Unity Software Inc 8-K, filed Oct 10, 2023
Unity Software Inc. (U)
About this 8-K
Unity Software Inc filed this 8-K on October 10, 2023, reporting on events of October 7, 2023.
Items reported
- Item 2.02: Financial results
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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| Item 2.02. | Results of Operations and Financial Condition. |
On October 9, 2023, Unity Software Inc. (“Unity” or the “Company”) issued a press release announcing the management changes described in Item 5.02 below and its reaffirmation of previously announced guidance for the quarter ended September 30, 2023. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02 of this Current Report on Form 8-K and the exhibit attached hereto as 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Retirement of President and Chief Executive Officer
On October 9, 2023, the Company announced that John Riccitiello will retire as the Company’s President and Chief Executive Officer and as a member of the Company’s Board of Directors (the “Board”), effective immediately. Mr. Riccitiello will assist with the transition of his responsibilities and has agreed to continue serving as an employee until he retires from the Company, effective April 9, 2024 (the “Retirement Date”).
In connection with his retirement, the Company and Mr. Riccitiello entered into a transition agreement (the “Agreement”), pursuant to which, until the Retirement Date, Mr. Riccitiello will continue to receive his base salary and previously granted equity awards will continue to vest. The Agreement also provides for a customary release of claims by Mr. Riccitiello.
In addition, Mr. Riccitiello will be entitled to an extension of the post-termination exercise period of his vested stock options outstanding on the Retirement Date until earliest to occur of (i) five years following the Retirement Date, (ii) the applicable expiration date of the applicable award, or (iii) such earlier date as provided or permitted under the applicable equity plan, subject to certain conditions described in the Agreement. If the Company terminates Mr. Riccitiello’s employment for “cause” or Mr. Riccitiello resigns for any reason, each as defined in the Agreement, prior to April 9, 2024, Mr. Riccitiello will not be entitled to the extended post-termination exercise period.
A copy of the Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K.
Appointment of Interim Chief Executive Officer and President
On October 9, 2023, the Company announced the appointment of James Whitehurst, age 55, to serve as the Company’s Interim Chief Executive Officer and President and as a member of the Board, effective immediately. Mr. Whitehurst will serve as a Class III director, to serve until the Company’s annual meeting of stockholders in 2026, or until his successor is duly elected and qualified or until his earlier death, resignation or removal.
Mr. Whitehurst also serves as a Special Advisor at Silver Lake Partners, a technology investment firm, a role he has held since March 2021. Prior to Silver Lake, Mr. Whitehurst served as a Senior Advisor at International Business Machines Corporation (“IBM”), a global technology company, from July 2021 to May 2022, after serving as President from April 2020 to July 2021 and as Senior Vice President from July 2019 to April 2020. From January 2008 to April 2020, he served as Chief Executive Officer of Red Hat, Inc., an open source software company, including through Red Hat’s acquisition by IBM in July 2019. Prior to joining Red Hat, Mr. Whitehurst held various leadership positions at Delta Air Lines, Inc., a global airline operator, from January 2002 to August 2007, and Boston Consulting Group, a management consulting firm, from September 1989 to December 2001. Mr. Whitehurst has served on the Boards of Directors of United Airlines Holdings, Inc., a publicly traded global airline operator, since March 2016, Amplitude, Inc., a publicly traded digital analytics company, since September 2021, Tanium Inc., a privately-held cybersecurity and systems management company, since January 2022, and Software AG, a software company traded on a foreign stock exchange, since January 2023. Mr. Whitehurst previously served on the Boards of Directors of multiple publicly traded companies, including Red Hat, from January 2008 to July 2019,
SecureWorks Corp., a cybersecurity company, from April 2016 to April 2019, and DigitalGlobe, Inc., a builder and operator of satellites for digital imaging, from August 2009 to May 2016. Mr. Whitehurst received a B.A. in Computer Science and Economics from Rice University and an M.B.A. from Harvard Business School.
In connection with his appointment, Mr. Whitehurst entered into a letter agreement (the “Offer Letter”) with the Company, providing for an annual base salary of $1,120,000 and an award of 200,000 restricted stock units (the “RSU Award”) in respect of the Company’s Common Stock. The RSU Award will be issued pursuant to the Company’s 2020 Equity Incentive Plan and will vest as follows: (1) 50% of the total shares subject to the RSU Award shall vest on February 25, 2024 (“Tranche 1”) and (2) the remaining 50% of the total shares subject to the RSU Award shall vest on May 25, 2024 (“Tranche 2”); provided that, should the employment start date of the Company’s permanent Chief Executive Officer (the “Permanent CEO Start Date”) occur prior to May 25, 2024, both Tranche 1 (to the extent not previously vested) and Tranche 2 shall vest on the Permanent CEO Start Date and settle on the next regular quarterly installment date following the Permanent CEO Start Date; provided further, that should Mr. Whitehurst’s employment with the Company terminate for any reason, other than by his voluntary resignation or a termination by the Company for Cause (as defined in the Offer Letter), prior to May 25, 2024, both Tranche 1 (to the extent not previously vested) and Tranche 2 shall vest on the date of such termination and settle on the next regular quarterly installment date following the date of such termination; provided further, that Mr. Whitehurst shall not be entitled to any future vesting if, prior to May 25, 2024, he (i) voluntarily resigns from his position as Interim Chief Executive Officer or (ii) is terminated for Cause.
A copy of the Offer Letter is attached as Exhibit 10.2 to this Current Report on Form 8-K. Mr. Whitehurst will also enter into a customary indemnification agreement with the Company in the form previously approved by the Board and filed with the Securities and Exchange Commission.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit No. |
Exhibit Description | |
| 10.1 | Transition Agreement by and between Unity Software Inc. and John Riccitiello, dated October 9, 2023. | |
| 10.2 | Offer Letter by and between Unity Software Inc. and James Whitehurst dated October 7, 2023 | |
| 99.1 | Press Release dated October 9, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| UNITY SOFTWARE INC. | ||||||
| Dated: October 10, 2023 |
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By: | /s/ Luis Visoso | |||
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Luis Visoso | |||||
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Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||
Exhibit 10.1
October 9, 2023
John Riccitiello
via email
Dear John,
I am writing to confirm my acceptance of your resignation so that you may pursue retirement.
I want to personally thank you for your contributions to Unity over the last 10 years, your steadfast leadership of the company through periods of great challenge, change, and growth, as well as your guidance and partnership on the Board. I also very much appreciate that you will continue to advise the company in near-term, providing for a smooth transition of leadership to set Unity up for continued success.
For all that you have done for Unity, and for your continued advisor role during this transition, the company would like to provide you with an extended exercise period of 5 years in which to exercise any vested equity, as well as permitting you to continue vesting in equity during the transition period.
In exchange for providing these benefits, and as is typical in these situations, we ask that you sign a standard legal separation agreement, which I have attached to this letter.
Again, I look forward to continuing to work with you during this transition period and truly wish you all the best in your retirement.
Sincerely,
/s/ Roelof Botha
Roelof Botha
Chairman of the Unity Board of Directors
October 9, 2023
John Riccitiello
via email
Dear John:
This letter sets forth the transition agreement leading up to and documenting your retirement (the “Agreement”), effective as of the date of your signature below, between you and Unity Technologies SF (the “Company”).
1. Retirement. You resign your employment with the Company and Unity Software, Inc. (“Unity”) effective April 9, 2024, unless your employment ends sooner pursuant to Section 2(c) below (the “Retirement Date”).
2. Transition Period.
a. Duties. Effective October 9, 2023 (the “Transition Date”), you resign your role as (i) President and CEO of the Company and Unity, (ii) any and all other positions held as an officer of the Company, Unity, or any of Unity’s direct or indirect subsidiaries and (iii) as a member of Unity’s board of directors and as a member of the board of directors or similar body of any of Unity’s direct or indirect subsidiaries. Between the Transition Date and the Retirement Date (the “Transition Period”), you agree to transition these duties and responsibilities and perform other tasks in good faith as requested by the Company. You agree to comply with the Company’s policies and procedures and your other obligations to the Company (including the terms of your Employment Agreement).
b. Compensation/Benefits. During the Transition Period, your base salary will remain the same, and you will continue to be eligible for the Company’s standard benefits. You will not be entitled to earn a bonus during the Transition Period, and your year-end bonus for fiscal year 2023 will be zero. During the Transition Period, your Company equity awards will continue to vest.
c. Early Conclusion. Nothing in this Agreement alters your employment at will status. If prior to April 9, 2024, the Company ends your employment without Cause (as defined in the Employment Agreement) or your employment ends due to your death or disability, then you will remain eligible for the Extended Exercise Period (described below), provided that you (or your estate) have satisfied the Severance Preconditions (as set forth below). If prior to April 9, 2024, you resign your employment for any reason or the Company terminates your employment with Cause, then you will no longer be eligible to participate in any Company benefit plans, and you will not be entitled to the Extended Exercise Period.
3. Extended Exercise Period. If you timely sign and comply with your obligations under this Agreement, and, on or after the Retirement Date, timely sign and return the Retirement Date Release attached hereto as Exhibit A, and allow it to become effective, (collectively, the “Severance Preconditions”), then the Company will extend the period of time in which you may
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exercise any vested, outstanding and unexercised equity awards as of the Retirement Date to the earlier of (i) five years following the Retirement Date, (ii) the applicable expiration date(s) of the award, or (iii) such earlier date as provided or permitted under the applicable equity plan (the “Exercise Extension”). To the extent your options are incentive stock options (“ISOs”), you understand that you must affirmatively accept the Exercise Extension as described below. If you accept the Exercise Extension in respect of your ISOs and the Exercise Extension becomes effective, such options will no longer qualify as ISOs and will instead be treated for tax purposes as nonqualified stock options. As a result, you understand that you must satisfy all applicable tax withholding obligations upon exercise of the options. You should consult with your tax advisor regarding the decision to accept or reject the Exercise Extension for any of your ISOs. To the extent your options are nonqualified stock options (“NSOs”), then if you sign the Retirement Date Release and allow it to become effective, the Exercise Extension will automatically apply to your NSOs that are outstanding, vested and exercisable as of the Retirement Date as a severance benefit.
You hereby elect to ACCEPT or DECLINE, as applicable, the Exercise Extension with respect to your ISOs as set forth below:
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ACCEPT | DECLINE |
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If the Retirement Date Release does not become effective in accordance with its terms, then any acceptance of the Exercise Extension will be disregarded and will be of no force or effect. You acknowledge that if you fail to timely accept the Exercise Extension, then the Exercise Extension will not apply to any of your ISOs and such ISOs will continue to be governed by their existing terms (including the existing post-termination exercise period).
4. Other Compensation or Benefits. You acknowledge that, except as expressly provided in this Agreement, you have not earned and will not receive from the Company any additional compensation (including base salary, bonus, incentive compensation, or equity), severance, or benefits before or after the Retirement Date, with the exception of any vested right you may have under the express terms of a written ERISA-qualified benefit plan (e.g., 401(k) account) or any vested stock options.
5. Non-disparagement. You agree not to disparage the Company, its officers, directors, employees, shareholders, parents, subsidiaries, affiliates, and agents, in any manner likely to be harmful to its or their business, business reputation, or personal reputation; provided that this section shall not apply to conduct covered by the Protected Rights section below.
6. No Voluntary Adverse Action. You agree that you will not voluntarily (except as legally required or as permitted under the Protected Rights section below) assist any person in bringing or pursuing any proposed or pending litigation, arbitration, administrative claim or other formal proceeding against the Company, its parent or subsidiary entities, affiliates, officers, directors, employees or agents.
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7. Cooperation. During the Transition Period and after the Retirement Date, you agree to cooperate fully with the Company in connection with its actual or contemplated defense, prosecution, or investigation of any pending or future claims or demands by or against third parties, or other matters arising from events, acts, or failures to act that occurred during the period of your employment by the Company. Such cooperation includes, without limitation, making yourself available to the Company upon reasonable notice, without subpoena, to provide complete, truthful and accurate information in witness interviews, depositions, and trial testimony. The Company will reimburse you for reasonable out-of-pocket expenses you incur in connection with any such cooperation (excluding foregone wages) and will make reasonable efforts to accommodate your scheduling needs.
8. No Admissions. You understand and agree that the promises and payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by the Company to you or to any other person, and that the Company makes no such admission.
9. Release of Claims. In exchange for the consideration provided to you under this Agreement to which you would not otherwise be entitled, you hereby generally and completely release the Company, and its affiliated, related, parent and subsidiary entities, and its and their current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns from any and all claims, liabilities, demands, causes of action, and obligations, both known and unknown, arising from or in any way related to events, acts, conduct, or omissions occurring at any time prior to and including the date you sign this Agreement. This general release includes, but is not limited to: (a) all claims arising from or in any way related to your employment with the Company or your resignation; (b) all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity, or profits interests in the Company; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the California Labor Code (as amended), the California Family Rights Act, and the California Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, you are not releasing the Company hereby from: (i) any obligation to indemnify you pursuant to the Articles and Bylaws of the Company, any valid fully executed indemnification agreement with the Company, applicable law, or applicable directors and officers liability insurance; (ii) any claims that cannot be waived by law, including without limitation claims under the California Fair Employment and Housing Act, to the extent such claims are not waivable as a matter of law with this release; and (iii) any claims for breach of this Agreement.
10. Section 1542 Waiver. In giving the release herein, which includes claims which may be unknown to you at present, you acknowledge that you have read and understand Section 1542 of the California Civil Code, which reads as follows:
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“A general release does not extend to claims that the creditor or releasing
party does not know or suspect to exist in his or her favor at the time of
executing the release and that, if known by him or her, would have materially
affected his or her settlement with the debtor or released party.”
You hereby expressly waive and relinquish all rights and benefits under that section and any law of any other jurisdiction of similar effect with respect to your release of claims herein, including but not limited to your release of unknown claims.
11. Protected Rights. You understand that nothing in this Agreement limits your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the California Department of Fair Employment and Housing, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand this Agreement does not limit your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. While this Agreement does not limit your right to receive an award for information provided to the Securities and Exchange Commission, you understand and agree that you are otherwise waiving all rights you may have to relief based on any claims that you have released and any rights you have waived by signing this Agreement.
12. Dispute Resolution. You and the Company agree that any disputes will be subject to the arbitration provisions set forth in the Employment Agreement.
13. Miscellaneous. This Agreement, including Exhibit A, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to its subject matter (in addition to provisions of the Employment Agreement that survive beyond the end of employment). It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of the Company. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified by the court so as to be rendered enforceable to the fullest extent permitted by law, consistent with the intent of the parties. This Agreement will subject to California law. Any ambiguity in this Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Agreement shall be in writing and shall not be deemed to be a waiver of any successive breach. This Agreement may be executed in counterparts and electronic or facsimile signatures will suffice as original signatures. You hereby waive notice of the meeting of Unity’s board of directors held at 7:00 a.m. Pacific time on Saturday, October 7 pursuant to Section 45(g) of the Company’s Amended and Restated Bylaws.
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Please sign and return this Agreement to me within five days. We wish you the best in your retirement!
Sincerely,
| By: | /s/ Scott Pitasky | |
| Scott Pitasky | ||
| Senior Vice President, Chief People Officer, Unity Technologies SF | ||
I HAVE READ, UNDERSTAND AND AGREE FULLY TO THE FOREGOING AGREEMENT:
| /s/ John Riccitiello |
| John Riccitiello |
| October 9, 2023 |
| Date |
EXHIBIT A
RETIREMENT DATE RELEASE
(to be signed and returned to the Company on or within twenty-one (21) days after the Retirement Date)
In exchange for the severance benefits to be provided to me by Unity Software SF (the “Company”) pursuant to that certain letter transition and retirement agreement with the Company dated October 6, 2023 (the “Agreement”), I hereby provide the following Retirement Date Release (the “Release”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.
I hereby represent that I have been paid all compensation owed and for all hours worked through the date I sign this Release, have received all the leave and leave benefits and protections for which I am eligible pursuant to the Family and Medical Leave Act, the California Family Rights Act, or otherwise, and have not suffered any on-the-job injury for which I have not already filed a workers’ compensation claim. I acknowledge that, other than the severance benefits to be provided to me pursuant to the Agreement upon satisfaction of the Severance Preconditions, I have not earned and will not receive from the Company any additional compensation (including base salary, bonus, incentive compensation, or equity), severance, or benefits, with the exception of any vested right I may have under the express terms of a written ERISA-qualified benefit plan (e.g., 401(k) account) or any vested options.
I hereby generally and completely release the Company, and its affiliated, related, parent and subsidiary entities, and its and their current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns from any and all claims, liabilities, demands, causes of action, and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to and including the date I sign this Release. This general release includes, but is not limited to: (a) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (b) all claims related to my compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity, or profits interests in the Company; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the California Labor Code (as amended), the California Family Rights Act, the Age Discrimination in Employment Act (“ADEA”) and the California Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, I am not releasing the Company hereby from any obligation to indemnify me pursuant to the Articles and Bylaws of the Company, any valid fully executed indemnification agreement with the Company, applicable law, or applicable directors and officers liability insurance. Also, excluded from this Release are any claims that cannot be waived by law.
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ADEA Release. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I have under the ADEA, and that the consideration given for the waiver and releases I have given in this Release is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised, as required by the ADEA, that: (a) my waiver and release does not apply to any rights or claims that arise after the date I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have twenty-one (21) days to consider this Release (although I may choose voluntarily to sign it sooner); (d) I have seven (7) days following the date I sign this Release to revoke this Release (in a written revocation sent to the Company); and (e) this Release will not be effective until the date upon which the revocation period has expired, which will be the eighth day after I sign this Release provided that I do not revoke it (the “Effective Date”).
In giving the release herein, which includes claims which may be unknown to me at present, you acknowledge that I have read and understand Section 1542 of the California Civil Code, which reads as follows:
“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”
I hereby expressly waive and relinquish all rights and benefits under that section and any law of any other jurisdiction of similar effect with respect to my release of claims herein, including but not limited to my release of unknown claims.
I understand that nothing in this Release limits my ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the California Department of Fair Employment and Housing, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). I further understand this Release does not limit my ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. While this Release does not limit my right to receive an award for information provided to the Securities and Exchange Commission, I understand and agree that, to maximum extent permitted by law, I am otherwise waiving any and all rights I may have to individual relief based on any claims that I have released and any rights I have waived by signing this Release.
[Signature page to follow]
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This Release, together with the Agreement (and its exhibits) constitutes the entire agreement between me and the Company with respect to the subject matter hereof (in addition to provisions of the Employment Agreement that survive the end of employment). I am not relying on any representation not contained herein or in the Agreement.
UNDERSTOOD, ACCEPTED, AND AGREED:
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| John Riccitiello |
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| Date |
Exhibit 10.2
October 7, 2023
James Whitehurst
BY EMAIL
Re: Offer of Employment by Unity Technologies SF
Dear Jim,
I am very pleased to confirm our offer to you of employment with Unity Technologies SF (the “Company”). You will be joining the Company in the role of Interim CEO and President. The terms of our offer and the benefits currently provided by the Company are as follows:
1. Position and Duration. You will be joining the Company in the role of Interim Chief Executive Officer (“CEO”) and President. This role will be an interim position, which will only last until a permanent CEO is hired by the Company. Upon the hire of a permanent CEO, your employment with the Company will come to an end unless otherwise agreed upon in writing between yourself and the Company, and signed by the Chief People Officer of the Company.
2. Starting Salary. This is an exempt position. Your starting base salary will be USD $93,333.34 per month. Any salary will be paid out on a semi-monthly basis less all applicable taxes, withholdings, and deductions required by law.
3. Start Date. Your start date will be October 9, 2023 (“Start Date”).
4. Location and Travel. You will work from the Company’s offices in San Francisco, California and New York, New York and will allocate your working time as between the two offices in your discretion. You will be expected to travel for business as appropriate.
5. Benefits. Beginning on the Start Date, you will be eligible to participate in any benefits plans offered to the employees of the Company. A presentation of our benefits program will be given to you during your first month of employment. The Company may modify benefits policies from time-to-time, as it deems necessary.
6. Restricted Stock Units. On the Start Date, you will be granted 200,000 Restricted Stock Units (“RSUs”) of Unity Software Inc., with the special vesting schedule set forth below (the “Grant”). This Grant shall vest in two tranches:
Tranche 1: 50% of the Grant shall vest on February 25, 2024; and
Tranche 2: The remaining 50% of the Grant shall vest upon May 25, 2024
Should the appointment of a permanent CEO of the Company occur prior to May 25, 2024, you shall be entitled to vest in both Tranche 1 (if not previously vested) and Tranche 2 of the Grant. Vesting in those tranches will occur upon the permanent CEO’s start date, however those shares will not settle until the Company’s next quarterly RSU installment date following the permanent CEO’s start date.
If your employment with the Company terminates for any reason, other than your voluntary resignation or a termination by the Company for Cause (as defined in Section 7), prior to May 25, 2024, you shall be entitled to vest in both Tranche 1 (if not previously vested) and Tranche 2 of the Grant. Vesting in those tranches will occur on your termination date. However, those shares will not settle until the Company’s next quarterly RSU installment date following the termination date.
For reference, the upcoming Company quarterly RSU installment dates are November 25, 2023; February 25, 2024; May 25, 2024; and August 25, 2024.
You shall not be entitled any future vesting if, prior to May 25, 2024, (1) you resign from the position of Interim CEO or (2) your employment is terminated for Cause (as defined in Section 7).
EXCEPT AS EXPRESSLY PROVIDED OTHERWISE ABOVE, each of Tranche 1 and Tranche 2 will be settled within 30 days following the applicable vesting date.
Except as stated above, the Grant will otherwise be subject to the terms and conditions of Unity Software Inc.’s Equity Plan. Promptly after the Start Date, you will receive a notice of grant and be required to sign and accept the grant in accordance with the Company’s acceptance procedures. In the event of any conflict or inconsistency between the terms of this offer and the terms of the notice of grant and/or grant agreement, the terms of this offer will govern.
7. Termination for Cause. Solely for the purposes of Section 6, “Cause” shall mean, and shall be limited to, your actions involving any one or more of the following events:
| a. | theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Company or Subsidiary documents or records; |
| b. | material failure to abide by the Company’s Code of Conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct and policies of any Subsidiary, as applicable); |
| c. | unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the Company or any of its Subsidiaries (including, without limitation, the Covered Executive’s improper use or disclosure of Company or Subsidiary confidential or proprietary information); |
| d. | any intentional act which has a material detrimental effect on the Company’s or its Subsidiary’s reputation or business; |
| e. | the repeated failure or inability to perform any reasonable assigned duties after written notice from the Company (or its Subsidiary, as applicable) of, and a reasonable opportunity to cure, such failure or inability; |
| f. | any material breach of any employment or service agreement between you and the Company (or its Subsidiary, as applicable), which breach is not cured pursuant to the terms of such agreement; |
| g. | conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs your ability to perform your duties with the Company (or its Subsidiary, as applicable); or |
| h. | Failure to pass a routine background check, successful completion of which is solely determined by the Company. |
8. Confidentiality; Company Rules and Policies. As an employee of the Company, you will have access to certain confidential information of the Company and you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. To protect the interests of the Company, you will need to
sign the Company’s standard “Employee Nondisclosure, Assignment and Non-Solicitation Agreement,” attached as Attachment 1, as a condition of your employment. During the period of your employment as Interim CEO, you agree to not engage in any employment, business or activity that is in any way competitive with the business or proposed business of the Company. The Company acknowledges that you have disclosed to the Company in writing any other gainful employment, business or activity that you are currently associated with or participate in (such activities, the “Permitted Activities”) and the Company has determined that no conflict exists as a result of the Permitted Activities and agrees that you may continue the Permitted Activities during your employment as Interim CEO. During your employment as Interim CEO, you will not assist any other person or organization in competing with the Company or in preparing to engage in competition with the business or proposed business of the Company.
Specifically, with regard to your position as Special Advisor to Silver Lake, you hereby agree that (1) you will not disclose Confidential Information about the Company to Silver Lake, (2) you will not take any action in your capacity as Special Advisor at Silver Lake that would reasonably be expected to be detrimental or competitive the Company, and (3) you will devote your working time to your role as Interim CEO of the Company to the extent necessary to perform the duties and responsibilities of such role.
You will also be required to abide by all Company rules and policies. Therefore, you will be asked to acknowledge that you have read the Global Code of Conduct and supplemental policies, which will be provided to you during your onboarding. In order to retain necessary flexibility in the administration of its policies and procedures, the Company reserves the right to change or revise its policies, procedures, and benefits at any time.
9. Global Privacy Notice to the Workforce. You confirm that you have read and understood Unity’s Data Privacy Policy attached as Attachment 2.
10. No Breach of Obligations to Prior Employers. We wish to impress upon you that we do not want you to, and we hereby direct you not to, bring with you any confidential or proprietary material of any former employer or to violate any other obligations you may have to any former employer. You represent that your signing of this offer letter, agreement(s) concerning equity granted to you, if any, under the Plan (as defined below) and the Company’s Employee Nondisclosure, Assignment and Non-Solicitation Agreement and your commencement of employment with the Company will not violate any agreement currently in place between yourself and current or past employers.
11. At Will Employment. While we look forward to a long relationship, should you decide to accept our offer, you will be an at-will employee of the Company, which means the employment relationship can be terminated by either of us for any reason, at any time, with or without prior notice and with or without cause. Any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) should be regarded by you as ineffective. Further, your participation in any stock plan or benefit program is not to be regarded as assuring you of continuing employment for any particular period of time. Any modification or change in your at will employment status may only occur by way of a written employment agreement signed by you and the Chief People Officer of the Company.
12. Authorization to Work. Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within three (3) business days of starting your new position you will need to present documentation demonstrating that you have authorization to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and non-U.S. citizens alike, you may contact our personnel office.
13. Arbitration. To the fullest extent permitted by applicable law, you and the Company agree to arbitrate any and all claims arising out of or related to your employment with the Company and the termination thereof, including claims by the Company, claims
against the Company, and claims against any current or former parent, affiliate, subsidiary, or successor of the Company, and each of the Company’s and these entities’ respective officers, directors, agents or employees. To the fullest extent permitted by applicable law, this includes, but is not limited to, tort claims, contract claims, statutory claims, and claims for unpaid wages or other forms of compensation, wrongful termination, retaliation, harassment, and/or discrimination based upon any federal, state or other ordinance, statute, regulation or constitutional provision, except that each party may, at its, his or her option, seek injunctive relief in court related to the improper use, disclosure or misappropriation of a party’s proprietary, confidential or trade secret information. All arbitration hearings shall be conducted in San Francisco, California (or another mutually agreeable location). THE PARTIES HEREBY WAIVE ANY AND ALL RIGHTS TO TRIAL BY A COURT OR A JURY REGARDING ANY CLAIMS THAT THEY HAVE NOW OR MAY HAVE IN THE FUTURE THAT ARE SUBJECT TO ARBITRATION UNDER THIS AGREEMENT. The parties further agree that any claims shall be resolved on an individual basis, and you agree to waive your right, to the extent allowed by applicable law, to consolidate any claims with the claims of any other person in a class, representative, or collective action or to participate as a representative of a class or in a collective action (“Class Waiver”). Any claim that all or part of the Class Waiver is invalid, unenforceable, unconscionable, void or voidable may be determined only by a court. In no case may class, collective or representative claims proceed in arbitration on behalf of other employees. This arbitration agreement does not apply to claims for workers’ compensation benefits, unemployment insurance benefits, or state or federal disability insurance, claims that are subject to the exclusive jurisdiction of the National Labor Relations Board, or any other claims that have been expressly excluded from mandatory arbitration by the Federal Arbitration Act or a governing law not preempted by the Federal Arbitration Act. If either party brings both arbitrable and non-arbitrable claims in the same action or related actions, both agree that the non-arbitrable claims shall be stayed until the conclusion of the arbitration, to the fullest extent permitted by law. The parties agree that, to the fullest extent permitted by law, arbitration shall be final and binding on the parties and shall be the exclusive remedy for the subject matter of such administrative claims. The arbitration shall be conducted through JAMS before a single neutral arbitrator, in accordance with the JAMS employment arbitration rules then in effect. The Company agrees to pay the fees and costs of the arbitrator beyond what you would be required to pay in Court. To initiate an arbitration, you or the Company must submit a demand for arbitration to JAMS. You are responsible for the filing fee if you initiate arbitration. The JAMS rules may be found and reviewed at http://www.jamsadr.com/rules-employment-arbitration. If you are unable to access these rules, inform the Company’s Human Resources Department and a hardcopy will be provided to you. To initiate an arbitration, you or the Company must submit a demand for arbitration to JAMS and the Company will timely pay the JAMS initial invoice. The burden of proof shall be allocated as provided by applicable law. The arbitrator shall apply the applicable substantive law in deciding the claims at issue. Claims will be governed by their applicable statute of limitations and failure to demand arbitration within the prescribed time period shall bar the claims as provided by law. The arbitrator shall issue a written decision that contains the essential findings and conclusions on which the decision is based. The arbitrator shall have the same authority as a court to award equitable relief, damages, costs, and fees as provided by law for the particular claims asserted. This arbitration clause shall be governed by and construed in all respects under the terms of the Federal Arbitration Act.
14. Entire Agreement. This offer, once accepted, constitutes the entire agreement between you and the Company with respect to the subject matter hereof and supersedes all prior offers, negotiations and agreements, if any, whether written or oral, relating to such subject matter. You acknowledge that neither the Company nor its agents have made any promise, representation or warranty whatsoever, either express or implied, written or oral, which is not contained in this agreement for the purpose of inducing you to execute the agreement, and you acknowledge that you have executed this agreement in reliance only upon such promises, representations and warranties as are contained herein.
15. Severability. If any term of this letter is held to be invalid, void, or unenforceable, the remainder of the terms herein will remain in full force and effect and will in no way be affected, and the parties will use their best efforts to find an alternative way to achieve the same result.
16. Governing Law. The terms of this letter and the resolution of any dispute as to the meaning, effect, performance or validity of this letter or arising out of, related to, or in any way connected with this letter, your employment with the Company or any other relationship between you and the Company (a “Dispute”) will be governed by the laws of the State of California, without giving effect to the principles of conflict of laws. To the extent not subject to arbitration as described in Section 13, you and the Company consent to the exclusive jurisdiction of, and venue in, the state courts in San Francisco County in the State of California (or in the event of exclusive federal jurisdiction, the courts of the Northern District of California in connection with any Dispute or any claim related to any Dispute).
17. Background Check. You agree that the Company may run a background check to determine suitability for employment. As this background check will likely not be completed until after your date of hire, you agree that your employment may later be terminated should the Company, in its sole discretion, deem that you have not successfully passed the background check. Such a termination will constitute a termination for “Cause” as specified in Section 7.
18. Section 409A. The payments and benefits provided under this offer are intended to comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the provisions of this offer shall be interpreted and applied consistently with such intent. All reimbursements under this offer that constitute deferred compensation within the meaning of Section 409A will be made or provided in accordance with the requirements of Section 409A, including, without limitation, that (1) in no event will any reimbursement payments be made later than the end of the calendar year next following the calendar year in which the applicable expenses were incurred; (2) the amount of reimbursement payments that the Company is obligated to pay in any given calendar year shall not affect the amount of reimbursement payments that the Company is obligated to pay in any other calendar year; and (3) your right to have the Company pay such reimbursements may not be liquidated or exchanged for any other benefit. All income tax make-whole payments provided under this letter agreement will be paid no later than the end of your taxable year next following your taxable year in which the taxes are remitted.
19. Acceptance. This offer will remain open until October 8, 2023. If you decide to accept our offer, and I hope you will, please sign the enclosed copy of this letter in the space indicated and return it to me. Your signature will acknowledge that you have read and understood and agreed to the terms and conditions of this offer letter and the attached documents, if any. Should you have anything else that you wish to discuss, please do not hesitate to call me.
We look forward to the opportunity to welcome you to the Company.
Very truly yours,
| By: | /s/ Scott Pitasky | |
| Scott Pitasky, Senior Vice President, Chief People Officer |
I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.
| /s/ James Whitehurst |
October 7, 2023 | |||
| James Whitehurst | Date |
Attachment 1
EMPLOYEE NONDISCLOSURE, ASSIGNMENT AND NON-SOLICITATION AGREEMENT
Attachment #2 - Global Workforce Privacy Notice
Exhibit 99.1
Unity Announces Leadership Transition
James M. Whitehurst Appointed Interim Chief Executive Officer and President
Company Reaffirms Third Quarter 2023 Guidance
Company to Release Third Quarter 2023 Financial Results on November 9, 2023
SAN FRANCISCO, October 9, 2023 – Unity (NYSE: U) (the “Company”), the world’s leading platform for creating and growing real-time 3D (RT3D) content, today announced that John Riccitiello will retire as President, Chief Executive Officer, Chairman and a member of the Company’s Board of Directors, effective immediately. James M. Whitehurst has been appointed Interim Chief Executive Officer, President and a member of the Board. Roelof Botha, Lead Independent Director of the Unity Board, has been appointed Chairman. Mr. Riccitiello will continue to advise Unity to ensure a smooth transition.
The Board will initiate a comprehensive search process, with the assistance of a leading executive search firm, to identify a permanent CEO.
“Working with Unity under John’s leadership has been one of the highlights of my career. John joined the Unity Board in 2013 and stepped in to lead the Company in 2014, at a time when we faced significant challenges,” Mr. Botha said. “John has led Unity through incredible growth over the last nearly 10 years, helping us transition from a perpetual license to a subscription model, enabling developers to monetize, building other game services to serve our creator community, leading us through an IPO and positioning us as a pioneer in the developer community. Unity would not be where it is today without the impact of his contributions. I remain excited for the future of Unity.”
“It’s been a privilege to lead Unity for nearly a decade and serve our employees, customers, developers and partners, all of whom have been instrumental to the Company’s growth,” Mr. Riccitiello said. “I look forward to supporting Unity through this transition and following the Company’s future success.”
Mr. Whitehurst is a seasoned technology and public company executive. He previously served as Senior Advisor and President at IBM, after joining through IBM’s acquisition of Red Hat, a leading provider of open source enterprise IT products and services, where he served as President and Chief Executive Officer from 2008 to 2020.
“I am honored to join Unity as Interim CEO and President at this important time in its evolution,” Mr. Whitehurst said. “With the Company’s experienced leadership and passionate employees, I am confident that Unity is well-positioned to continue enhancing its platform, strengthening its community of customers, developers and partners, and focusing on its growth and profitability goals. I look forward to working closely with the Board and our talented global team to execute on our strategy, and I anticipate a seamless transition.”
Unity reaffirms its previously announced third quarter 2023 guidance. The Company’s expectations regarding its third quarter 2023 financial results are preliminary and are subject to revision in connection with Unity’s financial closing procedures and finalization of the Company’s condensed consolidated financial statements for the third quarter 2023. Actual results may differ from these preliminary expectations.
Unity will release third quarter 2023 financial results after the market close on Thursday, November 9, 2023, with a webcast to follow at 2 p.m. PT/5 p.m. ET. The webcast and shareholder letter can be accessed at investors.unity.com. A replay of the webcast will also be available on Unity’s Investor Relations website.
About James M. Whitehurst
James M. Whitehurst previously served as Senior Advisor at IBM from July 2021 to May 2022 and President of IBM from April 2020 until July 2021. He joined IBM through the acquisition of Red Hat, a leading provider of open source enterprise IT products and services, where he served as Chief Executive Officer from January 2008 until April 2020. Prior to Red Hat, Mr. Whitehurst served in several leadership roles at Delta Air Lines, Inc. including as Chief Operating Officer from 2005 to 2007, Chief Network and Planning Officer from 2004 to 2005 and Senior Vice President, Finance Treasury and Business Development from 2002 to 2004. Before Delta, Mr. Whitehurst held several corporate development leadership roles at The Boston Consulting Group, where he worked with clients across a wide range of industries. Mr. Whitehurst currently serves on the Board of Directors of United Airlines and Amplitude, on the Supervisory Board of Software AG, and as a Special Advisor at Silver Lake. He has previously served on the Board of Directors of Red Hat, SecureWorks Corp. and DigitalGlobe, Inc. He received a B.A. in computer science from Rice University and an MBA from Harvard Business School.
About Unity Software Inc. (Unity)
Unity is the world’s leading platform for creating and growing interactive, real-time 3D (“RT3D”) content and experiences. Our comprehensive set of software and AI solutions supports content creators of all sizes through the entire development lifecycle as they build, run, and grow immersive, real-time 2D and 3D content and experiences for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. For more information, visit Unity.com.
Forward-Looking Statements
This press release contains “forward-looking statements,” as that term is defined under federal securities laws, including, but not limited to, statements regarding Unity’s third quarter 2023 financial results; Unity being well-positioned to continue enhancing its platform, strengthening its community of customers, developers and partners and focusing on its growth and profitability goals; and the expectation for a seamless transition and the Company’s ability to execute on its strategy. The words “believe,” “may,” “will,” “estimate,” “continue,” “intend,” “expect,” “plan,” “project,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) the ability to successfully transition executive leadership, (ii) Unity’s ability to maintain and establish favorable relationships with developers; (iii) the impact of macroeconomic conditions, such as inflation and actions taken by central banks to counter inflation, liquidity concerns and failures of banks and other financial institutions, and potential economic recession, on Unity’s business, as well as its customers, prospects, partners, and service providers; (iv) Unity’s ability to achieve and sustain profitability; (v) Unity’s ability to retain existing customers and expand the use of its platform; (vi) Unity’s ability to further expand into new industries and attract new customers; (vii) the impact of any changes of terms of service, policies or technical requirements from operating system platform providers or application stores which may result in changes to Unity’s or its customers’ business practices; (viii) Unity’s ability to maintain favorable relationships with hardware, operating system, device, game console and other technology providers; (ix) Unity’s ability to compete effectively in the markets in which we participate; (x) breaches in Unity’s security measures, unauthorized access to its platform, its data, or Unity’s customers’ or other users’ personal data; (xi) Unity’s ability to manage growth effectively; (xii) the rapidly changing and increasingly stringent laws, contractual obligations and industry standards that relate to privacy, data security and the protection of children; (xiii) Unity’s ability to successfully integrate ironSource’s technology and business and realize the intended benefits from the ironSource merger, and related costs and expenses, and (xiv) Unity’s ability to leverage its offerings as a result of the rise of generative AI technologies. Further information on these and additional risks that could affect Unity’s results is included in Unity’s filings with the Securities and Exchange Commission (SEC), including its Quarterly Report on Form 10-Q filed with the SEC on August 2, 2023, and other reports that we have filed or may file with the SEC from time to time, which could cause actual results to vary from expectations. Copies of reports filed
with the SEC are available on the Unity Investor Relations website. Statements herein speak only as of the date of this release, and Unity assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release except as required by law
Contacts
Investors:
Richard Davis
ir@unity3d.com
Media:
Ryan M. Wallace
ryan.wallace@unity3d.com