EXHIBIT 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated January 16, 2001, by and between WebTrends
Corporation, an Oregon corporation (the "Company"), NetIQ Corporation, a
Delaware corporation (the "Buyer"), and Xxxxxxx Xxxxxxx (the "Executive").
WHEREAS, Executive is currently serving as Chairman and Chief Executive
Officer of the Company;
WHEREAS, the Company, the Buyer and North Acquisition Corporation (the
"Merger Subsidiary") are simultaneously entering into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which the Merger Subsidiary will
merge with and into the Company (the "Merger"), with the Company constituting
the surviving corporation, and with the result that the Company will be a
wholly owned subsidiary of the Buyer;
WHEREAS, each of the Company, the Buyer and the Merger Subsidiary considers
it essential to its best interests and the best interests of its stockholders
to xxxxxx the continued employment of Executive by the Buyer from and after
the effective time of the Merger (the "Effective Time"); and
WHEREAS, Executive is willing so to continue his employment on the terms
hereinafter set forth in this agreement (the "Agreement");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. Term of Employment. Executive shall be employed by the Buyer for a
period (the "Employment Term") commencing at the Effective Time and ending on
the date that either the Executive or the Buyer terminates such Executive's
employment. Executive shall be an "at will" employee of Buyer. Notwithstanding
the foregoing, Executive shall continue to serve until the Effective Time as
an employee of the Company in the same capacity and in accordance with the
same terms and conditions as the date immediately preceding the date hereof.
2. Position.
(a) Executive shall serve as Chief Strategy Officer of the Buyer. In
such position, Executive shall have such duties and authority as shall be
set forth on Exhibit A hereto (the "Initial Duties").
(b) During the term of his employment hereunder, Executive will devote
substantially all of his business time and best efforts to the performance
of his duties hereunder and will not engage in any other business,
profession or occupation for compensation or otherwise which would conflict
with the rendition of such services either directly or indirectly, without
the prior written consent of the Board; provided, however, subject to
Section 12(b) below, nothing in this Section 2(b) shall preclude the
Executive from serving as a member of any board of directors on which he
serves as of the date of this Agreement and which has been disclosed to
Buyer, or as a member of any board of directors on which he may serve
during the term of this Agreement with the prior consent of the Chief
Executive Officer of Buyer in accordance with Buyer's standard policies
regarding such matters and from receiving compensation in connection
therewith.
3. Base Salary. The Buyer shall pay Executive an annual base salary of not
less than $200,000 (the "Base Salary") with the exact amount to be established
by the Buyer's Board of Directors that is commensurate with other similarly
situated executives of the Buyer, payable in regular installments in
accordance with the Buyer's usual payment practices. The Executive shall be
entitled to such increases in his Base Salary as may be determined from time
to time in the sole discretion of the Buyer.
4. Bonus. With respect to each fiscal year all or part of which is contained
in the Employment Term, Executive shall be eligible to receive, in addition to
his Base Salary, a bonus of not less than up to $100,000 (the "Bonus") for
services rendered during such fiscal year, which Bonus shall be determined and
shall be paid in accordance with the Buyer's past practice with respect to
other similarly situated executives of Buyer. The amount and form of such Bonus
shall be determined in the same manner used to determine the amount and form of
bonuses of similarly situated executives of Buyer.
5. Executive Benefits.
(a) Executive shall be provided employee benefits (including fringe
benefits, vacation, pension and profit sharing plan participation and life,
health, accident and disability insurance) (collectively "Executive
Benefits") on the same basis and on the same terms as those benefits are
generally made available to similarly situated executives of the Buyer.
(b) Concurrent with the Effective Time, Buyer and Executive will enter
into Buyer's standard Indemnification Agreement (the "Indemnification
Agreement") and Change of Control Severance Agreement the "Change of
Control Severance Agreement") that Buyer has entered into with its officers
substantially in the forms attached hereto as Exhibit B and Exhibit C,
respectively.
6. Grant of Option. Immediately prior to the Effective Time, the Company
shall grant to Executive an option to purchase 312,500 shares of the Company's
Common Stock pursuant to the terms and conditions of the Company's employee
stock option plan and standard option agreement in place as of the Effective
Time (the "Option"), which option shall be assumed by Buyer pursuant to the
Merger Agreement. The Option shall be subject to vesting as follows: 25% of the
shares subject to the option shall become vested on the first anniversary of
the Effective Time, 25% of the shares subject to the option shall become vested
on the second anniversary of the Effective Time, and 50% of the Shares subject
to the option shall become vested on the third anniversary of the Effective
Time, in each case subject to the Executive's continued employment with Buyer.
7. Business Expenses and Perquisites. Reasonable travel, entertainment and
other business expenses incurred by Executive in the performance of his duties
hereunder shall be reimbursed by the Buyer in accordance with Buyer policies
for similarly situated executives of Buyer.
8. Termination. In the event of termination of Executive's employment with
Buyer for any reason, Executive shall be entitled to receive his Base Salary,
Bonus and Executive Benefits earned through the date of termination as well as
that portion of the Option that is vested as of such date of termination.
Except as provided in Section 13(j), all other benefits due Executive following
Executive's termination of employment shall be determined in accordance with
the plans, policies and practices of Buyer. Executive's employment hereunder
shall terminate if Executive becomes physically or mentally incapacitated and
is thereafter unable for a period of six (6) consecutive months or for an
aggregate of six (6) months in any eighteen (18) consecutive month period to
perform his duties (such incapacity is hereinafter referred to as
"Disability").
9. Restrictions on Dispositions of Stock.
(a) Status as Affiliate and Insider. For so long as Executive is
employed by the Buyer in the position set forth in Section 2(a) and has the
Initial Duties, or, if the Executive's role at the Buyer changes, then for
so long as may be determined by Buyer's Board of Directors based upon the
criteria generally applied by it (i) Executive will be deemed an affiliate
of the Buyer, as that term is defined in Rule 144 under the Securities Act
of 1933 and (ii) sales, transfers or other dispositions of shares of the
Buyer's common stock by Executive will be subject to the restrictions on
trading by the Buyer's executive officers set forth in the Buyer's xxxxxxx
xxxxxxx policy (the "Xxxxxxx Xxxxxxx Policy"), a copy of which has been
furnished to Executive. Executive may establish a written plan of
distribution pursuant to Rule 10b5-1 of the Exchange Act of 1934 in order
to facilitate the sale of the Quarterly Allowance, as defined in Section
9(b) below, and to execute sales of Common Stock of Buyer in accordance
therewith (the "10b5-1 Agreement"). The 10b5-1 Agreement shall include
customary terms and shall provide (i) that the
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agent for the sale of shares shall generally seek to complete the sale of
as much of the Quarterly Allowance (as defined below) as practicable in the
agent's judgment within the first fifteen trading days from the opening of
the regular quarterly window under the Xxxxxxx Xxxxxxx Policy (the
"Preferred Trading Period"); (ii) that Buyer will not impose any blackouts
on Executive that would interfere with the Preferred Trading Period; (iii)
that no sales shall occur during the regular quarterly blackout period
under the Xxxxxxx Xxxxxxx Policy; and (iv) that the agent shall observe
other trading blackouts that may be applied by Buyer generally to its
executive officers, subject to the Preferred Trading Period.
(b) Additional Limitations on Dispositions. In addition to the
restrictions set forth in paragraph (a) and applicable laws, until the
earlier to occur of (i) the first anniversary of the Effective Time or (ii)
a Release Date, as defined below (the "Restricted Period"), Executive may
not (1) offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Buyer Common Stock or any securities
convertible into or exercisable or exchangeable for Buyer Common Stock or
(2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of Buyer
Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Buyer Common Stock or such other
securities, in cash or otherwise (collectively, a "Restricted
Transaction"), in any case relating to more than 250,000 shares of the
Buyer Common Stock (as adjusted for stock splits, stock dividends, stock
combinations and the like) in any single fiscal quarter (the "Quarterly
Allowance"). Notwithstanding the foregoing, if the Executive does not
utilize the full Quarterly Allowance in any fiscal quarter in which the
Buyer has restricted Executive from trading for at least 30 days under the
Xxxxxxx Xxxxxxx Policy, exclusive of Buyer's regular quarterly trading
restrictions (such unsold amount, the "Unsold Shares"), then Executive
shall be entitled to utilize the Unsold Shares in subsequent fiscal
quarters in addition to the Quarterly Allowance for such periods, provided
that in no fiscal quarter may the Executive utilize more than two times the
Quarterly Allowance. Nothing herein shall be construed to limit the ability
of a trust or foundation created by Executive and in existence as of the
date hereof to sell, transfer or otherwise dispose of shares of Buyer's
Common Stock issuable in the merger in respect of Company Common Stock held
by such trust or foundation as of the date hereof. Notwithstanding the
foregoing, this Section 9(b) shall not apply to (i) any bona fide gift of
Buyer's Common Stock by Executive to any of the mother, father,
descendants, brother(s), sister(s) or spouses of Executive or to any
trustee(s) for the benefit of any one or more of the foregoing, (ii) any
transfer effected pursuant to Executive's will or the laws of intestate
succession, or (iii) any pledge of Buyer's Common Stock by Executive that
on its terms precludes the sale of Buyer's Common Stock in the public
market during the Restricted Period, provided that (A) in the event of any
transfer made pursuant to Sections 9(b)(i) or 9(b)(iii) above, Executive
shall inform Buyer of such transfer prior to effecting it and (B) in the
event of any transfer made pursuant to 9(b)(i), the transferee shall
furnish Buyer with a written agreement to be bound by and complied with all
provisions of Section 9.
(c) Conditional Lock-Up. If Executive's employment with the Buyer is
terminated during the Restricted Period (i) by Executive, other than for
Good Reason or by reason of death or Disability, or (ii) by the Buyer for
Cause, then in either case Executive shall not enter into any Restricted
Transaction with respect to any shares of the Buyer's common stock for the
remainder of the Restricted Period and during the Extension Period, if any.
For purposes of this paragraph, the Extension Period shall commence upon
the expiration of the Restricted Period and continue for that number of
months, rounded up the nearest whole number, equal to the quotient obtained
by dividing (A) the difference of the number of shares of the Quarterly
Allowance already sold by Executive in the fiscal quarter in which
Executive's termination occurs minus the product of 83,334 multiplied by
the number of complete months elapsed in such quarter prior to Executive's
termination (but in no case shall the difference be less than zero),
divided by (B) 83,334; provided that no Extension Period shall apply after
a Release Date and, in no event, shall the Extension Period exceed three
months. This paragraph shall not apply to any termination of employment or
leave of absence that arises from Executive suffering a grave family
emergency that in Executive's reasonable judgment requires such a
termination or leave of absence.
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(d) Release Date. For purposes of this Section, "Release Date" shall
mean the earlier to occur of:
(i) the termination of Executive's employment with the Buyer by
Executive for Good Reason or by reason of death or Disability or by
Buyer for reasons other than Cause, as defined in Section 9(f) below;
and
(ii) in the event of a Change of Control of the Buyer, then the later
to occur of the six month anniversary of the Effective Time and the
consummation of the Change of Control; and
(iii) in the event of a change of Chief Executive Officer of Buyer
after the date hereof (a "Management Change"), then the later to occur
of the six month anniversary of the Effective Time and the date of the
Management Change.
For purposes of this section, a "Change of Control" shall mean (i) a merger or
consolidation in which Buyer is a constituent corporation or the sale or
exchange by the stockholders of Buyer of all or substantially all of the
capital stock of Buyer where the stockholders of Buyer immediately before such
merger or consolidation or sale or exchange do not obtain or retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock or other voting equity of the surviving or acquiring corporation or
other surviving or acquiring entity; (ii) the sale or exchange of all or
substantially all of Buyer's assets (other than a sale or transfer to a
subsidiary of Buyer as defined in section 424(f) of the Internal Revenue Code
of 1986, as amended (the "Code")) where the stockholders of Buyer immediately
before such sale or exchange do not obtain or retain, directly or indirectly,
at least a majority of the beneficial interest in the voting stock or other
voting equity of the corporation or other entity acquiring Buyer's Assets; or
(iii) a transaction in which a majority of the Board of Directors of the Buyer
or a majority of the officers of the Buyer immediately prior to such
transaction do not constitute a majority of the Board of Directors or a
majority of the officers, respectively, of the surviving corporation
immediately after such transaction.
(e) Definition of Cause. For purposes of this Agreement, "Cause" shall
mean (i) Executive's willful and continued failure substantially to perform
his duties hereunder (other than as a result of total or partial incapacity
due to physical or mental illness), (ii) material dishonesty in the
performance of Executive's duties hereunder, (iii) Executive's conviction
of a felony under the laws of the United States or any state thereof, (iv)
willful breach of fiduciary duty or willful breach of a material term of
this agreement or the Standard Employment Agreement, as defined below or
(v) any other willful act or omission which is materially injurious to the
financial condition or business reputation of the Buyer or any of its
subsidiaries or affiliates. If the Executive does any of the foregoing,
Buyer shall give Executive written notice thereof and Executive shall, if
such condition is reasonably susceptible of cure, have ten (10) days from
receipt of such notice to cure any such Cause, which notice shall state in
reasonable detail the facts and circumstances claimed to constitute such
Cause and the intent of Buyer to terminate Executive's employment upon the
failure of the Executive to effect a cure.
(f) Definition of Good Reason. For purposes of this Agreement, "Good
Reason" shall mean (i) reduction in Executive's annual base salary,
incentive programs or Executive Benefits (other than, in the case of such
programs or Executive Benefits, for changes generally affecting executives
similarly situated to Executive), (ii) any material adverse change in
Executive's status, title, position or material responsibilities, or (iii)
relocation, without Executive's consent, of Executive or his office space
at Buyer to a location more than 50 miles from Company's current facilities
in Portland, Oregon.
10. Proprietary Information, Invention Assignment and Arbitration
Agreement. At the Effective Time, Executive shall execute a copy of the
Buyer's standard form of Employment, Confidential Information and Invention
Assignment Agreement (the "Standard Employment Agreement") in the form
attached hereto as Exhibit D.
11. Conflicting Obligations. Executive represents that Executive has no
outstanding agreement or obligation that is in conflict with any of the
provisions of this Agreement, or that would preclude Executive from complying
with the provisions hereof, and further agrees that Executive will not enter
into any such conflicting agreement during the term of this Agreement.
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12. Covenants Not to Compete or Solicit.
(a) Definitions. As used in this Agreement, "Restricted Company" shall
mean a company that competes, or that has been formed to pursue a business
that would compete, with the business of Buyer immediately after the
Effective Time.
(b) Non-Compete. In consideration of: (i) the payment by the Buyer to
Executive of the Merger Consideration, (ii) the Buyer's willingness to
enter into the Merger Agreement, and (iii) the consideration payable to
Executive hereunder, Executive agrees that: (A) for the period beginning at
the Effective Time and ending on the second anniversary of the Effective
Time or (B) in the event that the period set forth in clause (A) is
determined to be unenforceable by a court of competent jurisdiction, the
maximum lesser period allowable, Executive will not, directly or
indirectly, be employed by (whether as an officer, employee, director
proprietor, partner, consultant or otherwise), or have any ownership
interest in, or participate in the financing, operation, management or
control of, any Restricted Company. It is agreed that ownership of no more
than five percent (5%) of the outstanding voting stock of a publicly-traded
company or ownership of an interest in an investment fund with respect to
which Executive does not make investment decisions shall not in and of
itself, constitute a violation of this Section. It is further agreed that
the foregoing consideration is not intended to constitute liquidated
damages for a violation of this section.
(c) Non-Solicit. Executive agrees that until the expiration of the non-
compete obligations specified above in subsection 12(b), Executive shall
not:
(i) knowingly take any action to, or do anything reasonably intended
to, divert business from the Buyer or any of its subsidiaries, or
influence or attempt to influence any retailer, dealer, vendor,
supplier, customer or potential customer of the Buyer or any of its
subsidiaries, in each case as existing on the date of Executive's
termination, to cease doing business with or compete with the Buyer or
any of its subsidiaries, as the case may be, existing on the date of
Executive's termination; or
(ii) knowingly recruit, solicit or assist others in recruiting, or
soliciting, any person who is an employee of the Buyer or any of its
respective subsidiaries, in each case as of the date of Executive's
termination, or knowingly induce or influence or attempt to induce or
influence any such employee to terminate his or her employment with the
Buyer or any of its respective affiliates, unless such employee is no
longer employed by the Buyer (or its subsidiaries) and has not been
employed by Buyer for a period of at least six months prior to being
solicited or recruited; provided however, that a general employment or
hiring advertisement in a publication of general circulation will not
be deemed to be a solicitation.
(d) REMEDIES. THE EXECUTIVE HEREBY RECOGNIZES AND ACKNOWLEDGES THAT A
MATERIAL VIOLATION OF THE TERMS AND PROVISIONS OF THIS SECTION 12 WOULD
CAUSE IRREPARABLE INJURY TO THE BUYER FOR WHICH THE BUYER WOULD HAVE NO
ADEQUATE REMEDY AT LAW. ACCORDINGLY, IN THE EVENT THAT EXECUTIVE SHALL FAIL
TO MATERIALLY COMPLY WITH THE TERMS AND PROVISIONS OF THIS SECTION 12 IN
ANY RESPECT, THE BUYER SHALL BE ENTITLED TO PRELIMINARY AND OTHER
INJUNCTIVE RELIEF AND TO SPECIFIC PERFORMANCE OF THE TERMS AND PROVISIONS
HEREOF. IN FURTHERANCE AND NOT IN LIMITATION OF THE FOREGOING, THE
EXECUTIVE HEREBY WAIVES ANY CLAIM OR DEFENSE THAT DAMAGES WOULD BE ADEQUATE
RELATING TO ANY VIOLATION OR BREACH BY THE EXECUTIVE OF THE TERMS AND
PROVISIONS OF THIS SECTION 12, THAT THE BUYER OR ANY OF ITS RESPECTIVE
AFFILIATES HAVE AN ADEQUATE REMEDY AT LAW OR THAT MONEY DAMAGES WOULD
PROVIDE AN ADEQUATE REMEDY FOR SUCH VIOLATION OR BREACH.
(e) EFFECT OF STANDARD EMPLOYMENT AGREEMENT. Until the expiration of the
covenants contained in this Section 12, such covenants shall supersede any
covenants relating to non-competition and non-solicitation contained in the
Standard Employment Agreement.
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(f) Severability. The parties intend that the covenants contained in the
preceding paragraphs shall be construed as a series of separate covenants,
one for each county, city, state and other political subdivision of each
country in which a Restricted Company is located. Except for geographic
coverage, each separate covenant shall be deemed identical in terms to the
covenant contained in the preceding paragraphs. If, in any arbitration or
judicial proceeding, a court or arbitrator shall refuse to enforce any of
the separate covenants (or any part thereof) deemed included in said
paragraphs, then such unenforceable covenant (or such part) shall be deemed
eliminated from this Agreement for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants (or portions
thereof) to be enforced. It is the intent of the parties that the covenants
set forth herein be enforced to the maximum degree permitted by applicable
law.
13. Miscellaneous.
(a) Governing Law; No Liability of Executive. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Oregon. Notwithstanding any term of the Standard Employment Agreement to
the contrary, the parties to this Agreement irrevocably agree that any
disputes under this Agreement or the Standard Employment Agreement, whether
related to construction, enforcement or otherwise, shall be resolved by
binding arbitration under the rules and auspices of the American
Arbitration Association to be conducted in Multnomah County, Oregon, and
the parties hereby irrevocably waive any and all objections thereto.
Executive shall not be subject to liability for breach of this Agreement by
reason of his termination of his employment hereunder.
(b) Entire Agreement/Amendments. This Agreement, the Indemnification
Agreement, the Change of Control Severance Agreement, the Option and the
Standard Employment Agreement contain the entire understanding of the
parties with respect to the employment of Executive by the Buyer. In case
of any direct conflicts between this Agreement and any such other
agreements, the provisions of this Agreement shall govern. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein and therein
other than those expressly set forth herein and therein. This Agreement may
not be altered, modified, or amended except by written instrument signed by
the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
of such party's rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement.
(d) Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by Executive or
by the Company and shall be assignable by the Buyer only with the consent
of Executive.
(f) Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
(g) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the execution page of this Agreement,
provided that all notices to the Buyer shall be directed to the attention
of the Board with a copy to the Secretary of the Buyer, or to such other
address as any party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
(h) Withholding Taxes. The Buyer may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required
to be withheld pursuant to any applicable law or regulation.
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(i) Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(j) Term of Agreement; Separation Benefits Upon Termination. This
Agreement shall become effective as of the date of the Merger Agreement and
shall remain in force until the termination of Executive's employment with
the Buyer, provided that if the Merger Agreement is terminated prior to the
Effective Time then this Agreement shall terminate on the date the Merger
Agreement is terminated, and provided further that Sections 7, 8, 9, 12 and
13 shall survive the termination of this Agreement (other than termination
in accordance with the foregoing proviso). In the event of the termination
of Executive's employment with the Buyer prior to the first anniversary of
the Effective Time (i) by the Buyer other than for Cause or (ii) by
Executive for Good Reason, Executive shall be entitled to receive, in
addition to the amounts provided for in Section 8, an amount equal to
Executive's Base Salary on the date of termination, prorated for the period
from the day after employment terminates until the first anniversary of the
Effective Time, and continuation during such period at no cost to Executive
of all of the Executive Benefits on the same terms as those benefits were
available to Executive (and Executive's family) immediately prior to the
termination of Executive's employment with the Buyer.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
Xxxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxxx
_____________________________________
0000 X.X. Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
WEBTRENDS CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
_________________________________
Title:
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
NETIQ CORPORATION
By: /s/ Ching-Xx Xxxxx
_________________________________
Title
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
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Exhibit A
Initial Duties: Overall Strategy, Mergers & Acquisitions and Integration
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Exhibit B
Indemnification Agreement
10
Exhibit C
Change of Control Severance Agreement
11
Exhibit D
Standard Employment Agreement
12
