CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") is made by and between CHORDIANT
SOFTWARE, INC. (the "Company") and Xxxx DanielsAllen Xxxxx ("Executive"). This
Agreement will become effective upon its execution by both parties hereto (the
"Effective Date").
RECITALS
WHEREAS Executive is employed by the Company pursuant to the terms of
Executive's offer letter from the Company;
WHEREAS Executive has been granted restricted shares of the
Company's common stock ("Restricted Shares"), as well as option(s) to purchase
shares of the Company's common stock (the "Options"), pursuant to the applicable
restricted stock agreement(s), stock option agreement(s) and equity incentive
plan(s) (together, the "Prior Grants");
WHEREAS in the future, Executive may be granted additional
shares of restricted stock and/or options to purchase the Company's common
stock, subject to the Board's sole discretion (together with Prior Grants, the
"Stock Awards"); and
WHEREAS the Company believes it is imperative to provide
Executive with accelerated vesting of the Stock Awards, as well as other
severance benefits, in the event that Executive is terminated without Cause (as
defined herein) or resigns for Good Reason (as defined herein) in connection
with a Change of Control (as defined herein).
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. Unless specified otherwise in Executive's employment or
offer letter, 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. Similarly, Executive may resign his/her
employment at any time, with or without advance notice or Good Reason. 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, as
otherwise agreed in writing between Executive and the Chief Executive Officer of
the Company, or as provided in any plan documents governing 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 or Executive resigns for Good Reason within ninety (90)
days prior to or twelve (12) months after a Change of Control, and Executive
signs a release substantially in the form (whichever is applicable) attached
hereto as Exhibit A (the "Release"), then the Company shall provide Executive
with the following severance benefits:
(i) The Company shall make severance payments to Executive in the form of
continuation of Executive's base salary in effect on the Termination Date for
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. Notwithstanding the
preceding, Executive's severance payments specified above will be reduced by the
Company by an amount equal to what Executive is paid or entitled to under any
contractual or statutory notice period contained in any employment
letter/arrangement or by way of law, such that the total severance payments plus
any notice pay shall not exceed twelve (12) months of base salary.
(ii) The Company will pay Executive an amount equal to Executive's annual bonus
(provided the Executive is under a non-commission, Company bonus plan). The
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; or (2) the actual performance of the Company
and Executive as measured against the specified performance objectives. This
amount will be paid over the entire 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 the premiums necessary to continue Executive 's life
and health insurance during the Severance Period.
(iv) Provided that Executive is not, or is no longer, an executive officer or
director of the Company, then the time period in which Executive is required to
repay any promissory note, loan or other indebtedness to the Company shall be
extended by sixty (60) months..
(v) The Company will accelerate the vesting of the Stock Awards such that the
greater of the following shall vest within ten (10) days after the date
Executive signs the Release: (a) 50% of the unvested shares as of the
Termination Date subject to the Stock Awards (after taking into account any
additional acceleration of vesting Executive may be receiving under any plan
document(s) governing the Stock Awards instituted prior to or after this
Agreement is executed, including any additional acceleration of vesting of
restricted stock under any restricted stock agreement(s)); or (b) all such
shares 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 that the Executive would
otherwise receive under the Company's 2000 Nonstatutory Equity Incentive Plan,
the Company's 1999 Equity Incentive Plan, or any other plan document(s) and
including any additional acceleration of vesting of restricted stock under any
restricted stock agreement(s)). Executive shall have sixty (60) months to
exercise any vested Options in addition to any time specified in the plan
document(s) governing the Options. The Stock Awards shall continue to be
governed by the terms of the applicable restricted stock agreement(s), stock
option agreements and equity incentive plan documents.
(vi) With respect to any Prior Grant intended to be an incentive stock option,
the acceleration of the vesting of the Prior Grant and the extension of the time
that Executive shall have to exercise the Prior Grant as provided in Paragraph
1(b)(v) of this Agreement are deemed to be a modification of the Prior Grant
within the meaning of Section 424(h) of the Internal Revenue Code ("Code"). Such
modification shall result in the granting of a new option as of the date of
execution of this Agreement, including providing a new grant date for purposes
of starting the holding period specified in Section 422(a)(1) of the Code and
for purposes of the provision that the option price be not less than the fair
market value of the stock at the time such option is granted as specified in
Section 422(b)(4) of the Code. If Executive and the Company agree that the Prior
Grant shall remain an incentive stock option and if the new option meets the
requirements for incentive stock options specified in Section 422(b) of the
Code, and the $100,000 per year limitation specified in Section 422(d) of the
Code as of the date of execution of this Agreement, then the unexercised portion
of the Prior Grant shall be appropriately modified as to the date of grant and
the option price; provided, however, that the option price shall be the greater
of the original option price of the Prior Grant or the fair market value of the
stock on the date of execution of this Agreement. If Executive and the Company
do not agree that such Prior Grant shall remain an incentive stock option, then
the Prior Grant shall be deemed to be a nonstatutory stock option as of the date
of execution of this Agreement, and the Prior Grant shall be appropriately
modified to reflect such changed status.
(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 ("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. 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"
shall mean that any one of the following events occurs during the Executive's
employment with the Company without Executive's consent: (i) any reduction of
Executive's annual base salary (including bonus) as of the time period
immediately preceding the Change of Control, except to the extent that the
annual base salary (including bonus) of all other officers of the Company is
similarly reduced; (ii) any material reduction in the package of benefits and
incentives provided to the Executive, or any action by the Company which would
materially and adversely affect the Executive's participation or reduce the
Executive's benefits under any such plans, except to the extent that such
benefits and incentives of all other officers of the Company are similarly
reduced; (iii) any 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 as in effect at any time within ninety (90) days preceding the
date of the Change of Control or at any time thereafter, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad faith
that is remedied by the Company promptly after notice thereof is given by
Executive; (iv) the Company's requiring Executive to relocate to any place
outside of a twenty-five (25) mile driving distance of Executive's current work
site, except for reasonably required travel on the business of the Company or
its affiliates that is not materially greater than such travel requirements
prior to the Change in Control or unless Executive accepts such relocation
opportunity; or (v) any failure to pay Executive any compensation or benefits to
which Executive is entitled within fifteen (15) days of the date due. Executive
may terminate his or her employment for Good Reason so long as Executive tenders
his resignation to the Company within thirty (30) days after the occurrence of
the event which forms the basis for his resignation for Good Reason. Executive
shall provide written notice to the Company describing the nature of the event
which forms the basis for Executive's resignation for Good Reason, and the
Company shall thereafter have ten (10) days to cure such event.
(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; (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; or (v) an acquisition by the Company of an unaffiliated company, for
cash or stock of the Company, in which some or all of the members of senior
management of the acquired company are retained by the Company for employment by
the acquired company or the Company.
3. 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.
4. 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' rights or obligations under the October 2002 restricted stock agreement
or any other applicable restricted stock or stock option agreements entered into
prior to or after the effective date of this Agreement or the 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) The 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 the
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 bring 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year written below.
Signed: /s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Address:
Date: April 24, 2003
CHORDIANT SOFTWARE, INC.
Signed: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
Date: April 24, 2003
Exhibit A - Release Agreements
EXHIBIT A
RELEASE AGREEMENT FOR EMPLOYEES UNDER 40 YEARS OF AGE
In exchange for the severance benefits I am receiving to which I would not
otherwise be entitled, I hereby release, acquit and forever discharge the
Company, and its officers, directors, agents, servants, employees, attorneys,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys'
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed, arising out of or in any way related to agreements, events,
acts or conduct at any time prior to and including the execution date of this
Release Agreement, including but not limited to: all such claims and demands
directly or indirectly arising out of or in any way connected with my employment
with the Company or the termination of that employment; claims or demands
related to salary, bonuses, commissions, stock, stock options, or any other
ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law, statute, or cause of action
including, but not limited to, the federal Civil Rights Act of 1964, as amended;
the federal Americans with Disabilities Act of 1990; the California Fair
Employment and Housing Act, as amended; tort law; contract law; wrongful
discharge; discrimination; harassment; fraud; defamation; emotional distress;
and breach of the implied covenant of good faith and fair dealing.
I UNDERSTAND THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS. In giving this release, which includes claims which may be
unknown to me at present, 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 favor at the time of executing the release, which if known by him must
have materially affected his 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 unknown or
unsuspected claims I may have against the Company.
DATED: AGREED:
[Employee's Name]
RELEASE AGREEMENT FOR EMPLOYEES 40 YEARS OF AGE OR OLDER
In exchange for the severance benefits I am receiving to which I would not
otherwise be entitled, I hereby release, acquit and forever discharge the
Company, and its officers, directors, agents, servants, employees, attorneys,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys'
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed, arising out of or in any way related to agreements, events,
acts or conduct at any time prior to and including the execution date of this
Release Agreement, including but not limited to: all such claims and demands
directly or indirectly arising out of or in any way connected with my employment
with the Company or the termination of that employment; claims or demands
related to salary, bonuses, commissions, stock, stock options, or any other
ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law, statute, or cause of action
including, but not limited to, 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"); the California
Fair Employment and Housing Act, as amended; tort law; contract law; wrongful
discharge; discrimination; harassment; fraud; defamation; emotional distress;
and breach of the implied covenant of good faith and fair dealing.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the ADEA, as amended. I also acknowledge that the
consideration given for the waiver and release in the preceding paragraph hereof
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) my waiver and release do not apply to any rights or claims that may
arise after the execution date of this Release; (b) I have been advised hereby
that I have the right to consult with an attorney prior to executing this
Release; (c) I have twenty-one (21) days to consider this Release (although I
may choose to voluntarily execute this release earlier); (d) I have seven (7)
days following my execution of this Release to revoke my agreement to it; and
(e) this Release will not be effective until the date upon which the revocation
period has expired, which will be the eighth day after this Release is executed
by me.
I UNDERSTAND THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS. In giving this release, which includes claims which may be
unknown to me at present, 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 favor at the time of executing the release, which if known by him must
have materially affected his 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 unknown or
unsuspected claims I may have against the Company.
DATED: AGREED:
[Employee's Name]
