Change in Control Bonus Plan



 






	 	 	 	 	 



EXHIBIT 10.1




THE ULTIMATE SOFTWARE GROUP, INC.

CHANGE IN CONTROL BONUS PLAN

FOR EXECUTIVE OFFICERS




Section 1. Purpose





     The purpose of The Ultimate Software Group, Inc. Change in Control Bonus
Plan for Executive Officers is to provide cash bonus payments to certain
executive officers of the Company upon a Change in Control of the Company. The
Plan is designed to promote the interests of the Company and its shareholders
by providing an additional incentive to management to maximize the value of the
Company’s business and its common stock.



Section 2. Definitions




     The following capitalized words as used herein shall have the following
meanings:




	 	(a)	 	“Award” means the contingent right of a Participant to receive a cash
payment under the Plan upon a Change in Control of the Company, subject
to such terms and conditions as the Committee may establish under the
terms of the Plan.






	 	(b)	 	“Board” means the Board of Directors of the Company.






	 	(c)	 	“Change in Control” shall have the same meaning as the term “Change
of Control,” as set forth in the Company’s Nonqualified Stock Option
Plan, as amended and restated as of December 20, 2002.






	 	(d)	 	“CIC Plans” means this Plan and The Ultimate Software Group, Inc.
Change in Control Bonus Plan for Officers and Employees.






	 	(e)	 	“Committee” means the Compensation Committee of the Board, or such
other committee of the Board that the Board shall designate from time to
time to administer the Plan.






	 	(f)	 	“Company” means The Ultimate Software Group, Inc., a Delaware company.






	 	(g)	 	“Participant” means an officer of the Company who has been granted an
Award under the Plan.






	 	(h)	 	“Plan” means The Ultimate Software Group, Inc. Change in Control
Bonus Plan for Executive Officers, as it may be amended from time to
time.






	 	(i)	 	“Sales Proceeds” means the fair market value of the gross
consideration received by the Company or its stockholders in the Change
in Control transaction, as determined by the Committee in good faith
immediately prior to the consummation of the Change in Control, taking
into account such factors as the Committee deems appropriate.





Section 3. Plan Administration





	 	(a)	 	Committee Members. The Plan shall be administered by the Committee.
The Committee shall have such powers and authority as may be necessary or
appropriate for the Committee to carry out its functions as described in
the Plan. No member of the Committee shall be liable for any action or
determination made in good faith by the Committee with respect to the
Plan or any Award thereunder.






	 	(b)	 	Discretionary Authority. Subject to the express limitations of the
Plan, the Committee shall have authority in its discretion to determine
the time or times at which Awards may be granted, the recipients of
Awards, and all other terms of Awards under the Plan. The Committee
shall also have discretionary authority to interpret the Plan, to make
all factual determinations
under the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee may
prescribe, amend, and rescind rules and regulations relating to the Plan.
All interpretations, determinations, and actions by the Committee shall
be final, conclusive, and binding upon all parties.





 









 










Section 4. Participation




     An officer of the Company who is designated by the Committee to
participate in the Plan shall be deemed a Participant in the Plan. The initial
Participants are listed on Schedule A hereto. The Committee may designate
additional Participants from time to time as it shall determine in its sole
discretion.



Section 5. Grant of Awards




     The Committee shall determine the Participants to whom Awards are granted
under the Plan and the terms of payment under an Award in accordance with the
terms of the Plan. The schedule of Awards applicable to each Participant shall
be as set forth in Schedule A hereto. The Committee may supplement Schedule A
from time to time in its sole discretion with additional Participants or
additional Awards, but shall not reduce the entitlement of any Participant
under any previously granted Award, except as provided in Section 9(b) hereof.



Section 6. Payment of Awards





	 	(a)	 	Change in Control. Payments to Participants under the Plan shall be
made only upon the consummation of a Change in Control transaction,
provided that the Participant remains employed by the Company at the time
of such consummation in accordance with Section 7 hereof. Payments to
Participants shall be determined on the basis of a percentage of the
Sales Proceeds in the Change in Control transaction, or on such other
basis as determined by the Committee in its sole discretion and as set
forth in Schedule A hereto or in any other action in writing approved by
the Committee.






	 	(b)	 	Limitation on Payments. The aggregate amount of payments to
Participants (including any “280G gross-up payment” under Schedule A
hereto) that may be made under the CIC Plans shall not exceed four
percent (4%) of the Sales Proceeds. To the extent that the aggregate
payments under the CIC Plans would otherwise exceed four percent (4%) of
the Sales Proceeds, the Committee shall reduce one or more payments,
under either or both of the CIC Plans, in its discretion in the manner
that it determines to be equitable and appropriate under the
circumstances.






	 	(c)	 	Time and Form of Payment. All payments to Participants hereunder
shall be made in single, lump-sum cash payments upon the consummation of
the Change in Control transaction.






	 	(d)	 	Tax Withholding. All payments under this Plan shall be subject to
applicable Federal and state income and employment taxes and any other
amounts that the Company is required by law to deduct and withhold from
such payment.





Section 7. Employment Requirement





	 	(a)	 	Termination prior to Change in Control. Any payment to a Participant
under the Plan shall be conditioned upon such Participant’s continued
employment with the Company until the consummation of the Change in
Control. A Participant shall not be entitled to the payment under an
Award if his or her employment is terminated at any time or for any
reason prior to the consummation of a Change in Control, including by
reason of death, disability, retirement, voluntary or involuntary
termination, or termination with or without cause.





 









 







	 	(b)	 	Termination following Change in Control. The termination of a
Participant’s employment upon or following the consummation of a Change
in Control shall not affect the Participant’s right to payment under an
Award, regardless of the reason for such termination.






Section 8. Unfunded Status




     All rights of Participants to benefits under the Plan are unfunded
obligations of the Company. Plan benefits shall be paid from the general
assets of the Company, and each of the Participants shall have the status of an
unsecured general creditor of the Company with respect to all interests under
the Plan.



Section 9. General Provisions





	 	(a)	 	Effective Date. The Plan shall become effective on March 5, 2004.






	 	(b)	 	Term; Amendment and Termination.






	 	(i)	 	Unless otherwise amended, extended or terminated by the Board as
provided in Section 9(b)(ii) below, the Plan shall terminate
automatically on March 5, 2009. In the event of such termination, all
rights of Participants under the Plan shall be deemed extinguished unless
a Change in Control has occurred prior to such date.






	 	(ii)	 	The Company may, from time to time prior to March 5, 2009, by
action of the Board, amend or terminate the Plan at any time, provided
that any resulting reduction in a Participant’s right to payments under a
previously granted Award shall be compensated for by a replacement plan
or arrangement of comparable or greater value to the affected
Participant. On or before March 9, 2007, the Board shall consider
whether to extend the term of the Plan or replace the Plan with a plan
or arrangement of comparable or greater value to the Participants. The
determination of whether a replacement plan or arrangement is of
comparable or greater value shall be made by the Committee in its sole
discretion, acting in good faith and based upon the facts and
circumstances existing at the time of the Committee’s determination.






	 	(c)	 	No Right to Employment. Nothing in the Plan shall be deemed to give
any Participant the right to remain employed by the Company or any
subsidiary or to limit, in any way, the right of the Company or any
subsidiary to terminate, or to change the terms of, a Participant’s
employment at any time.





	 	(d)	 	Governing Law. The Plan shall be governed by and construed in
accordance with the laws of Delaware, without regard to choice-of-law
rules.





 









 





SCHEDULE A




Awards Schedule




     Each of the following Change in Control payment amounts is subject to the
aggregate limit on payments under the CIC Plans equal to four percent (4%) of
the Sales Proceeds, as set forth in Section 6(b) of the Plan.



	 	 	 
	Participant #1 -

	 	Scott Scherr, President and Chief Executive Officer. Mr.
Scherr will be entitled to a payment under the Plan equal to 1.0% of
the Sales Proceeds upon the consummation of a Change in Control.
	 
	 	 
	Participant #2 -

	 	Marc D. Scherr, Vice Chairman and Chief Operating Officer.
Mr. Scherr will be entitled to a payment under the Plan equal to 0.75%
of the Sales Proceeds upon the consummation of a Change in Control.
	 
	 	 
	Participant #3 -

	 	Mitchell K. Dauerman, Executive Vice President, Chief
Financial Officer and Treasurer. Mr. Dauerman will be entitled to a
payment under the Plan equal to 0.25% of the Sales Proceeds upon the
consummation of a Change in Control.







	 	 	 
	280G Gross-Up Payment -

	 	To the extent that the Change in Control
payments to any of the Participants named above, whether under the Plan
or otherwise, exceed the limitation of Section 280G of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”), such
that an excise tax will be imposed under Section 4999 of the Code, each
such Participant will receive an additional “gross up” payment to
indemnify him for the effect of such excise taxes. The Participant’s
“gross-up” rights shall be as set forth in a separate letter agreement
with the Company.







Additional Change In Control Payments




	 	 	 
	Participants -

	 	Any officer of the Company designated by the Committee to be
a Participant under the Plan, including any officer named above in this
Schedule A.







	 	 	 
	Change in Control Payments -

	 	Up to 0.5% of the Sales Proceeds may be
allocated as additional Change in Control bonuses to any of the
individuals listed above and/or to one or more other officers or
employees of the Company. Allocations to individual officers or
employees will be determined by the Committee based upon the
recommendation of the CEO at the time a Change in Control transaction
is under consideration by the Board.