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E XHIBIT
99.3
CHANGE OF CONTROL AND
RETENTION AGREEMENT FOR
CHIEF EXECUTIVE
OFFICER
This Change-in-Control and
Retention Agreement (the “ Agreement ”) is made
and entered into as of
, 2007, by and between VeriSign, Inc., a Delaware corporation, and
(the “ Executive ”).
RECITALS
WHEREAS, the Executive is a
key employee of the Company who possesses valuable proprietary
knowledge of the Company, its business and operations and the
markets in which the Company competes;
WHEREAS, the Company draws
upon the knowledge, experience, expertise and advice of the
Executive to manage its business for the benefit of the
Company’s stockholders;
WHEREAS, the Company desires
to standardize its executive Change-in-Control
arrangements;
WHEREAS, the Company
recognizes that if a Change-in-Control were to occur, the resulting
uncertainty regarding the consequences of such an event could
adversely affect the performance of, and the Company’s
ability to attract and retain, its key employees, including the
Executive;
WHEREAS, the Company believes
that the existence of this Agreement will serve as an incentive to
Executive to remain in the employ of the Company and to be focused
and motivated to work to maximize the value of the Company for the
benefit of its stockholders, and would enhance the Company’s
ability to call on and rely upon Executive if a Change-in-Control
were to occur; and
WHEREAS, the Company and the
Executive desire to enter into this Agreement to encourage the
Executive to continue to devote the Executive’s full
attention and dedication to the success of the Company, and to
provide specified compensation and benefits to the Executive in the
event of a Termination Upon Change-in-Control pursuant to the terms
of this Agreement.
NOW, THEREFORE, THE
PARTIES HEREBY AGREE AS FOLLOWS:
The purpose of this Agreement
is to provide specified compensation and benefits to the Executive
in the event of Termination Upon Change-in-Control of Executive.
Subject to the terms of any applicable written employment agreement
between Company and the Executive, either the Executive or Company
may terminate the Executive’s employment at any time for any
reason.
| 2. |
TERMINATION UPON CHANGE OF CONTROL |
In the event of the
Executive’s Termination Upon Change-in-Control, the Executive
shall
be entitled to the benefits
described below in this Section 2. In addition if during the
twenty-four (24) months following a Change-in-Control
Executive dies, or terminates employment due to Disability, then
Executive, or Executive’s estate or designated beneficiary,
shall receive the benefits provided under Section 2.3
below.
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2.1.1 |
Accrued Salary and Vacation . A lump sum payment of all
salary and accrued vacation earned through the Termination
Date. |
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2.1.2 |
Accrued Bonus . A lump sum payment of any earned and
unpaid bonus from the prior fiscal year previously awarded by the
Company. |
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2.1.3 |
Expense Reimbursement . Upon submission of proper
expense reports by the Executive, the Company shall reimburse the
Executive for all expenses incurred by the Executive, consistent
with past practices, in connection with the business of the Company
prior to the Executive’s Termination Date. |
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2.1.4 |
Employee Benefits . Benefits, if any, under any 401(k)
plan, nonqualified deferred compensation plan, employee stock
purchase plan and other Company benefit plans under which the
Executive may be entitled to benefits, payable pursuant to the
terms of such plans. |
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2.2 |
Cash Severance Benefits . A lump sum equal to the sum of
(i) a pro rata portion of Executive’s target bonus for
the fiscal year of the Company in which the Termination Upon
Change-in-Control occurs, (ii) twenty-four (24) months of
Executive’s Base Salary, and (iii) 200% of the
Executive’s average target bonus for the three
(3) fiscal years of the Company preceding the fiscal year in
which Termination Upon Change-in-Control occurs or, if Executive
was employed by the Company for fewer than three (3) full
fiscal years preceding the fiscal year in which the Termination
Upon Change-in-Control occurs, 200% of the average target bonus for
the number of full fiscal years Executive was employed by the
Company prior to the Change-in-Control) or 200% of the target bonus
for the fiscal year in which the Termination Upon Change-in-Control
occurs if the Executive was not eligible to receive a bonus from
the Company during any of the prior three (3) fiscal years.
This lump sum amount shall be paid no later than sixty
(60) days after the Termination Date of the Termination Upon
Change-in-Control. |
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2.3 |
Acceleration of Equity Awards . All then unvested and
outstanding Equity Awards granted to Executive prior to the
Change-in-Control shall have their vesting and exercisability
accelerated in full on the Termination Date of the Termination Upon
Change-in-Control; provided, however, that notwithstanding any
provision in this Agreement to the contrary, if the Equity Awards
held by the Executive are not assumed upon a Change-in-Control,
then all such Equity Awards shall have their vesting and
exercisability accelerated in full immediately
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prior to the
Change-in-Control regardless of whether there is a Termination Upon
Change-in-Control. If the consideration to be received by
stockholders of the Company in connection with the
Change-in-Control consists of substantially all cash, then all such
Equity Awards shall have their vesting and exercisability
accelerated in full immediately prior to the Change-in-Control
regardless of whether there is a Termination Upon
Change-in-Control.
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2.4 |
Extended Insurance Benefits . |
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2.4.1 |
Benefit Continuation . If the Executive timely elects
health insurance continuation coverage under COBRA, then the
Company shall provide Executive and Executive’s dependents,
at the Company’s expense, twenty-four (24) months of the
Company’s health insurance coverage as in effect for such
person immediately prior to the Termination Upon Change-in-Control.
The date of the “qualifying event” for the Executive
and any of Executive’s dependents shall be the date of the
Termination Upon Change-in-Control. |
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2.4.2 |
Coverage Under Another Plan . Notwithstanding the
preceding provisions of this Section 2.4, upon the Executive
becoming covered as a primary insured (that is, not as a
beneficiary under a spouse’s or partner’s plan) under
another employer’s group health plan during the period
provided for herein, the Executive promptly shall inform the
Company and the Company’s obligations under this
Section 2.4.2 shall cease. |
| 3. |
FEDERAL EXCISE TAX UNDER SECTION 280G |
If (i) any amounts
payable to the Executive under this Agreement or otherwise are
characterized as excess parachute payments (“Parachute
Payments”) pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended (the “ Code ”),
and (ii) the Executive thereby would be subject to any United
States federal excise tax due to that characterization, then
Executive’s termination benefits hereunder will be payable,
at Executive’s election, either in full or in such lesser
amount as would result, after taking into account the applicable
federal, state and local income taxes and the excise tax imposed by
Section 4999, in Executive’s receipt on an after-tax
basis of the greatest amount of termination and other benefits. The
determination of any reduction required pursuant to this section
(including the determination as to which specific payments shall be
reduced) shall be made by a neutral party designated by the Company
and such determination shall be conclusive and binding upon the
Company or any related corporation for all purposes.
If the amounts payable to the
Executive under this Agreement are characterized as Parachute
Payments and the value of such Parachute Payments equals at least
110% of the threshold amount that would trigger any United States
federal excise tax being imposed on such Parachute Payments under
Section 280G of the Code, then the Company shall
“gross-up” the payment to the Executive under this
Agreement so that the net amount that the Executive receives will
be the same amount that he/she would have received had such federal
excise tax not been imposed.
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4.1 |
Capitalized Terms Defined . Capitalized terms used in
this Agreement shall have the meanings set forth in this
Section 4, unless the context clearly requires a different
meaning. |
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4.2 |
“ Base Salary ” means the base salary of the
Executive immediately preceding the Executive’s Termination
Date. |
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4.3 |
“ Board ” means the Company’s Board of
Directors. |
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(a) |
Executive’s willful and continued failure to
substantially perform Executive’s duties after written notice
providing Executive with ninety (90) days from the date of
Executive’s receipt of such notice in which to
cure; |
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(b) |
conviction of (or plea of guilty or no contest to) Executive
for a felony involving moral turpitude; |
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(c) |
Executive’s willful misconduct or gross negligence
resulting in material harm to the Company; or |
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(d) |
Executive’s willful violation of the Company’s
policies resulting in material harm to the Company. |
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4.5 |
“ Change-in-Control ” means: |
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(a) |
any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”)), other than a
trustee or other fiduciary holding securities of the Company under
an employee benefit plan of the Company or its subsidiaries,
becomes the “beneficial owner” (as defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly
(excluding, for purposes of this Section 4.5, securities
acquired directly from the Company), of securities of the Company
representing at least thirty percent (30%) of (A) the
then-outstanding shares of common stock of the Company or
(B) the combined voting power of the Company’s
then-outstanding securities; |
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(b) |
the consummation of a merger or consolidation, or series of
related transactions, which results in the voting securities of the
Company outstanding immediately prior thereto failing to continue
to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), directly or
indirectly, at least fifty (50%) percent of the combined
voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; |
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(c) |
a change in the composition of the Board occurring within a
24-month period, as a result of which fewer than a majority of the
Directors are Incumbent Directors; |
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(d) |
the sale or disposition of all or substantially all of the
Company’s assets (or consummation of any transaction, or
series of related transactions, having similar effect);
or |
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(e) |
stockholder approval of the dissolution or liquidation of the
Company. |
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4.6 |
“ Company ” means VeriSign, Inc. and,
following a Change-in-Control, any Successor. |
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4.7 |
“ Director ” means a member of the
Board. |
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4.8 |
“ Disability ” shall have the meaning given
such term under Section 409A of the Code. |
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4.9 |
“ Equity Award ” shall mean any option,
restricted stock award, restricted stock unit award, stock
appreciation right or other equity award to acquire shares of the
Company’s common stock granted or issued to the
Executive. |
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4.10 |
“ Good Reason ” means the occurrence of any
of the following conditions, without Executive’s written
consent: |
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(a) |
a change in the Executive’s authority, duties or
responsibilities that is inconsistent in any material and adverse
respect from the Executive’s authority, duties and
responsibilities immediately preceding the
Change-in-Control; |
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(b) |
a reduction in Executive’s base salary compared to
Executive’s base salary immediately preceding the
Change-in-Control, except for an across-the-board reduction of not
more than ten percent (10%) of base salary applicable to all
senior executives of the Company; |
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(c) |
a reduction in Executive’s bonus opportunity of five
percent (5%) or more from Executive’s bonus opportunity
immediately preceding the Change-in-Control, except for an
across-the-board reduction applicable to all senior executives of
the Company; |
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(d) |
a failure to provide Executive with long-term incentive
opportunities that in the aggregate are at least comparable to the
long-term incentives provided to other senior executives at the
Company; |
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(e) |
a reduction of at least 5% in aggregate benefits that Executive
is entitled to receive under all employee benefit plans of the
Company following a Change-in-Control compared to the aggregate
benefits Executive was eligible to receive under all employee
benefit plans maintained by the Company immediately preceding the
Change-in-Control; or |
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(f) |
a requirement that Executive be based at any office location
more than 40 miles from Executive’s primary office location
immediately preceding the Change-in-Control, if such relocation
increases Executive’s commute by more than ten
(10) miles from Executive’s principal residence
immediately preceding the Change-in-Control; or |
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(g) |
the failure of the Company to obtain the assumption of this
Agreement from any Successor as provided in Section 12.1 of
this Agreement. |
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4.11 |
“ Incumbent Directors ” shall mean Directors
who either (i) are Directors as of the date hereof, or
(ii) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection
with an actual or threatened proxy contest relating to the election
of directors to the Company). |
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4.12 |
“ Successor ” means any successor to the
Company or assignee of substantially all of the Company’s
business and/or assets whether or not as part of a
Change-in-Control. |
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4.13 |
“ Termination Date ” means the effective
date of any termination of Executive’s employment with the
Company or a Successor. |
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4.14 |
“ Termination Upon Change-in-Control ” means
(i) during the twenty-four (24) months following the
consummation of a Change-in-Control any termination of the
employment of the Executive by the Company without Cause, or any
resignation by the Executive for Good Reason; or (ii) any
termination of the employment of the Executive by the Company
without Cause occurring within six (6) months prior to the
consummation of such Change-in-Control that is requested by a third
party as part of such Change-in-Control. Executive must provide
written notice to the Company within ninety (90) days of the
existence of Good Reason and provide the Company with at least
thirty (30) days to cure the circumstances giving rise to Good
Reason. |
Executive’s receipt of
payments and benefits under this Agreement is conditioned upon the
delivery by Executive of a signed Termination Release Agreement in
substantially the form attached hereto as Exhibit A ,
provided, however, that the Executive shall not be required to
release any rights the Executive may have to be indemnified by the
Company.
The Executive shall be
entitled to no other termination, severance or change of control
compensation, benefits, or other payments fro
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