Exhibit 10.1
WIND RIVER SYSTEMS,
INC.
EXECUTIVE OFFICERS’ CHANGE
OF CONTROL
INCENTIVE AND SEVERANCE BENEFIT
PLAN AND SUMMARY PLAN
DESCRIPTION
Amended and Restated
January 30, 2009
S ECTION 1. I NTRODUCTION .
This Wind River Systems, Inc.
Executive Officers’ Change of Control Incentive and Severance
Benefit Plan (the “Plan”) was approved by the
Compensation Committee of the Board of Directors of Wind River
Systems, Inc. (the “Company”) on November 16,
1995, was amended and restated effective October 14, 2008 to
comply with Internal Revenue Code Section 409A, and was
further amended and restated on January 30, 2009 (the
“Effective Date”) to replace the golden parachute
excise tax gross-up provisions with “best results”
golden parachute excise provisions. The purpose of the Plan is
to encourage valued senior employees to work in the Company’s
best interests during and following a Change of Control (defined
below) by providing for the payment of incentive and severance
benefits as set forth herein. As of the Effective Date, this
amended and restated Plan shall supersede any group severance
benefit plan, policy or practice previously maintained by the
Company for the employees described herein. This Plan document also
is the Summary Plan Description for the Plan.
S ECTION 2. E LIGIBILITY F OR B ENEFITS .
(a) General Rules.
Subject to the requirements set
forth in this Section 2, and subject to further limitations
set forth subsequently in this Plan, the Company will award
incentive benefits to Eligible Employees and will grant severance
benefits during the Benefit Period to Eligible Employees. As a
condition of receiving severance benefits under the Plan, each
Eligible Employee must execute a general waiver and release, on the
form provided by the Company, which releases the Company from any
and all claims the Eligible Employee may have against the Company
(the “Release”).
(i) “Eligible
Employees” are, for
purposes of the Plan’s incentive benefits, all employees
employed at the level of Vice President or above at the time of the
occurrence of a Change of Control. This term, for purposes of the
Plan’s severance benefits, shall mean all employees employed
at the level of Vice President or above whose employment with the
Company is involuntarily terminated other than for Cause or who
voluntarily terminate employment for Good Reason, at any time
within twelve (12) months following a Change of
Control.
(ii) “Change of
Control” shall mean
(i) a merger or consolidation in which the Company is not the
surviving corporation; (ii) a reverse merger in which the
Company is the surviving corporation but the shares of the
Company’s common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise;
(iii) any other capital reorganization in which the
beneficial
ownership of more than fifty percent
(50%) of the shares of the Company entitled to vote changes;
(iv) a transaction or group of related transactions involving
the sale of all or substantially all of the Company’s assets;
or (v) the acquisition by any person, entity or group
(excluding any employee benefit plan, or related trust, sponsored
or maintained by the Company or any subsidiary of the Company) of
the beneficial ownership, directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the
combined voting power in the election of directors.
(iii)
“Cause” shall
mean misconduct, including: (i) conviction of any felony or
any crime involving moral turpitude or dishonesty;
(ii) participation in a fraud or act of dishonesty against the
Company; (iii) conduct by Executive which based upon a good
faith and reasonable factual investigation and determination by the
Company demonstrates gross unfitness to serve; or
(iv) intentional, material violation by Executive of any
contract between Executive and the Company or any statutory duty of
Executive to the Company that is not corrected within thirty
(30) days after written notice to Executive thereof. Physical
or mental disability shall not constitute
“Cause”.
(iv) “Good
Reason” shall mean
any one of the following events which occurs on or after the date
of the Change of Control: (i) a reduction of the Eligible
Employee’s rate of compensation; (ii) reduction in the
package of welfare benefit plans, taken as a whole, provided to the
Eligible Employee (except that employee contributions may be raised
to the extent of any cost increases imposed by third parties) or
any action by the Company which would adversely affect the Eligible
Employee’s participation or reduce the Eligible
Employee’s benefits under any of such plans;
(iii) change in the Eligible Employee’s
responsibilities, authority, title, reporting relationship or
offices resulting in diminution of position, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken
in bad faith which is remedied by the Company promptly after notice
thereof is given by the Eligible Employee; (iv) request that
the Eligible Employee relocate to a worksite that is more than
thirty-five (35) miles from his prior worksite, unless the
Eligible Employee accepts such relocation opportunity;
(v) material reduction in Eligible Employee’s duties;
(vi) failure or refusal of a successor to the Company to
assume the Company’s obligations under the Plan; or
(vii) material breach by the Company or any successor to the
Company of any of the material provisions of the Plan; provided,
however, that the Eligible Employee must provide written notice to
the Company of the condition that could constitute a “Good
Reason” event within ninety (90) days of the initial
existence of such condition and such condition must not have been
remedied by the Company within thirty (30) days of such
written notice.
(v) “Benefit
Period” shall mean
the period commencing on the date an employee of the Company
becomes an Eligible Employee as defined in paragraph (i) of
this Subsection (a) (the “Termination Date”) and
continuing for twelve (12) months (eighteen (18) months
if the Eligible Employee is the Company’s Chief Executive
Officer) following the Termination Date, if the Termination Date
occurs at any time within twelve (12) months after the Change
of Control.
(vi) “Equity
Award” shall mean a
grant of incentive or non-statutory stock options, restricted
stock, restricted stock units, stock appreciation rights,
performance shares, performance units, deferred stock units, or
other equity or equity award to an Eligible Employee pursuant to an
equity incentive plan of the Company.
(b) Exceptions.
An employee who otherwise is an
Eligible Employee will not receive severance benefits under the
Plan in any of the following circumstances:
(i) The employee voluntarily terminates employment
with the Company other than for Good Reason.
(ii) The employee voluntarily terminates employment
with the Company in order to accept employment with another entity
that is wholly or partly owned (directly or indirectly) by the
Company or a successor to the Company, or is wholly or partly owned
(directly or indirectly) by the parent or other affiliate of the
Company or its successor.
S ECTION 3. A MOUNT O F I NCENTIVE AND S EVERANCE B ENEFITS .
(a) Incentive
Benefits. Individuals who
are Eligible Employees at the time of a Change of Control shall
receive the following incentive benefits:
(i) If, on the date of the Change of
Control, the Eligible Employee has outstanding Equity Awards to
purchase or acquire shares in the stock of the Company, the vesting
schedule for such outstanding Equity Awards, to the extent not
already vested, shall be accelerated by a period of one
year.
(ii) If on the date of the Change of Control, the
Eligible Employee is the Chief Executive Officer of the Company,
and the Chief Executive Officer has outstanding Equity Awards to
purchase or acquire shares in the stock of the Company, the vesting
schedule for such outstanding Equity Awards, to the extent not
already vested, shall be accelerated by a period of two
years.
(b) Severance
Benefits. Eligible
Employees whose employment is terminated as described in Subsection
2(a) of this Plan will receive, subject to Section 4 hereof,
the following severance benefits:
(i) The Eligible Employee shall receive Compensation
during the Benefit Period. “Compensation” shall be the
Eligible Employee’s total base pay and bonus (excluding
draws, commissions, and other forms of additional compensation).
For purposes of this paragraph 3(b)(i), the amount of the Eligible
Employee’s base pay shall be equal to the amount of base pay
actually paid to the Eligible Employee during the twelve
(12) month period (eighteen (18) months if the Eligible
Employee is the Company’s Chief Executive Officer)
immediately preceding the Termination Date. For purposes of this
paragraph 3(b)(i), the amount of the bonus shall be determined
based upon the bonus which the Eligible Employee would have been
entitled to receive under the terms of the Company’s annual
incentive bonus plan for the Company’s fiscal year in which
the Termination Date occurs, assuming on-plan performance by the
Eligible Employee and the Company. If the Eligible Employee is the
Company’s Chief Executive Officer, this bonus amount shall be
multiplied by a factor of 1.5.
(ii) The Eligible Employee shall receive a bonus
payment for the year in which the Termination Date occurs if the
Eligible Employee received a bonus payment for the year immediately
preceding the year in which the Termination Date occurs. The amount
of the bonus payment payable for the year in which the Termination
Date occurs shall be equal to the amount of the bonus payment, if
any, paid to the Eligible Employee for the year immediately
preceding the year in which the Termination Date occurs, multiplied
by a fraction, the numerator of which shall be the number of months
the Eligible Employee works for the Company during the year in
which the Termination Date occurs, including the month in which the
Termination Date occurs, and the denominator of which shall be
twelve.
(iii) If, on the Termination Date, the Eligible
Employee has outstanding Equity Awards to purchase or acquire
shares in the stock of the Company, such outstanding Equity Awards,
to the extent they would otherwise vest if the Eligible Employee
completed twelve months of employment with the Company following
the Termination Date, shall become vested and exercisable on the
Termination Date. In addition, to the extent that any portion of
the outstanding Equity Awards of the Company’s Chief
Executive Officer did not become fully vested under paragraph
3(a)(ii) of the Plan because of the limitation of paragraph
3(a)(iii) of the Plan, such options shall become vested and
exercisable on the Termination Date.
(iv) If the Eligible Employee has medical, dental or
vision coverage, under a group health plan sponsored by the Company
on the Eligible Employee’s Termination Date, and if the
Eligible Employee timely elects continuation of such coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”), the Company will reimburse the Eligible
Employee for the total applicable premium cost paid for medical,
dental and vision coverage under COBRA as set forth in further
detail under Subsection 9(a) below. Such reimbursement shall be
made within thirty (30) days of the premium
payment.
S ECTION 4. L IMITATION O N A MOUNT O F B ENEFIT ; G OLDEN P ARACHUTE T AXES .
(a) Notwithstanding any other provision of the Plan
to the contrary, any benefits payable to an Eligible Employee under
this Plan shall be offset, to the maximum extent permitted by law,
by any severance benefits payable by the Company to such individual
under any other arrangement covering the individual.
(b) Notwithstanding any other provision of the Plan
to the contrary, (i) the severance benefits under this Plan
are in lieu of any other benefit provided under any other group
severance plan of the Company and (ii) severance benefits
under this Plan shall be reduced by the amount of any payment to
which the Eligible Employee is entitled under any individual
severance agreement then in effect between the Eligible Employee
and the Company. In addition, the Company shall withhold
appropriate federal, state, local and foreign income and employment
taxes from any payments hereunder.
(c) Notwithstanding any other provision of the Plan
to the contrary, in the event that the severance and other benefits
provided for in this Plan or otherwise payable or provided to an
Eligible Employee (i) constitute “parachute
payments” within the meaning of Section 280G of the
Internal Revenue Code (the “Code”), and (ii) but
for this Section 4(c), would be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise
Tax”), then the Eligible
Employee’s Plan benefits shall be either
(a) delivered in full, or (b) delivered as to such lesser
extent which would result in no portion of such Plan benefits being
subject to the Excise Tax, whichever of the foregoing amounts,
taking into account the applicable federal, state and local income
taxes and the Excise Tax, results in the receipt by the Eligible
Employee 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 the Eligible
Employee otherwise agree in writing, any determination required
under this Section 4(c) will be made in writing by a national
“Big Four” accounting firm selected by the Company or
such other person or entity to which the parties mutually agree
(the “Accountants”), whose determination will be
conclusive and binding upon the Eligible Employee and the Company
for all purposes. For purposes of making the calculations required
by this Section 4(c), the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Company and
the Eligible Employees shall furnish to the Accountants such
information and documents as the Accountants may reasonably request
in order to make a determination under this Section. The Company
shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this
Section 4(c). Any reduction in payments and/or benefits
required by this Section 4(c) shall occur in the following
order: (1) reduction of cash payments; and (2) reduction
of equity acceleration (full-value awards first, then stock
options), and (3) other benefits paid to the acceleration of
vesting shall be cancelled in the reverse order of the date of
grant for the Eligible Employee’s equity awards.
S ECTION 5. N OTICE O F T ERMINATION .
Any termination by the Company,
whether or not for Cause, or by the Eligible Employee for Good
Reason, shall be communicated by Notice of Termination to the other
party hereto given by hand delivery or by registered or certified
mail, return receipt requested, postage prepaid, if to the Eligible
Employee, then to the Eligible Employee at the Eligible
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