Exhibit 10.3
EMPLOYMENT
AGREEMENT
This Employment Agreement (this
“Agreement”), by and between Saba Software, Inc., a
Delaware corporation (the “Company”), and Peter E.
Williams III (“Executive”), is effective as of
February 1, 2006 (the “Effective
Date”).
R E C I T A L
S
A. Executive has been Chief Financial Officer of
the Company since March 2004.
B. The Board of Directors of the Company (the
“Board of Directors”) recognizes that Executive has
made important contributions to the success of the
Company.
C. The Company believes that maintaining sound
management is essential to protect and enhance the best interests
of the Company and its stockholders.
D. The Company desires assurance of the continued
association and services of Executive in order to retain
Executive’s experience, skills, abilities, background and
knowledge, and is willing to engage Executive’s services on
the terms and conditions set forth in this Agreement.
E. Executive desires to continue to be in the
employ of the Company, and is willing to accept such employment on
the terms and conditions set forth in this Agreement.
F. Company and Executive wish to enter into an
employment relationship with a written employment agreement
intended to supersede all other written and oral representations
regarding Executive’s employment with Company.
A G R E E M E N
T
NOW, THEREFORE, based on the
foregoing recitals and in consideration of the commitments set
forth below, Executive and the Company agree as follows:
1. Term, Position, Duties and
Responsibilities
1.1. Term .
The Company hereby employs Executive
to render services to the Company in the position of Chief
Financial Officer, reporting directly to the Chief Executive
Officer of the Company, for the period commencing on the Effective
Date and ending on the date Executive’s employment is
terminated under this Agreement (the “Term”). The
Company and Executive hereby acknowledge that either of them may
terminate Executive’s term of Employment for any reason or no
reason at all.
1.2. Position .
The duties of this position shall
include such duties and responsibilities as are reasonably assigned
to Executive by the Chief Executive Officer, including but not
limited to those customarily performed by chief financial officers
of similarly situated corporations. Executive agrees to serve in a
similar capacity for the benefit of any of the
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Company’s direct or indirect, wholly-owned
or partially-owned subsidiaries or affiliates. Additionally,
Executive shall serve in such other capacity or capacities as the
Chief Executive Officer may from time to time prescribe. During his
employment by the Company, Executive shall, subject to
Section 1.3, devote his full energies, interest, abilities and
productive time to the proper and efficient performance of his
duties under this Agreement.
1.3. Other Activities
. Except upon the prior
written consent of the Chief Executive Officer of the Company,
Executive will not (i) accept any other employment, or
(ii) engage, directly or indirectly, in any other business
activity (whether or not pursued for pecuniary advantage) that is
or may be in conflict with, or that might place Executive in a
conflicting position to that of, the Company. Notwithstanding the
foregoing, Executive shall be permitted to engage in occasional
professional or charitable activities outside the scope of his
employment with the Company so long as such activities (A) do
not conflict with the actual or proposed business of the Company or
any of its subsidiaries or affiliates, and (B) do not affect
the performance of his duties hereunder. In addition, subject to
the prior written consent of the Chief Executive Officer and the
Board of Directors of the Company and subject to Executive’s
fiduciary duties to the Company, Executive shall be permitted to
serve as a director of other corporations provided that their
businesses are not competitive with the actual or proposed business
of the Company or any of its subsidiaries or affiliates and
provided further that Executive’s service as a director of
such other corporations does not interfere with his performance of
his duties hereunder. Any such prior written consent may be
subsequently revoked in the event that the Board of Directors
determines, in good faith, that Executive’s position as a
director of any such other corporation has developed into a
conflict of interest.
1.4. Proprietary
Information . Executive recognizes that his employment with
the Company will involve contact with information of substantial
value to the Company, which is not generally known in the trade,
and which gives the Company an advantage over its competitors who
do not know or use it. Executive has previously executed and
delivered to the Company, a copy of the Company’s standard
form of Employee Proprietary Information and Inventions Agreement
(the “Employee Proprietary Information and Inventions
Agreement”).
2. Compensation of
Executive
2.1. Base Salary
. In consideration of the
services to be rendered under this Agreement, while employed by the
Company, Company shall pay Executive an initial base annual salary
of two hundred sixty-five thousand dollars ($265,000), less
standard deductions and withholdings, payable in regular periodic
payments in accordance with Company payroll policy. Such salary
shall be prorated for any partial month of employment on the basis
of a 30-day fiscal month. Such base salary shall be subject to
annual review by the Board of Directors in consultation with the
Chief Executive Officer.
2.2. Bonus .
Executive will be eligible to
receive quarterly bonuses totaling one hundred ten thousand dollars
($110,000) annually (such annual amount, the “Target
Bonus”), the exact amount of each such bonus to be determined
by the Board of Directors in consultation with the Chief Executive
Officer based upon Executive achieving certain performance criteria
and the Company achieving specific financial goals, in each case to
be determined by the Board
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of Directors in consultation with the Chief
Executive Officer. Any such bonus shall be payable quarterly after
the end of each fiscal quarter, and shall be prorated for partial
fiscal quarters; provided, however, notwithstanding the foregoing
to the contrary, Executive shall be eligible for the entire Target
Bonus for the Company’s fiscal year ended May 30, 2006
as if this Agreement were in effect for such purpose commencing on
June 1, 2005. In addition, Executive shall be eligible for
such additional bonuses as may be awarded by the Board of Directors
in its sole discretion from time to time in consultation with the
Chief Executive Officer.
2.3. Stock Option
. Subject to approval by
the Board of Directors, Executive will be granted a stock option to
purchase 40,000 shares of the Company’s Common Stock at the
market price in effect the date the Board of Directors approves the
grant pursuant to the Company’s standard form of Stock Option
Agreement to be entered into by and between Executive and the
Company (the “Stock Option Agreement”). The stock
option will vest over the course of four years in 16 equal
quarterly installments with the first installment vesting one
quarter after the Effective Date of this employment
agreement.
2.4. Benefits .
Executive shall be entitled to
participate in the Company’s group medical, dental, life
insurance, 401(k), deferred compensation or other benefit plans and
programs on the same terms and conditions as other members of the
Company’s senior executive management. Executive shall be
provided such perquisites of employment, including paid vacation,
and all paid holidays and sick leave as are provided to all other
members of the Company’s senior executive management.
Executive shall be entitled to reimbursement of all reasonable
expenses incurred by Executive in the performance of his duties
hereunder, in accordance with the policies and procedures
established by the Company from time to time, and as may be amended
from time to time.
3. Employment At
Will
Company or Executive may terminate
Executive’s employment with Company at any time for any
reason, including no reason at all, notwithstanding anything to the
contrary contained in or arising from any statements, policies, or
practices of Company relating to the employment, discipline, or
termination of its employees. This at-will employment relationship
cannot be changed except in writing signed by a duly authorized
officer of the Company other than Executive. This Section 3
shall survive any termination or expiration of this
Agreement.
4. Termination of
Employment
4.1. Termination by
Executive . Executive
may terminate his employment upon notice to the Company. In the
event that Executive elects to terminate his employment other than
for Good Reason (as defined below), the Company shall pay Executive
all base salary due and owing and all other accrued but unpaid
benefits (e.g., accrued vacation) through the last day actually
worked and thereafter the Company’s obligations under this
Agreement shall terminate.
4.2. Termination by the
Company for Cause . In the event that the Company terminates
Executive’s employment for Cause, the Company shall pay
Executive all
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base salary due and owing and all other accrued
but unpaid benefits (e.g., accrued vacation) through the last day
actually worked and thereafter the Company’s obligations
under this Agreement shall terminate. For the purposes of this
Agreement, termination shall be for “Cause” if
(i) Executive refuses or fails to act in accordance with any
lawful order or instruction of the Chief Executive Officer, and
such refusal or failure to act has not been cured within 30 days of
notice of such disobedience, (ii) Executive fails to devote
reasonable attention and time during normal business hours to the
business affairs of the Company or Executive is reasonably
determined by the Board of Directors to have been unfit (other than
as a result of an Incapacity), unavailable for service (other than
as a result of an Incapacity) or grossly negligent in connection
with the performance of his duties on behalf of the Company, which
unfitness, unavailability or gross negligence has not been cured
within 30 days of notice of the same; (iii) Executive is
reasonably determined by the Board of Directors to have committed a
material act of dishonesty or willful misconduct or to have acted
in bad faith to the material detriment of the Company in connection
with the performance of his duties on behalf of the Company;
(iv) Executive is convicted of a felony or other crime
involving dishonesty, breach of trust, moral turpitude or physical
harm to any person, or (v) Executive materially breaches any
agreement with the Company which breach has not been cured within
30 days notice of the same. For purposes of this Agreement, the
term “without Cause” shall mean termination of
Executive’s employment for reasons other than for
“Cause.”
4.3. Termination by the
Company without Cause or Termination by Executive for Good
Reason . In the event
that the Company terminates Executive’s employment without
Cause or Executive terminates his employment for Good Reason, the
Company shall pay Executive all base salary due and owing and all
other accrued but unpaid benefits (e.g., accrued vacation) through
the last day actually worked, and Executive shall be entitled to
receive the severance payments and benefits set forth below in this
Section 4.3; provided, however, that such severance and
benefits are conditioned on Executive’s execution and
non-revocation of a release agreement, the form of which is
attached hereto as Exhibit A , and thereafter the
Company’s obligations under this Agreement shall terminate.
For the purposes of this Agreement, termination shall be for
“Good Reason” if (i) there is a material
diminution of Executive’s reporting responsibilities without
Executive’s consent; (ii) there is a reduction by the
Company in Executive’s annual base salary then in effect
without Executive’s consent; or (iii) Executive’s
principal work location is relocated outside of the San Francisco
Bay Area without Executive’s consent. For purposes of the
foregoing, any change in title from Chief Financial Officer to an
executive officer that reports to the Company’s Chief
Executive Officer shall not be deemed a material change in
Executive’s reporting responsibilities. Executive agrees that
he may be required to travel from time to time as required by the
Company’s business and that such travel shall not constitute
grounds for Executive to terminate his employment for Good
Reason.
4.3.1. Target Bonus and Base
Salary . On the date
of the termination of Executive’s employment, the Company
shall pay to Executive, or to Executive’s beneficiaries or
estate as appropriate, in a single lump-sum payment, subject to
standard deductions and withholdings, Executive’s Target
Bonus, as if the applicable performance criteria and Company
financial goals had been achieved completely, pro rated based on
the number of days actually elapsed through the date of termination
in the year in which such termination occurs. In addition, the
Company shall pay to Executive, or to Executive’s
beneficiaries or
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estate, as appropriate, the sum of (i) an
amount equal to that number of months of Executive’s then
current base salary equal to the sum of six (6) months plus
one month for every twelve month period Executive has been employed
by the Company prior to the date of termination (which sum shall
not exceed twelve (12) months) (collectively, the
“Severance Months”), and (ii) an amount equal to
the product of (x) the quotient of the number of Severance
Months divided by 12, and (y) the Target Bonus amount (the
“Bonus Severance Amount”), less all applicable standard
deductions and withholdings. Such amounts payable in the preceding
sentence shall be payable either as a lump-sum or in the form of
salary continuation (with amounts attributable to the Target Bonus
prorated monthly), whichever the Company shall determine in its
sole discretion.
4.3.2. Acceleration of Vesting
of Stock Option . On
the date of termination of Executive’s employment, 100% of
the shares subject to any stock option then held by Executive,
including without limitation, the option described in
Section 2.3, shall vest and become immediately
exercisable.
4.3.3. Group Medical
Coverage . The
Company shall, following the Executive’s timely election,
provide the Executive with continued coverage for one year after
termination of Executive’s employment under the
Company’s group health insurance plans in effect upon
termination of Executive’s employment without Cause or for
Good Reason in accordance with the provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”), at
no cost to Executive. If COBRA or similar benefits are not
available by law during any portion of the remainder of such one
year period, then the Company shall pay Executive each month during
which COBRA or similar benefits are not available by law an amount
equal to the premium paid by Executive for the last month during
which such COBRA or similar benefits were available.
4.4. Termination for
Incapacity . In the
event that Executive suffers an Incapacity during Executive’s
employment, the Company may elect to terminate Executive’s
employment pursuant to this Section 4.4. In such event, the
Company shall pay Executive, or to Executive’s beneficiaries
or estate if applicable, all base salary due and owing and all
other accrued but unpaid benefits (e.g., accrued vacation) through
the date on which an Incapacity is determined to exist (the
“Determination Date”), less applicable standard
deductions and withholdings. In addition, within ten days of such
termination of Executive’s employment, the Company shall pay
to Executive, or to Executive’s beneficiaries or estate if
applicable, in a single lump-sum payment, subject to applicable
standard deductions and withholdings, an amount equal to the Target
Bonus, pro rated based on the number of days through the
Determination Date in the year in which such termination occurs,
less amounts of the Target Bonus previously paid to Executive for
the year in which such termination occurs. In addition, the Company
shall pay to Executive, or to Executive’s beneficiaries or
estate, as appropriate, the sum of (i) an amount equal to that
number of months of Executive’s then current base salary
equal to the Severance Months and, (ii) the Bonus Severance
Amount, less all applicable standard deductions and withholdings
and any disability payment otherwise payable by or pursuant to
plans provided by the Company and actually paid to Executive. Such
amounts payable in the preceding sentence shall be payable either
as a lump-sum or in the form of salary continuation (with amounts
attributable to the Bonus Severance Amount prorated
monthly),
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whichever the Company shall determine in its
sole discretion. Thereafter the Company’s obligations under
this Agreement shall terminate; provided, however, that nothing
contained in this Agreement shall limit Executive’s rights to
payments or other benefits under any long-term disability plans of
the Company in which Executive participates, if any. For the
purposes of this Agreement, Executive shall be deemed to have
suffered an “Incapacity” if Executive shall, due to
illness or mental or physical incapacity, be unable to perform the
duties and responsibilities required to be performed by him on
behalf of the Company for a period of at least 180 days.
4.5. Termination upon
Death . In the event
that Executive dies during Executive’s employment,
Executive’s employment shall be deemed to have terminated
upon the date of
