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Exhibit
10.3
RIVERBED TECHNOLOGY,
INC.
CHANGE IN CONTROL
SEVERANCE AGREEMENT
This Change in Control
Severance Agreement (the “Agreement”) is made and
entered into by and between Randy S. Gottfried
(“Executive”) and Riverbed Technology, Inc. (the
“Company”), effective as of May 1, 2008 (the
“Effective Date”).
RECITALS
1. It is expected that the
Company from time to time will consider the possibility of an
acquisition by another company or other change in control. The
Compensation Committee of the Board of Directors of the Company
(the “Committee”) recognizes that such consideration
can be a distraction to Executive and can cause Executive to
consider alternative employment opportunities. The Committee has
determined 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, threat or occurrence of a Change in Control of the
Company.
2. The Committee believes
that it is in the best interests of the Company and its
stockholders to provide Executive with an incentive to continue his
employment and to motivate Executive to maximize the value of the
Company upon a Change in Control for the benefit of its
stockholders.
3. The Committee believes
that it is imperative to provide Executive with certain severance
benefits upon Executive’s termination of employment following
a Change in Control. These benefits will provide Executive with
enhanced financial security and incentive and encouragement to
remain with the Company notwithstanding the possibility of a Change
in Control.
4. Certain capitalized terms
used in the Agreement are defined in Section 5
below.
AGREEMENT
NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the parties
hereto agree as follows:
1. Term of Agreement .
This Agreement will not terminate until all of the obligations of
the parties hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment
. The Company and Executive acknowledge that Executive’s
employment is and will continue to be at-will, as defined under
applicable law. If Executive’s employment terminates for any
reason other than for the reasons specified herein during the
period that is on or within twelve (12) months after a Change
in Control as provided herein, Executive will not be entitled to
any payments, benefits, damages, awards or compensation other than
the payment of accrued but unpaid wages, as required by law, and
any unreimbursed reimbursable expenses or pursuant to written
agreements with the Company, including equity award
agreements.
3. Severance Benefits
.
(a) Termination without
Cause or Resignation for Good Reason in Connection with a Change in
Control . If the Company terminates Executive’s
employment with the Company without Cause or if Executive resigns
from such employment for Good Reason, and such termination or
resignation occurs on or within twelve (12) months after a
Change in Control, and Executive signs and does not revoke a
release of claims with the Company (in a form reasonably acceptable
to the Company and effective no later than March 15 of the
year following the year in which the termination occurs), then
Executive will receive the following from the Company:
(i) Accrued
Compensation . The Company will pay Executive all accrued but
unpaid vacation, expense reimbursements, wages, and other benefits
due to Executive under any Company-provided plans, policies, and
arrangements.
(ii) Severance Payment
. Executive will receive a lump-sum payment of severance equal to
one hundred percent (100%) of Executive’s annual base
salary as in effect immediately prior to Executive’s
termination or resignation date or (if greater) at the level in
effect immediately prior to the Change in Control.
(iii) Bonus Payment .
Executive will receive a lump-sum cash payment in an amount equal
to one hundred percent (100%) of Executive’s full target
bonus for the fiscal year in effect at the date of such termination
or resignation.
(iv) Continued Employee
Benefits . If Executive elects continuation coverage pursuant
to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”) for Executive and Executive’s
eligible dependents, within the time period prescribed pursuant to
COBRA, the Company will reimburse Executive for the COBRA premiums
for such coverage (at the coverage levels in effect immediately
prior to Executive’s termination or resignation) until the
earlier of (A) a period of twelve (12) months from the
last date of employment of the Executive with the Company, or
(B) the date upon which Executive and/or Executive’s
eligible dependents becomes covered under similar plans. COBRA
reimbursements will be made by the Company to Executive consistent
with the Company’s normal expense reimbursement
policy.
(b) Timing of Severance
Payments . Unless otherwise required by Section 3(g), the
Company will pay any severance payments in a lump sum as soon as
practicable but no longer than 10 business days following
Executive’s termination or resignation date; provided,
however, that no severance or other benefits will be paid or
provided until the release of claims discussed in Section 3(a)
becomes effective, and any severance amounts or benefits otherwise
payable between Executive’s termination or resignation date
and the date such release becomes effective will be paid on the
effective date of such release. If Executive should die before all
of the severance amounts have been paid, such unpaid amounts will
be paid in a lump-sum payment promptly following such event to
Executive’s designated beneficiary, if living, or otherwise
to the personal representative of Executive’s
estate.
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(c) Voluntary Resignation;
Termination for Cause . If Executive’s employment with
the Company terminates (i) voluntarily by Executive (other
than for Good Reason during the period that is on or within twelve
(12) months after a Change in Control) or (ii) for Cause
by the Company, then Executive will not be entitled to receive
severance or other benefits except for those (if any) as may then
be established under the Company’s then existing written
severance and benefits plans and practices or pursuant to other
written agreements with the Company.
(d) Disability; Death
. If the Company terminates Executive’s employment as a
result of Executive’s Disability, or Executive’s
employment terminates due to his death, then Executive will not be
entitled to receive severance or other benefits except for those
(if any) as may then be established under the Company’s then
existing written severance and benefits plans and practices or
pursuant to other written agreements with the Company.
(e) Termination not in
Connection with a Change in Control . In the event
Executive’s employment is terminated for any reason other
than as provided in Section 3(a), then Executive will be
entitled to receive severance and any other benefits only as may
then be established under the Company’s then existing written
severance and benefits plans and practices or pursuant to other
written agreements with the Company.
(f) Exclusive Remedy .
In the event of a termination of Executive’s employment as
set forth in Section 3(a) of this Agreement, the provisions of
Section 3, as applicable, are intended to be and are exclusive
and in lieu of any other rights or remedies to which Executive or
the Company may otherwise be entitled, whether at law, tort or
contract, in equity, or under this Agreement (other than the
payment of accrued but unpaid wages, as required by law, and any
unreimbursed reimbursable expenses). Executive will be entitled to
no benefits, compensation or other payments or rights upon a Change
in Control or a termination of employment following a Change in
Control other than those benefits expressly set forth in
Section 3 of this Agreement or pursuant to written agreements
with the Company, including equity award agreements.
(g) Section 409A
.
(i) Notwithstanding anything
to the contrary in this Agreement, if Executive is a
“specified employee” within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and the final regulations and any guidance
promulgated thereunder (“Section 409A”) at the time of
Executive’s termination (other than due to death) or
resignation, then the severance payable to Executive, if any,
pursuant to this Agreement, when considered together with any other
severance payments or separation benefits that are considered
deferred compensation under Section 409A (together, the
“Deferred Compensation Separation Benefits”) that are
payable within the first six (6) months following
Executive’s termination of employment, will become payable on
the first payroll date that occurs on or after the date six
(6) months and one (1) day following the date of
Executive’s termination of employment. All subsequent
Deferred Compensation Separation Benefits, if any, will be payable
in accordance with the payment schedule applicable to each payment
or benefit. Notwithstanding anything herein to the contrary, if
Executive dies following his termination but prior to the six
(6) month anniversary of his termination, then any payments
delayed in accordance with this paragraph will be payable in a lump
sum as soon as administratively practicable after the date of
Executive’s death and all other Deferred Compensation
Separation Benefits will be payable in accordance with the payment
schedule applicable to each payment or benefit. Each payment and
benefit payable under this Agreement is intended to constitute
separate payments for purposes of Section 1.409A-2(b)(2) of
the Treasury Regulations.
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(ii) Any amount paid under
this Agreement that satisfies the requirements of the
“short-term deferral” rule set forth in
Section 1.409A-1(b)(4) of the Treasury Regulations shall not
constitute Deferred Compensation Separation Benefits for purposes
of clause (i) above.
(iii) Any amount paid under
this Agreement that qualifies as a payment made as a result of an
involuntary separation from service pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that
do not exceed the Section 409A Limit shall not constitute
Deferred Compensation Separation Benefits for purposes of clause
(i) above.
(iv) The foregoing provisions
are intended to comply with the requirements of Section 409A
so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under
Section 409A, and any ambiguities herein will be interpreted
to so comply. The Company and Executive agree to work together in
good faith to consider amendments to this Agreement and to take
such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to Executive under
Section 409A.
4. Limitation on
Payments . In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to Executive
(i) constitute “parachute payments” within the
meaning of Section 280G of the Code, and (ii) but for
this Section 4, would be subject to the excise tax imposed by
Section 4999 of the Code, then Executive’s severance
benefits under Section 3 will be either:
(a) delivered in full,
or
(b) delivered as to such
lesser extent which would result in no portion of such benefits
being subject to excise tax under Section 4999 of the
Code,
whichever of the foregoing amounts,
taking into account the applicable federal, state and local income
taxes and the excise tax imposed by Section 4999, results in
the receipt by Executive on an after-tax basis, of the greatest
amount of benefits, notwithstanding that all or some portion of
such benefits may be taxable under Section 4999 of the Code.
Unless the Company and Executive otherwise agree in writing, any
determination required under this Section 4 will be made in
writing by the Company’s independent public accountants
immediately prior to a Change in Control or such other person or
entity to which the p
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