Document:

Serverance Agreement

 
Exhibit 10.28

 

	*	 	Represents confidential information for which Ariba, Inc. is seeking confidential treatment with the Securities and Exchange Commission 

 
 
 
Ariba, Inc. 
807 11th Avenue 
Sunnyvale, CA 94089 
 
September 6, 2002 
 
Michael Schmitt 
807 11th Avenue 
Sunnyvale, CA 94089 
 
 
Dear Michael: 
 
For good and valuable consideration, Ariba, Inc. (the
“Company”) is pleased to offer you the following severance arrangement: 
 
1.    Severance Pay.    If the Company terminates your employment for any reason other than Cause or Permanent Disability, then the Company will continue to pay your cash
compensation for a period of 12 months following the termination of your employment (the “Continuation Period”). For this purpose, your “cash compensation” will be deemed to be the sum of: 
 
(a)    Your base salary
at the rate in effect at the time of the termination of your employment; plus 
 
(b)    The lesser of (i) the sum of your actual bonuses for the last four completed fiscal quarters preceding the termination of your employment or (ii) your target bonuses for
those four completed fiscal quarters. 
 
Your cash compensation
will be paid in accordance with the Company’s standard payroll procedures. 
 
However, this Paragraph 1 will not apply unless you (a) sign a general release of claims (in a form prescribed by the Company) of all known and unknown claims that you may then have against the Company
or persons affiliated with the Company and (b) have returned all Company property. In addition, all payments under this Paragraph 1 will be discontinued immediately if you fail to comply with Paragraph 2, 3, 4 or 5 below. 
 
“Cause” means (a) an unauthorized use or disclosure
of the Company’s confidential information or trade secrets, which use or disclosure causes material harm to the Company, (b) a material breach of any agreement between you and the Company, (c) a material failure to comply with the
Company’s written policies or rules, (d) a conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State, (e) gross negligence or willful misconduct or (f) a continued
failure to perform assigned duties after receiving written notification of the failure from the Company’s Chief Executive Officer. The 

Michael Schmitt 
September 6, 2002 
Page 2 
 

foregoing is not an exclusive list of all acts or omissions that the Company may consider as grounds for your termination without Cause.

 
“Permanent Disability” means that you
are unable to perform the essential functions of your position, with or without reasonable accommodation, for a period of at least 120 consecutive days because of a physical or mental impairment. 
 
2.    Non-Solicitation.    While you render services to the Company and during the Continuation Period (if any), you agree that you will not directly or indirectly, personally or through
others, solicit or attempt to solicit the employment of any employee of the Company or any of the Company’s affiliates, whether on your own behalf or on behalf of any other person or entity. The term “employment” for purposes of this
Paragraph 2 means to enter into an arrangement for services as a full-time or part-time employee, independent contractor, agent or otherwise. You and the Company agree that this provision is reasonably enforced as to any geographic area in which the
Company conducts its business. 
 
3.    Non-Competition.    While you render services to the Company and during the Continuation Period (if any), you agree that you will not: 
(a)    Directly or indirectly, individually or in conjunction with others, engage in activities that
compete with the Company or work for any entity that is part of the Company’s Market; 
 
(b)    Solicit, serve, contract with or otherwise engage any existing or prospective customer, client
or account of the Company on behalf of any entity that is part of the Company’s Market; or 
 
(c)    Cause or attempt to cause any existing or prospective customer, client or account of the
Company to divert from, terminate, limit or in any manner modify, or fail to enter into, any actual or potential business relationship with the Company. 
 
You and the Company agree that this provision is reasonably enforced with reference to any geographic area in which the Company maintains any such
relationship. For purposes of this Paragraph 3, the Company’s “Market” means (i) all companies that derive their revenue primarily from e-procurement software sales or sales of software or services aiding companies in sourcing
activities; and (ii) those companies set forth on Exhibit A hereto. You and the Company agree that the Company’s Market is global in scope. 
 
You and the Company further agree that if any provision set forth in this paragraph is not enforceable under the laws of the state in which you are
employed following the termination of your employment with the Company, nothing in this Agreement shall prohibit you from engaging in such lawful conduct; provided however, that if you elect to do so your rights to any of the severance pay set forth
in section 1 above shall be discontinued immediately. 

Michael Schmitt 
September 6, 2002 
Page 3 
 

 
4.    Cooperation and Non-Disparagement.    You agree that, during the Continuation Period, you will cooperate with the Company in every reasonable respect and will use your best efforts
to assist the Company with the transition of your duties to your successor. You further agree that, during the Continuation Period, you will not in any way or by any means disparage the Company, the members of the Company’s Board of Directors
or the Company’s officers and employees. 
 
5.    Disclosure.    You agree that, during the Continuation Period, you will inform any new employer or other person or entity with whom you enter into a business relationship, before
accepting employment or entering into a business relationship, of the existence of Paragraphs 2, 3 and 4 above. 
 
6.    Employment Relationship.    Notwithstanding the foregoing, employment with the Company is for no specific period of time. Your employment with the
Company is “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this offer.
This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at
will” nature of your employment may only be changed in an express written agreement signed by you and the Chief Executive Officer of the Company. 
 
7.    Withholding Taxes.    All forms of compensation referred to in this letter agreement are subject to
reduction to reflect applicable withholding and payroll taxes and other deductions required by law. 
 
8.    Entire Agreement.    This letter agreement supersedes and replaces any prior agreements, representations or understandings, whether written, oral or
implied, between you and the Company with respect to the subject matter hereof. 
 
9.    Severability.    If any provision of this letter agreement becomes or is deemed invalid, illegal or unenforceable in any applicable jurisdiction by reason of the scope, extent or
duration of its coverage, then that provision will be deemed amended to the minimum extent necessary to conform to applicable law so as to be valid and enforceable or, if the provision cannot be so amended without materially altering the intention
of the parties, then the provision will be stricken and the remainder of this letter agreement will continue in full force and effect. If any provision of this letter agreement is rendered illegal by any present or future statute, law, ordinance or
regulation (collectively, the “Law”), then that provision will be curtailed or limited only to the minimum extent necessary to bring the provision into compliance with the Law. All the other terms and provisions of this letter agreement
will continue in full force and effect without impairment or limitation. 
 
10.    Arbitration.    You and the Company agree to waive any rights to a trial before a judge or jury and agree to arbitrate before a neutral arbitrator any and all claims or disputes
arising out of 

Michael Schmitt 
September 6, 2002 
Page 4 
 

this letter agreement and any and all claims arising from or relating to your employment with the Company, including (but not limited to)
claims against any current or former employee, director or agent of the Company, claims of wrongful termination, retaliation, discrimination, harassment, breach of contract, breach of the covenant of good faith and fair dealing, defamation, invasion
of privacy, fraud, misrepresentation, constructive discharge or failure to provide a leave of absence, or claims regarding commissions, stock options or bonuses, infliction of emotional distress or unfair business practices. 
 
The arbitrator’s decision must be written and must
include the findings of fact and law that support the decision. The arbitrator’s decision will be final and binding on both parties, except to the extent applicable law allows for judicial review of arbitration awards. The arbitrator may award
any remedies that would otherwise be available to the parties if they were to bring the dispute in court. The arbitration will be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration
Association; provided, however that the arbitrator must allow the discovery authorized by the California Arbitration Act or the discovery that the arbitrator deems necessary for the parties to vindicate their respective claims or defenses. The
arbitration will take place in Santa Clara County or, at your option, the county in which you primarily worked with the Company at the time when the arbitrable dispute or claim first arose. 
 
You and the Company will share the costs of arbitration
equally, except that the Company will bear the cost of the arbitrator’s fee and any other type of expense or cost that you would not be required to bear if you were to bring the dispute or claim in court. Both the Company and you will be
responsible for their own attorneys’ fees, and the arbitrator may not award attorneys’ fees unless a statute or contract at issue specifically authorizes such an award. 
 
This arbitration provision does not apply to (a) workers’ compensation or unemployment insurance claims
or (b) claims concerning the validity, infringement or enforceability of any trade secret, patent right, copyright or any other trade secret or intellectual property held or sought by either you or the Company (whether or not arising under the
Proprietary Information and Inventions Agreement between you and the Company). 
 
If an arbitrator or court of competent jurisdiction (the “Neutral”) determines that any provision of this arbitration provision is illegal or unenforceable, then the Neutral shall modify or
replace the language of this arbitration provision with a valid and enforceable provision, but only to the minimum extent necessary to render this arbitration provision legal and enforceable. 
 
* * * * * 
 
You may indicate your agreement with these terms and accept
this offer by signing and dating both the enclosed duplicate original of this letter agreement and returning them to me. This offer, if not accepted, will expire at the close of business on
                                         ,
2002. 

Michael Schmitt 
September 6, 2002 
Page 5 
 

 

	 Very truly yours,

	
	 Ariba, Inc.

	
	 By:
	 	 /s/    ROBERT M.
CALDERONI

	 Title:
	 	 Chief Executive Officer

 
 
I have read and accept this employment offer: 
 

	
	 /s/    MICHAEL
SCHMITT

	 Signature of Michael Schmitt

	
	 Dated:
	 	 September 6, 2002

Michael Schmitt 
September 6, 2002 
Page 6 
 

 
Exhibit A 
 
 
[*] 
 

	*	 	Represents confidential information for which Ariba, Inc. is seeking confidential treatment with the Securities and Exchange Commission.Letter Agreement

Exhibit 10.29 
 
 
September 30, 2002 
 
 
James W. Steele 
807 11th Avenue 
Sunnyvale, CA 94089 
 
 
Dear Jim: 
 
This letter (the “Agreement”) is to confirm the agreement between you and Ariba, Inc. (“Ariba” or the
“Company”) regarding the termination of your employment with the Company. 
 

	 	1.	 	Your employment with the Company will terminate effective as of the close of business on October 4, 2002 (the “Termination Date”). In accordance with the
terms of the letter agreement between you and the Company dated as of February 26, 2002 (the “Severance Agreement”), a copy of which is attached hereto as Exhibit A, the Company will continue to pay you your cash compensation (pro
rata on a semi-monthly basis for both base salary and bonus, as listed below) in accordance with the Company’s standard payroll procedures, for a period of 12 months following the Termination Date. For the purposes of this paragraph, your cash
compensation will be deemed to be (a) a base salary of $450,000 per year and (b) a bonus of $150,000 per year, which represents the lesser of (i) the sum of your actual bonuses for the last four completed fiscal quarters preceding the Termination
Date and (ii) your target bonuses for those four completed fiscal quarters. However, the Company’s payment obligations under this paragraph 1 (a) will not apply unless you have returned all Company property and (b) will be discontinued
immediately if you fail to comply with paragraph 2, 3, 4 or 5 of the Severance Agreement, which paragraphs shall remain in effect. 

 

	 	2.	 	You agree that the only payments and benefits that you are entitled to receive from the Company in the future are those specified in this Agreement.

 

	 	3.	 	The Company will reimburse you in accordance with its expense reimbursement policies for all past business expenses incurred by you on behalf of the Company and for
which you have submitted to the Company valid expense reports, provided that you will not be entitled to reimbursement for expense reports submitted to the Company after October 31, 2002. 

 

	 	4.	 	You hereby resign as Representative Director and a member of the Board of Directors of Nihon Ariba K.K., and will cooperate with the Company to execute any and all
documentation required to effect such resignation and the de-registration of your directorship. 

 

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	 	5.	 	You agree and acknowledge that (i) you were granted an option, on April 4, 2001, to purchase 875,000 shares of Company Common Stock (“Common Stock”) under
the Ariba, Inc. 1999 Equity Incentive Plan (the “Plan”), which will expire as to 510,416 unvested shares thereunder on the Termination Date, (ii) you were granted an option under the Plan, on October 4, 2001, to purchase 1,500,000 shares
of Common Stock, which will expire as to 1,000,000 unvested shares thereunder on the Termination Date, and (iii) you were granted under the Plan, on December 3, 2001, 100,000 shares of restricted Common Stock, of which 66,666 unvested shares will be
canceled on the Termination Date. You agree that the options and shares of restricted Common Stock referenced in this paragraph 5 are governed by the terms of the Plan and the related option and restricted stock agreements, including but not limited
to terms relating to the expiration of vested options on the date three months from the Termination Date. 

 

	 	6.	 	You agree to comply with the terms of paragraphs 2, 3, 4 and 5 of the Severance Agreement. 

 

	 	7.	 	In consideration for receiving the severance payment and benefits described in paragraph 1 above, you waive and release and promise never to assert any claims or
causes of action, whether or not now known, against the Company or its predecessors, successors, or past or present subsidiaries (whether or not wholly owned), officers, directors, agents, employees and assigns (together called the
“Releasees”), with respect to any matter (without limitation) arising out of or connected in any way with your employment with the Company or the termination of that employment, including without limitation, claims of wrongful discharge,
constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract, breach of the covenant of good faith and fair dealing, CLAIMS RELATED TO THE PLAN (OR TO AWARDS, INCLUDING STOCK AND STOCK OPTIONS, THEREUNDER),
CLAIMS RELATED TO THE ARIBA, INC. EMPLOYEE STOCK PURCHASE PLAN, any claims of discrimination or harassment based on sex, age, race, national origin, disability or on any other basis, under Title VII of the Civil Rights Act of 1964, as amended, the
California Fair Employment and Housing Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, and all other laws and regulations relating to employment. 

 

	 	8.	 	Any controversy involving the construction or application of any terms, covenants or conditions of this Agreement, or any claims arising out of any alleged breach of
this Agreement, will be governed by the terms of paragraph 10 of the Severance Agreement, which paragraph shall remain in effect. 

 

	 	9.	 	You expressly waive and release any and all rights and benefits under Section 1542 of the Civil Code of the State of California (or any analogous law of any
other state), 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.” 

 

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	 	10.	 	Your participation in the Company’s Employee Stock Purchase Plan ends as of the Termination Date. Any payroll deductions accumulated but not used to purchase
shares as of your last day worked shall be refunded to you. You acknowledge that you have no other stock rights in the Company, or any parent or subsidiary of the Company (whether or not wholly owned), including options or other rights to acquire
shares of the Company’s common stock or other equity securities of the Company or any such parent or subsidiary, other than those rights enumerated in this paragraph and in paragraph 5 above. 

 

	 	11.	 	You represent and warrant that since your Termination Date you: (a) have returned to the Company all Company property, including, but not limited to, your
Company-issued laptop computer, including all files stored on such computer, any papers, files, documents, equipment, keys, access cards, identification, software or disks; (b) have not made and/or retained copies of any Company property, including,
but not limited to the foregoing; and (c) have not disclosed to any third-party any Company confidential or proprietary information. 

 

	 	12.	 	At all times in the future, you will remain bound by the Employee Agreement signed by you effective as of January 22, 2001 (the “Employee Agreement”), a
copy of which is attached as Exhibit B hereto. 

 

	 	13.	 	You agree that you will not initiate, maintain or accept the benefits from any legal action or proceeding of any kind against any of the Releasees as to any matter
released in this Agreement. 

 

	 	    	 	You shall make all reasonable and diligent efforts to cooperate with Ariba and its counsel regarding any litigation or investigation by any state, federal, foreign
or private person or entity, directly or indirectly arising from or relating to any transaction, event or activity that occurred during your employment with Ariba, asserted against any of the Releasees. Such cooperation shall include all reasonable
assistance that Ariba determines is necessary, including, but not limited to, meeting or consulting with Ariba and its counsel and their designees, reviewing documents, analyzing facts and appearing or testifying as a witness or interviewee or
otherwise. In connection with such cooperation, except as otherwise required by law, judicial order, or other lawful process, you will not cooperate or communicate in any way with any other party or witness or their counsel or designees, without the
express prior written consent of Ariba. Requests for such written consent shall be directed to Craig Schmitz or his successor. You further agree that you will advise Craig Schmitz, or his successor, as soon as practicable but in any event within
five (5) business days if you are contacted by any person, firm, corporation, association or other entity in connection with any pending or threatened claim against any of the Releasees. Upon receiving such a request, Ariba will respond as soon as
practicable but in any event within five (5) business days by either granting or denying such consent or by stating that it is not in a position to take such action due to the temporary unavailability of certain individuals at Ariba.

 

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	 	    	 	Nothing in this paragraph 13 is intended to prevent you from complying with the compulsory process of any court or agency or from providing truthful and accurate
testimony in any proceeding in which you do testify. 

 

	 	15.	 	All compensation paid under this Agreement is subject to reduction to reflect applicable withholding and payroll taxes. 

 

	 	16.	 	You agree that you will not disclose to others the fact or terms of this Agreement, except that you may disclose such information to your attorney, accountant, stock
broker or tax advisor in order for such individuals to render services to you; provided that you inform any such individual that he or she may not disclose such information to any other party. 

 

	 	17.	 	You agree that except as expressly provided in this Agreement, this Agreement renders null and void any and all prior agreements between you and the Company (with
the exception of the Plan and the Employee Agreement). You and the Company agree that this Agreement and the Employee Agreement, along with the terms of the Plan, constitute the entire agreement between you and the Company regarding the subject
matter therein, and that this Agreement may be modified only in a written document signed by you and a duly authorized officer of the Company. 

 

	 	18.	 	This Agreement shall be construed and interpreted in accordance with the laws of the State of California, without regard to principles of conflicts or choice of
laws. 

 

	 	19.	 	You agree that this Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one agreement.
Execution of a facsimile copy shall have the same force and effect as execution of an original, and a facsimile signature shall be deemed an original and valid signature. 

 

	 	20.	 	You have up to twenty-one (21) days after receipt of this Agreement within which to review it and to discuss with an attorney of your own choosing, at your own
expense, whether or not you wish to sign it. Furthermore, you have seven (7) days after you have signed this Agreement during which time you may revoke this Agreement. 

 

	 	21.	 	If you wish to revoke this Agreement, you may do so by delivering a letter of revocation to me. Because of this revocation period, you understand that this Agreement
shall not become effective or enforceable until the eighth day after the date you sign this Agreement. 

 

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Please
indicate your agreement with the above terms by signing below. 
 

	 Sincerely,

	
	 /s/    ROBERT M.
CALDERONI

	 Robert M. Calderoni
 President and Chief Executive Officer

 
 
My agreement with the above terms is signified by my signature below. Furthermore, I acknowledge that I have read and understand this
Agreement and that I sign this release of all claims voluntarily, with full appreciation that at no time in the future may I pursue any of the rights I have waived in this Agreement. 
 

	 	 	 	 	 
	
	 Signed:
	 	     /s/    JAMES W.
STEELE

	 	 	 	 Dated:
	 	     September 30, 2002

	 	 	 James W. Steele
	 	 	 	 	 	 

 

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Exhibit
A 
 
Severance Agreement

 
 
(incorporated herein by reference to Exhibit 10.27 to Registrant’s Form 10-Q dated May 15, 2002) 

 
Exhibit
B 
 
Employee Agreement

 
 
(incorporated herein by reference to Exhibit 10.20 to Registrant’s Form 10-Q dated May 15, 2001)

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