November 16, 2000
Gary L. Bloom
EMPLOYMENT AGREEMENT
Dear Gary:
On behalf of the Board of Directors of Veritas Software Corporation ("Veritas"),
I am pleased to offer you the position of President and Chief Executive Officer
of Veritas on the terms set forth below.
1) Position. You will be employed by Veritas as its President and Chief
Executive Officer commencing upon the date specified at the end of this
letter below the signature line (the "Commencement Date") and continuing
thereafter until termination pursuant to Section 6. You will have overall
responsibility for the management of Veritas and will report directly to
its Board of Directors. During your term of employment, you will also be
appointed to the Board of Directors. You will be expected to devote your
full working time and attention to the business of Veritas, and you will
not render services to any other business without the prior approval of
the Board of Directors or, directly or indirectly, engage or participate
in any business that is competitive in any manner with the business of
Veritas, except for current board memberships with AppWorx, Virata,
Mediasnap, and current advisory board memberships for Diamondhead
Ventures, Arcot, and the President's Advisory Council for Cal Poly San
Luis Obispo. You will also be expected to comply with and be bound by the
Company's operating policies, procedures and practices that are from time
to time in effect during the term of your employment.
2) Cash Compensation. Your annual base salary from the Commencement Date
through December 31, 2001 will be $1,000,000, and your bonus for 2001
will be targeted at $800,000 for a total target annual compensation of
$1,800,000. In subsequent years of employment the Compensation Committee
of the Board of Directors, at its own discretion, will determine your
compensation.
a) Base Salary. Your base annual salary will be payable in accordance
with Veritas' normal payroll practices with such payroll
deductions and withholdings as are required by law. Your base
salary will be reviewed on an annual basis by the Compensation
Committee of the Board of Directors and may be increased from time
to time, in the discretion of the Compensation Committee.
b) Bonus. You will be eligible to receive a target bonus payable
based on Veritas' EPS Bonus Plan for the year beginning January 1,
2001, a copy of which is attached to this letter as Exhibit A,
titled "Veritas 2001 Chief Executive Compensation Plan".
3) Vacation: It is understood that after commencing employment for Veritas
for one week you will be taking four weeks of vacation, such vacation
days to be in addition to any vacation days that are earned in the normal
course of employment. Further, during the first two years of employment,
you will be eligible for three weeks of vacation annually.
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4) Other Benefits. You will be eligible for the normal health insurance,
401(k), employee stock purchase plan and other benefits offered to all
Veritas senior executives of similar rank and status.
5) Stock Options. Within 30 days of the Commencement Date, the Compensation
Committee of the Board of Directors shall grant you incentive stock
options (to the maximum allowed under the IRS regulations) and
nonqualified stock options (for the balance) to purchase a total of
2,500,000 shares of Veritas common stock at an exercise price equal to
the fair market value of Veritas common stock on the date of grant
("Initial Option Price").
a) These options will vest and become exercisable over a four-year
period, in 48 equal monthly installments. Except as otherwise
indicated in this agreement, the vested portion of such options
may be exercised at any time until the earlier of 90 days after
the termination of your employment or ten years after the grant of
such options. The unvested shares may be exercised early
coincident with entering into a company repurchase agreement
mirroring your vesting schedule. You should consult a tax advisor
concerning your income tax consequences before exercising any of
the options.
b) Notwithstanding any other provision of this Section 5 to the
contrary, upon "Involuntary Termination," "Termination without
Cause," or "Termination for Death or Disability," a portion of the
unvested options shall immediately vest as provided in Section 8
below.
c) Veritas shall register the shares issuable under the option on a
Form S-8 registration statement and shall keep such registration
statement in effect for the entire period the options remain
outstanding.
d) In order to assure the consistency of the goals of its executives
with its shareholders, Veritas is committed to providing
substantial stock option incentive to its executives. During your
first year of employment with Veritas, in the event that your
initial stock options are priced materially above the market (that
your options are "under water"), the Veritas board of directors
agrees to meet, to deliberate, and, if and as it deems
appropriate, to grant additional options.
6) Employment and Termination. Your employment with Veritas will be at-will
and may be terminated by you or by Veritas at any time for any reason as
follows:
a) You may terminate your employment upon written notice to the Board
of Directors at any time for "Good Reason," as defined below (an
"Involuntary Termination");
b) You may terminate your employment upon written notice to the Board
of Directors at any time in your discretion without Good Reason
("Voluntary Termination");
c) Veritas may terminate your employment upon written notice to you
at any time following a determination by two-thirds (2/3) vote of
the entire Board of Directors that there is "Cause," as defined
below, for such termination ("Termination for Cause");
d) Veritas may terminate your employment upon written notice to you
at any time in the sole discretion of the Board of Directors
without a determination that there is Cause for such termination
("Termination without Cause");
e) Your employment will automatically terminate upon your death or
upon your disability as determined by the Board of Directors
("Termination for Death or Disability"); provided that
"disability" shall mean your complete inability to perform your
job responsibilities for a period of 180 consecutive days or 180
days in the aggregate in any 12-month period.
7) Definitions. As used in this agreement, the following terms have the
following meanings:
a) "Good Reason" means (i) a material reduction in your duties that
is inconsistent with your position as President and Chief
Executive Officer of Veritas or a change in your reporting
relationship such
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that you no longer report directly to the Board of Directors; (ii)
your no longer being President and Chief Executive Officer of
Veritas or, in the case of a Change in Control, of the surviving
entity or acquiror that results from any Change in Control; (iii)
any reduction in your base annual salary or target quarterly or
annual bonus (other than in connection with a general decrease in
the salary or target bonuses for all officers of Veritas) without
your consent; or (iv) material breach by Veritas of any of its
obligations hereunder after providing Veritas with written notice
and an opportunity to cure within seven days; (v) a requirement by
Veritas that you relocate your principal office to a facility more
than 50 miles from Veritas' current headquarters; or (vi) failure
of any successor to assume this agreement pursuant to Section
14(d) below.
b) "Cause" means (i) gross negligence or willful misconduct in the
performance of your duties to Veritas (other than as a result of a
disability) that has resulted or is likely to result in
substantial and material damage to Veritas, after a written demand
for substantial performance is delivered to you by the Board of
Directors which specifically identifies the manner in which the
Board believes you have not substantially performed your duties
and you have been provided with a reasonable opportunity, of not
less than 60 days, to cure any alleged gross negligence or willful
misconduct; (ii) commission of any act of fraud with respect to
Veritas; or (iii) conviction of a felony or a crime involving
moral turpitude either of which causes material harm to the
business and affairs of Veritas. No act or failure to act by you
shall be considered "willful" if done or omitted by you in good
faith with reasonable belief that your action or omission was in
the best interests of Veritas.
c) "Change in Control" means (i) The acquisition (other than from the
Company) by any person, entity or "group", within the meaning of
section 13(d) (3) or 14 (d) (2) of the Securities and Exchange Act
of 1934 (the "Exchange Act"), (excluding, for this purpose,
Veritas or its subsidiaries, (or any employee benefit plan of
Veritas or its subsidiaries which acquires beneficial ownership of
voting securities of Veritas) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50%
or more of either the then outstanding shares of common stock or
the combined voting power of the Veritas' then outstanding voting
securities entitled to vote generally in the election of
directors; or (ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by Veritas' shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of the office
is in connection with an actual or threatened election contest
relating to the election of the directors of Veritas, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) shall be, for the purposes of this Agreement,
considered as though such person were a member of the Incumbent
Board; or (iii) Approval of the stockholders of Veritas of a
reorganization, merger or consolidation, in each case, with
respect to which persons who were the stockholders of Veritas
immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than 50% of the combined
voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's
then outstanding voting securities, or a liquidation or
dissolution of Veritas or of the sale of all or substantially all
of the assets of Veritas.
8) Separation Benefits. Upon termination of your employment with Veritas for
any reason, you will receive payment for all unpaid salary and vacation
accrued to the date of your termination of employment; and your benefits
will be continued under Veritas' then existing benefit plans and policies
for so long as provided under the terms of such plans and policies and as
required by applicable law. Under certain circumstances, subject to your
execution of a termination and general release agreement, you will also
be entitled to receive severance benefits as set forth below. Veritas'
termination and general release agreement will contain provisions
specifying that you will not compete with Veritas while you are receiving
such severance benefits, nor will you solicit employees for a period of
two years after any final payment, that neither you nor Veritas shall
disparage the other party, and that neither party shall have claims that
survive that agreement.
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a) In the event of your Voluntary Termination or Termination for
Cause, you will not be entitled to any cash severance benefits or
additional vesting of shares of options.
b) In the event of your Involuntary Termination or Termination
without Cause within one year of the Commencement Date, you will
be entitled to
i) a severance payment equal to twelve months of your current
annual base salary plus full target bonus, payable over
twelve months in accordance with Veritas' normal payroll
practices with such payroll deductions and withholdings as
are required by law, provided, that you provide Veritas
with consulting services during such period after the date
of termination (the "CONSULTING SERVICES"); and
ii) accelerated vesting and exercisability of that portion of
your outstanding unvested options to purchase Veritas
common stock that would have vested within two years from
the date of the Involuntary Termination or Termination
without Cause, with all vested options exercisable for a
period of 90 days from the later of:
(1) the date of your Involuntary Termination or
Termination without Cause; or
(2) the date you cease providing Consulting Services to
Veritas.
c) In the event of your Involuntary Termination or Termination
without Cause within two years of the Commencement Date, you will
be entitled to:
i) a severance payment equal to six months of your current
annual base salary plus one-half of your target bonus,
payable over twelve months in accordance with Veritas's
normal payroll practices with such payroll deductions and
withholdings as are required by law, provided, that you
provide Veritas with Consulting Services; and
ii) accelerated vesting and exercisability of that portion of
your outstanding unvested options to purchase Veritas
common stock that would have vested within one year from
the Involuntary Termination or Termination without Cause,
with all vested options exercisable for a period of 90 days
from the later of:
(1) the date of your Involuntary Termination or
Termination without Cause; or
(2) the date you cease providing Consulting Services to
Veritas.
d) In the event of your Involuntary Termination or Termination
without Cause on or after two years of the Commencement Date, you
will not be entitled to any severance payments or accelerated
vesting of your outstanding unvested options.
e) In the event of your Involuntary Termination or Termination
without Cause within one year of a Change in Control, provided the
change of control occurs within two years of the Commencement
Date, you will be entitled to the following: a lump sum payment
equal to twelve months of your current annual base salary and full
target bonus (less applicable deductions and withholding) payable
within 30 days after the date of termination; and accelerated
vesting of fifty percent (50%) of your outstanding unvested
options to purchase Veritas common stock, with all vested options
exercisable for a period of 90 days from the date of your
Involuntary Termination or Termination without Cause. This section
8.e shall survive for twelve months beyond the term noted in
Section 13.
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f) For the purpose of this agreement, Termination by Death or
Disability shall be treated as Involuntary Termination.
g) If your severance and other benefits provided for in this Section
8 constitute "parachute payments" within the meaning of Section
280G of the Code and, but for this subsection, would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue
Code, then your severance and other benefits under this Section 8
will be payable, at your election, either in full or in such
lesser amount as would result, after taking into account the
applicable federal, state and local income taxes and the excise
tax imposed by Section 4999, in your receipt on an after-tax basis
of the greatest amount of severance and other benefits.
h) No payments due you hereunder shall be subject to mitigation or
offset.
9) Indemnification Agreement. Upon your commencement of employment with
Veritas, Veritas will enter into its standard form of indemnification
agreement for officers and directors (which can be viewed in our most
recent published proxy statement) to indemnify you against certain
liabilities you may incur as an officer or director of Veritas.
10) Confidential Information and Invention Assignment Agreement. Upon your
commencement of employment with Veritas, you will be required to sign its
standard form of Employee Agreement, a copy of which is attached to this
letter as Exhibit B, to protect Veritas' confidential information and
intellectual property.
11) No Solicitation. During the term of your employment with Veritas and for
two years thereafter, you will not, on behalf of yourself or any third
party, solicit or attempt to induce any employee of Veritas to terminate
his or her employment with Veritas.
12) Arbitration. The parties agree that any dispute regarding the
interpretation or enforcement of this agreement shall be decided by
confidential, final and binding arbitration conducted by Judicial
Arbitration and Mediation Services ("JAMS") under the then existing JAMS
rules rather than by litigation in court, trial by jury, administrative
proceeding or in any other forum. The filing fees and arbitrator's fees
and costs in such arbitration will be borne by Veritas. The parties will
be entitled to reasonable discovery of essential matters as determined by
the arbitrator. In the arbitration, the parties will be entitled to all
remedies that would have been available if the matter were litigated in a
court of law.
13) Term. This agreement shall be in effect upon the signing by both parties,
and shall expire two years after the commencement date, at which time
your employment with Veritas will be treated no less favorably than the
policies in effect at the time for other senior executives of Veritas.
14) Miscellaneous.
a) Authority to Enter into Agreement. Veritas represents that Mark
Leslie, its Chairman of the Board, has due authority to execute
and deliver this agreement on behalf of Veritas.
b) Absence of Conflicts. You represent that upon the Commencement
Date your performance of your duties under this agreement will not
breach any other agreement as to which you are a party.
c) Attorneys Fees. If a legal action or other proceeding is brought
for enforcement of this agreement because of an alleged dispute,
breach, default, or misrepresentation in connection with any of
the provisions of this agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs incurred,
both before and after judgment, in addition to any other relief to
which they may be entitled.
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d) Successors. This agreement is binding on and may be enforced by
Veritas and its successors and assigns and is binding on and may
be enforced by you and your heirs and legal representatives. Any
successor to Veritas or substantially all of its business (whether
by purchase, merger, consolidation or otherwise) will in advance
assume in writing and be bound by all of Veritas's obligations
under this agreement.
e) Notices. Notices under this agreement must be in writing and will
be deemed to have been given when personally delivered or two days
after mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid. Mailed notices to you will be
addressed to you at the home address which you have most recently
communicated to Veritas in writing. Notices to Veritas will be
addressed to its General Counsel at Veritas's corporate
headquarters.
f) Waiver. No provision of this agreement will be modified or waived
except in writing signed by you and an officer of Veritas duly
authorized by its Board of Directors. No waiver by either party of
any breach of this agreement by the other party will be considered
a waiver of any other breach of this agreement.
g) Entire Agreement. This agreement, including the attached exhibits,
represents the entire agreement between us concerning the subject
matter of your employment by Veritas.
h) Governing Law. This agreement will be governed by the laws of the
State of California without reference to conflict of laws
provisions.
Gary, we are very pleased to extend this offer of employment to you and look
forward to your joining Veritas as its President and Chief Executive Officer.
This offer of employment is effective through November 17, 2000, after which it
will expire. Please indicate your acceptance of the terms of this agreement by
signing in the place indicated below.
Very truly yours,
/s/ Mark Leslie
---------------------------------
Mark Leslie, Chairman and CEO
VERITAS Software Corporation
ACCEPTED:
/s/ Gary L. Bloom November 17, 2000
---------------------------------
Gary L. Bloom
Commencement Date: November 17, 2000
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Exhibit A
VERITAS 2001 CHIEF EXECUTIVE OFFICER COMPENSATION PLAN
The 2001 CEO Annual Compensation Plan shall consist of two components, as
follows:
Employment Agreement - VERITAS Software Corp. and Gary L. Bloom
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