Exhibit 10.33
Severance
Agreement
This Agreement is
entered into as of January 14, 2008, by and between
MICHAEL
(Mike) SHAW (the “Employee”) and
Selectica ,
Inc. , a Delaware corporation (the
“Company”).
1.
TERMINATION BENEFITS.
(a)
Qualifying Terminations. Severance benefits shall be
provided under this Agreement only if one of the following
Paragraphs applies:
(i)
Change in Control. The Company is subject to a Change in
Control before the Employee’s employment terminates and,
within 12 months thereafter, either (A) the Company
terminates the Employee’s employment for a reason other than
Cause or Permanent Disability or (B) the Employee resigns for
Good Reason; or
(ii)
No Change in Control. Paragraph (i) above does not
apply and the Company terminates the Employee’s employment
for a reason other than Cause or Permanent Disability.
(b)
Release. Subsection (a) above notwithstanding,
severance benefits shall be provided under this Agreement only if
the Employee has executed a general release of all known and
unknown claims that the Employee may then have against the Company,
using the form attached hereto as Exhibit A and without
making alterations (the “Release”), and has agreed not
to prosecute any legal action or other proceeding based on such
claims. However, the Employee shall not be required to release any
claims that the Employee may have against the Company arising under
(i) any indemnification agreement between the Employee and the
Company or (ii) any rights to indemnification, advancement of
expenses or repayment arising under the Company’s Certificate
of Incorporation, the Company’s Bylaws or the indemnification
provisions of applicable State statutes, in each case as currently
in effect or as subsequently amended.
(c)
Severance Pay. If Subsection (a)(i) above applies, then the
Employee shall be entitled to receive severance payments from the
Company for the period of 12 months following the termination
of the Employee’s employment. If Subsection (a)(ii) above
applies, then the Employee shall be entitled to receive severance
payments from the Company for the period of six months following
the termination of the Employee’s employment. (Such period of
12 or six months, as the case may be, is referred to below as the
“Continuation Period”). Such severance payments shall
be made in installments in accordance with the Company’s
standard payroll procedures. Such severance payments shall be equal
to the Employee’s base salary at the annual rate in effect
when the Employee’s employment terminates, prorated to
reflect the actual length of the Continuation Period.
The
preceding paragraph notwithstanding, the severance payments under
this Agreement shall in no event commence prior to the earliest
date permitted by Section 409A(a)(2)
of the
Internal Revenue Code of 1986, as amended (the “Code”),
if such Section is applicable. If the commencement of such
severance payments must be delayed, then the deferred installments
shall be paid in a lump sum on the earliest practicable date
permitted by Section 409A(a)(2) of the Code.
(d)
Health Insurance. If Subsection (a) above applies, and
if the Employee elects to continue health insurance coverage under
the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) for the Employee and, if applicable, the
Employee’s dependents following the termination of the
Employee’s employment, then the Company shall pay the
employer portion of the monthly premium under COBRA for the
Employee and, if applicable, such dependents until the earliest of
(i) the close of the Continuation Period, (ii) the
expiration of the Employee’s continuation coverage under
COBRA or (iii) the date when the Employee receives
substantially equivalent health insurance coverage in connection
with new employment or self-employment.
(e)
Definition of “Cause.” For purposes of this
Agreement, “Cause” shall mean:
(i) An
unauthorized use or disclosure by the Employee of the
Company’s confidential information or trade secrets, which
use or disclosure causes material harm to the Company;
(ii) A
material breach by the Employee of any agreement between the
Employee and the Company;
(iii) A
material failure by the Employee to comply with the Company’s
written policies or rules;
(iv)
The Employee’s conviction of, or plea of “guilty”
or “no contest” to, a felony under the laws of the
United States or any State thereof;
(v) The
commission of any act of fraud, embezzlement or dishonesty by the
Employee;
(vi)
The Employee’s gross negligence or intentional
misconduct;
(vii) A
continuing failure by the Employee to perform assigned duties after
receiving written notification of such failure from the Company;
or
(viii)
A failure by the Employee to cooperate in good faith with a
governmental or internal investigation of the Company or its
directors, officers or employees, if the Company has requested the
Employee’s cooperation.
(f)
Definition of “Change in Control.” For purposes
of this Agreement, “Change in Control” shall
mean:
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(i) The
consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if
persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization own
immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding
securities of each of (A) the continuing or surviving entity
and (B) any direct or indirect parent corporation of such
continuing or surviving entity;
(ii)
The sale, transfer or other disposition of all or substantially all
of the Company’s assets;
(iii) A
change in the composition of the Company’s Board of Directors
(the “Board”), as a result of which fewer than 50% of
the incumbent directors are directors who either:
(A) Had
been directors of the Company on the date 24 months prior to
the date of such change in the composition of the Board (the
“Original Directors”); or
(B)
Were appointed to the Board, or nominated for election to the
Board, with the affirmative votes of at least a majority of the
aggregate of (I) the Original Directors who were in office at
the time of their appointment or nomination and (II) the directors
whose appointment or nomination was previously approved in a manner
consistent with this Subparagraph (B); or
(iv)
Any transaction as a result of which any person is the
“beneficial owner” (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing at least 50%
of the total voting power represented by the Company’s then
outstanding voting securities. For purposes of this Paragraph (iv),
the term “person” shall have the same meaning as when
used in Sections 13(d) and 14(d) of such Act but shall exclude
(A) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of a Parent or Subsidiary
and (B) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions
as their ownership of the common stock of the Company.
A
transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company’s incorporation
or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s
securities immediately before such transaction.
(g)
Definition of “Good Reason.” For purposes of
this Agreement, “Good Reason” shall mean (i) a change
in the Employee’s position with the Company that materially
reduces the Employee’s level of responsibility, (ii) a
reduction in the Employee’s annual rate of
3
base
salary or (iii) a relocation of the Employee’s place of
employment by more than 50 miles, but only if such change,
reduction or relocation is effected by the Company without the
Employee’s consent.
(h)
Definition of “Permanent Disability.” For
purposes of this Agreement, “Permanent Disability”
shall mean the Employee’s inability to perform the essential
functions of the Employee’s position, with or without
reasonable accommodation, for a period of at least 120 consecutive
days because of a physical or mental impairment.
2.
PARACHUTE PAYMENTS.
(a)
Scope of Limitation. This Section 2 shall apply only if
an independent accounting firm selected by the Employee from among
the largest four accounting firms in the United States (the
“Accounting Firm”) determines that the after-tax value
of all Payments (as defined below) to the Employee, taking into
account the effect of all federal, state and local income taxes,
employment taxes and excise taxes applicable to the Employee
(including the excise tax under Section 4999 of the Code),
will be greater after the application of this Section 2 than
it was before the application of this Section 2. If this
Section 2 applies, it shall supersede any contrary provision
of this Agreement.
(b)
Basic Rule. In the event that the Accounting Firm determines
that any payment or transfer by the Company to or for the benefit
of the Employee (a “Payment”) would be nondeductible by
the Company for federal income tax purposes because of the
provisions concerning “excess parachute payments” in
Section 280G of the Code, then the aggregate present value of
all Payments shall be reduced (but not below zero) to the Reduced
Amount. For purposes of this Section 2, the “Reduced
Amount” shall be the amount, expressed as a present value,
which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Company because of
Section 280G of the Code.
(c)
Reduction of Payments. If the Accounting Firm determines
that any Payment would be nondeductible by the Company because of
Section 280G of the Code, then the Company shall promptly give
the Employee notice to that effect and a copy of the detailed
calculation thereof and of the Reduced Amount, and the Employee may
then elect, in the Employee’s sole discretion, which and how
much of the Payments shall be eliminated or reduced (as long as
after such election the aggregate present value of the Payments
equals the Reduced Amount) and shall advise the Company in writing
of the Employee’s election within 10 business days of receipt
of notice. If no such election is made by the Employee within such
10-day period, then the Company may elect which and how much of the
Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the
Reduced Amount) and shall notify the Employee promptly of such
election. For purposes of this Section 2, a present value
shall be determined in accordance with Section 280G(d)(4) of
the Code. All determinations made by the Accounting Firm under this
Section 2 shall be binding upon the C
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