PACKETEER,
INC.
CHANGE IN CONTROL
AGREEMENT
This Change in
Control Agreement (the “ Agreement ” ) is
made and entered into, effective as of March 26, 2007 (the
“ Effective Date ” ), by and between
Packeteer, Inc., a Delaware corporation, and _________, an
individual ( “ Executive ” ).
A. Executive
presently serves as the __________________ of the Company and
performs significant strategic and management responsibilities
necessary to the continued conduct of the Company’s business
and operations.
B. The
Compensation Committee of the Board of Directors of the Company has
determined at its meeting held on July 19, 2006 that it is in
the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication and objectivity
of Executive, notwithstanding the possibility or occurrence in the
future of a Change in Control affecting the continued employment of
Executive.
C. The
Committee believes that it is important to provide Executive with
certain severance benefits upon the circumstances described below,
in order to provide Executive with enhanced financial security and
to provide sufficient incentive and encouragement to Executive to
remain with the Company, even though there is no Change in Control
pending at this time.
In consideration
of the mutual covenants herein contained, and in consideration of
the continuing employment of Executive by the Company, the parties
agree as follows:
1.
Definitions and Construction
1.1
Definitions. Whenever used in this Agreement, the following
terms shall have the meanings set forth below:
(a)
“ Base Salary Rate ” means with respect
to Executive’s Termination Upon a Change in Control,
Executive’s monthly base salary rate in effect immediately
prior to such termination of employment (without giving effect to
any reduction in Executive’s base salary rate constituting
Good Reason). For this purpose, base salary does not include any
bonuses, commissions, fringe benefits, car allowances, other
irregular payments or any other compensation except base
salary.
(b)
“ Board ” means the Board of Directors of
the Company.
(c)
“ Cause ” means the occurrence of any of
the following: (1) Executive’s theft, dishonesty,
misconduct, breach of fiduciary duty for personal profit, or
falsification of any documents or records of the Company Group;
(2) Executive’s material failure
to abide by the
code of conduct or other policies (including, without limitation,
policies relating to confidentiality and reasonable workplace
conduct) of any member of the Company Group; (3) misconduct by
Executive within the scope of Section 304 of the
Sarbanes-Oxley Act of 2002 as a result of which of the Company is
required to prepare an accounting restatement;
(4) Executive’s unauthorized use, misappropriation,
destruction or diversion of any tangible or intangible asset or
corporate opportunity of a member of the Company Group (including,
without limitation, Executive’s improper use or disclosure of
the confidential or proprietary information of a member of the
Company Group); (5) any intentional act by Executive which has
a material detrimental effect on reputation or business of a member
of the Company Group; (6) Executive’s repeated failure
or inability to perform any reasonable assigned duties after
written notice from a member of the Company Group of, and a
reasonable opportunity to cure, such failure or inability;
(7) any material breach by Executive of any employment,
non-disclosure, non-competition, non-solicitation or other similar
agreement between Executive and a member of the Company Group,
which breach is not cured pursuant to the terms of such agreement;
(8) Executive’s failure to cooperate in any
investigation by the Company that has been approved by the Board or
the Audit Committee of the Board; or (9) Executive’s
conviction (including any plea of guilty or nolo contendere) of any
criminal act involving fraud, dishonesty, misappropriation or moral
turpitude, or which impairs Executive’s ability to perform
his duties with a member of the Company Group.
(d)
“ Change in Control ” means the
occurrence of any of the following:
(1) any
“person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities of the Company under an employee benefit plan of
the Company, becomes the “beneficial owner” (as defined
in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing more than
fifty percent (50%) of total fair market value or total voting
power of the Company’s then-outstanding securities entitled
to vote generally in the election of directors;
(2) the
Company is party to a merger, consolidation or similar corporation
transaction, or series of related transactions, which results in
the holders of the voting securities of the Company outstanding
immediately prior to such transaction(s) failing to retain
immediately after such transaction(s) direct or indirect beneficial
ownership of more than fifty percent (50%) of the total combined
voting power of the securities entitled to vote generally in the
election of directors of the Company or the surviving entity
outstanding immediately after such transaction(s);
(3) 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 (other than a
sale or disposition to one or more subsidiaries of the Company);
or
(4) a
change in the composition of the Board over a period of thirty-six
(36) consecutive months (twelve (12) consecutive months
in the case of any Section 409A Deferred Compensation) or less
as a result of which a majority of the Board members ceases, by
reason of one or more contested elections for Board membership, to
be comprised of
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individuals who
either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or
nominated for election as Board members during such period by at
least a majority of the Board members described in clause
(i) who were still in office at the time the Board approved
such election or nomination.
Notwithstanding
the foregoing, to the extent that any amount constituting
Section 409A Deferred Compensation would become payable under
this Agreement by reason of a Change in Control, such amount shall
become payable only if the event constituting a Change in Control
would also constitute a change in ownership or effective control of
the Company or a change in the ownership of a substantial portion
of the assets of the Company within the meaning of
Section 409A.
(e)
“ Change in Control Period ” means a
period commencing upon the date of the consummation of a Change in
Control and ending on the date occurring twelve (12) months
following the date of the consummation of such Change in
Control.
(f)
“ COBRA ” means the group health plan
continuation coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 and any applicable regulations
promulgated thereunder.
(g)
“ Code ” means the Internal Revenue Code
of 1986, as amended, or any successor thereto and any applicable
regulations or administrative guidelines promulgated
thereunder.
(h)
“ Committee ” means the Compensation
Committee of the Board.
(i)
“ Company ” means Packeteer, Inc.,
a Delaware corporation, and, following a Change in Control, a
Successor that agrees to assume all of the rights and obligations
of the Company under this Agreement or a Successor which otherwise
becomes bound by operation of law under this Agreement.
(j)
“ Company Group ” means the group
consisting of the Company and each present or future parent and
subsidiary corporation or other business entity thereof.
(k)
“ Disability ” means either
(1) the inability of Executive to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than
twelve (12) months, or (2) Executive is, by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering
employees of Executive’s employer.
(l)
“ Equity Award ” means any option, stock
appreciation right, restricted stock, restricted stock unit,
performance share or performance unit award or other award with
respect to shares of the capital stock of the Company or of any
other member of the Company Group granted to Executive by the
Company or any other Company Group member prior to a Change in
Control, including any such award which is assumed or continued by,
or for
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which a
replacement award is substituted by, the Successor or any other
member of the Company Group in connection with the Change in
Control.
(m)
“ Exchange Act ” means the Securities
Exchange Act of 1934, as amended.
(n)
“ Excluded Agreement ” means (i) the
Notice of Grant of Performance Shares and Performance Share
Agreement pursuant to which Executive was granted performance
shares on January 24, 2007, and (ii) any written
agreement between Executive and the Company entered into after the
date of this Agreement which expressly disclaims Section 7.2
hereof and is approved by the Board or the Committee.
(o) “ Good Reason ” means the
occurrence during a Change in Control Period of any of the
following conditions without Executive’s informed written
consent, which condition(s) remain(s) in effect ten
(10) business days after written notice to the Company from
Executive of such condition(s):
(1) a
material, adverse change in Executive’s title, duties or
responsibilities, causing Executive’s position to be of
materially lesser rank or responsibility within the Company or an
equivalent business unit of its parent, provided that continued
assignment to Executive after a Change in Control of substantially
the same duties and responsibilities to be performed by Executive
for the Company, its Successor or a business unit of a parent
entity that continues substantially all of the business of the
Company shall not constitute Good Reason, notwithstanding that the
entity for which Executive is to perform such duties and
responsibilities is not directly owned by public stockholders;
or
(2) a
decrease in Executive’s base salary rate or target bonus
amount, unless such reduction is part of a Company-wide reduction
program; or
(3) the
relocation of Executive’s work place for the Company Group to
a location that increases the regular commute distance between
Executive’s residence and work place by more than fifty
(50) miles (one-way); or
(4) following
the consummation of a Change in Control, any material breach of
this Agreement by the Company Group.
Executive’s continued employment for a
period not exceeding sixty (60) days following the occurrence
of any condition constituting Good Reason shall not constitute
consent to, or a waiver of rights with respect to, such
condition.
(p)
“ Release ” means a general release of
all known and unknown claims against the Company and its affiliates
and their stockholders, directors, officers, employees, agents,
successors and assigns substantially in the form attached hereto as
Exhibit A , with any modifications thereto determined
by legal counsel to the Company to be necessary or advisable to
comply with applicable law or to accomplish the intent of
Section 8 (Exclusive Remedy) hereof.
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(q)
“ Section 409A ” means
Section 409A of the Code and any applicable regulations
(including proposed or temporary regulations) and other
administrative guidance promulgated thereunder.
(r)
“ Section 409A Deferred Compensation
” means compensation and benefits provided by this
Agreement that constitute deferred compensation subject to and not
exempted from the requirements of Section 409A.
(s)
“ Separation from Service ” means a
separation from service within the meaning of Section
409A.
(t)
“ Specified Employee ” means a specified
employee within the meaning of Section 409A.
(u)
“ Successor ” means any successor in
interest to substantially all of the business and/or assets of the
Company.
(v)
“ Termination Upon a Change in Control ”
means the occurrence of any of the following events:
(1) termination
by the Company Group of Executive’s employment for any reason
other than Cause during a Change in Control Period; or
(2) Executive’s
resignation for Good Reason from employment with the Company Group
during a Change in Control Period, provided that such resignation
occurs within sixty (60) days following the occurrence of the
condition constituting Good Reason;
provided,
however , that
Termination Upon a Change in Control shall not include any
termination of Executive’s employment which is a result of
Executive’s death, Disability or voluntary termination of
employment other than for Good Reason.
1.2
Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation
of any provision of the Agreement. Except when otherwise indicated
by the context, the singular shall include the plural and the
plural shall include the singular. Use of the term “or”
is not intended to be exclusive, unless the context clearly
requires otherwise.
2.1
Initial Term. The initial term of this Agreement (the
“ Initial Term ” ) shall commence on the
Effective Date and shall terminate on the third anniversary of the
Effective Date, except as otherwise provided by
Section 2.3.
2.2
Renewal Term. During the one-year period commencing
immediately prior to the expiration of the Initial Term or any
Renewal Term (as defined below) then in effect, the Committee shall
determine, in its sole discretion, whether and for what period, if
any, and upon what terms and conditions (including any modification
to the terms and conditions of this
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Agreement as
then in effect that the Committee shall determine to be advisable)
the Company shall offer to Executive to extend the term of this
Agreement (any such extension being referred to herein as a
“ Renewal Term ” ) following the
expiration of the then effective Initial Term or Renewal Term as
the case may be. Following its determination, the Committee shall
advise Executive in writing of the terms and conditions upon which
the Company would be willing to extend the term of this Agreement;
provided, however, that if the Committee fails to so advise
Executive or if Executive does not accept the terms and conditions
upon which the Company would be willing to extend the term of the
Agreement, the Agreement shall terminate upon the expiration of the
Initial Term or Renewal Term then in effect except as otherwise
provided by Section 2.3.
2.3
Survival of Agreement.
(a)
Upon Pending Change in Control. Notwithstanding the
provisions of Section 2.1 and 2.2, the then effective Initial
Term or Renewal Term shall automatically be extended in the event
that such term would otherwise expire during the period commencing
upon the first public announcement of a definitive agreement that
would result in a Change in Control (even though still subject to
approval of the Company’s stockholders and other conditions
and contingencies) and ending upon the expiration of the Change in
Control Period. Such extension shall be upon the terms and
conditions of this Agreement as then in effect, provided that such
extension of the term of the Agreement shall expire upon the first
to occur of the first public announcement of the termination of
such definitive agreement or the expiration of the Change in
Control Period.
(b)
Certain Provisions. Notwithstanding the provisions of
Section 2.1 and 2.2, the obligation of the Company to make
payments or provide benefits pursuant to this Agreement to which
Executive has acquired a right in accordance with the applicable
provisions of this Agreement prior to the expiration of the then
effective Initial Term or Renewal Term shall survive the
termination of this Agreement until such payments and benefits have
been provided in full. Further, notwithstanding the provisions of
Section 2.1 and 2.2, the obligations of Executive pursuant to
Sections 9 and 10 shall survive the termination of this
Agreement.
3. [
Intentionally Omitted .]
4. Treatment
of Equity Awards Upon a Change in Control
The treatment of
Equity Awards held by Executive immediately prior to the
consummation of a Change in Control shall be determined in
accordance with the terms of the plans or agreements providing for
such awards, provided that all amounts pursuant to any such Equity
Award that constitutes Section 409A Deferred Compensation
shall be subject to, limited by and construed in accordance with
the requirements of Section 409A.
5.
Termination Upon a Change in Control
In the event of
Executive’s Termination Upon a Change in Control, Executive
shall be entitled to receive the compensation and benefits
described in this Section 5. The provision, time and manner of
payment or distribution of all such compensation and benefits that
constitute
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Section 409A Deferred Compensation shall be
subject to, limited by and construed in accordance with the
requirements of Section 409A, including the provisions of
Section 6.2 below.
5.1
Accrued Obligations. Executive shall be entitled to
receive:
(a) all
salary, bonuses, commissions and accrued but unused vacation earned
through the date of Executive’s termination of
employment;
(b) reimbursement
within ten (10) business days of submission, within three
(3) months following Executive’s termination of
employment, of proper expense reports of all expenses reasonably
and necessarily incurred by Executive in connection with the
business of the Company Group prior to his termination of
employment; and
(c) the
benefits, if any, under any Company Group retirement plan,
nonqualified deferred compensation plan, Equity Award plan or
agreement (other than any such plan or agreement pertaining to
Equity Awards whose treatment is prescribed by Section 5.3
below), health benefits plan or other Company Group benefit plan to
which Executive may be entitled pursuant to the terms of such plans
or agreements.
For the
purposes of this Section, notwithstanding any terms of the
applicable bonus plan, program or agreement to the contrary,
Executive shall be deemed to earn effective as of the last day of
the applicable bonus performance period the amount of any bonus to
which Executive is entitled (on the basis of the extent to which
applicable performance goals have been attained), notwithstanding
that the Company’s bonus payment date for such performance
period has not yet occurred as of the date of Executive’s
Termination Upon a Change in Control.
5.2
Cash Severance Payments. Provided that within sixty
(60) days following Executive’s Termination Upon a
Change in Control, Executive executes the Release and the period
for revocation of the Release has expired without the Release
having been revoked, Executive shall be entitled to receive an
amount equal to Executive’s Base Salary Rate multiplied by
eighteen (18). The Company shall pay such amount to Executive in a
lump sum cash payment within ten (10) business days following
the last to occur of (i) Executive’s termination of
employment or (ii) the last day on which Executive may revoke
the Release in accordance with its terms.
5.3
Acceleration of Vesting of Equity Awards. Subject to
Executive’s execution and nonrevocation of the Release as
provided in Section 5.2, and notwithstanding any provision to
the contrary contained in any plan or agreement evidencing an
Equity Award granted to Executive other than an Excluded Agreement,
the vesting and/or exercisability of each of Executive’s
outstanding Equity Awards shall be accelerated to the extent
provided below, effective as of the date of Executive’s
termination of employment; provided, however , that such
acceleration of vesting and/or exercisability shall not apply to
any Equity Award where such acceleration would result in plan
disqualification or would otherwise be contrary to applicable law
(e.g., an employee stock purchase plan intended to qualify under
Section 423 of the Code).
(a) The
vesting and/or exercisability of each of Executive’s
outstanding Equity Awards providing for an exercise or purchase
price equal to or greater the fair market value, determined as of
the date of grant of such award in accordance with the
terms
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of the
applicable plan or agreement, of the shares of stock subject to
such award shall be accelerated in full.
(b) The
vesting and/or exercisability of each of Executive’s
outstanding Equity Awards (other than an Equity Award evidenced by
an Excluded Agreement) not providing for an exercise or purchase
price at least equal to the fair market value, determined as of the
date of grant of such award in accordance with the terms of the
applicable plan or agreement, of the shares of stock subject to
such award shall be accelerated with respect to fifty percent (50%)
of the portions of such awards remaining unvested as of the date of
Executive’s termination of employment.
5.4
Health, Life Insurance and Long-Term Disability Benefits.
Subject to Executive’s execution and nonrevocation of the
Release as provided in Section 5.2, for the twelve-month
period commencing immediately following Executive’s
termination of employment, the Company shall arrange to provide
Executive and his dependents with health (including medical and
dental), life insurance and long-term disability benefits
substantially similar to those provided to Executive and his
dependents immediately prior to the date of such termination of
employment. Such benefits shall be provided to Executive at the
same premium cost to Executive and at the same coverage level as in
effect as of Executive’s termination of employment; provided,
however, that Executive shall be subject to any change in the
premium cost and/or level of coverage applicable generally to all
employees holding the position or comparable position with the
Company which Executive held immediately prior to the Change in
Control. The Company may satisfy its obligation to provide a
continuation of health benefits by paying that portion of
Executive’s premiums required under COBRA that exceed the
amount of premiums that Executive would have been required to pay
for continuing coverage had he or she continued in employment. If
the Company is not reasonably able to continue health, life
insurance and/or long-term disability benefits coverage under the
Company’s benefit plans, the Company shall provide
substantially equivalent coverage under other sources or will
reimburse (without a tax gross-up) Executive for premiums (in
excess of Executive’s premium cost described above) incurred
by Executive to obtain his own such coverage. If Executive and/or
Executive’s dependents become eligible to receive any such
coverage under another employer’s benefit plans during such
twelve-month period, Executive shall report such eligibility to the
Company, and th
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