Exhibit 10.11

 

SPESCOM SOFTWARE

 

 

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10052 Mesa Ridge Ct., Suite 100

 

San Diego, CA 92121-2616

 

Tel: 858.625.3000

 

Fax: 858.625.3010

 

www.spescomsoftware.com

 

April 19, 2006

 

Pierre DeWet

8763 Cayucos Way

San Diego, Ca. 92129

 

Dear Pierre:

 

In order to provide you with an incentive to exert your maximum efforts to
complete a change of control (“Change in Control”) in the ownership of Spescom
Software Inc. (the “Company”) that will be beneficial to the shareholders of the
Company, and in order to retain your services through and after the time that a
Change in Control has occurred, the Company agrees to offer you a retention
bonus (“Retention Bonus”) and severance benefits subject to the terms contained
in this letter agreement (“Agreement”).

 

1.                                       If at the time of a CIC your employment
with the Company has not been terminated voluntarily by you or based on Cause by
the Company, then a Retention Bonus will be an amount allocated to you out of a
pool equal to seven percent (7%) of the Net Acquisition Proceeds of any Change
in Control of the Company and will be payable in cash or securities of the
acquiring entity (the “Acquiror”), or a combination thereof, subject to Sections
below;  provided, however, that the minimum amount of the Retention Bonus pool
shall be $450,000 and the maximum amount of the Retention Bonus pool will be
$675,000, regardless of Net Acquisition Proceeds.

 

2.                                       At least 50% of the Retention Bonus you
receive (if any) will be paid in the form of cash. You will have the right to
demand that all or some portion of any cash component of the Retention Bonus be
paid in the form of securities of the Acquiror to the extent that the Net
Acquisition Proceeds consists of securities of the Acquiror.

 

3.                                       Any securities of the Acquiror that you
receive as part of the Retention Bonus may be subject to such terms and
conditions, including restrictions on the transferability of such securities for
a period of up to one (1) year, as the Company may determine.

 

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4.                                       The Chief Executive Officer of the
Company shall make recommendations to the Compensation Committee of the Board
regarding the allocation of the Retention Bonus pool described in Section 1,
provided that the final allocation and payment of the Retention Bonus is subject
to such committee’s approval and ratification. Payment of any Retention Bonus
hereunder shall be made simultaneous with the Closing.

 

5.                                       In the event that you are not employed
by the Company or the Acquiror after the Change in Control, the Company agrees
to redeem, or to cause the redemption of, for cash, any non-marketable
securities of the Acquiror that were paid as part of the Retention Bonus within
twelve (12) months after the Closing (the specific timing of such redemption to
be determined by the Company, in its sole discretion). Such redemption shall be
at a price equal to the fair market value of the securities redeemed at the time
of redemption, as reasonably determined by the Acquiror.

 

6.                                       In addition to the Retention Bonus, you
will be entitled to (i) severance benefits equal to six (6) months of your Base
Salary, paid in installments based on the Company’s standard payroll procedures
and (ii) payment by the Company of your COBRA premiums (less the Company’s
standard employee insurance contributions) under the Company’s health plan (or a
comparable health plan of the Acquiror) for a period of six (6) months after the
Closing, in any one of the following circumstances:

 

(a)                                                                                 
You are not offered employment at the Company or with the Acquiror after the
Change in Control;

 

(b)                                                                                
You are not offered employment at the Company or with the Acquiror after the
Change in Control in a position with duties and responsibilities that are
comparable to those of your current position and you decline the offered
position ;or

 

(c)                                                                                 
Relocation that increases your commute by more than twenty five (25) miles is
required to ensure continued employment following a Change in Control and you
decline to relocate thus terminating your employment

 

7.                                       In the event that you accept employment
with the Company or with the Acquiror after the Change in Control and are
terminated without Cause within twelve (12) months following the Closing, you
will be entitled to (i) severance benefits equal to six (6) months of your Base
Salary, paid in installments based on the Company’s standard payroll procedures
and (ii) payment by the Company of your COBRA premiums (less the Company’s
standard employee insurance contributions) under the Company’s health plan (or a
comparable health plan of the Acquiror) for a period of six (6) months after the
date of termination.

 

8.                                       Notwithstanding anything contained
herein to the contrary, your entitlement to the severance benefits described in
Sections 6 and 7 is conditioned upon your execution of an effective release of
claims (“Release”) and separation agreement (“Separation Agreement”) containing
such restrictive covenants (including, without limitation, non-competition,
non-solicitation and non-disclosure covenants) as the Company lawfully may
impose.

 

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9.                                       The following definitions apply for
purposes of this Agreement:

 

(a)                                                                                 
“Base Salary” means your base salary in effect immediately prior to the Closing.

 

(b)                                                                                
“Board” means the Board of Directors of the Company.

 

(c)                                                                                 
“Cause” means (A) a material breach by you of any of the terms of the Release or
Separation Agreement; (B) any act of misappropriation, embezzlement, fraud or
similar conduct involving the Company; (C) the conviction or the plea of nolo
contendere or the equivalent in respect of a felony involving moral turpitude;
(D) intentional infliction of any damage of a material nature to any property of
the Company; or (E) any intentional act by you that has a material detrimental
effect on the reputation or business of the Company.

 

(d)                                                                                
“Change in Control” means a transaction or related series of transactions
involving the sale or exchange of more than fifty percent (50%) of the stock or
assets of the Company so that the management and operation of the Company is
controlled by one shareholder or group of shareholders which is different than
those shareholders controlling the management and operation of the Company prior
to the Change of Control.

 

(e)                                                                                 
“Closing” means the closing of a transaction constituting a Change in Control.

 

(f)                                                                                   
“Net Acquisition Proceeds” means the sum of all cash and/or the market value of
any securities received by the Company upon a Change in Control, reduced (1) by
the selling and other transactional expenses incurred as a result of the Change
in Control and (2) by the liabilities of the Company, if any, retained by the
Company’s selling shareholders (not including any liabilities created as a
result of this Agreement) provided, however, that the deferred dividend and
related interest payable to Spescom Ltd. on its Series F Preferred Stock and any
payables owed to Spescom Ltd.excluding the 10% promissory notes and related
accrued interest shall not be deemed to be a liability of the Company retained
by the Company’s selling shareholders. Proceeds received with respect to any
contingent payments in any transaction constituting a Change in Control, less
any related expenses and liabilities as discussed above, shall be included in
the determination of Net Acquisition Proceeds and additional payments under the
Agreement shall be distributed as such contingent payments are received.

 

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10.                                 The determination of whether a Change in
Control has occurred, the determination of Net Acquisition Proceeds, the
calculation of the Retention Bonus, and the determination of the form in which
the Retention Bonus is payable shall be made by the Board subject to the terms
of this Agreement.

 

11.                                 The amounts payable pursuant to this
Agreement are not intended to have an impact on any other compensatory
arrangements or employee benefit plans under which you may be entitled to
benefits.

 

12.                                 The Company shall not be obligated to make
any payment pursuant to this Agreement unless and until any tax withholding
requirement is satisfied.

 

13.                                 All questions regarding the construction,
validation and interpretation of this Agreement will be governed by the law of
the State of California.

 

 

Please indicate your consent and agreement to the foregoing by signing where
indicated below.

 

Sincerely,

 

 

Spescom Software Inc.

 

 

 

By:

/s/ Keith Stentiford

 

 

 

 

Name:

Keith Stentiford

 

 

 

 

Title:

Chief Executive Officer

 

 

AGREED AND ACCEPTED

 

this 26th day of April  , 2006

 

 

By:

/s/ Pierre DeWet

 

 

 

Pierre DeWet

 

 

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