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Exhibit
10.2
September 24, 2007
David Crussell
1530 Rose Lane
Pleasanton, CA 94566
Dear Dave:
This letter sets forth the terms of the
transition agreement (the “Agreement”) between you and
SumTotal Systems, Inc. (the “Company”).
| 1. |
Separation Date. As discussed, your last day of
employment with the Company shall be December 31, 2007 (the
“Separation Date”). Of course, the Company will
accelerate the Separation Date in the event that you materially
breach this Agreement, the Confidentiality Agreement or any Company
policy. Your employment with the Company from the date of this
letter through the Separation Date shall be referred to as the
“Transition Period” for the purposes of this Agreement,
and will be subject to the following terms and
conditions. |
| 2. |
Transition Duties . You shall continue to be employed by
the Company and make yourself available to work for up to 40 hours
per month (the “Transition Period”), subject to all of
the standard policies and procedures of the Company. You shall,
within a reasonable period of time following any requests made of
you by the Company’s Chief Executive Officer
(“CEO”): (i) discharge and perform any and all
duties reasonably requested of you by the CEO or his designee;
(ii) take all steps reasonably satisfactory to the CEO to
ensure the orderly transition of all matters that you have handled
during the course of your employment with the Company; and
(iii) provide transition briefing information to the CEO as he
requests. All such requests by the CEO shall be made with
reasonable notice to you in advance, such that you need not be
“on call” during the Transition Period and nothing in
this Paragraph shall in any way limit your right to attend to
personal matters during the Transition Period, even if attending to
such personal matters renders you immediately unavailable to
respond to the requests of the CEO. During the Transition Period,
you will not have authority to bind the Company or make management
decisions, unless expressly authorized in writing in advance by the
CEO, or his designee. |
| 3. |
Salary Continuation and General Employee Benefits .
Through the Separation Date, you will continue to receive your
current base salary, paid in the Company’s ordinary payroll
cycle and subject to standard deduction and withholdings. You will
also continue to be eligible for the Company’s standard
employment benefits pursuant to the terms, conditions and
limitations of the benefit plans. |
Transition Agreement – David
Crussell
September 24, 2007
| 4. |
Vesting of Equity Awards. To the extent consistent with
the terms of the equity awards provided to you in connection with
your employment (the “Equity Awards”) and the
Company’s applicable equity incentive plans (the
“Equity Plans”), your Equity Awards will continue to
vest during the Transition Period in accordance with the operative
agreements and the applicable Equity Plans. You and the Company
agree that, effective as of the Separation Date, your
“service” to the Company (for the purposes of the
Equity Awards and the applicable Equity Plans) will cease, which
means that vesting of all Equity Awards shall cease as of the
Separation Date. All other terms of the Equity Awards remain
subject to the terms and conditions of the operative agreements and
the applicable Equity Plans. Accordingly, your right to exercise
any vested shares shall be in accordance with the applicable Equity
Awards and Equity Plans. |
| 5. |
Accrued Salary and Paid Time Off . On the Separation
Date, regardless of whether you sign this Agreement, you will be
paid all accrued and unused paid time off earned through that date,
subject to standard payroll deductions and withholdings. You are
entitled to these payments by law. You will continue to accrue paid
time off during the Transition Period at the same rate you were
earning such benefit prior to your execution of this
Agreement. |
| 6. |
Severance . The Company will pay you severance in the
amount of $233,333, which is equivalent to eight months base salary
(the “Severance Payment”). The Severance Payment shall
be made in one lump sum, on the payroll date following the
effective date of the Separation Date Release. The Severance
Payment will be subject to standard payroll deductions and
withholdings, the satisfaction of any outstanding debts to the
Company, and your timely return of all Company
Property. |
| 7. |
Executive and Management Bonus Plan. Although you will
have not earned any bonus or incentive compensation under the terms
of the Company’s Executive and Management Bonus Plan (the
“Bonus Plan”) through the end of December 31,
2007, and the Company is not obligated to make any payment to you
under the Bonus Plan, pursuant to this Agreement, assuming you sign
and allow to become effective this Agreement and the Separate Date
Release, the Company will pay you a pro-rated amount (eight-ninths
for third quarter and eight-twelfths for fourth quarter) of the
amount you would have normally received for the financial component
payout for the third and fourth quarters of 2007 if you had
remained fully employed through December 31, 2007 and the plan
payout date applicable to the third and fourth quarters. These
payments shall be made on the same terms and at the same time all
other eligible employees receive the third and fourth quarter 2007
financial component payouts. You expressly acknowledge that you are
not entitled to any payout of the MIT component of the Bonus Plan
for fiscal year 2007. |
Transition Agreement – David
Crussell
September 24, 2007
| 8. |
Retention Bonus. Provided you comply with the terms of
this Agreement and the Retention Bonus Agreement, you shall receive
your retention bonus of $206,250 on the first payroll after
October 19, 2007 (“Retention Bonus”). Such
Retention Bonus shall be subject to the Company’s standard
payroll deductions, including tax and payroll
withholdings. |
| 9. |
Health Care Coverage. To the extent provided by the
federal COBRA law or, if applicable, state insurance laws
(collectively, “COBRA”), and by the Company’s
current group health insurance policies, you will be eligible to
continue your group health insurance benefits at your own expense
after the Separation Date. On or after the Separation Date, you
will be provided with a separate notice more specifically
describing your rights and obligations to continuing health
insurance coverage under the COBRA laws. Although the Company is
not otherwise obligated to do so, if you enter into this Agreement,
comply with your obligations hereunder, and, on or timely after the
Separation Date, you sign, date, return to the Company and allow to
become effective the Separation Date Release, the Company agrees to
reimburse your COBRA premiums (the “COBRA
Reimbursement”) sufficient to continue your group health
insurance coverage at its current level (including dependent
coverage, if any), for eight months through August 31, 2008,
provided however that, the Company’s obligation to
provide the COBRA Reimbursement ceases immediately if you become
eligible for group health insurance coverage through a new employer
or if you materially breach this Agreement or the Confidentiality
Agreement. You agree to immediately notify the Company’s Vice
President, Human Resources in writing if you become eligible for
group health insurance coverage through a new employer at any time
prior to August 31, 2008. |
| 10. |
Other Compensation or Benefits and Agreements. You
acknowledge that, except as provided in this Agreement, you have
not earned and will not receive any other compensation, including
without limitation salary, bonus, incentive compensation, or
severance, or any benefits before or after the Separation Date,
with the exception of any vested right you may have under the
express terms of a written ERISA-qualified benefit plan (e.g.,
401(k) account) or any vested Equity Awards. You expressly
acknowledge that your Amended and Restated Change of Control
Agreement dated August 31, 2006 (“Change of Control
Agreement”) is hereby terminated, effective on the Effective
Date of this Agreement. You also expressly acknowledge that the
following agreements shall remain in full force and effect:
(a) Retention Bonus Agreement dated October 25, 2005,
(b) Employee Invention, Confidentiality, Unfair Competition,
and NonSolicitation Agreement dated May 17, 2004, and
(c) Indemnification Agreement dated April 14, 2004
(“Indemnification Agreement”). |
| 11. |
Noncompetition. From the Effective Date through
August 31, 2008, you will not perform, directly or indirectly,
the same or similar services for any Competitor of the Company, and
you will not engage in any business activities competitive with the
Company on your own behalf (or prepare to engage in such
activities). You acknowledge and agree that: your performance of
any such services would inevitably
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Transition Agreement – David
Crussell
September 24, 2007
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make use of the
confidential or proprietary information of the Company; you have
had access to competitively valuable such confidential and
proprietary information during the course of your employment for
the Company (including but not limited to: information regarding
the Company’s product research and development,
“roadmaps,” sales and marketing plans, partnership
plans, business plans, proposed merger and acquisition activities,
finances and operations, personnel); and that any breach of the
provisions of this section would be material and cause irreparable
harm to the Company and provide the basis for injunctive relief.
For purposes of this Agreement, “Competitor” means any
company, partnership, sole proprietorship, or other entity which
is, or plans or proposes to be, competitive with the Company, or
any of the Company’s lines of business or planned or proposed
lines of business. If you violate this section, or Sections 14 or
15 of this Agreement, you will forfeit and not be entitled to
receive any unpaid payments under the 2007 Executive and Management
Bonus Plan as set forth in Section 7, or Severance Payment as
set forth in Section 6, (collectively, “Non-Compete
Payments”) and be required to reimburse the Company an amount
equal to the unpaid Non-Compete Payments.
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| 12. |
Expense Reimbursements. You agree that, on or before the
Separation Date, you will submit your final documented expense
reimbursement statement reflecting all business expenses you
incurred through the Separation Date, if any, for which you seek
reimbursement. The Company will reimburse you for these expenses
pursuant to its regular business practice. |
| 13. |
Return of
Company Property. Except for documents or materials that the
Company authorizes you in writing to retain for purposes of
performing the services during the Transition Period (if any) and
except for your Company laptop and phone, which you may keep, on
the Separation Date, you shall return to the Company all Company
documents (and all copies thereof) and other Company property that
you have in your
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