EXHIBIT 10.2
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Employment and Non-Competition Agreement (this "Agreement") is
entered into by and between Tyler Technologies, Inc., a Delaware corporation
(the "Company"), and John M. Yeaman ("Executive"). This Agreement will become
effective upon the date it is executed by Executive as evidenced on the
signature page hereto (the "Effective Date").
The Company desires to employ Executive under the terms and subject to
the conditions set forth in this Agreement, Executive hereby representing that
he is free from any other obligation of continuing employment with any other
employer.
Executive desires employment as an employee of the Company under the
terms and subject to the conditions set forth in this Agreement.
The non-competition and confidentiality obligations of Executive as set
forth in this Agreement are a material inducement for the Company to enter into
this Agreement, and the Company would not enter into this Agreement absent such
covenants by Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which all parties mutually acknowledge, the parties
agree as follows:
1. Employment. The Company hereby employs Executive, and
Executive hereby accepts such employment, on the terms and subject to the
conditions set forth in this Agreement.
2. Duties of Executive.
(a) Executive will serve in the capacity of President and
Chief Executive Officer for the Company and, in addition, will serve in
such other capacities and perform such other duties (including those
that are consistent with the Company's bylaws) as may be assigned to
Executive from time to time by the Board of Directors, which duties
will be commensurate with the education, experience, and skills of
Executive. The Board of Directors will periodically review the duties
of Executive, which will occur not less than annually. In such
capacities, Executive shall have all necessary powers to discharge his
responsibilities.
(b) Executive will devote his full business time and
effort to the performance of his duties and responsibilities as an
executive of the Company, excluding vacation time and reasonable
absence due to illness.
(c) Executive will perform his duties in a professional
manner and will use his best efforts, skills, and abilities to promote,
enhance, and preserve the business of the Company and its affiliates
and the goodwill and relationships they have with their employees,
agents, representatives, customers, suppliers, and other persons having
business relations with any of them.
(d) Executive shall observe and comply with the written
rules and regulations of the Company with respect to its business and
shall carry out and perform the directives and policies of the Company
as the Board of Directors may from time to time state them to Executive
in writing.
3. Employment Term. The term of this Agreement will commence as
of the Effective Date and continue for a period of five (5) years; provided,
however, that at the end of such initial term or subsequent renewal of such
initial term, the term shall automatically extend for an additional one year
period unless the Company provides, at least six months prior to the end of such
initial term or subsequent renewal of such initial term, written notice that it
does not wish to extend the term. Notwithstanding the foregoing, this Agreement
may be earlier terminated in accordance with Section 7 of this Agreement.
4. Compensation.
(a) Base Salary. For services performed by Executive
pursuant to this Agreement, the Company will pay Executive during the
first two years of this Agreement a minimum base salary at the rate of
$325,000 per year (the "Base Salary"), which shall be payable in
substantially equal installments in accordance with the Company's
standard payroll practices but not less than monthly. During years
three through five of this Agreement, Executive's Base Salary shall be
set by the Compensation Committee of the Board of Directors, which will
be consistent with Executive's contributions to the Company and
Executive's then existing duties and responsibilities as such are
assigned to him by the then existing board of directors. The Base
Salary shall not be subject to reduction during the first two years,
but may be increased at the discretion of the Compensation Committee of
the Board of Directors or the Board of Directors as a whole. Any
compensation that may be paid to Executive under any additional
compensation or incentive plan of the Company or which may be otherwise
authorized from time to time by the Board of Directors shall be in
addition to the Base Salary to which Executive is entitled under this
Agreement.
(b) Annual Bonus. For each calendar year during the term
of this Agreement, Executive shall be eligible to receive an annual
performance bonus (the "Bonus"), which shall be established and paid at
the discretion of the Compensation Committee of the Board of Directors
or the Board of Directors as a whole. Executive's Bonus is targeted
each year to equal up to 100% of Executive's Base Salary, which will be
based on the performance of the Company and Executive's contributions
to such performance. The Bonus will be paid in accordance with the
Company's standard bonus payment practices.
(c) Equity Grants. During the term of this Agreement,
Executive shall be eligible and participate, in an appropriate manner
relative to other senior executives of the Company and consistent with
competitive pay practices generally, in any equity-based incentive
compensation plan or program of the Company, including, without
limitation, any plan or program providing for the grant of (i) options
to purchase common stock of the Company, (ii) restricted stock of the
Company, or (iii) similar equity-based units or interests. In
consideration of the mutual promises contained herein, the Company
shall grant Executive upon the execution of this Agreement options to
purchase 200,000 shares of Company Common Stock, $.01 par value per
share, subject to the terms and conditions of the Company's Amended and
Restated Stock Option Plan and the Company's standard stock option
agreement.
5. Executive Benefits. During the term of this Agreement, the
Company shall provide Executive with all benefits made available from time to
time by the Company to its senior executives and to its employees generally,
including, without limitation, participation in medical and dental benefit plans
and programs, disability and death insurance, 401-K plans, paid vacation, and
other fringe benefits.
2
6. Reimbursement of Expenses. The Company shall reimburse
Executive for all expenses actually and reasonably incurred by Executive in the
business interests of the Company. Such reimbursement shall be made to Executive
upon appropriate documentation of such expenditures in accordance with the
Company's policies.
7. Early Termination.
(a) It is the desire and expectation of each party that
the employer-employee relationship will continue for the full term as
set forth in Section 3 of this Agreement. The Company shall, however,
be entitled to terminate Executive's employment at any time with or
without Cause (as defined below), subject to the restrictions contained
in this Section 7.
(b) If Executive's employment is terminated by the
Company without Cause prior to the expiration of this Agreement, the
Company shall pay Executive a lump sum amount equal to two times the
Executive's annual cash compensation (which includes salary and bonus
only) paid by the Company to Executive during the immediately preceding
twelve-month period. Executive shall also be entitled to receive the
benefits set forth in Section 5 for a period equal to the greater of
eighteen (18) months or the number of months then remaining on the term
of this Agreement. A Change of Control (as defined below) shall be
deemed to be a termination without Cause, unless otherwise agreed in
writing by Executive.
(c) If Executive dies, is unable to perform his duties
and responsibilities as a result of a disability that continues for one
hundred and eighty (180) consecutive days or more, voluntarily resigns
from the Company, or is terminated by the Company for Cause, the
Company shall pay Executive (or his estate, executor, or legal
representative, as the case may be) any accrued and unpaid Base Salary
and finally determined and unpaid Bonus to the date employment ceases,
and the Company's obligations to pay additional salary, cash
compensation, or benefits shall terminate as of such date. In addition,
if the Company terminates Executive due to disability, the Company will
continue to pay the benefits outlined in Section 5 to Executive and
Executive's dependents for a period equal to the greater of eighteen
(18) months or the number of months then remaining on the term of this
Agreement.
(d) For purposes of this Agreement, "Cause" means a
determination by the Board of Directors that Executive has: (i) failed
or been unable for any reason to devote substantially all of his time
during normal business hours to the business of the Company and its
affiliates (except for vacations and absence due to illness); (ii) been
convicted of any felony; (iii) committed any act or engaged in any
conduct that is fraudulent or constitutes malfeasance or a breach of
fiduciary duties of Executive; (iv) persistently failed to abide by the
corporate policies and procedures as set forth in the Company's
employee handbook; (v) persistently failed to execute the reasonable
and lawful instructions of the Board of Directors relating to the
operation of the Company's business; or (vi) committed any material or
continuing breach of any of the terms of, or has materially or
continually failed to perform any covenant contained in, this Agreement
to be performed by Executive. With respect to (i), (iv), (v), and (vi)
above, Executive may not be terminated for Cause unless Executive fails
to cure such breach or failure of performance within thirty (30) days
after Executive's receipt of written notice of the breach or failure.
3
(e) For purposes of this Agreement, "Change of Control"
means approval by the shareholders of the Company of a merger or
consolidation of the Company into an unaffiliated entity, the
dissolution or liquidation of the Company, the sale of all or
substantially all of the assets of the Company, the acquisition by any
person, entity, or group of more than 50% of the voting stock of the
Company, or a change in a majority of the Company's Board of Directors
that was not approved by the then existing Board of Directors.
8. Confidential Information.
(a) Executive acknowledges that the Company and its
affiliates are continuously developing or receiving Confidential
Information (as defined below), and that during Executive's employment,
Executive will receive Confidential Information from the Company and
its affiliates and will receive special training relating to the
Company's and its affiliates' business methodologies. Executive further
acknowledges and agrees that Executive's employment by the Company
creates a relationship of confidence and trust between Executive and
the Company and its affiliates that extends to all Confidential
Information that becomes known to Executive. Accordingly, Executive
will not disclose or use any Confidential Information, except in
connection with the good faith performance of his duties as an officer
and employee, and will take reasonable precautions against the
unauthorized disclosure or use of Confidential Information. Upon the
Company's request, Executive will execute and comply with a third
party's agreement to protect its confidential and proprietary
information. In addition, Executive will not solicit or induce the
unauthorized disclosure or use of a third party's confidential or
proprietary information for the benefit of the Company or its
affiliates.
(b) For purposes of this Agreement, "Confidential
Information" means all written, machine-reproducible, oral and visual
data, information, and material, including, without limitation,
business, financial, and technical information, computer programs,
documents, and records (including those that Executive develops in the
scope of his employment) that (i) the Company and its affiliates, or
any of their respective customers or suppliers, treats as confidential
or proprietary through markings or otherwise, (ii) relates to the
Company and its affiliates, or any of their respective customers or
suppliers or any of their respective business activities, products, or
services (including software programs and techniques) and is
competitively sensitive or not generally known in the relevant trade or
industry, or (iii) derives independent economic value from not being
known to, and is not generally ascertainable by proper means by, other
persons who can obtain economic value from its disclosure or use.
Confidential Information shall not include information or material
that: (A) was in the public domain prior to the date of this Agreement
or subsequently came into the public domain through no fault of
Executive; (B) was lawfully received by Executive from a third party
free of any obligation of confidentiality; (C) is approved by the
Company for unrestricted public disclosure; or (D) is required to be
disclosed in a judicial or administrative proceeding or by a
governmental or regulatory authority, domestic or foreign.
9. Non Compete; No Solicitation.
(a) Executive understands that, during the course of his
employment by the Company, Executive will have access to and receive
the benefit of Confidential Information (as defined in Section 8) and
special training, as well as come into contact with the Company's and
its affiliates' customers and potential customers,
4
which Confidential Information, training, knowledge, and contacts would
provide invaluable benefits to competitors and potential competitors of
the Company and its affiliates. To protect the Company's interest in
this information and in these contacts and relationships, and in
consideration for the Company entering into this Agreement, Executive
agrees and covenants that for a period beginning on the Effective Date
of this Agreement and continuing until (i) if Executive voluntarily
resigns or is terminated for Cause, the then remaining term of this
Agreement, or (ii) if Executive is terminated without Cause, the
greater of two years or the then remaining term of this Agreement,
Executive will not (without the prior written consent of the Company),
directly or indirectly, (A) engage in any business that provides the
same or competitive products or services as those provided by the
Company and its affiliates in the State of Texas or in any other state
in which the Company or its affiliates is conducting or conducts such
business during the term of this Agreement or at the time of
termination of Executive's employment hereunder, or (B) solicit or
encourage or assist other persons or entities to solicit or encourage
any customers of the Company or any of its affiliates to terminate or
materially alter their relationship with the Company or its affiliates
or to become a customer of any other person or entity competing with
the Company or its affiliates, or (C) recruit, solicit or hire, or
encourage or assist other persons or entities to recruit, solicit or
hire, any employees of the Company or its affiliates.
(b) Executive understands and agrees that the foregoing
covenant is reasonable as to time, area, and scope and is necessary to
protect the legitimate business interests of the Company and its
affiliates. It is further agreed that such covenant will be regarded as
divisible and will be operative as to time, area, and scope to the
extent it may be so operative, and if any part of such covenant is
declared invalid, unenforceable, or void as to time, area, or scope,
the validity and enforceability of the remainder will not be affected.
(c) Executive understands and acknowledges that the
determination of damages in the event of a breach of any provision of
this Section 9 would be difficult. Executive agrees that the Company or
its affiliates, in addition to all other remedies it or any of them may
have at law or in equity and notwithstanding Section 16, will have the
right to injunctive relief if there is a breach without the necessity
of proving the inadequacy or unavailability of damages as an effective
remedy.
10. Notices. Any notice, consent, demand, or request, or other
communication to be given under this Agreement must be in writing and shall be
deemed given or made when delivered in person or within three (3) days upon
being sent certified mail, postage prepaid with return receipt requested, to the
following addresses:
If to the Company: Tyler Technologies, Inc.
5949 Sherry Lane, Suite 1400
Dallas, Texas 75225
If to Executive: Home address of Executive,
as shown on current records of the Company
11. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the specific subject matter
hereof and supersedes all prior agreements, whether written or oral, between the
parties with respect to the terms and conditions of employment of Executive by
the Company.
5
12. Modification. Any change or modification of this Agreement
shall not be valid or binding upon the parties, nor will any waiver of any term
or condition in the future be binding, unless the change or modification or
waiver is in writing and signed by both the Company and Executive.
13. Third Party Beneficiaries. If Executive dies prior to the
expiration of the term of this Agreement, any monies that may be due him under
this Agreement as of the date of his death will be paid to his estate. None of
the provisions of this Agreement shall be for the benefit of or enforceable by
any creditors of Executive.
14. Waiver of Breach. The waiver by the Company of a breach of any
provision of this Agreement by Executive will not operate or be construed as a
waiver of any subsequent breach by Executive.
15. Governing Law. This Agreement is governed by, and will be
construed in accordance with, the substantive laws of the State of Texas,
without giving effect to any conflicts-of-law, rule, or principle that might
require the application of the laws of another jurisdiction.
16. Arbitration. Any controversy, dispute, or claim arising under
this Agreement will be finally settled by arbitration conducted in accordance
with the American Arbitration Association Rules then in effect; provided,
however, that the parties will be obligated to negotiate in good faith for a
period of thirty (30) days to resolve such controversy, dispute, or claim prior
to submitting the same to arbitration. Any such arbitration proceeding will take
place in the City of Dallas, Texas, and the arbitrator will apply the laws of
the State of Texas. Any decision rendered by the arbitrator will be final and
binding and judgment thereon may be entered in any court having jurisdiction or
application thereon may be made to such court for an order of enforcement as the
case may require. The parties intend that this agreement to arbitrate be
irrevocable. If arbitration is invoked in accordance with the provisions of this
Agreement, the prevailing party will be entitled to receive from the other all
costs, fees, and expenses pertaining to or attributable to such arbitration,
including reasonable attorneys' fees.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will constitute one document.
[Remainder of page intentionally left blank]
6
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
effective as of July 1, 2003.
TYLER TECHNOLOGIES, INC., EXECUTIVE
a Delaware corporation
By: ________________________ By: __________________________
Name: G. Stuart Reeves Name: John M. Yeaman
Title: Chairman of the Board
By: ________________________
Name: H. Lynn Moore, Jr.
Title: Vice President and General Counsel
7