Confidentiality, Non-Competition and Non-Solicitation Agreement - Manugistics Inc., John K. Willoughby and Jo Anne Gardner
CONFIDENTIALITY, NON-COMPETITION AND
NON-SOLICITATION AGREEMENT
AGREEMENT made as of this 24th day of May, 1996 between Manugistics,
Inc., a Delaware Corporation, (hereinafter referred to as the "Company") and
John K. Willoughby and Jo Anne Gardner (hereinafter referred to as the
"Founders").
WHEREAS, the Founders, Company and certain other parties have entered
into a certain Agreement and Plan of Merger of even date herewith (which,
together with the documents and agreements referenced therein, is hereafter
referred to as the "Merger Agreement") providing for, among other things,
purchase of all of the capital stock of Avyx, Inc. (hereinafter referred to as
"Avyx") held by its shareholders; and
WHEREAS, the parties following the merger have entered into a
consulting agreement (hereinafter referred to as the "Consulting Agreement")
with the Company and have been and in consideration of an option to purchase,
in the aggregate, thirty thousand (30,000) shares of the Common Stock of
Manugistics Group, Inc., pursuant to the terms of the Manugistics Group, Inc.
Employee Stock Option Plan, as amended, at an exercise price equal to the
average of the high and low prices for the Common Stock as of the date the
merger transaction is consummated, Founders hereby covenant and agree as
follows:
1. Definitions: As used in this Agreement, the following terms
shall have the following meanings:
A. Avyx means Avyx, Inc. as well as the surviving
company following the merger of Manugistics Acquisition, Inc. and Avyx.
B. Company means Manugistics, Inc., Manugistics Group,
Inc. and all affiliates;
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C. Proprietary Information means any trade or business
secrets of Company and/or Avyx and any scientific, technical or business
materials that are treated by Company and/or Avyx as confidential or
proprietary, including but not limited to Manugistics' software modules,
Manugistics' Manufacturing Planning module, Avyx's ASE, Avyx's FAST,
information to which Founders had access relating to the Company's present or
planned business which could include the names and addresses of Company's
and/or Avyx's customers or prospective customers and methods of doing business
and certain other business information with which Company and/or Avyx has
entrusted Founders in the use, application or purpose therefor, as well as
information concerning: techniques, processes and programs relating to
company's customers and Company's and/or Avyx's products and any companies with
which the Company and/or Avyx does business; sales processes and procedures;
costs; Company's and/or Avyx's general business procedures and operations,
financial information, invoices, accounts receivable, billings, reports,
correspondence and payment of billings; sales information/or information
concerning profits; merchandising, sales or marketing strategies and
techniques; expansion plans with respect to marketing, products or otherwise;
methods of servicing customers; methods of pricing or charging for services and
products; business forms developed by or for Company and/or Avyx; with respect
to the Company and/or Avyx, form and content of proposals, reports and
analyses; names of suppliers, personnel or employees; advertising sources and
potential advertising sources; internal reporting methods; bids; contracts;
proposals; scientific and technical data, specifications and other
documentation, whether written, oral or machine-readable; forecasts;
predictions; designs, formulae; software programs, however embodied;
information about or belonging to customers, potential customers or others and
any other information relating to the operation,
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business, customers and sources of supply for all or any of the Company's
and/or Avyx's products. However, Proprietary Information shall not include any
information that (i) is or becomes publicly known without any breach of this
agreement; (ii) a Founder develops from and after the date hereof (and not
working under a Consulting Agreement) without reference to Proprietary
Information; or (iii) a Founder rightfully acquires from a third party without
any obligation on that Founder's part to maintain its confidentiality.
D. Intellectual Property means any writing, drawing,
logo, computer program, manual, trade name, trademark, service mark or other
material of the Company and/or Avyx registered or otherwise protected or
protectable under state, federal or foreign patent, trademark, copyright, or
similar laws.
2. Acknowledgments:
A. Founders recognize and acknowledge that: (1) in the
course of Founders' employment as an officer, director and/or executive
employee of Avyx, Inc., and/or their stock ownership in Avyx, Inc. and/or the
Company, as the case may be, it was necessary for Founders to use or have
access to information relating to Company's and/or Avyx's present or planned
business which includes in whole or in part, but which is not limited to, the
Proprietary Information and Intellectual Property; (2) the use,
misappropriation or disclosure of the Proprietary Information and Intellectual
Property would constitute a breach of trust and cause irreparable injury to
Company; and (3) it is essential to the protection of Company's goodwill and to
the maintenance of Company's competitive position that the Proprietary
Information and Intellectual Property be kept secret and that Founders not
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disclose the Proprietary Information and Intellectual Property to others or use
the same to Founder's own advantage or the advantage of others.
B. Founders further recognize and understand that to the
extent that they prepared any materials in the course of their employment by
Avyx, including written or graphic materials, any such materials conceived or
written by Founders were done as "work made for hire" as defined and used in
the Copyright Act of 1976, 17 USC Section 1 et seq. In the event of
publication of such materials, Founders understand that since the work was
"work made for hire," Manugistics, Inc., Manugistics Group, Inc. or Surviving
Company as the case may be, will solely retain and own all rights in said
materials, including rights of copyright.
C. Founders represent and warrant that they have
adequate personal financial resources and that their experience and
capabilities are such that the provisions of Section 3 below will not prevent
Founders from earning a livelihood. Founders also acknowledge that it would
cause Company serious and irreparable injury and cost if Founders were to
breach the obligations contained in Section 3.
3. Confidentiality, Noncompetition and Nonsolicitation:
A. Founders agree at all times from and after the date
hereof, to maintain in strict confidence the Proprietary Information and
Intellectual property. Founders understand that by agreeing to maintain the
Proprietary Information and Intellectual Property in strict confidence, they
are agreeing not to disclose the Proprietary Information and Intellectual
Property to any third party at any time and to refrain from utilizing, directly
or indirectly, the Proprietary Information and Intellectual Property at any
time for any purpose whether for Founders' own account or for the account of
any
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other person or business entity. Founders agree not to make any copies and
simultaneously with his execution hereof, to promptly return to Company any and
all documentary, machine-readable or other elements or evidence of the
Proprietary Information and Intellectual Property and any copies thereof that
may be in Founders' possession or under his control. Notwithstanding the
foregoing, a Founder may disclose Proprietary Information or Intellectual
Property to the extent required to do so by an order of a court of competent
jurisdiction, but only if such Founder first immediately notifies Company of
such order and uses its best efforts to cooperate with Company, at Company's
expense, (i) to lawfully avoid such disclosure and (ii) to protect the
information in question.
B. Founders agree that for a period of thirty-six (36)
months after the date hereof, Founders will not "compete" with Avyx and/or the
Company. As used herein, to "compete" means to be involved in any manner
whether directly or indirectly (any such involvement by Founder or any child or
parent of any Founder to be deemed the involvement of Founders personally), for
his own account or for the account of another, as owner, principal,
stockholder, director, employee, officer, consultant, agent, independent
contractor, partner, jointventurer, creditor or in any other manner, with any
person, business or entity located anywhere in the world that (i) produces,
manufactures, markets, sells or distributes (a) any of the products produced,
manufactured, marketed, sold or distributed by the Avyx and/or the Company as
of the date hereof, or at any time within one year preceding the date hereof or
at any time during the thirty-six (36) month period from and after the date
hereof, including without limitation any of the following: Manugistics'
software products, Manugistics' Manufacturing Planning module, ASE or FAST (b)
any products which the Company planned to produce, manufacture, market, sell or
distribute within three years following the date hereof as outlined or
identified in a
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business plan or related minutes or memoranda prior to the date hereof, or (ii)
that Founders know or have reason to know employs, solicits, or seeks to
persuade to become employed any employee of Avyx (or any successor division or
entity that consists primarily of the business of Avyx following any
reorganization involving Avyx) in violation of any noncompetition or other
agreement to which Avyx is a party; except that nothing herein shall prohibit
Founders from owning not more than 1% of any class of securities of any
publicly-traded entity. Founders acknowledge that because the Company's
business is highly competitive, price sensitive and capital intensive and
because the Company conducts its business and offers products throughout the
world and the information they may have acquired about the conduct of the
business of Avyx and/or the Company during the course of their employment by
Avyx and/or their stock ownership in Avyx is important to the entire breadth of
Company's business, it is appropriate to define such area broadly as relevant
to the fair protection of Company's goodwill and substantial economic
investment in same. Company acknowledges that it carries on a broad and
diversified business, and thus agrees (I) to provide Founders from time with
written notice of all products produced, marketed, manufactured, sold or
distributed by Company or Avyx ("Company Products"), (ii) that Founders'
obligations under this Section 3B shall apply and extend only to Company
Products with respect to which Founder has received such written notice or
otherwise has actual notice ("Notice"), and (iii) that any actions taken by a
Founder pursuant to a contract entered into, or an obligation incurred, prior
to the date of such Founder's receipt of any such Notice that would otherwise
cause such actions to be prohibited under this Section 3B shall not be deemed
to violate this Section 3B solely by reason of such Founder's receipt of such
Notice.
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C. Founders agree that for a period of thirty-six (36)
months after the date hereof during the period of Founders' Consulting
Agreement with Avyx, Founders shall not contact, divert or solicit directly or
indirectly any account, customer or supplier with whom Avyx has conducted any
business or for whom Avyx has performed any services or sold any products
during the period of Founders' stock ownership in and/or employment by Avyx,
including, but not limited to, any person or entity who was a potential
account, client or customer of Avyx as a result of contacts, including without
limitation the exchange of proposals, having been made between Avyx and such
person or entity prior to the date of this Agreement, but excluding NASA, as
defined in Section 3G below, it being expressly recognized that Founders are
permitted to work with NASA as described in Section 3G below. As used herein,
"to solicit directly or indirectly" means directly or indirectly, to provide,
offer to provide, or communicate with in any way to induce any interest in
using for the account of Founder or another, as owner, principal, stockholder,
director, employee, officer, consultant, agent, independent contractor,
partner, joint-venturer, creditor or in any other manner, services or products
provided by Avyx.
D. Founders agree that for a period of thirty-six (36)
months after the date hereof, they will neither employ nor solicit or seek to
persuade any employee, consultant or independent contractor of Company to
discontinue his employment or relationship with Company, or to become employed
or engaged in any business directly or indirectly competitive with Company's
business as described in Section 3B hereof.
E. To assist in the enforcement of the provisions set
forth in this Section 3, Founders agree to immediately notify the Company of
any contracts, agreements, policy statements
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and other similar documents relating to Founders' performance of services or
delivery of goods to or on behalf of any other person, group or entity during
the term of this Agreement if, in the reasonable judgment of Founders, such
document could raise a material issue as to whether Founders' obligations
thereunder could conflict with Founders' obligations under this agreement.
F. Notwithstanding anything contained in this Agreement
to the contrary, Founders, and each of them shall be permitted to: (i) Take any
actions (including the publication of professional articles, reports,
abstracts, and similar writings) permitted or required by the terms of the
Merger Agreement, including without limitation actions by John Willoughby as
"Paying Agent" thereunder and performance of services by Founders (through
their wholly owned corporation, The Kendall Group, Inc.) (A) under the
Consulting Agreements, (B) under the contract dated August 3, 1994 and modified
on March 13, 1995, June 9, 1995, and October 23, 1995, between the University
of Maryland and Information Sciences, Inc., formerly a wholly-owned subsidiary
of Avyx, Inc. (hereinafter referred to as the "University of Maryland
Contract"), and (C) under any substitute, replacement or follow-up contract or
agreement to the University of Maryland Contract between Founders (or their
controlled entity) and NASA, any NASA field agency, any NASA research center,
or any NASA direct support contractor (each and all of which are referred to
hereinafter as "NASA") pertaining to process requirements of mission
operations; (ii) Enter into or participate in, and perform services (including
the publication of professional articles, reports, abstracts or similar
writings) under, any contracts, agreements and projects with NASA relating to
aerospace mission operations, including process definition, operations concepts
and computer systems concepts and requirements; and (iii) Enter into or
participate in, and perform services (including the publication of professional
articles, reports, abstracts,
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and similar writings) under, any contracts, agreements and projects with any
party, including any commercial company, involving general management
consulting in commercial areas not relating to (A) manufacturing decision
support, (B) manufacturing supply chain management, or (C) any other business
area explicitly described in published business plans or annual reports of the
Company.
4. Remedies. Founders acknowledge that any breach by them
of the obligations set forth in Section 3 A, B, C, D, or E above would
substantially and materially impair and irreparably harm Company's business and
goodwill; that such impairment and harm would be difficult to measure; and,
therefore, total compensation in solely monetary terms would be inadequate.
Consequently, Founders agree that in the event of any breach or any threatened
breach by Founders of any of the provisions of Section 3 A, B, C, D or E above,
Company shall be entitled, in addition to monetary damages or other remedies,
to equitable relief, including injunctive relief. The existence of any claims
or cause of action by Founders against the Company or any rights to offset
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by Company of such covenants. All
covenants and agreements set forth shall be binding on and shall inure to the
benefit of and be enforceable by or for Company's successors, transferees and
assigns. In any action under or arising out of this agreement, the prevailing
party shall be entitled to recover from the non-prevailing party all of the
prevailing party's costs and expenses of such action, including without
limitation reasonable attorneys' fees.
5. Severance. It is the intention of the parties that the
provisions of Section 3 hereof shall be enforceable to the fullest extent
permissible under applicable law, but that the unenforceability (or
modification to conform to such law) of any provision or provisions thereof
shall not render
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unenforceable, or impair, the remaining provisions. In the event a specific
provision of this Agreement, or any portion thereof, is determined to be
invalid by statute or administrative or judicial decision (provided the time of
appeal of such decision has expired with no appeal having been made), the
parties shall conform their conduct to satisfy the requirements of such statute
or administrative or judicial decision. The remainder of this Agreement shall
not be affected by any such determination and shall continue in full force and
effect as provided herein.
6. Governing Law. This Agreement shall be governed in all
respects, including without limitation, validity, interpretation, effect,
performance and enforcement, by the laws of Delaware (without application of
any principles of conflicts or choice of law that may otherwise be applicable).
Any action arising out of or relating to any of the provisions of this
Agreement may, at the election of Company, be brought and prosecuted only in
the courts of Delaware, and in the event of such election the parties hereto
consent to the jurisdiction and venue of said courts.
7. Modification. This instrument constitutes the entire
Agreement between the parties, and may be changed only by an agreement in
writing signed by the parties.
8. Assignment. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and be binding upon the
successors, transferees and assigns of the Company. This Agreement, being for
the personal services of Founders, shall not be assignable or subject to
anticipation by him.
9. No Conflicting Agreements. The parties agree that this
Agreement supersedes all previous agreements between them relating to the
matters set forth herein; provided that this Agreement shall not supersede, but
instead shall be interpreted in conjunction with, the Consulting
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Agreements and the Merger Agreement. Founders warrant and represent that their
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, restriction, or any adjudication or
finding of any kind by any court or agency to which Founders may be a party or
by which Founders may be bound, and that he will save, defend, and hold Company
harmless and indemnify Company for any liability related to a breach of this
warranty and representation, including a costs, expenses, and reasonable
attorneys' fees incurred in defending against such a claim.
10. Consideration; Grant of Options. As consideration for the
promises, covenants, representations and agreements of Founders hereunder,
Company agrees to make the following grants and awards, the grant date of which
shall be the date hereof:
(a) John Willoughby ("Willoughby") shall be granted options under
the Manugistics Group, Inc. Employee Stock Option Plan, as amended (the "Plan")
to purchase fifteen thousand (15,000) shares of Manugistics Group, Inc. common
stock (the "Stock") at an exercise price equal to the fair market price of such
Stock (as determined under the provisions and usual procedures of the Plan) on
the date hereof. Such options shall vest in twenty-five percent (25%)
increments, with the first 25% (i.e., options to purchase three thousand seven
hundred fifty shares of Stock) vesting on the date that is one year after the
date of this Agreement, and the remaining three 25% increments vesting on the
succeeding three annual anniversaries of such first vesting date, respectively,
so that one hundred percent (100%) of such options shall be vested on the date
that is four years after the date hereof.
(b) Jo Anne Gardner ("Gardner") shall be granted options under the
Plan to purchase fifteen thousand (15,000) shares of Stock at an exercise price
equal to the fair market price of
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such Stock (as determined under the provisions and usual procedures of the
Plan) on the date hereof. Such options shall vest in accordance with the
vesting schedule set forth in paragraph (a) of this Section.
(c) The options to be granted to the Founders as
described above shall be subject to all the rules of the Plan and of any
form(s) of agreement customarily used by Company in implementing grants under
the Plan. Company and Founders agree to execute any and all such documents and
agreements as required or appropriate to accomplish the purposes of this
Section.
(d) If a Founder breaches this Agreement and in the case of a
curable breach fails to cure such breach within ten (10) business days after
receiving written notice thereof from the Company, then all options granted
under this Section 10 to such Founder that are not vested at the time of such
breach shall forthwith terminate and be canceled, and such Founder shall have
no further rights by reason of such canceled non-vested options.
11. Termination. If the Closing has not occurred on or before June 1,
1996, this Agreement, and each and every provision hereof, shall be terminated
and of no force and effect from and after June 1, 1996. If the Closing does
occur on or before June 1, 1996, then except for Sections 2A, 2B and 3A, which
shall continue in accordance with their terms, this Agreement shall be
terminated as to Company and each Founder, and shall have no further force and
effect, upon the earlier of (i) the date thirty-six (36) months after the date
hereof, and (ii) the termination of, or breach by Company or Avyx or Founder
under, such Founders' Consulting Agreement.
Accepted by FOUNDERS:
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/s/ JOHN K. WILLOUGHBY
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John K. Willoughby
/s/ JO ANNE GARDNER
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Jo Anne Gardner
Accepted by MANUGISTICS:
/s/ WILLIAM M. GIBSON
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Signature
William M. Gibson
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Name
President & CEO
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Title
Witness: /s/ Julia A. Bowen
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