Document:

EX-10.4.B

 

Exhibit 10.4(b)

Schedule identifying Split-Dollar Agreements between

directors of Park National Corporation and The Park National Bank,

The Richland Trust Company or

The First-Knox National Bank of Mount Vernon as identified in such Schedule,

which Split-Dollar Agreements are identical to the Split-Dollar Agreement,

dated September 3, 1993, between Leon Zazworsky and The Park National Bank

     The following directors of Park National Corporation (“Park”) entered into Split-Dollar
Agreements with the subsidiaries of Park identified below, which Split-Dollar Agreements are
identical to the Split-Dollar Agreement, dated September 3, 1993, between Leon Zazworsky and The
Park National Bank (“Park National Bank”) filed as Exhibit 10.3 to Park’s Annual Report on Form
10-K for the fiscal year ended December 31, 2003 (File No. 1-13006):

	 	 	 	 	 
	 	 	Subsidiary of Park which is a Party to	 	Date of Split-Dollar
	Name of Director	 	Split-Dollar Agreement	 	Agreement
	 
	Maureen Buchwald

	 	The First-Knox National Bank of Mount
Vernon (“First-Knox National Bank”)
	 	May 22, 1998
	 
	 	 	 	 
	James J. Cullers

	 	First-Knox National Bank
	 	May 22, 1998
	 
	 	 	 	 
	F. William Englefield IV

	 	Park National Bank
	 	September 2, 1993
	 
	 	 	 	 
	John J. O’Neill

	 	Park National Bank
	 	September 2, 1993
	 
	 	 	 	 
	J. Gilbert Reese

	 	Park National Bank
	 	September 8, 1993
	 
	 	 	 	 
	Rick R. Taylor

	 	The Richland Trust Company
	 	September 29, 1993exv10w1

 

			
	EXHIBIT 10.1
	 	EXCUTION COPY

EMPLOYMENT AGREEMENT

Employment Agreement dated October 12, 2006 between Inter-Tel (Delaware), Incorporated (the
“Corporation”) and Norman Stout (the “Executive”).

RECITALS

	 	(a)	 	The Corporation wishes to employ the Executive and the Executive wishes to be
employed by the Corporation, and in consideration for such employment, the Executive
has agreed to the non-competition and non-solicitation provisions hereof.
	 
	 	(b)	 	The parties wish to set forth in writing the terms and conditions relating to
the Executive’s employment relationship with the Corporation.

     In consideration of the mutual covenants and agreements contained in this Agreement (the
receipt and adequacy of which are acknowledged), the parties agree as follows.

ARTICLE 1

DEFINITIONS

Section 1.1 Defined Terms.

     As used in this Agreement, the following terms have the following meanings:

“Base Salary” has the meaning ascribed to such term in Section 3.1.

“Board” means the Board of Directors of the Corporation.

“Business” means (a) the development, manufacture, marketing and support of business communication
networks, services, equipment and devices; (b) any other business conducted by the Corporation
and/or its affiliates after the date of this Agreement up to the termination of the Executive’s
employment; and (c) any business that the Corporation and/or its affiliates is in the process of
developing (as reflected in a written business or strategic plan of the Corporation) at the time
the Executive’s employment is terminated.

“Cause” means any of the following:

	 	(a)	 	Executive’s conviction of a felony or the entering by Executive of a plea of
nolo contendere to a felony charge;
	 
	 	(b)	 	Executive’s gross neglect, willful malfeasance or willful gross misconduct in
connection with his employment hereunder which has had a material adverse effect on
the business of the Corporation and its subsidiaries, unless Executive

 

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	 	 	 	reasonably believed in good faith that such act or non-act was in or not opposed to
the best interests of the Corporation;
	 
	 	(c)	 	a refusal by Executive to perform Executive’s duties, responsibilities or
obligations assigned to Executive in accordance with the terms hereof (provided that
such duties, responsibilities or obligations are not inconsistent with his position as
Chief Executive Officer and are otherwise lawful) that continues for a period of
fifteen (15) calendar days following receipt by Executive of written notice from the
Corporation identifying the duties, responsibilities or obligations not being
performed;
	 
	 	(d)	 	a violation by Executive of any policy of the Corporation that is generally
applicable to all employees or all officers of the Corporation including, but not
limited to, policies concerning insider trading or sexual harassment, or the
Corporation’s Code of Business Conduct (including any future revisions of such
policies, procedures and Code of Business Conduct), that Executive knows or reasonably
should know could reasonably be expected to result in a material adverse effect on the
Corporation;
	 
	 	(e)	 	Executive’s failure to cooperate, if requested by the Board, with any
investigation or inquiry into his or the Corporation’s business practices, whether
internal or external, including, but not limited to Executive’s refusal to be deposed
or to provide testimony at any trial or inquiry;
	 
	 	(f)	 	subject to clause (g) below, any material breach by the Executive of this
Agreement; or
	 
	 	(g)	 	any breach by Executive of the provisions of Sections 6 or 7;

provided, however, that in the case of subclauses (d), (e) and (f), Cause shall not exist
if, such violation, failure to cooperate or breach, if capable of being cured, shall have
been cured by Executive within twenty (20) calendar days after receipt of notice thereof
from the Corporation.

“Change of Control” means the occurrence of any of the following:

	 	(a)	 	A transaction or series of transactions (other than an offering of stock to
the general public through a registration statement filed with the Securities and
Exchange Commission) whereby (i) any “person” or related “group” of “persons” (as such
terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the
Corporation, any of its affiliates, an employee benefit plan maintained by the
Corporation or any of its affiliates, or a “person” that, prior to such transaction,
directly or indirectly controls, is controlled by, or is under common control with,
the Corporation) directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of the Corporation
possessing more than fifty
percent (50%) of the total combined voting power of the

 

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	 	 	 	Corporation’s securities
outstanding immediately after such acquisitions, or (ii) the Corporation or any
affiliate is party to a merger, consolidation, sale of assets (that comprises
substantial assets of Corporation and its affiliates as a whole) or other business
combination in which Corporation issues more than fifty percent (50%) of the
Corporation’s common stock then outstanding; or
	 
	 	(b)	 	Any action or event occurring within a two-year period, as a result of which
fewer than a majority of the outside directors of the Corporation are Incumbent
Directors. “Incumbent Directors” shall mean directors who either (i) are outside
directors of the Corporation as of the date hereof, or (ii) are elected, or nominated
for election, as an outside director to the Board with the affirmative votes of at
least a majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in connection
with (a) an actual or threatened proxy contest relating to the election of directors
to the Corporation or (b) in the absence of a proxy contest, the exercise by a
stockholder of cumulative voting rights in favor of such individual and in opposition
to a nominee of the Board), provided, however, that the term “Incumbent Directors”
shall not include Steven Mihaylo, Dr. Anil Puri and Kenneth Urish; or
	 
	 	(c)	 	The consummation of a merger or consolidation of the Corporation with any
other corporation, other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the total voting
power represented by the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation; or
	 
	 	(d)	 	The consummation of the sale, lease or other disposition by the Corporation
of seventy-five percent (75%) or more of the Corporation’s assets.

“Code” has the meaning ascribed to such term in Section 12.10.

“Commencement Date” means the date of this Agreement.

“Confidential Information” means all information owned, possessed or controlled by the Corporation
and/or its affiliates including, without limitation, all information related to developments,
inventions, enhancements, financial, scientific, technical, manufacturing, process know-how and
marketing information and all names of or lists of customers and suppliers howsoever received by
the Executive from, through or relating to the Corporation and/or its affiliates and in whatever
form (whether oral, written, machine readable or otherwise), which pertains to the Corporation
and/or its affiliates; provided, however, that the phrase “Confidential Information” shall not
include information which:

	 	(a)	 	was in the public domain prior to the date of receipt by the Executive;

 

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	 	(b)	 	becomes part of the public domain by publication or otherwise, not due to any
unauthorized act or omission of the Executive; or
	 
	 	(c)	 	the Executive is required by law to disclose, provided, however, that, unless
prohibited by law, the Executive first notifies the Board at the first reasonable
opportunity that he is required to disclose such Confidential Information.

“Corporation” has the meaning ascribed to such term in the Preamble.

“Customer” means any Person who has (a) purchased or licensed from the Corporation and/or its
affiliates any product produced or service supplied, sold, licensed or distributed by the
Corporation and/or its affiliates, or (b) supplied to the Corporation and/or its affiliates any
product to be produced, sold, licensed or distributed by the Corporation and/or its affiliates;
provided, however, that after the termination of the Executive’s employment for any reason,
Customers shall only include any Person who was a Customer during the twelve (12) months preceding
the date of the termination of the Executive’s employment.

“Development” means any discovery, invention, design, improvement, concept, specification,
creation, development, treatment, computer program, method, process, apparatus, specimen, formula,
formulation, product, hardware or firmware, any drawing, report, memorandum, article, letter,
notebook and any other work of authorship and ideas (whether or not patentable or copyrightable)
and legally recognized proprietary rights (including, but not limited to, patents, copyrights,
trademarks, topographies, know-how and trade secrets), and all records and copies of records
relating to the foregoing, that:

	 	(a)	 	result or derive from the Executive’s employment or from the Executive’s
knowledge or use of Confidential Information;
	 
	 	(b)	 	are conceived or made by the Executive (individually or in collaboration with
others) in the course of his employment;
	 
	 	(c)	 	result from or derive from the use or application of the resources of the
Corporation and/or its affiliates; or
	 
	 	(d)	 	relate to the business operations of actual or demonstrably anticipated
research and development by the Corporation and/or its affiliates.

“Disability” means the Executive’s inability to substantially fulfil his duties on behalf of the
Corporation for a continuous period of four (4) months or more or the Executive’s inability to
substantially fulfil his duties on behalf of the Corporation for an aggregate period of four (4)
months or more during any consecutive twelve (12) month period, which the parties agree would cause
undue hardship to the Corporation which cannot be accommodated; and if there is any disagreement
between the Corporation and the Executive as to the Executive’s Disability or as to the date any
such Disability began or ended, the same shall be determined by a physician mutually acceptable to
the Corporation and the Executive whose determination
shall be conclusive evidence of any such Disability and of the date any such Disability began or
ended.

 

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“Executive” has the meaning ascribed to such term in the Preamble.

“Good Reason” means any of the following:

	 	(a)	 	a reduction in any of Executive’s compensation rights hereunder (that is,
Base Salary or bonus opportunity under Section 3.2), it being understood that the
failure of Executive to earn an actual bonus for any fiscal year, in whole or in part,
under any applicable executive compensation or bonus plan, is not a reduction in such
compensation rights;
	 
	 	(b)	 	the Corporation’s failure to elect or re-elect Executive to the position of
Chief Executive Officer of the Corporation or the removal of Executive by the
Corporation from the position of Chief Executive Officer of the Corporation;
	 
	 	(c)	 	a material reduction in Executive’s duties and responsibilities as in effect
immediately prior to such reduction;
	 
	 	(d)	 	the assignment to Executive of duties that are materially inconsistent with
his position or duties or that materially impair Executive’s ability to function as
Chief Executive Officer of the Corporation and any other position in which he is then
serving;
	 
	 	(e)	 	a material breach of any material provision of this Agreement by the
Corporation;
	 
	 	(f)	 	the relocation of Executive’s principal place of employment to a place
located 100 miles outside of Maricopa County, Arizona; or
	 
	 	(g)	 	the failure of the Corporation to obtain the assumption, by operation of law
or otherwise, of this Agreement by any entity which is the surviving entity in any
merger or other form of corporate reorganization involving the Corporation or by any
entity that acquires all or substantially all of the Corporation’s assets;

provided, however, that notwithstanding the foregoing, Good Reason shall not exist (i) if
Executive shall have consented in writing to the occurrence of the event giving rise to
Good Reason, or (ii) unless Executive shall have delivered a written notice to the Board
within three (3) months of his having actual knowledge of the occurrence of one of such
events stating that he intends to terminate his employment for Good Reason and specifying
the factual basis for such termination, and such event, if capable of being cured, shall
not have been cured within thirty (30) days of the receipt of such notice (the “Good Reason
Cure Period”).

“Intellectual Property Rights” means all worldwide intellectual and industrial property rights in
connection with the Developments including, without limitation:

	 	(a)	 	patents, inventions, discoveries and improvements;
	 
	 	(b)	 	ideas, whether patentable or not;

 

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	 	(c)	 	copyrights;
	 
	 	(d)	 	trademarks;
	 
	 	(e)	 	trade secrets;
	 
	 	(f)	 	industrial and artistic designs; and
	 
	 	(g)	 	proprietary, possessory and ownership rights and interests of all kinds
whatsoever;

including, without limitation, the right to apply for registration or protection of any of the
foregoing.

“Notice of Resignation Period” has the meaning ascribed to such term in Section 4.1(a).

“Person” means a natural person, partnership, limited liability partnership, corporation, joint
stock company, trust, unincorporated association, joint venture or other entity or governmental
entity, and pronouns have a similarly extended meaning.

“Prospective Customers” means (a) any Person solicited by the Executive on behalf of the
Corporation for any purpose relating to the Business, and (b) any Person solicited by the
Corporation for any purpose relating to the Business; provided, however, that after termination of
the Executive’s employment for any reason, Prospective Customers shall only include any Person who
was a Prospective Customer during the twelve (12) months preceding the date of the termination of
the Executive’s employment.

“Severance Period” has the meaning ascribed to such term in Section 4.2(e).

“Term” has the meaning ascribed to such term in Section 2.4.

“Territory” means (a) the 50 mile radius around Tempe, Arizona, (b) the State of Arizona, (c) the
states bordering Arizona, and (d) the United States of America.

“Tier 1 Severance Agreement” has the meaning ascribed to such term in Section 12.2.

ARTICLE 2

EMPLOYMENT

Section 2.1 Position

     On the terms and subject to the conditions hereinafter contained, the Executive will be
employed by the Corporation as its Chief Executive Officer.

 

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Section 2.2 Duties of Employment

     The Executive shall report to and be subject to the general direction of the Board and shall
have such duties and responsibilities as are delegated to him by the Board which are consistent
with the positions of Chief Executive Officer (including reporting to the Board and any committee
thereof).

Section 2.3 Full and Faithful Service

     The Executive shall faithfully serve the Corporation and use his best efforts to promote the
interests of the Corporation and during the term of this Agreement, the Executive shall devote his
full time and energy to the Corporation and shall not, directly or indirectly, render services to
any Person other than services with regard to charitable or community service organizations or,
with the prior consent of the Board, other professional activities; provided such activities do not
interfere with Executive’s duties hereunder. With the prior consent of the Board, the Executive
may also serve or continue to serve on not more than two (2) boards of directors of companies (or
similar business organizations), as long as they involve no conflict of interest with the interests
of the Corporation. The Executive further acknowledges that he will comply with (a) the lawful
policies and procedures established by the Corporation, from time to time, including the
Corporation’s Code of Business Conduct (including any future revisions of such policies, procedures
and Code of Business Conduct), and (b) all applicable laws, rules and regulations, and all
requirements of all applicable regulatory, self-regulatory and administrative bodies.

Section 2.4 Term

     The Executive’s employment by the Corporation and the Executive’s duties hereunder shall begin
on the Commencement Date and shall continue until August 1, 2009 (the “Term”); provided that the
Executive’s employment may be terminated in accordance with Article 4 hereof. Unless the parties
specifically extend the Executive’s employment under this Agreement in writing at the end of the
Term, the Executive’s employment under this Agreement shall cease and terminate and, subject to
Section 12.3 hereof, this Agreement shall terminate. Upon the expiration of this Agreement at the
end of the Term, the Corporation shall owe no additional amounts to the Executive (except for any
unpaid Base Salary or expense reimbursement hereunder).

ARTICLE 3

REMUNERATION AND BENEFITS

Section 3.1 Salary

     The Corporation shall pay to the Executive a salary (the “Base Salary”) at the rate of
$400,000 per annum, payable to the Executive in accordance with the payroll practices of the
Corporation for its senior management as are in effect from time to time. The Executive’s Base
Salary may be increased by the Board from time to time and once increased shall thereafter be the
Base Salary hereunder.

 

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Section 3.2 Bonus

     The Executive is entitled to participate in any bonus or incentive compensation plans as are
made available by the Board to senior management from time to time in accordance with the terms and
conditions of such plans, which such bonus plans shall be based on hard and soft performance
metrics consistent with the Corporation’s current bonus policy.

Section 3.3 Health and Insurance Benefits

     The Executive shall be eligible to participate in such health, medical, dental, disability and
life insurance coverage as the Corporation has in effect for its senior management from time to
time.

Section 3.4 Expenses

     The Corporation will pay or reimburse the Executive for all reasonable traveling and other
out-of-pocket expenses incurred by the Executive in connection with his employment hereunder in
accordance with the policies of the Corporation in effect from time to time.

Section 3.5 Vacation

     Executive’s vacation time permitted shall be based on years of service to the Corporation
(including service with other entities for which the Corporation has previously given the Executive
credit). The Executive will be allowed to carry forward any unused vacation time into the next
year based on the Corporation’s accrual method applicable to its senior management.

Section 3.6 Automobile

     The Corporation shall pay to the Executive an automobile allowance in the amount of $10,000
per year.

Section 3.7 Club Dues

     The Corporation shall continue to pay to the Executive an amount equal to the Executive’s
annual club dues at their current level.

Section 3.8 Withholding Taxes

     All amounts paid or benefits received by the Executive shall be subject to such withholding
taxes as are required by applicable laws.

 

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ARTICLE 4

TERMINATION

Section 4.1 Termination by the Corporation or the Executive

     Subject to Section 12.3, this Agreement and the employment contemplated hereunder may (and in
the case of Subsection 4.1(e), shall) be terminated, at any time, in the following manner and in
the following circumstances:

	 	(a)	 	by the Executive, by providing forty-five (45) calendar days written notice
of resignation to the Corporation (the “Notice of Resignation Period”), in which case,
subject to Section 4.1(b), this Agreement and the Executive’s employment shall
terminate at the end of the Notice of Resignation Period;
	 
	 	(b)	 	during the Notice of Resignation Period, the Corporation may waive such
Notice of Resignation Period, in whole or in part, in which case this Agreement and
the Executive’s employment shall terminate immediately upon receipt by the Executive
of a written notice from the Corporation;
	 
	 	(c)	 	provided that the Executive’s employment has not been previously terminated
(or the process for such termination commenced) pursuant to any other subsection of
this Section 4.1, by the Executive, for Good Reason, in which case this Agreement and
the Executive’s employment shall terminate on that date which is at the end of the
Good Reason Cure Period;
	 
	 	(d)	 	by the Corporation, for Cause, in which case this Agreement and the
Executive’s employment shall terminate immediately upon receipt of a written notice by
the Executive from the Corporation setting out the cause for termination;
	 
	 	(e)	 	automatically without further notice, upon the death of the Executive, in
which case this Agreement and the Executive’s employment shall terminate on the date
of the Executive’s death;
	 
	 	(f)	 	automatically without further notice, upon the determination that the
Executive has suffered a Disability, in which case this Agreement and the Executive’s
employment shall terminate as of the date of the occurrence of such Disability; or
	 
	 	(g)	 	by the Corporation, without Cause and other than for the circumstances in
subsection 4.1(b), in which case this Agreement and the Executive’s employment shall
terminate immediately upon receipt by the Executive of a written notice of termination
from the Corporation.

Any termination by the Corporation for Cause pursuant to Section 4.1(d) shall be effected by a
resolution of the majority of the members of the Board, excluding the Executive. Prior to the
effectiveness of any such termination, Executive shall be afforded an opportunity to meet

 

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with the Board, upon reasonable notice under the circumstances, and explain and defend any action
or omission alleged to constitute grounds for a termination for Cause; provided that, the Board may
suspend Executive with pay from his duties hereunder prior to such opportunity and such suspension
shall not constitute a breach of this Agreement by the Corporation or otherwise form the basis for
a termination by Executive for Good Reason. If Executive has, and utilizes, such opportunity to be
heard, the Board shall promptly reaffirm that grounds for a termination for Cause exist or
reinstate Executive to his position hereunder.

Section 4.2 Payment Upon Termination

     In the event the Executive’s employment is terminated pursuant to Section 4.1, the Executive
shall only be entitled to the following compensation and benefits upon termination:

	 	(a)	 	Should this Agreement be terminated pursuant to Subsection 4.1(a) or (b), the
Executive shall only be entitled to (i) payment of the Executive’s Base Salary until
the end of the Notice of Resignation Period; (ii) continued health and welfare
insurance benefits coverage (excluding life insurance and disability benefits coverage
which shall cease on the date of termination) in which the Executive was participating
at the date of termination by the Corporation for the period ending the last day of
the Notice of Resignation Period (or, if during all or part of such period Executive
is no longer actively working for the Corporation, reimburse Executive for COBRA
payments for the period prior to the last day of the Notice Resignation Period); (iii)
the value of the pro-rated vacation leave with pay for that portion of the calendar
year up to the end of the Notice of Resignation Period and any vacation from previous
years carried forward in accordance with Section 3.5 of this Agreement, to the extent
the Executive’s accrued vacation entitlement has not been used by him at the time of
termination; and (iv) any accrued but unpaid business expenses at the date of
termination by the Corporation required to be reimbursed under Section 3.4 of this
Agreement.
	 
	 	(b)	 	Should this Agreement be terminated pursuant to Subsection 4.1(d), the
Executive shall only be entitled to payment of the Executive’s Base Salary earned up
to the date of termination plus an amount equal to the sum of: (i) the value of the
pro-rated vacation leave with pay for that portion of the calendar year in which the
employment of the Executive hereunder is terminated that the Executive was actively
employed and any vacation from previous years carried forward in accordance with
Section 3.5 of this Agreement, to the extent the Executive’s accrued vacation
entitlement has not been used by him at the time of termination; and (ii) any accrued
but unpaid business expenses at the date of termination required to be reimbursed
under Section 3.4 of this Agreement.
	 
	 	(c)	 	Should this Agreement be terminated pursuant to Subsection 4.1(e), the
Executive’s estate shall only be entitled to the payment of the Executive’s

 

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	 	 	 	Base
Salary earned up to the date of termination plus an amount equal to the sum of: (i)
the Executive’s Base Salary paid for a period of one year, which shall be
made by way of salary continuance on the Corporation’s regular pay day, and in
accordance with its payroll practices at the date of termination; (ii) the value of
the pro-rated vacation leave with pay for that portion of the calendar year in
which the employment of the Executive hereunder is terminated that the Executive
was actively employed and any vacation from previous years carried forward in
accordance with Section 3.5 of this Agreement, to the extent the Executive’s
accrued vacation entitlement has not been used by him at the time of termination;
and (iii) any accrued but unpaid business expenses at the date of termination
required to be reimbursed under Section 3.4 of this Agreement.
	 
	 	(d)	 	Should this Agreement be terminated pursuant to Subsection 4.1(f), the
Executive shall only be entitled to payment of the Executive’s Base Salary earned up
to the date of termination plus an amount equal to the sum of: (i) a lump sum equal to
the Executive’s Base Salary payable for six (6) months (without reduction due to any
net present value calculation) (ii) the value of the pro-rated vacation leave with pay
for that portion of the calendar year in which the employment of the Executive
hereunder is terminated that the Executive was actively employed and any vacation from
previous years carried forward in accordance with Section 3.5 of this Agreement, to
the extent the Executive’s accrued vacation entitlement has not been used by him at
the time of termination; and (iii) any accrued but unpaid business expenses at the
date of termination required to be reimbursed under Section 3.4 of this Agreement.
	 
	 	(e)	 	Should the Agreement be terminated pursuant to Subsection 4.1(c) or (g),
provided that the Executive signs and does not revoke a standard release of claims
with the Corporation in a form acceptable to the Corporation (such acceptance not to
be unreasonably withheld, conditioned or delayed), the Corporation’s only obligations
shall be to:

	 	(i)	 	pay to the Executive (x) any accrued but unpaid Base Salary
for services rendered to the date of termination; (y) any accrued but unpaid
expenses at the date of termination required to be reimbursed under Section
3.4 of this Agreement; and (z) the value of the pro-rated vacation leave with
pay for that portion of the calendar year in which the employment of the
Executive hereunder is terminated that the Executive was actively employed and
any vacation from previous years carried forward in accordance with Section
3.5 of this Agreement, to the extent the Executive’s accrued vacation
entitlement has not been used by him at the time of termination;
	 
	 	(ii)	 	pay to the Executive an amount equal to his Base Salary as at
the date of termination for the greater of (x) twelve (12) months and (y) the

 

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	 	 	 	number of months remaining in the Term (such period, the “Severance Period”).
Payment of the Executive’s Base Salary during the Severance Period shall be
made by way of salary continuance on the
Corporation’s regular pay day, and in accordance with its payroll practices
at the date of termination;
	 
	 	(iii)	 	pay to the Executive an amount equal to the value of any
annual bonus earned by the Executive through the date of termination (which
for certainty does not include the Severance Period). Such amount shall be
paid at the end of the Severance Period and shall be calculated as follows:
the product of (x) the average fiscal year end bonus (excluding any retention
bonus) paid to the Executive for the five (5) fiscal years prior to the fiscal
year in which his employment is terminated divided by twelve (12), and (y) the
number of full and complete months that Executive was employed by the
Corporation during the fiscal year in which his employment is terminated; and
	 
	 	(iv)	 	subject to the terms of such plans, pay for the Executive’s
participation in COBRA continuation coverage under the Corporation’s health
and welfare benefit plans (excluding short-term disability and long term
disability benefits which shall cease on the date of termination) in which the
Executive was participating at the date of termination, until the earlier to
occur of (x) eighteen (18) months following the date of Executive’s
termination and (y) the Executive’s eligibility for health and welfare
benefits at Executive’s subsequent job, if any.

Section 4.3 Involuntary Termination Following a Change of Control

	 	(a)	 	During the Term, if either (i) within ninety (90) days prior to a Change of
Control or (ii) within twenty-four (24) months following a Change of Control (1) the
Executive terminates his or her employment with the Corporation for Good Reason, or
(2) the Corporation terminates the Executive’s employment for other than Cause, and
the Executive signs and does not revoke a standard release of claims with the
Corporation in a form acceptable to the Corporation (such acceptance not to be
unreasonably withheld, conditioned or delayed), then the Executive shall be entitled
to:

	 	(i)	 	receive a lump-sum severance payment equal to the Executive’s
annual Base Salary (as in effect immediately prior to (x) the Change of
Control, or (y) Executive’s termination, whichever is greater), multiplied by
2.99; and
	 
	 	(ii)	 	receive a lump-sum severance payment equal to the Executive’s
average annual bonus (excluding any retention bonus) earned by the Executive
for the preceding five (5) fiscal years prior to the fiscal year in which his
employment is terminated, multiplied by 2.99.

 

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	 	(b)	 	The severance payment to which the Executive is entitled pursuant to Section
4.3(a) shall be paid by the Corporation to the Executive in cash and in full on
the earliest date on which such payment may be made without additional tax, penalty
or limitation being imposed on the Corporation or the Executive.
	 
	 	(c)	 	The severance payment to the Executive pursuant to Section 4.3 is in lieu of,
and not in addition to, those payments provided for in Section 4.2(e).

Section 4.4 Effect of Termination

     Upon termination of his employment for any reason whatsoever, the Executive shall thereupon be
deemed to have immediately resigned any position the Executive may have as an officer, director or
employee of the Corporation together with any other office, position or directorship which the
Executive may hold with any of the Corporation’s affiliates or related entities. In such event,
the Executive shall, at the request of the Corporation, forthwith execute any and all documents
appropriate to evidence such resignations. The Executive shall not be entitled to any payments in
respect of such resignations in addition to those provided for herein.

Section 4.5 Release

     The Executive agrees that payment by the Corporation of the amounts set out in Subsection
4.2(e) or Section 4.3 shall be in full and final settlement of any and all actions, causes of
actions, suits, claims, demands and entitlements whatsoever which the Executive has or may have
against the Corporation, its affiliates and any of their respective directors, officers, employees,
representatives, successors and assigns arising out of his hiring, his employment and the
termination of his employment or this Agreement. The Executive agrees that as a condition to the
receipt of the payments and benefits set out in Subsection 4.2(e) or Section 4.3, he shall execute
a release of the Corporation in form and substance reasonably acceptable to the Corporation.

Section 4.6 Suspension or Termination of Benefits and Compensation

     In the event that the Corporation determines that, without the express written consent of the
Board, the Executive has breached any provisions of Section 5, 6, 7, 8 or 9 of this Agreement, the
Corporation shall have the right to suspend or terminate any or all remaining payments and/or
benefits, if any, referenced in Sections 4.2(e) of this Agreement. Such suspension or termination
of payments and/or benefits shall be in addition to and shall not limit any and all other rights
and remedies as set out in Section 10.2 of this Agreement that the Corporation may have against the
Executive. For clarity, to the extent that this Section 4.6 conflicts with the Corporation’s
policy regarding disabilities of employees, this Section 4.6 shall prevail.

Section 4.7 No Duty to Mitigate

     The Executive shall be under no duty to mitigate any loss of income as a result of the
termination of his employment hereunder and any payments due the Executive upon

 

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termination of
employment shall not be reduced in respect of any other employment compensation received by the
Executive following such termination.

ARTICLE 5

CONFIDENTIAL INFORMATION

Section 5.1 Confidentiality

	 	(a)	 	During the term of this Agreement and following the termination thereof, the
Executive shall not use, divulge, diffuse, sell, transfer, give, circulate, or
otherwise distribute to any Person whatsoever or whomsoever, or otherwise make public,
any Confidential Information.
	 
	 	(b)	 	Notwithstanding any provision of this Agreement to the contrary, the
Executive shall have the right to use Confidential Information in relation to the
performance of his duties, in which event, the Executive shall, at all times, take all
reasonable measures in order to prevent the disclosure or non-authorized use of such
Confidential Information.
	 
	 	(c)	 	Except in accordance with the performance of his duties, under no
circumstances shall the Executive reproduce any Confidential Information without the
prior written consent of the Board. All reproductions of Confidential Information
shall be governed by this Agreement and shall be treated as Confidential Information
hereunder.
	 
	 	(d)	 	The Executive shall not publish or release or allow the publication or
release of any material containing Confidential Information without the prior written
consent of the Board.
	 
	 	(e)	 	The Executive shall not install, copy or receive any Confidential Information
into his own or any other computer or computer system not owned and controlled by the
Corporation, without the express written permission of the Corporation. Where the
Executive has received permission from the Board to so install, copy or receive
Confidential Information, the Executive shall be solely responsible to the Corporation
for the security of such Confidential Information and shall follow any and all
directions given by the Corporation.
	 
	 	(f)	 	The obligations of the Executive under this Section 5.1 shall be subject to
the requirements of US securities laws and disclosures by the Executive that are
required by such laws are hereby expressly permitted.

Section 5.2 Corporation Property

     Confidential Information (including any reproduction thereof) shall remain the sole property
of the Corporation and shall be returned to the Corporation immediately upon request or upon the
termination of the Executive’s employment, for any reason.

 

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ARTICLE 6

NON-COMPETITION

Section 6.1 Non-Competition.

     The Executive shall not (whether individually or as a partner, joint venturer, agent,
consultant, shareholder or equity owner of another Person or otherwise), during the term of this
Agreement and for a period of eighteen (18) months following the termination of his employment, for
any reason (including without limitation by virtue of the expiration of the Term), participate in,
engage in or have a financial interest in, directly or indirectly, in any endeavour, activity, or
business in all or part of the Territory which is competitive, in any way, with the Business.

Section 6.2 Exception

     The Executive shall not be in default under Section 6.1 by virtue of the Executive holding,
strictly for portfolio purposes and as a passive investor, no more than three percent (3%) of the
issued and outstanding shares of or any other interest in, any body corporate which is listed on
any recognized stock exchange.

Section 6.3 Reasonable

     The Executive agrees and acknowledges that the scope and duration of the covenants set forth
in this Article 6 are reasonable and appropriate and that the Business is carried on or
contemplated to be carried on in the Territory. The Executive agrees and acknowledges that (a) any
breach or threatened breach of the covenants set forth in this Article 6 will cause irreparable
injury to the Corporation and that money damages will not provide an adequate remedy to the
Corporation for such a breach or threatened breach of this Article 6 and (b) the Corporation shall
have the right to seek from any court of competent jurisdiction specific performance of this
Article 6 or injunctive relief against any act which would violate this Article 6. If the final
judgment of a court of competent jurisdiction declares that any term or provision of this Article 6
is invalid or unenforceable, the parties hereto agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the
term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and this Article 6
shall be enforceable as so modified.

ARTICLE 7

NON-SOLICITATION

Section 7.1 Non-Solicitation of Customers or Employees

     The Executive shall not, during the term of this Agreement and for a period of eighteen (18)
months following the termination of his employment, for any reason (including

 

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without limitation by virtue of the expiration of the Term), on his own behalf or on behalf of
or in connection with any other Person, without the prior written consent of the Corporation,
directly or indirectly, in any capacity whatsoever, alone, through or in connection with any
Person:

	 	(a)	 	canvass or solicit the business of (or procure or assist the canvassing or
soliciting of the business of) any Customer or Prospective Customer or customer of the
Corporation’s affiliates for any purpose which is competitive with the Business; or
	 
	 	(b)	 	accept (or procure or assist the acceptance of) any business from any
Customer or Prospective Customer or customer of the Corporation’s affiliates which
business is competitive with the Business; or
	 
	 	(c)	 	supply (or procure or assist the supply of) any goods or services to any
Customer or Prospective Customer or customer of the Corporation’s affiliates for any
purpose which is competitive with the Business; or
	 
	 	(d)	 	employ, engage, offer employment or engagement to or solicit the employment
or engagement of or otherwise entice away from the employment or engagement of the
Corporation or any of its affiliates, any individual who is employed or engaged by the
Corporation or any of its affiliates whether or not such individual would commit any
breach of his/her contract or terms of employment or engagement by leaving the employ
or the engagement of the Corporation or any of its affiliates; or
	 
	 	(e)	 	procure or assist any Person to employ, engage, offer employment or
engagement or solicit the employment or engagement of any individual who is employed
or engaged by the Corporation or any of its affiliates or otherwise entice away from
the employment or engagement of the Corporation or any of its affiliates any such
individual.

ARTICLE 8

NON-DISPARAGEMENT

Section 8.1 Non-Disparagement

     The Executive covenants and agrees that he shall not engage in any pattern of conduct that
involves the making or publishing of written or oral statements or remarks (including, without
limitation, the repetition or distribution of derogatory rumors, allegations, negative reports or
comments) which are disparaging, deleterious or damaging to the integrity, reputation or goodwill
of the Corporation, its affiliates or its and their management.

 

- 17 -

ARTICLE 9

INTELLECTUAL PROPERTY

Section 9.1 Ownership of Intellectual Property

	 	(a)	 	All rights, titles and interests in or to the Developments shall vest and are
owned exclusively by the Corporation immediately on its creation and regardless of the
stage of its completion. The Executive irrevocably grants, transfers and assigns to
the Corporation all of his right, title and interest, if any, in any and all
Developments, including rights to translation and reproductions in all forms or
formats and all Intellectual Property Rights thereto, if any, and he agrees that the
Corporation may copyright said materials in the Corporation’s name and secure renewal,
reissues and extensions of such copyrights for such periods of time as the law may
permit.
	 
	 	(b)	 	At all times hereafter, the Executive agrees promptly to disclose to the
Corporation all Developments, to execute separate written transfers or assignments to
the Corporation at the Corporation’s request, and to assist the Corporation in
obtaining any Intellectual Property Right in the United States and in any other
countries, on any Developments granted, transferred or assigned to the Corporation
that the Corporation, in its sole discretion, seeks to register. The Executive also
agrees to sign all documents, and do all things necessary to obtain such Intellectual
Property Rights, to further assign them to the Corporation, and to reasonably protect
the Corporation against infringement by other parties at the Corporation’s expense
with the Corporation’s prior written approval.

     The Executive shall keep complete, accurate, and authentic information and records on all
Developments in the manner and form reasonably requested by Board. Such information and records,
and all copies thereof, shall be the property of the Corporation as to any Developments assigned to
the Corporation. The Executive agrees to promptly surrender such information and records at the
request of the Board. All these materials will be Confidential Information upon their creation.

ARTICLE 10

REMEDIES

Section 10.1 Reasonableness

	 	(a)	 	The Executive expressly recognizes that Articles 5, 6, 7, 8 and 9 of this
Agreement are of the essence of this Agreement, and that the Corporation would not
have entered into this Agreement without the inclusion of the said Articles.
	 
	 	(b)	 	The Executive further recognizes and expressly acknowledges that: (i) the
application of the Articles 5, 6, 7, 8 and 9 of this Agreement will not have the

 

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	 	 	 	effect of prohibiting him from earning a living in a satisfactory manner in the
event of the termination of his employment and of this Agreement, and (ii) the
Corporation would be subject to an irreparable prejudice should one or several of
the said Articles be infringed, or should the Executive be in breach of any of his
obligations thereunder.
	 
	 	(c)	 	The Executive further recognizes and expressly acknowledges that Articles 5,
6, 7, 8 and 9 of this Agreement grant to the Corporation only such reasonable
protection as is admittedly necessary to preserve the legitimate interests of the
Corporation and the Executive equally recognizes, in this respect, that the
description of the Business is reasonable.

Section 10.2 Remedies

     The Executive hereby recognizes and expressly acknowledges that the Corporation would be
subject to irreparable harm should any of the provisions of Article 5, 6, 7, 8 or 9 be infringed,
or should any of the Executive’s obligations thereunder be breached by the Executive, and that
damages alone will be an inadequate remedy for any breach or violation thereof and that the
Corporation, in addition to all other remedies, shall be entitled as a matter of right to equitable
relief, including temporary or permanent injunction to restrain such breach.

ARTICLE 11

CONFLICTING OBLIGATIONS

Section 11.1 No Conflicting Obligations

     The Executive represents and warrants to the Corporation that:

	 	(a)	 	there exists no agreement or contract and he is not subject to any
obligation, which restricts him from (i) being employed by the Corporation; or (ii)
from performing the duties assigned to him pursuant to this Agreement; or (iii) from
soliciting the clients or customers of a third party; or (iv) from using information
within his knowledge or control which may be useful in the performance of his duties
for the Corporation;
	 
	 	(b)	 	in the performance of his duties for the Corporation, he shall not improperly
bring to the Corporation or use any trade secrets, confidential information or other
proprietary information of any third party; and
	 
	 	(c)	 	he will not infringe the intellectual property rights of any third party.

 

- 19 -

ARTICLE 12  — GENERAL

Section 12.1 Notice Provisions

     Except as otherwise expressly provided herein, all notices relating to this Agreement shall be
in writing and either delivered by hand, courier service or facsimile transmission and addressed as
follows:

	 	 	 	 	 
	 

	 	The Executive:
	 	Norman Stout
	 

	 	 	 	c/o Inter-Tel (Delaware), Incorporated
	 

	 	 	 	1615 S. 52nd Street
	 

	 	 	 	Tempe, Arizona 85281
	 
	 	 	 	 
	 

	 	The Corporation:
	 	Inter-Tel (Delaware) Incorporated
	 

	 	 	 	1615 S. 52nd Street
	 

	 	 	 	Tempe, Arizona 85281
	 

	 	 	 	Attn: Chairman of the Board

Any address referred to in this Section 12.1 may be changed by notice given in accordance with the
provisions of this Section. Any notice which is delivered by hand, courier service or facsimile
transmission shall be effective when delivered.

Section 12.2 Entire Agreement

     This Agreement contains the entire agreement between the Corporation and the Executive with
respect to employment and supersedes all previous negotiations, understandings and agreements
whether verbal or written, with respect to the terms and conditions of employment between the
Corporation and the Executive, including without limitation that certain Tier 1 Key Employee Change
of Control Severance Agreement, effective as of March 20, 2006, by and between Executive and the
Corporation (the “Tier 1 Severance Agreement”) which shall be terminated, without any payment or
other benefit to either the Corporation or the Executive accruing (and as to which both of the
Executive and the Corporation hereby waive any claim); provided, however, that if (a) this
Agreement is not terminated in accordance with its terms, (b) the Executive is serving as the Chief
Executive Officer of the Corporation, and (c) the Executive does not have another employment or
severance agreement in effect with the Corporation at the time of such termination or expiration of
this Agreement, then the Tier 1 Severance Agreement shall return to effectiveness as if it were not
terminated hereby.

Section 12.3 Survival

     It is expressly agreed by the parties hereto that the provisions of Articles 4, 5, 6, 7, 8, 9,
10, 11 and 12 shall survive the termination of this Agreement, the expiration of the Term, and/or
the termination of the Executive’s employment, for any reason.

 

- 20 -

Section 12.4 Governing Law

     This Agreement shall be governed by and interpreted in accordance with the laws of the State
of Arizona.

Section 12.5 Successors and Assigns

     This Agreement may not be assigned by the Executive. This Agreement and the rights and
obligations hereunder may, without the further express consent of the Executive, be assigned by the
Corporation to any Person which succeeds to all or substantially all of the business, assets or
property of the Corporation.

Section 12.6 Execution of Further Documents

     The Corporation and Executive agree that they shall, from time to time and at all times, do
all such further acts and execute and deliver all such further documents and assurances as shall be
reasonably required in order to fully perform and carry out the terms of this Agreement.

Section 12.7 Amendments and Waivers

     No supplement, modification, amendment or waiver of this Agreement shall be binding unless
executed in writing by the Executive and the Corporation. No waiver of any of the provisions of
this Agreement shall be deemed to constitute a waiver of any other provision (whether or not
similar), nor shall such waiver constitute a waiver or continuing waiver unless otherwise expressly
provided in writing duly the party to be bound thereby.

Section 12.8 Severability

     In the event that any provision or any part of any provision hereof is deemed to be invalid by
reason of the operation of any law or by reason of the interpretation placed thereon by a court,
this Agreement shall be construed as not containing such provision or part of such provision and
the invalidity of such provision or such part shall not affect the validity of any other provision
or the remainder of such provision hereof. All other provisions hereof which are otherwise lawful
and valid shall remain in full force and effect.

Section 12.9 Legal Advice

     The Executive acknowledges that he has been afforded the opportunity to obtain independent
legal advice with respect to this Agreement and that he fully understands the nature and
consequences of this Agreement.

Section 12.10 Legal Costs

     After a Change of Control, if any legal action or other proceeding is brought by the Executive
for the enforcement of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement, the
Executive shall be entitled to recover his reasonable attorneys fees and other costs incurred

 

- 21 -

in that action or proceeding, in addition to any other relief to which he may be entitled, in the
event and to the extent that the Executive prevails in such action or other proceeding.
Notwithstanding anything hereinabove to the contrary, as between the Executive and the Corporation,
the Corporation shall bear all legal costs and expenses of defending the validity of this Agreement
against any third party. The Corporation shall bear all legal costs and expenses incurred in
contesting or disputing the characterization of any amounts paid pursuant to this Agreement as
being non-deductible under section 280G of the Code of the United State Internal Revenue Code of
1986, as amended (the “Code”) or subject to imposition of an excise tax under section 4999 of the
Code.

Section 12.11 Certain Tax Provisions

     If any payment otherwise due hereunder would be, when otherwise due, subject to additional
taxes and interest under Section 409A of the Code, for example, and not by way of limitation,
because of the prohibition under Section 409A against the payment of deferred compensation on
account of separation of service within six months of separation in the case of any key employee of
a public company, then such payment shall be deferred to the extent required to avoid such
additional taxes and interest. If any payment to be made or benefit to be provided to Executive
pursuant to this Agreement, after taking into account all other relevant payments or benefits
provided to Executive, would constitute or give rise to a “parachute payment” as defined in Section
280G of the Code, then the payments to be made or benefits to be provided to Executive and
otherwise taken into account in the determination of such a parachute payment shall be reduced so
that the aggregate present value of all such payments and benefits does not exceed three times
Executive’s “annualized includible compensation for the base period” (as such phrase is defined in
Section 280G(d)(1) of the Code) minus one dollar. The determination of any reduction in the
payments or benefits to be provided to Executive shall be made by the Corporation and the
Corporation’s determination in good faith shall be conclusive and binding on the Corporation.

Section 12.12 Preamble/Recital

     The Executive and the Corporation acknowledge and agree that the provisions contained in the
preamble/recital section of this Agreement shall form part of this Agreement and may be relied upon
by either party.

Section 12.13 Counterparts

     This Agreement may be executed by the parties in one or more counterparts, each of which when
so executed and delivered shall be deemed to be an original and such counterparts shall together
constitute one and the same instrument.

[signature page follows]

 

- 22 -

     IN WITNESS WHEREOF the parties have caused this Employment Agreement to be executed as of the
date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Inter-Tel (Delaware), Incorporated
	 
	 	 	 	 	 	 	 	 
	 /s/ Terry Santoni

	 	 	 	By:	 	 	 	 /s/ J. Robert Anderson
	 	 	 	 	 	 	 
	(Witness)

	 	 	 	 	 	 	 	J. Robert Anderson
	 

	 	 	 	 	 	 	 	Chairman of the Compensation Committee
	 

	 	 	 	 	 	 	 	Member of the Board of Directors
	 
	 	 	 	 	 	 	 	 
	 /s/ Terry Santoni

	 	 	 	 	 	 	 	EXECUTIVE
	 

(Witness)

	 	 	 	 	 	 	 	 /s/ Norman Stout
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Norman Stout

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