UNICA CORPORATION Executive Retention Agreement
EXHIBIT 10.1
UNICA CORPORATION
THIS EXECUTIVE RETENTION AGREEMENT by and between Unica Corporation, a Delaware corporation
(the “Company”), and (the “Executive”) is made as of , 2008 (the
“Effective Date”).
WHEREAS, the Company recognizes that, as is the case with many publicly-held corporations, the
possibility of a change in control of the Company exists and that such possibility, and the
uncertainty and questions which it may raise among key personnel, may result in the departure or
distraction of key personnel to the detriment of the Company and its stockholders, and
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that appropriate
steps should be taken to reinforce and encourage the continued employment and dedication of the
Company’s key personnel without distraction from the possibility of a change in control of the
Company and related events and circumstances.
NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its
employ, the Company agrees that the Executive shall receive the severance benefits set forth in
this Agreement in the event the Executive’s employment with the Company is terminated under the
circumstances described below subsequent to a Change in Control (as defined in Section 1.1).
1. Key Definitions.
As used herein, the following terms shall have the following respective meanings:
1.1 “Cause” means:
(a) the Executive’s willful failure to perform [his/her] duties as an officer of the Company
(other than any such failure resulting from incapacity due to physical or mental illness or any
failure after the Executive gives notice of termination for Good Reason), which failure is not
cured within 30 days after a written demand for performance is received by the Executive from the
Board of Directors of the Company which specifically identifies the manner in which the Board of
Directors believes the Executive has not performed the Executive’s duties; or
(b) the Executive’s willful misconduct which affects the business reputation of the Company.
For purposes of this Section 1.1, no act or failure to act by the Executive shall be
considered “willful” unless it is done, or omitted to be done, in bad faith and without reasonable
belief that the Executive’s action or omission was in the best interests of the Company.
1.2 “Change in Control” means an event or occurrence set forth in any one or more of
subsections (a) through (d) below (including an event or occurrence that constitutes a Change in
Control under one of such subsections but is specifically exempted from another such subsection):
(a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more
of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the
Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security
exercisable for, convertible into or exchangeable for common stock or voting securities of the
Company, unless the Person exercising, converting or exchanging such security acquired such
security directly from the Company or an underwriter or agent of the Company), (ii) any acquisition
by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by
any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection
(c) of this Section 1.2; or
(b) such time as the Continuing Directors (as defined below) do not constitute a majority of
the Board (or, if applicable, the Board of Directors of a successor corporation to the Company),
where the term “Continuing Director” means at any date a member of the Board (i) who was a member
of the Board on the date of the execution of this Agreement or (ii) who was nominated or elected
subsequent to such date by at least a majority of the directors who were Continuing Directors at
the time of such nomination or election or whose election to the Board was recommended or endorsed
by at least a majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be excluded from this
clause (ii) any individual whose initial assumption of office occurred as a result of an actual or
threatened election contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents, by or on behalf of a person other than the Board;
or
(c) the consummation of a merger, consolidation, reorganization, recapitalization or statutory
share exchange involving the Company or a sale or other disposition of all or substantially all of
the assets of the Company in one or a series of transactions (a “Business Combination”), unless,
immediately following such Business Combination, each of the following two conditions is satisfied:
(i) all or substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business
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Combination (which shall include, without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the Company’s assets either directly or
through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as
the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately
prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, respectively; and (ii) no Person (excluding any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially
owns, directly or indirectly, 50% or more of the then outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such
corporation entitled to vote generally in the election of directors (except to the extent that such
ownership existed prior to the Business Combination); or
(d) a complete liquidation or dissolution of the Company.
1.3 “Change in Control Date” means the first date during the Term (as defined in
Section 2) on which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if (a) a Change in Control occurs, (b) the Executive’s employment with the
Company is terminated prior to the date on which the Change in Control occurs, and (c) it is
reasonably demonstrated by the Executive that such termination of employment (i) was at the request
of a third party who has taken steps reasonably calculated to effect a Change in Control or (ii)
otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes
of this Agreement the “Change in Control Date” shall mean the date immediately prior to the date of
such termination of employment.
1.4 “Disability” means the Executive’s absence from the full-time performance of the
Executive’s duties with the Company for 180 consecutive calendar days as a result of incapacity due
to mental or physical illness which is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to the Executive or the Executive’s legal
representative.
1.5 “Good Reason” means the occurrence, without the Executive’s written consent, of
any of the events or circumstances set forth in clauses (a) through (d) below. Notwithstanding the
occurrence of any such event or circumstance, such occurrence shall not be deemed to constitute
Good Reason if, prior to the Date of Termination specified in the Notice of Termination (each as
defined in Section 3.2(a)) given by the Executive in respect thereof, such event or circumstance
has been fully corrected and the Executive has been reasonably compensated for any losses or
damages resulting therefrom (provided that such right of correction by the Company shall only apply
to the first Notice of Termination for Good Reason given by the Executive).
(a) the assignment to the Executive of duties inconsistent in any material respect with the
Executive’s position (including status, offices, titles and reporting requirements), authority or
responsibilities in effect immediately prior to the earliest to occur of (i) the Change in Control
Date, (ii) the date of the execution by the Company of the initial written agreement or instrument
providing for the Change in Control or (iii) the date of the adoption by the Board of Directors of
a resolution providing for the Change in Control (with the
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earliest to occur of such dates referred to herein as the “Measurement Date”), or any other
action or omission by the Company which results in a material diminution in such position,
authority or responsibilities;
(b) a reduction in the Executive’s annual base salary as in effect on the Measurement Date or
as the same was or may be increased thereafter from time to time;
(c) a change by the Company in the location at which the Executive performs [his/her]
principal duties for the Company to a new location that is both (i) outside a radius of 35 miles
from the Executive’s principal residence immediately prior to the Measurement Date and (ii) more
than 20 miles from the location at which the Executive performed [his/her] principal duties for the
Company immediately prior to the Measurement Date; or
(d) the failure of the Company to obtain the agreement from any successor to the Company to
assume and agree to perform this Agreement, as required by Section 6.1.
The Executive’s right to terminate [his/her] employment for Good Reason shall not be affected
by [his/her] incapacity due to physical or mental illness.
2. Term of Agreement. This Agreement, and all rights and obligations of the parties
hereunder, shall take effect upon the Effective Date and shall expire upon the first to occur of
(a) the expiration of the Term (as defined below) if a Change in Control has not occurred during
the Term, (b) the termination of the Executive’s employment with the Company prior to the Change in
Control Date, (c) the date 12 months after the Change in Control Date, if the Executive is still
employed by the Company as of such later date, or (d) the fulfillment by the Company of all of its
obligations under Sections 4 and 5.2 if the Executive’s employment with the Company terminates
within 12 months following the Change in Control Date. “Term” shall mean the period commencing as
of the Effective Date and continuing in effect through , 2011.
3. Employment Status; Termination Following Change in Control.
3.1 Not an Employment Contract. The Executive acknowledges that this Agreement does
not constitute a contract of employment or impose on the Company any obligation to retain the
Executive as an employee and that this Agreement does not prevent the Executive from terminating
employment at any time. If the Executive’s employment with the Company terminates for any reason
and subsequently a Change in Control shall occur, the Executive shall not be entitled to any
benefits hereunder except as otherwise provided pursuant to Section 1.3.
3.2 Termination of Employment.
(a) If the Change in Control Date occurs during the Term, any termination of the Executive’s
employment by the Company or by the Executive within 12 months following the Change in Control Date
(other than due to the death of the Executive) shall be communicated by a written notice to the
other party hereto (the “Notice of Termination”),
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given in accordance with Section 7. Any Notice of Termination shall: (i) indicate the
specific termination provision (if any) of this Agreement relied upon by the party giving such
notice, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under the provision so
indicated and (iii) specify the Date of Termination (as defined below). The effective date of an
employment termination (the “Date of Termination”) shall be the close of business on the date
specified in the Notice of Termination (which date may not be less than 15 days or more than 120
days after the date of delivery of such Notice of Termination), in the case of a termination other
than one due to the Executive’s death, or the date of the Executive’s death, as the case may be.
In the event the Company fails to satisfy the requirements of Section 3.2(a) regarding a Notice of
Termination, the purported termination of the Executive’s employment pursuant to such Notice of
Termination shall not be effective for purposes of this Agreement.
(b) The failure by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting any such fact or circumstance in enforcing the Executive’s or
the Company’s rights hereunder.
(c) Any Notice of Termination for Cause given by the Company must be given within 90 days of
the occurrence of the event(s) or circumstance(s) which constitute(s) Cause. Prior to any Notice
of Termination for Cause being given (and prior to any termination for Cause being effective), the
Executive shall be entitled to a hearing before the Board of Directors of the Company at which
[he/she] may, at [his/her] election, be represented by counsel and at which [he/she] shall have a
reasonable opportunity to be heard. Such hearing shall be held on not less than 15 days prior
written notice to the Executive stating the Board of Directors’ intention to terminate the
Executive for Cause and stating in detail the particular event(s) or circumstance(s) which the
Board of Directors believes constitutes Cause for termination.
(d) Any Notice of Termination for Good Reason given by the Executive must be given within 90
days of the occurrence of the event(s) or circumstance(s) which constitute(s) Good Reason.
4. Benefits to Executive.
4.1 Stock Acceleration. If the Change in Control Date occurs during the Term and if,
within 12 months following the Change in Control Date, the Executive’s employment with the Company
is terminated by the Company (other than for Cause, Disability or death) or by the Executive for
Good Reason, then the Executive shall be entitled to the following benefits upon the date of the
Executive’s termination:
(a) if, as of the Change in Control Date, the Executive has been employed by the Company for
at least one year, but less than two years, (i) 75% of the number of shares subject to each
outstanding option to purchase shares of Common Stock of the Company held by the Executive that
were not already vested (inclusive of any accelerated vesting provided for in the Company’s 2005
Stock Incentive Plan) shall become immediately exercisable in full and shares of Common Stock of
the Company received upon exercise of any
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such options will no longer be subject to a right of repurchase by the Company and the
remaining 25% of such number of shares subject to each outstanding option shall continue to become
vested in accordance with the original vesting schedule set forth in such options, with 25% of the
number of shares that would otherwise have become vested on each subsequent vesting date in
accordance with the original schedule becoming vested on each subsequent vesting date and (ii) 75%
of the number of shares subject to each outstanding restricted stock award held by the Executive
that were not already vested (inclusive of any accelerated vesting provided for in the Company’s
2005 Stock Incentive Plan) shall become immediately vested in full and will no longer be subject to
a right of repurchase by the Company and the remaining 25% of such number of shares subject to each
outstanding restricted stock award shall continue to become vested in accordance with the original
vesting schedule set forth in such restricted stock award, with 25% of the number of shares that
would otherwise have become vested on each subsequent vesting date in accordance with the original
schedule becoming vested on each subsequent vesting date; and
(b) if, as of the Change in Control Date, the Executive has been employed by the Company for
two years or more, (i) each outstanding option to purchase shares of Common Stock of the Company
held by the Executive shall become immediately exercisable in full and shares of Common Stock of
the Company received upon exercise of any options will no longer be subject to a right of
repurchase by the Company and (ii) each outstanding restricted stock award shall be deemed to be
fully vested and will no longer be subject to a right of repurchase by the Company.
4.2 Compensation. If the Change in Control Date occurs during the Term and the
Executive’s employment with the Company terminates within 12 months following the Change in Control
Date, the Executive shall be entitled to the following benefits:
(a) Termination Without Cause or for Good Reason. Subject to Section 4.4, if the
Executive’s employment with the Company is terminated by the Company (other than for Cause,
Disability or death) or by the Executive for Good Reason within 12 months following the Change in
Control Date, then the Executive shall be entitled to the following benefits:
(i) the Company shall pay to the Executive in a lump sum in cash within 60 days after the Date
of Termination the aggregate of the following amounts:
(1) the sum of (A) the Executive’s base salary through the Date of Termination, (B) the
product of (x) the annual bonus paid or payable (including any bonus or portion thereof which has
been earned but deferred) for the most recently completed fiscal year and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (C) the amount of any compensation previously
deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not previously paid (the sum of the amounts described in
clauses (A), (B), and (C) shall be hereinafter referred to as the “Accrued Obligations”); and
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(2) the amount equal to (A) the sum of (x) the Executive’s highest annual base salary in
effect at any time during the one-year period prior to the Change in Control Date and (y) the
Executive’s then current target annual bonus minus (B) any other amounts paid to the Executive by
the Company or any successor as severance or similar payments as a result of the termination of his
or her employment in connection with such Change in Control.
(ii) for 12 months after the Date of Termination, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy, the Company shall continue to
provide benefits to the Executive and the Executive’s family at least equal to those which would
have been provided to them if the Executive’s employment had not been terminated, in accordance
with the applicable Benefit Plans in effect on the Measurement Date or, if more favorable to the
Executive and [his/her] family, in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies; provided, however, (1) that if
the Executive becomes reemployed with another employer and is eligible to receive a particular type
of benefits (e.g., health insurance benefits) from such employer on terms at least as favorable to
the Executive and [his/her] family as those being provided by the Company, then the Company shall
no longer be required to provide those particular benefits to the Executive and [his/her] family
and (2) to the extent such payments are taxable and/or extend beyond the period of time during
which the Executive would be entitled (or would, but for this clause (2)) to COBRA continuation
coverage under a group health plan of the Company, such payments shall be made on a monthly basis);
(iii) to the extent not otherwise previously paid or provided, the Company shall pay or
provide to the Executive within 45 days after the Date of Termination any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive following the
Executive’s termination of employment under any plan, program, policy, practice, contract or
agreement of the Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the “Other Benefits”); and
(iv) for purposes of determining eligibility (but not the time of commencement of benefits) of
the Executive for retiree benefits to which the Executive is entitled, the Executive shall be
considered to have remained employed by the Company until 12 months after the Date of Termination.
(b) Resignation without Good Reason; Termination for Death or Disability. Subject to
Section 4.4, if the Executive voluntarily terminates [his/her] employment with the Company within
12 months following the Change in Control Date, excluding a termination for Good Reason, or if the
Executive’s employment with the Company is terminated by reason of the Executive’s death or
Disability within 12 months following the Change in Control Date, then the Company shall (i) pay
the Executive (or [his/her] estate, if applicable), in a lump sum in cash within 30 days after the
Date of Termination, the Accrued Obligations and (ii) pay or provide to the Executive within 30
days after the Date of Termination the Other Benefits.
(c) Termination for Cause. If the Company terminates the Executive’s employment with
the Company for Cause within 12 months following the Change in Control
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Date, then the Company shall (i) pay the Executive, in a lump sum in cash within 30 days after
the Date of Termination, the sum of (A) the Executive’s annual base salary through the Date of
Termination and (B) the amount of any compensation previously deferred by the Executive, in each
case to the extent not previously paid, and (ii) pay or provide to the Executive within 30 days
after the Date of Termination the Other Benefits.
4.3 Taxes.
(a) Notwithstanding any other provision of this Agreement, except as set forth in Section
4.3(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined
below), the Company shall not be obligated to provide to the Executive a portion of any “Contingent
Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive
to the extent necessary to eliminate any “excess parachute payments” (as defined in Section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”)) for the Executive. For
purposes of this Section 4.3, the Contingent Compensation Payments so eliminated shall be referred
to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury
Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation
Payments so eliminated shall be referred to as the “Eliminated Amount.”
(b) Notwithstanding the provisions of Section 4.3(a), no such reduction in Contingent
Compensation Payments shall be made if (i) the Eliminated Amount (computed without regard to this
sentence) exceeds (ii) 110% of the aggregate present value (determined in accordance with Treasury
Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any
additional taxes that would be incurred by the Executive if the Eliminated Payments (determined
without regard to this sentence) were paid to [him/her] (including, state and federal income taxes
on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect
to all of the Contingent Compensation Payments in excess of the Executive’s “base amount” (as
defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such
reduction in Contingent Compensation Payments pursuant to this Section 4.3(b) shall be referred to
as a “Section 4.3(b) Override.” For purpose of this paragraph, if any federal or state income
taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes
shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined
federal and state income tax rate provided by law.
(c) For purposes of this Section 4.3 the following terms shall have the following respective
meanings:
(i) “Change in Ownership or Control” shall mean a change in the ownership or effective control
of the Company or in the ownership of a substantial portion of the assets of the Company determined
in accordance with Section 280G(b)(2) of the Code.
(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or made available (under this Agreement or otherwise) to a “disqualified
individual” (as defined in Section 280G(c) of the
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Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a
Change in Ownership or Control of the Company.
(d) Any payments or other benefits otherwise due to the Executive following a Change in
Ownership or Control that could reasonably be characterized (as determined by the Company) as
Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates
provided for in this Section 4.3(d). Within 30 days after each date on which the Executive first
becomes entitled to receive (whether or not then due) a Contingent Compensation Payment relating to
such Change in Ownership or Control, the Company shall determine and notify the Executive (with
reasonable detail regarding the basis for its determinations) (i) which Potential Payments
constitute Contingent Compensation Payments, (ii) the Eliminated Amount and (iii) whether the
Section 4.3(b) Override is applicable. Within 30 days after delivery of such notice to the
Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating
either (A) that [he/she] agrees with the Company’s determination pursuant to the preceding sentence
or (B) that [he/she] disagrees with such determination, in which case [he/she] shall set forth (i)
which Potential Payments should be characterized as Contingent Compensation Payments, (ii) the
Eliminated Amount, and (iii) whether the Section 4.3(b) Override is applicable. In the event that
the Executive fails to deliver an Executive Response on or before the required date, the Company’s
initial determination shall be final. If and to the extent that any Contingent Compensation
Payments are required to be treated as Eliminated Payments pursuant to this Section 4.3, then the
Payments shall be reduced or eliminated, as determined by the Company, in the following order: (i)
any cash payments, (ii) any taxable benefits, (iii) any nontaxable benefits, and (iv) any vesting
of equity awards, in each case in reverse order beginning with payments or benefits that are to be
paid the farthest in time from the date that triggers the applicability of the excise tax, to the
extent necessary to maximize the Eliminated Payments. If the Executive states in the Executive
Response that [he/she] agrees with the Company’s determination, the Company shall make the
Potential Payments to the Executive within three business days following delivery to the Company of
the Executive Response (except for any Potential Payments which are not due to be made until after
such date, which Potential Payments shall be made on the date on which they are due). If the
Executive states in the Executive Response that [he/she] disagrees with the Company’s
determination, then, for a period of 60 days following delivery of the Executive Response, the
Executive and the Company shall use good faith efforts to resolve such dispute. If such dispute is
not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in
Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The
Company shall, within three business days following delivery to the Company of the Executive
Response, make to the Executive those Potential Payments as to which there is no dispute between
the Company and the Executive regarding whether they should be made (except for any such Potential
Payments which are not due to be made until after such date, which Potential Payments shall be made
on the date on which they are due). The balance of the Potential Payments shall be made within
three business days following the resolution of such dispute. Subject to the limitations contained
in Sections 4.3(a) and (b) hereof, the amount of any payments to be made to the Executive following
the resolution of such dispute shall be increased by amount of the accrued interest thereon
computed at the prime rate announced from time to time by Citibank, N.A., compounded monthly from
the date that such payments originally were due.
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(f) The provisions of this Section 4.3 are intended to apply to any and all payments or
benefits available to the Executive under this Agreement or any other agreement or plan of the
Company under which the Executive receives Contingent Compensation Payments.
4.4 Compliance with Section 409A.
(a) Subject to the provisions in this Section 4.4, any severance payments or benefits under
this Agreement shall begin only upon the date of the Executive’s “separation from service”
(determined as set forth below) which occurs on or after the Date of Termination. The following
rules shall apply with respect to distribution of the payments and benefits, if any, to be provided
to the Executive under this Agreement:
(i) It is intended that each installment of the severance payments and benefits provided under
this Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Code
and the guidance issued thereunder (“Section 409A”). Neither the Company nor the Executive shall
have the right to accelerate or defer the delivery of any such payments or benefits except to the
extent specifically permitted or required by Section 409A.
(ii) If, as of the date of the Executive’s “separation from service” from the Company, the
Executive is not a “specified employee” (within the meaning of Section 409A), then each installment
of the severance payments and benefits shall be made on the dates and terms set forth in this
Agreement.
(iii) If, as of the date of the Executive’s “separation from service” from the Company, the
Executive is a “specified employee” (within the meaning of Section 409A), then:
(1) Each installment of the severance payments and benefits due under this Agreement that, in
accordance with the dates and terms set forth herein, will in all circumstances, regardless of when
the separation from service occurs, be paid within the Short-Term Deferral Period (as hereinafter
defined) shall be treated as a short-term deferral within the meaning of Treasury Regulation
Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A. For purposes of this
Agreement, the “Short-Term Deferral Period” means the period ending on the later of the
15th day of the third month following the end of the Executive’s tax year in which the
separation from service occurs and the 15th day of the third month following the end of
the Company’s tax year in which the separation from service occurs; and
(2) Each installment of the severance payments and benefits due under this Agreement that is
not described in Section 4.4(a)(iii)(1) and that would, absent this subsection, be paid within the
six-month period following the Executive’s “separation from service” from the Company shall not be
paid until the date that is six months and one day after such separation from service (or, if
earlier, the Executive’s death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that is six months and
one day following the Executive’s
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separation from service and any subsequent installments, if any, being paid in accordance with
the dates and terms set forth herein; provided, however, that the preceding
provisions of this sentence shall not apply to any installment of severance payments and benefits
if and to the maximum extent that such installment is deemed to be paid under a separation pay plan
that does not provide for a deferral of compensation by reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from
service). Any installments that qualify for the exception under Treasury Regulation Section
1.409A-1(b)(9)(iii) must be paid no later than the last day of the Executive’s second taxable year
following his taxable year in which the separation from service occurs.
(b) The determination of whether and when the Executive’s separation from service from the
Company has occurred shall be made and in a manner consistent with, and based on the presumptions
set forth in, Treasury Regulation Section 1.409A-1(h). Solely for purposes of this Section 4.4(b),
“Company” shall include all persons with whom the Company would be considered a single employer
under Section 414(b) and 414(c) of the Code.
(c) All reimbursements and in-kind benefits provided under the Agreement shall be made or
provided in accordance with the requirements of Section 409A to the extent that such reimbursements
or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that
(i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter
period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement
during a calendar year may not affect the expenses eligible for reimbursement in any other calendar
year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the
calendar year following the year in which the expense is incurred and (iv) the right to
reimbursement is not subject to set off or liquidation or exchange for any other benefit.
(d) Notwithstanding anything herein to the contrary, the Company shall have no liability to
the Executive or to any other person if the payments and benefits provided hereunder that are
intended to be exempt from or compliant with Section 409A are not so exempt or compliant.
4.5 Mitigation. The Executive shall not be required to mitigate the amount of any
payment or benefits provided for in this Section 4 by seeking other employment or otherwise.
Further, except as provided in Section 4.2(a)(ii), the amount of any payment or benefits provided
for in this Section 4 shall not be reduced by any compensation earned by the Executive as a result
of employment by another employer, by retirement benefits, by offset against any amount claimed to
be owed by the Executive to the Company or otherwise.
4.6 Release. The obligation of the Company to make the payments and provide the
benefits to the Executive under Sections 4.2(a)(i)(2) and 4.2(a)(ii) is conditioned upon the
Executive signing a release of claims, in a customary and reasonable form requested by the Company
(the “Executive Release”), within such period of time as the Company may specify following the Date
of Termination, and upon the Executive Release becoming effective in accordance with its terms.
The Company shall not be obligated to make any payments to the Executive under Section 4.2(a)(i)(2)
until the Executive Release has become effective; provided that at such time as the Executive
Release becomes effective, the Company shall promptly pay to
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the Executive any payments that would otherwise have been made to the Executive between the
Date of Termination and date on which the Executive Release becomes effective.
5. Disputes.
5.1 Settlement of Disputes; Arbitration. All claims by the Executive for benefits
under this Agreement shall be directed to and determined by the Board of Directors of the Company
and shall be in writing. Any denial by the Board of Directors of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The Board of Directors
shall afford a reasonable opportunity to the Executive for a review of the decision denying a
claim. Any further dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award
in any court having jurisdiction.
5.2 Expenses. The Company agrees to pay as incurred, to the full extent permitted by
law, all legal, accounting and other fees and expenses which the Executive may reasonably incur as
a result of any claim or contest (regardless of the outcome thereof) by the Company, the Executive
or others regarding the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any contest by the
Executive regarding the amount of any payment or benefits pursuant to this Agreement), plus in each
case interest on any delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code. Notwithstanding the foregoing, (i) the expenses eligible for
reimbursement may not affect the expenses eligible for reimbursement in any other taxable year,
(ii) such reimbursement must be made on or before the last day of the year following the year in
which the expenses were incurred, and (iii) the right to reimbursement is not subject to
liquidation or exchange for another benefit.
6. Successors.
6.1 Successor to Company. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and agree to perform this Agreement to the
same extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness
of any succession shall be a breach of this Agreement and shall constitute Good Reason if the
Executive elects to terminate employment, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Date of Termination.
As used in this Agreement, “Company” shall mean the Company as defined above and any successor to
its business or assets as aforesaid which assumes and agrees to perform this Agreement, by
operation of law or otherwise.
6.2 Successor to Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s 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 the Executive or [his/her] family hereunder if the Executive had
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continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive’s estate.
7. Notice. All notices, instructions and other communications given hereunder or in
connection herewith shall be in writing. Any such notice, instruction or communication shall be
sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii)
prepaid via a reputable nationwide overnight courier service, in each case addressed to the
Company, at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and to the Executive at the Executive’s
address indicated on the signature page of this Agreement (or to such other address as either the
Company or the Executive may have furnished to the other in writing in accordance herewith). Any
such notice, instruction or communication shall be deemed to have been delivered five business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable nationwide overnight courier service. Either party
may give any notice, instruction or other communication hereunder using any other means, but no
such notice, instruction or other communication shall be deemed to have been duly delivered unless
and until it actually is received by the party for whom it is intended.
8. Miscellaneous.
8.1 Employment by Subsidiary. For purposes of this Agreement, the Executive’s
employment with the Company shall not be deemed to have terminated solely as a result of the
Executive continuing to be employed by a wholly-owned subsidiary of the Company.
8.2 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
8.3 Injunctive Relief. The Company and the Executive agree that any breach of this
Agreement by the Company is likely to cause the Executive substantial and irrevocable damage and
therefore, in the event of any such breach, in addition to such other remedies which may be
available, the Executive shall have the right to specific performance and injunctive relief.
8.4 Governing Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts, without
regard to conflicts of law principles.
8.5 Waivers. No waiver by the Executive at any time of any breach of, or compliance
with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of
that or any other provision at any subsequent time.
8.6 Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original but both of which together shall constitute one and the same
instrument.
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8.7 Tax Withholding. Any payments provided for hereunder shall be paid net of any
applicable tax withholding required under federal, state or local law.
8.8 Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto in respect of the subject
matter contained herein; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.
8.9 Amendments. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.
8.10 Executive’s Acknowledgements. The Executive acknowledges that [he/she]: (a) has
read this Agreement; (b) has been represented in the preparation, negotiation, and execution of
this Agreement by legal counsel of the Executive’s own choice or has voluntarily declined to seek
such counsel; (c) understands the terms and consequences of this Agreement; and (d) understands
that the law firm of WilmerHale is acting as counsel to the Company in connection with the
transactions contemplated by this Agreement, and is not acting as counsel for the Executive.
8.11 Section 409A. This Agreement is intended to comply with the provisions of
Section 409A and the Agreement shall, to the extent practicable, be construed in accordance
therewith. The Company makes no representation or warranty and shall have no liability to the
Executive or any other person if any provisions of this Agreement are determined to constitute
deferred compensation subject to Section 409A and do not satisfy an exemption from, or the
conditions of, Section 409A.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first set forth above.
| UNICA CORPORATION |
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| By: | ||||
| Title: | ||||
| EXECUTIVE: |
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| Name: | ||||
| Address: | ||||