
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his consent.
19. Integrated Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the
subject matter hereof, and there are no agreements,
understandings, specific restrictions, warranties or
representations relating to said subject matter between the
parties other than those set forth herein or herein provided
for.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will take effect as an original
and all of which shall evidence one and the same Agreement.
21. Governing Law. The terms of this Agreement shall be governed
by and construed in accordance with the laws of the State of
South Carolina.
22. Assignment. The rights, duties and obligations under this
Agreement may not be assigned by either party, except if there
is a Change of Control as defined in Section 16, Employer may
assign its rights and obligations hereunder to the person,
corporation, partnership or other entity which has gained such
control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
"Employer"
[CORPORATE SEAL] POLICY MANAGEMENT SYSTEMS
CORPORATION
Witness:
_____________________________ BY: ___________________________
President
_____________________________
"Employee"
_____________________________ _________________________ (SEAL)
Timothy V. Williams
_____________________________
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EXHIBIT A
Acting in any capacity, either individually or with any
corporation, partnership or other entity, directly or indirectly,
in providing, or proposing to provide, data processing software
systems, related automation support services and information
services to the insurance industry, including, but not limited to,
application software, processing, consulting and related services,
in the performance of any of the following types of duties in any
part of the insurance industry:
1. The performance of the sales and marketing functions.
2. The responsibility for sales revenue generation.
3. The responsibility for customer satisfaction.
4. The responsibility for research and development of insurance
data base products.
5. The responsibility for the research and development of
information data processing systems and services.
6. The providing of input to pricing of products.
7. The planning and management of data processing services
resources.
8. The coordination of the efforts of the various aspects of
computer systems services organizations with other functions.
9. The planning and management of information services resources.
10. The providing and management of an operations staff to support
the above listed activities.
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EXHIBIT B
RESTRICTED AREA
Fifty mile radius of the city limits of the following cities:
Toronto, Canada Birmingham, Alabama
Columbus, Ohio Minneapolis, Minnesota
Cincinnati, Ohio San Diego, California
Chicago, Illinois Melbourne, Australia
Dallas/Fort Worth, Texas Indianapolis, Indiana
Los Angeles, California St. Paul, Minnesota
Boston, Massachusetts Denver, Colorado
Philadelphia, Pennsylvania Mobile, Alabama
Hartford, Connecticut Seattle, Washington
San Francisco, California Bloomington, Illinois
New York City, New York Des Moines, Iowa
Columbia, South Carolina San Juan, Puerto Rico
Sydney, Australia El Paso, Texas
Honolulu, Hawaii Detroit, Michigan
Jacksonville, Florida Phoenix, Arizona
Milwaukee, Wisconsin San Antonio, Texas
Montreal, Canada Baltimore, Maryland
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EXHIBIT B (CONT.)
Kansas City, Missouri San Jose, California
Stanford, Connecticut Memphis, Tennessee
Oklahoma City, Oklahoma Washington, D.C.
Atlanta, Georgia New Orleans, Louisiana
Houston, Texas London, England
Miami, Florida Paris, France
Princeton, New Jersey St. Louis, Missouri
Cleveland, Ohio Nashville, Tennessee
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EXHIBIT C
CONFIDENTIAL INFORMATION
1. All software/systems (including all present, planned and
future software), whether licenses or unlicensed, developed by
or on behalf of or otherwise acquired by Policy Management
Systems Corporation or any of its subsidiaries.
"All software/system" shall mean:
. all code in whatever form
. all data pertaining to the architecture and design of
such software systems
. all documentation in whatever form
. all flowcharts
. any reproduction or recreation in whole or in part of
any of the above in whatever form.
2. All business plans and strategies including:
. strategic plans
. product plans
. marketing plans
. financial plans
. operating plans
. resource plans
. all research and development plans including all data
produced by such efforts.
3. Internal policies, procedures, methods and approaches which
are unique to Policy Management Systems Corporation and are
non-public.
4. Any information relating to the employment, job
responsibility, performance, salary and compensation of any
present or future officer or employee of Policy Management
Systems Corporation.