1
EXHIBIT 10.24
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is entered into by
and between DataWorks Corporation (the "Company"), a California corporation, and
Stuart W. Clifton ("Executive"), effective as of December 19, 1997 ("Effective
Date").
WHEREAS, the Company desires to continue to employ Executive and to
assure itself of the continued services of Executive, and Executive desires to
be employed by the Company, under the terms and conditions herein, and
WHEREAS, the Company and Executive desire to amend and restate the terms
of Executive's existing Employment Agreement dated May 27, 1994 (the "Prior
Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT BY THE COMPANY. The Company hereby employs Executive
to render full-time services to the Company as its Chief Executive Officer and
President. Executive shall have responsibilities, duties and authorities that
are customarily associated with the position of Chief Executive Officer and
President, and such other duties as mutually agreed upon by Executive and the
Company.
2. TERM OF EMPLOYMENT. The term of Executive's employment under
this Agreement shall commence as of the Effective Date and shall end upon
termination of this Agreement by either party in accordance with Section 4 (the
"Term").
3. COMPENSATION.
3.1 SALARY. The Company agrees to pay Executive compensation
(including base salary, bonuses and equity compensation, if any) as determined
by the Company's Board of Directors (the "Board") from time to time. As of
January 1, 1998, Executive's annualized base salary ("Base Salary") shall be
$325,000. In addition, Executive shall be entitled to an annual bonus based upon
achievement of defined goals determined by the Board in good faith and set forth
in the Company's annual bonus plan for senior executives. Executive's bonus
target for 1998 shall be 100% of Base Salary subject to all other provisions of
such bonus plan as so determined by the Board.
3.2 STOCK OPTIONS. Executive acknowledges that on December
19, 1997 (the "Grant Date") Executive was granted a stock option (the "Option")
under the Company's 1995 Equity Incentive Plan (the "Plan") in accordance with
the following terms and evidenced by the Company's standard form of stock option
agreement: (i) the Option shall be exercisable for 120,000 shares of the
Company's Common Stock; (ii) the Option shall have a term of ten (10) years,
measured from the date of grant, and shall have an exercise price equal to the
"fair market value" per share of the Company's Common Stock on December 18,
1997, the day prior to the date of grant, as such term is defined in Section
2(l) of the Plan; (iii) subject to Section 4.4(b) below, the Option shares shall
vest over a four (4)-year period measured from the date of grant;
1.
2
and (iv) the Option shall be an incentive stock option, as such term is defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
the extent permitted by the Code.
3.3 BENEFITS. Executive shall be eligible to participate in
any incentive plan, stock award plan, bonus, participation or extra compensation
plan, pension, group health, disability and life insurance plan or other benefit
programs which the Company provides for its executives generally.
4. TERMINATION OF EMPLOYMENT. Subject to the following provisions
of this Section 4, the Company and Executive shall have the right to terminate
Executive's employment at any time for any reason whatsoever, with or without
Cause (as defined below). The provisions of this Section 4 shall survive any
termination of Executive's employment.
4.1 COMPANY-INITIATED TERMINATION WITHOUT CAUSE.
(a) Subject to Section 4.4 below, in the event the
Company terminates Executive's employment without Cause and subject to (i) the
execution by Executive of the release attached hereto as Exhibit A and (ii) the
expiration of the seven (7) day revocation period provided for in such release
during which such release shall not have been revoked (collectively, the
"Release Condition"), (A) Executive shall receive as severance an aggregate cash
payment (the "Severance Amount") equal to the following: (x) 200% of Executive's
then current Base Salary plus (y) 200% of the annual bonus most recently paid to
Executive pursuant to the Company's bonus plan for senior executives, payable in
equal monthly installments over the 12-month period following the date of
termination; and (B) the Company shall pay, pursuant to COBRA, all costs
associated with the continuation of coverage under the Company's group health
plan(s) for the 12-month period following termination. Such continuing coverage
shall provide for the same terms under which Executive, Executive's spouse, and
Executive's dependents were covered immediately prior to termination.
Executive's compensation and benefits shall otherwise cease as of such
termination date.
(b) For purposes of this Agreement, "Cause" shall
mean (a) willful breach or habitual neglect of Executive's duties hereunder and
failure to remedy such breach or neglect within 30 days after written notice to
Executive thereof, or (b) misconduct, including, but not limited to: (i)
conviction of any felony or of any crime involving moral turpitude or
dishonesty; (ii) participation in any fraud against the Company; (iii)
Executive's repeated insubordination or refusal to comply with the reasonable
request of the Board relating to the scope or performance of Executive's duties;
or (iv) conduct by Executive which in the good faith and reasonable
determination of the Board demonstrates Executive's gross unfitness to serve.
4.2 COMPANY-INITIATED TERMINATION FOR CAUSE. In the event
Executive's employment is terminated by the Company or its successor at any time
for Cause, Executive's compensation and benefits will in its entirety cease
immediately, and Executive shall not be entitled to any severance benefits.
4.3 EXECUTIVE-INITIATED VOLUNTARY TERMINATION. Executive may
voluntarily terminate his employment with the Company or its successor at any
time by giving the Board
2.
3
thirty 30 days' written notice. In the event Executive voluntarily terminates
his employment with the Company or its successor, except as otherwise provided
in Section 4.4 below, all of Executive's compensation and benefits will
immediately and in their entirety cease as of the termination date. Executive
acknowledges that he will not receive any severance pay or benefits upon such
voluntary termination except as otherwise provided in Section 4.4.
4.4 TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) In the event that, at the time of or within
twelve (12) months following the occurrence of a Change in Control (as defined
below), (i) the Company or its successor terminates Executive's employment
without Cause or (ii) Executive voluntarily terminates his employment for any
reason or for no reason, then, in either case, in lieu of the provisions of
Sections 4.1 and 4.3, the Company or its successor shall pay to Executive, in a
single lump sum no later than thirty (30) days following such termination and
subject to the Release Condition, the Severance Amount and shall in addition
provide the other benefits provided for in Section 4.1(a) of this Agreement.
Notwithstanding any other provision of this Agreement, in no event shall
Executive receive total cash payments under this Article 4 exceeding the
Severance Amount provided for in Section 4.1(a).
(b) In addition to any payments pursuant to Section
4.4(a) above, in the event that, at the time of or within twelve (12) months
following the occurrence of a Change in Control which occurs more than one (1)
year after the Effective Date, (i) the Company or its successor terminates
Executive's employment without Cause or (ii) Executive voluntarily terminates
his employment for any reason or for no reason, then, in either case, the
vesting and exercisability of any and all options then owned by Executive to
purchase shares of the Company's Common Stock shall immediately accelerate in
full and become fully vested and exercisable otherwise in accordance with their
terms.
(c) Except as set forth in this Section 4,
Executive's compensation and benefits shall cease as of the date of any
termination of Executive's employment with the Company.
(d) "Change in Control" means: (1) any merger,
consolidation, recapitalization or similar transaction in which the holders of
the Company's outstanding voting securities immediately prior to such
transaction do not hold directly or indirectly at least 50% of the outstanding
voting securities of the surviving entity; or (2) any sale of all or
substantially all of the Company's assets.
4.5 LOANS. In the event the Company or its successor
terminates Executive's employment without Cause, any Loans (as defined in the
Prior Agreement) outstanding, up to an aggregate principal amount not to exceed
$198,000 and all accrued interest thereon, shall automatically be forgiven by
the Company. In the event Executive's employment is terminated at any time for
Cause, all Loans currently outstanding and all accrued interest thereon shall
automatically become due and payable in full.
3.
4
4.6 CERTAIN REDUCTIONS IN PAYMENTS.
(a) In the event that any payment received or to be
received by Executive pursuant to this Agreement ("Payment") would (i)
constitute a "parachute payment" within the meaning of Section 280G of the Code
and (ii) but for this subsection (a), be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then, subject to the provisions of
subsection (b) hereof, such Payment shall be reduced, if at all, to the largest
amount which Executive, in his discretion, determines would result in maximizing
Executive's net proceeds with respect to such Payment (after taking into account
the payment of any Excise Tax imposed on such Payment). The determination by
Executive of any required reduction pursuant to this subsection (a) shall be
conclusive and binding upon the Company. The Company shall reduce a Payment in
accordance with this subsection (a) only upon written notice by Executive
indicating the amount of such reduction, if any. If the Internal Revenue Service
(the "IRS") determines that a Payment is subject to the Excise Tax, then
subsection (b) hereof shall apply, and the enforcement of subsection (b) shall
be the exclusive remedy to the Company for a failure by Executive to reduce the
Payment so that no portion thereof is subject to the Excise Tax.
(b) If, notwithstanding any reduction described in
subsection (a) hereof (or in the absence of any such reduction), the IRS
determines that Executive is liable for the Excise Tax as a result of the
receipt of one or more Payments, then Executive shall be obligated to pay back
to the Company, within thirty (30) days after final IRS determination, an amount
of such Payment(s) equal to the "Repayment Amount." The Repayment Amount with
respect to such Payment(s) shall be the smallest such amount, if any, as shall
be required to be paid to the Company so that Executive's net proceeds with
respect to such Payment(s) (after taking into account the payment of the Excise
Tax imposed on such Payment(s)) shall be maximized. Notwithstanding the
foregoing, the Repayment Amount with respect to such Payments shall be zero if a
Repayment Amount of more than zero would not eliminate the Excise Tax imposed on
such Payment(s). If the Excise Tax is not eliminated pursuant to this subsection
(b), Executive shall pay the Excise Tax.
5. NOTICES. Any notice which the Company is required or may desire
to give to Executive shall be given by personal delivery, facsimile or
registered or certified mail, return receipt requested, addressed to Executive
at the address of record with the Company, or at such other place as Executive
may from time to time designate in writing. Any notice which Executive is
required or may desire to give to the Company hereunder shall be given by
personal delivery, facsimile or by registered or certified mail, return receipt
requested, addressed to the Company at its principal office, or at such other
office as the Company may from time to time designate in writing. The date of
personal delivery, facsimile or mailing any such notice shall be deemed to be
the date of delivery thereof.
6. ARBITRATION. If a dispute arises between the Company and
Executive relating to the interpretation or performance of this Agreement, the
parties agree to hold a meeting, attended by individuals with decision-making
authority, regarding the dispute to attempt in good faith to negotiate a
resolution of the dispute prior to pursuing other available remedies. If no such
agreement can be reached within 90 days after such meeting (or, if no such
meeting is held, within 30 days of the request of either party) any unresolved
dispute shall be resolved by binding
4.
5
arbitration requested by either party hereto unless the dispute involves the
amount of damage, loss or liability at issue in pending litigation with a third
party, in which event arbitration shall not be commenced until such amount is
ascertained or the parties agree to arbitration. Such arbitration shall be
conducted by three arbitrators in San Diego, California, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, as
modified herein ("AAA"). The arbitrators shall be selected by mutual agreement
of the parties or, failing such agreement, in accordance with the aforesaid AAA
rules. The parties shall bear the costs of the arbitrators equally. Subject to
the reasonable discretion of the arbitrators and upon good cause shown, the
parties shall have the right of limited prehearing discovery, including (i)
exchange of witness lists, (ii) exchange of documentary evidence and reasonably
related documents, (iii) written interrogatories, and (iv) depositions under
oath of any witnesses who are to be called to testify at the arbitration
hearing. As soon as the discovery is concluded, the arbitrators shall hold a
hearing in accordance with the aforesaid AAA rules. Thereafter the arbitrators
shall promptly render a written award, together with a written opinion setting
forth in reasonable detail the grounds for such award. The award shall also
provide that the prevailing party shall recover its reasonable attorneys' fees
and other costs incurred in the proceedings, in addition to any other relief
which may be granted. Judgment may be entered in any court of competent
jurisdiction to enforce the arbitral award. The duty of the parties to arbitrate
any dispute hereunder shall survive expiration or termination of this Agreement
for any reason. The decision of the arbitrators so appointed shall be binding
and conclusive upon the parties to this Agreement. Nothing in this Section 6
shall limit the right of any party to seek or obtain appropriate injunctive or
other equitable relief from any court of competent jurisdiction pending the
outcome of any arbitration hereunder.
7. CONFIDENTIAL AND PROPRIETARY INFORMATION.
7.1 DEFINITION OF CONFIDENTIAL AND PROPRIETARY INFORMATION.
Executive hereby acknowledges that, during the Term, Executive shall or may make
use of, acquire, create, develop or add to certain confidential and/or
proprietary information regarding the Company's business (whether in existence
prior to, as of or after the Effective Date, collectively "Proprietary
Information"), which Proprietary Information shall include, without limitation,
all of the following materials and information (whether or not reduced to
writing and whether or not patentable or protected by copyright): inventions,
processes, formulae, programs, technical data, know-how, procedures, manuals,
confidential reports and communications, marketing methods, product sales or
cost information, new product ideas or improvements, new packaging ideas or
improvements, research and development programs, identities or lists of
suppliers, vendors, or other customers, financial information of the Company of
any nature whatsoever, or any other confidential or proprietary information
relating to the Company's business. The parties hereto agree that the failure of
any Proprietary Information to be marked or otherwise labeled as confidential or
proprietary shall not affect its status as Proprietary Information.
7.2 USE. Executive shall not, directly or indirectly,
disclose, divulge, reveal, report, publish, transfer or otherwise communicate,
or use for his own benefit or the benefit of any other person, partnership, firm
corporation or other entity, or use to the detriment of the Company, or misuse
in any way, any Proprietary Information. Executive and the Company each hereby
stipulates that, as between them, all Proprietary Information acquired or made,
developed or conceived of in whole or part by Executive constitutes important,
material and confidential
5.
6
and/or proprietary information of the Company, constitutes unique and valuable
information and affects the successful conduct of the Company's business and its
goodwill, and that the Company shall be entitled to recover its damages, as well
as any appropriate injunctive relief, for any breach of this Section 7.
7.3 OWNERSHIP.
(a) Executive hereby acknowledges and agrees that
all right, title and interest in and to any Proprietary Information shall be and
shall remain the exclusive property of the Company, and that any Proprietary
Information which Executive acquires from the Company was received in confidence
and as a fiduciary of the Company. Without limiting the foregoing, Executive
hereby assigns to the Company any and all right, title and interest which
Executive may have in all Proprietary Information (including, without
limitation, all inventions, trade secrets, patents, copyrights and all other
rights in connection therewith) made, developed or conceived of in whole or in
part by Executive during the Term, subject to Section 2780 of the California
Labor Code. Executive further agrees to execute and deliver any and all
instruments, and to do all other things reasonably requested by the Company,
both during and after the Term, in order to vest more fully in the Company all
ownership rights in such Proprietary Information. All equipment, notebooks,
documents, memoranda, reports, files, samples, books, correspondence, lists,
other written and graphic records and the like in any way relating to any
Proprietary Information or the Company's business or its activities, which
Executive shall prepare, use, construct, observe, process or control
(collectively, the "Materials") shall be and shall remain the Company's
exclusive property, and Executive hereby agrees to deliver all Materials,
together with any and all copies thereof, promptly to the Company upon the
termination of this Agreement for any reason.
(b) Without limiting any other provision set forth
in this Agreement, if any Proprietary Information or Materials are protected by
copyright and are deemed in any way to fall within the definition of "work made
for hire," as such term is defined in 17 U.S.C. Section 101, or any successor
provision thereof, such work shall be considered a "work made for hire," the
copyright of which shall be owned solely, completely and exclusively by the
Company. Without limiting any other provision of this Agreement, if any
Proprietary Information or Materials are protected by copyright and are not
considered to be included in the categories of works covered by the "work made
for hire" definition contained in 17 U.S.C. Section 101, or any successor
provision thereof, such items shall be deemed to be assigned and transferred
completely and exclusively to the Company by virtue of Executive's execution of
this Agreement.
8. GENERAL.
8.1 INDEMNIFICATION. The Company shall indemnify, defend and
hold harmless Executive from and against all payments, costs and expenses
whatsoever (including, without limitation, reasonable attorneys' fees) which
Executive may incur in connection with Executive's guaranty of any obligations
of the Company in favor of Greyhound Financial Corporation or Silicon Valley
Bank (unless such payments, costs and expenses are the direct result of
Executive's gross negligence or willful misconduct).
6.
7
8.2 ENTIRE AGREEMENT. This Agreement shall supersede the
Prior Agreement and sets forth the complete, final and exclusive embodiment of
the entire agreement between Executive and the Company and supersedes all prior
agreements or understandings between the parties, with respect to the subject
matter hereof. This Agreement is entered into without reliance upon any promise,
warranty or representation, written or oral, other than those expressly
contained herein, and it supersedes any other such promises, warranties,
representations or agreements. This Agreement may not be amended or modified
except in a written instrument signed by Executive and a duly authorized officer
or director of the Company.
8.3 SEVERABILITY. If a court of competent jurisdiction
determines that any term or provision of this Agreement is invalid or
unenforceable, then the remaining terms and provisions shall be unimpaired. Such
court shall have the authority to modify or replace the invalid or unenforceable
term or provision with a valid and enforceable term or provision which most
accurately represents the parties' intention with respect to the invalid or
unenforceable term or provision.
8.4 SUCCESSORS AND ASSIGNS. This Agreement shall bind the
heirs, personal representatives, successors, assigns, executors and
administrators of each party, and inure to the benefit of each party, its heirs,
successors and assigns. However, because of the unique and personal nature of
Executive's duties under this Agreement, Executive may not delegate the
performance of his duties under this Agreement.
8.5 APPLICABLE LAW. This Agreement shall be deemed to have
been entered into and shall be construed and enforced in accordance with the
laws of the State of California as applied to contracts made and to be performed
entirely within California.
8.6 HEADINGS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
7.
8
IN WITNESS WHEREOF, the parties have duly authorized and caused this
Agreement to be executed as follows:
STUART W. CLIFTON, DATAWORKS CORPORATION,
AN INDIVIDUAL A CALIFORNIA CORPORATION
/s/ Stuart W. Clifton By: /s/ Norman R. Farquhar
- ------------------------------ ----------------------------------
Norman R. Farquhar
Executive Vice President and
Chief Financial Officer
8.
9
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
In exchange for payment to me of amounts pursuant to Section 4 of my
Employment Agreement, I hereby furnish DataWorks Corporation (the "Company")
with the following release and waiver:
I hereby release, and forever discharge the Company, its officers,
directors, agents, employees, stockholders, successors, assigns and affiliates,
of and from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys' fees, damages, indemnities and obligations of every kind
and nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, arising at any time prior to and
including the date eight days prior to the execution date of this Release with
respect to any claims relating to my employment and the termination of my
employment, including but not limited to, claims pursuant to any federal, state
or local law relating to employment, including, but not limited to,
discrimination claims, claims under the federal Age Discrimination in Employment
Act of 1967, as amended ("ADEA"), or claims for wrongful termination, breach of
the covenant of good faith, contract claims, tort claims, and wage or benefit
claims, including but not limited to, claims for salary, bonuses, commissions,
stock, stock options, vacation pay, fringe benefits, severance pay or any form
of compensation.
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of California
or any other jurisdiction of similar effect with respect to any claims I may
have against the Company.
I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this waiver and release is knowing and
voluntary, and that the consideration given for this waiver and release is in
addition to anything of value to which I was already entitled as an employee of
the Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the waiver and release granted
herein does not relate to claims which may arise after this agreement is
executed; (b) I have the right to consult with an attorney prior to executing
this agreement (although I may choose voluntarily not to do so); (c) I have
twenty-one (21) days from the date I receive this agreement, in which to
consider this agreement (although I may choose voluntarily to execute this
agreement earlier); (d) I have seven (7) days following the execution of this
agreement to revoke my consent to the agreement; and (e) this agreement shall
not be effective until the seven (7) day revocation period has expired.
Date: __________________ By: __________________________________
Stuart W. Clifton
9.