Document:

Amendment to Employment Agreement between Legato and Noah D. Mesel

 
EXHIBIT 10.7

 
AMENDMENT 
TO 
EMPLOYMENT AGREEMENT DATED AS OF SEPTEMBER 13, 2002 
 
THIS AMENDMENT (“Amendment”) to the Employment Agreement by and between Legato Systems, Inc., a Delaware corporation (the “Corporation”), and Noah D. Mesel (the
“Executive”), is made as of this 16th day of September, 2002. 
 
WHEREAS, the Corporation and the Executive entered into an Employment Agreement dated as of September 13, 2002 (the “Employment Agreement”); 
 
WHEREAS, Section 26 of the Employment Agreement
provides that the Employment Agreement may only be amended by a written instrument signed by the Executive and an authorized officer of the Corporation; and 
 
WHEREAS, the Corporation and the Executive now wish to amend certain provisions in the Employment Agreement, in order to provide
the Executive with an additional time period to exercise his option to purchase shares of the common stock of the Corporation following the involuntary termination of his employment, among other things. 
 
NOW, THEREFORE, in consideration of the mutual promises
and covenants contained in this Amendment and of other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 
 
1. The definition of “Involuntary Termination” in Part One of the Employment Agreement is hereby amended and
restated in its entirety to read as follows: 
 
Involuntary Termination means (i) the Corporation’s termination of the Executive’s employment for any reason other than a Termination for Cause, or (ii) the Executive’s voluntary resignation within one hundred
eighty (180) days following (A) a material reduction in the scope of his duties and responsibilities or the level of management to which he reports, (B) a reduction in the aggregate dollar amount of his base salary and Target Bonus by more than
fifteen percent (15%), (C) a relocation of his principal place of employment to a location that is more than fifty (50) miles from his then primary place of residence, or (D) a material breach by the Corporation of any of its obligations under this
Agreement and the failure of the Corporation to cure such breach within sixty (60) days after receipt of written notice from the Executive in which the actions or omissions constituting such material breach are specified. 
 
An Involuntary Termination shall not include
the termination of Executive’s employment by reason of death or Incapacity. 
 
2. Part Three, Paragraph 14(e) of the Employment Agreement is hereby amended and restated in its entirety to read as follows: 

 
Extension of Exercise Period. For each outstanding Option (i) which is granted to the Executive on or after September 13, 2002 or (ii) which is outstanding on that date and is not otherwise listed as an excluded
Option on attached Schedule I, the Executive shall have until the earlier of (i) the expiration of the twenty-four (24)-month period measured from the date of his Involuntary Termination or (ii) the expiration date of the option term in which
to exercise that Option. To the extent the exercise period of any existing Option which is an incentive stock option under the federal income tax laws is so extended, that Option shall be deemed to be regranted on the date of this Agreement and may
accordingly fail to retain such incentive stock option status by reason of the One Hundred Thousand Dollar ($100,000) limit on the initial exercisability of incentive stock options per calendar year or because the exercise price of that Option is
below the Fair Market Value of the Common Stock on September 13, 2002. Accordingly, if the Option does lose such incentive stock option status, the Executive shall recognize immediate taxable income upon the subsequent exercise of that Option in an
amount equal to the Fair Market Value of the purchased shares less the exercise price paid for those shares, and the Executive will have to satisfy all applicable income and employment withholding taxes at the time of such exercise. To the extent
any such Option does retain its incentive stock option status, the Executive shall not be entitled to long-term capital gain treatment upon the subsequent sale of any shares purchased under that Option unless such sale occurs more than two (2) years
after the deemed September 13, 2002 regrant date of that Option and more than one (1) year after the date such Option is exercised for those shares. 
 
3. Schedule I to the Employment Agreement is hereby amended and restated in its entirety to read as follows: 
 
LIST OF EXCLUDED OPTIONS 
 
The following Options currently held by the
Executive shall not be modified pursuant to Paragraph 14(e) of the Agreement to provide the extended twenty-four (24)-month exercise period following the date of his Involuntary Termination. Accordingly, for each of the Options listed
below, the Executive shall continue to have only until the earlier of (i) the expiration of the option term or (ii) the end of the period specified in the applicable stock option agreement for which that Option is to remain exercisable
following the date of his termination of employment with the Corporation, including an Involuntary Termination. 
 

	 Grant Date

	  	 Number of Option Shares

	  	 Exercise Price

	 	  	 	  	 

 
4. Except as expressly
set forth herein, all of the terms and provisions of the Employment Agreement shall remain unmodified and in full force and effect, and the Employment Agreement shall be read together and construed with the applicable sections of this Amendment.

 

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5. This Amendment may be
executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 
 
6. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Employment Agreement. 
 
7. The provisions of this Amendment shall be construed and interpreted under
the laws of the State of California applicable to agreements executed and wholly performed within the State of California. If any provision of this Amendment as applied to any party or to any circumstance should be adjudged by a court of competent
jurisdiction to be void or unenforceable for any reason, the invalidity of that provision shall in no way affect (to the maximum extent permissible by law) the application of such provision under circumstances different from those adjudicated by the
court, the application of any other provision of this Amendment, or the enforceability or invalidity of this Amendment as a whole. Should any provision of this Amendment become or be deemed invalid, illegal or unenforceable in any jurisdiction by
reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision will be stricken, and the remainder of this Amendment shall continue in full force and effect.. 
 
8. This Amendment, together with the Employment Agreement as amended hereby, shall supercede and replace any prior agreement between the Corporation and
the Executive relating to the subject matter hereof. 
 

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IN WITNESS
WHEREOF, the undersigned have executed this Amendment as of the day and year written above. 
 

	 LEGATO SYSTEMS, INC.

	
	 By:
	 	 /s/    George I. Purnell

	 	 	 
	 Title:
	 	 V.P. Human Resources and CLO

	 	 	 
	 	 	 
	 /s/    Noah D.
Mesel        

	 Noah D. Mesel

 

4Transition Bonus Agreement between Legato and Noah D. Mesel

 
EXHIBIT 10.8

 
January 20, 2003

 
Dear Noah: 
 
We are pleased to inform you that the Compensation Committee
of the Board of Directors has recently approved a special transition bonus program which will be in effect for you and certain other key employees of Legato should the company be acquired on or before January 9, 2004. 
 
Such an acquisition will be deemed to occur for purposes of
the transition bonus program should any of the following events designated as change in control events under your September 13, 2002 Employment Agreement with Legato be consummated on or before January 9, 2004: 
 
(i) a merger or consolidation in which
securities possessing more than fifty percent (50%) of the total combined voting power of the outstanding Legato securities are transferred to a person or persons different from the persons holding those securities immediately prior to such
transaction; 
 
(ii) the sale,
transfer or other disposition of all or substantially all of Legato’s assets in complete liquidation or dissolution of the company; or 
 
(iii) any transaction or series of related transactions pursuant to which any person or any group of persons comprising a
“group” within the meaning of Rule 13d-5(b)(1) under the Securities Exchange Act of 1934, as amended (other than Legato or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is
controlled by or is under common control with, Legato) becomes directly or indirectly the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities possessing (or convertible into or
exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Legato securities outstanding immediately after the consummation of such transaction or series of related transactions, whether such
transaction involves a direct issuance from Legato or the acquisition of outstanding securities held by one or more of Legato stockholders. 
 
If such an acquisition of Legato were to occur on or before January 9, 2004 and you are asked to continue to provide services to Legato or
any successor entity, whether as an employee, 

consultant or other independent contractor, in order to facilitate the transition process between Legato and the acquiring entity, then you
will be entitled to a special transition bonus equal to two (2) times your monthly base salary (at the rate in effect for you immediately prior to the acquisition) for each full month of such service you render following the acquisition, up to a
total of six (6) months of such post-acquisition service for a maximum potential bonus equal to twelve (12) times your monthly rate of base salary. The amount of your monthly bonus will be pro-rated for any partial month of post-acquisition service
you render, with such pro-ration based on the number of business days in such month. 
 
Your transition bonus will be paid to you at the end of each month of such post-acquisition service, subject to the company’s collection of all applicable withholding taxes. Such bonus will be in
addition to any severance benefits to which you may become entitled under Parts Three and Four of your September 13, 2002 Employment Agreement with Legato, as modified by the subsequent Amendment to such agreement, in the event there should occur an
“involuntary termination” (as such term is defined in your Employment Agreement) of your employment with Legato (or any successor entity) within eighteen (18) months after an acquisition of Legato which qualifies as a “change in
control” for purposes of your Employment Agreement. 
 
Should no such change in control of Legato occur by January 9, 2004, then the transition bonus program will terminate, and you will cease to be entitled to any bonus payments pursuant to the terms of this letter. 
 
No provision of the transition bonus program or your potential
transition bonus will confer any right upon you to continue in Legato’s employ (or the employ of any successor entity) for any period of specific duration or interfere with or otherwise restrict in any way the rights of Legato or your rights to
terminate your employment at any time for any reason, with or without cause. 
 
We hope that you find this transition bonus program a valuable addition to your compensation package which will encourage you to continue in the company’s employ and facilitate the necessary
transition process in connection with any acquisition of Legato effected on or before January 9, 2004. 
 
We ask that you acknowledge your receipt of this letter and your acceptance of the terms 
 

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and conditions governing your participation in the transition bonus program signing and dating the Acceptance section below and returning it
to George Purnell as soon as possible. 
 
Very truly yours, 
/s/    GEORGE I.
PURNELL                 
George I. Purnell 
Vice President Human Resources

and Chief Learning officer 
 
ACCEPTANCE 
 
I hereby acknowledge receipt of the Company’s letter of January 20, 2003 setting
forth the terms and conditions governing my entitlement to transition bonus payments should I continue to provide services to Legato or any successor entity following an acquisition of Legato consummated prior to January 10, 2004. I hereby agree to
and accept all those terms and conditions, and my entitlement to any actual transition bonus payments shall be determined solely by the terms and conditions of such letter. I further understand and agree that I will in no event be entitled to any
transition bonus payments if an acquisition of Legato is not consummated on or before January 9, 2004. 
 
Signature: /s/    NOAH D.
MESEL                             
 
Printed Name: Noah D. Mesel 
 
Dated:    January
28, 2003 
 

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