EXHIBIT 10.2

 

EMPLOYMENT AGREEMENT

WITH NON-COMPETITION AND NO-HIRE AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the              day
of             , 2002 by and between NetIQ Corporation, a Delaware corporation
(“NetIQ”), and the undersigned security holder and employee (“Employee”) of
PentaSafe Security Technologies, Inc., a Texas corporation (the “Company”).

 

WHEREAS, Employee is both a security holder and a key employee of the Company
and has confidential and proprietary information relating to the business and
operation of the Company.

 

WHEREAS, NetIQ, Company and certain other parties have entered into an Agreement
and Plan of Merger (as the same may be amended from time to time, the “Merger
Agreement”), pursuant to which the Company will become a wholly-owned subsidiary
of NetIQ. Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to them in the Merger Agreement.

 

WHEREAS, Employee’s entry into this Agreement is an inducement for NetIQ to
enter into the Merger Agreement and is a condition to the Closing of the Merger.

 

NOW, THEREFORE, IT IS HEREBY AGREED by and between the parties hereto as
follows:

 

1.    Employment Term; Employment Period.    The term of Agreement (the
“Employment Term”) shall commence at and as of the Effective Time of the Merger
(“Effective Date”) and shall end at the close of business on the second
anniversary of the Effective Date. “Employment Period” as used in this Agreement
shall mean the period of Employee’s continuous employment by NetIQ commencing on
the Effective Date and ending the earlier to occur of (a) termination of
Employee’s employment in accordance with Article 6 or (b) the last day of
Employment Term.

 

2.    Employment; Duties and Acceptance.

 

(a)    Employment Term; Duties.    On the Effective Date, NetIQ shall employ
Employee in the capacity set forth on Exhibit A to render services to and
continue in the employment of NetIQ (and/or its subsidiaries). During the
Employment Period, Employee shall perform for NetIQ (and/or its subsidiaries)
such duties as he or she shall be directed by NetIQ to perform and shall devote
his or her attention and energies and his best efforts, on a full-time basis, to
the business and affairs of NetIQ and to the discharge of his duties, functions
and responsibilities hereunder, and will use his best efforts to promote the
interests of NetIQ.

 

(b)    Acceptance.    Employee hereby accepts such position and agrees to render
the services described above. Employee shall perform services hereunder with
fidelity and to the best of his or her ability.

 

3.    Compensation; Benefits.

 

(a)    During the Employment Period, NetIQ agrees to pay Employee an annual

 

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salary and bonus equivalent or better than that earned by Employee at the
Company on September 30, 2002, as disclosed by Company in the Company Disclosure
Schedule under the Merger Agreement, payable in accordance with NetIQ’s standard
employment policies. Employee’s annual salary shall be reviewed annually and
will be adjusted in accordance with NetIQ’s standard employment policies.

 

(b)    During the Employment Period, NetIQ shall provide Employee such standard
employee benefits as are provided to its other employees of commensurate
position. NetIQ will recommend to its Board of Directors that Employee be
granted an option to purchase shares of NetIQ Stock, which option grant will
vest 25% on the one year anniversary of the Effective Date and quarterly
thereafter, at the rate of 6.25%, and will be fully vested at the end of four
years.

 

4.    Confidentiality Agreement.    Concurrently with the execution of this
Agreement, Employee will execute the “Employment, Confidential Information,
Covenant Not to Compete and Invention Assignment Agreement” in the form attached
hereto as Exhibit B (the “Confidentiality Agreement”).

 

5.    Covenant Not to Compete.    Concurrently with the execution of this
Agreement, Employee will execute the “Non-Competition and No-Hire Agreement” in
the form attached hereto as Exhibit C (the “Non-Compete Agreement”).

 

6.    Termination.

 

(a)    Death or Disability.    If Employee’s relationship with NetIQ terminates
as a result of Employee’s death or disability (within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended), no compensation or
payments will be made other than as required by law or statute.

 

(b)    Termination for Cause or Voluntary Resignation.    If, during the
Employment Term, Employee’s relationship with NetIQ is terminated by NetIQ for
Cause (as defined in Section 6(d) below) or if Employee resigns his position
voluntarily, no compensation, payments or benefits (except any benefits required
by law) will be paid or provided to Employee for the periods following the date
when such a termination of service is effective, nor shall NetIQ be required to
make the payment set forth in Section 6(c) to Employee. Employee’s obligations
under the Non-Compete Agreement shall continue until the termination of the
Non-Compete Agreement in accordance with its terms.

 

(c)    Termination Without Cause.    During the Employment Term, Employee’s
employment with NetIQ may not be terminated by NetIQ without Cause (as defined
in Section 6(d) below) except as provided herein. During the Employment Term, if
NetIQ terminates Employee’s employment without Cause (as defined in Section
6(d)), then NetIQ will pay Employee six months salary as severance, in
accordance with its regular payroll policies and less any applicable
withholding. Except as otherwise required by law, such payment shall be in lieu
of any other severance or severance-type benefits to which the Employee may be
entitled under NetIQ’s then existing benefit plans and programs. In addition,
Employee’s obligations under the Non-Compete Agreement and under Section 5 of
the Confidentiality Agreement shall terminate upon the earlier of (i) the
termination of the Non-Compete Agreement in accordance with its terms, and (ii)
the date six (6) months after the end of the Employment Period.

 

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(d)    Definition of Cause.    As used in this Agreement, the term “Cause” shall
mean:

 

(i)    Employee’s continued and willful failure to perform his duties and
responsibilities in good faith to the best of his or her ability after written
notice thereof from NetIQ to Employee, which failure is not cured within fifteen
(15) days following written notice of such failure to Employee;

 

(ii)    Employee willfully engaging in any act which constitutes gross
misconduct and which is injurious to NetIQ (or its affiliates);

 

(iii)    Employee being convicted of a felony, or committing an act of
dishonesty, fraud or malfeasance against, or the misappropriation of property
belonging to, NetIQ (or its affiliates); or

 

(iv)    Employee willfully breaching in any material respect the terms of this
Agreement, including with respect to a Confidentiality Agreement or the
Non-Compete Agreement.

 

7.    Survival.    Except as expressly provided by this Agreement, the
Confidentiality Agreement and Non-Compete Agreement shall survive the
termination of this Agreement.

 

8.    Notices.    All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid or otherwise delivered by facsimile transmission, by hand
or by nationally recognized overnight courier service (next business day
delivery), addressed:

 

If to the Security Holder, at the address set forth below the Security Holder’s
signature at the end hereof.

 

If to NetIQ:         NetIQ Corporation

3553 North First Street

San Jose, CA 95134

Attn: James A. Barth

 

(or to such other address as may be stated in written notice furnished by either
party to the other party). Each such notice or other communication shall for all
purposes of this Agreement be treated as effective or having been given (i) when
delivered, if delivered personally, (ii) if sent by facsimile, the first
business day after the date of confirmation that the facsimile has been
successfully transmitted to the facsimile number for the party notified, (iii)
if sent by mail, at the earlier of its receipt or 72 hours after the same has
been deposited in a regularly maintained receptacle for the deposit of the
United States mail, addressed and mailed as aforesaid, or (iv) if sent by
nationally recognized overnight courier service, the first business day
following the deposit of such notice with such courier service.

 

9.    Governing Law.    This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Texas (without
regard to the principles of conflict of laws thereof).

 

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10.    Amendments.    This Agreement shall not be changed or modified in whole
or in part except by an instrument in writing signed by each party hereto.

 

11.    NetIQ’s Successors.    This Agreement shall inure to the benefit of any
successor to NetIQ (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise), or to all or substantially all
of NetIQ ‘s business and/or assets.

 

12.    Entire Agreement.    Except as set forth herein, this Agreement together
with the Confidentiality Agreement and the Non-Compete Agreement, shall
supersede and replace all prior agreements or understandings relating to the
subject matter hereof, and no agreement, representations or understandings
(whether oral or written or whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the relevant matter hereof.

 

13.    Counterparts.    This Agreement may be executed in counterparts, each of
which shall be an original, and all of which together shall constitute one and
the same agreement.

 

14.    Effect of Headings.    The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.

 

15.    Effectiveness of Agreement.    This Agreement shall become effective at
and as of the Effective Date.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

EMPLOYEE

/s/    DOUGLAS ERWIN

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(Signature)

Douglas Erwin

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(Print Name)

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(Print Address)

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(Print Facsimile Number)

NETIQ CORPORATION

By:

 

    

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