Document:

ex10.htm

Exhibit 10.1

RETENTION AGREEMENT

 

THIS RETENTION AGREEMENT, dated as of May 6, 2011, (the “Agreement”), is by and between Acxiom Corporation, a Delaware corporation (the “Company”) and Christopher W. Wolf (the “Executive”).

 

WHEREAS, the Executive currently serves as the Chief Financial Officer of the Company; and

 

WHEREAS, the Executive has expressed his desire to resign as Chief Financial Officer of the Company in order to pursue other interests; and

 

 WHEREAS, the Executive acknowledges that (i) he is not otherwise entitled to receive a bonus for the 2012 fiscal year and (ii) he is not otherwise eligible to receive any severance benefits in connection with his desired voluntary resignation; and

 

WHEREAS, the Company desires to offer the Executive a special retention bonus opportunity (the “Retention Bonus”) to retain the Executive’s services (i) to facilitate the orderly transition of a new Chief Financial Officer; (ii) to complete and file with the Securities and Exchange Commission the Company’s 2011 annual report on Form 10-K for the fiscal year ended March 31, 2011, including the execution of the certificates required of the Company’s principal financial officer in connection therewith (the “2011 Annual Report”), in compliance with all applicable rules and regulations; (iii) to complete the Company’s annual business plan; and (iv) to assist with such other matters as the interim Chief Executive Officer of the Company may reasonably request (collectively, the “Retention Obligations”); and

 

WHEREAS, the Company and Executive wish to reach an agreement on the terms and conditions under which the Executive will be entitled to receive the Retention Bonus.

 

NOW, THEREFORE, intending to be legally bound hereby, the parties agree as follows:

 

1. Term.  This Agreement shall commence on the date hereof and shall continue through the expiration of the Consulting Period defined in Section 5 below (the “Term”).

 

2. Executive’s Obligations during the Retention Period.  Upon the execution of this Agreement and continuing through June 1, 2011 (the “Retention Period”), subject to the next succeeding sentence, the Executive will devote his full time and attention during normal business hours to the business and affairs of the Company and its subsidiaries, including, without limitation, the satisfactory completion of the Retention Obligations.  Notwithstanding the foregoing, so long as such activities do not interfere in a material way with the performance by Executive of the Retention Obligations, the Executive shall be permitted, during business hours for the duration of the Retention Period, to participate in activities (whether from inside the Company’s facilities or otherwise) reasonably related to pursuing other interests including, without limitation, seeking new employment and preparing for transition from his current employment with the Company to employment commencing following the Retention Period.

 

3. Salary and Benefits during the Retention Period.  During the Retention Period, the Executive shall be entitled to the salary and benefits that he is otherwise currently eligible to receive as a full-time employee.  Additionally, the terms and conditions of the Executive’s termination of employment from the Company during the Retention Period shall be governed exclusively by the Acxiom Corporation, Inc. 2010 Executive Officer Severance Policy and any applicable plan and award agreement(s) for equity grants (including any performance or incentive awards) previously made to the Executive.  For the avoidance of doubt, by executing this Agreement the Executive acknowledges that following the completion of the Retention Period (i) the Executive shall not be entitled to any benefits under the Acxiom Corporation, Inc. 2010 Executive Officer Severance Policy regarding his termination of employment and (ii) any outstanding equity grants (including any performance or incentive awards) previously granted to the Executive shall be governed exclusively by the plan and award agreement(s) applicable to such grants.   The Company shall continue to reimburse Executive for actual travel and other expenses reasonably incurred in connection with performance of the Retention Obligations, provided that such expenses are supported by documentation that complies with the Company’s travel and expense policies (the “Eligible Expenses).

 

  

  

  

 

4. Retention Bonus.  Provided the Executive (i) remains employed with the Company through the completion of the Retention Period; (ii) satisfactorily performs his duties as Chief Financial Officer through the completion of the Retention Period; (iii) satisfactorily completes the Retention Obligations in compliance with all applicable rules and regulations prior to the expiration of the Retention Period, and (iv) otherwise complies with the terms of this Agreement, including without limitation the provisions of Section 5 below, the Company agrees to pay the Executive a Retention Bonus of $400,000.  For the avoidance of doubt, the Executive acknowledges that the determination of whether the Executive has met all of the obligations required to receive the Retention Bonus, including the satisfactory completion of the Retention Obligations, shall be made by the Company in good faith and in its reasonable discretion exercised in accordance with the terms of this Agreement.

 

The Retention Bonus shall be paid to the Executive in twenty-four semi-monthly payments in accordance with the Company’s normal payroll cycle, less any applicable state and federal taxes required to be withheld, with such payments commencing on the normal payroll cycle occurring immediately following the expiration of the Retention Period.  The Executive’s continued right to receive the Retention Bonus payments is conditioned upon the Executive’s execution of a general release in the form attached as Exhibit A (the “Release of Claims”) and the expiration of any period during which the Executive may revoke such Release of Claims, pursuant to the terms therein, prior to the expiration of the Release Execution Period.  For purposes of this Agreement, the “Release Execution Period” shall mean the period beginning on June 1, 2011 and ending on the thirtieth day thereafter.  Notwithstanding the foregoing, in the event that the payment of the Retention Bonus and any subsequent termination of Executive’s employment occurs in connection with an exit incentive program or other employment termination program offered to a group or class of employees, as defined under the Older Worker Benefit Protection Act, 29 U.S.C. Section 626, the Release Execution Period shall mean the period beginning on June 1, 2011 and ending on the sixtieth day thereafter.

 

Anything in this Agreement to the contrary notwithstanding, the payment of the Retention Bonus pursuant to this Section 4 is conditioned upon (i) the Executive’s execution and nonrevocation of the Release of Claims prior to the expiration of the Release Execution Period and (ii) compliance with the restrictions and obligations of Sections 9 and 10 hereof (collectively, the “Restrictions”).

The Company shall reimburse Executive for reasonable legal expenses incurred in connection with the negotiation of this Agreement, in an amount up to $10,000.

5. Consulting Services.  For the twelve (12) month period following his termination of employment with the Company (the “Consulting Period”), the Executive agrees to make himself available, at reasonable times upon the reasonable request of the Company and pursuant to reasonable advance notice, to provide consulting services to the Company.  Both parties hereby agree that the aggregate number of hours the Executive may be required to work pursuant to this Agreement during the Consulting Period shall not exceed one hundred sixty (160) hours.  The Executive shall maintain records with respect to the time spent in the performance of Executive’s duties and responsibilities hereunder and shall submit such records to the Company as reasonably requested.  The Company shall continue to reimburse Executive’s Eligible Expenses incurred in connection with the provision of his consulting services hereunder.  Notwithstanding anything to the contrary contained herein, the Executive’s provision of consulting services during the Consulting Period shall be provided as an “independent contractor,” and shall not constitute continued employment for purposes of any Company pension, retirement, health, equity or any other benefit plan or program, including for purposes of continued vesting of any outstanding equity awards.

 

  

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6. Delay of Payment Required by Section 409A of the Code.  It is intended that (i) each payment or installment of payments provided under this Agreement will be a “separate “payment” for purposes of Section 409A of the Internal Revenue  Code of 1986, as amended (the “Code”), and (ii) that the payments will satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Code, including those provided under Treasury Regulations 1.409A-1(b)(4) (regarding short-term deferrals), 1.409A-1(b)(9)(iii) (regarding the two-times, two-year exception), and 1.409A-1(b)(9)(v) (regarding reimbursements and other separation pay).  Notwithstanding anything to the contrary in this Agreement, if (i) on the date the Executive’s employment with the Company terminates or at such other time that is relevant under Section 409A of the Code, the Company determines that Executive is a “specified employee” (as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of the Company and (ii) the Company determines that any payments to be provided to the Executive pursuant to this Agreement are subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code if provided at the time otherwise required under this Agreement, then such payments will be delayed until the date that is six (6) months after the date of the Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)) with the Company or, if earlier, the date of the Executive’s death.  Any payments delayed pursuant to this Section 6 will be made in a lump sum on the first day of the seventh month following the Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)) or, if earlier, the date of the Executive’s death and any remaining payments required to be made under this Agreement will be paid upon the schedule otherwise applicable to such payments under the Agreement.

 

7. Representations.

 

(a) The Company represents and warrants that this Agreement has been authorized by all necessary corporate action of the Company and is a valid and binding agreement of the Company enforceable against it in accordance with its terms.

 

(b) The Executive represents and warrants that he is not a party to any agreement or instrument which would prevent him from entering into or performing his duties in any way under this Agreement.  The Executive also acknowledges and agrees that upon entry into this Agreement he shall not be entitled nor have any right to seek severance or any other benefits for any termination of employment occurring on or after the completion of the Retention Period under the Acxiom Corporation 2010 Executive Officer Severance Policy or any other Company plan, program or policy.

 

8. Assignment; Binding Agreement.  This Agreement is a personal contract and the rights and interests of the Executive hereunder may not be sold, transferred, assigned, pledged, encumbered, or hypothecated by him, except as otherwise expressly permitted by the provisions of this Agreement.  This Agreement will inure to the benefit of and be enforceable by the Executive and his personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amount would still be payable to him hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, will be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there is no such designee, to his estate.

 

  

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9. Confidentiality; Non-Solicitation; Non-Competition.

 

(a) Non-Solicitation.

 

(i) The Executive specifically acknowledges that the Confidential Information described in this Section 9 includes confidential data pertaining to current and prospective customers of the Company, that such data is a valuable and unique asset of the Company’s business and that the success or failure of the Company’s specialized business is dependent in large part upon the Company’s ability to establish and maintain close and continuing personal contacts and working relationships with such customers, and to develop proposals which are specifically designed to meet the requirements of such customers.  Therefore, the Executive agrees that during the Term of this Agreement, he will not, except on behalf of the Company or with the Company’s express written consent, solicit, either directly or indirectly, on his own behalf or on behalf of any other person or entity, any customers or targeted potential customers with whom he had contact before his date of termination from the Company (the “Date of Termination”) to take any action which could reasonably be expected to adversely affect the Company.

 

(ii) The Executive specifically acknowledges that the Confidential Information described in this Section 9 also includes confidential data pertaining to current and prospective employees and agents of the Company, and the Executive further agrees that during the Term of this Agreement, the Executive will not directly or indirectly solicit, induce or attempt to induce, on his own behalf or on behalf of any other person or entity, the services of any person who is an employee, consultant or agent of the Company, solicit any of the Company’s employees, consultants or agents to terminate their employment or agency with the Company or take any other actions which would otherwise cause the Company’s employees, consultants or agents to violate any Company policy, program or plan.

 

(iii) The Executive specifically acknowledges that the Confidential Information described in this Section 9 also includes confidential data pertaining to current and prospective vendors and suppliers of the Company, and the Executive agrees that during the Term of this Agreement, the Executive will not directly or indirectly solicit, on his own behalf or on behalf of any other person or entity, any vendor or supplier of the Company for the purpose of either providing products or services to do a business competitive with that of the Company or terminating or changing (in an adverse manner) such vendor’s or supplier’s relationship or agency with the Company.

 

(iv) For purposes of this Section 9(a), references to the Company mean the Company or any existing or future subsidiary of the Company and any other entities that directly or indirectly, through one or more intermediaries, control, are controlled by or are under common control with the Company.

 

(b) Non-Competition.

 

(i) The Executive covenants and agrees that during the Term of this Agreement, he will not engage in or carry on, directly or indirectly, as an individual, principal, owner, employee, agent, associate, consultant, director or in any other capacity, a business competitive with that conducted by the Company.  A “business competitive with that conducted by the Company” includes, but is not limited to, any business or activity involved in information management products, marketing solutions and other services related to customer acquisition, growth and retention, including data collection, data integration technology and services, database services, information technology outsourcing, consulting and analytics services and consumer privacy products and services, or any other significant business in which the Company or any of its subsidiaries is engaged in, in each case where such products or services are competitive with products or services offered by the Company or any of its subsidiaries that constitute more than five percent (5%) of the Company’s revenues in any of its eight (8) preceding fiscal quarters.  To “engage in or carry on” will mean to have ownership in such business (excluding ownership of up to one percent (1%) of the outstanding shares of a publicly-traded company) or to consult, work in, direct or have responsibility for any area of such business, including but not limited to the following areas: operations, technology strategy, sales, marketing, product planning, research, design or development.  Notwithstanding anything to the contrary, for purposes of this Section 9(b), the Company and Executive agree that Executive shall not be prohibited from engaging or carrying on in any background screening business so long as Executive complies with the provisions of Section 9(a).

 

  

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(ii) During the Term of this Agreement, the Executive certifies and agrees that he will promptly notify the Board of Directors of the Company (the “Board”) in writing of his employment or other affiliation with any potentially competitive business or entity, before the commencement of such employment or affiliation.

 

(c) The parties intend that each of the covenants contained in this Section 9 will be construed as a series of separate covenants, one for each state of the United States, each county of each state of the United States, and each foreign jurisdiction in which the Company does business or is preparing to do business.  Except for geographic coverage, each such separate covenant will be deemed identical in terms to the covenant contained in the preceding subsections of this Section 9.  If, in any judicial proceeding, a court will refuse to enforce any of the separate covenants (or any part thereof) deemed included in those subsections, then such unenforceable covenant (or such part) will be deemed eliminated from this Agreement for the purpose of those proceedings to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced.  In the event that the provisions of this Section 9 should ever be deemed to exceed the time or geographic limitations, or the scope of this covenant is ever deemed to exceed that which is permitted by applicable law, then such provisions will be reformed to the maximum time, geographic limitations or scope, as the case may be, permitted by applicable law.  The unenforceability of any covenant in this Section 9 will not preclude the enforcement of any other of said covenants or provisions of any other obligation of the Executive or the Company hereunder, and the existence of any claim or cause of action by the Executive or the Company against the other, whether predicated on the Agreement or otherwise, will not constitute a defense to the enforcement by the Company of any of said covenants.

 

(d) If the Executive will be in violation of any provision of this Section 9, then each time limitation set forth in this Section 9 will be extended for a period of time equal to the period of time during which such violation or violations occur.  If the Company seeks injunctive relief from such violation in any court, then the covenants in this Section 9 will be extended for a period of time equal to the pendency of such proceedings, including all appeals by the Executive.

 

10. Ownership of Developments; Trade Secrets of Others.  All copyrights, patents, trade secrets, or other intellectual property rights associated with any idea, concepts, techniques, inventions, processes, or works of authorship developed or created by the Executive during the course of his work for the Company or its clients, including past employment and with respect to the services to be provided hereunder (collectively, the “Work Product”), will belong exclusively to the Company and will, to the extent possible, be considered a work made by the Executive for hire for the Company within the meaning of Title 17 of the United States Code.  To the extent the Work Product may not be considered work made by the Executive for hire for the Company, the Executive agrees to assign, and automatically assign at the time of creation of the Work Product, without any requirement of further consideration, any right, title, or interest the Executive may have in such Work Product.  Upon the request of the Company, the Executive will take further actions, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to such assignment.   The Executive represents that he is not bound by, and covenants that he will not enter into, any agreements, either written or oral, which are in conflict with this Agreement.  For purposes of this Section 10, the term “Company” also will include any existing or future affiliates of the Company.

 

  

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11. Company Remedies.  The Executive acknowledges and agrees that the restrictions and covenants contained in this Agreement are reasonable and necessary to protect the legitimate interests of the Company and that the services to be rendered by him hereunder are of a special, unique and extraordinary character.  To that end, in the event of any breach by the Executive of Section 9 or Section 10 hereof, the Executive agrees that the Company would be entitled to injunctive relief, which entails that (i) it would be difficult to replace the Executive’s services; (ii) the Company would suffer irreparable harm that would not be adequately compensated by monetary damages and (iii) the remedy at law for any breach of any of the provisions of Section 9 or Section 10 may be inadequate.  The Executive further acknowledges that legal counsel of his choosing has reviewed this Agreement, that the Executive has consulted with such counsel, and that he agrees to the terms herein without reservation.  Accordingly, the Executive specifically agrees that the Company will be entitled, in addition to any remedy at law or in equity, and to the extent consistent with Section 409A of the Code, to (i) retain any and all payments not yet paid to him under this Agreement in the event of any breach by him of his covenants under Sections 9 and 10 hereunder, (ii) in the event of such breach, seek monetary damages and (iii) obtain preliminary and permanent injunctive relief and specific performance for any actual or threatened violation of Section 9 or Section 10 of this Agreement.  This provision with respect to injunctive relief will not, however, diminish the right to claim and recover damages, or to seek and obtain any other relief available to it at law or in equity, in addition to injunctive relief.  Notwithstanding anything contained herein, any amounts paid or payable to the Executive pursuant to this Agreement or otherwise by the Company, including any equity compensation granted to Executive, may be subject to forfeiture or repayment to the Company in accordance with Section 409A of the Code.

 

12. Entire Agreement.  This Agreement contains all the understandings between the parties hereto pertaining to the matters referred to herein, and supersedes any other undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto.  To the extent that any term or provision of any other document or agreement executed by the Executive with or for the Company during the Term of this Agreement, including, without limitation, Sections 4, 7, 8 and 11 of the Acxiom Corporation Associate Agreement, conflicts or is inconsistent with this Agreement, the terms and conditions of this Agreement shall prevail and supersede such inconsistent or conflicting term or provision, except to the extent, if any, expressly provided otherwise in such other document or agreement with specific reference to this Agreement.  The Executive represents that, in executing this Agreement, he does not rely and has not relied upon any representation or statement not set forth herein made by the Company with regard to the subject matter or effect of this Agreement or otherwise and that the Executive has been represented by counsel selected by the Executive.

 

13. Amendment, Modification or Waiver.  No provision of this Agreement may be amended or waived, unless such amendment or waiver is agreed to in writing, signed by the Executive and by a duly authorized officer of the Company.  No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

 

14. Notices.  Any notice to be given hereunder will be in writing and will be deemed given when delivered personally, sent by courier or facsimile or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice hereunder in writing:

 

  

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To the Executive at:             Christopher W. Wolf

536 18th Avenue N.E.

St. Petersburg, Florida 33704

Facsimile: ______________

To the Company at:             Acxiom Corporation

601 East Third Street

Little Rock, Arkansas  72201

Attention: General Counsel

Facsimile: (501) 252-0303

Any notice delivered personally or by courier under this Section 14 will be deemed given on the date delivered and any notice sent by facsimile or registered or certified mail, postage prepaid, return receipt requested, will be deemed given on the date transmitted by facsimile or five days after post-marked if sent by U.S. mail.

 

15. Severability.  If any provision of this Agreement or the application of any such provision to any party or circumstances will be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, will not be affected thereby, and each provision hereof will be validated and will be enforced to the fullest extent permitted by law.

 

16. Governing Law.  This Agreement will be governed by and construed under the internal laws of the State of Arkansas, without regard to its conflict of laws principle.

 

17. Jurisdiction and Venue.  This Agreement will be deemed performable by all parties in, and venue will exclusively be in, the state or federal courts located in the State of Arkansas.  The Executive and the Company hereby consent to the personal jurisdiction of these courts and waive any objections that such venue is objectionable or improper.

 

18. Headings.  All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.

 

19. Withholding.  All payments to the Executive under this Agreement will be reduced by all applicable withholding required by federal, state or local law.

 

20. Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

21. Section 409A

 

(a) Notwithstanding any other provision to the contrary, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of “deferred compensation” (as such term is defined in Section 409A of the Code and the Treasury Regulations promulgated thereunder) upon or following a termination of employment unless such termination is also a “separation from service” from the Company within the meaning of Section 409A of the Code and Section 1.409A-1(h) of the Treasury Regulations and, for purposes of any such provision of this Agreement, references to a “separation,” “termination,” “termination of employment” or like terms shall mean “separation from service.”

 

  

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(b) Notwithstanding any other provision to the contrary, in no event shall any payment under this Agreement that constitutes “deferred compensation” for purposes of Section 409A of the Code and the Treasury Regulations promulgated thereunder be subject to offset by any other amount unless otherwise permitted by Section 409A of the Code.

 

(c) For the avoidance of doubt, any payment due under this Agreement within a period following Executive’s termination of employment or other event, shall be made on a date during such period as determined by the Company in its sole discretion.

 

(d) It is intended that the Agreement, to the extent practicable, comply and be interpreted in accordance with Section 409A of the Code, and the Company shall, as necessary, adopt such conforming amendments as are necessary to comply with Section 409A of the Code without reducing the benefits payable hereunder without the express written consent of the Executive.

 

(e) To the extent that any reimbursement, fringe benefit or other, similar plan or arrangement in which the Executive participates during the term of Executive’s employment under this Agreement or thereafter provides for a “deferral of compensation” within the meaning of Section 409A of the Code, (i) the amount eligible for reimbursement or payment under such plan or arrangement in one calendar year may not affect the amount eligible for reimbursement or payment in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed or paid), (ii) subject to any shorter time periods provided herein or the applicable plans or arrangements, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (iii) any such reimbursement or payment may not be subject to liquidation or exchange for another benefit.

 

(f) By accepting this Agreement, Executive hereby agrees and acknowledges that the Company does not make any representations with respect to the application of Section 409A of the Code to any tax, economic or legal consequences of any payments payable to the Executive hereunder. Further, by the acceptance of this Agreement, the Executive acknowledges that (i) the Executive has obtained independent tax advice regarding the application of Section 409A of the Code to the payments due to the Executive hereunder, (ii) the Executive retains full responsibility for the potential application of Section 409A of the Code to the tax and legal consequences of payments payable to the Executive hereunder and (iii) the Company shall not indemnify or otherwise compensate the Executive for any violation of Section 409A of the Code that my occur in connection with this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement effective as of date set forth above.

ACXIOM CORPORATION

By: /s/ Jerry Gramaglia      

 

Name:  Jerry Gramaglia      

 

Title:  CEO                                                                                 

EXECUTIVE

            

 

 

/s/ Christopher W. Wolf         

Christopher W. Wolf

  

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EXHIBIT A

Form of General Release

  

  

  

Form of General Release

 

This Release (the “Release”), dated as of ________, is made by and among Christopher W. Wolf (the “Executive”) and Acxiom Corporation and all of its subsidiaries (collectively, the “Company”).

 

WHEREAS, the parties hereto entered into that certain Retention Agreement dated as of May 6, 2011 (the “Agreement”);

 

WHEREAS, pursuant to Section 4 of the Agreement, it is a condition precedent to the Company’s continuing obligation to make the payments under Section 4, that the Executive executes and delivers this Release.

 

NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Executive Release.  The Executive, ON BEHALF OF HIMSELF, HIS SPOUSE, ATTORNEYS, HEIRS, EXECUTORS, ADMINISTRATORS, AGENTS, ASSIGNS AND ANY TRUSTS, PARTNERSHIPS AND OTHER ENTITIES UNDER HIS CONTROL AND ANY OTHER PERSON CLAIMING BY, THROUGH OR UNDER THE EXECUTIVE (TOGETHER, THE “EXECUTIVE PARTIES”), HEREBY GENERALLY RELEASES AND FOREVER DISCHARGES the Company, its respective predecessors, successors and assigns and its respective past and present stockholders, members, directors, officers, employees, agents, representatives, principals, insurers and attorneys (together the “Company Parties”) from any and all claims, demands, liabilities, suits, damages, losses, expenses, attorneys’ fees, obligations or causes of action, KNOWN OR UNKNOWN, CONTINGENT OR NON-CONTINGENT of any kind and every nature whatsoever, and WHETHER OR NOT ACCRUED OR MATURED, which any of them have or may have, arising out of or relating to any transaction, dealing, relationship, conduct, act or omission, OR ANY OTHER MATTERS OR THINGS OCCURRING OR EXISTING AT ANY TIME PRIOR TO AND INCLUDING THE EXECUTION DATE OF THIS RELEASE (including, but not limited to, any claim against the Company Parties based on, relating to or arising under wrongful discharge, breach of contract (whether oral or written), tort, fraud (including fraudulent inducement into this Release), defamation, negligence, promissory estoppel, retaliatory discharge, Title VII of the Civil Rights Act of 1964, as amended, any other civil or human rights law, the Age Discrimination in Employment Act of 1967, Americans with Disabilities Act, Section 409A of the Internal Revenue Code or 1986, as amended (the “Code”) or any other applicable provisions of the Code, Employee Retirement Income Security Act of 1974, as amended, or any other federal, state or local law relating to employment or discrimination in employment) arising out of or relating to the Executive’s employment by the Company or his services as an officer or employee of the Company or any of its subsidiaries, or otherwise relating to the termination of such employment or the Agreement (collectively, “Claims”); provided, however, such general release will not limit or release the Company Parties from their respective obligations (i) under the Agreement that expressly survive termination of employment, (ii) under the Company’s benefit plans and agreements (excluding the Acxiom Corporation, Inc. 2010 Executive Officer Severance Policy) that expressly survive termination of employment, including without limitation the Company’s equity incentive plans, (iii) in respect of the Executive’s services as an officer or director of the Company or any of its subsidiaries, pursuant to any director and officer indemnification agreements or as provided by law or the certificates of incorporation or by-laws (or like constitutive documents) of the Company or any of its subsidiaries or [(iv) insert at the time of termination a description of any other agreements with the Company that expressly survive the Executive’s termination].  The Executive, ON BEHALF OF HIMSELF AND THE EXECUTIVE PARTIES, hereby represents and warrants that no other person or entity has initiated or, to the extent within his control, will initiate any such proceeding on his or their behalf.

 

  

  

  

 

2. Non-Disparagement.  The Executive agrees that for eighteen (18) months following the expiration of the Term of the Agreement the Executive shall not, in any communications with the press or other media or any customer, client or supplier of the Company or any of its subsidiaries, make any statement which disparages or is derogatory of the Company or any of its subsidiaries or any of their respective directors or senior officers; provided, however, that this Section 2 shall apply to the Executive only for so long as the Company, its subsidiaries and their respective directors and senior officers refrain from making any such communication which disparages or is derogatory of the Executive.

 

3. Acknowledgement of Waiver of Claims under ADEA.  The Executive acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 and that this waiver and release is knowing and voluntary.  The Executive acknowledges that the consideration given for this waiver and release is in addition to anything of value to which the Executive was already entitled.  The Executive further acknowledges that (a) he has been advised that he should consult with an attorney prior to executing this Release, (b) he has been given twenty-one (21) days within which to consider this Release before executing it and (c) he has been given seven (7) days following the execution of this Release to revoke this Release.

 

4. Acknowledgment.  The parties hereto acknowledge that they understand the terms of this Release and that they have executed this Release knowingly and voluntarily.  The Executive acknowledges that, in consideration for the covenants and releases contained herein, he will receive the payments as described in Section 4 of the Agreement, and that he would not receive such payment without the execution of this Release.  Furthermore, the Executive acknowledges that amounts paid or payable to the Executive pursuant to the Agreement or otherwise by the Company, including any equity compensation granted to the Executive, may be subject to forfeiture or repayment to the Company pursuant to any clawback policy as adopted by the Board from time to time and applicable to senior executives of the Company, and Executive hereby agrees to be bound by any such policy.

 

5. Severability.  All provisions of this Release are intended to be severable.  In the event any provision or restriction contained herein is held to be invalid or unenforceable in any respect, in whole or in part, such finding shall in no way affect the validity or enforceability of any other provision of this Release.  The parties hereto further agree that any such invalid or unenforceable provision shall be deemed modified so that it shall be enforced to the greatest extent permissible under law, and to the extent that any court or arbitrator of competent jurisdiction determines any restriction herein to be unreasonable in any respect, such court or arbitrator may limit this Release to render it reasonable in the light of the circumstances in which it was entered into and specifically enforce this Release as limited.

 

6. Specific Performance.  If a court of competent jurisdiction determines that the Executive has breached or failed to perform any part of this Release, the Executive agrees that the Company will be entitled to seek injunctive relief to enforce this Release.

 

  

  

  

 

7. Governing Law.  This Release shall be governed by and construed in accordance with the laws of the State of Arkansas without reference to principles of conflict of laws.

 

8. Jurisdiction and Venue.  This Release will be deemed performable by all parties in, and venue will exclusively be in the state and federal courts located in, the State of Arkansas.  The Executive hereby consents to the personal jurisdiction of these courts and waives any objection that such venue in objectionable or improper.

 

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IN WITNESS WHEREOF, the Executive has hereunto set his hands, as of the day and year first above written.

 

 

______________________________________

Christopher W. Wolf, individuallyex10_1.htm

EXHIBIT 10.1

 

EXECUTION COPY

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (the “Agreement”) is made and entered into as of December 9, 2010 (“Effective Date”), by and between ShoreTel, Inc., a Delaware corporation (the “Company”), and Peter Blackmore (the “Executive”).

 

1.             POSITION AND DUTIES

 

Executive will serve as the Company’s President and Chief Executive Officer (“CEO”) and will report to the Company’s Board of Directors (the “Board”). Executive will have overall operating responsibility for the day-to-day management of the Company and will render such business and professional services in the performance of his duties, consistent with Executive’s position, as shall reasonably be assigned to him by the Board.

 

2.             MEMBERSHIP ON BOARD

 

As long as Executive serves as CEO, the Company will nominate Executive for election and/or reelection as a member of the Board whenever his term is scheduled to expire. Executive may be removed from the Board in accordance with applicable law and the Company’s Bylaws.

 

3.             EXCLUSIVE SERVICE

 

Executive will devote his full working time and attention to the business of the Company and will not directly or indirectly, engage or participate in any business that is competitive in any manner with the business of the Company. Executive will also be expected to comply with and be bound by the Company’s operating policies, procedures and practices that are from time to time in effect during the term of his employment. Executive’s service on the boards of directors of other companies will be subject to the same review and approval process that applies to other members of the Board. Executive will not render other services to any for-profit business other than the Company without the prior approval of the Board. It is understood that the Board may deny approval for any reason that it deems in the best interests of the Company including the desire to have Executive not take on additional time commitments.

 

4.             AT-WILL EMPLOYMENT

 

Executive and the Company understand and acknowledge that Executive’s employment with the Company constitutes “at-will” employment, and the employment relationship may be terminated at any time, with or without cause and with or without notice.  Executive agrees to resign from all positions that he holds with the Company, including, without limitation, his position as Chairman and a member of the Board immediately following the termination of his employment, if the Board so requests. Upon the Board’s request, Executive shall execute any and all documents reasonably required to give effect to any such terminations.

 

5.             COMPENSATION AND BENEFITS

 

5.1             Base Salary.  While employed by the Company pursuant to this Agreement, the Company shall pay Executive an annual base salary of $400,000 (the “Base Salary”), payable in accordance with the Company’s normal payroll practices, with such payroll deductions and withholdings as are required by law.  The Base Salary will be reviewed annually by the Compensation Committee of the Board and may be increased (but not reduced; provided that such Base Salary may be reduced to the extent that it is less than the amount that would constitute Good Reason as defined in Section 9.6(b)).  Any changes thereto shall be determined by the Company in its sole and absolute discretion.  Except as specifically set forth in this Section 6.1, the term “Base Salary” as used in this Agreement means the base salary of the Executive immediately preceding the Executive’s Termination Date.

 

  

  

  

 

5.2           Incentive Compensation Target Bonus.  Executive will be eligible to receive an annual objective-based incentive bonus (“Target Bonus”) based on criteria established by the Board.  For the fiscal year of Executive’s employment ending June 30, 2011 (the “2011 Target Bonus”) and subsequent fiscal years, Executive’s Target Bonus will be equal to one hundred percent (100%) of Executive’s then-current Base Salary.  Such Target Bonus may be increased at the discretion of the Board to a maximum of one hundred and fifty percent (150%) of the then current Base Salary based on achievement of performance objectives determined by the Board.  The bonus will be paid as soon as reasonably practicable after the fiscal-year end but no later than the Section 409A short-term deferral period under Treasury Regulation 1.409-1(b)(4).  The 2011 Target Bonus shall be prorated by the number of days between the Effective Date and June 30, 2011.  This prorated portion of the 2011 Target Bonus will be guaranteed at one hundred percent (100%).   Any earned bonus will be paid regardless of whether Executive is employed at the time the bonus is to be paid.

 

5.3           Employee Benefits.  Executive shall be eligible to participate in all employee benefit plans and arrangements, including, but not limited to, medical, dental, vision and long-term disability insurance benefits and arrangements, as are made available by the Company to its other senior executives, subject to the terms and conditions thereof.  Executive may at his option choose United Healthcare for his medical, dental, and vision coverage and be reimbursed (no later than 60 days after the costs are incurred by the Executive) by the Company or have the Company pay the provider directly .  The amount that will be reimbursed or paid directly will not exceed $2154.00 per month through January 1, 2012.  It may be increased by 10% per year thereafter but will not exceed the actual costs of the medical, dental, and vision coverage.

 

5.4           Vacation.  Executive will be entitled to paid vacation and holidays pursuant to the terms of the Company’s vacation policy as may exist from time to time.

 

5.5           Expenses.  The Company will, in accordance with applicable Company policies and guidelines, reimburse Executive for all reasonable and necessary expenses incurred by Executive in connection with his performance of services on behalf of the Company.

 

5.6           Annual Physical.  The Company will pay on Executive’s behalf the cost of one annual physical at TBD located in Northern California.

 

6.             EQUITY GRANTS

 

On December 13, 2010, which will be Executive’s first day of employment, Executive will be granted options under the Company’s 2007 Equity Incentive Plan (the “Plan”) to purchase 1,000,000 shares of the Company’s common stock (the “Options”). 750,000 shares of such Option (the “first option”) will have an exercise price equal to the fair market value of the Company’s common stock on the date of grant and the remaining 250,000 shares of the Option (the “second option”) will have an exercise price equal to the higher of $11.00 per share or the fair market value of the Company’s common stock on the date of grant. The first option and the second option will vest conditioned upon Executive’s continued employment with the Company, over four (4) years, with twenty-five percent (25%) of the total number of shares subject to the first option and the second option vesting and becoming exercisable one year after the Effective Date, and 1/48 of the total number of shares subject to the first option and the second option vesting and becoming exercisable on each monthly anniversary of the Effective Date.  Notwithstanding the foregoing, in the event of certain separations from service from the Company, the vesting of the Options will be accelerated as set forth in Section 7.

 

  

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7.             TERMINATION BENEFITS

 

7.1           Prior Obligations.  In the event that Executive’s employment terminates for any reason, whether voluntary or involuntary, Executive shall be entitled to the benefits under this Section 7.1:

 

7.1.1 Accrued Salary and Vacation.  A lump sum payment of all salary and accrued vacation earned through the Termination Date.

 

7.1.2 Expense Reimbursement.  Upon submission of proper expense reports by the Executive, the Company shall reimburse the Executive for all expenses incurred by the Executive, consistent with past practices, in connection with the business of the Company prior to the Executive’s Termination Date.

 

7.1.3 Employee Benefits.  Benefits, if any, under any 401(k) plan, nonqualified deferred compensation plan, employee stock purchase plan and other Company benefit plans under which the Executive may be entitled to benefits, subject to and payable pursuant to the terms of such plans.

 

7.2          Termination in Absence of a Change of Control.  Subject to Section 7.4 and provided that the Executive executes a binding Termination Release Agreement in a form specified by the Company substantially as attached as Exhibit A within twenty-one (21) days from his Termination Date as set forth therein, in the event of the Executive’s Termination in the Absence of a Change of Control, in addition to the benefits provided under Section 7.1 of this Agreement, Executive shall be entitled to the following benefits:

 

7.2.1 Executive shall receive an amount equal to eighteen (18) months of Executive’s Base Salary, payable in one lump sum.

 

7.2.2 The Company will reimburse Executive for premiums paid for continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or for United Healthcare, at the option of Executive, for a period of eighteen (18) months after Executive’s Termination Date.

 

7.2.3 Executive shall receive an amount equal to Executive’s Target Bonus less any previously paid advances on such bonus for the fiscal year in which the Termination in the Absence of a Change of Control occurs, prorated for the number of days of Executive’s service to the Company for such year, payable in one lump sum. If such termination were to occur in the second (2nd) half of the fiscal year, the first (1st) half incentive plan funded percentage would be used and a performance rating factor of 1.0 in calculating the amount owed would be used.

 

  

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7.2.4 Executive will receive accelerated vesting of the Options as if executive had provided an additional 6 months of service measured from the Termination Date.  Notwithstanding the provisions of this Section 7.2.4, the Board may in its sole discretion provide for additional vesting of the Options or other future equity awards made to Executive upon termination under this Section 7.2.

 

7.3          Additional Benefits on Termination Upon Change of Control.  Subject to Section 7.4 and provided that the Executive executes a binding Termination Release Agreement in a form specified by the Company substantially as attached as Exhibit A within twenty-one (21) days from his Termination Date as set forth therein, in the event of the Executive’s Termination Upon a Change of Control, in addition to the benefits provided under Section 7.1 of this Agreement (and in place of the benefits provided under Section 7.2 of this Agreement), Executive shall be entitled to the following benefits:

 

7.3.1 Executive shall receive an amount equal to eighteen (18) months of Executive’s Base Salary, payable in one lump sum.

 

7.3.2 The Company will reimburse Executive for premiums paid for continuation coverage pursuant to COBRA or for United Healthcare, at the option of Executive, for a period of eighteen (18) months after Executive’s Termination Date.

 

7.3.3 Executive shall receive an amount equal to one hundred and fifty percent (150%) of Executive’s Target Bonus for the year in which the Termination Upon Change of Control occurs, payable in one lump sum.

 

7.3.4 Executive will receive accelerated vesting of 100% of the unvested portion of the Options.

 

7.3.5 Transition Services for Termination Upon Change of Control.  As a condition to your receipt of the benefits provided pursuant to this Section 7.3, you agree that you will make yourself available to the Company (and any Successor) following your Termination Upon a Change of Control to provide reasonable transition services for a period of time not to exceed three (3) months, provided that such services shall not account for greater than twenty percent (20%) of the level of services you provided in your capacity as an employee prior to your Termination Upon Change of Control.

 

7.4           Timing of Payments.

 

7.4.1 In the event that Executive’s employment terminates for any reason, whether voluntarily or involuntarily, all payments made under Section 7.1 of this Agreement shall be made within sixty (60) days of the Termination Date, provided that, for any payments where a release is required, such release has been executed and is effective.

 

  

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7.4.2 In the event of a Termination in Absence of a Change of Control, all payments (other than COBRA premium reimbursements) made under Section 7.2 of this Agreement shall be made within sixty (60) days of the Termination Date, provided that, for any payments where a release is required, such release has been executed and is effective.

 

7.4.3 In the event of a Termination Upon a Change of Control, all payments (other than COBRA premium reimbursements) made under Section 7.3 of this Agreement shall be made within sixty (60) days of the Termination Date, provided however that if Executive’s Termination Date is prior to the consummation of the Change of Control, all payments (other than COBRA premium reimbursements) made under Section 7.3 of this Agreement (less any payments previously made under Section 7.2 of this Agreement) shall be made within sixty (60) days of the consummation of the Change of Control, provided further that, for any payments where a release is required, such release has been executed and is effective.

 

8.             FEDERAL EXCISE TAX UNDER SECTION 280G

 

If (1) any amounts payable to the Executive under this Agreement or otherwise are characterized as excess parachute payments pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), and (2) the Executive thereby would be subject to any United States federal excise tax due to that characterization, then Executive’s termination benefits hereunder will be payable either in full or in a lesser amount, whichever would result, after taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, in Executive’s receipt on an after-tax basis of the greatest amount of termination and other benefits. The determination of any reduction required pursuant to this section (including the determination as to which specific payments shall be reduced) shall be made by one of the seven largest accounting firms doing business in the U.S. which otherwise does not perform services for the Company (which will be chosen by the mutual agreement of Executive and Company), and such determination shall be conclusive and binding upon the Company or any related corporation for all purposes. If required, the payments and benefits under this Agreement shall be reduced in the following order: (A) a pro rata reduction of (i) cash payments that are subject to Section 409A as deferred compensation and (ii) cash payments not subject to Section 409A; (B) a pro rata reduction of (i) employee benefits that are subject to Section 409A as deferred compensation and (ii) employee benefits not subject to Section 409A; and (C) a pro rata cancellation of (i) accelerated vesting of stock and other equity-based awards that are subject to Section 409A as deferred compensation and (ii) stock and other equity-based awards not subject to Section 409A. In the event that acceleration of vesting of stock and other equity-based award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Executive’s stock and other equity-based awards unless Executive elects in writing a different order for cancellation.

 

9.             DEFINITIONS

 

9.1           Capitalized Terms Defined.  Capitalized terms used in this Agreement shall have the meanings set forth in this Section 10, unless the context clearly requires a different meaning.

 

9.2          “Cause” means:

 

  

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(a)           material failure to perform Executive’s duties; provided that no termination for Cause under this subsection (a) shall occur unless the Executive: (i) has been provided with notice of the Company’s intention to terminate the Executive for Cause, and (ii) has had at least 30 days to cure or correct such failure;

 

(b)           engagement in intentional misconduct or dishonesty by Executive in the performance of executive’s duties under this Agreement which is materially detrimental to the Company; provided that no termination for Cause under this subsection (b) shall occur unless the Executive: (i) has been provided with notice of the Company’s intention to terminate the Executive for Cause, and (ii) has had at least 30 days to cure or correct such dishonesty or misconduct if such dishonesty or misconduct is curable or correctable;

 

(c)           any material breach of this Agreement or material failure to follow any reasonable written policies of the Company; provided that no termination for Cause under this subsection (c) shall occur unless the Executive: (i) has been provided with notice of the Company’s intention to terminate the Executive for Cause, and (ii) has had at least 30 days to cure or correct such breach if such breach is curable or correctable;

 

(d)           Executive’s conviction of (or pleading guilty or nolo contendere to) any felony;

 

(e)           Executive’s willful refusal to follow reasonable direction from the Board of Directors of the Company; provided that no termination for Cause under this subsection (e) shall occur unless the Executive: (i) has been provided with notice of the Company’s intention to terminate the Executive for Cause, and (ii) has had at least 30 days to cure or correct such refusal if it is curable or correctable; or

 

(f)           Executive’s exercise of bad faith in the performance of his responsibilities that results in grossly unsatisfactory performance.

 

9.3          “Change of Control” means:

 

(a)           the consummation of a merger, consolidation or reorganization approved by the Corporation's stockholders, unless securities representing at least fifty percent (50%) of the total combined voting power of  the outstanding voting securities of the Company or its Successor are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation's outstanding voting securities immediately prior to such transaction; or

 

(b)           the sale, transfer or other disposition of all or substantially all of the Corporation's assets (or consummation of any transaction, or series of transactions, having similar effect) other than such a sale, transfer or disposition to an entity, in which at least fifty percent (50%) of the combined voting power of the voting securities of which is owned by the Corporation or by stockholders of the Corporation in substantially the same proportion as their ownership of the Corporation immediately prior thereto; or

 

(c)           any transaction or series of related transactions pursuant to which any person or any group of persons comprising a "group" as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation)  becomes directly or indirectly the beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act) of securities representing  more than fifty percent (50%) of (A) the outstanding shares of the common stock of the Company, or (b) the total combined voting power of the Company's securities outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation's stockholders; or

 

  

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(d)           a change in the composition of the Board occurring within a twelve (12) month period, as a result of which fewer than a majority of the Directors are “Incumbent Directors.” “Incumbent Directors” shall mean directors who are either (i) directors as of the date of this Agreement, or (ii) elected, or nominated for election, 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 an actual or threatened proxy contest relating to the election of directors to the Company).

 

9.4           “Company” or the “Corporation” shall mean ShoreTel, Inc. and any Successor.

 

9.5           “Equity Award” shall mean any option, restricted stock award, restricted stock unit award, stock appreciation right or other equity award to acquire shares of the Company’s common stock granted or issued to the Executive.

 

9.6           “Good Reason” means a material negative change in the service relationship by the occurrence of any of the following conditions, without the Executive’s written consent:

 

(a)           a reduction of Executive’s authority, duties, or responsibilities provided that all reductions occurring over the preceding consecutive twelve (12) month period in the aggregate are material; provided, however, that the following shall not, in and of themselves, constitute “Good Reason”: (i) absent a Change of Control, the termination of Executive’s position as “President”, if  Executive remains CEO; and (ii) absent a Change of Control, the termination of Executive’s position as “Chairman of the Board” if he was previously “Chairman of the Board”, or as a general member of the Board, if Executive remains CEO.

 

(b)           a ten percent (10%) or more reduction in the Executive’s Base Salary relative to the highest amount in effect since the Effective Date (other than an equivalent percentage reduction in annual base salaries prior to a Change of Control that applies to the majority of named executive officers);

 

(c)           the Company’s requiring the Executive to be based at any office or location more than 50 miles from the Company’s headquarters in Sunnyvale, CA, which is where the Executive is based as of the Effective Date;

 

(d)           a failure by the Company to nominate or renominate you to the Board; provided that the failure of stockholders of the Company to elect you to the Board shall not constitute Good Reason;

 

  

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(e)           a material breach of this Agreement by the Company; provided that no Good Reason under this subsection (e) shall exist unless the Company: (i) has been provided with notice of the breach, and (ii) has had at least 30 days to cure or correct the breach; or

 

(f)           a requirement that Executive report to anyone other than the Board.

 

9.7          “Permanent Disability” means “disability” as defined in Section 409A and Treasury Regulations promulgated thereunder:

 

9.8          “Successor” means the Company as defined above and any successor to or assignee of substantially all of its business and/or assets whether or not as part of a Change of Control.

 

9.9          “Termination Date” means the effective date of an Executive’s “separation from service” (as defined in Section 409A and Treasury Regulations promulgated thereunder).

 

9.10        “Termination in Absence of Change of Control” means:

 

9.10.1 any termination of the Executive’s employment by the Company without Cause other than during the period beginning three (3) months prior to the consummation of a Change of Control and ending on the date which is twelve (12) months following a Change of Control; or

 

9.10.2 any resignation by the Executive for Good Reason where (i) such Good Reason occurs other than during the period commencing during the period beginning three (3) months prior to the consummation of a Change of Control and ending on the date which is twelve (12) months following the Change of Control, and (ii) notice is provided to the Company within ninety (90) days of the existence of Good Reason with a thirty (30) day opportunity to cure.

 

9.10.3 Notwithstanding the foregoing, the term “Termination in Absence of Change of Control” shall not include any termination of the Executive’s employment (1) by the Company for Cause; (2) by the Company as a result of Executive’s Permanent Disability; (3) as a result of Executive’s death; or (4) as a result of the Executive voluntarily terminating Executive’s employment with the Company for other than Good Reason.

 

9.11        “Termination Upon Change of Control” means:

 

9.11.1 any termination of the employment of the Executive by the Company without Cause during the period commencing during the period beginning three (3) months prior to the consummation of a Change of Control and ending on the date which is twelve (12) months following the consummation of a Change of Control; or

 

9.11.2 any resignation by the Executive for Good Reason where (i) such Good Reason occurs during the period commencing during the period beginning three (3) months prior to the consummation of a Change of Control and ending on the date which is twelve (12) months following the Change of Control, and (ii) notice is provided to the Company within ninety (90) days of the existence of Good Reason with a thirty (30) day opportunity to cure.

 

  

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9.11.3 Notwithstanding the foregoing, the term “Termination Upon Change of Control” shall not include any termination of Executive’s employment (1) by the Company for Cause; (2) by the Company as a result of Executive’s Permanent Disability; (3) as a result of Executive’s death; or (4) as a result of Executive’s voluntary termination of Executive’s employment with the Company other than for Good Reason.

 

10.           RELEASE OF CLAIMS

 

Executive’s receipt of payments and benefits under this Agreement is conditioned upon the delivery by Executive of a signed and effective Termination Release Agreement in substantially the form attached hereto as Exhibit A, provided, however, that the Executive shall not be required to release any rights the Executive may have to be indemnified by the Company.

 

11.          NOT APPLICABLE

 

12.          CONFLICT IN BENEFITS; NONCUMULATION OF BENEFITS

 

12.1        No Limitation of Regular Benefit Plans.  Except as provided in Section 13.2 below, this Agreement is not intended to and shall not affect, limit or terminate any plans, programs or arrangements of the Company that are regularly made available to a significant number of employees or officers of the Company, including without limitation the Company’s equity incentive plans.

 

12.2        Noncumulation of Benefits.  The Executive may not cumulate cash severance payments, acceleration of Equity Award vesting or other termination benefits under both this Agreement, any other written agreement with the Company and/or another plan or policy of the Company. If the Executive has any other binding written agreement or other binding arrangement with the Company that provide that upon a change of control or termination of employment the Executive shall receive change of control, termination, severance or similar benefits, then Executive hereby expressly waives Executive’s rights to such other benefits and any agreement providing such benefits terminates and is superseded on the Effective Date of this Agreement.

 

13.          PROPRIETARY AND CONFIDENTIAL INFORMATION

 

Executive’s receipt of the payments and benefits described in this Agreement are conditioned upon the Executive’s acknowledgment of Executive’s continuing obligation under, and Executive’s agreement to abide by the terms and conditions of, the Company’s Confidentiality and/or Proprietary Rights Agreement between the Executive and the Company. Accordingly, during the term of this Agreement and following the Termination Date, Executive agrees to continue to abide by the terms and conditions of the Company’s Confidentiality and/or Proprietary Rights Agreement between the Executive and the Company.

 

14.           INDEMNIFICATION

 

The Company will provide indemnification pursuant to the Company’s standard form of Indemnification Agreement, which is attached hereto as Exhibit B.

 

  

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15.          NON-SOLICITATION

 

For a period of one (1) year after the Termination Date, the Executive will not solicit the services or business of any employee or consultant of the Company to discontinue that person’s or entity’s relationship with or to the Company without the written consent of the Company.

 

16.           ARBITRATION

 

16.1        Disputes Subject to Arbitration.  Any claim, dispute or controversy arising out of this Agreement, the interpretation, validity or enforceability of this Agreement or the alleged breach thereof shall be submitted by the parties to binding arbitration by a sole arbitrator under the rules of the American Arbitration Association; provided, however, that (1) the arbitrator shall have no authority to make any ruling or judgment that would confer any rights with respect to the trade secrets, confidential and proprietary information or other intellectual property of the Company upon the Executive or any third party; and (2) this arbitration provision shall not preclude the Company from seeking injunctive relief from any court having jurisdiction with respect to any disputes or claims relating to or arising out of the misuse or misappropriation of the Company’s intellectual property. Judgment may be entered on the award of the arbitrator in any court having jurisdiction.

 

16.2        Site of Arbitration. The site of the arbitration proceeding shall be in Santa Clara County, California.

 

17.          NOTICES

 

For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed return receipt requested as follows:

 

If to the Company:

 

960 Stewart Drive

Sunnyvale, CA 94085

Attn: Legal Department

 

and, if to the Executive, at the address indicated below or such other address specified by the Executive in writing to the Company, with a copy to Anna Jones, 5847 San Felipe, Suite 200, Houston, Texas, 77057. Either party may provide the other with notices of change of address, which shall be effective upon receipt.

 

18.          MISCELLANEOUS PROVISIONS

 

18.1        Heirs and Representatives of the Executive; Successors and Assigns of the Company.  This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devises and legatees. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of the Company.

 

  

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18.2        No Assignment of Rights.  The interest of the Executive in this Agreement or in any distribution to be made under this Agreement may not be assigned, pledged, alienated, anticipated, or otherwise encumbered (either at law or in equity) and shall not be subject to attachment, bankruptcy, garnishment, levy, execution, or other legal or equitable process. Any act in violation of this Section 18.2 shall be void.

 

18.3        Amendment; Waiver.  No provision of this Agreement shall be modified, amended, waived or discharged unless the modification, amendment, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

18.4        Entire Agreement.  This Agreement represents the entire agreement and understanding between the parties as to the subject matter herein (whether oral or written and whether express or implied) and expressly supersedes any existing agreement or understanding providing for any employment, change of control, severance, termination or similar benefits by and between the Executive and the Company.

 

18.5        Withholding Taxes; 409A.  All payments made under this Agreement shall be subject to reduction to reflect all federal, state, local and other taxes required to be withheld by applicable law. To the extent (a) any payments or benefits to which Executive becomes entitled under this Agreement, or under any agreement or plan referenced herein, in connection with Executive’s termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code (“Section 409A”) and (b) Executive is deemed at the time of such termination of employment to be a “specified employee” under Section 409A of the Code, then such payments shall not be made or commence until the earliest of (i) the expiration of the six (6)-month period measured from the date of Executive’s “separation from service” (as such term is at the time defined in Treasury Regulations under Section 409A of the Code) from the Company; or (ii) the date of Executive’s death following such separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Executive, including (without limitation) the additional twenty percent (20%) tax for which Executive would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to Executive or Executive’s beneficiary in one lump sum (without interest). Any termination of Executive’s employment is intended to constitute a “separation from service” as such term is defined in Treasury Regulation Section 1.409A-1. It is intended that each installment of the payments provided hereunder constitute separate “payments” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). It is further intended that payments hereunder satisfy, to the greatest extent possible, the exemption from the application of Code Section 409A (and any state law of similar effect) provided under Treasury Regulation Section 1.409A-1(b)(4) (as a “short-term deferral”).

 

18.6        Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

  

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18.7        Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California, without regard to where the Executive has his residence or principal office or where he performs his duties hereunder.

 

18.8        Reimbursement of Legal Fees.  The Company will reimburse Executive for reasonable legal fees incurred in connection with the negotiation and execution of this Agreement in an amount not to exceed $10,000. In the event of litigation between the parties to the Agreement, the prevailing party as determined by the court shall be entitled to reasonable attorneys’ fees.

 

18.9        Effective Date; Term of Agreement.  The term of this Agreement shall be three years (the “Initial Term”).  Either party may provide written notice at least nine (9) months prior to the end of the Initial Term that such party does not wish to continue the term of this Agreement beyond the Initial Term, in which case Executive’s employment under this Agreement will terminate.  If such written notice is not timely provided, the term of this Agreement shall renew and extend for another three years (the “Renewal Term”).  Either party may provide written notice at least nine (9) months prior to the end of the first, or any subsequent, Renewal Term that such party does not wish to continue the term of this Agreement beyond the Renewal Term in effect.  If such written notice is not timely provided, the term of this Agreement shall renew and extend for another three years after each such Renewal Term.

 

18.9.1 Termination Prior to End of Initial or Renewal Term Without Cause or for Good Reason.  If Executive’s employment is terminated without Cause or for Good Reason, Executive shall receive the benefits pursuant to Sections 7.2 and 7.3 of this Agreement; provided that in any event no payments will be made under this Agreement solely because the Agreement is not renewed with respect to any Renewal Term ; and provided further that if Executive’s employment is terminated without Cause or for Good Reason in less than one year after the Effective Date, in lieu of the vesting provided by the first sentence of Section 7.2.4, Executive will receive accelerated vesting of the Options as if Executive had provided a full year of service to the Company (as if he was employed continuously for one year after the Effective Date) but in no event less than six (6) months of accelerated vesting.

  

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

 

	 	EXECUTIVE
	 	 	 	 
	
 

	/s/ Peter Blackmore 
	 	 	 	 
	 	 	 	 
	 	Address:	 	 
	 	 	 	 

 

	 	SHORETEL, INC.
	 	 	 
	
 

	
By: 

	/s/ Gary J. Daichendt   
	 	 	 
	 	Title:  	Chairman of the Board    

                                                                                                            

  

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EXHIBIT A

 

TERMINATION RELEASE AGREEMENT

 

In consideration of the severance benefits (the “Severance Benefits”) offered to me by ShoreTel, Inc. (the “Employer”) pursuant to my Employment Agreement with Employer dated ________________, 2010 (the “Agreement”) and in connection with the termination of my employment, I agree to the following general release (the “Release”).

 

1.             On behalf of myself, my heirs, executors, administrators, successors, and assigns, I hereby fully and forever generally release and discharge Employer, its current, former and future parents, subsidiaries, affiliated companies, related entities, employee benefit plans, and their fiduciaries, predecessors, successors, officers, directors, shareholders, agents, employees and assigns (collectively, the “Company”) from any and all claims, causes of action, and liabilities up through the date of my execution of the Release. The claims subject to this release include, but are not limited to, those relating to my employment with Employer and/or any predecessor or successor to Employer and the termination of such employment. All such claims (including related attorneys’ fees and costs) are barred without regard to whether those claims are based on any alleged breach of a duty arising in statute, contract, or tort. This expressly includes waiver and release of any rights and claims arising under any and all laws, rules, regulations, and ordinances, including, but not limited to: Title VII of the Civil Rights Act of 1964; the Older Workers Benefit Protection Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the National Labor Relations Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); the Workers Adjustment and Retraining Notification Act; the California Fair Employment and Housing Act (if applicable); the provisions of the California Labor Code (if applicable); the Equal Pay Act of 1963; and any similar law of any other state or governmental entity. The parties agree to apply California law in interpreting the Release.

 

Accordingly, I further waive any rights under Section 1542 of the Civil Code of the State of California or any similar state statute. Section 1542 states: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which, if known to him or her, must have materially affected his or her settlement with the debtor.”

 

2.     This Release does not extend to, and has no effect upon, any benefits that have accrued, and to which I have become vested, under the Executive Employment Agreement or any employee benefit plan within the meaning of ERISA sponsored by the Company.

 

	
a.  

	
In understanding the terms of the Release and my rights, I have been advised to consult with an attorney of my choice prior to executing the Release. I understand that nothing in this Release is intended to constitute an unlawful release or waiver of any of my rights under any laws and/or to prevent, impede, or interfere with my ability and/or rights, if any: (a) under applicable workers’ compensation laws; (b) to seek unemployment benefits; (c) to file a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, or any applicable state agency; (d) provide truthful testimony if under subpoena to do so, (e) file a claim with any state or federal agency or to participate or cooperate in such a matter, and/or (f) to challenge the validity of this release. Furthermore, notwithstanding any provisions and covenants herein, the Release shall not waive (a) any rights to indemnification I may have as an officer or director of Employer or otherwise in connection with my employment with Employer, under applicable law or Employer’s bylaws or other governing instruments or any agreement addressing such subject matter between Employer and me (including any fiduciary insurance policy maintained by Employer under which I am covered) or under any merger or acquisition agreement addressing such subject matter, (b) any obligations owed to me pursuant to the Agreement, (c) my rights of insurance under any liability policy covering Employer’s officers (in addition to the rights under subsection (a) above), or (d) any accrued but unpaid wages; any reimbursement for business expenses pursuant to Employer’s policies for such reimbursements, any outstanding claims for benefits or payments under any benefit plans of Employer or subsidiaries, any accrued but unused vacation, any ongoing agreements evidencing outstanding equity awards granted to me, any obligations owed to me pursuant to the terms of outstanding written agreements between myself and Employer and any claims I may not release as a matter of law, including indemnification claims under applicable law. To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be resolved through binding arbitration pursuant to Subsection i below, and the arbitration provision set forth in the Agreement.

 

  

  

  

 

	
b.  

	
I understand and agree that Employer will not provide me with the Severance Benefits unless I execute the Release. I also understand that I have received or will receive, regardless of the execution of the Release, all wages owed to me together with any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.

 

	
c.  

	
As part of my existing and continuing obligations to Employer, I have returned to Employer all documents (and all copies thereof) and other property belonging to Employer that I have had in my possession at any time, including but not limited to files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of Employer (and all reproductions thereof). I understand that, even if I did not sign the Release, I am still bound by any and all confidential/proprietary/trade secret information, non-disclosure and inventions assignment agreement(s) signed by me in connection with my employment with Employer, or with a predecessor or successor of Employer, pursuant to the terms of such agreement(s).

 

	
d.  

	
I represent and warrant that I am the sole owner of all claims relating to my employment with Employer and/or with any predecessor of Employer, and that I have not assigned or transferred any claims relating to my employment to any other person or entity.

 

  

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e.  

	
I agree to keep the Severance Benefits and the provisions of this Release confidential and not to reveal their contents to anyone except my lawyer, my spouse or other immediate family member, and/or my financial consultant, or as required by legal process or applicable law.

 

	
f.  

	
I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or me.

 

	
g.  

	
I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by either the Company or myself.

 

	
h.  

	
I agree that I will not make any negative or disparaging statements or comments, either as fact or as opinion, about the Company, its employees, officers, directors, shareholders, vendors, products or services, business, technologies, market position or performance. Nothing in this paragraph shall prohibit me from providing truthful information in response to a subpoena or other legal process.

 

	
i.  

	
Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of the Release shall be settled by arbitration in accordance with the arbitration provision of the Agreement. If for any reason the arbitration procedure set forth in the Agreement is unavailable, I agree to arbitration under the employment arbitration rules of the American Arbitration Association or any successor hereto. The parties further agree that the arbitrator shall not be empowered to add to, subtract from, or modify, alter or amend the terms of the Release. Any applicable arbitration rules or policies shall be interpreted in a manner so as to ensure their enforceability under applicable state or federal law.

 

	
j.  

	
I agree that I have had at least twenty-one (21) calendar days in which to consider whether to execute the Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release. I understand that the offer of the Severance Benefits and the Release shall expire on the twenty-second (22nd) calendar day after my employment termination date if I have not accepted it by that time. I further understand that Employer’s obligations under the Release shall not become effective or enforceable until the eighth (8th) calendar day after the date I sign the Release provided that I have timely delivered it to Employer (the “Effective Date”) and that in the seven (7) day period following the date I deliver a signed copy of the Release to Employer I understand that I may revoke my acceptance of the Release. I understand that the Severance Benefits will become available to me after the Effective Date.

 

	
k.  

	
In executing the Release, I acknowledge that I have not relied upon any statement made by Employer, or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein. Once effective and enforceable, this agreement can only be changed by another written agreement signed by me and an authorized representative of Employer.

 

  

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l.  

	
Should any provision of the Release be determined by an arbitrator, court of competent jurisdiction, or government agency to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect. Specifically, should a court, arbitrator, or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the parties that the general release and the waiver of unknown claims above shall otherwise remain effective to release any and all other claims. I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.

 

[SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT FOLLOWS]

 

  

4

  

 

EXECUTIVE’S ACCEPTANCE OF RELEASE

 

BEFORE SIGNING MY NAME TO THE RELEASE, I STATE THE FOLLOWING: I HAVE READ THE RELEASE, I UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS. I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY.

 

 

	 	Date delivered to employee _______________, _____. 
	 	 
	 	Executed this _______ day of _______________, _____.

 

                                                                                   

 

	 	Signature
	 	 
	 	Name (Please Print)

 

                

[SIGNATURE PAGE TO GENERAL RELEASE AGREEMENT]

 

  

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EXHIBIT B

 

FORM OF INDEMNIFICATION AGREEMENT

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