Exhibit 10.2
CHANGE IN CONTROL SEVERANCE
AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this
“Agreement”) is entered into as of April 26, 2005, (the
“Effective Date”), by and between Bradley Sparks
(“Executive”) and WatchGuard Technologies, Inc., a
Delaware corporation, (the “Company”).
As of the Effective Date, Executive will serve
as an employee of the Company in the position of Chief Financial
Officer (“CFO”) with appropriate authority and
responsibilities for such role. As CFO, Executive shall report
directly to the Company’s Chief Executive Officer.
Executive’s office will be located in the Seattle, Washington
area and Executive’s duties shall primarily be performed
there. Executive will earn an annual base salary of $220,000
(subject to adjustment in accordance with the Company’s
policy), 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
be eligible to receive a bonus (if any) in accordance with the
Company’s policy.
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1.
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Definitions . The following definitions shall apply for all
purposes under this Agreement:
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(a) Cause .
“Cause” has the same meaning as in the Plan.
(b) Corporate Transaction .
“Corporate Transaction” has the same meaning as in the
Plan.
(c) Good Reason . “Good
Reason” has the same meaning as in the Plan.
(d) Plan . “Plan”
means the Company’s Amended and Restated 1996 Stock Incentive
Compensation Plan.
(e) 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
his duties 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 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.
(a) Executive shall be entitled to
receive a severance payment from the Company (the “Severance
Payment”) if within the first eighteen (18) month period
after the occurrence of a Corporate Transaction, either:
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(i)
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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(c); or
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(ii)
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The Company
terminates Executive’s employment for any reason other than
Cause, death or Total Disability.
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For all purposes under this Agreement, the
amount of the Severance Payment shall be equal to one (1) times
Executive’s annual base salary as in effect on the date of
termination of Executive’s employment. The Severance Payment
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.
The Severance Payment shall be in lieu of any
other post-termination of employment payments or
benefits.
(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 this Section 2 are conditioned on
Executive’s continuing compliance with this Agreement and the
Company’s policies and 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.
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3.
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Tax Effect
of Payments .
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(a) Excise Taxes . In the
event that it is determined that any payment or distribution of any
type to or for the benefit of Executive made by the Company, by any
of its affiliates, by any person who acquires ownership or
effective control of the Company or ownership of a substantial
portion of the Company’s assets (within the meaning of
section 280G of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder (the “Code”)) or by any
affiliate of such person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
(the “Total Payments”), would be subject to the excise
tax imposed by section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax,
together with any such interest or penalties, are collectively
referred to as the “Excise Tax”), then such payments or
distributions shall be payable either (x) in full or (y) as to such
lesser amount which would result in no portio