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Exhibit
10.1
CHANGE IN CONTROL
SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE
AGREEMENT (this “Agreement”) is entered into as of
April 19, 2005, (the “Effective Date”), by and between
Edward J. Borey (“Executive”) and WatchGuard
Technologies, Inc., a Delaware corporation, (the
“Company”).
As of the Effective Date, Executive will
continue to serve as an employee of the Company in the position of
Chairman and Chief Executive Officer (“CCEO”) with
appropriate authority and responsibilities for such role as
provided in the Employment Agreement. As CCEO, Executive shall
continue to report directly to the Company’s Board of
Directors. Executive’s office will continue to be located in
the Seattle, Washington area and Executive’s duties shall
primarily be performed there. Executive will continue to earn an
annual base salary of $400,000 (subject to adjustment in accordance
with the Employment Agreement), which shall cover all hours worked,
payable in the time and manner that salary is paid by the Company
to employees generally, and subject to required tax withholding.
Executive will continue to be eligible to receive a bonus in
accordance with the Employment Agreement.
1. Definitions . The following
definitions shall apply for all purposes under this
Agreement:
(a) Bonus Target .
“Bonus Target” has the same meaning as in the
Employment Agreement.
(b) Cause .
“Cause” has the same meaning as in the Employment
Agreement.
(c) Corporate
Transaction . “Corporate Transaction” has the same
meaning as in the Plan.
(d) Employment
Agreement . “Employment Agreement” means the June
30, 2004 employment offer letter agreement by and between Executive
and the Company.
(e) Excise Tax .
“Excise Tax” has the same meaning as in the Employment
Agreement.
(f) Excise Tax Restoration
Payment . “Excise Tax Restoration Payment” has the
same meaning as in the Employment Agreement.
(g) Good Reason .
“Good Reason” has the same meaning as in the Employment
Agreement.
(h) Plan .
“Plan” means the Company’s Amended and Restated
1996 Stock Incentive Compensation Plan.
(i) Total Disability .
“Total Disability” shall be deemed to occur on the
ninetieth (90th) consecutive or non-consecutive calendar day within
any twelve (12) month period that Executive is unable to perform
the duties set forth in the Employment Agreement because of any
mental or physical impairment of Executive which is expected to
result in death or which has lasted or is expected to last for a
continuous period of twelve (12) months or more and which causes
Executive to be unable, in the opinion of the Company, to perform
his duties for the Company and to be engaged in any substantial
gainful activity.
2. Severance Payment, Equity
Compensation and Benefits .
(a) Executive shall be
entitled to receive severance benefits from the Company
(collectively, the “Severance Payment”) if within the
first eighteen (18) month period after the occurrence of a
Corporate Transaction, either:
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(i) |
Executive resigns his employment for Good Reason within sixty
(60) days after Executive becomes aware of the occurrence of an
event specified in Section 1(g); or |
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(ii) |
The Company terminates Executive’s employment for any
reason other than Cause, death or Total Disability. |
For all purposes under this Agreement,
the Severance Payment shall consist of the following
items:
(v) two (2) times
Executive’s annual base salary as in effect on the date of
termination of Executive’s employment;
(w) Executive’s annual
Bonus Target for the year of termination multiplied by the
percentage that is equal to the number of calendar days that
Executive was employed by the Company during such year divided by
365;
(x) Executive’s
outstanding unvested Company stock options shall become fully
vested and exercisable;
(y) the benefits described in
Section 9(a)(iii) of the Employment Agreement; and
(z) the Excise Tax
Restoration Payment as provided by Section 9(b) of the Employment
Agreement.
Subparagraph items (v) and
(w) shall be paid to Executive in a single cash lump sum payment
not later than seven (7) business days following the date that the
conditions in Section 2(c) with respect to the release of claims
are satisfied.
(b) Mitigation .
Except as may be expressly provided elsewhere in this Agreement,
Executive shall not be required to mitigate the amount of any
payment or benefit contemplated by this Section 2 (whether by
seeking new employment or in any other manner). No such payment
shall be reduced by earnings that Executive may receive from any
other source. Notwithstanding the foregoing, to the extent
Executive receives severance or similar payments and/or benefits
under any other Company plan, program, agreement, policy, practice,
or the like, not referenced herein, the Severance Payment due to
Executive under this Agreement will be correspondingly reduced (and
vice-versa).
(c) Conditions . All
payments and benefits provided under Section 2 are conditioned on
Executive’s continuing compliance with this Agreement and the
Company’s policies and
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Executive’s execution (and
effectiveness) of a severance agreement including a release of
claims and covenant not to sue in a form reasonably acceptable to
the Company. No Severance Payment shall be provided to Executive
unless and until such severance agreement is effective.
The
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