|
Exhibit
10.1
EPICOR SOFTWARE
CORPORATION
MANAGEMENT RETENTION
AGREEMENT
This Management Retention
Agreement (the “Agreement”) is made and entered into
effective as of February 19, 2008 (the “Effective
Date”), by and between Thomas F. Kelly (the
“Executive”) and Epicor Software Corporation (the
“Company”). Certain capitalized terms used in this
Agreement are defined herein.
RECITALS
WHEREAS, Executive has agreed
to accept employment with the Company as its Chief Executive
Officer (“CEO”); and
WHEREAS, Executive and
Company wish to commemorate the terms and conditions of
Executive’s employment as Company CEO in a written
agreement;
NOW, THEREFORE, in
consideration of the mutual covenants and promises set forth herein
and for other good and valuable consideration, the receipt of and
sufficiency of which are hereby acknowledged, Company and the
Executive agree as follows:
1. Definitions . The
following terms referred to in this Agreement shall have the
following meanings:
(a) “ Cause
” means (i) any act of personal dishonesty taken by
Executive in connection with his responsibilities as an employee
which is intended to result in substantial personal enrichment of
Executive; (ii) Executive’s conviction of a felony which
the Board reasonably believes has had or will have a material
detrimental effect on the Company’s reputation or business;
(iii) a willful act by Executive which constitutes gross
misconduct and is materially injurious to the Company; or
(iv) continued willful violations by Executive of
Executive’s obligations to the Company after there has been
delivered to Executive a written demand for performance from the
Company which describes the basis for the Company's belief that
Executive has not substantially performed his duties and after
Executive has been given at least 10 business days in which to cure
the circumstances identified in such written demand.
(b) “ Change of
Control ” means the occurrence of any of the following
(i) the sale, lease, conveyance or other disposition of all or
substantially all of the Company’s assets as an entirety or
substantially as an entirety to any person, entity or group of
persons acting in concert, (ii) any transaction or series of
transactions that results in, or that is in connection with, any
person, entity or group acting in concert (other than existing
affiliates of the Company), acquiring “beneficial
ownership” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of such percentage
of the aggregate voting power of all classes of voting equity stock
of the Company as shall exceed fifty percent (50%) of such
aggregate voting power, (iii) a merger or consolidation in
which the Company is not the surviving entity, except for a
transaction, the principal
1
purpose of which is to change
the state in which the Company is incorporated; or (iv) any
reverse merger in which the Company is a surviving entity but in
which securities possessing more than fifty percent (50%) of
the total combined voting power of the Company’s outstanding
securities are transferred to a person or persons different from
the persons holding those securities immediately prior to such
reverse merger; or (v) a liquidation of the
Company.
(c) “ Disability
” means Executive’s inability due to any physical or
mental condition to perform a substantial portion of his employment
duties to the Company for twenty-four (24) or more consecutive
weeks.
(d) “ Involuntary
Termination ” means, without Executive’s express
written consent, (i) a significant reduction of
Executive’s duties, position or responsibilities relative to
Executive’s CEO duties, position or responsibilities in
effect immediately prior to such reduction, or the removal of
Executive from such position, duties and responsibilities, unless
Executive is provided with comparable duties, position and
responsibilities; (ii) a reduction by the Company of
Executive’s CEO base salary as in effect immediately prior to
such reduction unless such reduction is made pursuant to and
proportionately with any Company policy applicable to
similarly-situated Company executives; (iii) the relocation of
Executive to a facility or a location more than one hundred
(100) miles from the Company’s current Irvine,
California location; (iv) any purported termination of
Executive’s CEO title by the Company which is not effected
for Cause or for which the grounds relied upon are not valid;
(v) Executive’s death or Disability; or (vi) the
failure of the Company to obtain the assumption of this Agreement
by any successors contemplated in Section 14 below.
2. Term of Agreement .
Executive hereby accepts employment with the Company as Company CEO
for a period beginning on the Effective Date and continuing
thereafter until Executive’s employment as Company CEO is
terminated for any reason, including through Executive’s
voluntary termination, Involuntary Termination, or termination for
Cause, subject to the terms and conditions set forth herein (the
“Employment Term”). As specifically described in this
Agreement, the parties’ obligations under specific sections
herein continue in certain respects following the Employment
Term.
3. At-Will Employment
. The Company and Executive acknowledge that Executive’s
employment is and shall continue to be at-will, as defined under
applicable law. If Executive’s employment terminates for any
reason, Executive shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this
Agreement, or as may otherwise be established under the
Company’s then existing employee benefit plans or policies at
the time of termination.
4. Base Salary .
During the Employment Term, the Company will pay Executive a salary
at an annualized rate of $500,000 as compensation for his services
(the “Base Salary”). The Base Salary will be paid
periodically in accordance with the Company’s normal payroll
practices and be subject to the usual, required withholdings. Any
increases to the Base Salary during the Employment Term may only be
authorized by and will be subject to the prior written approval of
the Company’s Board of Directors.
2
5. Annual Incentive .
Executive will be eligible to receive annual cash bonus payments
under the Company’s cash bonus plan for key employees
beginning on the Effective Date. The bonus will be paid on a fiscal
year basis based on a performance plan agreed to between the
Executive and the Board of Directors of the Company. The initial
cash bonus plan to Executive to be entered into following the
Executive’s commencement as Company CEO shall provide for an
on target bonus amount equal to 60% of Executive’s Base
Salary, or $300,000 (the “Initial Target Bonus”).
Payment of 50% of the Initial Target Bonus, or $150,000, will be
guaranteed for the 2008 fiscal year and will be paid to Executive
upon commencing employment as Company CEO, subject to the usual and
required withholdings. The remaining 50% of the Initial Target
Bonus will be subject to the terms and conditions of the initial
cash bonus plan to Executive to be entered into following the
Executive’s commencement as Company CEO.
6. Restricted Stock
Grant . Pursuant to the terms of the Agreement, Executive shall
be granted a total of two hundred twenty-eight thousand
(228,000) shares of restricted Company common stock, allocated
equally (114,000) to each of the 2008 and 2009 fiscal years
(the “Restricted Stock Grant”). The Restricted Stock
Grant shall provide that the restrictions on the stock shall lift
based on achievement of applicable Company performance goals during
2008 and 2009 as determined in accordance with the terms of the
Company’s Performance Based Restricted Stock Program (the
“Program”) approved by the Company’s Compensation
Committee and subject to the Executive’s continued service to
the Company through the 2008 and 2009 performance periods.
Notwithstanding the foregoing, for the 2008 fiscal year, all
Company performance goals applicable to the 114,000 shares of
restricted stock allocated to such fiscal year will be deemed
achieved at 100% target, subject to the Executive’s continued
service to the Company through the 2008 performance period. The
Restricted Stock Grant is also subject to the terms, definitions
and provisions of the Company’s applicable stock incentive
plan, as may be amended from time to time (the “Plan”)
and the restricted stock agreement by and between Executive and the
Company (the “Restricted Stock Agreement”), both of
which documents are incorporated herein by reference.
7. Relocation Expenses
. For the six (6) month period following the execution of this
Agreement, the Company will reimburse Executive for the actual
reasonable rental expense incurred by Executive in renting a
residence in Orange County, California while Executive searches for
permanent housing for himself and his family. During the same six
(6) month period, Company shall reimburse Executive for the
actual reasonable commercial air travel expense incurred by
Executive and his spouse in traveling back and forth to
Executive’s current Northern California home. Additionally,
the Company will reimburse Executive for his actual reasonable
expenses incurred in moving and relocating his family and household
to Southern California. Company will not pay or reimburse Executive
for any costs or expenses associated with Executive’s
(i) sale of his current residence, or (ii) purchase of a
residence in Orange County. Executive agrees that he will submit
all such reimbursable expenses to the Company with appropriate
documentation as such expenses are incurred and the Company shall
reimburse Executive promptly thereafter in accordance with the
Company’s expense reimbursement policy. Notwithstanding the
prior sentence, Executive agrees that he shall have submitted all
such expenses to Company by no later than December 1, 2008 so
that Company will be in a position to reimburse Executive for all
such expenses by no later than December 31, 2008.
3
8. Country Club
Membership . The Company will assist Executive in acquiring a
local to Orange County, Country Club/Golf Membership by reimbursing
Executive for actual Membership initiation fees incurred by
Executive in joining such Country Club up to a maximum
reimbursement of $50,000. Executive shall be responsible for
payment of any monthly dues or fees associated with such
membership. In the event that Executive should voluntarily
terminate his position as Company CEO before the end of the three
year period following the Effective Date, Executive shall be
required to pay back to Company the expense reimbursement paid by
Company to Executive upon Executive’s sale of his membership
in such Club.
9. Other . Upon
Commencement as Company CEO, Executive shall be eligible to
participate in the Company's health plan, including the Exec-U-Care
plan. After meeting eligibility requirements, Executive will be
able to participate in various company benefit programs including
the Company's 401(k) savings program, Employee Stock Purchase Plan,
Section 125 Reimbursement Account, Deferred Compensation
Program and the Confidential Employee Assistance Program
(EAP).
10. Severance Benefits
Upon Involuntary Termination .
Section 10(i) below
governs severance benefits to be received by Executive upon the
occurrence of an Involuntary Termination at any time during the
term of this Agreement which Involuntary Termination does not occur
within twelve months following a Change of Control.
Section 10(ii) below governs severance benefits to be received
by Executive upon the occurrence of an Involuntary Termination at
any time during the term of this Agreement which Involuntary
Termination does occur within twelve months following a Change of
Control. The payment of Severance benefits to Executive under this
Section 10 is subject to Section 14 herein.
(i) Upon the occurrence of an
Involuntary Termination at any time during the term of this
Agreement which Involuntary Termination does not occur within
twelve months following a Change of Control, Executive shall be
entitled to only the following
| 
