Draper Fisher Jurvetson and two other VC firms settled a lawsuit leveled at them by the former CEO of portfolio company Agentis International, who alleged he wasn’t getting the severance package the VCs had promised him, according to court documents obtained by PE Week.
DFJ Partner Raj Atluru and Vincent Worms of Partech International offered Jean-Yves Dexmier the CEO job at startup Agentis during the summer in 2001. The contract guaranteed Dexmier a base salary of $264,000 and benefits for 12 months after his termination and 20 days of annual vacation and payments, according to the complaint.
That money went unpaid when the VCs made Dexmier’s termination a condition of further financing in 2005, the complaint alleges. The unpaid benefits could total more than $270,000.
DFJ, Partech, Constellation Ventures and Agentis are listed as defendants in the original complaint. Atluru declined to comment for this story. Worms did not return phone calls requesting comment.
Jim Marshall, the CEO of Agentis Software, says his company bought the assets of Agentis earlier this year and restarted the company with a new team. The company was also relocated from San Mateo, Calif., to Atlanta. Marshall says the lawsuit was settled by the venture capitalists recently. Terms of the deal were undisclosed.
Dexmier’s complaint alleges that the VCs required him to purchase stock in his startup during the Series B financing. Dexmier’s $100,000 went to pay the company payroll and was later converted to Series B equity as part of the company’s $11.75 million financing in 2003, according to the complaint. Dexmier initially refused to put his money in, but the investors said they wouldn’t fund Agentis adequately and he would lose his job if he didn’t invest, the complaint says. Dexmier claims he was illegally required to “defer compensation and return his earnings to Agentis as a condition of continued employment.”
It’s rare for VCs to ask an executive to participate in a deal alongside them, says Andrew Toebben, an attorney with Gunderson Dettmer, which is not affiliated with the case. It’s most often used when the executive participated in a friends-and-family round of seed financing, he says. The VCs typically ask the executive to re-up in the Series B round or convert to common stock. Participating in the round keeps the executive incentivized; converting to common shares strips him or her of any special rights given under the Series A financing agreement.
Worms and Philippe Cases, also of Partech, told Dexmier in 2005 that they and DFJ had decided to terminate him as a condition of further funding, the complaint says. Atluru told Dexmier later that day that DFJ did not pay severance and encouraged him to either receive payment based on Agentis’s ability to get customer contracts, or by taking equity in lieu of severance. Dexmier wanted cash and didn’t get it, the complaint says.
Dexmier is now the owner of an events management company called Dexline.