Key Employee Agreement - VERITAS Software Corp. and and Kenneth E. Lonchar
KEY EMPLOYEE AGREEMENT
THIS KEY EMPLOYEE AGREEMENT, dated as of the 25th day of April, 1997, is
by and between VERITAS Software Corporation, a Delaware corporation ('VERITAS
DELAWARE'), VERITAS Software Corporation, a California corporation ('VERITAS
CALIFORNIA') (VERITAS Delaware and VERITAS California may be referred to herein
collectively as the 'COMPANY') and Kenneth E. Lonchar (the 'EMPLOYEE').
A. Employee is employed as an officer of OpenVision Technologies, Inc.
B. OpenVision, VERITAS Delaware and VERITAS California have entered into
an Agreement and Plan of Reorganization dated as of January 13, 1997 (the
'REORGANIZATION AGREEMENT'), pursuant to which a wholly-owned subsidiary of
VERITAS Delaware will be merged with and into OpenVision; and
C. The Company and Employee wish to enter into this Key Employee
Agreement relating to Employee's contemplated employment with the Company.
NOW, THEREFORE, IT IS HEREBY AGREED by and between the parties hereto as
(a) Duties. The Company agrees to employ Employee as Vice
President and Chief Financial Officer of the Company, and Employee agrees to
perform such reasonable responsibilities and duties as may be required of him by
the Company. During the Employment Term (as defined in subsection (b) below),
Employee shall carry out his duties and responsibilities hereunder in a diligent
and competent manner and shall devote his full business time, attention and
(b) Term. The term of Employee's employment under this Agreement
(the 'EMPLOYMENT TERM') shall commence on the Effective Time (as defined in the
Reorganization Agreement) and shall terminate on the first anniversary of the
Effective Time (the 'FIRST ANNIVERSARY'). At the end of the Employment Term,
Employee' s employment with the Company shall become 'at-will,' as defined under
(c) Place of Employment. During the Employment Term, Employee
shall render his services at the principal executive offices of the Company.
Employee shall do such traveling as shall be reasonably necessary in connection
with his duties and responsibilities hereunder; provided, however, that Employee
shall be reimbursed for all reasonable expenses.
2. COMPENSATION AND BENEFITS.
(a) Base Compensation. The Company shall pay Employee as
compensation for his services a base salary at the annualized rate of $172,000,
along with such performance bonus amounts as the Chief Executive Officer or
Board of Directors of the Company (the 'Board') shall authorize, in its
discretion, from time to time. Such salary shall be reviewed at least annually
and shall be increased from time to time subject to accomplishment of such
performance and contribution goals and objectives as may be established from
time to time by the Board. Such salary shall be subject to applicable tax
withholding and shall be paid periodically in accordance with normal Company
payroll practices. The annual compensation (excluding bonus amounts) specified
in this Section 2(a), together with any increases in such compensation that the
Board may grant from time to time, is referred to in this Agreement as 'BASE
(b) Employee Benefits. Employee shall be eligible to participate
in Employee benefit plans and executive compensation programs maintained by the
Company applicable to other key executives of the Company, including (without
limitation) retirement plans, savings or profit-sharing plans, deferred
compensation plans, supplemental retirement or excess-benefit plans, stock
option, incentive or other bonus plans, life, disability, health, accident and
other insurance programs, paid vacations, and similar plans or programs, subject
in each case to the generally applicable terms and conditions of the plan or
program in question and to the determination of any committee administering such
plan or program.
3. SEVERANCE PAYMENTS.
(a) Termination Prior to First Anniversary. If, prior to the
First Anniversary, Employee's employment terminates as a result of an
Involuntary Termination, then Employee shall receive the following severance
benefits from the Company:
(i) Severance Payment. A cash payment in an amount
equal to the sum of (A) fifty percent (50%) of Employee's Base Compensation, (B)
any unpaid quarterly bonuses earned by Employee in a previous quarter and (C)
50% of Employee' s on-target bonus for the year in which such termination
(ii) Continued Employee Benefits. Health, dental and
life insurance coverage at the same level of coverage and with the same
percentage of Company-paid coverage as was provided to Employee immediately
prior to the Involuntary Termination (the 'COMPANY-PAID COVERAGE'). If such
coverage included Employee' s dependents immediately prior to the Involuntary
Termination, such dependents shall also be covered at Company expense.
Company-Paid Coverage shall continue until the earlier of (i) six months from
the date of termination or (ii) the date that Employee and his dependents become
covered under another employer's group health, dental or life insurance plans
that provide Employee and his dependents with comparable benefits and levels of
coverage. For purposes of Title X of the Consolidated Budget Reconciliation Act
of 1985 ('COBRA'), the date of the 'qualifying event' for Employee and his
dependents shall be the date upon which the Company-Paid Coverage terminates;
(iii) Consulting Relationship. The Company agrees to
retain Employee as a consultant to the Company for the period commencing with
the date of the Involuntary Termination and ending six months thereafter (the
'CONSULTING PERIOD'). During the Consulting Period, Employee shall report to the
president of the Company and shall be available to perform consulting services
for the Company; provided, however, that the Company shall not require Employee
to perform services for more than thirty-two (32) hours in any one month during
the Consulting Period. All stock options and restricted stock held by Employee
shall continue to vest through the Consulting Period, and all such stock options
shall remain exercisable for three months following the Consulting Period. Any
incentive stock options held by Employee shall automatically convert into
nonstatutory stock options three months and one day following the date of the
Involuntary Termination, to the extent required by law.
(b) Other Termination. In the event: (i) Employee's employment
terminates by reason of Employee's voluntary resignation not resulting from an
Involuntary Termination; or (ii) the Company terminates Employee's employment
after the First Anniversary; Employee shall not be entitled to receive any
severance under Section 3(a) hereof or any other benefits except for those (if
any) as may then be established under the Company's then-existing severance and
benefits plans and policies at the time of such termination.
4. DEFINITIONS. As used herein, the term
(a) Involuntary Termination. 'INVOLUNTARY TERMINATION' shall mean
(i) without Employee's express written consent, the significant reduction of
Employee's duties, authority or responsibilities, relative to Employee's duties,
authority or responsibilities as in effect immediately prior to such reduction,
or the assignment to Employee of such reduced duties, authority or
responsibilities; (ii) without Employee's express written consent, a substantial
reduction, without good business reasons, of the facilities and perquisites
(including office space and location) available to Employee immediately prior to
such reduction; (iii) a reduction by the Company in the base salary of Employee
as in effect immediately prior to such reduction; (iv) a material reduction by
the Company in the kind or level of employee benefits, including bonuses, to
which Employee was entitled immediately prior to such reduction with the result
that Employee's overall benefits package is significantly reduced; (v) the
relocation of Employee to a facility or a location more than fifty (50) miles
from Employee's then present location, without Employee's express written
consent; (vi) any purported termination of Employee by the Company; (vii) the
failure of the Company to obtain the assumption of this agreement by any
successors contemplated in Section 6(a) below; or (viii) any act or set of facts
or circumstances that would, under California case law or statute, constitute a
constructive termination of Employee.
5. NOTICES. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing to both parties and shall be
deemed given on the date of delivery, if delivered, or three days after mailing,
if mailed first-class mail, postage prepaid, (i) if to Employee, at the home
address that he most recently communicated to the Company in writing; and (ii)
if to the Company, at the Company's principal executive offices to the Chief
Executive Officer's attention; or (iii) to such other address as any party
hereto may designate by notice given as herein provided.
(a) Company 's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
'COMPANY' shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
6(a) or which becomes bound by the terms of this Agreement by operation of law.
(b) Employee 's Successors. The terms of this Agreement and all
rights of Employee hereunder shall inure to the benefit of, and be enforceable
by, Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
7. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California as applied to agreements entered into and performed within California
solely by residents of that state.
8. NO DUTY TO MITIGATE. Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement, nor shall any such payment
be reduced by any earnings that Employee may receive from any other source.
9. SEPARABILITY. In the event that any provision or provisions of this
Agreement is held to be invalid or unenforceable by any court of law or
otherwise, the remaining provisions of this Agreement shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
parts had not been included therein.
10. ENTIRE AGREEMENT. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter hereof and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration or modification of any of the provisions of this Agreement shall be
binding unless in writing and signed by duly authorized representatives of the
11. AMENDMENTS. This Agreement shall not be changed or modified in whole
or in part except by an instrument in writing signed by each party hereto.
12. MERGER. In the event of a termination of the Reorganization
Agreement pursuant to Section 9 thereof, the parties' obligations hereunder
shall terminate effective as of the effective date of the termination of the
13. ATTORNEY FEES, COSTS AND EXPENSES. The Company shall promptly
reimburse Employee, on a monthly basis, for the reasonable attorney fees, costs
and expenses incurred by Employee in connection with any action brought by
Employee to enforce his rights hereunder. In the event Employee is not the
prevailing party, determined without regard to. whether or not the action
results in a final judgment, Employee shall repay such reimbursements.
14. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
15. EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Key Employee
Agreement as of the date first written above.
VERITAS SOFTWARE CORPORATION,
A DELAWARE CORPORATION
/s/ Mark Leslie
Signature of Authorized Signatory
Print Name and Title
VERITAS SOFTWARE CORPORATION,
A DELAWARE CORPORATION
/s/ Mark Leslie
Signature of Authorized Signatory
Print Name and Title
/s/ Kenneth Lonchar
Kenneth E. Lonchar