1
EXHIBIT 10.11
QC ACQUISITION CORP.
c/o Sprout Group
3000 Sand Hill Road
Building 4, Suite 270
Menlo Park, CA 94025
May 23, 1995
Mr. Alan Anderson
2185 Ridge Point Court
Walnut Creek, CA 94596
Dear Alan:
QC Acquisition Corp. ("QCAC") is pleased to extend this offer of employment
to you to serve as President and Chief Executive Officer of Quintus Corporation
(the "Company"). This offer and your employment with the Company, should you
decide to accept our offer, would commence upon QCAC's purchase of all of the
Company's outstanding capital stock (the "Purchase"). The other terms and
conditions of your employment would be as follows:
1. Position. You will serve in a full-time capacity as President and
Chief Executive Officer of the Company. In addition, you will be elected a
Director of the Company immediately following the Purchase. As we also
discussed, as President and a director of the Company, you will have input on
the appointment of other directors of the Company.
2. Compensation. You will be paid a salary of $15,833.33 per month,
payable in accordance with the Company's standard payroll practices for
salaried employees. This salary will be subject to adjustment at the discretion
of the Company's Board of Directors in each subsequent calendar year as part of
the Board's annual review of employee compensation.
3. Bonus. You will be eligible for an annual bonus of up to 50 percent
(50%) of your salary. Bonus payments, if any, will be determined pursuant to an
annual management incentive plan presented by the Company's management for each
prospective fiscal year and approved by and at the discretion of the Company's
Board of Directors.
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Mr. Alan Anderson May 23, 1995
Page 2
4. Stock Options. Following the Purchase, you will be granted an
option to purchase 1,142,858 shares of Common Stock of QCAC,(1)/(QCAC
anticipates that it will merge into the Company following the Purchase, with
your options becoming options to purchase a comparable number of shares of
Company Common Stock and representing a comparable percentage of Company's
capitalization.) Your option is expected to be treated as an "incentive stock
option," subject to its satisfying all the applicable requirements for an
incentive stock option under the applicable tax laws, and will have a per share
exercise price equal to $0.05 per share. Your option will have a term of ten
years, subject to earlier termination upon termination of your service
relationship with the Company or a sale or merger of QCAC.(2) Subject to the
terms described herein, your option will be governed by a Stock Option Plan
adopted by the Board of Directors of QCAC in its sole discretion and evidenced
by agreements adopted under such plan.(3)
This option will be subject to vesting, with fifty percent (50%) of
the underlying shares vesting pursuant to a time-based formula and the other
fifty percent (50%) vesting based on Company performance. Your time-based
options will vest as follows: After twelve months of employment, twenty-five
percent (25%) will vest; and the remainder will vest in equal monthly
installments over the 36 months following the one year anniversary of your
employment. Your performance-based options will vest over a
________________________
(1) As of the Purchase, QCAC will have issued 9,000,000 shares of Series A
Preferred Stock at $1.00 per share, which Preferred Stock is convertible on a
one-for-one basis into Common Stock, and options (including yours) covering
2,928,582 shares of Common Stock. Your percentage interest, of course, is
subject to dilution if QCAC raises additional equity financing or grants
additional stock options.
(2) In the event the entity surviving such sale or merger does not assume your
option, the vesting of your option will accelerate such that all of the
underlying shares will be vested immediately prior to such sale or merger. Even
if the entity surviving such sale or merger is willing to assume your option,
the vesting of the shares underlying the performance-based portion of your
option will accelerate if such sale or merger involves a value of the Company
in excess of the thresholds set forth in Exhibit A hereto.
(3) Among other terms, the Stock Option Plan will require that optionees not
sell, make any short sale of, loan, pledge, grant any option for the purchase
of, or otherwise dispose of or transfer for value any of the QCAC shares issued
upon exercise of an option under the Stock Option Plan for up to one hundred
eighty days following QCAC's initial public offering or another underwritten
public offering of QCAC equity securities, pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended, within two
years of QCAC's initial public offering.
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Mr. Alan Anderson May 23, 1995
Page 3
significantly longer vesting schedule(4), but the vesting of such
performance-based options will accelerate upon the achievement of specified
performance milestones as set forth in Exhibit A hereto.
5. Severance. In the event that the Company terminates your employment
"without cause" (as defined below), you will be entitled to receive your regular
monthly compensation until the earlier of (a) six months following the effective
date of such termination if such termination occurs within twelve months after
the Purchase or nine months following the effective date of such termination if
such termination occurs on or after the twelve month anniversary of the Purchase
and (b) your commencing full-time employment with another employer. For purposes
of this letter, termination "without cause" shall mean termination for reasons
other than: (i) financial dishonesty, including without limitation,
misappropriation of funds or property of the Company, (ii) a repeated refusal to
comply with reasonable directives of the Board of Directors of the Company, or
the gross negligence or willful misconduct in the performance of duties assigned
to you by such Board, or (iii) the conviction of any crime involving moral
turpitude, fraud, or any felony.
6. Fringe Benefits. The Company will provide you with those employee
benefits that the Company after the Purchase maintains generally for its
employees and for which you individually qualify.
7. Expense Reimbursement. During the period of your employment, you will
be reimbursed for reasonable and necessary expenses incurred on behalf of the
Company in accordance with the Company's expense reimbursement policy.
8. Vacation. You will accrue vacation pursuant to the Company's general
vacation policies which are in effect after the Purchase.
9. Proprietary Information and Inventions Agreement. As with all Company
employees involved in the development of or with access to Company trade
secrets, you will be required, as a condition to your employment with the
Company, to sign the Company's standard Proprietary Information and Inventions
Agreement, a copy of which is enclosed as Exhibit B hereto.
- -------------------
(4) The exact time periods for the time-based vesting of your performance-based
options is pending input from the independent accounting firm selected to audit
the Company's financial statements, but could involve the vesting of such shares
in a single lump sum on the day before the tenth anniversary of your employment
with the Company.
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May 23, 1995
Page 4
Mr. Alan Anderson
10. Period of Employment. Your employment with the Company will be "at
will," meaning that either you or the Company will be entitled to terminate your
employment at any time for any reason with or without cause. Any contrary
representations which may have been made or which may be made to you are
superseded by this offer.
11. Outside Activities. During the period that you render services to the
Company, you will not engage in any employment, business, or activity that is
in any way competitive with the business or proposed business of the Company,
and you will not assist any other person or other organization in competing
with the Company or in preparing to engage in competition with the business or
proposed business of the Company.
12. Entire Agreement. Other than the Company's standard Proprietary
Information and Inventions Agreement referred to in paragraph 9 and the
Company's standard stock option grant documents referred to in paragraph 4,
this letter contains all of the terms of your employment with the Company and
supersedes any other understandings, oral or written, between you and the
Company.
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Mr. Alan Anderson May 23, 1995
Page 5
13. Modifications. Any additions or modifications of these terms
would have to be in writing and signed by yourself and a person authorized by
the Board of Directors of the Company.
We hope that you find the foregoing terms acceptable, and we look
forward to your response to this letter by May 24, 1995. You may indicate your
acceptance by signing and dating the enclosed duplicate original of this letter
and returning it to me by the May 24, 1995 expiration date. We believe that you
will be a key contributor to the Company's future success and profitability, and
we look forward to the start of your new career with the Company.
Very truly yours,
QC ACQUISITION CORP.
By: /s/ PAUL H. BARTLETT
---------------------
Paul H. Bartlett
Chairman of the Board
AGREED TO AND ACCEPTED BY:
ALAN ANDERSON
/s/ ALAN ANDERSON
- ------------------
Date: 5/24/95
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EXHIBIT A
PERFORMANCE VESTING
To the extent one or more of the following financial performance
milestones are attained while the Optionee continues in Service to QCAC (as
definitively defined in the Option Plan, "Service"), then the applicable
percentage of the shares underlying the performance-based option (the
"Performance Option Shares") indicated for each such attained milestone shall
immediately vest and QCAC's repurchase right with respect to those Option
Shares shall terminate.
The performance milestones are based on the Operating Income of Quintus
Corporation ("Quintus"), QCAC's wholly-owned subsidiary, determined in
accordance with generally accepted accounting principles but excluding (a)
amortization of goodwill or purchase-price related intangibles arising from
QCAC's May 25, 1995 acquisition of all of the outstanding capital stock of
Quintus, (b) closing costs directly related to such acquisition, and (c) the
expenses incurred pursuant to the termination of certain Quintus employees as
contemplated by Section 4.5 of the Stock Purchase Agreement effecting such
acquisition. Such adjusted Quintus Operating Income shall be reasonably
determined by the Board of Directors of QCAC and shall include, without
limitation, the expense of any bonus payments to Quintus employees. Any such
accelerated vesting of the Performance Option Shares and lapse of QCAC's
repurchase right with respect to those Performance Option Shares shall be
calculated proportionately (calculated on a straight-line basis, with any
fractional share rounded to the nearest whole number of Option Shares) if
Quintus Operating Income for a specified period falls between the Threshold
Operating Income and the Maximum Vesting Operating Income. No accelerated
vesting of the Option Shares will occur if Quintus Operating Income is at or
below the Threshold Operating Income level; and even if Quintus Operating
Income should exceed the Maximum Vesting Operating Income level specified for a
particular time period below, the maximum acceleration for that time period
shall be limited to 35% of the Performance Option Shares in the case of
full-year periods or 17.5% of the Performance Option Shares in the case of
partial-year periods.
% of Option % of Option
Shares Vesting at Maximum Shares Vesting
Threshold % of Option Target Target Vesting at Maximum
Operating Shares Vesting Operating Operating Operating Vesting
Time Period Income at Threshold Income Income Income Operating Income
- ----------------------------------------------------------------------------------------------------------------
05/25/95 to ($2,028,000) 0% ($1,352,000) 12.5% ($1,081,600) 17.5%
12/31/95
01/01/96 to $1,428,000 0% $2,856,000 25.0% $3,427,200 35.0%
12/31/96
01/01/97 to $2,960,000 0% $5,920,000 25.0% $7,104,000 35.0%
12/31/97
01/01/98 to $4,140,000 0% $8,280,000 25.0% $9,936,000 35.0%
12/31/98
01/01/99 to $2,900,000 0% $5,800,000 12.5% $6,960,000 17.5%
06/30/99
1 of 2 Pages
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EXHIBIT A continued
ACCELERATION OF VESTING
Should a Corporate Transaction (as defined below) be effected during the
time periods set forth below for an acquisition price (the "Per Share
Acquisition Price") payable per share of QCAC Common Stock (determined on a
fully-diluted basis as if all QCAC's outstanding securities exercisable or
convertible into Common Stock were in fact exercised or converted immediately
prior to such Corporate Transaction) in an amount not less than the minimum
price per share indicated below for the respective time periods indicated below
in which such Corporate Transaction occurs, then QCAC's repurchase right
regarding Performance Option Shares will, immediately prior to the effective
date of that Corporate Transaction, terminate in its entirety and all of an
Optionee's Performance Option Shares shall immediately vest.
Time Period Minimum
of Acquisition Price
Acquisition Per Share
----------- -----------------
05/25/95 to 12/31/96 $4.20
01/01/97 to 12/31/97 $5.25
01/01/98 to 12/31/98 $6.30
01/01/99 to 12/31/99 $7.35
01/01/00 to 12/31/00 $8.40
01/01/01 or later $9.45
Should a Corporate Transaction be effected during a time period set
forth above for a Per Share Acquisition Price less than the applicable minimum
price listed above for such time period, there will be no acceleration of
vesting, and the vesting and repurchase rights related to such options will
remain in effect.
Upon the consummation of a Corporate Transaction, each such option will
terminate, unless the acquirer expressly agrees to assume such option or
substitute therefor a substitute option of the acquirer.
"Corporate Transaction" shall mean either of the following
shareholder-approved transactions: (1) a merger or consolidation in which
securities possessing more than fifty percent (50%) of the total combined voting
power of QCAC's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction, or (2) the sale, transfer or other disposition of all or
substantially all of QCAC's assets in complete liquidation or dissolution of
QCAC. (Note that the merger of QCAC into Quintus is not a "Corporate
Transaction" and that following such merger, options will be governed as if
initially granted by Quintus.)
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EXHIBIT B
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
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EMPLOYEE
PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
------------------------
The following confirms an agreement between me and Quintus
Corporation, a Delaware corporation (the "Company"), which is a material part
of the consideration for my employment by the Company:
1. In consideration of my employment by the Company and the
compensation received by me from the Company from time to time, I hereby agree
as follows:
a. I understand that the Company possesses and will possess
Proprietary Information which is important to the business. For purposes of
this Agreement, "Proprietary Information" is information that was or will be
developed, created, or discovered by or on behalf of the Company, or which
became or will become known by, or was or is conveyed to the Company, which has
commercial value in the Company's business. "Proprietary Information" includes,
but is not limited to, information about circuits, layouts, algorithms, trade
secrets, computer programs, designs, technology, ideas, know-how, processes,
formulas, compositions, data, techniques, improvements, inventions (whether
patentable or not), works of authorship, business and product development
plans, salaries and terms of compensation of other employees, customers and
other information concerning the Company's actual or anticipated business,
research or development, or which is received in confidence by or for the
Company from any other person. I understand that my employment creates a
relationship of confidence and trust between me and the Company with respect to
Proprietary Information.
All Proprietary Information and all title, patents, patent
rights, copyrights, mask work rights, trade secret rights, and other
intellectual property and rights anywhere in the world (collectively "Rights")
in connection therewith shall be the sole property of the Company. I hereby
assign to the Company any Rights I may have or acquire in such Proprietary
Information. At all times, both during my employment by the Company and after
its termination, I will keep in confidence and trust and will not use or
disclose any Proprietary Information or anything relating to it without the
prior written consent of an officer of the Company except as may be necessary
and appropriate in the ordinary course of performing my duties to the Company.
Disclosure restrictions of this Agreement shall not apply
to any information that I can document is generally known to the public through
no fault of mine. Nothing contained herein will prohibit an employee from
disclosing to anyone the amount of his or her wages.
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b. I understand that the Company possesses or will possess
"Company Materials" which are important to its business. For purposes of this
Agreement, "Company Materials" are documents or other media or tangible items
that contain or embody Proprietary Information or any other information
concerning the business, operations or plans of the Company, whether such
documents have been prepared by me or by others. "Company Materials" include,
but are not limited to, blueprints, drawings, photographs, charts, graphs,
notebooks, customer lists, computer disks, tapes or printouts, sound recordings
and other printed, typewritten or handwritten documents, as well as samples,
prototypes, models, products and the like.
All Company Materials shall be the sole property of the
Company. I agree that during my employment by the Company, I will not remove any
Company Materials from the business premises of the Company or deliver any
Company Materials to any person or entity outside the Company, except as I am
required to do in connection with performing the duties of my employment. I
further agree that, immediately upon the termination of my employment by me or
by the Company for any reason, or during my employment if so requested by the
Company, I will return all Company Materials, apparatus, equipment and other
physical property, or any reproduction of such property, excepting only (i) my
personal copies of records relating to my compensation; (ii) my personal copies
of any materials previously distributed generally to stockholders of the
Company; and (iii) my copy of this Agreement.
c. I will promptly disclose in writing to my immediate
supervisor, with a copy to the Chairman of the Board of Directors of the
Company, or to any persons designated by the Company, all "Inventions", (which
term includes improvements, inventions, works of authorship, trade secrets,
technology, circuits, layouts, algorithms, computer programs, formulas,
compositions, ideas, designs, processes, techniques, know-how and data, whether
or not patentable) made or conceived or reduced to practice or developed by me,
either alone or jointly with others, during the term of my employment. I will
also disclose to the President of the Company Inventions conceived, reduced to
practice, or developed by me within six (6) months of the termination of my
employment with the Company; such disclosures shall be received by the Company
in confidence (to the extent they are not assigned in (d) below) and do not
extend the assignment made in Section (d) below.
I will not disclose Inventions covered by Section 1.d to
any person outside the Company unless I am requested to do so by management
personnel of the Company.
d. I agree that all Inventions which I make, conceive, reduce
to practice or develop (in whole or in part, either alone or jointly with
others) during my employment shall be the sole property of the Company to the
maximum extent permitted by Section 2870 of the California Labor Code, a copy
of which is attached hereto as Attachment B, and I hereby assign such
Inventions and all Rights therein to the
2.
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Company. No assignment in this Agreement shall extend to inventions, the
assignment of which is prohibited by Labor Code section 2870. The Company shall
be the sole owner of all Rights in connection therewith.
e. I agree to perform, during and after my employment, all
acts deemed necessary or desirable by the Company to permit and assist it, at
the Company's expense, in evidencing, perfecting, obtaining, maintaining,
defending and enforcing Rights and/or my assignment with respect to such
Inventions in any and all countries. Such acts may include, but are not limited
to, execution of documents and assistance or cooperation in legal proceedings I
hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents, as my agents and attorneys-in-fact to act for and in my
behalf and instead of me, to execute and file any documents and to do all other
lawfully permitted acts to further the above purposes with the same legal force
and effect as if executed by me.
f. I have attached hereto as Attachment A a complete list of
all existing Inventions to which I claim ownership as of the date of this
Agreement and that I desire to specifically clarify are not subject to this
Agreement.
g. During the term of my employment and for one (1) year
thereafter, I will not encourage or solicit any employee or consultant of the
Company to leave the Company for any reason. However, this obligation shall not
affect any responsibility I may have as an employee of the Company with respect
to the bona fide hiring and firing of Company personnel.
h. I agree that during my employment with the Company I will
not engage in any employment, business, or activity that is in any way
competitive with the business of proposed business of the Company, and I will
not assist any other person or organization in competing with the Company or
in preparing to engage in competition with the business or proposed business of
the Company. The provisions of this paragraph shall apply both during normal
working hours and at all other times including, but not limited to, nights,
weekends and vacation time, while I am employed by the Company.
i. I represent that my performance of all the terms of this
Agreement will not breach any agreement to keep in confidence proprietary
information acquired by me in confidence or in trust prior to my employment by
the Company. I have not entered into, and I agree I will not enter into, any
agreement either written or oral in conflict herewith or in conflict with my
employment with the Company.
2. I agree that this Agreement is not an employment contract and
that I have the right to resign and the Company has the right to terminate my
employment at any time, for any reason, with or without cause.
3.
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3. I agree that this Agreement does not purport to set forth all of
the terms and conditions of my employment, and that as an employee of the
Company I have obligations to the Company which are not set forth in this
Agreement.
4. I agree that my obligations under paragraphs 1(a) through 1(e)
and paragraph 1(g) of this Agreement shall continue in effect after termination
of my employment, regardless of the reason or reasons for termination, and
whether such termination is voluntary or involuntary on my part, and that the
Company is entitled to communicate my obligations under this Agreement to any
future employer or potential employer of mine.
5. I agree that any dispute in the meaning, effect or validity of
this Agreement shall be resolved in accordance with the laws of the State of
California without regard to the conflict of laws provisions thereof. I further
agree that if one or more provisions of this Agreement are held to be illegal
or unenforceable under applicable California law, such illegal or unenforceable
portion(s) shall be limited or excluded from this Agreement to the minimum
extent required so that this Agreement shall otherwise remain in full force and
effect and enforceable in accordance with its terms.
6. This Agreement shall be effective as of the date I execute this
Agreement and shall be binding upon me, my heirs, executors, assigns, and
administrators and shall inure to the benefit of the Company, its subsidiaries,
successors and assigns.
7. This Agreement can only be modified by a subsequent written
agreement executed by the Chairman of the Board of Directors of the Company.
4.
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I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE
OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR
REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I
SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE
UNDERSTANDING THAT ONE COUNTERPART WILL BE RETAINED BY THE COMPANY AND THE
OTHER COUNTERPART WILL BE RETAINED BY ME.
Dated: 5/24/1999 /s/ ALAN K. ANDERSON
----------------------------------------
Employee Signature
Alan K. Anderson
----------------------------------------
Employee Name
ACCEPTED AND AGREED TO:
QUINTUS CORPORATION
By: /s/ PAUL H. BARTLETT
- -------------------------------------
5.
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ATTACHMENT A
------------
Quintus Corporation
301 East Evelyn Avenue
Mountain View, CA 94041-1530
Ladies and Gentlemen:
1. The following is a list of Inventions relevant to the subject matter
of my employment by Quintus Corporation (the "Company") that have been made or
conceived or first reduced to practice by me alone or jointly with others prior
to my employment by the Company that I desire to clarify are not subject to the
Company's Proprietary Information and Inventions Agreement.
X No Inventions
- -------
See below:
- -------
Additional sheets attached
- -------
2. I propose to bring to my employment the following materials and
documents of a former employer:
X No materials or documents
- -------
See below:
- -------
/s/ Alan K. Anderson
---------------------------------------------
Employee Signature
Alan K. Anderson
---------------------------------------------
Employee Name
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ATTACHMENT B
Section 2870. Application of provision providing that employee shall
assign or offer to assign rights in invention to employer.
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer; or
(2) Result from any work performed by the employee for his
employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.