EXHIBIT 10.1
CHANGE OF CONTROL AGREEMENT
This Change
Of Control Agreement (“Agreement”) is made by
and between Chordiant Software, Inc. (the
“Company”) and Peter Norman
(“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 or may be 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. 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.
(ii) The Company will
pay Executive an amount equal to the 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 the
Executive is not or is no longer an executive officer or director
of the Company, then the time period in which the 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, 1999 Equity Incentive Plan, or any other plan
document(s) including any additional acceleration of vesting of
restricted stock under any restricted stock agreement(s) governing
the Stock Awards. Executive shall have sixty (60) months to
exercise any such vested Options in addition to any time specified
in 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)(iv) 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.
(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 ba
