Preview
Hearing Date: 10/21/2024 9:30 AM
Location: Court Room 2502
Judge: Weaver-Boyle, Lynn
FILED
6/20/2024 1:53 PM
IRIS Y. MARTINEZ
CIRCUIT CLERK
COOK COUNTY, IL
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
2024CH05798
Calendar, 13
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FILED
System Generated Hearing Date: 10/21/2024 9:30 AM 6/20/2024 1:53 PM
Location: Court Room 2502 IRIS Y. MARTINEZ
Judge: Weaver-Boyle, Lynn CIRCUIT CLERK
COOK COUNTY, IL
2024CH05798
Calendar, 13
IN THE CIRCUIT COURT OF COOK COUNTY
COUNTY DEPARTMENT, CHANCERY DIVISION
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
MICHAEL DUFFY, ) 2024CH05798
Plaintiff, ) Case No. ___________
vs. )
)
GTY TECHNOLOGY HOLDINGS INC., )
d/b/a EUNA SOLUTIONS and )
CITYBASE, INC., )
Defendant. )
COMPLAINT
Plaintiff, Michael Duffy (“Plaintiff” or “Duffy”), by his undersigned counsel, hereby
submits this Complaint against Defendant GTY Technology Holdings Inc. d/b/a Euna Solutions
(“Euna”) and CityBase, Inc. (“CityBase,” collectively, “Defendants”) and states as follows:
PARTIES AND JURISDICTION
1. Duffy is an individual residing in Cook County, Illinois.
2. Euna is a Massachusetts corporation with a principal place of business in Chicago,
Illinois.
3. CityBase is a Delaware corporation with a principal place of business in Chicago,
Illinois.
4. Most of the events giving rise to this litigation took place in Cook County, Illinois.
Accordingly, jurisdiction is proper pursuant to 735 ILCS 5/2-209(a)(1) and venue is proper
pursuant to 735 ILCS 5/2-101(1).
CLAIM FOR DECLARATORY JUDGMENT
5. On or around May 31, 2024, Defendants filed a demand for arbitration with JAMS
against Duffy. That arbitration is currently pending (the “Arbitration”).
6. In their Demand, Defendants bring certain claims against Duffy pertaining to a so-
called Fair Competition Agreement (the “2018 FCA”) and attached as Exhibit 1 hereto. Defendants
also base the arbitrability of their claims solely on the 2018 FCA.
7. The 2018 FCA, however, was never an effective contract.
8. On September 12, 2018, Duffy signed an offer letter (the “2018 Offer Letter”),
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
attached as Exhibit 2, from Defendants that incorporated the 2018 FCA as Exhibit A. See Ex. 2 at
¶ 7.
9. The first paragraph of the 2018 Offer Letter indicates that it will not become
effective unless and until the completion of a contemplated transaction by which Euna acquired
CityBase:
10. Paragraph 7 of the 2018 Offer Letter explains that the terms of the 2018 FCA are
to become effective only when the employment relationship between Euna and Duffy begins:
11. Therefore, at the time of their execution, neither the 2018 Offer Letter nor the 2018
FCA were yet binding on Duffy or Euna.
12. Neither the 2018 Offer Letter nor the 2018 FCA ever became binding agreements.
13. The Closing Date referred to in the first paragraph of the 2018 Offer Letter
ultimately turned out to be February 19, 2024.
14. In the time period between the execution of the 2018 Offer letter and 2018 FCA
and the Closing Date, on February 14, 2019, Euna presented a new offer letter to Duffy (the “2019
Offer Letter”), which is attached hereto as Exhibit 3.
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15. Paragraph 12 of the 2019 Offer Letter, which expressly supersedes all prior
agreements without exception provides: This offer letter, together with the Incentive Plan, any
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
equity award agreements referenced herein and the Fair Competition Agreement, constitutes the
entire agreement and understanding between the parties as to the subject matter herein and
supersedes all prior or contemporaneous agreements whether written or oral. This offer letter
supersedes in its entirety that certain offer letter between you and the Company dated as of
September 12, 2018. (Ex. 3 at ¶ 12, emphasis added)
16. The term “Fair Competition Agreement” within Paragraph 12 of the 2019 Offer
Letter cannot be a reference to the 2018 FCA.
17. The term “Fair Competition Agreement” is governed by Paragraph 7 of the 2019
Offer Letter, which states: As a material inducement for the Company to agree to enter into an
employment relationship with you on the terms set forth herein, you agree to execute and comply
with the Fair Competition Agreement attached hereto as Exhibit A. (Ex. 3, at ¶ 7, emphasis added).
18. The 2018 FCA is not attached to the 2019 Offer Letter.
19. Therefore, the 2018 FCA never became an enforceable agreement as to Duffy.
20. Under the Illinois Declaratory Judgment Act, 735 ILCS 5/2-701 et seq, “The court
may, in cases of actual controversy, make binding declarations of rights.” Here, there is an actual
controversy. Defendants seek to enforce the 2018 FCA in the Arbitration.
21. The 2018 FCA is not a valid and binding contract and therefore Defendants have
no basis on which to arbitrate its claims against Duffy.
3
WHEREFORE, Duffy prays for a declaration that the 2018 FCA, including the arbitration
clause of the 2018 FCA, is unenforceable and for such other and further relief as this Court deems
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
equitable and just.
Date: June 20, 2024 Respectfully submitted,
Daniel Lynch
Amy J. Kanarowski Michael Duffy,
Lynch Thompson LLP (60040)
150 S. Wacker Drive, Suite 2600 By:/s/ Daniel Lynch
Chicago, IL 60606 One of his attorneys
312-346-1600/312-667-9231 (fax)
dlynch@lynchthompson.com
akanarowski@lynchthompson.com
docketing@lynchthompson.com
4
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
Exhibit 1
EXECUTION VERSION
GTY Technology Holdings Inc.
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
September 12, 2018
Michael Duffy
Re: Offer of Employment
Dear Michael:
On behalf of GTY Technology Holdings Inc. (together with its successors, the “Company”), I am
pleased to offer you the position of Executive Vice President of the Company and Chief Executive
Officer of CityBase, Inc. (“CityBase”), working out of CityBase’s principal offices in Illinois.
Your employment will be effective as of the Closing Date of the transactions contemplated by that
certain Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company,
CityBase and certain other parties thereto (the “Effective Date”). In the event the transactions
contemplated by the Merger Agreement are not consummated, this offer letter will be void ab
initio and of no force or effect. In addition, in the event of your “disability” (as defined in Treas.
Reg. Section 1.409A-3(i)(4)), death or other termination of employment with CityBase prior to the
Effective Date, this offer letter will be void ab initio and of no force or effect.
The terms that will apply to your employment with the Company are as follows:
1. Position and Duties. Commencing on the Effective Date, provided you are able to provide
services to CityBase as its Chief Executive Officer, you will be employed by the Company
on a full-time basis as an Executive Vice President of the Company and the Chief Executive
Officer of CityBase, reporting to the Chief Executive Officer of the Company (the
“Company CEO”).
You agree to perform the duties and responsibilities of your positions, and such other duties
and responsibilities as shall from time to time be mutually agreed upon between you and
the Company CEO. You agree that, while employed by the Company, you will devote
your full business time and your best efforts, business judgment, skill and knowledge
exclusively to the advancement of the business and interests of the Company and CityBase;
provided, however, you will be permitted to (i) engage in charitable and civic activities and
(ii) manage your personal and family financial matters, in each case, to the extent such
activities do not individually or in the aggregate interfere with your duties and
responsibilities to the Company or create any actual or potential conflict of interests with
the Company’s business.
2. Base Salary and Annual Bonus. During your employment with the Company, you will
receive an initial base salary of $300,000, less applicable tax and other withholdings and
deductions required by law, payable in accordance with the Company’s payroll practices
in effect from time to time. Your base salary will be subject to periodic review by the
Compensation Committee (the “Committee”) of the Company’s Board of Directors (the
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“Board”). The Company may increase but not decrease your base salary without your prior
written consent.
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
For each calendar year of your employment, you will be eligible to receive an annual cash
incentive bonus (the “Annual Bonus”) in a target amount equal to $100,000. The Annual
Bonus will be subject to pro-ration for any period of employment of less than a full calendar
year. The Annual Bonus will be subject to the achievement of Company and individual
performance goals established by the Committee. The actual amount of the Annual Bonus,
if any, will be determined in good faith by the Committee. You must be employed by the
Company on the day that the Annual Bonus (if any) for a calendar year is paid in order to
earn and receive such Annual Bonus. Any earned Annual Bonus shall be subject to
standard payroll deductions and withholdings, and paid no later than March 15th of the
year following the calendar year to which the Annual Bonus relates.
3. Equity Compensation. On or about the Effective Date, you will, subject to the approval by
the Board, be granted an equity award in the form of performance-based restricted stock
units covering 600,000 shares of Company common stock (and, subject to Board approval,
up to an additional 200,000 shares of Company common stock) (the “Equity Award”). The
Equity Award will be granted pursuant to the terms of, and subject to shareholder approval
of, the GTY Technology Holdings Inc. 2018 Omnibus Incentive Plan (the “Incentive
Plan”). The Board intends to adopt the Incentive Plan prior to the Effective Date and to
submit the Incentive Plan for shareholder approval in connection with the consummation
of the transactions contemplated by the Merger Agreement. The parties hereto agree to
use commercially reasonable efforts to negotiate the terms of the Equity Award in good
faith and agree to such terms prior to the date of grant. The Equity Award will be subject
to all of the terms, conditions and restrictions set forth in the award agreement and the
Incentive Plan.
4. Benefit Plans and Programs. You will be eligible to participate in the Company’s or
CityBase’s benefits and benefits plans and programs in effect from time to time, subject to
the terms of any and all plan documents. The Company reserves the right, in its sole
discretion, to amend, change or discontinue, in whole or in part, any and all of its benefits
and/or benefit plans and programs, at any time for any reason. The Company will
reimburse you for all reasonable business expenses you incur in the performance of your
duties, subject to the terms of the Company’s expense reimbursement policies in effect
from time to time applicable to senior executives. You will be entitled to paid vacation in
accordance with the Company’s policies. The Company will provide you with
substantially the same director & officer insurance coverage that the Company provides
senior executives.
5. At-Will Employment. Your employment with the Company shall, at all times, be on an
“at-will” basis. This means that your employment is not for a fixed term or definite period.
Rather, your employment can be terminated at any time, for any or no reason, with or
without cause or notice, and you may resign at any time with or without reason, subject to
any notice you are required to provide pursuant to the terms of the Fair Competition
Agreement between you and the Company. The at-will nature of the employment
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101985141v2
relationship cannot be changed except in a separate, individualized, written agreement
signed by you and the Company.
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
6. Termination. In the event your employment with the Company terminates for any reason,
the Company will pay you (i) unpaid base salary and earned but unpaid Annual Bonus
through the termination date, payable in accordance with the Company’s payroll practices,
(ii) unreimbursed business expenses, payable in accordance with and subject to the terms
of the Company’s expense reimbursement policies and (iii) any vested non-forfeitable
amounts owing or accrued as of the termination date under the Company’s benefit plans or
programs in which you participated (collectively, the “Accrued Benefits”).
Without otherwise limiting the “at-will” nature of your employment, in the event your
employment is terminated at any time by the Company without “Cause” (as defined below)
or you resign for “Good Reason” (as defined below), then the Company shall provide you
the following payments and benefits (the “Severance Benefits”): (1) an amount (the “Cash
Severance”) equal to 1.5 times the sum of your then-current base salary plus your target
Annual Bonus, payable in substantially equal installments over the 18-month period
following the date of your termination (the “Severance Period”); and (2) provided you
timely elect and remain eligible for coverage pursuant to Part 6 of Title I of ERISA, or
similar state law (collectively, “COBRA”), payment or reimbursement to you of an amount
equal to the full monthly premium for COBRA continuation coverage under the
Company’s medical plans as in effect on the date of your termination with respect to the
level of coverage in effect for you and your eligible depends as of the date of your
termination, on a monthly basis on the first business day of the calendar month next
following the calendar month in which the applicable COBRA premiums were paid, with
respect to the period from the date of your termination until the earlier of (x) 18 months
following such date and (y) the date you become eligible for continued coverage under a
subsequent employer’s health plan.
Notwithstanding anything herein to the contrary, you will not be entitled to receive the
Severance Benefits or any other payment or benefit triggered upon termination of
employment (other than the Accrued Benefits) unless, within 30 days following the
termination date, you, or in the event of your death or Disability, your legal representatives,
have executed and not revoked a general release of claims in a standard form utilized by
the Company (the “Release”). The Severance Benefits shall be paid or commence on the
first payroll period following the date the Release becomes effective (the “Payment Date”),
provided that if the period during which you may deliver the Release spans two calendar
years, the Payment Date shall be no earlier than January 1 of the second calendar year.
For purposes of this offer letter, “Cause” shall mean: (i) a willful act of dishonesty by you
in connection with the performance of your duties as an employee; (ii) your conviction of,
indictment for, or plea of guilty or nolo contendere to, (x) a felony or (y) any other crime
involving fraud, embezzlement or moral turpitude or a material violation of federal or state
law that has had or is reasonably likely to have a detrimental effect on the Company’s
reputation or business; (iii) your gross misconduct in the performance of your duties as an
employee; (iv) your intentional or grossly negligent unauthorized use or disclosure of any
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101985141v2
Confidential Information or Intellectual Property (each as defined in the Fair Competition
Agreement); (v) your material breach of any obligations under any written agreement
between you and the Company, including, without limitation, the Fair Competition
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
Agreement, if such breach is not remedied by you within thirty (30) days after the Company
provides you with notice thereof; (vi) your material breach of any material Company policy
generally applicable to Company employees and communicated to you, including but not
limited to those relating to insider trading or sexual harassment, if such breach is not
remedied by you within thirty (30) days after the Company provides you with notice
thereof; or (vii) your willful refusal to follow the lawful directives of the Board or the
Company CEO, if such refusal is not remedied by you within thirty (30) days after the
Company provides you with notice thereof.
For purposes of this offer letter, “Good Reason” shall mean your resignation after one of
the following conditions initially has come into existence without your written consent: (i)
a relocation of your principal work location to a facility or a location more than 30 miles
from your principal work location on the Effective Date; (ii) a requirement that you report
to any officer of the Company other than the Company CEO; or (iii) a material diminution
in your base salary or target Annual Bonus opportunity. A resignation for Good Reason
will not be deemed to have occurred unless you give the Company written notice of the
condition within 90 days after the condition initially comes into existence, the Company
fails to remedy the condition within 30 days after receiving your written notice and you
actually resign your employment within 60 days following the expiration of the Company’s
cure period.
7. Fair Competition Agreement. As a material inducement for the Company to agree to enter
into an employment relationship with you on the terms set forth herein, you agree to
execute and comply with the Fair Competition Agreement attached hereto as Exhibit A.
8. Company Policies and Procedures. Your employment will be subject to the Company’s
standard policies and procedures (whether as currently existing or to be established in the
future), as they may be amended, changed or discontinued at any time and such other rules
and regulations as may be adopted or amended in the Company’s sole discretion.
9. Section 409A. The Severance Benefits and other payments under this offer letter triggered
on a termination of employment shall begin only after the date of your “separation from
service” (determined as set forth below), which occurs on or after date of the termination
of your employment, and shall be subject to the provisions of this Section 9. The intent of
the parties is that payments and benefits under this offer letter comply with, or are exempt
from, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and,
accordingly, to the maximum extent permitted, this offer letter shall be interpreted to be in
compliance therewith. For purposes of Section 409A, your right to receive any installment
payments pursuant to this offer letter will be treated as a right to receive a series of separate
payments. Neither the Company nor you shall have the right to accelerate or defer the
delivery of any such payments except to the extent specifically permitted or required by
Section 409A.
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101985141v2
If, as of the date of your “separation from service” from the Company, you are not a
“specified employee” (within the meaning of Section 409A), then each installment of the
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
severance payments shall be made on the dates and terms set forth in this offer letter.
If, as of the date of your “separation from service” from the Company, you are a “specified
employee” (within the meaning of Section 409A), then: (i) each installment of the
Severance Benefits that, in accordance with the dates and terms set forth in this offer letter,
will in all circumstances, regardless of when the “separation from service” occurs, be paid
within the short-term deferral period (as defined in Section 409A) shall be treated as a
“short-term deferral” within the meaning of Treasury Regulation Section 1.409A-l(b)(4) to
the maximum extent permissible under Section 409A and shall be paid on the dates and
terms set forth in this offer letter; and (ii) each installment of the Severance Benefits that
is not described in clause (i) above and that would, absent this clause (ii), be paid within
the six-month period following your “separation from service” from the Company shall
not be paid until the date that is six months and one day after such “separation from service”
(or, if earlier, your death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that is six
months and one day following your “separation from service” and any subsequent
installments, if any, being paid in accordance with the dates and terms set forth in this offer
letter; provided, however, that the preceding provisions of this clause (ii) shall not apply to
any installment of the Severance Benefits if and to the maximum extent that that such
installment is deemed to be paid under a separation pay plan that does not provide for a
deferral of compensation by reason of the application of Treasury Regulation 1.409A-
l(b)(9)(iii) (relating to separation pay upon an involuntary separation from service). Any
installments that qualify for the exception under Treasury Regulation Section 1.409A-
l(b)(9)(iii) must be paid no later than the last day of your second taxable year following the
taxable year in which the “separation from service” occurs.
The determination of whether and when your “separation from service” from the Company
has occurred shall be made in a manner consistent with, and based on the presumptions set
forth in, Treasury Regulation Section l.409A-1(h). Solely for purposes of this paragraph,
“Company” shall include all persons with whom the Company would be considered a
single employer under Section 414(b) and 414(c) of the Code.
All reimbursements and in-kind benefits provided under this offer letter shall be made or
provided in accordance with the requirements of Section 409A to the extent that such
reimbursements or in-kind benefits are subject to Section 409A, including, where
applicable, the requirements that (1) any reimbursement is for expenses incurred during
your lifetime (or during a shorter period of time specified in this offer letter), (2) the amount
of expenses eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year, (3) the reimbursement of any eligible
expense will be made on or before the last day of the calendar year following the year in
which the expense is incurred, and (4) the right to reimbursement is not subject to set off
or liquidation or exchange for any other benefit.
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101985141v2
Notwithstanding any other provision of this offer letter, the Company makes no
representation or warranty and shall have no liability to you or to any other person if any
provisions of this offer letter are determined to constitute deferred compensation subject to
FILED DATE: 6/20/2024 1:53 PM 2024CH05798
Section 409A but do not satisfy an exemption from, or the conditions of, that section. If
either you or the Company reasonably determines that any payment to you will violate
Section 409A, you and the Company agree to use reasonable best efforts to restructure the
payment in a manner that is either exempt from or compliant with Section 409A to the
extent that the restructuring is consistent with the original economic intent of the
parties. You and the Company agree to execute any and all amendments to this offer letter
(or any other applicable agreement) that are consistent with the original economic intent of
the parties and promote compliance with the distribution provisions of Section 409A in an
effort to avoid or minimize, to the extent allowable by law, the tax (and any interest or
penalties thereon) associated with Section 409A. If it is determined that a payment to you
was (or may be) made in violation of Section 409A, the Company will cooperate, to the
extent commercially reasonable, with any effort by you to mitigate the tax consequences
of such violation, including cooperation with your participation in any IRS voluntary
compliance program or other correction procedure under Section 409A that may be
available to you; provided, that such correction is consistent with the commercial intent of
the parties hereunder; provided, further, that in no event shall the Company be obligated to
incur any material cost in connection with its obligations under this sentence.
10. Section 280G. Notwithstanding any other provision of this letter or any other plan,
arrangement or agreement to the contrary, if any of the payments or benefits provided or
to be provided by the Company, Ci