CHANGE OF CONTROL
AGREEMENT
This
Change of Control Agreement (this “ Agreement
”), dated as of May ___, 2009, is entered into by and between
F5 Networks, Inc., a Washington corporation (the “
Company ”), and ________________________ (the
“ Executive ”).
The Board of
Directors of the Company (the “ Board ”)
has determined that it is in the best interests of the Company and
its shareholders to ensure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control of the Company. The
Board believes it is imperative to diminish the inevitable
distraction of the Executive arising from the personal
uncertainties and risks created by a pending or threatened Change
of Control, to encourage the Executive’s full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with reasonable compensation and benefit arrangements
upon a Change of Control. In order to accomplish these objectives,
the Board has caused the Company to enter into this
Agreement.
1.1 “ Change of Control ” shall
have the definition set forth in Appendix A hereto, which is
hereby incorporated by reference.
1.2 “ Change of Control Date ”
shall mean the first date on which a Change of Control occurs.
Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if Executive’s employment with
the Company is terminated prior to the date on which the Change of
Control occurs, and if such termination of employment (i) was
at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control,
then for the purposes of this Agreement the “ Change of
Control Date ” shall mean the date immediately prior
to the date of such termination of employment.
1.3 “ Protected Period ” shall
mean the two (2) year period commencing on the Change of
Control Date and ending on the second anniversary of that
date.
2. Employment during Protected Period
2.1 Position, Authority, Duties and
Responsibilities
During
employment during the Protected Period, the Executive’s
position, title, authority, duties and responsibilities shall be at
least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time
during the ninety (90) day period immediately preceding the
Change of Control Date.
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During
employment during the Protected Period, the Executive’s
services shall be performed at the Company’s offices on the
Change of Control Date at which the Executive was employed or any
office that is subsequently designated by the Company and is less
than thirty (30) miles from such location.
The
Executive and the Company acknowledge that, except as may otherwise
be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company or
its affiliated companies is “at will” and may be
terminated by either the Executive or the Company or its affiliated
companies at any time with or without cause. Except as otherwise
provided herein, if prior to the Change of Control Date, the
Executive’s employment with the Company or its affiliated
companies terminates for any reason, then the Executive shall have
no further rights under this Agreement.
During
employment during the Protected Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive will devote all of the Executive’s professional
productive time, ability, attention and effort to the business and
affairs of the Company and the discharge of the responsibilities
assigned to the Executive hereunder, and will use the
Executive’s reasonable best efforts to perform faithfully and
efficiently such responsibilities. It shall not be a violation of
this Agreement for the Executive to (a) serve on corporate,
civic or charitable boards or committees, (b) deliver
lectures, fulfill speaking engagements or teach at educational
institutions, (c) manage personal investments, or
(d) engage in activities permitted by the policies of the
Company or as specifically permitted by the Company, so long as
such activities do not significantly interfere with the performance
of the Executive’s responsibilities in accordance with this
Agreement. It is expressly understood and agreed that to the extent
any such activities have been conducted by the Executive prior to
the Protected Period, the continued conduct of such activities (or
the conduct of activities similar in nature and scope thereto)
during the Protected Period shall not thereafter be deemed to
interfere with the performance of the Executive’s
responsibilities to the Company.
As
long as the Executive remains employed by the Company during the
Protected Period, the Company agrees to pay or cause to be paid to
the Executive, and the Executive agrees to accept in exchange for
the services rendered hereunder by the Executive, the following
compensation:
The
Executive shall receive an annual base salary (the “
Annual Base Salary ”), at least equal to the
Executive’s annual salary at the highest rate in effect in
the twelve (12) months immediately preceding the Change of
Control Date. The Annual Base Salary shall be paid in substantially
equal installments and at the same intervals as the salaries of
other executives of the
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Company are
paid. The Board or the Compensation Committee [or the Chief
Executive Officer] shall review the Annual Base Salary at least
annually and shall determine in good faith and consistent with any
generally applicable Company policy any increases for future
years.
In
addition to the Annual Base Salary, the Executive shall be awarded
an annual incentive bonus (the “ Annual Incentive
Bonus ”) in cash at least equal to 100% of the
Executive’s highest annual target incentive bonus in effect
in the twelve (12) months immediately preceding the Change of
Control Date. Each Annual Incentive Bonus shall be paid in
intervals (such as quarterly) no less frequently than as paid
immediately preceding the Change of Control Date but in no event
less frequently than annually, unless the Executive shall elect to
defer the receipt of the Annual Incentive Bonus in accordance with
the terms of any Company deferred compensation program. The term
“ Bonus Payment Period ” as used herein
refers to the quarterly, annual or other interval (but not greater
than annual) with respect to which all or a pro rata portion of the
Annual Incentive Bonus is paid.
As
long as the Executive remains employed by the Company during the
Protected Period, the Executive shall be entitled to participate,
subject to and in accordance with applicable eligibility
requirements, in such fringe benefit programs as shall be provided
to other executives of the Company and its affiliated companies
from time to time during the Protected Period by action of the
Board (or any person or committee appointed by the Board to
determine fringe benefit programs and other emoluments), including,
without limitation, paid vacations; any stock purchase, savings or
retirement plan, practice, policy or program; and all welfare
benefit plans, practices, policies or programs (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans or programs).
As
long as the Executive remains employed by the Company during the
Protected Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by
the Executive in accordance with the policies, practices and
procedures of the Company and its affiliated companies in effect
for the executives of the Company and its affiliated companies
during the Protected Period. Without limitation on the foregoing,
reimbursement shall be made no later than the end of the fourth
month of the year following the year in which the expense was
incurred.
During
the Protected Period, employment of the Executive may be terminated
as follows:
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6.1 Termination by the Company or the Executive
At
any time during the Protected Period, the Company may terminate the
employment of the Executive with or without Cause (as defined
below), and the Executive may terminate the Executive’s
employment for Good Reason (as defined below) or for any reason,
upon giving a Notice of Termination (as defined below).
6.2 Automatic Termination
This
Agreement and the Executive’s employment during the Protected
Period shall terminate automatically upon the death or Total
Disability of the Executive. The term “ Total
Disability ” as used herein shall mean the
Executive’s inability (with such accommodation as may be
required by law and which places no undue burden on the Company),
as determined by a physician selected by the Company and acceptable
to the Executive, to perform the duties set forth in
Section 2.1 hereof for a period or periods aggregating twelve
(12) weeks in any three hundred sixty-five (365) day
period as a result of physical or mental illness, loss of legal
capacity or any other cause beyond the Executive’s control,
unless the Executive is granted a leave of absence by the Board.
The Executive and the Company hereby acknowledge that the duties
specified in Section 2.1 hereof are essential to the
Executive’s position and that the Executive’s ability
to perform those duties is the essence of this
Agreement.
6.3 Notice of Termination
Any
termination by the Company or by the Executive during the Protected
Period shall be communicated by a Notice of Termination to the
other party given in accordance with Section 9 hereof. The
term “ Notice of Termination ” shall mean
a written notice that (a) indicates the specific termination
provision in this Agreement relied upon and (b) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated. The
failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance that contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
During
the Protected Period, “ Date of Termination
” means (a) if the Executive’s employment is
terminated by reason of death, the date the Executive’s death
occurs, (b) if the Executive’s employment is terminated
by reason of Total Disability, immediately upon a determination by
the Company of the Executive’s Total Disability, and
(c) in all other cases, ten (10) days after the date of
delivery or mailing of the Notice of Termination. The
Executive’s employment and performance of services will
continue during such ten (10) day period; provided, however,
that the Company may, upon notice to the Executive and without
reducing the Executive’s compensation during such period,
excuse the Executive from any or all of the Executive’s
duties during such period. Notwithstanding anything contained in
this Agreement to the contrary, the date on which a
“separation from service” (“ Separation
from Service ”) pursuant to Section 409A of the
Internal Revenue Code of 1986, as amended (“
Code
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Section 409A ”) occurs shall be the “Date of
Termination” or termination of employment for purposes of
determining the timing of payments under this Agreement to the
extent necessary to have such payments and benefits under this
Agreement be exempt from the requirements of Code Section 409A or
comply with the requirements of Code Section 409A.
In
the event of termination of the Executive’s employment during
the Protected Period, all compensation and benefits set forth in
this Agreement shall terminate except as specifically provided in
this Section 7.
7.1 Termination by the Company Other Than for Cause or by the
Executive for Good Reason
If
during the Protected Period the Company terminates the
Executive’s employment other than for Cause or the Executive
terminates the Executive’s employment for Good Reason, the
Executive shall be entitled to:
(a) receive
payment of the following accrued obligations (the “
Accrued Obligations ”):
(i) the
Annual Base Salary through the Date of Termination to the extent
not theretofore paid;
(ii) the
Annual Incentive Bonus for the last completed Bonus Payment Period
prior to the Date of Termination to the extent not theretofore
paid;
(iii) the
product of (x) the Annual Incentive Bonus payable with respect
to the Bonus Payment Period in which the Date of Termination occurs
and (y) a fraction the numerator of which is the number of
days in such Bonus Payment Period through the Date of Termination,
and the denominator of which is the total number of days in that
Bonus Payment Period;
(iv) any
compensation previously deferred by the Executive (together with
accrued interest or earnings thereon, if any); and
(v) any
accrued vacation pay that would be payable under the
Company’s standard policy, in each case to the extent not
theretofore paid;
(b) have
the Company pay, for one (1) year after the Date of
Termination, the Executive’s premiums for health insurance
benefit continuation for the Executive and the Executive’s
family members, if applicable, that the Company provides to the
Executive under the provisions of the federal Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“
COBRA ”), (such payment is hereinafter referred
to as “ COBRA Continuation ”);
(c) an
amount as severance pay equal to [two for President and CEO; one
for other executive officers] times the Annual Incentive Bonus
payable with respect to the fiscal year in which the Date of
Termination occurs;
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(d) an
amount as severance pay equal to [two for President and CEO; one
for other executive officers] times the Annual Base Salary for the
fiscal year in which the Date of Termination occurs; and
(e) immediate
vesting of all outstanding stock options, restricted stock units,
restricted stock and other equity previously granted to the
Executive by the Company.
7.2 Termination for Cause or Other Than for Good
Reason
If
during the Protected Period the Executive’s employment shall
be terminated by the Company for Cause or by the Executive for
other than Good Reason, this Agreement shall terminate without
further obligation on the part of the Company to the Executive,
other than the Company’s obligation to pay the Executive
(a) the Annual Base Salary through the Date of Termination,
(b) that portion of the Annual Incentive Bonus for the last
completed Bonus Payment Period prior to the Date of Termination to
the extent not heretofore paid, (c) the amount of any
compensation previously deferred by the Executive in accordance
with the terms of any Company deferred compensation program,
(d) any benefits under generally applicable employee benefit
programs (other than any severance program) and (e) any
accrued vacation pay that would be payable under the
Company’s standard policy, in each case to the extent
theretofore unpaid.
In
the event the Executive’s employment is not terminated prior
to expiration of the Protected Period, this Agreement shall
terminate without further obligation on the part of the Company to
the Executive, other than the Company’s obligation to pay the
Executive that portion of the Annual Incentive Bonus for the last
completed Bonus Payment Period prior to the expiration of the
Protected Period to the extent not heretofore paid; and the product
of (a) the Annual Incentive Bonus payable with respect to the
Bonus Payment Period in which the Protected Period expired and
(b) a fraction the numerator of which is the number of days in
such Bonus Payment Period through the end of the Protected Period
and the denominator of which is the total number of days in that
Bonus Payment Period. Such payment will be made within ten
(10) working days of the expiration of the Protected
Period.
7.4 Termination Because of Death or Total
Disability
If
during the Protected Period the Executive’s employment is
terminated by reason of the Executive’s death or Total
Disability, this Agreement shall terminate automatically without
further obligation on the part of the Company to the Executive or
the Executive’s legal representatives under this Agreement,
other than the Company’s obligation to pay the Executive the
Accrued Obligations (which shall be paid to the Executive’s
estate or beneficiary, as applicable in the case of the
Executive’s death) and to provide COBRA
Continuation.
All
payments of Accrued Obligations, or any portion thereof payable
pursuant to this Section 7, other than deferred compensation
pursuant to Section 7.1(a)(iv) hereof, shall be made to the
Executive within ten (10) working days of the Date of
Termination. Deferred compensation pursuant to
Section 7.1(a)(iv) hereof shall be payable pursuant to the
terms of the
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deferred
compensation program. Subject to Section 19, any severance
payments payable to the Executive pursuant to Sections 7.1(c)
and 7.1(d) hereof shall be made to the Executive in a lump sum
within ten (10) working days of the Date of Termination.
Notwithstanding the preceding provisions of this Section 7, if
any payment or benefit pursuant to this Agreement constitutes a
“deferral of compensation” subject to Code
Section 409A (after taking into account, to the maximum extent
possible, any applicable exemptions) (a “ 409A
Payment ”), then the provisions of Section 19.1
hereof shall apply. In addition, Section 7.10 hereof must be
satisfied to receive payments and benefits under this
Agreement.
For
purposes of this Agreement, “ Cause ”
means the occurrence of one (1) or more of the following
events:
(a) the
willful and continued failure by the Executive, after reasonable
notice and opportunity to cure, to substantially perform
Executive’s duties with the Company (other than any such
failure resulting from the Executive’s Total
Disability);
(b) willful
gross misconduct involving serious moral turpitude or breach of the
Executive’s duty of loyalty to the Company;
(c) the
Executive being convicted of a felony or of a violation of a state
or federal criminal law involving the commission of a crime against
the Company or any other criminal act involving moral turpitude
demonstrably injurious to the Company’s financial position or
reputation;
(d) the
Executive willfully (x) impedes, (y) endeavors to
obstruct or impede or (z) fails to materially cooperate with
an investigation authorized by the Board; or
(e) any
other material willful violation of any provision of this Agreement
by the Executive, subject to the notice and opportunity-to-cure
requirements of Section 8 hereof.
For purposes of
this Section, no act or omission on the part of the Executive shall
be considered “ willful ” unless it is
done or omitted in bad faith and without reasonable belief that
such conduct was in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the
Board (excluding the Executive), after reasonable notice is
provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board,
finding that, in the good faith opinion of the Board, the Executive
is guilty of conduct described above, and specifying the
particulars thereof in detail.
For
purposes of this Agreement, “ Good Reason
” means:
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