EXHIBIT 10.3
[FORM OF SECTION 16 OFFICER
AGREEMENT]
AMENDED & RESTATED
CHANGE OF CONTROL SEVERANCE
AGREEMENT
This Change of Control Severance Agreement (the
“Agreement”) is entered into
this
day
of
, 2008 (the “Effective Date”)
between
(“Executive”) and Agilent Technologies, Inc., a
Delaware corporation (the “Company”). This
Agreement supersedes and replaces all prior agreements and
understandings on the matters set forth herein, including but not
limited to the Change of Control Severance Agreement
dated
, 200 (as further amended
on
, 2004 and
on
, 2005) between Executive and the Company. This Agreement is
intended to provide Executive with the compensation and benefits
described herein upon the occurrence of specific events following a
change of control of the ownership of the Company (defined as
“Change of Control”).
RECITALS
A.
As is the case with most, if not all, publicly-traded businesses,
it is expected that the Company from time to time may consider or
may be presented with the need to consider the possibility of an
acquisition by another company or other change in control of the
ownership of the Company. The Board of Directors of the
Company (the “Board”) recognizes that such
considerations can be a distraction to Executive and can cause the
Executive to consider alternative employment opportunities or to be
influenced by the impact of a possible change in control of the
ownership of the Company on Executive’s personal
circumstances in evaluating such possibilities. The Board has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication and objectivity of Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control of the
Company.
B.
The Board believes that it is in the best interests of the Company
and its shareholders to provide Executive with an incentive to
continue his or her employment and to motivate Executive to
maximize the value of the Company upon a Change of Control for the
benefit of its shareholders.
C.
The Board believes that it is important to provide Executive with
certain benefits upon Executive’s termination of employment
in certain instances upon or following a Change of Control that
provide Executive with enhanced financial security and incentive
and encouragement to Executive to remain with the Company
notwithstanding the possibility of a Change of Control.
D.
At the same time, the Board expects the Company to receive certain
benefits in exchange for providing Executive with this measure of
financial security and incentive under the Agreement.
Therefore, the Board believes that the Executive should provide
various specific commitments which are intended to assure the
Company that Executive will not direct
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Executive’s skills, experience and
knowledge to the detriment of the Company for a period not to
exceed the period during which payments are being made to Executive
under this Agreement.
E.
Certain capitalized terms used in this Agreement are defined in
Article VII.
The
Company and Executive hereby agree as follows:
ARTICLE I.
EMPLOYMENT BY
THE COMPANY
1.1
Executive is currently employed as
of
the Company and has been named a Section 16 officer of the
Company.
1.2
Executive shall be entitled to the rights and benefits of
this Agreement and this Agreement may not be terminated, except as
otherwise provided in Section 4.5, if Executive is a
Section 16 officer on the date of the occurrence of any event
set forth in Section 2.1(a) or
Section 2.2(a) hereof (the “Section 1.2
Date.”) The rights and obligations of the parties hereto
contained in Articles III through VIII shall survive any
termination of this Agreement for the longer of
(i) twenty-four (24) months following a Termination Event (as
hereinafter defined) (the “Term”) or (ii) such
longer period provided for in this Agreement.
1.3
The Company and Executive each agree and acknowledge that Executive
is employed by the Company as an “at-will” employee and
that either Executive or the Company has the right at any time to
terminate or to change Executive’s employment with the
Company, or to determine that Executive is no longer a
Section 16 officer of the Company regardless of the continued
employment of the Executive with or without cause or advance
notice, for any reason or for no reason. The Company and
Executive wish to set forth the compensation and benefits which
Executive shall be entitled to receive in the event that
Executive’s employment with the Company terminates under the
circumstances described in Article II of this Agreement.
1.4
The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive’s past
services to the Company, Executive’s continued employment
with the Company, Executive’s compliance with the obligations
described in Section 4.2, and Executive’s execution of
the general waiver and release described in
Section 4.3. The Company and Executive agree that
Executive’s compliance with the obligations described in
Section 4.2 and Executive’s execution of the general
waiver and release described in Section 4.3 are preconditions
to Executive’s entitlement to the receipt of benefits under
this Agreement and that these benefits shall not be earned unless
all such conditions have been satisfied through the scheduled date
of payment. The Company hereby declares that it has relied
upon Executive’s commitments under this Agreement to comply
with the requirements of Article IV, and would not have been
induced to enter into this Agreement or to execute this Agreement
in the absence of such commitments.
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ARTICLE II.
TERMINATION
EVENTS
2.1
Involuntary Termination Upon or Following Change of Control
.
(a)
In the event Executive’s employment with the Company and its
subsidiaries is involuntarily terminated at any time by the Company
without Cause either (i) at the time of or within twenty-four
(24) months following the occurrence of a Change of Control,
(ii) within three (3) months prior to a Change of
Control, whether or not such termination is at the request of an
“Acquiror”, or (iii) at any time prior to a Change
of Control, if such termination is at the request of an Acquiror,
then, upon such Change of Control, such termination of employment
will be a Termination Event and the Company shall pay Executive the
compensation and benefits described in and at the times provided
under Article III. For all purposes of this Agreement
the term “Acquiror” is either a person or a member of a
group of related persons representing such group that in either
case obtains effective control of the Company in the transaction or
a group of related transactions constituting the Change of
Control.
(b)
In the event Executive’s employment with the Company and its
subsidiaries is either involuntarily terminated by the Company with
Cause at any time, or is involuntarily terminated by the Company
without Cause at any time other than under the circumstances
described in Section 2.1(a), then such termination of
employment will not be a Termination Event, Executive will
not be entitled to receive any payments or benefits under
the provisions of this Agreement, and the Company will cease paying
compensation or providing benefits to Executive as of
Executive’s termination date.
2.2
Voluntary Termination Upon or Following Change of Control
.
(a)
Executive may voluntarily terminate his employment with the Company
and its subsidiaries at any time. In the event Executive
voluntarily terminates his employment within three (3) months
of the occurrence of an event constituting Good Reason and on
account of an event constituting Good Reason, which event occurs
either (i) at the time of or within twenty-four (24) months
following the occurrence of a Change of Control, (ii) within
three (3) months prior to a Change of Control, whether or not
such termination is at the request of an “Acquiror”, or
(iii) at any time prior to a Change of Control, if such
triggering event or Executive’s termination is at the request
of an Acquiror, then, upon such Change of Control, such termination
of employment will be a Termination Event and the Company shall pay
Executive the compensation and benefits described in and at the
times provided under Article III.
(b)
In the event (i) Executive voluntarily terminates his
employment for any reason other than on account of an event
constituting Good Reason under the circumstances described in
Section 2.2(a), or (ii) Executive’s employment
terminates on account of either death or physical or mental
disability, then such termination of employment will not be
a Termination Event, Executive will not be entitled to
receive any payments or benefits under the provisions of this
Agreement, and the Company will cease paying compensation or
providing benefits to Executive as of the Executive’s
termination date.
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ARTICLE III.
COMPENSATION AND
BENEFITS PAYABLE
3.1
Right to Benefits . If a Termination Event occurs,
Executive shall be entitled to receive the benefits described in
this Agreement so long as Executive complies with the restrictions
and limitations set forth in Article IV; provided, further,
that the Executive must execute the employee Release (as defined in
Section 4.3); and the time period for revocation of such
Release must have elapsed (an “Effective Release”)
within sixty (60) days of the Termination Event which Release shall
remain in effect at the time that the benefits of this
Article III are paid. If a Termination Event does not
occur, Executive shall not be entitled to receive any benefits
described in this Agreement, except as otherwise specifically set
forth herein.
3.2
Salary Continuation . Upon the occurrence of a
Termination Event, Executive shall receive two times the sum of
Executive’s Base Salary plus Target Bonus, less any
applicable withholding of federal, state or local taxes.
Amounts to be paid under this section shall be paid in a lump sum
no later than the later of thirty (30) days after the date of the
Termination Event or the date of an Effective Release.
3.3
Health Insurance Coverage .
Upon the occurrence of a Termination Event,
Executive shall be entitled to receive a payment equal to
Eighty-Thousand U.S. Dollars ($80,000) (the “Health Expense
Benefit”). The purpose of the Health Expense Benefit is
to assist Executive with healthcare expenses, including additional
health plan premium payments that may result from the occurrence of
a Termination Event. Amounts to be paid under this section
shall be paid in a lump sum no later than thirty (30) days after
the date of the Termination Event or the date of an Effective
Release.
This Section 3.3 provides only for the
Company’s payment of the Health Expense Benefit.
This Section 3.3 does not affect the rights of Executive or
Executive’s covered dependents under any applicable law with
respect to health insurance continuation coverage.
3.4
Stock Award Acceleration . Executive’s stock
options which are outstanding as of the date of the Termination
Event (the “Stock Options”) shall become fully vested
upon the occurrence of the Termination Event and exercisable so
long as Executive complies with the restrictions and limitations
set forth in Article IV. The maximum period of time
during which the Stock Options shall remain exercisable, and all
other terms and conditions of the Stock Options, shall be as
specified in the relevant Stock Option agreements and relevant
stock plans under which the Stock Option were granted. The
term “Stock Options” shall not include any rights of
the Executive under the Company’s employee stock purchase
plan.
Executive’s restricted stock awards that
are outstanding as of the date of the Termination Event
(“Restricted Stock”) and that are not subject to
performance-based vesting shall become fully vested and free from
any contractual rights of the Company to repurchase or otherwise
reacquire the Restricted Stock as a result of Executive’s
termination of employment. All shares of Restricted Stock
which have not yet been delivered to Executive or his designee
(whether because subject to joint escrow instructions or otherwise)
shall be delivered to Executive or his designee as soon as
administratively feasible after the occurrence of a Termination
Event.
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Executive’s restricted stock awards that
are subject to performance-based vesting shall be covered by the
terms of the applicable award agreement.
The
treatment of Executive’s other awards, if any, outstanding
under the 1999 Stock Plan of the Company, or any successor plan
thereto (together the “Stock Plan”), at the time of the
Termination Event shall be governed by the respective award
agreement. This includes but is not limited to restricted
stock units, awards under the long-term performance program, and
includes awards made pursuant to the Stock Plan which may be
settled in cash.
3.5
Bonus . If a Termination Event occurs, Executive shall
receive a pro-rated bonus under any bonus plan applicable to
Executive, which is in place at the time of the Termination Event
for the performance period in which the Termination Event
occurs. The amount of the bonus shall be calculated under the
terms of such bonus program as established by the Company,
including whether or not, or to what degree, any
performance-based conditions have been met, and shall be equal to
the amount of the bonus the Executive would have been paid under
the terms of such bonus program had the Executive continued his
employment with the Company until the end of such performance
period multiplied by a fraction in which (i) the numerator is
the number of days from and including the first day of the
performance period until and including the date of the Termination
Event, and (ii) the denominator is the number of days in the
performance period. Such bonus shall be paid on the date
Executive would have received the bonus if the Termination Event
had not occurred during such performance period; provided, however,
that in any event such bonus will be paid no later than two and
one-half (2 ½) months after the end of the calendar year in
which the Termination Event occurs. Executive’s rights
to the payment provided in this Section 3.5 shall not be
terminated by the application of Section 4.2 of this
Agreement. This Section 3.5 shall not apply to awards
pursuant to the Stock Plan.
3.6
Mitigation . Except as otherwise specifically provided
herein, Executive shall not be required to mitigate damages or the
amount of any payment provided under this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation
earned by Executive as a result of employment by another employer
or by retirement benefits after the date of the Termination Event,
or otherwise.
3.7
Compliance with Section 409A . In the event that
(i) one or more payments of compensation or benefits received
or to be received by Executive pursuant to this Agreement
(“Agreement Payment”) would constitute deferred
compensation subject to Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and
(ii) Executive is deemed at the time of such termination of
employment to be a “specified employee” under
Section 409A(a)(2)(B)(i) of the Code, then such Agreement
Payment shall not be made or commence until the earlier of
(i) the expiration of the six (6)-month period measured from
the date of Executive’s “separation from service”
(as such term is at the time defined in Treasury Regulations under
Section 409A of the Code) with the Company or (ii) such
earlier time permitted under Section 409A of the Code and the
regulations or other authority promulgated thereunder; provided,
however, that such deferral shall only be effected to the extent
required to avoid adverse tax treatment to Executive under
Section 409A of the Code, including (without limitation) the
additional twenty percent (20%) tax for which Executive would
otherwise be liable under Section 409A(a)(1)(B) of the
Code in the absence of such deferral. During any period in
which an Agreement Payment to Executive is deferred pursuant to the
foregoing,
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Executive
shall be entitled to interest on the deferred Agreement Payment at
a per annum rate equal to the highest rate of interest applicable
to six (6)-month non-callable certificates of deposit with daily
compounding offered by the following institutions: Citibank N.A.,
Wells Fargo Bank, N.A. or Bank of America, on the date of such
separation from service. Upon the expiration of the applicable
deferral period, any Agreement Payment which would have otherwise
been made during that period (whether in a single sum or in
installments) in the absence of this paragraph shall be paid to
Executive or his beneficiary in one lump sum, including all accrued
interest.
ARTICLE IV.
LIMITATIONS AND
CONDITIONS ON BENEFITS; AMENDMENT OF AGREEMENT
4.1
Reduction in Payments and Benefits; Withholding Taxes
. The benefits provided under this Agreement are in lieu of
any benefit provided under any other severance plan, program or
arrangement of the Company in effect at the time of a Termination
Event. The Company shall withhold appropriate federal, state
or local income, employment and other applicable taxes from any
payments hereunder.
4.2
Obligations of the Executive .
(a)
For two years following the Termination Event, Executive agrees not
to personally solicit any of the employees either of the Company or
of any entity in which the Company directly or indirectly possesses
the ability to determine the voting of 50% or more of the voting
securities of such entity (including two-party joint ventures in
which each party possesses 50% of the total voting power of the
entity) to become employed elsewhere or provide the names of such
employees to any other company which Executive has reason to
believe will solicit such employees.
(b)
Following the occurrence of a Termination Event, Executive agrees
to continue to satisfy his obligations under the terms of the
Company’s standard form of Proprietary Information and
Non-Disclosure Agreement previously executed by Executive (or any
comparable agreement subsequently executed by Executive in
substitution or supplement thereto). Executive’s
obligations under this Section 4.2(b) shall not be
limited to the Term.
(c)
It is expressly understood and agreed that although Executive and
the Company consider the restrictions contained in this
Section 4 to be reasonable, if a final judicial determination
is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is
an unenforceable restriction against Executive, the provisions of
this Agreement shall not be rendered void, but shall be deemed
amended to apply as to such maximum time or territory and to such
maximum extent as such court may judicially determine or indicate
to be enforceable. Alternatively, if any court of competent
jurisdiction finds that any restriction contained in this Agreement
is unenforceable, and such restriction cannot be amended so as to
make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained
herein.
(d)
Executive acknowledges and agrees that the Company’s remedies
at law for a breach or threatened breach of any of the provisions
of Section 4.2(a) or Section 4.2(b)
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would be
inadequate and, in recognition of this fact, Executive agrees that,
in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company, without posting any bond, shall,
with respect to a breach or threatened breach of
Section 4.2(a) or Section 4.2(b) only, obtain
equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction, or any other
equitable remedy which may then be available.
4.3
Employee Release Prior to Receipt of Benefits . Upon
the occurrence of a Termination Event, and prior to the receipt of
any benefits under this Agreement on account of the occurrence of a
Termination Event, Executive shall, as of the date of a Termination
Event, execute an employee release substantially in the form
attached hereto as Exhibit A (“Release”) as shall
be determined by the Company. Such employee Release shall
specifically relate to all of Executive’s rights and claims
in existence at the time of such execution relating to
Executive’s employment with the Company, but shall not
include (i) Executive’s rights under this Agreement;
(ii) Executive’s rights under any employee benefit plan
sponsored by the Company; or (iii) Executive’s rights to
indemnification under the Company’s bylaws or other governing
instruments or under any agreement addressing such subject matter
between Executive and the Company or under any merger or
acquisition agreement addressing such subject matter;
(iv) Executive’s rights of insurance under any liability
policy covering the Company’s officers or (v) claims
which Executive may not Release as a matter of law, including, but
not limited to, indemnification claims under applicable law.
It is understood that Executive has twenty-one (21) days after
receipt of the form of Release from the Company to consider whether
to execute such employee Release and Executive may revoke such
employee Release within seven (7) days after execution of such
employee Release. In the event that the Executive has not
received a form of Release from the Company by the tenth (10
th ) day following the Termination Event, the Executive
may execute the form of Release attached hereto as Exhibit A
and that shall be deemed acceptable to the Company. In the
event Executive does not execute such employee Release within the
twenty-one (21) day period, or if Executive revokes such employee
Release within the seven (7) day period, no benefits shall be
payable under this Agreement and this Agreement shall be null and
void. Nothing in this Agreement shall limit the scope or time
of applicability of such employee Release once it is executed and
not timely revoked.
4.4
Golden Parachute Payments .
(a)
In the event that any payment received or to be received by
Executive pursuant to this Agreement or otherwise but determined
without regard to any additional payments required under
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