exv10w1



 







EXHIBIT 10.1





April 4, 2006



Mr. Jeffrey Kraatz

777 Mariners Island Blvd.

San Mateo, CA 94404




Dear Jeff:




     I am pleased to offer you the position of Vice President Sales of The Americas and APAC of
Keynote Systems, Inc. This letter embodies the terms of your promotion.



     You will report to Umang Gupta, Chief Executive Officer and your base salary will be
$6,250.00, paid semi-monthly. In addition, your maximum incentive compensation will be $225,000.00
per annum based on revenue and expense targets to be set each year. The next six (6) months,
$18,750.00 per quarter of your commission draws against commissions earned based on plan that will
be delivered to you within 30 days.



     In anticipation and recognition of your important future contribution to the growth of
Keynote, and subject to the approval of Keynote’s Board of Directors, we would like to offer you an
incentive stock option grant for 65,000 shares of common stock. You will receive incentive stock
options to the extent permitted under the law, which currently allows the grant during any one year
of incentive stock options with a fair market value at the date of grant of up to $100,000.00. If
the value of the shares exceeds $100,000.00, that amount in excess will be granted as non-qualified
stock options. The grant date of your option will be the date the Board or a committee designated
by the Board approves the option grant by a written resolution. In calculating the exercise price
for such options it is the later of (a) your promotion date or (b) the date the Board or a
committee, if any, approves the option grant by resolution. Fair market value on such date will be
the closing price per share on the NASDAQ National Market. Consistent with our employee stock
option plan, vesting relates to exercisability not “ownership”, these shares will vest as to 1/4th
of the total number of shares on your first anniversary of the effective date of this promotion
with an additional 1/48th of the total shares vesting at the end of months 13 through 48 of your
continued employment with Keynote. The terms of your stock option grant are set forth more fully
in our Stock Option Plan agreements.



     As an employee, you may terminate employment at any time and for any reason whatsoever with
notice to Keynote Systems, Inc. We require that, in the event of resignation, you give at least
three (3) months notice. Similarly, Keynote Systems may terminate your employment at any time and
for any reason whatsoever, with or without cause, with three (3) months notice, or three (3) months
of base salary plus quarterly incentive compensation as averaged over the previous year, provided
that in order to receive any separation benefits you must first sign, date and deliver to the
Company, and allow to become effective, a general release of all known and unknown claims in the
form provided to you by the Company; and further provided that you will not be required to release
any right to indemnification you may have under applicable law, the Company’s Certificate of
Incorporation, the Company’s bylaws or any indemnity agreement between you and the Company.



 









 





     Furthermore, this letter agreement supersedes all our prior written or oral communication with
you and can only be modified by written agreement signed by you and an officer of Keynote Systems.



I look forward to working with you in this new role!



Sincerely,



\s\ Umang Gupta




Umang Gupta

Chairman & CEO




	 	 	 	 	 
	Accepted:

	 	\s\ Jeff Kraatz
 

	 	 






Date: March 28, 2006