Exhibit 10.3
EMPLOYMENT AGREEMENT
Agreement made as of June 14, 1999 between Xxxxx X. Xxxxxxx, residing at
000 Xxxxxxx, Xxx. #000 in the City of Redondo Beach, State of California,
referred to in this agreement as DPW, and DeskTalk Systems, Inc. (DSI), a
corporation organized and existing under the laws of the State of California
with its principal place of business located at 00000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx X-000, Xxxx of Torrance, State of California, referred to in this
agreement as DSI.
In consideration of the mutual covenants and promises of the parties, DSI
and DPW agree as follows:
Section I
Employment
DPW accepts employment by DSI as President and Chief Executive Officer,
reporting to the Chairman of the Board of Directors, subject to the terms and
conditions of this agreement. This agreement is for personal services and is
non-assignable.
Section II
Term of Employment
This agreement and the employment shall commence on June 14, 1999, and
continue for a period of two years. The term shall automatically be extended
for an additional period of one year at the end of the Term, unless not less
than ninety days prior to the expiration of the term of this Agreement, either
party notifies the other party in writing that it intends not to renew the
Agreement.
Section III
Duties of DPW
DPW will serve DSI faithfully and to the best of DPW's ability under the
board of directors of DSI. DPW shall devote DPW's entire productive time,
energy, ability, and attention to the performance of the duties agreed on to be
performed by DPW throughout the term of this employment agreement. DPW shall
not directly or indirectly render any services of a business, commercial, or
professional nature to any person or organization other than DSI whether for
compensation or otherwise, during the term of this agreement. DPW use the DSI
Headquarters facility as his base of operation.
Notwithstanding anything to the contrary, Section III shall not prohibit
DPW from serving and being compensated, upon the approval of DSI, as a Director,
Advisor and/or Consultant for any other entity that is not, directly or
indirectly, competitive with DSI, so
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long as such service does not in any way impact DPW's abilities to serve DSI to
the best of DPW's ability.
Section IV
Compensation
Base. DPW's base salary shall be at a rate of Two Hundred Thousand Dollars
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($200,000) annually, payable according to DSI's standard employee wage payment
policy. Said policy may be changed from time to time in the discretion of DSI.
Said base salary may be reviewed for the purpose of increasing same on an annual
basis according to Desktalk policy or at any other time during the Term of this
Agreement at the discretion of the Board of Directors.
Incentive Compensation. DPW shall be shall be eligible for incentive
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compensation of sixty-five thousand dollars ($65,000) per year. Incentive
compensation shall be paid, if earned, on a quarterly basis. Incentive
compensation shall be based on financial goals as agreed by the Board of
Directors.
Stock Options. During the initial term only, DPW may be granted, at the
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discretion of the Board of Directors, a stock option from DSI for one hundred
and ninety five thousand (195,000) shares of common stock at $2.00 per share
pursuant to the normal terms and conditions found in DSI's standard Incentive
Stock Option Plans with the exception of the following special terms and
conditions:
(i) In the case of a Change of Control (as defined below) and DPW is
subsequently terminated without cause then all such options shall vest
immediately.
(ii) In the case of a Change of Control (as defined below) and DPW's base
pay is subsequently decreased by more than twenty percent (20%) then fifty
percent (50%) of the remaining unvested options shall vest immediately, and the
remainder of the option shall vest pursuant to its own terms.
(iii) A Change of Control shall be construed to have occurred when: an
individual, firm, corporation, partnership or other entity (a "Controlling
Person" defined not to include any shareholder at the time of the granting of
this Option) who becomes the beneficial owner of fifty percent (50%) or more of
the shares of common stock then outstanding of the Company. Notwithstanding the
above, no Change of Control shall occur by reason of an Initial Public Offering.
Section V
DPW's Service as Director
DPW consents to serve as a director of DSI, if elected or appointed,
without further compensation.
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Section VI
Termination
Termination by DPW. DPW may terminate this agreement at any time with
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thirty days advance notice. So long as DPW continues to perform his duties
through the date of termination, DSI agrees to continue to pay DPW pursuant to
the compensation as outlined above until the date of termination.
Termination by DSI. DSI may terminate this agreement at any time without
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cause. If DSI terminates the agreement without cause, DSI shall pay DPW, in one
lump sum or as it otherwise would come due, six months base salary. In addition,
for a period of six months from the date of termination, or until DPW receives
health benefits from another, DSI shall continue to pay all health benefits
available to DPW prior to DPW's termination. DSI may terminate this agreement
for cause. If DSI terminates this agreement for cause, DSI shall owe no money or
benefits to DPW. The terms "for cause" shall include, but not be limited to,
conviction of a felony, theft or embezzlement from DSI, and like items.
If DSI becomes obligations to DPW pursuant to Article VI(b), DPW shall make
reasonable efforts to mitigate damages by seeking other comparable employment,
although he will, DPW take any position that would require him to breach any
agreement with DSI. To the extent that DPW shall receive compensation, benefits
or service credit for benefits from such other employment, the payments to be
made and the benefits provided by DSI under this section shall be
correspondingly reduced. For purposes of this section, DPW shall be considered
employed if he owns his own business, contracts his services or in any way
becomes employed. DPW shall have an affirmative duty to give notice to DSI of
any new employment within five (5) business days of such employment.
Section VII
Return of DSI's Property
On termination of this agreement, regardless of how termination is
effected, or whenever requested by DSI, DPW shall immediately return to DSI all
of DSI's property, including without limitation all computer equipment issued,
customer lists and prospect lists, used in rendering services or otherwise, that
is in DPW's possession or under DPW's control.
Section VIII
Use of Confidential Information
It is understood between the parties that, during the term of the
employment, DPW will be dealing with the confidential information that DSI's
property used in the course of its business. All documents that DPW prepares, or
confidential information that might be given to DPW in the course of the
employment, are the exclusive property of DSI and shall remain in DSI's
possession. DPW shall treat as confidential any information obtained by DPW
concerning techniques, methods, systems, prices, plans or policies. DPW agrees
that DPW will not during DPW's employment, or at any time subsequently, disclose
to anyone, directly or indirectly, any of such confidential information, or use
them for any reason or purpose whatsoever other than in the course of his
employment with DSI.
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Section IX
Other Benefits
DPW shall be entitled to all benefits normally afforded regular employees
of DSI.
Section X
Non-Compete
(a) If the Agreement is not renewed by DPW, DPW voluntarily terminates his
employment with DSI, or DPW is terminated for cause then DPW agrees that for a
period of two years from the date of termination of this Agreement DPW shall
not:
(i) work for, perform work for, own in whole or in part, manage,
operate, control or participate in the ownership, management, operation or
control of, or provide consulting or advisory services to, any individual,
partnership, firm, corporation or institution engaged in Competitive Business
(as defined below), directly or indirectly, within any Restricted Area (as
defined below);
(ii) employ or retain, or offer to employ or retained in any capacity
by DSI at any time during DPW's employ by DSI or during the non-compete term, or
assist another person or entity in accomplishing the same. Notwithstanding the
above, this paragraph shall not apply to any person that has severed their
relationship with DSI for at least four months.
(b) If the Agreement is not renewed by DSI, or DSI terminates this
Agreement without cause then in consideration for any termination benefits paid
by DSI to DPW, DPW agrees that for a period of one year from the date of
termination of this Agreement DPW shall not:
(i) work for, perform work for, own in whole or in part, manage,
operate, control or participate in the ownership, management, operation or
control of, or provide consulting or advisory services to, any individual,
partnership, firm, corporation or institution engaged in Competitive Business
(as defined below), directly or indirectly, within any Restricted Area (as
defined below);
(ii) employ or retain, or offer to employ or retain, any person in any
capacity, where such person was employed or retained in any capacity by DSI at
any time during DPW's employ by DSI or during the non-compete term, or assist
another person or entity in accomplishing the same. Notwithstanding the above,
this paragraph shall not apply to any person that has severed their relationship
with DSI for at least four months.
(c) "Competitive Business" shall mean INS, NextPoint, InfoVista,
CrossKeys, Concord Communications, and Quallaby, provided, however, that with
sixty (60) days prior notice DSI may amend the term Competitive Business from
time to time to add business or enterprises that: (i) provides, or anticipates
providing, software or services for
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historical network performance monitoring and (ii) are clear and direct
competitors of the Company.
(d) "Restricted Area" shall mean any geographic area in which the DSI is
engaged in business, or has a business plan under which it planned to engage in
business, at the time DPW's employment is terminated. Any action performed
outside of a Restricted Area which is intended to or would reasonably be
expected to have an economic impact within a Restricted Area, shall be deemed to
have been committed within a Restricted Area.
Section X
General Provisions
Complete Agreement. The parties agree that this agreement is the complete
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and exclusive statement of the agreement between the parties, which supersedes
and merges all prior proposals, understandings and all other agreements, oral or
written, between the parties relating to this agreement, excepting the
Confidentiality Agreement and Option Agreement previously executed by DPW.
Representation by Counsel. DPW has been advised to seek legal counsel in
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the review, and prior to, execution of this agreement. DPW understands that
this agreement has been drafted by the General Counsel of the Company, and that
the General Counsel of the Company works solely for and owes his duty of loyalty
strictly to the Company.
Amendment. This agreement may not be modified, altered or amended except
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by written instrument duly executed by the authorized representatives of each of
the parties.
Waiver. The waiver or failure of either party to exercise in any respect
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any right provided for in this agreement shall not be deemed a waiver of any
further right under this agreement.
Severability. If any provision of this agreement is invalid, illegal or
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unenforceable under any applicable statute or rule of law, it is to that extent
to be deemed omitted. The remainder of the agreement shall be valid and
enforceable to the maximum extent possible.
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Governing Law and Jurisdiction. This agreement and performance hereunder
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shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties have executed this agreement.
Dated as of April 16, 1999
DESKTALK SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Chairman Xxxxx X. Xxxxxxx
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