Exhibit 10.6
BOTTOMLINE TECHNOLOGIES (de),
INC.
Executive Retention
Agreement
THIS EXECUTIVE RETENTION AGREEMENT
(the “Agreement”) by and between Bottomline
Technologies (de), Inc., a Delaware corporation (the
“Company”), and Kevin Donovan (the
“Executive”) is made as of February 5, 2004 (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 “ Change in Control
” means an event or occurrence set forth in any one or more
of subsections (a) through (c) below:
(a) any “person,” as
such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”) (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
or any corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportion as their
ownership of stock of the Company) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the
Company’s then outstanding securities;
(b) the stockholders of the Company
approve a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being
converted into voting securities of
the surviving entity) more than 80% of the combined voting power of
the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no “person” (as hereinabove defined) acquires more than
50% of the combined voting power of the Company’s then
outstanding securities; or
(c) the stockholders of the Company
approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.
1.2 “ Change in Control
Date ” means the first date during the Term (as defined
in Section 2) on which a Change in Control occurs.
1.3 “ Cause ”
means the discharge resulting from a determination by a vote of the
Board that the Employee:
(a) has been convicted of a felony
involving dishonesty, fraud, theft or embezzlement or any other
felony; or
(b) has performed or failed to act,
which if he were prosecuted and convicted for such performance or
failure would constitute a crime or offense involving money or
property of the Company (in either case in an amount or at a value
in excess of $5,000), or which would constitute a felony in the
jurisdiction involved.
1.4 “ Good Reason
” means:
(a) the continued assignment to the
Employee of any duties or the continued significant change in the
Employee’s duties, either of which is substantially
inconsistent with the Employee’s duties immediately prior to
such assignment or after notice thereof from the Employee to the
Board setting forth in reasonable detail the respects in which the
Employee believes such assignments or duties are significantly
inconsistent with the Employee’s prior duties;
(b) a reduction in the
Employee’s then base compensation;
(c) the imposition of a requirement
by the Company, any person in control of the Company or any
successor to the Company, that the location at which the Employee
performs his principal duties for the Company or any successor to
the Company be changed to a new location outside a radius of
50 miles from the then current location; or
(d) any breach by the Company of any
material provision of this Agreement;
provided that none of the foregoing shall
constitute Good Reason to the extent the Employee has agreed in
writing thereto.
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The right of the Employee to terminate his at
will employment as a result of Good Reason shall not be affected by
the Employee’s disability, or the fact that the Employee at
such time may have an offer of employment from another employer or
any other reason for terminating his employment with the
Company.
1.5 “ Disability
” means the Executive shall have been unable to perform the
Executive’s duties with the Company for 90 days, whether or
not consecutive, during any 360-day period, due to a physical or
mental disability. A determination of disability shall be made by a
physician satisfactory to both the Employee and the Company;
provided, that if the Employee and the Company do not agree on a
physician, the Employee and the Company shall each select a
physician and these two together shall select a third physician,
whose determination as to disability shall be binding on all
parties.
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 June 30, 2006.
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.
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”), 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
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be. In the event the Company fails
to satisfy the requirements of this 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 10 days of the
occurrence of the event(s) or circumstance(s) which constitute(s)
Cause.
4. Benefits to Executive
.
4.1 Compensation and Stock
Acceleration . 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) Terminat
