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66. It is DENIED thut .lames M, Mazzu misrepresented his experience, oackground or
uoilities, und to the contl'llry, it is spcciflcally ulleged that these mutters were accul'lltely disclosed
prior to and during employment discussions.
67, The allegations of Pmagraph 67 arc a conclusion of law to which no answer is required.
Insofur as Paragraph 67 assumes tlmt there were misrepresentations made oy .lames M. Mazzu, this
is specifically DENIED (See answer to Paragruph 66 above),
68. The allegations of Paragraph 68 represent conclusions of law to which no answer is
required.
69, The allegations of Paragraph 69 represent conclusions of law to which no answer is
required.
70. The allegations of Paragraph 70 represent conclusions of law to which no answer is
required, Insofar as Paragraph 70 may be considered a factual representation, it is DENIED that
James M, Mazzu was terminated for cause and it is specifically alleged that he was told that there
was nothing wrong with his performance and his termination was dictated totally by non.
performance related factors,
71. The allegations of Paragruph 71 represent conclusions of law to which no answer is
required,
72. The ullegutions of Paragraph 72 represent conclusions of law to which no answer is
required,
73. The allegations of Puragraph 73 represent conclusions of law to which no answer is
required,
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74, Thc allcgations of Paragraph 74 represent conclusions of law to which no answer is
requircd. Insofar as the allegations of Paragraph 74 representliletual allegations, they arc DENIED,
and to the contrary it is spccifically alleged that the PlaintilThas vigorously sought new cmployment
and in all othcr ways sought to mitigatc his damages,
ANSWF;R TO COUNTERCLAIM
75. Thc allegations of Paragraph 75 simply incorporatc previous paragraphs and require no
answer.
76. It is specifically DENIED that James M. Mazzu misrepresented his experience,
background or abilities to representatives of KnowledgeSoft, Inc. during employment discussions.
To the contrary, it is spccifically alleged that James M. Mazzutruthfully and pl'Operly presented his
experience, background, abilities and capabilities to managc and oversce cmployees and resources,
properly represented his experience and competency with java language and properly represented
his experience and abilities with rcspect to artificial intelligence and Ical'l1ing agents.
77. The allcgations of Paragraph 77 arc DENIED, Moreover, it is specifically alleged that
James M, Mazzu had the ability, background and experiencc in management level responsibilities
to competently managc all projects assigned to him, including projects involving programming in
java language, artificial intclligence, intelligence leaming agents, agent-based technology, and that
any defects or problems with projects were precxisting and/or caused by thc incompetency of support
provided by KnowledgeSoft, Inc, 's managemcnt and othcr factors that wcre KnowlcdgeSofl, Inc. 's
rcsponsibility and not James M. Mazzu's responsibility,
7&, The allcgations of Paragraph 78 are DENIED. It is specifically alleged that no material
misrepresentations were madc with actual knowledge of lillsity or recklessness.
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79. Thc allcgations of Paragruph 79 arc /JENIED for thc reasons set f()rlh above, ioc" that
110 misreprescntations wcrc made and accordingly therc could be no justifiablc rcliance by
KnowledgcSon, Inc..
80. The allegations of Paragraph 80 arc DEN/ED. Jam\1S A. Mazzu did not make
misrcpresentations; accordingly, KnowledgeSoft, Inc, could not have rclied upon them,
81. Thc allcgations of Paragraph 81 conccrning matcriality arc conclusions oflaw to which
no rcply is requircd.
82, Thc allegations of Paragraph 82 arc /)EN/ED. James M, Mazzu is without knowledge
concerning what losscs KnowlcdgcSoft, Inc, may havc suffcrcd, but DENIES that any losscs werc
caused by misrepresentations for the reasons that no misreprcscntations were made as fully outlined
above. Morcovcr, James M. Mazzu brought propcr managcmcnt and programming skills to his
position, and any losscs incurrcd by KnowledgcSoft, Inc. wcrc caused by KnowledgeSoft's own
deficiencies in management and failurc to providc adcquatc support to Jamcs M. Mazzu during his
tenure,
WHEREFORE, it is respectfully rcquested that judgment be entercd in favor of James
M. Mazzu and against KnowledgeSoft, Inc. as previously requested,
DATED: January 25, 1999
D:\FILES\MAZZlJ\MIlZt.u-PJnlntiIl1s Response 10 Counlor.Clllim-Jnn25,wpd
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4. Alhllilled.
SlIMMt\HY
The responses tOIlVCl'IIll'nts 111111\' HIll'c1lklllly ~ll\! fllrth illlllllllhercd purugruphs
throughout this Answer with New f'dutter tllthe 1\IIWlIlbl ('olllphlint are illcorporuted herein by
rclcrenee in responsc to till' Illllt-lnlllll1l'rcd Pilllll',r111'1t purporlillg hI sUlllnlllri/.c thc allcgations
containcd withinlhe i\lllclldl,d ('olllplaillt. II I,,: Hl'el'iIil'lIl1y dellied thllt any fraudulent and/or
negligcnt misreprcsentations II'l'I"e lIIi1<lc to JallwH rV1i11l1l ("rvlallu"), that hc or his lillllity
detrimcntally relil,d upollallY rcpreselltations hy I )loj'cmlilllls, Ihat allY represcnlatiolls wcre ,lude
thai he would he employed hy KllOlI'ledgeSoft Ill\' a "I\'ilsollilblc period oftinw (lilliI' ycars)," and
thai MaZ/.u gavc lip a lucrative pel'lllillWIlI positioll of 0\\'1' sevell Yl'HrS duration. It is further
dcnied that Mauu was iL'rminilted solely lll'cilUSC the Pllsition Ill' Director of Rcsearch and
Developmcnt was not allappJ'llpriatc positioll I'm KllowlcdgcSoft bccausc of its size.
~AC[llt\! ,t\tJ!!,':,GAILQ.~~
5, DCllied. Al"tcr reilsonable illvestigation, Iklendanls arc without knowledge or
infill'llllltion sul'lkient to fill'lII a helieI' as tothc truth of the avermcnts of Paragl'llph 5 und,
lherefi}re, deny the sallle.
6. Dellbl. Alkr reasllnable investigation, Defendants are without knowledge Dr
infilrllllltion sul'lkient to Ii 11'1I I a helieI' as tll the tmth of the averments of Paragraph 6 and,
therefhre, deny the sallle.
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7, Denied. After reasonable investigation, Defendants arc without knowledge or
information sufl1eienlto form a bdief as to the truth of the averments of Paragraph 7 and,
therefore, deny the same.
8. Denied. After reasonable investigation, Defendants are without knowledge or
information sut'Jicienlto t(lI'm a belief as to the truth of the averments of Paragraph 8 and,
thercforc, dcny thc samc.
9, Dcnicd. It is dcnicd that Mazzu had "dcvclopcd an expcrtisc in the complete
product dcvclopmcnt cycle and the practical application of artificial intclligcnc('."
10. Admittcd in part and dcnied in part. It is admittcd that in April of 1997, Mazzu
scnt a covel' lettcr ar.d rcsumc to KnowlcdgcSoft in rcsponse to a job opcning postcd on
KnowledgeSoft's wcb page. It is denicd that thc wcb pagc inl()J'Ination was a "solicitation." The
remaining allegations of Paragraph 10 arc dcnicd,
11. Denied as statcd. It is admittcd that Edward Skonecki in April of 1997 was thc
Director of Product Developmcnt at KnowlcdgeSoft. It is further admittcd that MI'. Skonecki
sent an e-mall to Mazzu as a follow-up to Mazzu's covcr Icttcr and resumc. It is dcnicd that this
e-mall was sent "immediately" aftcr rcceipt of thc covcr Icttcr and resume, The c.mall is a
writing which spcaks 1'01' itsclf and the attcmpt to quote a portion of that c-mail out of contcxt is
inhercntly misleading and dcnicd.
12. Admittcd.
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I), Adllllltud III plllllllld d,'lIi"d III pml. II is IIdmltted thut the MUZZllS tmvelled to
l'el1l1sylvUllll; III ullily Mil) I III)'/, 1\11,'1 ll'II'llIlIlIhlu illwstigution, Defendants are without
knowl\,deu ,II' illliilllllltlllll 'i1l1l1",,'1I1111 1'11111111 h\'llef liS 10 the truth 01' the averment that
Mrs, MnulI W,IS "lilliI' nll'lIlll'llill'I~IIIIII( IIllhallinll', II is spedtically denied that Robert Pryar
is Todd's "perslIllIll 1\'1111111" III th'll IlIdd "1'1'1' Ilt-scrihed him as such, It is admitted that Todd's
usslshllll 'Il'l up U 1II""lilW 1ll'II\""11 Mr, l'II'm IIl1d Ihu MaulIs.
14. IlclI",d, 1'11'1I'1\' 'I'" I\"'I'OIlSU III Paragraph 13, anove, To the contrary, Todd's
IIsslstulIlll1erely sl'tlll' 1I1111'clinl: hL'lWCI'1l the Mauus and MI'. Pryal'. Ndther Todd nor his
IIsslslllnl or III1YOI\\' .'Im' a'i'iodalcd wilh KnowledgeSoll indicated to MI'. Pryar that "he should do
everything thllt he could do tOlllake sure that MI'. and Mrs, MazZll were impressed with the
nnm,ll
15, Adllllltcd in parland denied in parI. It is admitted that MI'. Mazzu wrote a Ie ltCI'
aileI' he retllnwd to Mllssaehuselts I'rom tl1(~ early May 1997 trip. The letter is a writing which
spellks fhr itsel I' IInd IIny attl'ml't 10 paraphrase, characterizc or quote from the letter is inherently
mlsleuding and denied. In addition, please see response to Paragraph D, above,
1(,. Admiltcd in parland deni"d in parI. It is admitted that later in the month of May
1997, MaUll l'etun1l'd to Medlilllieshurg and met with Alan Todd. It is denied that said trip was
011 Muy I, 11}1}7. With respeclto the remaining allegations of Paragraph 16:
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D,) Admitted, By way of further answer, considcl'lltionliJr additional stock
options related to all KnowlcdgcSoi'l cmployccs, lJpon information and
bclicf, Mazzullnderstood that his hcing considercd fIll' additional stock
options was conditioned in part upon his performance and on his
continued cmploymcnt, which was not guuranteed;
E,) Denied. By way of tilrlher answer, Todd may have indicated that
Mcchanicsburg would be a great plaee fl1l" thc MazzlIs to live, It is
specit1cally denied that he ever made any reference to raising children to
adulthood;
F.) Admitted;
G,) Denied as stated. Todd never guaranteed unconditional or unlimited
resources; and,
1-1,) Denied as stated. It is admitted that Todd told Mazzu he would have an
of't1ee, once construction of KnowblgeSoi'l's new offices was completed,
while employed al KnowledgeSolt.
17. Admitted. It is admitted that on Monday, May 19, 1997, Todd sent an e-mail
message to James Mazzu, It is admitted that the text of the e-mail message is accurately quoted
in Paragraph 17 of the Amended Compluint,
18, Admitted in purt and dcnied in purl. It is admitted that on Monday, May 19, 1997,
Mazzu sent an e-mail messagetoTodd.Itis admitted that the text of the e-nHlil message is
(,
neeurntely quoted in Paragrnph I R of the Amended Complaint. The I'l~maining allegution~ of
Parngraph I Rare eonehlsions of law to which no responsive pleading i~ required and, therelilre,
arc denied.
19. Admitted in part and denied in part. It is admitted that on Monday, May 20, 1997,
Todd sent an e-mailmessagetoJamesMazzu.lti~ admitted that till: text of the e-muilmessuge
is ae(;urately quoted in Paragraph 19 of the Amended Complaint. The remaining allegations of
Paragraph 19 are conclusions of law to whieh no responsive pleading is required and, thereli're,
arc denied. It is further admitted that a copy of the May 20, 1997 wrr~spondence Irom
KnowledgcSoft to Mazw was attachcd to the Amcnded Complilint served upon Defendants at
Exhibit I.
20. Denied, After reasonablc investigation, Defcndants arc without knowledge or
information sufficient to limn a belief a~ to the truth of the avcrment~ of Paragraph 20 and,
therefore, deny thc same. It i~ admitted that Mazzll, at variou~ times, di~cussed with
Mr. Skoneeki and Todd the purchase of a home in Meehaniesbllrg. It is dcnied that in any such
discussions Mr. Skonecki or Todd discussed with Mazw thc purchase of a home with re~peetto
its proximity to KnowledgeSolrs office. It is further denied that MlIzzu had any reason to
believe that his employment with KnowledgeSoft would 11Istlll!" a minimum period of lilllr yeurs.
21. Admitted in part and denied in part. After rea~onahle investigation, Defendants
arc without knowledge or information sufficient to!imn a belief as to the truth of till' averments
of Puragraph 21 and, therefore, deny the same. By way of further response, the allegations of
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Paragruph 21 lire conclusions of IllW to which no responsive pleuding Is requlrcd. To thc cxtcnta
response is deemed to bc rcquircd, the llllcgations of Pal'Ugl'llph 21 arc dcnied. It is spccifically
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denied that prior to Mazzu' s eommenccment of work any spec! fic contl'llcts, tcrms or conditions
governed thc rellltlonship betwecn thc parties. It is admittcd that Mazzu movcd to Pennsylvania
ut or about thc tlmc hc commcnccd his cmploymcnt, bcgan working at KnowledgcSon on June 9,
1997, and that his titlc was Dircctor of Rcscarch and Dcvclopment.
22, Admittcd in part and denied in part. It is admitted that on Junc 12, 1997. Mauu
signed an "Employcc Acknowlcdgmcnts and Agrccmcnts" and that atmc and eorrcet copy of
said Employcc Acknowledgmcnts and Agrccmcnts was attached to the Amended Complaint
served upon Defendants at Exhibit 2. Thc Employee Acknowledgmcnts llnd Agrecmcnts is II
writing which spellks It)r itscl I' and any attcmpt tu churactcrize, pal'llphrasc or quotc its contents
out of contcxt is inhcrcntly mislcading and dcnicd, By way of furthcr rcsponsc, any
ehara"terization of thc terms and Icgal obligations thereundcr is a conclusion of IllW to which no
responsive plcllding is required. By WllY of further response, it Is spceifically denied that there
were any "pre-employment, oral" or "written agreements" and llny alleglltion in Pllragraph 22
regarding the revocation or rescission of any such agrecmcntls dcnicd liS II conclusion of law to
which no rcsponsivc plcllding is rcquircd, Furthcr, the characterization of thc Employcc
Acknowlcdgments and Agrcemcnts regarding at-will employment Is spccifically denicd,
23. Admitted In part and denicd in part. It is admitted that on or about July 1, 1997,
MllZZU signed an "Inccntlve Agrecment'" datcd by agrccmcnt to June I, 1997, and that II true and
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correct copy of said Inccntivc Agrccmcnt was allachcd to thc Amcndcd Complaint served upon
Defendants at Exhibit 3, Thc Inccntivc Agrccmcnt is a writing which spcaks 1'01' itself and any
allempt to eharactcrizc, paraphrasc or quotc its contcnts out of context is inhercntly misleading
and denied. By way of furthcr response, thc charactcrization of thc tcrms of and thc legal
obligations thercundcr is dcnied as a conclusion of law to which no rcsponsivc pkading is
requircd. In addition, thc charactcrizations with rcspcct to its Icgal signilicancc are conclusions
of law to which no rcsponsivc plcading is rcquircd and, accordingly, same arc dcnicd, It is
specifically denied that thc Inccntivc Agrccmcnt did not providc that Mazzu was an at-will
employee.
24. Denicd. After reasonable invcstigation, Defendants arc without knowledge or
information sufficient to form a belicf as to the truth of the avcrments of Paragraph 24 and,
thereforc, deny the samc,
25, Adrnilled in part and dcnicd in part. It is admillcd that betwcen June 1997 and
January 1998, Mazzu worked at KnowlcdgeSoft and that his titlc was Director of Research and
Developmcnt. It is dcnied that Mazzumade any "substantial" or "valuablc" contributions to
KnowledgeSoft in any way whatsocver. To thc contrary, contrary to his prc-cmploymcnt
represcntations regarding his background and abilitics, Mazzu was not qualificd or capable to
undcrtuke the dutics associutcd with his position.
26. Admillcd in part alld dcnicd in pm1. It is admillcd that on January 16, 1998,
KnowledgeSoft inll)rmed Mazzuthat hc was being terminated. It is dcnied that his termination
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had nothing 10 do with his perfortnanee. Rathel', his 1~\i1ure to perform to acceptable standards
was a factor in his termination, It is admitted that at various limes reasons given to Mazzu for
his termination included re-strueturing of positions.
27. Denied. The allegations of Paragraph 27 are conclusions of law to which no
responsive pleading is required and, therelc)l'c, are denied, By way of further response, it is
specifically denied that Defendants had actual or constructivc Knowledge prior 10 hiring Mauu
that KnowledgeSoft would merge with another company such as "Kobixx," It is further denied
that Defendants had actual or constructive Knowledge that they would be involved in a
downsizing situation where Mazzu would possibly be terminated prior to hiring Mazzu, It is
further denied that any such inltmnation was intentionally not disclosed to the MazZlls.
28, Denied as stated,
COli NT I -
8REACH OF AN I~Ml'LOYMENT CONTRACT
SlIPI'ORTF;D IlV Al>mTIONAL CONSmF,RATION
29, The responses to Paragraphs 1-28 above, are incorporated by rel'crenee as if fully
set forth herein.
30. Denied. The allegations of Paragraph 30 arc conclusions of law to which no
responsive pleading is required. By way of further response, to the extent a response is deemed
to be required, the allegations of Paragraph 30 are denied,
31. Admitted in part and denied in part. I t is admitted that Mazzu began to work at
KnowledgeSoft on .Iune 9, 1997. It is denied that Mazzu began his employment at
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KnowledgeSoll "in reliance on" uny "covennnts und promises." By wuy of further nnswer, to the
extent Mnzzu relied on nny c1aimcd covelHlI1ls or promises, suid rcliuncc wus not justified,
32, Denicd. Thc n!legations of Purugruph 32 are conclusions of law to which no
responsivc plending is required nnd, thercl(lI'e, are dcnied. To the extent a I'esponse is deemed to
be necessary. the nllegntions of I'arugrnph 32 nre denicd, It is specifically denied thnt Defcndnnts
hnd "aelual knowledge" or "encournged" I'lnintilTs to "providc ndditionnl considernti('n" in
exchangc I()I' Mnzzu being sclected I(lr the position of Director of Research and D(wclopment.
33. Denied, The n!legations of I'nrugrnph 33 are conclusions of Inw to whieh no
responsive plending is required nnd, therelllre, are denied, To the extent n response is deemed to
be required, the nllegations of Pmagraph 33 nre dcnied. It is denied thntthe allegntions set forth
in subparugrnphs A, B. C, 01' D constitute "ndditionnl eonsiderntion." By wny of further
respO;Jse, Defendnnls respond to the subpnrugruphs of Paragruph 33 of the Amended Complaint
as follows:
A,) Admitted in pnrt nnd denied in pnrl. It is admitted thnlthe Mazzus moved
to Pennsylvnnia. The remaining n!legntions of Parugrnph 33(A) are d~'njed
as aileI' rcnsonnble investigntion, Defendnnts me without knowledge or
information sufllcient to 1(11'111 a belief as to the truth of them;
B,) Denied. Aller reasonnble investigation, Defendants are without
knowledge or informntion suflieh:ntto form n belief ns to the truth of the
nverments of I'nrngrnph 33(13) nnd. therefore. deny snme;
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C.) Admittl,d in part and denied in parI. It is admitted that Mazzu signed
agreements with KnowledgeSoli regarding his employment with
KnowledgeSoft, Any attempt to characterize, paraphmse 01' quote out of
context the content of any such agreement is inherently misleading and
denied; and,
D.) Denied, After reasonable investigation, llel'enuants arc without
knowledge or information sufliekmt to (('I'm a belief as to the truth of the
averments of subparagraph 33(D) and, therel()re, deny the same.
34, Denied. The allegations or Paragraph 34 arc conclusions of law to which no
responsive pleading is required, To the extent a response is del'med to be required, the
allegations of Paragraph 34 arc denied. It is speeilieally denied Ihut any "additional
consideration" was provided to KnowledgeSoft by the Mazzus or that Del'endants made any
express or implicit promises that KnowledgeSoft was ol'l'ering Mazzu a '''long-term career
position' of, at a minimum, lour years' duration."
35. Denied, The allegations of Paragraph 35 aw conclusions or law to which no
responsive pleading is required. To the extent a response is deemed to be required, the
allegations of Parngraph 35 are denied. By way of further response, it is specilieally denied that
"Mazzu explicitly" or "implicitly" was promised a position of "long-term career duration" 01' that
"the Plaintiffs hud provided [uny] udditionul consideration."
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36, Dcnicd, It is dcnicd that Plaintiffs havc suffercd the hUl'ln allegcd in Paragraph 36
of the Amendcd Complaint or thall'laintiffs arc cntillcd to compensution with respect to any
such alleged loss from [)elcndunts,
WHERr<:FORE, Dclcndants rcquest that this Court dismiss Pluintiffs' Amended
Complaint and entcr judgment in favor of KnowledgcSoft, Ine, and Alan D, Todd and against
Pluintitl~,
COUNT II -
,lUSTlFlABLE RELIANCE
37, The responses to I'urugraphs 1-36 above arc ineorpol'Uted by refcrence as if fully
set forth herein,
38, The allegations of Paragraph 38 arc conclusions of luw to which no responsive
pleading is n:quired, To thc cxtent a response is deemed to be nceessary, the allcgations of
Paragraph 38 arc denied, It is spccitically denicd that Dcfendants mudc the rcpresentations us
more specifically denied above, that Mazzurelicd upon uny such ullcgcd reprcscntations, and
that to the extent any such rcprcscntations werc made, and relied upon, that any sllch rcliance
wasjustifiablc, It is spccifieally dcniecl that thcrc was any "reusonuble" 01' "justitiable"
expectation by James Mazzuthut hc would be hired us a ;;Iong-tcrm employee" or "would not be
terminated a fcw short months alh:r" commcncing work,
39. Denied, The allegations of Paragraph 39 me conclusions of law to which no
responsive pleading is required, To the cxtent a response is deemed to be required, the
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Paragraph 41 arc denied, It i~ ~pecitieally denied that Defendanl~ or employee~ of
KnowledgeSoli mude any frnudulent and/or negligent mi~repre~entation~ or that ally
repre~entation~ mude to Plaintiff~ induced them to "give up and cea~e pur~uing their professions
inMu~saehu~elt~" or "induced them to move from Murlboro, Mas~aehu~ells, to Meehunicsburg,
Pennsylvania" or that to the extent Plaintiffs were ~o "induced" thut any reliunce was ju~tified.
42. Admilted in part und denied in part. It i~ admilted that Defendants believed that
the Mazzus would move Ihull Mussachuselts to Mechanicsburg, Pennsylvunia, in order to take
tlw job with KnowledgeSoli, It is denied that Plaintiffs relied upon representations of
Defendants, that uny such rcliance was reasonable, and that as more fully set forth above, any
frnudulent and/or negligent misrepresen:ation~ were made.
43, Denied, It is specitically denied that Defendants had determined prior to hiring
Mazzu that KnowledgeSoli would merge with another company which had research and
development capabilities or that any such future merger might result in a downsizing situation.
44. Denied, The allegations of Paragraph 44 arc conclu~ion~ of law to which no
responsive pleading i~ required, To the cxtent a rcsponse is deemcd to be required, the
allegution~ of Paragraph 44 arc denied.
45. Denied, The allcgation~ of Paragraph 45 arc conclusions of luw to which no
respon~ive pleading is required and, therefore, arc denied. To lhe extent a response is deemed to
I.,., required. the allegations of Paragraph 45 arc denied, To the extent any of the ulleged
representations were made (see below), it is specifically denied that any were fruudulenl or
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negligent misrepresentations, thutuny of the ulleged statements "induced" Mazzu to act or tllllt
any alleged reliunee upon any nlleged representution was Justif1ed, With respcelto the rcmainlng
allcgations of I'urugrnph 45:
^.) Dcnied. It is speeif1cally dcnied thalutuny timc Todd or anyonc
Ussocillted with KnowlcdgcSon rcprcscntcd to MuzzlItlmt KnowledgeSoft
wus offering to hillla "Iong.tcrm curccr position;"
[3,} Denied. It is dcnied thutut uny timc Todd or unyone ussociatcd with
KnowledgcSon stutcd to MuzZlI tlmt KnowledgcSol't was offcring himu
$20,000 sign-on bonus "Inthc form of stock options sprcad over four
years of cmploymcnt." To thc contrary, Todd mcrely told Mazzuthut ifhc
were offcred the position, purt ofthc compcnsution puckuge Included u
stock option plan. Todd nevcr reprcscnted lhut Muzzu should considcr the
plan u"sign.on bonus," thut hc could count on rcceiving ull of the shurcs
which would vcst periodicully over u four yeur period, that hc could count
on staying with KnowledgeSon for u four ycur pcriod or thut uny
purtlclllar valuc could he uscrihed tothc shares of stock then or ut any tlnw
in the Il/lurc, In addition, lIponlnforlllution and helief~ Mazzuunderstood
thut the slock options would vest pcriodicully over a four ycur pcriod und
thut his cxcrcisc of thcm was conditioned upon his continucd employment,
which wus not guaranteed;
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rcprcscntutions wcrc madc upon which a rcusonablc pcrson could concludc thut thc position was
anything othcr than at-will.
47. Dcnicd. Thc allcgations of Parngraph 47 arc conclusions of luw to which no
rcsponsivc plcading is rcquiwd. To thc cxtcnt a rcsponsc is dccmcd to bc rcquircd, thc
ullcgations of Parugraph 47 utc dcnicd. By way of furthcr rcsponsc. it is spccifically dcnicd that
Dcfcndants "intcntionally withhdd matcrial inllltlllation" from Mauu. It is furthcr dcnicd that
oral or writtcn conlrncts wcrc cntcrcd into prior to thc cntry of thc employmcnt relationship othcr
than Il)r at-will cmploymcnt or that any statcmcnts wcrc madc prior to thc cntry of thc
cmploymcnt rclationship that implied anything othcr than an cmployce at-will relationship
betwcen Muzzu uml KnowlcdgeSoft.
48. Dcnicd. Thc allcgutions of Parugraph 48 arc conclusions of law to which no
responsivc plcading is rcquired. To thc cxtcnt a responsc is dccmed to be rcquircd, thc
allcgutions of Pmagrapb 48 arc dcnicd, It is spccificully dcnicd that Plaintirfs wcrc harmcd by
any action 01' inaction of Dcfcndants, that any "fraudulcnt or ncgligcnt misrcprcscntations" werc
madc by Defendants or thaI Plaintiffs "rcjcctcd job and carccr opportunities" or "incurrcd
expcnses" or that thcy wcrc subjcct to "cmotional strcss and actual incon\'cnkncc" by uny of the
Dercndants' conduct.
49. Dcnicd. It is dcnicd that Plaintiffs have surfcrcd thc harm allcgcd in Paragraph 49
ofthc Amcndcd Complaint or that Plaintiffs arc cntitlcd to compcnsation with rcspcct to any
such allcged loss rrom Dcrcndants. It is spccifically denicd that Mazzu incurrcd "substantial
18
Paragraph 57 arc dcnicd. By way of lilrthcr rcsponsc, it is spccifically dcnicd that Todd or uny
other KnowlcdgeSoft cmployee cxplicitly or implicitly made any represcntations or sugge~:tion~
that Mazzu was bcing hired as a "Iong-tcrm carecr cmploycc" who would "grow with
KnowlcdgeSoft and who would bc cmployed 1'01' "minimum tcrm of foul' ycars." To the
contrary. no represcntations wcrc madc hy anyonc associatcd with KnowlcdgeSoft upon which
any reasonablc pcrson could eoncludc that Mauu was bclng hircd for anything othcr than at-will
employment.
58. Denicd. It is spccilically dcnicd that prior to hiring Mazzu, KnowledgcSort or
anyonc associatcd with KnowlcdgcSoft had dctcrmincd that KnowlcdgcSoft would mcrgc with
another company which had research and dcvclopmcnt capabilities 01' that anyonc assoclatcd
with KnowledgeSoft kncw or should havc knownlhat any such futurc activity would result in a
downsizing sil\mtion.
59. Dcnicd. Thc allcgations of Paragraph 59 arc conclusions or law to which no
rcsponsive plcading is rcquircd. To thc extcnt a rcsponsc is dccmcd to bc required, thc
allegations of Paragraph 59 utC dcnicd. It is spccl Iically dcnicd that Mazzu' s failure to
adcquatcly pcrform his dutics was not a factor in his tcrmination,
60. Dcnied. It is dcnicd that Plaintiffs havc suffered the hmm allcgcd in Paragraph 60
ofthc Amcnded Complaint or that Plaintiffs arc clltitlcd to compcnsation with rcspect to any
such allcged loss from Dcfcndants. It is spccilically dcnicd that Muzzu incurrcd "substantial
monctary losses," lost any job opportunities or prcscnt or futurc salary or stock options or
20
incurred cxpenscs lIssociutcd with moving 01' thc salc of his homc or that to the cxtent Mazzu
Incurred any such losscs, KnowlcdgcSoft or Todd arc in any wuy liablc I'(lr such allcged losscs.
It is furthcr dcnied that Muzzu suffcrcd any pain, suffcring, inconvcnicncc Dr cmotional distrcss
or that to thc cxtcnt Mauu did so, that KnowlcdgcSoft 01' Todd arc Iiablc 1'(11' any allcgcd
problcms.
WHEREFORE, Dcrcndants rcqucst that this Court dismiss Plaintiffs' Amcndcd
Complaint and cntcr judgmcnt in favor of KnowlcdgcSoft, Inc, lInd Alan f), Todd and against
Plaintiffs,
COUNT VI .
l'lJNITIVE DAMAGE~
61. Dcnicd. Thc allcgations of Paragraph 6t arc conclusions of taw to whleh no
responsive plcading is rcquired. To thc cxtcnt u rt'sponsc is dccmcd to bc rcquired, the
allegations of Parugraph 61 arc dcnicd.
WHEREFORE. Dcfendants rcqucst that this Court dismiss Plaintiffs' Amcnded
Complaint and cntcr judgment in favor of KnowlcdgcSoft, Inc, lInd Alan D. Todd and against
Plaintiffs.
NEW MATTER
62. Mazzu has failed to statc a c1aimllpon which rclicf can be granted.
63. MazzlI's contract e1aims arc barrcd by failure ofeonsidcration and lack of mutual
obligation,
21
64. Mazzu's contru~t claims lIrc barrcd by thc statut~ of frauds,
65. Muzzu's ~ontract claims arc barrcd or rcduc~d by Mazzu's breach of his duties
and obligations as an cmploycc, including but not limilt)d to, his failurc to adcquatcly perform
thc job rcsponsibilitics designatcd to him as a KnowlcdgcSoft cmployce.
66, Mauumisl'('prcscntcd his cxperi\,ncc, background and abilitics to KnowlcdgcSoft
during thc prc-cmploymcnt discussions,
67, KnowlcdgcSoft justifiably rclied upon Mauu's misrcprcscntations in dcciding to
hirc Mazzu, to its dctrimcnt, bas cd on his misreprcscntations rcgarding his cxpericncc and
abilitics.
68, Mazzu's claims arc barred or rcduccd by off-set of KnowlcdgcSoft's losses
associatcd with Mauu's hrc"chcs of his obligations and dutics as an employcc and rcsulting
from its justiliablc rcliancc on his prc-cmploymcnt misrcprcscntations.
69. Mazzu was an at-will cmployce and, accordingly, hc could bc tcrminated for any
or no reason.
70. In thc altcrnativc, Mazzu was terminatcd for cause.
71. Muzzu's claims arc barrcd by cstoppcl.
72. Muzzu's e1aims arc barrcd by waiv(~r.
73. Mazzu's claims arc barrcd by accord and satisfaction.
74. Plaintiffs claims fail or arc rcduccd bccausc of Plaintiff's failure to mitigate
damages by thc failurc to cxcrcisc rcasonable diligcnce in sceking cmploymcnt.
22
77. Contrary to his prc-cmploymcnt reprcsentations, Mazzu hud ncithcr the ability,
background, nor cxpcricncc in managcmcnt Icvel rcsponsibilitics and fuilcd to compctcntly
manage thc projccts assigncd to him; had ncithcr ability, buckground, nor expcricnce with
rcspcct to programming in thc .Iavu lunguugc and (kmonstrated incompctcney in programming
and a complctc lack of knowlcdge of the .lava IHnguagc; and, had neithcr ability, baekgl'Ound, nor
cxperiencc with rcspcct to artificial intclligcncc, intclligencc learning ugcnts, or agcnt-bascd
tcchnology, and tidlcd to providc any bencfit to KnowlcdgcSoft with rcspcctthcrcto.
73, Mazzu madc thc abovc misrcprescntations with actual knowlcdgc thutthey wcrc
falsc 01' with rccklcss disregard as to whcthcr they were lillsc and/or negligcntly.
79. KnowlcdgcSotijustifiably rdicd upon Mazzu's misreprcsentations in deciding to
hire Mazzu, to its dctrimcnt, bascd on his misrcprcscntations rcgarding his expcricncc,
background, and abilities,
80, Mazzumadc said misrcprcscntations with thc intent that KnowlcdgcSoft would
rely upon them to its detrimcnt.
81. Said misrcprcs'~ntations wcrc matcrial to KnowledgeSoti in its dccision to hire
Mazzu as its Dircctor of Rcscarch and Dcvclopmcnt and to hcad-up its pl'Oduct dcvclopmcnt
process, managc thc dcvelopmcnt of an usscssmcnt managcmcnt systcm and dircct thc dcsign of
the LOIS 3,03 product, among othcr things.
82, KnowlcdgcSoft suffcred losscs as a rcsult of its justifiablc rcliancc on Mazzu's matcrial
misrcprcscntations rcgarding his cxpericnce, background, and abilitics in that it hircd him at a
24
IMAZZlJI"ACKNOWLlWGI~S ANIl AGREES THAT THI~
EXERCISAIJILITY 011 OPTIONS 1'1JRS1JANT TO
AIHICU: A, HEREOF IS EARNEIl ONLY BY THE
CONTINlJING EMI'LOYMENT ,AT Tim WILL OF nIE
COMPANY (NOT THROUGII THE ACT OF IJEING
H1REIl, REIN(; G1~ANTEI) THIS OI'TION OR
ACQlJIRING SHARES IIEI{F:1JNDEI~). IMAZZ1JI
FURTHER ACKNOWLlWGlqS\ TIIAT NOTHING IN TillS
AGREEMENT, NOR IN IKNOWLEDGESOFT'SI
PERFORMANCE INCENTIVE STOCK PLAN WHICH IS
INCORPORATED HI~REIN IJY REFERENCE SHALL
CONFER lJl'ON~AZZ1Jl ANY RIGHT WITH RESPECT
19 CONTINUATION OF EMPLOYMENT BY
IKNOWLEDf;ESOFTI, NOR SHALL IT INTElU'lmE IN
ANY W A\:' WITH HIS RIGI{I' OR IKNOWLEDGI~SO(i'T~
RIGHT TP TERMINATE HIS EMPLOYMENT AT ANY
TIME WITH OR WITHOUT CAUSE-" (Emphasis addcd.)
15. In addition, thc Employcc Acknowlcdgmcnts and Agrccmcnts, cxccutcd by James
Mazzu on Junc 12, 1997, contains an additional five (5) specific refercnees to thc fact that thc
cmploymcnt rclationship betwccn Mazzu and KnowlcdgcSot't was onc of cmploymcnt at-will
and that KnowlcdgcSoft could tcrminate Mazzu for "any rcason, including without limitation,
. . . for causc or without cause," (See, ~ ~11.1, 1.3, lA, 1.5, and 12.)
16. Bccausc Mazzu and KnowlcdgcSol't clcarly intcndcd that Mazzu's cmploymcnt
be at-will the Court nccd not look to outsidc sourccs to dctcrminc thc partics' intent. Thercforc,
the doctrine of additional consideration is inapplicablc.
17. Furthcrmorc, cven iftll'~ partics had not spccilically agrccd that thc employment
was at will, thc Mazzus havc tllilcd to allcgc facts sufficicnt to support a Iinding for "additional
consideration" in ordcr to ovcrcomc thc strong prcsumption that all employment rclationships arc
at-will.
4
24. Furthcl', it is questionablc whether Pcnnsylvania rccognizcs thc tort of wrongful
dischargc in violation of publk policy.
25. Plaintiffs havc not allcgcd that KnowledgeSoft tCl'lninatcd Mazzu with a specilic
intent to harm, and, thcrcl(lI'c, evcn if Pcnnsylvania rccognizcd thc tort of wrongful dischargc
with spccific intcnt to harm, Plaintiffs have f;1iled to stalc a caUSl' of action.
26. To thc cxtcnt it can be flrgued that Pcnnsylvania rccognizcs thc tort of wrongful
discharge in violation of a c1car public policy, the plaintiff must allcgc and provc that thc
disehargc was undcrtakcn in contravcntion of a clear cstablishcd public policy, "which strikcs at
thc hcart ofa citizcn's social rights, dutics, and rcsponsibilitics" in ordcr to cstablish a cognizable
claim.
27. Plaintiffs havc not allcgcd that KnowlcdgcSoft tcrminatcd Mazzu in contravcntion
of any public policy.
28. Accordingly, CVen ifthc t0l1 ofwrongfiil discharge werc rccognizcd undcr
Pcnnsylvania law, Plaintiffs havc Ihiled to allcgc facts sufliclent to establish this cause of action
and, thcrcforc, Count V should be dismissed,
WHEREFORE, KnowlcdgeSoft and Todd rcquest that thc Court grant thcir Prcliminary
Objcetion raising legal insufficiency of thc Complaint at Count V . Wrongttll Dischargc.
6
SUMMARY
This is a suit by James M. Mazzu and members of his family
arising out of his contract of employment with KnowledgeSoft, lnc,
and fraudulent and/or negligent misrepresentations made to him in
May of 1997 by KnowledgeSoft's President, Alan Todd, and others
when he agreed to become the Director of Research and Development
for KnowledgeSoft, The Plaintiff and his family detrimentally
relied upon the representation that he would be employed by
KnowledgeSoft for a reasonable period of time (four years) and gave
up a lucrative permanent position of over seven years duration with
Charles River Analytics in Cambridge, Massachusetts and moved his
family to Mechanicsburg, Pennsylvania, Within seven and one-half
months of accepting KnowledgeSoft's offer to be Director of
Research and Development he was terminated and told that "Director
of Research and Development" was not an appropriate position for
KnowledgeSoft because of its si~e.
Factual Allegations
5, James M, Mazzu holds a Master's degree in Mechanical
Engineering froln the University of Massachusetts, Amherst and is a
Doctor of Engineering candidate,
6, Prior to May of 1997 the Plainti ffs, James M, Mazzu and
Sima Mazzu lived in Marlborough, Massachusetts,
7. F'rom January of 1990 to June of 1997 James M, Mazzu worked
for Charles River Analytics as a product leader and senior
scientist where he managed software research and development teams
2
in converting small business innovative resea~ch into commercial
applications,
8. James M. Mazzll had a patent application pending on
"Automatic IJearning in a Computerized Environment".
9, James M. Mazzu, through education and work experience, had
developed an expertise in the complet.e product development cycle
and the practical application of artificial intelligence,
10. In April of 1997 James M. Mazzu responded to an internet
solicitation by KnowledgeSoft by sending a cover letter and resume
out.lining his areas of expertise to KnowledgeSoft via electronic
mail,
11, The Director of Product Development at KnowledgeSoft,
Edward Skonecki, immediat.ely responded via electronic mail
indicating "he would very much like to speak" to ,James M. Mazzu.
12, On May 5, 1997, James M. Mazzu traveled to Mechanicsburg,
Pennsylvania where he met with Alan Todd, President of
KnowledgeSoEt, as well as various other executives including the
Director of Engineering and the Vice-Presidents of Strategic
Planning, Service Operations and Marketing,
13, When James M. Mazzu traveled to Mechanicsburg he was
accompanied by his wife, Sima Mazzu, who was then four months
pregnant, and Alan 'rodd arranged for an individual described as his
"perdonal x'ealtor", Robert Priar, to show Mr, and Mrs, Mazzu
housing opportunities in the area,
14, Alan D. Todd specifically indicated to Robert Priar, his
personal realtor, that he should do everything that he could do to
3
make sure that Mr, and Mrs, Mazzu were impressed with the area,
15, Upon returning to Massachusetts, James M, Mazzu wrote to
Alan 'I'odd and Ed Skonecki to thanK them for taking him and his wife
to dinner and arranging for Todd's personal realtor, Bob priar, to
show him and his wife the area. He told both of these men that he
and his wife felt Mechanicsburg "will be a wonderful place to ra.ise
our family",
16. On May 1, 1997, James M, Mazzu returned to
KnowledgeSoft's Headquarters in Mechanicsburg where he again met
with Alan Todd, During this meeting Todd reiterated and stated
that:
A,) KnowledgeSoft was offering James M, Mazzu d long-term
career position;
B.) KnowledgeSoft was essentially offering James M, Mazzu
a $20,000 sign-on bonus since the 10,000 shares were currently
valued at $3/share, and after four years James M, Mazzu could
exercise his option to buy them at $l/share, If the company's
value increased in the four year period, then the shares would be
worth significantly more;
C,) KnowledgeSoft was committed to investing heavily
into Research and Development in order to insure a strong future;
D.) Jame8 M. Mazzu would be considered for additional
stock options after six months to one year of service;
E,) Mechanicsburg is a great place for James M, Mazzu to
bring his family and to raise hie children to adulthood;
4
F, ) KnowledgeSoft and Alan 'I'odd alw<'lYs live up to their
word and could be trusted;
Q,) James M, Mazzu would be given the resources to hire
exceptional programmers to help him build a Research and
Development team; and
H.) James M, Mazzu would be given his own private
office, for the entire length of his employment.
17, On Monday, May 1.9, 1997 Alan Todd sent the following
electronic message to James M, Mazzu:
"Thank you for making two trips to Mechanicsburg, PA to
review the career opportunity at KnowledgeSoft, inc. I'm
pleased to make YOll an offer for the I'ole of "Director -
Research and Development",
Your employment package includes the following items that
we discussed:
1, $95k base salary
2. $1.5k moving expenses
3, KSI will pay the difference between your existing
heal thcare (under the Cobra law) and the cost of local
heal thcare here in the event. you're not accepted into our
plan because of the pre-existing pregnancy, I expect.
that you'll be accepted into our plan but rest assured,
we'll help make sure you get coverage,
4, You will have a private office (as soon as it's
finished - it's being built right now)
5, You will be provided a laptop computer powerful
enough for Java development, etc, (i,e. Pentium 32MB,
1GB, Active color)
6. You will be eligible for 1.0,000 stock options which
will vest over 4 years.
Jim, I'm really looking forward to having you joint the
KnowledgeSoft. Teaml III please let me know if there is
anything I can do.
Thanks again,
Sincerely,
Alan Todd
President & CEO"
5
months, and discussing the purchase options with both Ed Skonecki
and Alan Todd, the Mazzus purchased a new home in Mechanicsburg
based specifically on its close proximity to KnowledgeSoft
sacrificing fast resale potential because they were going to be
with KnowledgeSoft for a minimum of four years,
21. James M, Mazzu quit his position at Charles River
Analytics, moved himself and his family to the Mechanicsburg area,
and on June 9, 1997, commenced work at KnowledgeSoft as Director of
Research and Development,
22, On or about July I, 1997 .James M, Mazzu signed a formal
incentive agreement which was dated as of June 1, 1997 providing
for the grant of stock options over a four year period and an
agreement not to compete with "KnowledgeSoft" while employed and
"for a period of one (1) year following the termination of the
Employee's employment,"
23, Sima Mazzu holds a masters degree in Cl.inical Mental
Health Counseling Counseling Psychology, Pennsylvania law
doesn't allow master's level clinicians to receive a license,
therefore, making it more difficult for sima Mazzu to start a
private practice in Pennsylvania than in Massachusetts, The
decision to move to Pennsylvania was based solely on the strength
of KnowledgeSoft' s offer of long term and prof i table career
employment for James M, Mazzu.
24, Between June, 1997 and January, 1998 James M, Mazzu
functioned as KnowledgeSoft' s Director of Research and
Devel.opment, making numerous substanti al and valuable contributions
7
COUNT I
ADDITIONAL CONSIDERATION
27, The allegations set forth in Paragraphs 1 through 26,
inclusive, are incorporated herein by reference and made a part
hereof as though fully set forth,
28, The Defendants, KnowledgeSoft and Alan D, Todd, had
actual knowledge Flnd encouraged the Plaintiffs, James M, Mazzu and
Sima Mazzu, to provide additional consideration to KnowledgeSoft
and Alan D, Todd in exchange for James M. Mazzu being selected for
the position of Director of Research and Development,
29, Under the Pennsylvania doctrine of additional
consideration the Plaintiffs provided substantial benefits to the
Defendants and Plaintiffs suffered substantial hardships which
included, but were not limited to, the following:
A.) The Plaintiffs sold their home in
Massachusetts and moved their entire family
Mechanicsburg, Pennsylvania area;
B,) the Plaintiff, James M. Mazzu, gave up a steady and
lucrative full-time position with Charles River Analytics in
Cambridge, Massachusetts in order to take the position being
offered by the Defendants;
C, ) the Plainti ff, James M, Mazzu, signed various
agreements with KnowledgeSoft including an agreement not to
compete, a confidentiallity agreement and an intellectual property
agreement; and
Marlborough,
unit to the
9
D,) sima Mazzu gave up the opportunity to start a
private practice using her master's degree in clinical mental
health in Massachusetts by moving to Pennsylvania.
30, This additional consideration was provided by James M.
Mazzu and sima Mazzu based on the Defendants express and implicit
promises that the position being offered at KnowledgeSoft was a
"long term career position" of, at a minimum, four years duration.
31, The Defendants knowingly and intentionally terminated
James M, Ma7.zu's position after only seven and one-half months of
work knowing that they had explicitly and implicitly promised a
position of long term career duration, and that the Plaintiffs had
provided the above cited additional consideration,
32, The Plaintiffs were harmed by the Defendants in the form
of substantial monetary losses, including but not limited to, lost
job opportunities, lost present and future salary, lost stock
options, and expenses incurred in moving from Massachusetts to
Pennsylvania, including the distress sale of the Plaintiffs'
Massachuset ts home for signi f icantly less than could have been
obtained through a non-distress sale. In addition, the Plaintiffs
have suffered losses in the form of pain, suffering, inconvenience
and emotional distress which could be expected under circumstances
where such extraordinary additional consideration was provided,
WHEREFORE, the Plaintiffs request that judgment be entered
against the Defendants and in favor of the Plaintiffs in an amount
exceeding fifty thousand dollars.
10
COUNT II
JUSTIFIABLE RELIANCE
33, The allegations set forth in Paragraphs 1 through 32,
inclusive, are incorporated herein by reference and made a part
hereof as though set forth,
34, The Plaintiffs justifiably relied upon the
representations of Alan n, Todd as a represent.ati ve of
KnowledgeSoft and other KnowledgeSoft employees as set forth above
which created the reasonable and justifiable expectation that James
M, Mazzu would be a long term employee of KnowledgeSoft and would
not be terminated a few short months after moving from
Massachusetts to Pennsylvania,
35, The Plaintiffs were harmed by the Defendants when their
reasonable and just.ifiable expectations were violat.ed and this harm
was in the form of substantial monetary losses, including lost job
opportunities, lost present and future salary, lost stock options
and expenses incurred in moving from Massachusetts to Pennsylvania,
including the distress sale of the Plaintiffs' Massachusetts home
for signif icantly less than could have been obtained through a non-
distress sale, In addition, the Plaintiffs have suffered non-
monetary losses in the form of pain, suffering, inconvenience and
emotional distress which could be expected under circumstances
where their justifiable reliance was violated,
WHEREFORE, the Plaintiffs request that judgment be entered
against the Defendants and in favor of the Plaintiffs in an amount
exceeding $50,000.00,
11
COUNT III
FRAUDULENT AND/OR NEGLIGENT MISREPRESENTATION
36, The allegations set forth in Paragraph 1 through 35,
inclusive, are incorporated herein by reference and made a part
hereof as though fully set forth,
37, The Defendants through Alan D, Todd and KnowledgeSoft
employees made fraudulent and/or negligent misrepresentations that
induced the Plaintiffs, Ja~es M. Mazzu and Sima Mazzu, to give up
and cease pursuing their positions in Massachusetts and induced
them to move from Marlborough, r~assachuset.t8 to Mechanicsburg i
Pennsylvania.
38, The Defendants had actual notice and knowledge that James
M. Mazzu and Sima Mazzu would have to move from Cambridge,
Massachusetts to Mechanicsburg, Pennsylvania, and it was clearly
foreseeable that they would suffer injury from reasonable reliance
on the fraudulent and/or negligent misrepresentations,
39, Both of t.he Plaintiffs, James M, Mazzu and Sima Mazzu,
justifiably relied UPOl'l the fraudulent and/or negligent
misrepresentation and sustained injury as a result of Buch
reliance,
40. The direct fraudulent and/or negligent misrepresentations
made by Alan D, Todd and other KnowledgeSoft employees to induce
the Plaintiffs to act included, but are not limited to, the
following:
A,) That KnowledgeSoft was offering James M, Mazzu a
long term career position;
12
B.) that KnowledgeSoft was offering James M, Mazzu a
$20,000 sign on bonus in the form of stock options spread over four
years of employment;
C,) that KnowledgeSoft was committed to investing
heavily in research and development;
D,) that James M. Mazzu would be considered for
additional stock options after six months to one year of service;
E,) that the position was so secure that James M, Mazzu
and Sima Mazzu would raise their family in Mechanicsburg,
Pennsylvania if James M. Mazzu accepted it;
F,) that the President of KnowledgeSoft, Alan D. Todd,
lives up to and keeps his word;
Q,) that James M, Mazzu would be given the resources to
hire exceptional programmers to help him build a research and
development team;
H.) that James M, Mazzu would be given his own private
office for the entire length of his employment; and
T.) that KnowledgeSoft's hospitalization was the best
available in Pennsylvania,
41. The indirect fraudulent or negligent misrepresentations
made by Alan D, Todd and other KnowledgeSoft employees and
operatives under his control to induce the Plaintiff to act
included, but are not limited to, creating the clear and
unequivocable impression that the position being offered to James
M, Mazzu was secure and long term and that he should move his
family from Massachusetts to Pennsylvania,
13
42. The plaintiffS, James M, MazZ,U and sima MazZU, were
harmed by these fraudulent and/or negligent misrepresentations in
that they rejected job and career opportunities, expenses .....ere
incurred and they were subject. t.o emotional stress and actual
inconvenience by t.he Defendant.'s conduct..
43. The plaintiffB were harmed by the Defendants in the form
of substantial monetary losses, including lost job opportunities,
lost present and future salary, lost stock opt.ions and expenses
incurred in moving from Massachusetts to pennsylvania, including
the distress sale of the Plaintiffs' Massachusetts home for
significantlY less than could have been obtained through a non-
distress sale, In addition, the plaintiffs have suffered losses in
the form of pain, suffering, inconvenience and emotion distress
which could be expected under circumstances where such fraudulent
and/or negllgent misrepresentations have been made,
WHEREFORE, the plaintiffS request that judgment be entered
against the Defendants in favor of the plaintiffs in an amount
exceeding $50,000,00.
COUNT IV
SUPPLYING FALSE AND MISLEADING INFORMATION
44. The allegations set forth in Paragraphs 1 through 43,
inclusive, are incorporated her-ein by reference and made a part
hereof as though fully set forth,
45, The Defendants through Alan D, Todd and other
KnowledgeSoft employees supplied false and misleading information
to, the Plaintiffs, James M, Mazzu and Sima Mazzu, directly and
14
indirectly, knowing that this information was being used by the
Plaintiffs for their guidance in making significant and critical
career and business decisions,
46, The Defendants also withheld and failed to disclose
material informat ion concerning the employment of James M. Mazzu
that they knew would have caused him to reject their offer of
employment and accept employment from other better situated
corporations or stay in the secure long term job that he presently
held.
47. The false information supplied by the Defendants
included, but are not limited to, the following:
A,) That KnowledgeSoft was offering James M. Mazzu
a long term career posi~ion;
B,) that KnowledgeSoft was offering James M, Mazzu
a $20,000 sign on bonus;
C,) that KnowledgeSoft was committed to investing
heavily in research and development;
D, ) that ,fames M, Mazzu would be considered for
additional stock options after six months to one year of service;
E.) that the position was so secure that James M,
Mazzu and Sima Mazzu could raise their family in Mechanicsburg,
Pennsylvania if James M, Mazzu accepted it;
F, ) that the President of KnowledgeSoft, Alan D,
Todd, lives up to and keeps his word;
15
G,) that James M. Mazztl would be given the
resources to hire exceptional programmers to help hi m build a
research and development t.eam;
H,) t.hat James M, Mazzu would be given his own
private office for t.he ent.ire lengt.h of his employment; and
I.) t.hat KnowledgeSoft's hospitalizat.ion waB the
best available in Pennsylvania,
48, The Defendants failed to exercise reasonable care and
compet.ence in obtaining and communicating information they provided
to both plaintiffs as require<;l by t.he restat.ement. (Second) of
Torts, Sect.ion 552,
49, The Plaintiffs were harmed by the Defendants in the form
of substantial monet.ary losses including lost job opportunities,
lost present. and future salary, lost stock options and expellses
incurred in moving from r~a8sachuset.ts to Pennsylvania, including
t.he dist.ress sale of t.he PlaintHfs' Massachusetts home for
significant.ly less t.han could have been obt.ained through a non-
distress sale, In addition, t.he Plaint.iffs have suffered losses in
t.he form of pain, suffering, inconvenience and emot.ional dist.ress
which could be expected under circumstances where false and
misleading information was provided.
WHEREFORE, t.he Plaint.iffs request that. judgement. be entered
against t.he Defendant.s and in favor of the plaintiffs in an amount
exceeding $50,000,
16
COUNT V
WRONGFUL DISCHARGE
50, The allegations set forth in Paragraphs 1 through 49,
inclusi ve, are incorporat.ed herein by reference and are made a part
hereof as though fully set forth,
51, The Defendants, through Alan D. Todd and other
KnowledgeSoft employees, made it clear both explicitly and
implicitly that ,Tames M, Mazzu was being hired as a long-term
career employee who would grow wit.h KnowledgeSoft and who would be
employed for a minimum term of four years. These representations
were so expli.cit and clear that they became and were a ter\o of
employment completely negating any inference of employment at will.
52, The Defendants intentionally violated this term of
employment when they discharged James M, Mazzu, not because of any
performance difficulties but because they had concluded that
KnowledgeSoft was too small to need a director of research and
development,
53, The Plaintiffs were both harmed by the Defendants in the
form of substantial monet.ary losses, including lost job
opportunities, lost present. and future salary, lost stock opt.ions
and expenses incurred in moving from Massachusett.s to Pennsylvania,
including the distress sale of the Plaintiffs' Massachusetts house
for significantly less than could have been obtained through a non-
distress sale, In addition, the Plaintiffs have slIffered losses in
the form of pain, suffering, inconvenience and emotion distress
17
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IN THE COURT OF COMMON PLEAS
JAMES M. M~ZZU AND
SIMA MAZZU,
OF CUMBERLAND COUNTY, PENNA,
Plainti.ffs
NO: 98-1161 Civil Term
v,
KNOWLEDGESOFT, INC. AND
ALAN D. 'fODD
CIVIL ACTION - L~W
Defendants
:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: I::::
ANSWER TO PRELIMINARY OBJECTIONS
AND NOW COMES the Plaintiffs, James M, MazZU and Sima MazZu by
and through their counsel, James J. West, and file the following
answer to the Defendants preliminary Objections:
PRELIMINARY OBJECTION 1
DEMURRER TO EACH COUNT
A, count 1 _ Breach of Employment Contract
1, The allegations of paragraphs one through sixteen of the
Defendants' preliminary Objections are all conclusions of law
derived from the facts alleged in the Plaintif:s' complaint and
hence no answer is required. 5 Standard pennsylvania Practice 2nd
2, In light of the fact that the Defendants' First
!l 25.14
preliminary Objection raises issues which are in the nature of a
demurrer, all well-pled facts as well as all reasonable inferences
are admitted for purpose of ruling on said objections. 5 standard
pennsylvania practice 2nd !l 25:14
1
3. Defendants' preliminary Objections misstate the facts and
inferences arising from the complaint and when the facts of the
Complaint and inferences arising therefrom are properly considered
a cause of action under Pennsylvania law is properly stated,
4. The Defendants entered into oral and written contracts
with plaintiff James M. MazzU through an interstate exchange of E-
mail and mail which contracts never once mentioned the employment
at will concept and, in fact, rebut any inference of employment at
will. (Complaint ~ 1-20 and Exhibit 1),
5, The incentive agreement and employee acknowledgment and
agreement (Exhibits 2 and 3 to Plaintiffs' Complaint) cited in
Defendants' Preliminary Objections were presented and signed on
June 12, 1997 and July 1, 1997, after the plaintiffs had quit their
positions in Massachusetts, sold their home in Massachusetts and
moved to Pennsylvania and actually commenced work at Knowledgesoft,
(Complaint ~ 20 _ 23, Exhibits 2 and 3) Assuming arquendo that
Pennsylvania law (as opposed to Massachusetts law) applies to the
oral and written contract, the post negotiation, post reliance and
post employment attempts to vary the original contract would not be
successful once the original employment contract was negotiated,
accepted and mutually agreed to by the plaintiffs and Defendants.
Moreover, the "additional consideration" provided by the plaintiffs
in the form of quitting lucrative positions and moving from
Massachusetts to pennsylvania totally rebuts any presumption of
employment at will even if an express oral and written contract had
not been entered lnto by the partles. See News printina Com'Da~
2
Ino. v. Round.Y..-409 Pa. Super. 64, 597 A2d 662 (1991)
B. Count V - Breach of contract by Wrongful Discharge
6, The allegations of paragraphs seventeen through thirty
four of the Defendants' Preliminary Objections are conclusions of
law derived from the facts alleged in the Plaintiffs' Complaint and
hence require no answer, 5 Standard Pennsylvania Practice 2nd ~
25,14,
7. For the reasons set forth in paragraphs four and five of
this Answer to the Defendants Preliminary Objections the Plaintiffs
entered into a binding oral and written contract with the
defendants without any mention of the employment bring at will,
provided valuable "additional consideration" legally rebutting any
empl.oyment at will. presumption and t.he breach of such oral and
written contract is compensable in damages, The employment at will
concept was only interjected in this case after the Plaintiffs had
accepted the Defendants oral and written offers, quit thei.r
lucrati.ve jobs in Massachusetts, sold their home, moved from
Massachusetts to Pennsylvania and actually commenced work under the
contract, Any attempt to impose the employment at will. doctrine ex
post factQ, after total detrimental reliance and delivery of
valuable "additional consideration" would not fraudulent and
legally ineffective,
3
C. Count III - Fraudulent and/or Negligent Misrepresentations
8, The allegations of paragraph 35 through 64 of the
Defendants' preliminary Objections are conclusions of law derived
from .the facts alleged in the Plaintiffs Complaint to which no
answer is required. 5 Standard Pennsylvania practice 2nd ~ 25,14
9, The Defendants throughout this section tend to fragment
and misstate the allegations of the Plaintiffs Complaint and
thereby deprive the Plaintiff of facts well pled and the proper
inferences arising from those facts.
10, When the Complaint is not fragmented, but read as a
whole, and the proper and reasonable inferences drawn, it clearly
charges that the Defendants misrepresented the position that James
M. Mazzu was being hired for, took affirmative steps to convince
him that he was being hired for a long term career opportunity
lasting a minimum period of four years, and affirmatively induced
James Mazzu and his wife to provide extensive "additional
consideration" in the form of quitting his long term, established
and lucrative position at Charles River Analytics, selling the
family home, moving from Massachusetts to Pennsylvania, and only
after actually commencing work at Knowledgesoft did the Defendants
attempt to vary the terms of his employment by having him sign
agreement.s containing language dealing with employment at will,
While these agreements could not expressly create an employment at
will relationship, the timing of their presentation is evidence
that the defendants acted fraudulently when t.hey at.tempted to
interject this new condition and vary the terms of Jim Mazzu's
4
employment after exprmw oral and written contracts E1howing a
meeting of the minds and the irrevocable delivery of Plaintiffs'
"additional consideration",
11. We would also point out that the Complaint spacifically
alleges that the Defendants had actual and constructive knowledge
prior to the hiring of James M, Mazzu that Knowledgesoft was
planning to merge with a company such as Kobixx which would make
the research and development job James M, Mazzu was promised for
the long term, in fact obsolete, The withholding of this vital
information is also charged as a basis for fraudulent and/or
negligent misrepresentation (Complaint ~ 27).
D, Count II - Justifiable Reliance
12. The allegations of paragraphs 65-70 of the Defendants'
Preliminary Objections are conclusions of law derived from the
facts alleged in the Plaintiff's Complaint and hence require no
answer. 5 Standard Pennsylvania Practice 2nd ~ 25.14
13, Count II dealing with Justifiable Reliance and Count III
dealing with Fraudulent and/or Negligent Misrepresentation may in
fact ultimately merge but it is unnecessary to decide that issue at
the present time, The factual allegations of justifiable reliance
are appropriate and belong in the Complaint and can be relied to
support other counts. The contract and tort aspects of this case
represent separate and distinct theories of recovery, See Browne
v. Maxfield. 663 F.Supp, 1193 (E,D,Pa. 1987).
5
B. Count IV - Supplying False and Misleading Information
14. 'I'he allegations of paragraph 71 through 76 of the
Defendants' Preliminary Objections are conclusions of law derived
from the facts alleged in the Plaintiff's Complaint and hence no
answer is required. 5 Standard Pennsylvania Practice I 25,14
15, The Plaintiff's respectfully submit that supplying false
and misleading information for use in someone's business purpose
can be a separate tort under the restatement, Count IV may
eventually merge with the allegations of Count II and III but the
Plaintiff's are entitled to have those factual allegations in the
Complaint and rely upon them to support their legal theories, The
theory should not be rejected at this stage pending full
development of the record especially since it sets forth a
different factual basis for recovery, i.e., that the defendants
specifically withheld from the Plaintiffs that they were
dishonorable types that would selfishly welsh on their promises for
financial gain and recklessly induce a young family to move
hundreds of miles and then wantonly leave them stranded without
even offering minimal severance pay, when to the contrary the
defendants affirmatively misrepresented that they were honest and
honorable, guided by scruples and morals, rather than pure economic
considerations, A jury should be permitted to pass on this factual
theory which is nowhere else set forth in the Complaint. (Complaint
at 52-54,) For a case recognizing the applicability of Reststement
552 in an employment context see Browne v. Maxwell. 663 F, Supp.
1193 at 1202 (E,D,Pa,1987),
6
19. It is obvious that the Defendant's conduct in breaching
the contract and making false and fraudulent promises and
misrepresentations was the sole proximate cause of Sima Mazzu
moving to the Mechanicsburg area and that the Defendants are
responsible for any and all damages directly caused by the
allegations of the Complaint,
PRELIMINARY OBJECTION 3
THE COMPLAINT AGAINST THE DEFENDANT ALAN D, TODD
20, 'I'he allegations of paragraphs 88 through 91 of the
Defendants' preliminary Objections are conclusions of law derived
from the facts alleged in the Plaintiffs' Complaint and hence no
answer is required. 5 standard Pennsylvania Practice 2nd ~ 25,14
21, The Defendant Alan D, Todd is individually liable. if he
committed the acts charged in Counts I through V of the Complaint,
Defendant Todd's responsibility would be based on his own conduct
as the Chief Executive Officer and as an individual who actually
made decisions and committed the acts that resulted in the damages
outlined in the Complaint,
PRELIMINARY OBJECTION FOUR
MOTION TO STRIKE FOR A MORE SPECIFIC PLEADING
22, The allegations of paragraphs ninety two through ninety
six of the Defendants' Preliminary Objections are conclusions of
law derived from the facts alleged in Plaintiff's Complaint and
hence no answer is required. 5 Standard Pennsylvania Practice 2nd
~ 25.14
8
JAMES M, MAZZU and
SIMA MAZZU,
PLAINTIFFS
V.
KNOWLEDGESOFT, INC, and
ALAN D. TODD,
DEFENDANTS
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
98-1161 CIVIL TERM
IN RE: PRELIMINARY OBJECTIONS TO AMENDED COMPLAINT
BEFORE BAYLEY.), AND HESS. J.
ORDER OF COURT
AND NOW, this 2~ day of November, 1998, IT IS ORDERED:
(1) Defendants' demurrer to all claims of plaintiff Sima Mazzu, IS GRANTED.
The amended complaint of Sima Mazzu against defendants, IS DISMISSED,
(2) Defendants' demurrer to the count of Supplying False and Misleading
Information, IS GRANTED, That count IS DISMISSED.
(3) Defendant Alan Todd's demurrer to the counts of the amended complaint
against him individually that sound in contract, IS GRANTED. The contract counts
against Alan Todd, ARE DISMISSED, Todd's demurrer to the count in the amended
complaint that sounds in tort, IS DENIED,
(4) All other preliminary objections of defendants to the amended complaint,
ARE DENIED,
/
James J. West, Esquire
For Plaintiffs
- (:~J'-' ,'Y'~,Q,et. /I /;;J,~-/q&',
-\f- .J>,1'J,
Leonard H. MacPhee, Esquire
For Defendants
:saa
JAMES M. MAZZU and
SIMA MAZZU,
PLAINTIFFS
V.
KNOWLEDGE SOFT, INC, and
ALAN 0, TODD,
DEFENDANTS
IN THE OOURT OF COMMON PLEAS OF
CUMBERlAND COUNTY, PENNSYLVANIA
98.1161 CIVIL TERM
~RE: PRELIMINARY OB~ECTIONS TQ AMENDED COMPLAIN!
BEFORE BAYL~.4.._AND IiESS. ~
OPINION AND ORDER OF COURT
BAYLEY, J., November 24, 1998:--
Plaintiffs, James M. Mazzu and Sima Mazzu filed an amended complaint
against defendants, KnowledgeSoft. Inc. and Alan D, Todd. Defendants filed
preliminary objections to the complaint which were briefed and argued on October 7,
1998, The amended complaint contains the following averments:
James Mazzu worked from January of 1990 to June of 1997 for Charles River
Analytlcs as a product leader and senior scientist whore he managed software
research and development teams In converting small business innovative research
Into commercial applications. During that time, Mazzu and his wife lived in
Marlborough, Massachusetts, In April of 1997, Mazzu sent a letter and resume by
electronic mall to defendant, KnowledgeSoft, Inc., In response to an Internet posting.
KnowledgeSoft, a Pennsylvania corporation located In Mechanlcsburg, Pennsylvania,
Is In the business of developing knowledge management platforms delivered on
Intranet/internet s~stems. It was arranged that Mazzu would travel to Mechanlcsburg
and meet with Alan Todd, president of KnowledgeSoft, and some other exeoutives,
98-1161 CIVIL. TERM
1. $95K base salary
2. $15K moving expenses
3. KSI will pay the difference between your existing healthcare
(under the COBRA law) and the cost of local health care here In
the event you're not accepted into our plan because of the pre-
existing pregnancy. I expect that you'll be accepted into our plan
but rest aasured, we'll help make sure you get coverage,
4. You will havl:l a private office (as soon as it's finished - it's being
built right now)
5. You will be provided a laptop computer powerful enough to Java
development, etc, (I.E. Premium 32 MB, 1GB, Active c%r),
6. You will be eligible for 10,000 stock options which will vest over 4
years. (Emphasis added.)
James Mazzu responded on the same day:
I accept your offer as outlined below. However, I request the wording
of Item 6 be clarified such that It indicates that I will 'receive' the
options upon my start date (6/9/97) and that they can be exercised at $1
per share in the future, Please indicate this in your signed offer letter to
be Fed-X'd to me today along with your benefits package.
Thanks for getting back to me so quickly and I'm very excited about
being part of the KnowledgeSoft teaml (Emphasis added.)
Todd responded on the same day:
Thanks for the emall response and Welcome Aboardlll We're excited
to have you on the Team.
I'll make the changes you requested and send your fed ax package out
Tuesday, You'll receive by Wed. Sorry, I couldn't get it out today, /'11
be traveling the rest of the week. If you have any questions, you can
call Julie Myers at ext. 4289, She will be sending you the offer
letter. She manages the procl:lsses of all hiring, payroll, and stock
options, (Emphasis added.)
The electronic mall was followed by a written letter dated May 20, 1997, which
both Todd and Mazzu signed.
On behalf of KnowledgeSoft,inc. I am pleased to offer you the position
of Director-Research and Development. The position will be based at
our Richard Lane location. We will be moving to this location at the end
.3-
98-1161 CIVIL TERM
of May,
KnowledgeSofl,lnc, has enormous growth potential and you will bring
Immediate value to us within our product development team,
You will receive a yearly salary of $95,000 payable semi-monthly. In
addition to your salary we will Issue 10,000 options for stock in the
Company which will vest on a quarterly basis over a four year period.
This stock will have a strike price of $1,00 per share,
KnowledgeSofl.lnc. will reimburse you for moving expenses not to
exceed $15,000.00 ($5,000.00 of which will be advanced to you upon
receipt of your signed offer letter and the balance of which shall be paid
within one week after your start date),
A copy of our benefits summary Is enclosed for your review as well.
KnowledgeSofl.lnc. will reimburse you for the difference between the
cost of the COBRA coverage with your current employer and your
proportionate cost of our health care should your wife's pre-existing
condition not be covered by US Healthcare (our current health care
provider). This reimbursement will be from your start date at
KnowledgeSofl.lnc, through the delivery date of your child. If our
Insurance covers your wife's condition, we would expect that YOll would
adopt our coverage.
As you know we are moving Into a new building at the end of this
month, At present we are enlarging the current space and will provide
you with a private office when phase two Is complete,
We will provide you with a laptop computer powerful enough for Java
development, etc, (i.e. Pentium 32 MB, 1GB, Active color).
Two additional requirements for KnowledgeSoft employment Include
signing of a Confidentiality Agreement and an Intellectual Property
Agreement, You can sign these agreements upon your starting.
I'm convinced KnowledgeSoft has some exciting opportunities before us
and I know that you can achieve your professional goals and grow with
us, I look forward to working with you.
Please signify your acceptance by signing in the space provided,
(Emphasis added,)
Mazzu resigned from his position with Charles River Analytics and moved with
his family to Mechanlcsburg. The Mazz,us placed their Marlborough, Massachusetts
home for sale for $45,000 less than the assessed value. They purchased a home In
Mechanlcsburg. Mazzu began employment with KnowledgeSofl as Director of
-4-
98-1161 CIVIL TERM
Research and Development on June 9, 1997. Three days later, on Juno 12, 1997,
Mazzu signed a document titled "Employment Acknowledgments and Agreements"
(containing a confidentiality and Intellectual Property Agreement). On JUly 1, 1997, a
month after he began working for KnowledgeSoft, Inc" Mazzu signed an "Incentive
Agreement" which provided for the grant of stock options to vest periodically over a
four year period. This agreement was backdated to June 1, 1997,
Between June, 1997 and January, 1998, Mazzu worked for KnowledgeSoft as
Director of Research and Development. On January 16, 1998, KnowledgeSoft told
Mazzu that he was being terminated, the termination had nothing to do with his
performance, his position was not appropriate for a oompany the size of
KnowledgeSoft, and the acquisition of a company named "Kobixx" left no place to
move him,
Plaintiffs aver:
The Defendants, through Alan D. Todd and other KnowledgeSoft
employees, made It clear both explicitly and Implicitly that James M,
Mazzu was being hired as a long-term career employee who would
grow with KnowledgeSoft and who would be employed for a
minimum term of four years. These representations were so explloit
and clear that they became and were a term of the employment
completely negating any inference of employment at will. (Emphasis
added.)
* * *
Based on Plaintiffs' Information and belief It is alleged that the
Defendants had actual and constructive knowledge prior to hiring James
M, Mazzu that KnowledgeSoft would merge with another company suoh
as 'Koblxx' which had Research & Development capabilities and knew or
should have known Ihat this would result In a downsizing situation where
-5-
98-1161 CIVIL TERM
James M, Mazzu would possibly be terminated but intentionally did not
dlsolose this fact to James M. Mazzu and Sima Mazzu In order to further
their business Interests at the risk and expense of the Plaintiffs.
Plaintiffs further aver that Sima Mazzu holds a Master's Degree in Clinical Mental
Health Counseling - Counseling Psychology, that she is not permitted to be licensed
In Pennsylvania becCluse she only has the Master's Degree, and It is difficult for her to
start private practice in Pennsylvania,
DISCUSSIO~
Plaintiffs' amended complaint contains five counts titled, Breach of an
Employment Contract Supported by Additional Consideration, Justifiable Reliance,
Fraudulent and/or Negligent Misrepresentation, Supplying False and Misleading
Information, and Breach of Contract by Wrongful Discharge. Both plaintiffs seek
compensatory and punitive damages against defendants as a result of
KnowledgeSoft, Inc.'s termination of the employment of James Mazzu, Defendants
have demurred all counts In plaintiffs' amended complaint, to the claims for punitive
damages, and to all of the claims of Sima Mazzu. In the alternative, defendants seek
a more specific pleading, In ruling on a demurrer, all well-pleaded facts must be
accepted as true, Davis v, Davis, 422 Pa. Super. 410 (1993), A demurrer is to be
sustained only when there Is a certainty that no recovery Is possible, Id.
In Pennsylvania, with some exceptions, an employment relation Is considered
to be "at-will," and, absent a contract may be terminated by either party at any time,
for any reason or for no reason, Cashdollar v. Mercy Hospital, 406 Pa. Super. 606
-6.
98-1161 CIVIL TERM
(1991), One of the exceptions set forth In Cashdollar Is that "la]n employee can
defeat the 'at-will' presumption by establishing, tntel allEl, that the employee gave his
employer additional consideration other than the services for whlc;h he was hired,"
The facts In Cashdollar were as follows:
[C]ashdollar, at the age of forty-seven, accepted a position as Vice
President of Human Resources at Mercy, where he was to earn
approximately $91,000.00 per year, Before he was hired by Mercy,
Cashdollar was Vice President of Human Resources for the Fairfax
Hospital Association in Fairfax, Virginia where he was earning $82,000.00
per year, Cashdollar had been employed by Fairfax for four and one-
half years. In the summer of 1986, Cashdollar Interviewed for the
position at Mercy after he was approached by an executive search firm
that was retained by Mercy, Subsequently, Mercy Invited Cashdollar to
Pittsburgh where he was Interviewed by several Mercy executives
Including Kenneth Buser, the Executive Vice President. Cashdollar
testified that, during the Interview, Buser spoke to him about a future
role that he would have with Mercy and with the Eastern Mercy Health
Alliance if he were hired. Cashdollar testified further that Mercy showed
particular Interest in him because of his background In multi-hospital
administration which would be relevant to his prospective work with the
Eastern Mercy Health Alliance, Initially, Cashdollar was not selected for
the position, However, after Mercy's first choice 101' the position had
rejected Its offer, Cashdollar was asked If he was Interested In being
further considered for the job. Cashdollar replied that he was not
Interested because his wife was pregnant at the time, and he did not
want to relocate, Cashdollar then received a phone call from Kenneth
Buser in which Buser implored him to reconsider the Mercy Job and
asked him to come to Pittsburgh at the hospital's expenstl to become
acquainted with the city. After much persistence on Buser's part,
Cashdollar accepted Mercy's offer, Cashdollar testified that he accepted
the offer because It was an excellent career opportunity and because he
would be earning a greater salary. Cashdollar then resigned from his
position at Fairfax Hospital, sold his house In Virginia and moved his
pregnant wife and two-year-old child to Pittsburgh. (Citations to record
omitted.)
After working sixteen days for Mercy Hospital, Cashdollar was fired for allegedly
-7-
98-1161 CIVIL TERM
creating an unstable working environment in the I,uman Resources Department.
Cashdollar sued the hospital and was awarded damages of $407,000. The court trial
remitted the award to $204,000, and denied the hospital's motion for a Judgment
notwithstanding the verdict and a new trial. Cross appeals were filed in the Superior
Court of Pennsylvania. The Superior Court stated:
This Court has found insufficient additional consideration where
an employee has suffered detriments, in the course of his or her
employment, that are 'commensurate with those incurred by all manner
of salaried professionals.' See Veno v. Meredith, 357 Pa. Super. 85,
515 A,2d 571 (1986). However, in the instant case, there was sufficient
evidence that, in taking the job with Mercy, Cashdollar suffered greater
hardship than those hardships 'incurred by all manner of salaried
professionals.' Cashdollar gave up his secure employment with Fairfax
Hospital Association where he had worked for over four years at a salary
of $82,000,00 per year. In addition, Cashdollar uprooted his pregnant
wife and two-year-old child and sold his home based on his
understanding that he was going to a job where his special talents
would be employed as Vice President of Human Resources at Mercy
and also as a participant in the Eastern Mercy Health Alliance, In light of
those special circumstances that attended Cashdollar's Job change, we
conclude that these hardships constitute sufficient additional
consideration to rebut the at-will presumption. See Darlington v.
General Elee" supra, 350 Pa.Superior Ct. at 201, 504 A.2d at 315
(additional consideration regarded as sufficient when new employee
must undergo substantial hardship such as moving family to take new
position); see also Scullion v. EMECO Indus" supra, 398 Pa,Superior
Ct. at 297, 580 A.2d at 1358; Lucacher v. Kerson, supra 158 Pa. Super.
at 441, 45 A.2d at 248.2 Thus, we cannot say that the trial court erred in
hOlding that the jury could properly find, based on this evidence, that an
implied contract for employment existed between Cashdollar and Mercy,
Therefore, the trial court did not err in refusing to grant Mercy's motion
for judgment notwithstanding the verdict.
2, In addition, we should note that the unusually persistent efforts
of Mr. Buser and his suggestion that Mr, Cashdollar was particularly
well-suited for the position, tend to suggest a 'substantial benefit' to
-8-
98.1161 CIVIL TERM
Mercy, See Darlington v. General Elec., supra 350 Pa.Super, at 201,
504 A.2d at 315.
Plaintiffs attached to their amended complaint copies of the "Employee
ACknowledgments and Agreements" that James Mazzu signed on June 12, 1997, and
the Incentive Agreement that he avers was backdated to June 1, 1997 when he
signed It on July 1, 1997. The Acknowledgment Agreement restrains Mazzu from
soliciting or Inducing any employee of KnowledgeSoft to leave the omploy of the
company, attempting to hire an employee of the company, and soliciting the trade of
or trading with the customers and suppliers of the company for any business purpose
for up to one year fOllowing his termination for cause or without cause, It has
numerous clauses that set forth that the provisions therein shal/ be enforceable
notwithstanding the manner of any termination of Mazzu by the company for cause or
without cause, The Incentive Agreement grants Mazzu an option to purchase up to
10,000 of shares of Class B common stock In KnowledgeSoft, Inc, for a maximum
period of ten years. That agreement provides:
Termination of Status as an Employee, In the event of Ihe
termination of the Employee's Continuous Status as an Employee, he
may, but only within thirty (30) days from the date of such termination
(but In no event later than the date of expiration of the term of this
Option as set forth In Section 5 above), exercise this Option to the extent
that he was entitled to exercise It at the date of such termination. To the
extent that he was not entitled to exercise the Option at the date of such
termination, or If he does not exercise this Option within the time
specified herein, the Option shall terminate.
* * *
THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE
,
,
,
.9.
98-1161 CIVIL TERM
EXERCISABILlTY OF OPTIONS PURSUANT TO ARTICLE A, HEREOF IS
EARNED ONLY BY CONTINUING EMPLOYMEN'r AT THE WILL OF THE
COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). THE
EMPLOYEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
PERFORMANCE INCENTIVE STOCK PLAN WHICH IS INCORPORATED
HEREIN BY REFERENCE, SHALL CONFER UPON THE EMPLOYEE
ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT
WITH THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY
WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS
EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE.
(Emphasis added.)
Defendants cite the Acknowledgement Agreement and the Incentive Agreement
as oonoluslve proof that James Mazzu was hired as an at-will employee so as to
require the dismissal of his oounts of breaoh of oontraot by wrongful dlsoharge and
breaoh of an employment oontraot supported by additional oonslderatlon, We
disagree. Both agreements were signed by Mazzu after he was hired, resigned his
exeoutlve position In Massaohusetts, moved to Meohaniosburg and oommenoed his
employment at KnowledgeSoft, Ino, Nothing In plaintiffs' pleadings as to the terms of
employment whloh he avers that he aooepted and whloh resulted In his starting work
for KnowledgeSoft, Ino. on June 9, 1997, refers to any speolflo term of employment
other than that defendant Todd "made It olear both explloltly and Implloltly that James
M, Mazzu was being hired as a long-term oareer employee who would grow with
KnowledgeSoft and who would be employed for a minimum term of four years," The
letter signed by Mazzu and Todd dated May 20, 1997, whloh set forth the terms of
employment, oontaln a statement that "Two additional requirements for
-10-
98-1161 CIVIL TERM
KnowledgeSoft employment Includes signing of a Confidentiality Agraemenl and
Intellectual Property Agreement." It did not state that those agreements would contain
at-will employment clauses. The provisions In the Acknowledgment Agreement or the
Incentive Agreement do not set forth that they amended the terms of employment
under which plaintiff commenced working for KnowledgeSoft, Inc. on June 9, 1997,
The Incentive Agreement provides that "The employae further acknowledges and
agrees that nothing In this agreement. , . shall confer upon the employee any right
with respect to continuation of employment with the company, nor shall It Interfere in
any way with his right or the company's right to terminate his employment at any time
with or without cause." Whether KnowledgeSoft had the right to terminate Mazzu's
employment at any time with or without cause depends on the terms of employment
that commenced on June 9, 1997, not on the wording in the Incentive Agreement.
Based on the pleadings, the Acknowledgment Agreement and Incentive Agreement
are not integrated contracts which set forth the terms of Mazzu's employment with
KnowledgeSoft, Inc" therefore, evidence as to the terms of that employment is not
barred by the Parol Evidence Rule, See Kehr Packages, Inc. v, Fidelity Bank, 710
A.2d 1169 (pa. Super, 1993).
Pursuant to Cashdollar v. Mercy Hospital, supra, the averments in plaintiffs'
pleadings are sufficient to state a cause of action as to whether the "at-will"
presumption Is defeated because Mazzu gave KnowledgeSoft additional consideration
other than the services for which he was hired, In Darlington v, General Electric,
-11-
98-1161 CIVIL TERM
350 Pa. Super, 183 (1986), the Superior Court of Pennsylvania stated that:
[Ilf sufficient additional consideration is present, the law presumes this to
be sufficient to rebut the at-will presumption, Such a contract could not
be rightfully terminated at-will but would continue for a reasonable length
of time.
Plaintiff worked for KnowledgeSoft, Inc. for only seven months and seven days before
he was terminated, We cannot say as a matter of law that such a period was
reasonable. Accordingly, we will deny defendants' demurer to the counts in plaintiffs'
complaint of breach of an employment contract supported by additional
consideration, justifiable reliance and breach of contract by wrongful discharge,
Defendants demur to plaintiffs' counts alleging fraudulent misrepresentation,
see Delahanty v. First Pennsylvania Bank, NA, 318 Pa, Super. 90 (1983), and
negligent misrepresentation, see Rempel v. Nationwide LIte Insurance Co" 471 Pa.
404 (1977). Plaintiffs have averred that when Mazzu was hired, defendants
Intentionally withheld from him information regarding a pending merger with Koblxx,
misrepresented to him the company's status, and that he relied on such information
to his detriment in accepting the offer of employment. The pleaded facts are
sufficient to support these causes of action. In light of plaintiffs' claim for negligent
misrepresentation which Is defined in the Restatement (Second) of Torts, Section 552,
they have no separate claim for Supplying False and Misleading Information,
Accordingly, that count will be dismissed,
Defendants' preliminary objection to plaintiffs' claim for punitive damages Is
that the averments in the complaint, even if proven, would not give rise to a finding of
-12-
t";,..... ,
..1'
98-1161 CIVIL TERM
outrageous conduct sufficient for an award of punitive damages, Based on the
pleadings, we will not dismiss this claim at this stage. Field v. Philadelphia Electric
Co., 388 Pa. Super, 400 (1989).
Defendant Alan Todd demurs 10 all counts against him Individually because
plaintiffs' averments relate solely to his actions as president of KnowledgeSoft, Inc,
while acting on behalf of the corporation. Plaintiffs acknowledge that Todd cannot be
liable on their contractual claims. However, they maintain that he can be personally
liable on their tort claims for fraudulent and/or negligent misrepresentation. Plaintiffs
have pleaded sufficient facts to state a claim against Alan Todd based on his
partlcipotlon in tortious activity. Wicks v, Mllzoco, 503 Pa. 614 (1983),
Lastly, defendants maintain that Sima Mazzu has not stated any claim upon
which she can recover damages against them. Sima Mazzu acknowledges that she
would not be entitled to damages on her husband's contract claims against
defendants, She argues, however, that she Is equally harmed by the alleged
fraudulent and negligent misrepresentations that affected her decision to move to
Mechanlcsburg with her husband. We disagree, The alleged fraudulent and
negligent misrepresentations regarding the status of James Mazzu's prospective
employment with KnowledgeSoft, lno" were made to induce him to work for the
company, Sima Mazzu has not pleaded any facts which would warrant a finding of a
breach of any duty owed to her by KnowledgeSoft or Todd. See Bel'da v, CBS, lnc"
800 F,Supp. 1272 (WD Pa, 1992).
-13-
2. Undcr Pcnnsylvania law, all cmploymcnt rclationships nrc prcsumcd to bc "nt-
will," which means thc cmploycc may bc tcrminatcd for any rcason, a bad rcnsonlll' no rcason.
3, A formcr cmploycc complnining of tcrmination in violntion of an nllcgcd
cmployment agrccmcnt must ovcrcomc th(~ prcsumption that thc relationship was at-will.
Plaintiffs carry an cxtraordinarily hcavy burdcn. Plaintiffs musl dcmonstratc with c1car and
conclusivc evidencc that the pm1ics intcndcd thc cmploymcnt rclationship to bc somcthing othcr
than at will.
4, Thc Mazzus havc litilcd to allcgc facts suflicicnt to support a Iinding for
"additional considcration" in ordcr to ovcrcomc thc strong prcsumption that all cmployment
rclationships are at-will,
5. The racts allcgcd in thc Amcnded Complaint, cven iftruc, do not cstablish that thc
partics intcnded thc cmploymcnt rclationship to be something othcr than at-will.
6. In fact, when all of thc facts plcad in the Amcnded Complaint arc rcvicwcd, it is
clear that thc parties specifically intcndcd that the cmploymcnt rclationship bc at-will.
7. Thc doctrinc of additional considcration is an "intcntion-interfcring dcvice," by
which a court may infcr, when appropriatc cireumstanccs arc allcgcd and provcd, that the partics
intendcd ror the cmployment rclationship to bc somcthing othcr than at-will,
8. Thc conccpt of"additional consideration," as an intention inferring dcvicc, is not
availablc to a formcr cmploycc whcrc, as hcrc, it is othcrwise clcar that thc partics intcndcd for
the cmploymcnt rclationship (0 bc tcrminablc at-will bccause whcn thc purtics' intcnt with
2
COMI'ANY (NOT TIIIWlJGl1 TilE ACT OF BEING
JIIIU:I>, BEIN(; (;RANTlm TillS O!'TION Ol{
ACQUIRING SIIARES IIEIUWNI>I<:I{). IMAZZlII
FURTHER ACKNOWUmm:ISI TIIAT NOTIIING IN nlls
AGRt:EMENT, NOI{ IN IKNOWLEI>GESOFT'SI
I'ERFORMANCI': INCENTIVE STOCK !'LAN WHlCIIIS
INCORI'OI{ATEU IlImEIN !lY IU:FEIU:NCE SIIALI"
CONFER IJI'ON-IMAZZlIIANY RIGIIT WITIIIU;;SI'F,CT
TO CON:t'INlJATlON OF EM!'I,!1YMEJ'fJ' BY
ili.NOWLEI>GESOFTI, NOI{ SHALL IT I~.J'E.!!FE.RE IN
ANY WAY WITIIIHS IUGlfI' QR IKNOWLEI>GESOU'SI
RIGIIT TO T1mMINATE illS EI\'IJ'LOYMEN'.L~Li\..NY
TIME WITII OR WlrllOlIT CAIJSE." (Emphasis addcd.)
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14. In addition, thc Employcc Acknowlcdgnwnts and Agrccmcnts, exccutcd by Jamcs
Mauu on June 12,1997, contains an additional fivc (5) specific J'cl'crenccs to thc filct that thc
cmploymcnt rclationship bctwccn Mazzu and KnowlcdgeSon was onc of cmployment at-will
and that KnowlcdgeSol't could tCJ'minatc Mazzu l'(lr "any J'cason, including without limitation,
. , . for causc 01' without causc," (See, ~I ~II.I, 1.3, 1.4, 1.5, and 12.)
15. Bccausc Mazzu and KnowlcdgcSoft clcarly intcndcd that Mazzu's cmploymcnt
bc at-will thc Court nccd not look to outsidc sourccs to dctcrmine thc partics' intcnt. ThcrclllJ'c,
thc doctrinc of udditional considcration is inapplicablc.
16. Bccausc thc cmploymcnt relationship hctwcml KnowlcdgcSol't and Mazzu was
clearly tcrminablc at-will, KnowlcdgcSol't could tcrminatc Mazzu for any rcason, or no rcason
and thcrcl'(lrc did not brcach thc cmploymcnt agrccmcntundcr thc lacts as allcgcd in thc
Amcndcd Complaint, as a mallcr of law, and thc Mazzus' claim should hc dismisscd.
WIIF,Ut:FOIU:, KnowlcdgcSol't and Todd rcqucst that this Court grant thcir I}rcliminary
Objcction raising Icgal insurncicncy of thc Amcndcd Complaint as to Count I.
..
I.
,
~
I
~:
,
i
!
23. In fuet, when nil ofthc facts plcad in thc Amended Complaint arc rcvicII'cd, it is
clcar that thc parties spccifically intcndcd that thc cmploymcnt rclationship bc at-will.
24. Accordingly, Plaintiffs havc litilcd to cstablish that thcrc was an implicd or
exprcss contract bctween Mazzu and KnowlcdgcSoli I()r anything othcr than an at-will
cmploymcnt rclationship and, accordingly, ifthc Mazzus arc attcmpting to asscrt a causc of
action for brcach of an ullcgcd cmploymcnt contract, thcir claims must lilil as a mattcr of law.
25. If, on the othcr hand, Plaintiffs arc attempting at Count V to asscrt a cause of
action for thc tort of wrongful dischargc, then thcir cla,ms fail as a mattcr of law for different
reasons.
26. Pcnnsylvunia law does not rccognizc thc tort ofwrongliil dischargc and, thercforc,
Count V of thc Mazzu's Complaint should bc dismisscd for Iitilurc to statc a claim upon which
rclicf can bc granted.
27, At onc timc it appearcd that Pcnnsylvllnia might adopt two diffcrcnt causes of
actionundcr thc tort of wrong Iii I dischargc: (I) with spccilic intcnt to harm; and (2) in viollltion
of e1car public policy,
28. Thc tort of wrongful dischargc with spccific intent to harm and the tort of
wrongful dischurgc in violation of 1I clcar public policy arc thc only cxccptions to thc at will rulc
which havc cvcr bccn uvuilablc.
29, Pcnnsylvania hlls c1carly lIbandoncd thc tort of wrong Iii I dischargc with specific
intent to hurm, if such tort cvcr cxistcd under Pcnnsylvania law,
6
30. Furthcr, it is qucstionable whcthcr PcnnsylvUI\ia recognizes the tort of wronglhl
discharge in violution of public policy,
31. Plaintiffs havc not allcgcd that KnowlcdgcSoft tcrminated Mazzu with a spccific
intcnt to harm, and, thcreforc, even if Pcnnsylvania rccognizcd thc tort of wrongful dischargc
with spccific intcnt to harm, Plainti ffs havc tllilcd to statc a cause of action.
32. To thc extcnt it can bc argucd that l'lmnsylvania rccognizcs thc tort of wrongful
dischargc in violation of a clcar public policy, thc plaintilT must allcgc and provc that thc
dischargc was undcrtakcn in contravcntion of a clcar establishcd public policy, "which strikes at
thc hcart ofa citizcn's social rights, dutics, and rcsponsibilitics" in ordcr to estaolish a cognizaolc
claim.
33. Plaintiffs havc not allegcd that KnowlcdgcSoft tcrminated Mazzu in contravcntion
of any public policy.
34. Accordingly, cvcn ifr.hc tort of wrongful dischargc wcrc I'l'cognizcd undcr
Pcnnsylvania law, Plaintiffs havc nlilcdto allcgc facts surnclcnt to cstablish this causc of action
and, thcreforc, Count V should bc dismlsscd.
WHEREFORE, KnowlcdgcSotl and Todd rcquest that thc CouI1 grant their Preliminury
Objcction raising Icgal insuflicicncy of thc Amcndcd Complaint at Count V - Wrongrul
Dischargc.
7
SUMMARY
This is a suit by James M. Mazzu and menillers of his family
arising out of his contract of employment with KnowledgeSoft, Inc.
and fraudulent and/or negligent misrepresentations made to him in
May of 1997 by KnowledgeSoft's Pr.esident, Alan Todd, and others
when he agreed to become the Director of Research and Development
for KnowledgeSoft. The Plaintiff and his family detrimentally
relied upon the representation that he would be employed by
KnowledgeSoft for a reasonable period of time (four years) and gave
up a lucrative permanent position of over seven years duration with
Charles River Analytics in Cambridge, Massachusetts and moved his
family to Mechanicsburg, Pennsylvania. Within seven and one-half
months of accepting KnowledgeSoft's offer to be Director of
Research and Development he was terminated and told that "Director
of Research and Development" was not an appropriate position for
KnowledgeSoft because of its size.
Factual Allegations
5. James M. Maz zu holds a Master's degree in Mechanical
Engineering from the University of Massachusetts, Amherst and is a
Doctor of Engineering candidate.
6. Pr ior to May of 1997 the Plaintiffs, James M. Maz,zu and
sima Mazzu lived in Marlborough, Massachusetts.
7. From January of 1990 to June of 1997 James M. Mazzu worked
2
for Charles River Analytics as a product leader. and senior
scientist where he managed software research and dev~loplllent teams
in converting small business innovative research into commercial
applications.
8. James M. Mazzu had a patent i1pplication pending on
"Automatic Learning in a Computerized Environment".
9. James M. Mazzu, through education and work experience, had
developed an expertise in t.he complete product. development. cycle
and the pract.ical application of art.ificial intelligence.
lO. In April of 1997 James M. Mazzu responded t.o an internet
solicitation by KnowledgeSoft by sending a cover let.t.er and resume
out.lining his areas of expertise to KnowledgeSoft via electronic
mail.
11. The Director of Product Development at KnowledgeSoft,
Edward Skonecki, immediately responded via electronic mail
indicating "he would very much like to speak" to James M. Mazzu.
1.2. On May 5, 1997, James M. Mazzu traveled to Mechanicsburg,
pennsyl vania where he met. wi th Alan Todd, President of
KnowledgeSoft, as well as various other executives including the
Director of Engineering and the Vice-Presidents of Strate~ic
Planning, Service Operations and Marketing.
1. 3. When James M. Mazzu traveled to Mechanicsburg he was
accompanied by his wife, Sima Mazzu, who was then four months
pregnant, and Alan Todd arranged for an individual described as his
"personal realtor", Robert Priar, to show Mr. and Mrs'. Mazzu
3
~'
housing opportunities in the area.
14. Alan D. Todd specifically indicated to Robert Priar, his
personal realtor, that he should do everything that he could do to
make sure that Mr. and Mrs. Mazzu were impressed with the area.
15. Upon returning to Massachusetts, James M. Mazzu wrote to
Alan Todd and Ed Skonecki to thank t.hem for taking him and his wife
to dinner and arranging for Todd's personal realtor, Bob priar, to
show him and his wife the area. He told both of these men that he
and his wife felt Mechanicsbul:g "will be a wonderful place to raise
our family".
16. On May 1, 1997, James M. Mazzu returned to
KnowledgeSoft's Headquarters in Mechanicsburg where he again met
with Alan Todd. During this meeting Todd reiterated and stated
that:
A.) KnowledgeSoft was offering James M. Mazzu a long-term
career position;
B.) KnowledgeSoft wa~ ~ssentially offering JamBS M. Mazzu
a $20,000 sign-on bonus since the 10,000 shares were currently
valued at $3/share, and after tour years James M. Mazzu could
exercise his option to buy them at $1./ share. If the company's
value increased in the four year period, then the shares would be
worth significantly more;
C.) KnowledgeSoft was committed to investing heavily
into Research and Development in order to insure a strong future;
D.) James M. Mazzu would be considered for additional
4
stock options after six months to pne year of service;
E.) Mechanicsburg is a great place for James M. Mazzu to
bring his family and to raise his children to adUlthood;
F.) KnowledgeSoft and Alan 'fodd always 11 ve up to their
word and could be trusted;
G.) James M. Mazzu would be given the reSOUrcE'S to hire
except ional programmers to help him build a Research and
Development team; and
II.) James M. Mazzu would be given his own private
office, for the entire length of his employment.
17. On Monday, May 19, 1997 Alan Todd sent the following
electronic message to James M. Mazzu:
"Thank you for making two trips to Mechanicsburg, PA to
review the career opportunity at KnowledgeSoft, inc. I'm
pleased to make you an offer for the role of "Director _
Research and Development".
Your employment package includes the following items that
we discussed:
1. $95k base salary
2. $15k moving expenses
3. KSI will pay the difference between your eXisting
healthcare (under the Cobra law) and the cost of local
heal thcare here in the 'event you're not: accepted into our
plan because of the pre-existing pregnancy. I expect
that you'll be accepted int:o our plan but rest assured,
we'll help make sure you get coverage.
4. You will have a private office (as soon as it's
finished - it's being built right now)
5. You will be prov1ded a laptop computer powerful
enough for Java development, etc. (i.e. Pentium 32MB,
1GB, Active color)
6. You will be eli.gible for 10,000 stock options which
will vest over 4 years.
5
This was followed by a formal letter on May 20/ 1997.
(Exhibit 1)
20. Mr. and Mrs. MazzU ilrumediately placed their Marlborough,
Massachusetts home up for sale $45,000 less than assessed value in
order to sell quickly t.o facilitate their move to Mechanicsburg and
enable a purchase of a home in Mechanicsburg without having two
mortgages. A blnding contract of sale for the Massachusetts Mazzu
home was entered on June 9, 1997. After searching for a home ln
Mechanlcsburg for two months, and discussing the purchase options
with both Ed Skonecki and Alan Todd, the Mazzus purchased a new
home in Mechanicsburg based specifically on it.s close proximity to
KnowledgeSoft sacrificing fast resale potential because they were
going to be with I<nowledgeSoft for a minimum of four years.
21. James M. Mazzu quit his position at Charles River
Analytics, moved himself and his family to the Mechanicsburg area,
and on June 9, 1997, cOlrumenced work at KnowledgeSoft as Director of
Research and Development under the contracts, terms and conditions
out lined above.
22. On June 12, 1997, James M. Mazzu was presented with a
document which was titled "Employee Acknowledgments and Agreements"
which covered confidential information, inventions, company
property, competition, soliciting employees to leave, publication
rights, and a non competition clause. This document was presented
to James M. Mazzu three days after he commenced work at
KnowledgeSoft and does not revoke or rescind the preemployment oral
7
";::ny.,;\!:..:_~~tT'!.."_.
and written agreements or even contain a neW agreement that the
employment previouslY contracted for was to be considered
retroactively as at will employment, but merely provides that its
above cited terms or conditions would apply upon termination "for
cause or without cause". (Exhibit 2)
23. On or about July 1, 1997 James M. Mazzu signed a formal
incentive agreement which KnowledgeSoft employees had backdated to
appear that it was signed on June 1, 199'7. This agreement provided
for the grant of stock options over a four year period and
repeated parts of the agreement discussed in paragraph 22 above not
to compete with "KnowledgeSoft" while employed and "for a period of
one (1) year following the termination of the Employee's
employment." This document was presented to James M. Mazzu three
weeks after he commenced work at KnowledgeSoft and does not revoke
or rescind the preemployment oral and written agreements or even
contain a new agreement that the employment previously contracted
for was to be retroactively considered as at will employment, but
merely provides that the stock option and agreement not to compete
would apply upon termination "for any reason" or "for cause or
without cause". (Exhibit 3)
24. Sima MazzU holds a masters degree in Clinical Mental
Health Counseling Counseling Psychology. Pennsylvania law
doesn't allow master's level clinicians to receive a license,
therefore, making it more difficult: for Sima MazZU to start a
private practice in Pennsylvania than in Massachusetts. Her
8
decision t.o move to Pennsylvania was based solely on the strength
of KnowledgeSoft' s preemployment offers of long term and profitable
career employment for James M. Mazzu as described herein and she
was unaware of any post employment attempts by Knowledgesoft or its
executives to welsh on their pr.eemployment contracts.
25. Between J'une, 1. 997 and January, 1998 James M. Mazzu
functioned as KnowledgeSoft' s Director of Research and
Development, making numerous substantial and valuable contributions
to his employer's product :md sale1J.
26. On January 16, 1998, James M. Mazzu was told that he was
being terminated and that his termination had nothing to do with
his performance. The reasons subsequently given for this
termination were to save the company money; a "Director of Research
and Development position was not appropriate for a company the size
of KnowledgeSoft"; and due to the acquisition of a company named
"Kobixx" there as no place to move him.
27. Based on Plaintiffs' information and belief it is alleged
that t.he Defendants had actual and constructive knowledge prior to
hiring James M. Mazzu that KnowledgeSoft would merge with another
company such as "Kobixx" which had Research & Development
capabilities and knew or should have known that this would result
in a downsizing situation where James M. Mazzu would possibly be
terminated but intentionally did not disclose this fact to J'ames M.
Mazzu and Sima Mazzu in order to further their business interests
at the risk and expense of the Plaintiffs.
9
COUNT I
BREACH OF AN EMPLOYMENT CONTRACT SUPPORTED BY
ADDITIONAL CONSIDERATION
29. The allegations set forth in Paragraphs 1 through 28,
inclusive, are incorporated herein by reference and made a Part
hereof as though fully set forth.
30. The Defendants, KnowledgeSoft and Alan D. Todd, entered
into a contract of employment evidenced by the oral and written
exchange of mutual promises set forth in paragraphs 12 through 21
above.
31. The Plaintiff James M. Mazzu commenced employment at
KnowledgeSoft on June 9, 1997 in reliance on these covenants and
promises.
32. The Defendants, KnowledgeSoft and Alan D. Todd, had
actual knowledge and encouraged the Plaintiffs, James M. Mazzu and
Sima Mazzu, to provide additional consideration to KnowledgeSoft
and Alan D. Todd in exchange for James M. Mazzu being selected for
the position of Director of Research and Development.
33. Under the Pennsylvania doctrine of addHional
consideration the Plaintiffs provided substantial benefits to the
Defendants and Plaintiffs suffer.ed substantial hardships which
included, but were not limited to, the following:
A.) The Plaintiffs sold their home in Marlborough,
Massachusetts and moved their entire family unit to the
1.1
M~chanicsburg, Pennsylvania area;
B.) the Plaintiff, James M. Mazzu, gave up a steady and
lucrative full-time position with Charles River' Analytics in
Cambr idge, Massachusetts in order to take the position being
offered by the Defendants;
C.) the Plaintiff, JamBs M. Mazzu, signed various
agreements with KnowledgeSoft including an agreement not to
compete, a conUdentiallity agreement and an intellectual property
agreement I and
D.) Sima Mazzu gave up the opportunity to start a
pri vat€: practice using her master's degree in clinical mental
health in Massachusett.s by moving to Pennsylvania.
34. This additional consideration was provided by James M.
Mazzu and Sima Mazzu based on the Defendants express and implicit
promises that the position being offered at KnowledgeSoft was a
"long term career posit.ion" of, at a minimum, four years duration.
3 5. The Defendilnts knowingly and intentionally terminated
James M. Mazzu's position after only seven and one-half months of
work knowing that they had explicitly and implicitly promised a
position of long term career duration, and that the Plaintiffs had
provided the above cit.ed additional consideration.
36. The Plaintiffs were harmed by the Defendants in the form
of substantial monetary losses, including but not linlited to, lost
job opportunities, lost present and future salary, lost stock
12
options, and expenses incurred in moving from Massachusetts to
Pennsylvania, including the distress sale of the Plaintiffs'
Massacbusetts home for significantly less than could have been
obtained through a non-distress sale. In addition, the Plaintiffs
have suffered losses in the form of pain, suffering, inconvenience
and emotional distress which could be expected under circumstances
where such extraordinary additional consideration was provided.
WHEREFORE, the Plaintiffs request that judgment. be entered
against the Defendants and in favor of the Plaintiffs in an amount
exceeding fifty thousand dollars.
COUNT II
JUSTIFIABLE RELIANCE
37. The allegations set forth in Paragrapbs 1 through 36,
inclusive, are incorporated herein by reference and made a part
hereof as though set forth.
38. In selling his home and quitting his job in Massachusetts
and moving to Pennsylvania to enable James M. Mazzu commence work
as an employee of KnowledgeSoft the Plaintiffs justifiably relied
upon the representations of Alan D. Todd as a representative of
KnowledgeSoft and other KnowledgeSoft employees as set forth above
which created the reasonable and justifiable expectation that James
M. Mazzu would be a long term employee of KnowledgeSoft and would
not be terminated a few short months after moving from
Massachusetts to Pennsylvania.
13
39. The Plaintiffs were harmed by the Defendants when their
reasonable and justifiable expectations were violated and this harm
was in the form of substantial monetary losses, including lost job
opportunities, lost present and future salary, lost stock options
and expenses incurred in moving from Massachusetts to Pennsylvania,
including the distress sale of the Plaintiffs' Massachusetts home
for significantly less than could have been obtained through a non-
dist.ress sale. In addition, t.he Plaintiffs have suffered non-
monetary losses in the form of pain, suffering, inconvenience and
emot ional distress which could be expected under circumstances
where their justifiable reliance was violated.
WHEREFORE, the Plaintiffs request that judgment be entered
against the Defendants and in favor of the Plaintiffs in an amount
exceeding $50,000.00.
COUNT I II
FRAUDULENT AND/OR NEGLIGENT MISREPRESENTATION
40. The allegations set forth in Paragraph 1 through 39,
inclusive, are incorporated herein by reference and made a part
hereof as though fully set forth.
41. The Defendants through Alan D. Todd and KnowledgeSoft
employees made fraudulent and/or negligent misrepresentations that
induced the Plaintiffs, James M. Mazzu and Sima Mazzu, to give up
and cease pursuing their professions in Massachusetts and induced
them to move from Marlborough, Massachusetts to Mechanicsburg,
14
Pennsylvania.
42. The Defendant.s had actual notice and knowledge that James
M. Mazzu and sima Mazzu would have to move from Cambridge,
Massachusetts to Mechanicsburg, Pennsylvania, and it was clearly
foreseeable that they would suffer injury from reasonable reliance
on the fraudulent and/or negligent misrepresentations.
4.1. Based on information and belief the Defendants had
determined prior to hiring JamBS M. Mazzu that they would merge
with another company which had Resear'ch & Development capabi li ties
and knew or should have known that this would result in a
downsizing situation where James M. Mazzu would possibly be
terminated.
44. Both of the Plaintif.fs, James M. Mazzu and sima Mazzu,
justifiably relied upon the fraudulent and/or negligent
misrepresentation and sustained injury as a result of such
reliance.
45. The direct fraudulent and/or negligent misrepresentations
tRade by Alan D. Todd and other KnowledgeSoft employees to induce
the Plaintiffs to act included, but are not limited to, the
following:
A.) That KnowledgeSoft was offering James M. Mazzu a
long term career position;
B.) that KnowledgeSoft was offering James M. Mazzu a
$20,000 sign on bonus in the form of stock options sprf;1ad over four
1 5
years of employment;
c. ) that KnowledgeSoft was conunitted to investing
heavily in research and development;
D. ) that James M. Mazzu would be considered for
additional stock options after six months to one year of service;
E.) that the position was so secure that James M. Mazzu
and Sima Mazzu would raise their family in Mechanicsburg,
Pennsylvania if James M. Mazzu accepted it;
F.) that the President of KnowledgeSoft, Alan D. Todd,
lives up to and keeps his word;
G.) that JamES M. Mazzu would be given the resources to
hire exceptional programmers to help him build a research and
development team;
H.) that James M. Mazzu would be given his own private
office for the entire length of his employment; and
I.) that KnowledgeSoft's hospitalization was the best
available in Pennsylvania.
46. The indirect fraudulent or negligent misrepresentations
made by Alan D. Todd and other KnowledgeSoft employees and
operatives under his control to induce the Plaintiff to act
included, but are not limited to, creating the clear and
unequivocal impressioa that the position being offered to James M.
Mazzu was secure and long term and that he should move his family
from Massachusetts to Pennsylvania.
47. The Defendants, KnowledgeSoft and Alan D. Todd, also
1.6
intentionally withheld material inf.ormation from the Plaintiffs in
that they did not disclose during the course of the negotiations or
at anytime prior to James M. Mazzu commencing work that they would
welsh on their oral and written contracts and attempt to vary the
terms, post commencement of work, by terminating James M. Mazzu and
contending he was an employee at will.
48. The Plaintiffs, ,Tames M. Mazzu and Sima Mazzu, were
harmed by these fraudulent and/or negligent misrepresentations in
that they rejected job and career opportunities, expenses were
incurred and they were subj ect to emotional fitress and actual
inconvenience by the Defendant's conduct.
49. The Plaintiffs were harmed by the Defendants in the form
of substantial monetary losses, including lost job opportunities,
lost present and future salary, lost stock options and expenses
i:1curred in moving from Massachusetts to Pennsylvania, including
the distress sale of the Plaintiffs' Massachusetts home for
significantly less than could have been obtained through a non-
distress sale. In addition, the Plaintiffs have suffered losses in
the form of pain, suffering, inconvenience and emotion distress
which could be expected under circumstances where such fraudulent
and/or negligent misrepresentations have been made.
WHEREFORE, the Plaintiffs request that judgment be entered
against the Defendants in favor of the Plaintiffs in an amount
exceeding $50,000.00.
17
COUNT IV
SUPPLYING FALSE AND MISLEADING INFORMATION
50. 'l'he allegations set forth in Paragraphs 1 through 49,
inclusive, are incorporated herein by reference and made a part
hereof as though fully set forth.
51. The Defendants through Alan D. Todd and other
KnowledgeSoft employees supplied false and misleading information
to the Plaintiffs, JamBS M. Mazzu and Sima Mazzu, directly and
indirectly, knowing that this information was being used by the
Plaintiffs for their guidance in making significant and critical
career and business decisions.
52. The Defendants also withheld and failed to disclose
material information concerning the employment of James M. Mazzu
that they knew would have caused him to reject their offer of
employment and accept employment from other better situated
corporations or stay in the secure long term job that he presently
held, i. e., that the Defendants would welsh on their oral and
written contracts and attempt to varied the terms t.hereof, post
commence of employment by James M. Mazzu, by terminating him and
contending he was an employee at will.
53. The false Information supplied by the Defendants
included, but are not limited to, the following:
A.) That KnowledgeSoft was offering James M. Mazzll
a long term career position;
18
B.) that KnowledgeSoft was offering James M. Mazzu
a $20,000 sign on bonus;
C.) that KnowledgeSoft was committed to investing
heavily in research and development;
D.) that James M. Mazzu would be considered for
additional stock options after six months to one year of service;
E.) that the position was so secure that James M.
Mazzu and sima Mazzu could raise their family in Mechanicsburg,
Pennsylvania if James M. Mazzu accepted it;
F.) that t.he President of KnowledgeSoft, Alan D.
Todd, lives up to and keeps his word;
G.) that James M. Mazzu would be given the
resources to hire exceptional programmers to help him build a
research and development t.eam;
H.) that James M. Mazzu would be given his own
private office for the entire length of his employment; and
I.) that KnowledgeSoft.'s hospitalization was the
best available in Pennsylvania.
54. The Defendants failed to exercise reasonable care and
competence in obtaining and communicating information they provided
to both Plaintiffs as required by the Restatement (Second) of
Torts, Section 552.
55. The Plaintiffs were harmed by the Defendants in the form
of substantial monetary losses including lost job opportunities,
lost present and future salary, lost stock options and expenses
19
incurred in moving ftow, Massachusetts to Pennsylvania, including
the distress sale of t.he Plaintiffs' Massachusetts home for
significantly less than could have been obtained through a non-
distress sale. In addition, the Plaintiffs have suffered losses in
the form of pain, suffering, inconvenience and emotional distress
which could be expected under circumstances where false and
misleading information was provided.
WHEREFORE, the Plaintiffs request. that :Judgement be entered
against the Defendants and in favor of the Plaintiffs in an amount
exceeding $50,000.
COUNT V
BREACH OF CONTRACT BY
WRONGFUL DISCHARGE
56. The allegations set forth in Paragraphs 1 through 55,
inclusive, are incorporated herein by reference and are made a part
hereof as though fully set forth.
57. The Defendants, through Alan D. Todd and other
KnowledgeSoft employees, made it clear both explicitly and
implicitly that James M. Mazzu was being hired as a long-term
career employee who would grow with KnowledgeSoft and who would be
employed for a minImum term of four years. These representations
were so explicit and clear that they became and were a term of
employment completely negating any infer'ence of employment at will.
58. Based on Informa t ion and bel ief thq t Defendant had
20
determined prior to hiring JamBs M. Mazzu that t.hey would merge
with anothel' company which had Research & Development capabi 11 ties
and knew or should have known that this would result in downsizing
situation where James J. Ma~zu would possibly be terminated.
59. The Defendants intentionally violated this contractual
agreement of employment when they discharged James M. Mazzu, not
because of any performance difficulties but because they had
concluded that KnowledgeSoft was too small to need a director of
research and development.
60. The Plaintiffs were both harmed by the Defendants in the
form of substantial monetary losses, including lost job
opportunities, lost present and future salary, lost stock options
and expenses incurred in moving from Massachusetts to Pennsylvania,
including the distress sale of the Plaintiffs' Massachusetts house
for significantly less than could have been obtained through a non-
distress sale. In addition, the Plaintiffs have suffered losses in
the form of pain, suffering, inconvenience and emotion distress
which could be expected under circumstances where such a term and
condition of employment is ignored, broken and otherwise violated.
WHEREFORE, the Plaintiffs request that judgment be entered
against the Defendants and in favor of the Plaintiffs in the amount
exceeding $50,000.00.
21
.,
E~LOVEE ACKNOWLEDGMENTS AND AGREEMFJ1:l'j
The undenigned ("Employee") recognizes and acknowledge!! that: (a) in the course of
Employee's employment with KnowledgeSo/Unc, (the "Company"), it will be necessary for
Employee to acquire information which could include, in whole or in part, information concerning
the Company's sales. sales volume. sales methods, sale. proposals. customers and prospective
customers, identity of customers and prospective customers, identity of key purclwing personnel
in the employ of custOmers and prospective customers, amount or kind of customer's purchases
from the Company, the Company's sourte3 of supply. the Company's computer programs,
computer spreadsheets, system documenwioll, special hardware, product hardware, software
development, the Company's ltlAIIuals, formulae, processes, methods, macllines, compositions,
ideas. improvemenu, invenliom or other confidential or proprietary information belonging to the
Company or relating to the Company's aWaits (collectively referred to herein as the "Confidential
Wonnation"); (b) the ConfidentiallnfomlAtlon is the property of the Company; (c) the use,
misappropriatloo or disclosure of the Confidential Wonnation would constitute a breach of trust
and could cause irreparable injury to the Company; and (d) it is essential to the prolection of the
Company's good will and the mainlell1l\ce oC the Company's competitive position that the
Confidentiallnformatlon be kept secret and lhat Employee not disclose the ConJidential
Wormation 10 others or use the Confidential Infonnation to Employee's own advantage or the
advantage of others,
Employee further recognizes and acknowledges that it is essential for the proper
protection or the business or the Company that Employee be restrained (a) from soliciting or
inducing any employee of the Company to leave the employ of the Company, (b) from hiring or
attempting to hire any employee or the Company, and (c) from soliciting the trade of or trading
with the customers and suppliers of the Company for any business purpose,
Employee further recognizes and understands that his (her) duties at the Company may
include the development of software source code or other computer software progranunins,
preparation of materials, including wrinen or graphic materials, and that any such materials
conceived or written by him (her) shaU be done as "work made for bire" as defined and u$Cd in the
Copyright Act of 1976,17 U,S,C, ~ I ~~, In the event of publication of such materials,
Employee understands that sinct. the work is a "work made for hire" Ihe Company will solely
retain 8l1d own all rights in said materials, including right of' copyright, and that the Company,
may. at, Its discretion, on a case-by-~ basis, granl Employee by-line credit on such materials as
the Company may deem appropriate,
I. In light of the foregoin?"
I I Employee agrees 10 hold and safeguard Ihe Confidential
Information in trust for the Company, its successors and assigns, and agrees that he (she) shall
nor, withoullhe prior wriuen con,enr ofrhe Company, misappropriate or disclose or make
available 10 anyone for use outside the Company's organization at any time, either during his (her)
employment with the Company or subsequent to the termination ofbis (her) employment with the
Company for any reason, including without limitation termination by the Company for cause or
without eause, any of the Confidential Wonnatlon, whether or not developed by Employee,
except as required in the performance of Employee's dutles to the Company,
1. 2 Employee shall disclose promptly to the Company or its nominee
any and all works, inventlons, dJscoveries and improvements authored, conceived or made by
Employee during the period of employment and related to the business or activitles of the
Company, and hereby assigns and agrees to assigtl all his (her) interest therein to the Company or
its nominee, Whenever requested to do so by the Company, Employee shall execute any and all
applieations, assignments or other instruments which the Company shall deem necc:ssal)' to apply
for and obtain Letters Patent or Copyrights of the United States or any foreign counuy or to
otherwise prolect t1w Company's Interest therein. Such obligatlon.~ shall continue beyond the
termination of employment with respect to works. inventlons, discoveries and improvements
authored, conceived or made by Employee during the period of employment, and shall be binding
upon Employee's usigns. e1CCCUtOrs, administrators and other legal representatives,
1.3 UJl<ln the tennlnation of Employee's employment with tbeCompany
for any reason, including without limitation teonination by the Company for eause or without
cause, Employee shall promptly deliver to the Company all documents, malerials, equipment or
infonnatlon in Employee's possession or control which are owned by the Company or which were
prepared by Employee in the cowse of Employee'S employment with tbe Company, inc1ucling
without limitation all correspondence, drawings, blueprints. manuals, letters, notes, notebooks,
reports, now-chans, computer programs. computer spreadsheetS, proposals and any documents
concerning the Company's customers or concerning products or processes used by the Company,
Wlthoutlimiting the foregoing sentence, Employee will pmmptly deliver to the Company any and
all other documents or materials containing or constituting Confidential Information,
) .4 Employee agrees that during his (her) employment with the
Company he (she) shall not. directl)' or Indltectly, solicit the trade o( or trade with, any customer,
prospective customer, supplier, or prospective supplier of the Company for any business purpose
other than for the benefit of the Company Employee further agrees that for one (I) year
following termination of his (her) employment with the Company, including without limitation
tennloanon by the Company for cause or without cause, Employee shall not, directly or indirectly,
solicit the trade of, or trade with. any customers or suppliers, or prospective customers or
suppliers oCthe Company.
1,5 Employee agrces that, during his (her) employment with the
Company and for one (I) year following termination of Employee's employment with the
Company, including withollt limitation termination by the Comllany for cause or without c:ause,
Employee shall not, directly or indirectly, solicit or induce. or attempt to solicit or induce, any
employee of thc Company to leave the Company for any reason whatsoever, or hire any employee
of the Company.
1.6 Employee agrecs thaI in the event of publication by Employee of
written or graphic materials the Company will retain and own all rights in said materials, including
right of copyrighr
2
2. Employee represents and WaITlllU lhal he (she) is nol a Put:V 10 or
othctwlse subject 10 or bound by the lenns of any contract, agreement or undCl1llnding which in
any maMer would Umlt or othawise &/feet his (her) ability to perfonn his (her) obligations
hereunder, Employee further represents and warcants that blJ (her) cmploytMlt with the
Company win not require him to disclose or \lse any confidential information belonging to prior
employers or other persons or entities.
3, Employee represents that his (her) experience and capabilities are such that
the provisions of section 1 wil1llOt prevent him (her) from eamlng his (her) Uvelihood, and
acknowledges that it would cause tbe Company serious and irreparable injury and cost if
Employee were to use his (her) ability and knowledge in competition with the Company or to
otherwise breach the obligatiolU contained in section 1,
4, In the event ofa breach by Employee ofthc teml5 of this Agreemenl, the
Company sha11 be entitled, iftt shall so elect, to institute legal pl'()Cl'Mings to obtalu damages for
any such breach, or to enforce the specific petformance of this Agreement by Employee and to
enjoin Employee from any further violation of this Agreement and to exercise such remedies
cunlu1atively or in conjunction with all other rights and remedies provided by law. Employee
acknowledges, however, that the remedies at law for any breach by him (her) of the provisions of
this Agreement may be inadequate and that the Company shall be entitled to injunctive relief
against him (her) in the event of any breach,
5, The non-disclosure and non-solicitalion obligallons conlained in Paragraph
1 of this Agreement (collectively referred to herein as the "Restrictive Covenlll1U") shal1 be
extended by the length of time during which Employee shall have been in breach of any of the
Restrictive Covenants.
6, Employee agrees tl!Atlhe Restrictive Covenants shall be enforceable to the
fullest extent permissible under applicable law, but thaI the unenforccability (or modification to
cotuorm to such law) of any provision or provisions hereof sha11 not rCfl(\er unenforceable, or
impair, the remainder thereof. If any provision or provisions hereof shall be deemed invalid or
unenforceable, either in whole or in part. this Agreement shall be deemed amended 10 delete or
modify, as necessary, the offending provision or provisions and to alter the bounds thf.Icof in
order to render II valid and enforceable.
7, In an action by the Complll1Y to enforu this Agreement any claims asserted
by Employee against the Company shall nOI constitute a defense to the Company's action,
8, This Agreement shall be governed lIl1d construed in accordance with the
laws oflhe Commonwealth of Pennsylvania.
9, Employee hereby irrevocably submits 10 personal jurisdiction oflhe Uniled
Slates District Court for Ihe Middlc DistriCI of Pennsylvania or the COllrt of Common Pleas of
Dauphin County, PeMsylvania in lIl1Y aClion or proceeding arising oul of or relaring 10 this
Agreement and Employee hereby irrevocably agrees thar all claims in respect of any such action
or proceeding may be heard lIl1d dClennincd in either such coun
.
,
10, Employcehereby irrevocably consents to the service of any summons and
complaint and any other proce" which may be served in any action or proceeding arising out of
or related to this Agreement brought in the United States District Coun for the Middle District of
Pennsylvania or the COUlt of Common Pleas ofDauphln County by sending copies of SIIch
process to Employee, at his (her) address as set forth on the signature page hereof; by certified or
registered United States mail.
II, Employee hereby irrevocably waives any objection which he (sbe) now or
bereafter llUIy have to the venue of any action or proceeding arislng out of or relating to this
Agreement being aumell in the United States District Court for the Middle District of
Pennsylvania or the Coun ofCollUllon Picas of Dauphin County, Pennsylvania and any objection
on the ground that any such action or proceeding in eltllCl' of suc.l} Courts has been brought in any
Inconvenient forum, Nothing In Ibis section II shall aJfectthe right of the Company to bring any
action or proceeding against Employee or his (her) propeny in the couns of other jurisdictions,
12, The obligations of Employee under this Agreement shall (,Ontinue after the
termination of his (her) employment with the Company for any ruson, with or without cause, and
shall be binding on his (her) heirs. executors, legal representatives and assigns and shaD inure to
the benefit of any successors and assigns of the Company,
13. Employee has agreed 10 eKeCUle and deliver Ihis Agreement in
consideratlor~ among other things, of (i) Employee's receipt of compensation from time to time by
the Company; Illd (ii) the willingness of the Company to make valuable bene6u available
hereafter to Employee,
14, This Agreement represents the entire agreement of Ihe panies and may be
amended only by a writing signed by all parties to this Agreement
1 S, EMPLOYEE ACKNOWLEDGES THAT HE (SHE) HAS READ AND
UNDERSTANDS THE FOREGOING PROVISIONS AND THAT SUCH PROVISIONS ARE
REASONABLE AND ENFORCEABLE, EMPLOYEE FURTHER ACKNOWLEDGES mAT
HE (SHE) HAS BEEN AFFORDED AN OPPORTUNI1Y TO HAVE TInS AGREEMENT
REVIEWED BY HIS (HER) COUNSEL,
16. EMPLOYEE ACKNOWLEDGES THAT (1) THIS AGREEMENT IS
BEING EXECUTED IN CONNECTION WIlli A SUBSTANTIAL CAPITALIZATION OF
THE COMPANY WHICH CAPITALIZATION IS NECESSARY TO PROVIDE THE
COMPANY WITH THE CAPITAL TO CONTINUE OPERA nONS AT CURRENT LEVELS
OF EMPLOYME,NT; (11) THE EXECUTION HEREOF IS NECESSARY TO INDUCE mE
PROVIDER OF THE CAP IT AUZA nON TO PROVIDE SUCH CAPIT ALi AND (ill) THE
FOREGOING REPRESENtS ADDITIONAL AND ADEQUATE CONSIDERATION TO
EMPLOYEE IN EXHAJ'lGE FOR EMPLOYEE'S EXECUTION OF THIS AGREEMENT.
4
C')
3
!
!.
KNOWLEDGESOFI'.INC.
INCENTIVE AGREEMENT
THIS INCINTIVE AGREEMENT ("Agreement'~ is alade and entered Into as of June
I, 1997 (tho "Date of Grant") by and between Jawes MM2U (the "Employee'~ and
KllowledgeSoft.inc~ . Pennsylvania corporation (the "Company").
ARTICLE A. GRANT OF INCENTIVE STOCK OPTION
1. Grot of St~k Option. Tbe Company hereby grants to the Employee all option
(the "Optlon'11O purchase a total 000.000 !hlUes oC Class B Common Stock (collectively. the
"Shll'es'1, at the price dctennined as provided herein, and in all respeetA subject to the tenns,
definitions and provisions of the KnowlcdgrSoft.inc. Performance Incentive Stock Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference. Unless otherwise
defined herein. the temIS defined in the Plan shall have the same defined meanings herein,
2. Nanre of the ODtioD. The Option is intended to qualifY as IInlncentive Stock
Option as defined in Section 422 of the Code.
3. Exerclse~. The exercise price is $1.00 for each share oCClass B Common
Stock, which price is not less than the fair market value per share of the Class B Common Stock
on the Date ofGI'IIIl.
4. Eterdse of Option. The Option shAll be exercisable during its tenn in
accordance with the sehedule set {o\ih in Exhibit A, subject to the following conditions:
(8) The Option shall not be pro-rated if exercised between the
dates inidca; rather, each perccntagc shall remain constant during its stated
duration.
(b) Thc Option may not be excrcised for a fraction of II ShlUe.
(c) In the event of the Employee's death, disability or other lermination of
employment, the exen;isability of the Option is eovcmed by Set.tion 8. 9 and 10 below.
(d) In no event may the Option be exercised after the date of expiration of the
telm of the Option IS set forth in Section 5 below,
(0) Method of I;xerci~e. The Option shall be exercisable. in whole 01' in part.
by the delivery ofwrinen notice to the Company which shall statc the eleclion to exercise the
Option, the numberofSharts in respect of which Ihe Option is being exercised, and such other
representations and agreements as to the holder's investment intenl with respect 10 the Shares as
may be required by the Company. Such wlilten notice shall be signed by the Optionee and shall
-1-
, ..
be delivered In penon or by certified mall 10 the Secretary of the Company. The wrinen notice
shall be accompanied by payment of the exercise price and, if nol previously delivered, a signed
Slock Purohase Agreement. The Oplion shall be deemed 10 be exercised upon receipl by the
CompMY of such wrilWn notice ac;eompanled by the exercise price and the signed Slock
purchase Agrr.crnent
No Shares will be issued purslWlt to the exercise of an Option unless such
issuance and such exen:ise shall comply with all relevanl provisions of law and the requirements
of any stocle exchange upon which lbe SI1II'es may then be listed. Assuming such C(lmpliancc,
for income laX puxposes the Sb2res shall be considered transferred to the Employee on the date
on which the Option is exercised with respect to such Shares,
~
5. Term or the Option. No portion of the Option may be exercised more lhan ten
(10) years (five (5) yeart If the Employee owns, immedialely before the Date ofGranI, stoek
representing more than ten percent (10'10) of the total cumbined voting power of all classes of
stocle of the Company or of any Parent or Subsidiary) from the Date of Grant of this Option. and
may be exercised during such term only in accordance with the Plan and the tenns of this Option.
6. ~tethod or Pavment. Payment of the exercise price shall be by any of the
following, or a combination thereof. at the election of the Employee:
(a) cash;
(b) check;
(c) surrender of other shares of Class B COllUnon Stock of the Company
which (i) either have been owned by the Employee for more than six (6) months on the date of
surrender or were not acquired, directly or indirectly, from the Company and (ii) have a fair
market value on the date of surrender equal to the exercise price of the Shares as to which the
Option is being exercised.
7. Restrictions on Exercl,~ As a C(lndition 10 the exercise of lhe Option, the
Company may require the Employee to make any representation and warranty to the Company as
may be required (i) by any applicable law or regulation, or (ii) under the tenns of the Plan or this
AGreement. Thc Company may also place appropriate legends upon certifica1c.~ for the Shares.
8. Termination of Status as In Emuloyee. In the event of the tenninatlon of the
Employee's Continuous Status as an Employee, he may, bul only within thirty (30) days from
the date of such termination (but in no event later than the date of expiration of the tenn of this
Option as set forth in Section S above), exercise this Option to the extent that he was entilled to
exercise it at th-: dale of S\lch tennination. To the extent that he was not entitled to exercise this
Option at the date of such lerminalion, or ifhe does not exercise this Option within the time
specified herein, the Option shalltcrminate,
9. Dlsabllltv of tbe EmDlovee. Notwithstanding the provisions of Section 8 above,
in the event of the termination of the Employee's Continuous Status as an Employee lIS a result
-2-
of his lotal and permanenl disability (as defined in Secllon 22(e)(3) of the Code), he may, bUI
only within three (3) months from the dale of lerminalion of employment (buIln no evenllale.f
than the date of expiration of the term oflhis OplionllS set forth in Section 5 above), exercise this
Option to the extent he was onlilled 10 exercise II althe due of llU~h lennination. To the extent
thai he was not entided lo exercise this Oplion at the date of lennination, or Ifbe does not
exotcise Ibis Option within the time specified herein, the Option sltalllconinale.
10. Dutb of tbe E.!!!.I!loyee. Notwithstanding the JlI'ovisions of Section 8 above, in
the ~ent of the death oflhe Employee who shall have been in Continuous Status as an Employee
since the date of grant oflhis Option, the OptiOQ may be exercised, at any time within six (6)
months following the (]ale of death (but in no evenl1aler than the date of expiration of Ihe lerm of
lhls Oplion as sel forth in Section S above) by the Employee's estate or by a person who acquired
the righlto exercise the Option by bequest or inheritance, but only to the extent the right to
eXotcise bad lCCIUed at the date of death.
J 1. Butrictions on Transfer.
(a) This Option may nol be transferred in any manner other than by will or by
the laws of descent or distribution. 1 may be exercised durin& the lifetime of the Employee only
by the Employee, The terms of this Option shall be binding upon the execulors, administrators,
heirs, successors and assigns of the Employee,
(b) The Employee hereby agrees, upon the requesl of the Company or the
underwriters managing the initial public offering of the Company's securities, nollo sell, make
any short sale of. loan. granl any option for Ihe purchase of, or otherwise dispose of any shares of
Ihe Company's Class B Common Slock (other than those included in the registralion) withoul the
prior written consent of the Company or sucb underwrilers, a.~ the case may be, for such period of
time (not 10 exceed 180 days) from tbe effeclive dale of such registration as the Company or
underwriters may specify; provided thaI all officers and directors of the C'.ompany al the lime of
such public offering agree to a similar l'C'slrietion.
12. Earlv Disposition of Stock. The EmplOYe<! undentands thaI ifhe disposes of any
Shares received under this Option within two (2) years after the Date ofOranl or within one (I)
year after such Shares were transferred 10 him, he will be treated for federal income tax pwposcs
IS having r<<eived ordinary incume althe lime of such disposition ill an amounl generally
measured by Ihe difference between the price paid for the Shares at the date (lfthe exercise and
the fair markel value of the Shares althe date of disposition, The Employee hereby agrees to
notify Ihe Company in wriling wilhin 30 days after tbe date of any such dlspO$ition,
ARTICLE B. RESTIUCTIONS ON THE SHARES
13. Reslrlclions ou TraDsfen. The Employee agrees lhal he shall nol, without the
prior written consenl of the Company,
-3-
(a) sell, tranSfer, gift. alienate or in any other way dispose of any of the
Shares;
(b) pledge or otherwise encwnber any of the Shares; or
(e) designate auy of the Shafes into joint names with any other individual.
14. ODtlonl1 Purchase Ullon tbe Occurrence of Certain Events. Upon (a) the
retirement of the Employee, (b) the termlnation of the Employee's employment with tbe
Company by the Company for lilY reason, (c) the resignation of employment wilh \be Company
by the Employee, (d) the disability (as defined in Section 22(eX3) of the Code) or death of the
Bmployu, (e) an award of!l1y of the Shares to the spouse oCthe Employee in a proceeding for
equitable distribution of marital property upon divorce, or a similar CC)I1It-ordered distribution of
propetty incident to the divorce of the Employee, (f) the filing of a petition in bankruptcy by or
against the Employee, or the assignment by the Employee for the benefit of his CTCditors, or the
levy or sale of all or substantially all of the propertY of the Employee, (g) the transfer of all or a
portion of the Shares by opuation of law, or (11) a proposed sale, transfer, gift or other disposition
of the Shares (individually, an "Optionall'urchase Event"), the Company shall have the right, but
not the obligation, to purchase all or a portion of the Shares then held by the Employee for the
purchase pric,: per share set forth in Section IS, At the Company's discretion, it may assign its
right to purchase all or a portion of the Employee's Shares to one or more of the shareholders of
the Company.
The Employee rohall immediately notify the Company oClhe OCCWTence ofan Optional
Purchase Event described in (e), (f), (g) or (h) above.
IS. I'urehas~. The purchase price per shares for the Shares purchased by the
Company pursuant to Section 14 (the "Purchase Price'~ shall be its Fair Market Value as of the
last day oflhe fiscal year immediately preceding the year in which the Optlonul Purchase Event
occurs.
"Fair Market Value" shall mean the price per share determined by the urtified public
accountants then employed by the Company, such determination to be binding upon all of the
parties,
16. Metbod of Pavm~ Unless the parties agree otherwise in writing. 1be Purr-base
Price shall be paid over ten (10) years in consecutive, e(jual, annual installments. the first
installment to be paid on the date of the closing, and the remaining installments to be paid on or
before the same day of each year thereafter, Such indebtednes.~ shall be represented by a
promissory note from Ihe Company bearing interest from lhe dale oCthe closing at Ihe lowest rale
then pennitted 10 be eh8re~d under Seclions 483 and 1274 of the Code so as 10 avoid impuled
interest. foregone interest and original issue discount, and shall provide that the obligor shall
have the privilelle of prepaying all or any part therrof at any time, The certificates representing
the Shares to be purchased shall be held in escrow by the CompJIIYas security Cor the payment
oC the Purchase Price until paid in full, The right to VOle such Shares shall vest immediately in
.4.
. '
the Company upon payment of the initiallnstallmenl of the Purchase Prioe lIthe closing; the
Company shall forfeit such voting rights during any period Its note Is in def\lult.
17. ~. A closing of the purchase of Shares by the Company punUlnt to SOlltion
14 hereoCshall be held II the offic:cofrhe Company,ll a date and time mutually Igreeable 10 the
Employee and die Company. within sixty (60) days (240 days in the event oftht Employcc's
disability or dealh) following the Company's receipt of notice ofthc occurrence of an Optional
Purchase Event and the calculation of the Purchase Price. The Employee's share certlficate(s)
shall be delivered by die Employee to the Company, duly endorsed in blank. with any l1CCt&aIy
ttan.~fer tax stamps duly affixed IIId canceled, together with such other instnunCllI5 as coWlSel tor
the Company may reuonably request The Purehase Price shall be paid as sot fotth in Section 16
hereof. ~
18. Lel!eDd. Each certificate for Shares issued to the Employee shall bear a
conspicuous legend substantially as follows:
THE SHARES OF STOCK EVIDENCED BY TIUS CERTIFICATE
CONSTIrorE RESTRICTED SECUlUTIES AND MAY NOT BE SOLD
UNLESS REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, (THE "ACT'~, AND APPUCABLE STATE SECURITIES
LA WS OR UNLESS THERE IS AVAILABLE AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE
STATE SECURITIES LAWS.
THE SHARES OF STOCK EVIDENCED BY T'AIS CERilFICA TE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER AND REPURCHASE
RIGHTS IN FAVOR OF TIlE COMI'ANY PURSUANT TO AN AGREEMENT
DATED AS OF OCTOBER 31,1996, BY AND BETWEEN THE
SHAREHOLDER NAMED 11iEREIN AND THE COMPANY. AN EXTRACT
OF THE RELEV ANI' PROVISIONS OF THE AFOREMENTIONED
AGREEMENT CAN BE OBTAINED FROM TIlE SECRETARY OF TIlE
COMPANY AT THE ADDRESS OF TIlE COMPANY'S REGISTERED
OFFICE IN THE COMMONWEALTII OF PENNSYLV ANlA.
The Company shall cause dIe legond pfO$cribed by lhis Section 18 to be affixed to each
certificate representing shares of the Company hereafter issued 10 the Employee.
19. Transfers Ineffectlv~. No purported sale, assignment, hypothecation, transfer,
pledge, crcation of a security interest ill or lien on, ellcumbranee of, gift or other disposition of
any of lhe Shares by the Employee in violation of the ptovisiuns of this Agreemenl shall be
vslid, and the Company shall not transfer any oflhe Shares on its books, nor shall any of the
Shares be cnlitled to vole, nor shall any dividends be paid thereon, during the period of any such
violation, The provisions of Ihis Seclion shall be in addition to and nOlin lieu of any other
remedies, legal Of equitable, available 10 enfotce this Agreement.
.5.
. '
ARnCt.E C. lNTELLECT1.lAJ., PROPERTY MA "f"fERS
AND AGREEMENT NOT TO COMPETE
20. IimDlovee'. Ackaowled~meatJ. The Employee recognizes and acknowledges
that: (a) in the course of the Employee's employment by the Company, it will be neceswy for
the Employee to acquire lnfonnatlon which could include, in whole or in part, infonnation
concerning the Company'awes, si\les volume, sales methods, sales proposals, ClISlomm and
prospective custom~,identity of customen; lIlId pfOspective customers, identity of key
pUfchaslng pusoMelln 1he employ of customers and prospective customers, lIlI10unl or kind of
customer'. purch.ases from the Company,the Company's sources of supply, the Company's
computer programs, computer spreads.beets, system dOClUllcntation, special hardware, product
hardware, related software'llcvelopment, the Company's manuals, fOmlulae, processes, methods,
machines, compositions, ideas, improvements, iaventions or other confidential or proprietary
information belonging to the Company or re1ating to the Comp~IY's affairs (col1ectively refened
to herein as the "Confidential Infonnation"); (11) the Contidential Infomlation is the property of
the ComplIlIY; (c) the use, misappropriation or disclosure of the Confidential Information would
constitute a breach ofttust and could cause irreparable injury to the CompanYi and (d) it is
essential to the protection of the Company's good will and 10 the maintenance of the Company's
competitive position lhat the Confidential Information be kept secret and that the Employee not
disclose the Confidential Information to olhcrs or use the Confidential Information to the
Employee's own advantage or the advantage of others,
The Employee fI1r1her recognh:es and acknowle.dges that it is essential for the proper
protection of the business of the Company that the Employee be restrained (a) from soliciting or
inducing any employee of the Company to leave the employ of the Company, (b) from hiring or
attempting to hire any employee of the Company, (e) from soliciting the trade of or trading with
the customers and suppliers of the C.ompany for any business purpose, znd (d) from l'.Ompeting
against the Company for a reasonable period following the termination of the Employee's
employment with the Company,
The Employee further recognizes and undmlands that his duties at the Company may
include the preparaiion of malerials, including written or graphic malerials, and that any such
materials conceived or written by him shall be done lIS "work made for hire" as defined and used
in the Copyright Act of 1976, 17 U.S,C. A 1 ~ 1M. In the event of publication of such materials,
the Employee understands that since the work is a ''work made for hire". the Company will
solely retain and own all rights in said materials. including right of copyright, and that the
Company may, at ils discretion, on a case-by-<<se basis. grant the Employee by-line credit on
such malerials as the Company may deem appropriate,
21. Non-Disclosure of CoufidentlallufolJll!!!!!.!!.. The Employee agrees to bold IUld
safeguard the Confidentiallnfonnalion in trust for the Company, its successors and assigns and
agrees lbal hc shall not, without the prior written consenl of the Company, misapplopriale or
disclose or make available 10 anyone for use outside lhe Company's orllanization at any lime,
either during his employment with the Company or subsequent to the termination of his
employmcn! with the Company for any reason, including, wilhout limilation, tennination by the
-6-
, '
Company for cause or wilboul cause, any of Ihe Confidential InfOlUl.tiOn. whether or nol
developed by Ihe Employee, excepl as required In the perfonnance of the Employee's dutits to
the Company,
22. Dlsdosllre oOYQrks and IDveDdonsJAssilnmeDt of PateDb. The Employee
shall dlsclose promplly to the Company or ilS nominee my and all works, InvOlltions, discoveries
and improvements aulllOriZed, conceived or made by the Employee during his employment and
related to the business or activities of the Company, and hereby assigns IIId agrees to assign all
his interest therein to the Company or its nominee. Whenever requested to do 10 by the
Company, the Employee shall execute any and all applications, wignmenU or other instnlments
which the Company shall deem neeessary to apply for and obtain LeI1cl'S, Patents, or Copyrights
oflhe United States or any.coreign country or to otherwise prolCclthe Company's interest
therein. Such obligations shall conlinue beyond the tennlnation of employment with respect to
worlcs, inventions, discoveries and improvements authored, conceived or made by the Employee
during his employment, and shall be binding upon the Employee's assigns. executors,
admlnistntors and other legal representatives.
23, Return ofl'-faterlals. Upon the lcnninalion of the Employee's employment with
the Company for any reason, including withoullimilalion lennination by the Company for cause
or without cause, the Employee shall promptly deliver to the Company all correspondence,
drawings, blueprints, manlUls, letters, notes, notebooks, reports, flow-c\wts, programs,
proposals and any documents concerning the Company's customers or concerning products or
processes used by the Company and, wilhoUlllmiting the foregoing, will promptly deliver tClthe
Company any and all other documents or materials containing or constituting Confidential
Infonnation.
24. ~eslrictloDs 00 Comoetltioo. The Employee covenanls and agrees that during
the period of the Employee's employment hereunder and for a pcriod of one (I) year following
the tennination of the Employee'9 employment, including, without limitatioo,lc:nnination by the
Company for canse or withoul cause, the Employee shall not, in the United Slates of America,
engage, directly or indiw:tly, whether as principal or as agent, officer, director, employee.
consultanl, shareholder, or othenvise, alone or in association with any other petiCIn. colJloration
or other entity, in any Competing Business. For purposcs oflhis Agreement, the Ic:nn
"Competing Business" shali mean any person. colJloration or othcr entity engaged in the
business of selling or attempling to scll any product or sCllViee which is the Slllne as or similar 10
produets or services sold by the Company, within the last two (2) years prior 10 tennlnation of
Ihe Employee's employment hereunder.
25. /IIon.Solicll.lloo ofCuslomers and SupDllers. The Employee agrees that
during his employmcnt with the Company he shall not, directly or indirectly, solicit the trade of.
or ITade with, any CUSlomer, prospeclive customer, supplier, or prospeclive supplier of the
Company for any business pUlJlose other than for the benefit of Ihe Company. The Employee
fUrther agrees Ihat for one (I) year following the tcnnlnation ofllis employment with the
Company, Including, withouI limitation. tennination by the Company for causc or wilhout cause,
.7.
. '
tho employee shall nol, directly or indirectly, solicit the lt1Ide of, or trade with, any customers or
,uppllCll'll, or prospective customers or suppliers, of the Company.
26. Non-SolldtatloD of Emnlovees. The Employee agrees that, during his
employment with the Company and for one (I) year following the tennination of the Employee's
employment with the Company, Including, withoutllmilatioD, tcnnlnation by the Company for
cause or without cause, the Employee shall nol, directly or indireclly, solicil (J( induce, or attempt
to solicit or Induce, ony employee of the Company 10 leave the Company for lIlY ruson
whAtsoever, or hire any employee of the Company.
27. Work Made for I{ln. The Employee agrees that in the event of publication by
the Employee of written or-graphic materials during his employment with the Company, the
Company will retain md O\\lll all rights in said materials, including right nf copyright.
28. Confidentlllllty of the Terms of this 61reellleDt. The Employee covenants ahd
agrees that he shall keep confidential and shall not disclose to myone, including, without
limitation, other CIllployc:cs of the Company, the existence of, as well as all nwerialtenns and
conditions of, this AgrecmCllt, including, without limitation. the number of Shares that may be
exercised under the Option granted to the Employee,
29. lio Prior Al!reements. The Employee represents and warrants that he is not a
party to or otherwise subjeclto or bound by the tenus of any contracl, agreement or
understanding which in any manner would limit or othelWise affecl his ability to perform his
obligations hereunder, including. Wilhoutlimilation, any contract, agreement or undefStanding
containing lerms and provisions similar in any manner to those contained in this Article C. 111e
Employee further represents and warrants thaI his employment with the Company wiU not
require him to disclose or use any confidential information belonging to prior enJoloyers or other
penOlls or entities.
30. Employee's Abilities. The Employee rqlresenlS thallUs experience and
capabilities are such that the provisions of this Article C. will not prevent him from earning his
livelihood, and acknowledges that it would cause the Company serious and irreparable injury and
cost if the Employee wet'e to use his ability and knowledge in competition with the Company or
10 otherwise breach the obligations contained in this Article C.
31. Remedl~. In the event of a breach by the Employee of the tenus of this
Agreement, the Company shall be entitled, if it shall so elect, to inslitule legal proceedings to
obtain danlages fOr any such breach, or to enforce the specific performance of this Agreemenl by
the Employee and to CIIjoio the Employee from any further violation of this Agreement and 10
exercise such remedies cumulatively or in conjunction with all other rights and remedies
provided by law. The patties acknowledge and agree thaI, in the evenl of a breach by the
Employee of the terms of this Agreement,the extent of the Company's damages would be
extremely difficult to ascertain, To avoid this problem, the parties agree that in the evenl of a
breach by the Employee, the Employee shall, al the Company's discretion, forfeit aU rights to the
Option granted to th~ Employee under Article A, above, including. withoullimitation, all right~
.8.
10 Shares previtlUnly purchasc:d Wider Ihe Oplion u well as all future rights 10 purchase ShAres.
The parties agree !bal forfe/lII.!e oflhe Employee's Option as afore.uJd shall be In addition to any
other reUtelo which the Company might olherwise be entitled to under !be tenns oClhia
Agreement. Specifically, the Employee: acknowledges lhat!be remedies at law for any breach by
hlm oCthe provisions oflhi, Agreement (including the CorfellW'll ofhls Options) may be
inadequate and that the Company shall be entilled 10 injunctive relief against him in !be event of
any breach.
n, &!.Ibllrlutlon III ~pl!,ry Rulrlctlons. II is the inUntioR of the parties that the
provisions of Article C. hereof shall be enforctable 10 the fullesl extent pennissible under
applioable law, but thatthc WlenCon:eability (or modifioation \0 confoltll to suoh law) Il>fany
provision or provisions hereof shall not render unenforcc.:Ible. or impair, the remainder !bCl'oof
If any provision or provislllns hereof slall be deemed illvalld or Wlcnforuable, ei!ber in whole or
in part, lhis Agreement shall be deemed amended \0 delele or modify, as ncceswy, !be offending
provision or provisions and to alter the bounds !bcreof in order \0 render it valid and enforceable.
33. :rqllilll! Period. The non-compctition. nondisclosuxe and non-solicllati.on
obligations contained in Artiele C. hereof shall be elCtended by Ihe length ofUme during which
the Employee shall h~ve been in breach of any of !be provisions of such Article C.
34. Emplover Vllllation Nol a Defens~. In an action by the Company to enCon:e lhis
Agreement, any claims asserted by Ihe Employee againstlhe Company shall nol constitute II
defense to the Company's acrion.
ARTICLE D. RELEASE
35. EmDlovee Releue. In consideration oC!be grant of the Option to the I!mployee
as set forth in Article A. above, and o!ber good and valuable oonsidetallon, the receipt and
sufficiency ofwhJch is hereby acknowledged by !be Employee, the Employee hereby remiscs,
releases and forever disoharges the Company, its officers, directors and shareholders. and their
respective heirs, personal representatives, successors and assign.~ (collectively,lhe "Released
Parties'1 of and from any and all actions, suits, proceedings, debts, damage, coslS, claims.
demands, causes of aotion andlor liabilities of any nature or description whatsoever in law of
equity which he may have or may ever have had from the beginning of time to the present,
known or unknown, real or imagillll)', actual or potential, by reason of any ar.:tions of any kind
laken by any of the Released Parties with rcspectlo !be Employee's ability to acquire 10 receive
(in any manner whatsQCver) an equity interest in the Company, exoept for the Company'a
obligation to fulfill the terms and provisions of Article A, aoove.
ARIICLE E. S CORPORATION PROVISIONS
36. E.k!'.tifll!. Each Employee acknowledges !bar the Company has enlered into this
Agreement with the understanding and expeclatiollthat!be Company will be taxed as an "S
corporation" under (i) Ihe lax laws of the United Slates; and (Ii) Ihe tax laws of the
Commonweahh of Pennsylvania, The Employee shall lake all necessary and appropriate steps
-9-
:;/"""'!":"'''!",-'. ,,-,...,,,",---
,~'
and Qhnll execute all neoessaIY and appropriate consents aIl4 Cllher docUMents requised to
_"" .... ",.,..,,', .1..... . ,. """ . .. S .............." .... ....... .r..
Uol,", s_ "" .. .".,........ .rP-I""" ".....- ,'011""'... ..y ...i~
.bIoh ...,. ,..1"", ....".,,.., .... .""'fyI.... .. s...,.,....,. .... .. - or...
united StatCll or the commonwealth ofPe1U\sylvania.
J7. ~~. The Employee hereby inevOt.3bly constitutes and appoints
... ~"""" .1'" ",.,..y." .. _. wi" ,.- or........., "" toO... ......
._,In-,",''''' ...... . _..... _-""go. ,..~. -.. doh"'. ...~... fil. ln
... ...,1_" _. .1"'''' ....."' ,..-. i_........................
." ""'1;,0' . ..' bo ..."'" by ...,,.,,,.. U,i"" '"'" ~... C-''' ,r
._,"". . ..,.~... ,ol\d ."',,"" ,'''' """""... s _(- .i.I'"
stalUS) , This power-of-altomey is a durable power and sbal1l1Ot be terminated upon the
incapacity. disability or incompetenee of the Employee an4 shall not be revoked and lIhall
."",i"'" p.i.....' "....tu bY ... ...,1". or" _... ~"" ".... "'" - or
..i."'" ..... pol "",oI' ".,.... ".. .", 1- bY'" Omp''''' "",.........
CApacity on any such matter.
ARTICLE F. MlSCELLANf,OUS
38. E-Dtire Al!reetn'Jl1. This Agreement represents the entire agreement of the
parties and may be amended ollly by a wrltini\signed by each of them.
39. Goverl!!n, LaW. This Agreement shall be goVCllled by and eonsnued in
accordance with the laWS of me com:nonwcalth ofPctUlSYlvallia.
40. Qm!~"t to JurlsdlCtlOll.. The Employee hereby inevocable ~l1bmits to the
'"""'" i""..i.... .1.' U..... ,"'. Di"i. "'"" r"....... DO". 'rP_,",,'
" ... "''''' 01 <<-0' PI'" or D"'''' " Com"""'" .,..,.,. """I..... " "" "'~.
" ...._. .,;.i.. '" ,'M M"'''' . .... ^..~~,..... """,.. ""'bY,"",,'""
,,,,,, "" .11 ,I.;'" ;, ,..,.., ,{~, "'" .".. "..-.. ~Y bo h...... -"'" 10
eithct such court.
41. Slll'Vlce of ProC"s$.. The Employee hcte'oy itrevocably eonsentsto the service of any
._.M .... "mp"'"' ... .., ""'....... wbk' "'" '" ""'" " ~, "... M .......0.
arising out of or related to this Agreement brought in the United States District Court for me
Middle District ofl'e1U\sylvania or the CourtS of Common Pleas of Dauphin or CUI1\berland
County by the mailin!l by certified or registered mail of copies of such process to the Employcc
at his address as sel forth on me signatUte page hereof,
41.. Veoue. 'The Employce hereby irrevocably waives any objection which he noW or
hereafter may have to the laying of venue of any action or proceeding mslllS out of or relating to
this Agreement brought in the United fitalcs District Court for the Middle District of
,,",,,,,~i. " .. c,"". ., C,- ... ,{O~,bi." """.1... c_. ,-~,"".
10-
.,' ,
ind any objection on th~ ground that any such llCtion or peoceeding in either of such Courts has
been brought In any Inoonvmicnt fomm. Nothing in this Sect/on 42 shall alTect tbe right orthe
Company to bring any action or proceeding against the Employee or his property In the courts of
other Jwisdictlons.
43. Al!rettneat Blndlnl!. The obligations of the Employec under this Agreement
shall oontinue after the lcm1inatlon ofhJs employment with the Company for any reason, with or
without cause,and shall be bindinll on his heirs, executors, legal repn:sentative and assigns and
5halllnure to the benefit of any SUCCCSSOI'S and wigns of the Company.
44. Counttrp.rt~. Section Headlnn. This Agreement may be executed in any number
of counterparts, eacb ofwbich shall be deemed to be an original, but all of which together slw.ll
constitute one and the mIlC instrument. The section headings oftbis Agreement arc for
convenicncc of eeference only and shall not affect the construction Or interpretation of any of the
provisions hereof.
45. RefereQceHIl. Gender. Although. for the sake of convenienc:, all references in
this Agreement to the gender oflbe Employee arc to the masculine gender, thc parties
acknowledge and agree that all such refcrcnca shall include the feminine gender.
THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT TUE EXERCISABILITY
OF OPTIONS PURSUANT TO ARTICLE A. HEREOF IS EARNED ONLY BY
CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTrON OR ACQUIRING
SUARES HEJU:UNDER). TilE EMPLOYEE FURTHER ACKNOWLEDGES AND
AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
PERFORMANCE INCENTIVE STOCK PLAN WHICH IS INCORPORATED HEREIN
BY REFERENCE, SHALL CONFER UPON THE EMPLOYEE ANY RlGHT W1TII
RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR
SHALL IT INTERFERE IN ANY WAY WITH IDS RlGllT OR THE COMPANY'S
RIGHT TO TERMINATE illS EMPLOYMENT AT ANY TIME WITH OR WITHOUT
CAUSE.
The Employee acknowledges receipt of a copy of the Plan and certain lnfomlAtion related thereto
and rcpcesents that he Is familiar with the tenns and provisions thereof, and hereby accepts this
Option subject to all oflhe tenns and pcovisions thereof. TIlc Employee has reviewed the Plan
and this Agreement in theie enticcly, has had an opportunity to obtain the advice of counsel prioe
to executing this Agreement and fully undemands all provisions of the AgreemeuI, which
provisions the Employee acknowledges and agrees are reasonable and enfoeceable to peotcet the
Company's interests, The Employee heeeby agcees 10 accept as bindll1g, conclusive and final all
decisions oe interprelatiol1s of the Conunincc upon any questions arising under the Plan, The
Employee further agrees to notify the Company upon any change in the residence adthess
indicated below,
.11.
JAMES M. MA2ZU and
SIMA MAZZlJ.
Plaintiffs.
IN TilE COURT OF COMMON PLEAS
CUMIlERI.AND COUNTY, PENNSYLVANIA
No, 98-1161 Civil Terlll
v,
CIVIL ACTION - LAW
KNOWLEDGESOFT, INC. and
ALAN D, TODD,
Defendants,
MOTION Oft' DEft'I~NDANTS FOR I~NTRY Oft'
STIPULATED-TO CONFIIWNTIALlTY ORDER
Defendants, KnowledgeSotl, Ine, and Alall /), Todd ("Defendants"), hy and through their
allorneys, Buchanan Ingersoll Profcssional Corporation, hcrehy Iik this Motion for Entry of
Stipulated-To Conlidentiality Order as follows:
I. The parties arc engaged in discovery in the ahove-rdcrenced l11aller.
2, Certain of the Illaterials sought in discovery contain eonlidential and proprietary
information,
3, Accordingly, in order to facilitate the now of discovery and maintain protection
of conlidentialand proprietary inforlllationand Illaterials, the parties have agreed to the entry of
the Confidentiality Order allaehed hereto at Tah A,
4, The parties have stipulated to the entry of this Order on the Stipulation for Entry
of Confidentiality Order allaehed hereto at Tah \l,
5, In addition, the undersigned counsel has spoken with counsel for Plaintiffs, .lames
.I, West, Esquire, and Mr, West indicated that Plaintiffs concur in the entry of the all ached
Confidentiality Order,
6, Defendants' Preliminary Ohjeetions to Plaintiffs' Amended Complaint were heard
by The Honorable Edgar \l, Bailey and The Ilonorahle Kevin A, Hess, Judge Bailey authored
the Opinion and Order relating to those Preliminary Ohjections,
C!.d LL~cl
:3 -)I'ry) 'lS
rUe:.)
'd'<-JC C
CI fU:lC/f... u...1~
J2f2.. -1-( CC.H'1/('....Jlj .
3, Con fi dent i aU2Q_c..!ID1e!l \~ J!U!!! nJl)I'111Ut!gld ILl)gl~()c~lliQm,
(a) A deponent may during the deposition he shown, and examined ahout,
confidential documents and informntion, Dcponents shall not rctain or copy confidcntial
documents or portions of the transcript of their depositions that contain confidential information
provided to them or the cntitics thcy rcpresent under other provisions of this Ordcr,
(b) Thc partics anticipate that sOl11e or all ofthc depositions taken in this casc
will contain discussions of confidential inllll'lnation and therell)re, unless the parties agree
othcrwise, or until furthcr order of this Court, all transcripts ofdcpositions taken in these cases
will be regarded as confidential documents,
4,
Subpoena hv Other Courts or Al,(9!1.c..ig,sc
Ifanother court or an administrative
agency suhpoenas or ordcrs production ofconfidcnlial documcnts which a party has ohtained
under the terms of this ordcr, such party shall promptly notify thc party or othcr person who
designated the dOlllment as confidential of the pendency of such suhpoena or order,
5, Filing, Confidential documcnts need not hc filed with the Prothonotary except
when required in connection with motions under Pa, R,C',P, 4012 or other matters pending before
the Court, If filed, they shall be filed under seal and shall remain scaled with the Prothonotary so
long as they retain their status as stamped confidential documents, All documents filed under
seal shall be placed in a box or envelope and marked "scaled hyorder of court",
6, Use, Persons obtaining access to eonlidential documents under this order shall
use the information only for preparation and trial of this litigation (including appeals and
retrials). and shall not use such infol1nation for any other purpose, including business,
governmental. cOl11ll1ercial, or administrativc or judicial proceedings; nor shall such persons
3