ex103.htm


    Exhibit
10.3

     

    December
23, 2008

     

    Mr. Kevin
Donovan

     

    25
Susannah’s Crossing

     

    Dover NH
03820

     

    Dear
Kevin:

     

    Reference
is made to your Executive Retention Agreement with Bottomline Technologies (de),
Inc. (the “Company”) dated as of November 16, 2006 (the
“Agreement”).  In all respects, the Agreement shall remain in full
force and effect, provided, however, that:

     

    
      	
              1.  

            	
              It
      is agreed that Section 1.4 is hereby amended and restated in its entirety
      to read as follows:

            


    

     

    “Good Reason”
means:

     

    (a)           a
material diminution in the Employee's authority, duties or
responsibilities;

     

    (b)           a
material reduction in the Employee’s then base compensation;

     

    (c)           a
material diminution in the budget over which the Employee retains
authority;

     

    (d)           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 Executive
performs his principal duties for the Company or any successor to the Company be
changed to a new location outside the radius of 50 miles from the then current
location; or

     

    (e)           any
breach by the Company of any material provision of this Agreement;

     

    provided, however, that no such
event or condition shall constitute a termination for Good Reason unless (x) the
Executive gives the Company a written notice of termination no more than 90 days
after the initial existence of such condition; (y) the grounds for termination
(if susceptible to correction) are not corrected by the Company within 30 days
of its receipt of such notice; and (z) the Executive’s termination of employment
occurs within two years following the Company’s receipt of such
notice.

     

    The right
of the Executive to terminate his at will employment as a result of Good Reason
shall not be affected by the Executive’s disability, or the fact that the
Executive at such time may have an offer of employment from another employer or
any other reason for terminating his employment with the Company.”

     

    
      	
              2.  

            	
              It
      is further agreed that Section 4.1(a)(v) is hereby amended to include the
      following language at the end of the sentence: “; and provided further
      that any benefits coverage provided by the Company that continues beyond
      the COBRA coverage period shall be administered in accordance with the
      Company’s ordinary payroll
practices;”

            


    

     

    
      	
              3.  

            	
              It
      is further agreed that Section 4.1(a)(vi) is hereby amended to include the
      following sentence at the end of the paragraph: “, and such amounts or
      benefits shall be paid or provided to the Executive in a lump sum within
      ten (10) business days following the date of
  termination;”

            


    

     

    
      	
              4.  

            	
              It
      is further agreed that Section 8.9 is hereby amended and restated in its
      entirety to read as follows:

            


    

     

    “Section
409A.   Subject to the provisions in this Section 8.9, 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 of the Executive’s
employment.  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:

     

    (a)           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.

     

    (b)           
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.

     

    (c)           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:

     

    (i)  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 fifteenth day of the third
month following the end of the Executive’s tax year in which the separation from
service occurs and the fifteenth day of the third month following the end of the
Company’s tax year in which the separation from service occurs; and

     

    (ii)  Each
installment of the severance payments and benefits due under this Agreement that
is not described in Section 8.9(c)(i) above 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 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 the taxable year in which the separation from service
occurs.

     

    (d)            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 8.9(d), “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.

     

    (e)           All
reimbursements and in-kind benefits provided under this 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.”

    


     

    [Remainder
of Page Intentionally Left Blank]

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    By
execution of this letter, you hereby agree to the foregoing amendment of the
Agreement and reaffirm your obligations under the Agreement.

     

    Very
truly yours,

     

    Bottomline
Technologies (de), Inc.

     

    
      
        	 	 	 
	 	 	 	 
	
                December
      23, 2008 

              	
                By:
      

              	/s/ Joseph
      L. Barry, Jr.	 
	 	 	Joseph
      L. Barry, Jr.	 
	 	 	Chairman
      of Compensation Committee	 
	 	 	 	 


      

      
                                          

      
        
          	 	Accepted
      and Agreed:	 
	 	 	 	 
	
                  December
      23, 2008 

                	
                  By:
      

                	/s/ Kevin
      M. Donovan	 
	 	 	Kevin
      M. Donovan