E.piphany, Inc. Severance Agreement with Karen Richardson

Summary

This agreement between E.piphany, Inc. and employee Karen Richardson outlines severance benefits if her employment ends. If she is terminated without cause or resigns for good reason, especially after a change of control, she receives cash severance, continued health and insurance benefits, and accelerated vesting of stock options. The agreement specifies different benefits depending on whether termination is related to a change of control or not. Payments are made within 30 days of termination, and benefits end if she secures comparable coverage elsewhere.

EX-10.19 5 f78932ex10-19.txt EXHIBIT 10.19 EXHIBIT 10.19 E.PIPHANY, INC. SEVERANCE AGREEMENT This Severance Agreement (the "Agreement") is made and entered into by and between Karen Richardson (the "Employee") and E.piphany, Inc. (the "Company"), effective as of the latest date set forth by the signatures of the parties hereto below. WHEREAS, the Board of Directors of the Company (the "Board") may from time to time consider the possibility of an acquisition of the Company by another company or another change of control as a means of enhancing stockholder value. WHEREAS, the Board recognizes that such consideration can be a distraction to the Employee and cause the Employee to consider alternative employment opportunities. WHEREAS, the Board believes that it is imperative to provide the Employee with certain severance benefits upon Employee's termination of employment which provides the Employee with enhanced financial security and provides incentive and encouragement to the Employee to remain with the Company. WHEREAS, certain capitalized terms used in the Agreement are defined in Section 7 below. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Term of Agreement. This Agreement shall terminate upon the date that all obligations of the parties hereto with respect to this Agreement have been satisfied. 2. At-Will Employment. The Company and the Employee acknowledge that the Employee's employment is and shall continue to be at-will, as defined under applicable law. If the Employee's employment terminates for any reason, except as expressly provided herein, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation except for those payments that may be available in accordance with the Company's established employee plans and practices, pursuant to other agreements with the Company or pursuant to applicable law. 3. Severance Benefits. (a) Termination In Connection With A Change of Control. If the Employee's employment is terminated by the Company without Cause or the Employee resigns for Good Reason, at any time after the announcement of a Change of Control and before eighteen (18) months following a Change of Control (a "Change of Control Termination"), then, subject to Section 6, the Employee shall be entitled to receive the following severance benefits: (1) Severance Payment. A cash payment in an amount equal to one hundred and fifty percent (150%) of the Employee's Annual Compensation plus a payment of seventy-five percent (75%) of the current year target bonus for the Employee. (2) Continued Employee Benefits. One hundred percent (100%) Company-paid health, dental and life insurance coverage at the same level of coverage as was provided to such employee immediately prior to the Termination Date (the "Company-Paid Coverage"). If such coverage included the Employee's dependents immediately prior to the Termination Date, such dependents shall also be covered at Company expense. Company-Paid Coverage shall continue until the earlier of (i) eighteen (18) months from the Termination Date, or (ii) the date that the Employee and his or her dependents become covered under another employer's group health, dental or life insurance plans that provide Employee and his or her dependents with comparable benefits and levels of coverage. For purposes of Title X of the Consolidated Budget Reconciliation Act of 1985 ("COBRA"), the date of the "qualifying event" for Employee and his or her dependents shall be the date upon which the Company-Paid Coverage terminates. (3) Stock Option/Restricted Stock Accelerated Vesting. The vesting of all outstanding stock options or restricted stock awards held by Employee (collectively the "Options") extended to Employee under an approved Company plan or program shall accelerate by twelve (12) months as of the Termination Date (but, in no event, shall the Options become vested and exercisable as to more than one hundred percent (100%) of the shares subject to such Options). In the event that Employee is entitled to accelerated vesting of a particular Option pursuant to the terms of both the applicable option agreement and this Agreement, the vesting of the Option shall be accelerated in accordance with whichever agreement (i.e, this Agreement or the applicable option agreement) results in greater economic value being delivered to the Employee. (However, in no event shall the Employee be entitled to accelerated vesting under both such agreements.) In addition, under no circumstances shall any Option become vested and exercisable as to more than one hundred percent (100%) of the shares subject to such Option. Employee's stock options shall remain exercisable for such period of time as is prescribed in the respective stock option agreements. (4) Timing of Severance Payments. Any severance payment to which Employee is entitled under Section 3(a)(1) shall be paid by the Company to the Employee (or to the Employee's successor in interest, pursuant to Section 9(b)) in cash and in full, not later than thirty (30) calendar days following the Termination Date, subject to Section 11(f). (b) Termination Apart from Change of Control. In the event the Employee's employment is terminated without Cause prior to the announcement of a Change of Control ("Severance Termination"), then the Employee shall be entitled to receive the following severance benefits: (1) Severance Payment. A cash payment in an amount equal to one hundred percent (100%) of the Employee's Annual Compensation plus a payment of fifty percent (50%) of the current year target bonus for the Employee. (2) Continued Employee Benefits. Provided that Employee elects continuing medical and dental coverage under COBRA, the payment of COBRA premiums through the earlier of (i) twelve (12) months from the Termination Date, or (ii) the date that the Employee -2- (and any dependents covered under Employee's Company Paid Coverage immediately prior to Termination) become covered under another employer's group health and dental plans that provide Employee and said dependents with comparable benefits and level of coverage., (3) Stock Option/Restricted Stock Accelerated Vesting. The vesting of all outstanding stock options or restricted stock awards held by Employee (collectively the "Options") extended to Employee under an approved Company plan or program shall accelerate by twelve (12) months as of the Termination Date (but, in no event, shall the Options become vested and exercisable as to more than one hundred percent (100%) of the shares subject to such Options). In the event that Employee is entitled to accelerated vesting of a particular Option pursuant to the terms of both the applicable option agreement and this Agreement, the vesting of the Option shall be accelerated in accordance with whichever agreement (i.e, this Agreement or the applicable option agreement) results in greater economic value being delivered to the Employee. (However, in no event shall the Employee be entitled to accelerated vesting under both such agreements.) In addition, under no circumstances shall any Option become vested and exercisable as to more than one hundred percent (100%) of the shares subject to such Option. Employee's stock options shall remain exercisable for such period of time as is prescribed in the respective stock option agreements. (4) Timing of Severance Payments. Any severance payment to which Employee is entitled under Section 3(b)(1) shall be paid by the Company to the Employee (or to the Employee's successor in interest, pursuant to Section 9(b)) in cash and in full, not later than thirty (30) calendar days following the Termination Date, subject to Section 11(f). (c) Voluntary Resignation; Termination For Cause;; If the Employee's employment terminates by reason of the Employee's voluntary resignation (and is not a Change of Control Termination), or if the Employee is terminated for Cause, then the Employee shall not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company's then existing option, severance and benefits plans and practices, pursuant to other agreements with the Company or pursuant to applicable law. (d) Disability; Death. If the Company terminates the Employee's employment as a result of the Employee's Disability, or such Employee's employment is terminated due to the death of the Employee, then the Employee shall not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company's then existing severance and benefits plans and practices or pursuant to other agreements with the Company. 4. Vacation. If the Employee remains employed with the Company through December 31, 2004, the Employee shall be entitled to a one-time additional four (4) weeks of vacation in addition to any other vacation to which she may otherwise be entitled under the Company's vacation policies, to be taken at a time mutually agreed upon by the Employee and the Company (the "Extra Vacation"). The Extra Vacation shall not be counted for purposes of any accrual limits the Company may have with respect to its vacation policies. If, after December 31, 2004, the Employee is terminated for any reason other than Cause prior to taking all of her Extra Vacation, the Employee shall be paid a lump-sum amount equal to the value of the unused portion of the Extra Vacation calculated at her base salary rate in effect on the Termination Date in addition to (i) any earned but unpaid compensation and any accrued but unused vacation and (ii) any benefits to which she may otherwise be entitled pursuant to Section 3 hereof. -3- 5. Attorney Fees, Costs and Expenses. The Company shall reimburse Employee for the reasonable attorney fees, costs and expenses incurred by the Employee in connection with any action brought by Employee to enforce his or her rights hereunder, provided such action is not decided in favor of the Company. 6. Limitation on Payments. (a) In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this Section 6, would be subject to the excise tax imposed by Section 4999 of the Code, then the Employee's severance benefits under Section 3(a)(1) shall be either (A) delivered in full, or (B) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Any taxes due under Section 4999 shall be the responsibility of the employee. (b) If a reduction in the payments and benefits that would otherwise be paid or provided to the Employee under the terms of this Agreement is necessary to comply with the provisions of Section 6(a), the Employee shall be entitled to select which payments or benefits will be reduced and the manner and method of any such reduction of such payments or benefits (including but not limited to the number of options that would vest under Section 3(a)) subject to reasonable limitations (including, for example, express provisions under the Company's benefit plans) (so long as the requirements of Section 6(a) are met). Within thirty (30) days after the amount of any required reduction in payments and benefits is finally determined in accordance with the provisions of Section 6(c), the Employee shall notify the Company in writing regarding which payments or benefits are to be reduced. If no notification is given by the Employee, the Company will determine which amounts to reduce. If, as a result of any reduction required by Section 6(a), amounts previously paid to the Employee exceed the amount to which the Employee is entitled, the Employee will promptly return the excess amount to the Company. (c) Unless the Company and the Employee otherwise agree in writing, any determination required under this Section 6 shall be made in writing by the Company's accountants immediately prior to Change of Control, whose determination shall be conclusive and binding upon the Employee and the Company for all purposes. For purposes of making the calculations required by this Section 6, the accountants may, after taking into account the information provided by the Employee, make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Employee shall furnish to the accountants such information and -4- documents as the accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section 6. 7. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings: (a) Annual Compensation. "Annual Compensation" means an amount equal to the greater of (i) Employee's Company salary for the twelve (12) months preceding the Change of Control or (ii) Employee's current Company salary on an annualized basis. (b) Cause. "Cause" shall mean (i) any act of personal dishonesty taken by the Employee in connection with his responsibilities as an employee and intended to result in significant personal enrichment of the Employee, (ii) the conviction of, or a plea of "guilty" or "no contest" to, a felony under the laws of the United States, any state thereof or any foreign country, which conviction or plea negatively and materially reflects on the Employee's fitness to perform his or her duties or materially harms the Company's reputation or financial status, (iii) willful misconduct by the Employee that is materially injurious to the Company, (iv) any act of fraud, dishonesty or moral turpitude by the Employee that is materially injurious to the Company; or (v) for a period of not less than thirty (30) days following delivery to the Employee of a written demand for performance from the Company that describes the basis for the Company's belief that the Employee has not substantially performed his duties, continued violations by the Employee of the Employee's obligations to the Company that are demonstrably willful and deliberate on the Employee's part. Any dismissal for cause in accordance with Subsection (v) of this definition must be approved by the Company's Board of Directors prior to the dismissal date. (c) Change of Control. "Change of Control" means the occurrence of any of the following events: (1) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities; (2) A change in the composition of the Board occurring within a twelve-month period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are appointed, 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); (3) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that 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 or such surviving -5- entity's parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or such surviving entity's parent outstanding immediately after such merger or consolidation; (4) The consummation of the sale or disposition by the Company of all or seventy-five percent (75%) or more of the Company's assets. (d) Disability. "Disability" shall mean that the Employee has been unable to perform his or her Company duties as the result of his or her incapacity due to physical or mental illness, and such inability, at least twenty-six (26) weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Employee or the Employee's legal representative (such Agreement as to acceptability not to be unreasonably withheld). Termination resulting from Disability may only be effected after at least thirty (30) days' written notice by the Company of its intention to terminate the Employee's employment. In the event that the Employee resumes the performance of substantially all of his or her duties hereunder before the termination of his or her employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked. (e) Good Reason. "Good Reason" means, without the Employee's express written consent, any of the following events: (i) a material reduction by the Company of the impact and nature of Employee's duties, responsibilities or authority, relative to the impact and nature of the Employee's duties, responsibilities or authority as in effect immediately prior to the Change of Control; (ii) a reduction by the Company in the base salary or target bonus opportunity of the Employee as in effect immediately prior to the Change in Control; (iii) a material reduction by the Company in the kind or level of employee benefits (i.e., health, vision, life, 401k or the like) to which the Employee was entitled immediately prior to the Change of Control; or (iv) the relocation by the Company of the Employee's location of employment to a facility or a location more than fifty (50) miles from the Employee's location of employment immediately prior to the Change of Control. (f) Termination Date. "Termination Date" shall mean (i) if this Agreement is terminated by the Company for Disability, thirty (30) days after notice of termination is given to the Employee (provided that the Employee shall not have returned to the performance of the Employee's duties on a full-time basis during such thirty (30)-day period), (ii) if the Employee's employment is terminated by the Company for any other reason, the date on which a notice of termination is given to Employee, or (iii) if the Agreement is terminated by the Employee, the date on which the Employee delivers the notice of termination to the Company. -6- 8. Non-Competition and Non-Solicitation Following Severance Termination. (a) Noncompetition. The Employee acknowledges that the nature of the Company's business is such that if the Employee were to become employed by, or substantially involved in, the business of a competitor of the Company during the twelve (12) months following the Termination Date of a Severance Termination, in any geographic area in which the Company does business, it would cause substantial and irreparable harm to the Company. Thus, to protect the Company's goodwill, trade secrets and confidential information, the Employee agrees and acknowledges that the Employee will not directly or indirectly engage in (whether as an employee, consultant, agent, proprietor, principal, partner, stockholder, corporate officer, director or otherwise), nor have any ownership interest in or participate in the financing, operation, management or control of, any person, firm, corporation or business that competes with Company or is a customer of the Company. (b) Non-Solicitation. During the twelve (12) months after the Termination Date of a Severance Termination, the Employee agrees and acknowledges that the Employee will not either directly or indirectly solicit, induce, attempt to hire, recruit, encourage, take away, hire any employee of the Company or cause an employee to leave his or her employment either for the Employee or for any other entity or person. (c) Understanding of Covenants. the Employee represents that she (i) is familiar with the foregoing covenants not to compete and not to solicit, and (ii) is fully aware of her obligations hereunder, including, without limitation, the reasonableness of the length of time, scope and geographic coverage of these covenants, and (iii) agrees that the length of time, scope and geographic coverage of these covenants are reasonable and are necessary to protect the interests of the Company. (d) Conditional Nature of Severance Payments. The Employee agrees and acknowledges that the Employee's right to receive the severance payments set forth in Section 3 (to the extent the Employee is otherwise entitled to such payments) shall be conditioned upon compliance with the restriction in this section 8. In the event of any breach of this Section 8, the Company shall be entitled to recover from the Employee, and the Employee shall pay to the Company, an amount equal to the amount paid to the Employee pursuant to Section 3 multiplied by a fraction the numerator of which equals 12 less the number of months that have elapsed between the date of termination and the date of such breach, and the denominator of which is equal to 12. 9. Successors. (a) Company's Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this Section 9(a) or which becomes bound by the terms of this Agreement by operation of law. -7- (b) Employee's Successors. The terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 10. Notice. (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him at the home address that he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with Section 10(a) of this Agreement. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the termination date (which shall be not more than thirty (30) days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his or her rights hereunder. 11. Miscellaneous Provisions. (a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source. (b) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). 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. (c) Whole Agreement. This Agreement and any outstanding stock option, stock purchase or related agreements, represent the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior arrangements and understandings regarding same. Other than the agreements described in the preceding sentence, no agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof. -8- (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California without regard to principles of conflicts of laws. (e) 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. (f) Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes. (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. [The remainder of this page is intentionally left blank] -9- IN WITNESS WHEREOF, each of the parties has executed this Agreement on the dates indicated below. COMPANY: E.PIPHANY, INC. By: -------------------------- Name: ------------------------ Title: ----------------------- Date: ------------------------ EMPLOYEE: ----------------------------- Name: Date: ------------------------ -10-