AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
Exhibit 10.73
AMENDED AND RESTATED CHANGE
OF CONTROL AGREEMENT
This Amended
and Restated Change Of Control Agreement (the “Agreement”) is entered
into this 24th
day of November, 2008 (the “Effective Date”), between Chordiant
Software, Inc. (the “Company”) and Xxxxxxxx X. Xxxxxx
(“Executive”). This Agreement is intended to provide Executive with
the compensation and benefits described herein upon the occurrence of specific
events.
Whereas,
the Company and Executive previously entered into a Change of Control Agreement,
dated April 13, 2007 (the “Prior Change of Control Agreement”); and
Whereas,
the Company and Executive wish to amend and restate the Prior Change of Control
Agreement by entering into this Amended and Restated Change of Control Agreement
to clarify certain matters previously agreed to by the parties and to comply
with the parties’ original intent that the Prior Change of Control Agreement be
interpreted, construed and administered in a manner that satisfies Section 409A
of the Internal Revenue Code of 1986, as amended from time to time, among other
things;
Now,
Therefore, in consideration of the foregoing, the mutual covenants
contained herein, and other good and valuable consideration, the parties hereto
hereby agree as follows:
1. Termination
of Employment.
(a) At-Will
Employment. Executive’s employment is at-will, which means
that the Company may terminate Executive’s employment at any time, with or
without advance notice, and with or without Cause (as defined
herein). Similarly, Executive may resign his/her employment at any
time, with or without advance notice or Good Reason (as defined
herein). Executive shall not receive any compensation of any kind,
including, without limitation, severance benefits, following Executive’s last
day of employment with the Company (the “Termination Date”), except as expressly
provided herein, or as provided in any plan documents governing the compensatory
equity awards that have been or may be granted to Executive from time to time in
the sole discretion of the Company (the “Stock Awards”). Executive
shall devote all reasonable efforts to the performance of Executive’s duties,
and shall perform such duties in good faith.
(b) Termination Related to a Change of
Control. If Executive’s employment is terminated without Cause
(and other than as a result of Executive’s death or disability) or Executive
resigns for Good Reason, in either case on or within twelve (12) months after a
Change of Control (a “Covered Termination”), and provided such termination
constitutes a “separation from service” (within the meaning of Treasury
Regulation Section 1.409A-1(h)), and provided Executive signs and allows to
become effective a release substantially in the form attached hereto as Exhibit A (the “Release”)
within the time period provided therein, then the Company shall provide
Executive with the following severance benefits (the “Benefits”):
(i) The
Company shall make severance payments to Executive in the form of continuation
of Executive’s base salary (at the rate in effect on the Termination Date) for
the first twelve (12) months following the Termination Date (the “Severance
Period”). These payments will be made on the Company’s ordinary
payroll dates and will be subject to standard payroll deductions and
withholdings.
(ii) The
Company will pay Executive an amount equal to Executive’s annual
bonus. The annual bonus will be calculated at one of the following
rates, whichever is higher: (1) as if both Executive and the Company achieved
one hundred (100) percent of their specified performance objectives for the year
in which the Termination Date occurs; or (2) the actual performance of the
Company and Executive, determined as of the Termination Date, as measured
against the specified performance objectives for the year in which the
Termination Date occurs. This amount will be paid over the Severance
Period on the Company’s ordinary payroll dates, in equal installments, and will
be subject to standard payroll deductions and withholdings.
(iii) The
Company will pay Executive an additional amount of $3,000, which Executive may,
but is not obligated to, use to pay for life insurance benefits during the
Severance Period. This amount will be paid over the Severance Period
on the Company’s ordinary payroll dates, in equal installments, and will be
subject to standard payroll deductions and withholdings.
(iv) Provided
that Executive elects continued coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (together with any state or local laws of
similar effect, “COBRA”), the Company will pay the premiums for Executive’s
group health (including dental and vision) insurance coverage, including
coverage for Executive’s eligible dependents, for a maximum period of twelve
(12) months following the Covered Termination or such lesser number of months as
Executive and Executive’s eligible dependents are eligible for such coverage;
provided, however, that
the Company will pay premiums for Executive and Executive’s eligible dependents
only for coverage for which they were enrolled immediately prior to the
Termination Date. Executive (and Executive’s dependents, as
applicable) will be solely responsible for making a timely and accurate election
for continuation of coverage pursuant to COBRA. No premium payments
will be made by the Company pursuant to this paragraph following the effective
date of Executive’s coverage by a health (including dental and vision) insurance
plan of a subsequent employer or such other date on which Executive (and
Executive’s dependents, as applicable) cease to be eligible for COBRA
coverage. After the Severance Period, for the balance of the COBRA
period, if any, Executive shall maintain any such coverage at Executive’s own
expense.
(v) After
taking into account any additional acceleration of vesting Executive may be
entitled to receive under any other plan or agreement, the Company will
accelerate the vesting of the Stock Awards such that the lesser of the following
shall vest effective as of the Termination Date: (a) 50% of the
then-unvested shares, rights, or units, as applicable subject to the Stock
Awards; and (b) that number of shares, rights or units subject to each such
Stock Award that would have vested if Executive had worked for the Company for
twelve (12) additional months beyond the Termination Date. This
acceleration of vesting will be in addition to any acceleration of vesting of
the Stock Awards that Executive would otherwise receive under the Company’s 2000
Nonstatutory Equity Incentive Plan, 1999 Equity Incentive Plan, 2005 Equity
Incentive Plan or any other documents governing the Stock Awards. In
addition, Executive shall have one (1) year to exercise any vested Stock Awards,
but in no event shall such exercise period extend beyond the expiration of the
original term of the Stock Award. Except as expressly set forth
herein, the Stock Awards shall continue to be governed by the terms of the
applicable award agreements and equity incentive plan
documents. Notwithstanding anything to the contrary contained herein,
the maximum number of months of accelerated vesting that may be credited to any
Stock Award under this Agreement, when added to any accelerated vesting provided
for under any award agreement or equity incentive plan documents, shall not
exceed twenty-four (24) months in the aggregate.
(c) Termination For Cause
Procedure. The Company may not terminate Executive’s
employment for Cause unless and until Executive receives a copy of a resolution
duly adopted by the affirmative vote of at least a majority of the Board of
Directors of the Company or any successor thereto (“Board”) finding that in the
good faith opinion of the Board, Executive was guilty of the conduct
constituting “Cause” and specifying the particulars thereof in
detail. The Company shall provide Executive with reasonable notice of
the Board vote and an opportunity for Executive, together with Executive’s
counsel, to be heard before the Board.
2. Limitations
And Conditions On Benefits
(a) Release Prior to Payment of
Benefits. Upon the occurrence of a Covered Termination, and
prior to the payment of any of the Benefits, Executive shall execute, and allow
to become effective, the Release within the time frame set forth therein, but
not later than the 60th day
following the Termination Date. Such Release shall specifically
relate to all of Executive’s rights and claims in existence at the time of such
execution and shall confirm Executive’s continuing obligations to the Company
(including but not limited to obligations under any confidentiality and/or
non-solicitation agreement with the Company). Notwithstanding the
payment schedules set forth in Section 1 above, no Benefits will be paid prior
to the effective date of the Release. On the first regular payroll pay day
following the effective date of the Release, the Company will pay Executive the
Benefits Executive would otherwise have received on or prior to such date but
for the delay in payment related to the effectiveness of the Release, with the
balance of the Benefits being paid as originally scheduled.
(b) Compliance with Section
409A. It is intended that each installment of the payments and
benefits provided for in this Agreement is a separate “payment” for purposes of
Treasury Regulation Section 1.409A-2(b)(2)(i). For the avoidance of
doubt, it is intended that payments of the amounts set forth in this Agreement
satisfy, to the greatest extent possible, the exemptions from the application of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
(Section 409A of the Code, together, with any state law of similar effect,
“Section 409A”) provided under Treasury Regulations 1.409A-1(b)(4),
1.409A-1(b)(5) and 1.409A-1(b)(9). However, if the Company (or, if applicable,
the successor entity thereto) determines that the severance payments and
benefits provided under this Agreement (the “Agreement Payments”) constitute
“deferred compensation” under Section 409A and Executive is, on the Termination
Date, a “specified employee” of the Company or any successor entity thereto, as
such term is defined in Section 409A(a)(2)(B)(i) of the Code (a “Specified
Employee”), then, solely to the extent necessary to avoid the incurrence of the
adverse personal tax consequences under Section 409A, the timing of the
Agreement Payments shall be delayed as follows: on the earlier to
occur of (i) the date that is six months and one day after Executive’s
“separation from service” (as defined above) or (ii) the date of Executive’s
death (such earlier date, the “Delayed Initial Payment Date”), the Company (or
the successor entity thereto, as applicable) shall (A) pay to Executive a lump
sum amount equal to the sum of the Agreement Payments that Executive would
otherwise have received through the Delayed Initial Payment Date if the
commencement of the payment of the Agreement Payments had not been so delayed
pursuant to this Section 2(b) and (B) commence paying the balance of the
Agreement Payments in accordance with the applicable payment schedules set forth
in this Agreement.
3. Definitions.
(a) Definition of
Cause. For purposes of this Agreement, “Cause” shall mean that
Executive has committed, or there has occurred, one or more of the following
events: (1) conviction of any felony or misdemeanor involving moral
turpitude, fraud or act of dishonesty against the Company; (2) a finding by the
Board, after a good faith and reasonable factual investigation, that Executive
has engaged in gross misconduct; or (3) material violation or material breach of
any Company policy or statutory, fiduciary, or contractual duty of Executive to
the Company; provided,
however, that in the event that any of the foregoing events occurs, the
Company shall provide notice to Executive describing the nature of such event
and Executive shall thereafter have ten (10) days to cure such event if such
event is capable of being cured.
(b) Definition of Good Reason. For
purposes of this Agreement, “Good Reason” means that Executive voluntarily
terminates employment with the Company (or any successor thereto) if and only
if:
(i) one
of the following actions has been taken without Executive’s express written
consent:
(1) there
is a material reduction (where material is considered greater than 5%) in
Executive’s annual base compensation from the compensation in effect immediately
preceding the Change of Control;
(2) there
is a material change in Executive’s position or responsibilities (including the
person or persons to whom Executive has reporting responsibilities) that
represents an adverse change from Executive’s position or responsibilities from
those in effect at any time within ninety (90) days preceding the date of the
Change of Control or at any time thereafter;
(3) Executive
is required to relocate Executive’s principal place of employment to a facility
or location that would increase Executive’s one way commute distance by more
than twenty-five (25) miles;
(4) the
Company (or any successor thereto) materially breaches its obligations under
this Agreement or any other then-effective employment agreement with Executive;
or
(5) any
acquirer, successor or assignee of the Company fails to assume and perform, in
all material respects, the obligations of the Company hereunder;
and
(ii) Executive
provides written notice to the Company’s Board within the thirty (30) day period
immediately following such action; and
(iii) such
action is not remedied by the Company within thirty (30) days following the
Company’s receipt of such written notice; and
(iv) Executive’s
resignation is effective not later than sixty (60) days after the expiration of
such thirty (30) day cure period.
The termination of Executive’s
employment as a result of Executive’s death or disability will not be deemed to
be a Good Reason.
(c) Definition of Change of
Control. For purposes of this Agreement, a “Change of Control”
means: (i) a dissolution, liquidation or sale of all or substantially all of the
assets of the Company; (ii) a merger or consolidation in which the Company is
not the surviving corporation; (iii) a reverse merger in which the Company is
the surviving corporation but the shares of the Company’s common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (iv) the acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or any comparable successor provisions (excluding
any employee benefit plan, or related trust, sponsored or maintained by the
Company or any Affiliate of the Company) of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty percent
(50%) of the combined voting power entitled to vote in the election of
directors.
4. Best
After Tax.
(a) If
any payment or benefit (including payments and benefits pursuant to this
Agreement) that Executive would receive in connection with a Change of Control
from the Company or otherwise (“Transaction Payment”) would (a) constitute a
“parachute payment” within the meaning of Section 280G of the Code, and (b) but
for this sentence, be subject to the excise tax imposed by Section 4999 of the
Code (the “Excise Tax”), then the Company shall cause to be determined, before
any amounts of the Transaction Payment are paid to Executive, which of the
following two alternative forms of payment would result in Executive’s receipt,
on an after-tax basis, of the greater amount of the Transaction Payment
notwithstanding that all or some portion of the Transaction Payment may be
subject to the Excise Tax: (1) payment in full of the entire amount of the
Transaction Payment (a “Full Payment”), or (2) payment of only a part of the
Transaction Payment so that Executive receives the largest payment possible
without the imposition of the Excise Tax (a “Reduced Payment”) . For
purposes of determining whether to make a Full Payment or a Reduced Payment, the
Company shall cause to be taken into account all applicable federal, state and
local income and employment taxes and the Excise Tax (all computed at the
highest applicable marginal rate, net of the maximum reduction in federal income
taxes which could be obtained from a deduction of such state and local
taxes). If a Reduced Payment is made, (x) Executive shall have no
rights to any additional payments and/or benefits constituting the Transaction
Payment, and (y) reduction in payments and/or benefits shall occur in the
following order: (1) reduction of cash payments; (2) cancellation of accelerated
vesting of equity awards other than stock options; (3) cancellation of
accelerated vesting of stock options; and (4) reduction of other benefits (if
any) paid to Executive. In the event that acceleration of
compensation from Executive’s equity awards is to be reduced, such acceleration
of vesting shall be canceled in the reverse order of the date of
grant.
(b) The
independent registered public accounting firm engaged by the Company for general
audit purposes as of the day prior to the effective date of the Change of
Control shall make all determinations required to be made under this Section
4. If the independent registered public accounting firm so engaged by
the Company is serving as accountant or auditor for the individual, entity or
group effecting the Change of Control, the Company shall appoint a nationally
recognized independent registered public accounting firm to make the
determinations required hereunder. The Company shall bear all
expenses with respect to the determinations by such independent registered
public accounting firm required to be made hereunder.
(c) The
independent registered public accounting firm engaged to make the determinations
hereunder shall provide its calculations, together with detailed supporting
documentation, to the Company and Executive within fifteen (15) calendar days
after the date on which Executive’s right to a Transaction Payment is triggered
or such other time as reasonably requested by the Company or
Executive. If the independent registered public accounting firm
determines that no Excise Tax is payable with respect to the Transaction
Payment, either before or after the application of the Reduced Amount, it shall
furnish the Company and Executive with detailed supporting calculations of its
determinations that no Excise Tax will be imposed with respect to such
Transaction Payment. Any good faith determinations of the accounting
firm made hereunder shall be final, binding and conclusive upon the Company and
Executive.
5. Other
Employment Terms and Conditions. The employment relationship
between the parties shall be governed by the general employment policies and
procedures of the Company, including those relating to the protection of
confidential information and assignment of inventions; provided, however, that
when the terms of this Agreement differ from or are in conflict with the
Company’s general employment policies or procedures, this Agreement shall
control.
6. General
Provisions.
(a) This
Agreement, including all exhibits hereto, constitutes the complete, final and
exclusive embodiment of the entire agreement between the parties with regard to
the subject matter hereof. It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises or
representations. Notwithstanding the foregoing, nothing in this
Agreement shall affect the parties’ obligations under the Stock Awards (except
as expressly set forth herein) or Executive’s Employee Proprietary Information
and Inventions Agreement. This Agreement cannot be modified except in
a writing signed by Executive and a duly-authorized member of the
Board.
(b) Whenever
possible, each provision of this Agreement will be interpreted in such a manner
as to be effective under applicable law. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement. Any invalid or unenforceable provision shall be modified
so as to be rendered valid and enforceable in a manner consistent with the
intent of the parties insofar as possible.
(c) Executive’s
or the Company’s failure to insist upon strict compliance with any provision of
this Agreement or the failure to assert any right Executive or the Company may
have hereunder shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.
(d) This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument. Facsimile signatures shall be deemed as effective as
originals.
(e) This
Agreement is intended to bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors, assigns, heirs,
executives and administrators, except that Executive may not assign any of his
duties hereunder and he may not assign any of his rights hereunder without the
written consent of the Company. This Agreement shall be interpreted
and enforced in accordance with the laws of the State of
California.
(f) If
either party hereto brings any action to enforce such party’s rights hereunder,
the prevailing party in any such action shall be entitled to recover such
party’s reasonable attorneys’ fees and costs incurred in connection with such
action.
(g) For
purposes of construction, this Agreement shall be deemed to have been drafted by
the Company, and the rule of construction of contracts that ambiguities are
construed against the drafting party shall be applied against the
Company.
(h) Any
notice required to be given or delivered to the Company under the terms of this
Agreement shall be in writing and addressed to the Corporate Secretary of the
Company at its principal corporate offices. Any notice required to be
given or delivered to Executive shall be in writing and addressed to Executive
at the address indicated herein or to the last known address provided by
Executive to the Company. All notices shall be deemed to have been
given or delivered upon: personal delivery; three (3) days after deposit in the
United States mail by certified or registered mail (return receipt requested);
one (1) business day after deposit with any return receipt express courier
(prepaid); or one (1) business day after transmission by facsimile or
e-mail.
In Witness
Whereof, the parties have executed this Agreement as of the date written
below.
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/s/
Xxxxxxxx X. Xxxxxx
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Xxxxxxxx
X. Xxxxxx
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Address:
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Date:
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11/24/08
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CHORDIANT
SOFTWARE, INC.
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/s/
Xxxxxx X. Xxxxxxxxxxx
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Name:
Xxxxxx X. Xxxxxxxxxxx
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Title: President
& CEO
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Date:
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11/24/08
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Exhibit A
– Release Agreement
.
Exhibit
A
RELEASE
AGREEMENT FOR EMPLOYEES 40 YEARS OF AGE OR OLDER
I
understand and agree completely to the terms set forth in the Chordiant
Software, Inc. Amended and Restated Change of Control Agreement (the
“Agreement”).
I
understand that this Release, together with the Agreement, constitutes the
complete, final and exclusive embodiment of the entire agreement between
Chordiant Software, Inc. (the “Company”) and me with regard to the subject
matter hereof. I am not relying on any promise or representation by
the Company that is not expressly stated therein. Certain capitalized
terms used in this Release are defined in the Agreement.
I
hereby confirm my obligations under my Proprietary Information and Inventions
Agreement.
Except
as otherwise set forth in this Release, I hereby generally and completely
release Chordiant Software, Inc. and its current and former directors, officers,
employees, shareholders, partners, agents, attorneys, predecessors, successors,
parent and subsidiary entities, insurers, affiliates, and assigns (collectively,
the “Released Parties”) from any and all claims, liabilities and obligations,
both known and unknown, that arise out of or are in any way related to events,
acts, conduct, or omissions occurring prior to my signing this Agreement
(collectively, the “Released Claims”). The Released Claims include,
but are not limited to: (1) all claims arising out of or in any
way related to my employment with the Company, or the termination of that
employment; (2) all claims related to my compensation or benefits from the
Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options, or any
other ownership interests in the Company; (3) all claims for breach of
contract, wrongful termination, and breach of the implied covenant of good faith
and fair dealing; (4) all tort claims, including claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and
(5) all federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment
and Housing Act (as amended). Notwithstanding the foregoing, the
following are not included in the Released Claims (the “Excluded Claims”):
(1) any rights or claims for indemnification I may have pursuant to any
written indemnification agreement with the Company to which I am a party, the
charter, bylaws, or operating agreements of the Company, or under applicable
law; or (2) any rights which are not waivable as a matter of
law. In addition, nothing in this Release prevents me from filing,
cooperating with, or participating in any proceeding before the Equal Employment
Opportunity Commission, the Department of Labor, or the California Department of
Fair Employment and Housing, except that I hereby waive my right to any monetary
benefits in connection with any such claim, charge or proceeding. I
hereby represent and warrant that, other than the Excluded Claims, I am not
aware of any claims I have or might have against any of the Released Parties
that are not included in the Released Claims.
I
acknowledge that I am knowingly and voluntarily waiving and releasing any rights
I may have under the ADEA. I also acknowledge that the consideration
given for the Released Claims is in addition to anything of value to which I was
already entitled. I further acknowledge that I have been advised by
this writing, as required by the ADEA, that: (a) the Released Claims do not
apply to any rights or claims that arise after the date I sign this Release; (b)
I should consult with an attorney prior to signing this Release (although I may
choose voluntarily not to do so); (c) I have twenty-one (21) days to consider
this Release (although I may choose to voluntarily sign it sooner); (d) I have
seven (7) days following the date I sign this Release to revoke the Release by
providing written notice to an officer of the Company; and (e) the Release will
not be effective until the date upon which the revocation period has expired
unexercised, which will be the eighth day after I sign this Release provided
that I do not revoke it (“Effective Date”).
I
acknowledge that I have read and understand Section 1542 of the California Civil
Code which reads as follows: “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.” I hereby expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any claims hereunder, including but
not limited to any unknown claims.
I
hereby represent that I have been paid all compensation owed and for all hours
worked, I have received all the leave and leave benefits and protections for
which I am eligible, and I have not suffered any on-the-job injury for which I
have not already filed a workers’ compensation claim.
I
acknowledge that to become effective, I must sign and return this Release to the
Company so that it is received not later than twenty-one (21) days following the
date it is provided to me, and I must not revoke it thereafter.
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Xxxxxxxx
X. Xxxxxx
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Sign:
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Date:
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