Exhibit 10.26
3PAR I NC .
MANAGEMENT RETENTION
AGREEMENT
This Management Retention Agreement
(the “Agreement”) originally made and entered into by
and between
(the “Executive”) and 3PAR Inc. (the
“Company”), effective as of
(the “Prior Agreement”), is hereby amended and restated
to comply with Section 409A of the Internal Revenue Code,
effective as of December 19, 2008.
RECITALS
A. It is expected that the Company
from time to time may consider a Change of Control (as defined
below). The Board of Directors of the Company (the
“Board”) recognizes that such consideration can be a
distraction to the Executive and can cause the Executive to
consider alternative employment opportunities. The Board has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication and objectivity of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control of the
Company.
B. The Board believes that it is in
the best interests of the Company and its shareholders to provide
the Executive with an incentive to continue his or her employment
and to motivate the Executive to maximize the value of the Company
upon a Change of Control for the benefit of its
shareholders.
C. The Board believes that it is
imperative to provide the Executive with certain severance benefits
upon the Executive’s termination of employment following a
Change of Control which provides the Executive with enhanced
financial security and incentive and encouragement to remain with
the Company notwithstanding the possibility of a Change of
Control.
D. Certain capitalized terms used in
this Agreement are defined in Section 4 below.
The parties hereto agree as
follows:
1. Term of Agreement . This
Agreement shall terminate upon the date that all obligations of the
parties hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment . The
Company and the Executive acknowledge that the Executive’s
employment is and shall continue to be at-will, as defined under
applicable law, and may be terminated by either party at any time,
with or without cause or notice. If the Executive’s
employment terminates for any reason, including (without
limitation) any termination prior to a Change of Control, the
Executive shall not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this Agreement, or
as may otherwise be available in accordance with the
Company’s established employee plans or pursuant to other
written agreements with the Company.
3. Change of Control Severance
Benefits .
(a) Involuntary Termination other
than for Cause , Death or Disability or Voluntary
Termination for Good Reason Following A Change of Control . If,
within twelve (12) months following a Change of Control, the
Executive’s employment is terminated (i) involuntarily
by the Company other than for Cause, death or Disability or
(ii) by the Executive pursuant to a Voluntary Termination for
Good Reason, then, subject to the Executive entering into and not
revoking a mutual release of claims with the Company substantially
in the form attached as Exhibit A to this Agreement
(the “Release”), the Company shall provide the
Executive with the following benefits upon such
termination:
(i) Severance Payment . A
lump-sum cash payment in an amount equal to fifty percent
(50%) of the Executive’s Annual Compensation;
(ii) Continued Executive
Benefits . Company-paid health, dental, vision, long-term
disability and life insurance coverage at the same level of
coverage as was provided to the Executive immediately prior to the
Change of Control and at the same ratio of Company premium payment
to Executive premium payment as was in effect immediately prior to
the Change of Control (the “Company-Paid Coverage”). If
such coverage included the Executive’s dependents immediately
prior to the Change of Control, such dependents shall also be
covered at Company expense. Company-Paid Coverage shall continue
until the earlier of (A) one year from the date of
termination, or (B) the date upon which the Executive and his
or her dependents become covered under another employer’s
group health, dental, vision, long-term disability or life
insurance plans that provide the Executive and his or her
dependents with comparable benefits and levels of coverage. For
purposes of Title X of the Consolidated Budget Reconciliation
Act of 1985 (“COBRA”), the date of the
“qualifying event” for the Executive and his or her
dependents shall be the date upon which the Company-Paid Coverage
commences, and each month of Company-Paid Coverage provided
hereunder shall offset a month of continuation coverage otherwise
due under COBRA.
(iii) Equity Compensation
Accelerated Vesting . Fifty percent (50%) of the unvested
portion of any stock option, restricted stock or other Company
equity compensation held by the Executive shall be automatically
accelerated in full so as to become completely vested or, if the
Executive has exercised his or her early exercise rights with
respect to any stock option, then fifty percent (50%) of the
unreleased portion of the stock option shall be automatically
released from the Company’s repurchase option pursuant to the
stock option.
(b) Voluntary Resignation .
If the Executive’s employment terminates by reason of the
Executive’s voluntary resignation (and is not a Voluntary
Termination for Good Reason), then the Executive shall 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 severance and benefits plans or pursuant to other written
agreements with the Company.
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(c) Disability; Death . If
the Executive’s employment with the Company terminates as a
result of the Executive’s Disability, or if the
Executive’s employment is terminated due to the death of the
Executive, then the Executive shall 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 severance
and benefits plans or pursuant to other written agreements with the
Company.
(d) Termination for Cause .
If the Executive is terminated for Cause, then the Executive shall
not be entitled to receive severance or other benefits.
(e) Termination Apart from Change
of Control . In the event the Executive’s employment is
terminated for any reason, either prior to the occurrence of a
Change of Control or after the twelve (12) month period
following a Change of Control, then the Executive shall be entitled
to receive severance and any other benefits only as may then be
established under the Company’s then existing severance and
benefits plans or pursuant to other written agreements with the
Company.
(f) Timing of Release . The
receipt of any severance pursuant to this Section 3 will be
subject to the Executive signing an not revoking the Release and
provided further that the Release becomes effective no later than
sixty (60) days following termination of Executive’s
employment. No severance will be paid or provided until the Release
becomes effective.
(g) Timing of
Severance . The severance payment to which Executive is
entitled shall be paid in cash and in full on the sixtieth
(60 th ) day following the
Executive’s separation from service, or, if later, such time
as is required by Section 8.
4. Definition of Terms . The
following terms referred to in this Agreement shall have the
following meanings:
(a) Annual Compensation .
“Annual Compensation” shall mean an amount equal to the
Executive’s Company annual base salary at the rate in effect
immediately preceding the Executive’s date of termination
with the Company.
(b) Cause .
“Cause” shall mean (i) an act of personal
dishonesty taken by the Executive in connection with his or her
responsibilities as an Executive and intended to result in
substantial personal enrichment of the Executive, (ii) the
Executive being convicted of a felony, (iii) a willful act by
the Executive which constitutes gross misconduct and which is
injurious to the Company, (iv) following delivery to the
Executive of a written demand for performance from the Company
which describes the basis for the Company’s reasonable belief
that the Executive has not substantially performed his or her
duties, continued violations by the Executive of the
Executive’s obligations to the Company which are demonstrably
willful and deliberate on the Executive’s part.
(c) Change of Control .
“Change of Control” means the occurrence of any of the
following events:
(i) Any “person” (as
such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the
“beneficial owner” (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting
power represented by the Company’s then outstanding voting
securities; or
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(ii) The consummation of the sale or
disposition by the Company of all or substantially all the
Company’s assets; or
(iii) The consummation of a merger
or consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or
its parent) at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such
merger or consolidation; or
(iv) A change in the composition of
the Board occurring within a two-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the Effective Date, or
(B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those directors
whose election or nomination was not in connection with any
transaction described in subsections (i), (ii), or
(iii) above, or in connection with an actual or threatened
proxy contest relating to the election of directors to the
Company.
(d) Disability .
“Disability” shall mean that the Executive has been
unable to perform his or her Company duties as the result of his or
her incapacity due to physical or mental illness, and such
inability, at least twenty-six (26) weeks after its
commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive’s legal representative (such
Agreement as to acceptability not to be unreasonably withheld).
Termination resulting from Disability may only be effected after at
least thirty (30) days’ written notice by the Company of
its intention to terminate the Executive’s employment. In the
event that the Executive resumes the performance of substantially
all of his or her duties hereunder before the termination of his or
her employment becomes effective, the notice of intent to terminate
shall automatically be deemed to have been revoked.
(e) Section 409A Limit .
For purposes of this Agreement, “Section 409A Limit”
shall mean the lesser of two (2) times:
(i) Executive’s annualized compensation based upon the
annual rate of pay paid to Executive during Executive’s
taxable year preceding Executive’s taxable year of
Executive’s termination of employment as determined under,
and with such adjustments as are set forth in, Treasury Regulation
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance
issued with respect thereto; or (ii) the maximum amount that
may be taken into account under a qualified plan pursuant to
Section 401(a)(17) of the Code for the year in which
Executive’s employment is terminated.
(f) Voluntary Termination for
Good Reason . “Voluntary Termination for Good
Reason” shall mean the Executive voluntarily resigns after
the occurrence of any of the following (i) without the
Executive’s express written consent, a material reduction of
the Executive’s duties, authority or responsibilities,
relative to the Executive’s duties, authority or
responsibilities as in
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effect immediately prior to such
reduction, or the assignment to the Executive of such reduced
duties, authority or responsibilities; provided, however, that a
reduction in duties, authority or responsibilities solely by virtue
of the Company being acquired and made part of a larger entity
shall not by itself constitute grounds for a “Voluntary
Termination for Good Reason”; (ii) without the
Executive’s express written consent, a material reduction,
without good business reasons, of the facilities or perquisites
(including office space and location) available to the Executive
immediately prior to such reduction; (iii) a material
reduction by the Company in the base salary of the Executive as in
effect immediately prior to such reduction; (iv) a material
reduction by the Company in the aggregate level of employee
benefits, including bonuses, to which the Executive was entitled
immediately prior to such reduction with the result that the
Executive’s aggregate benefits package is materially reduced
(other than a reduction that generally applies to Company
employees); (v) the relocation of the Executive to a facility
or a location outside Santa Clara, Alameda or San Mateo counties,
without the Executive’s express written consent; or
(vi) the failure of the Company to obtain the assumption of
this agreement by any successors contemplated in Section 6(a)
below. In addition, upon any such voluntary termination the
Executive must provide notice to the Company of the existence of
the one or more of the above conditions within ninety
(90) days of its initial existence and the Company must be
provided at least thirty (30) days to remedy the
condition.
5. Non-Solicitation . In
consideration for the severance benefits the Executive is to
receiv
