COMPELLENT TECHNOLOGIES,
INC.
EXECUTIVE EMPLOYMENT
AGREEMENT
This
Executive Employment
Agreement (the “ Agreement ”)
is entered into as of the 16th day of June, 2008 (the “
Effective Date ”) by and between
Compellent Technologies,
Inc., a Delaware corporation (the “
Company ”), and Brian P. Bell (“
Executive ”), an individual residing in the
State of Wisconsin.
The Company
desires to employ Executive and avail itself of the unique skills,
talents, contacts, judgment and knowledge of Executive;
Executive desires
to be employed by the Company pursuant to the terms and conditions
described more fully below:
Now, Therefore , in
consideration of the foregoing and the mutual covenants set forth
herein, the Company and Executive, intending to be legally bound,
hereby agree as follows:
1. Employment and Duties. Subject to the terms and
conditions set forth herein, the Executive shall serve as the
Company’s Vice President, Sales, with those duties set forth
on Schedule 1 attached hereto. Executive shall devote his full
working time and efforts to the Company’s business, to the
exclusion of all other employment or active participation in other
material business interests, unless otherwise consented to in
writing by the disinterested members of the Board of Directors of
the Company (the “ Board ”). The
Executive may not serve as a director on any board of directors
without the unanimous written consent of the Board.
2. At
will Employment. Executive’s employment with Company
shall be at will and this Agreement may be unilaterally terminated
by either party subject to the terms of Section 5 of this
Agreement.
3. Compensation. For all services rendered by Executive
pursuant to this Agreement, the Company shall compensate Executive
pursuant to the terms and conditions as initially listed in
Schedule 2 attached hereto, or as it may be adjusted from time
to time hereafter.
4. Proprietary Information and Inventions Agreement.
Executive affirms his obligations under the Proprietary Information
and Inventions Agreement (the “ Proprietary
Agreement ”) that is attached as Schedule 3
hereto, which he has previously executed in connection with the
commencement of his employment.
A. Voluntary Termination. Except as provided in
Sections 5.B., C., D. and E., each party hereto may terminate
Executive’s employment by giving to the other party no less
than thirty (30) days prior written notice of the party’s
intent to terminate. If Executive
voluntarily
terminates his employment without Good Reason then the Company
shall have no further liability to Executive for any payment,
compensation or benefit whatsoever, other than payment of
Executive’s accrued but unpaid salary and benefits through
the date of Executive’s termination. If the Company
voluntarily terminates Executive’s employment without Cause
(as set forth in Section 5.D. hereof) or Executive terminates
his employment for Good Reason (as set forth in Section 5.E.),
and subject to Executive’s compliance with Section 6 of
this Agreement and with the Proprietary Agreement, then Executive
shall be entitled to a severance payments and benefits as described
in Section 6 of this Agreement.
B. By Death. Executive’s employment shall be
terminated automatically upon the death of Executive. The
Company’s total liability in such event shall be limited to
payment of Executive’s accrued but unpaid salary and benefits
through the date of Executive’s death.
C. By Disability. The Company may terminate
Executive’s employment upon the inability of Executive to
perform on a full-time basis the duties and responsibilities of his
employment with the Company by reason of his illness or other
physical or mental impairment or condition, if such inability
continues for an uninterrupted period of 90 days. A period of
inability shall be “uninterrupted” unless and until
Executive returns to full-time work for a continuous period of at
least 30 days. The Company shall have no liability for
severance pay or benefits following the date of Executive’s
termination of employment, other than payment of Executive’s
accrued but unpaid salary and benefits through the date of
Executive’s termination AND ANY RIGHTS EXECUTIVE HAS TO
DISABILITY INSURANCE BENEFITS UNDER APPLICABLE LAW OR THE
COMPANY’S SHORT OR LONG TERM DISABILITY INSURANCE POLICIES AS
IN EFFECT AT THE TIME OF TERMINATION.
D. For Cause. The employment relationship between
Executive and the Company created hereunder shall automatically and
immediately terminate upon the occurrence of any one of the
following events:
(i) the conviction of Executive of a
felony;
(ii) the gross negligence or willful misconduct of
Executive which is reasonably determined by the Board to be
injurious to the business or interests of the Company;
(iii) Executive’s willful violation of specific
and lawful directions of the Board, which persists for a period of
5 days after notice is given of such willful
violation;
(iv) excessive absenteeism of Executive which persists
for a period of 30 days after the Board has given the
Executive notice of such absenteeism;
(v) material failure of Executive to perform or
observe the provisions of this Agreement with the Company which
persists for a period of 30 days after notice is given of such
failure to perform or observe;
(vi) failure to cooperate with the Company in any
investigation or formal proceeding; or
(vii) any act of fraud with respect to any aspect of
the Company’s business where such act is reasonably
determined by the Board to be injurious to the business of the
Company.
E. Good Reason. Executive’s voluntary resignation
of his employment under this Agreement will be considered to be
with “Good Reason” if, following the occurrence of one
or more of the events listed below, Executive (1) provides
written notice to the Board of the event(s) constituting Good
Reason within thirty (30) days after the first occurrence of
such event(s), (2) the Company fails to reasonably cure such
event(s) within thirty (30) days after receiving such notice,
and (3) Executive’s termination of his employment is
effective not later than thirty (30) days after the end of the
period in which the Board may cure the event(s). The following
events will give rise to Good Reason, unless Executive has
consented thereto in writing:
(i) A material reduction or diminution in the
Executive’s job responsibilities or duties; provided,
however, that neither a mere change in title alone nor reassignment
to a position that is substantially similar to the position held
prior to the reassignment shall constitute Good Reason (including
but not limited to, following a Change in Control, performing
substantially the same duties with respect to substantially the
same size and scope of organization, but which organization is part
of a larger organization);
(ii) A material reduction by the Company of
Executive’s Base Salary as in effect on the date of this
Agreement (as set forth on Schedule 2 hereof) or as same may
be increased from time to time thereafter; provided, however, that
a reduction of Base Salary in connection with a similar general
reduction of the base salaries of the Company’s executive
employees shall not constitute Good Reason;
(iii) The relocation of Executive’s primary work
location, on a permanent basis, to an office that would increase
the Executive’s one way commute distance by more than
seventy-five (75) miles from Executive’s primary work
location as of immediately prior to such change; or
(iv) any acquirer, successor or assignee of the
Company fails to assume and perform, in all material respects, the
obligations of the Company hereunder.
A. If the Company voluntarily terminates
Executive’s employment without Cause (and other than as a
result of Executive’s death or disability (as defined above))
or if Executive resigns his employment with Good Reason, then
subject to the effectiveness of Executive’s executed general
waiver and release of claims in favor of the Company and its
affiliates (in substantially the form attached hereto as
Schedule 4), and provided Executive complies with his
continuing obligations to the Company (including but not limited to
those in the Proprietary Agreement), Executive shall be entitled to
receive:
(i) a lump sum payment equal to four (4) months
of his Base Salary, less applicable withholdings (the “
Cash Severance ”);
(ii) if Executive was enrolled in a group health plan
( e.g ., medical, dental, or vision plan) sponsored by the
Company immediately prior to termination, and if Executive (or his
eligible dependents) timely elects to continue such coverage under
the Consolidated Omnibus Budget Reconciliation Act of 1985
(together with any state law of similar effect, “
COBRA ”), the Company will pay to the insurance
carrier(s) the full amount of the premiums due for Executive and
his eligible dependents for the first four (4) months of such
coverage under COBRA (or until such earlier time as Executive
and/or his eligible dependents are no longer eligible for COBRA
coverage); and
(iii) if the termination occurs on, within three
(3) months prior to, or eighteen (18) months following, a
Change in Control (as defined below), 100% of Executive’s
then-outstanding and unvested compensatory equity awards (in
addition to any acceleration provided for pursuant to the stock
options to purchase 50,000 shares granted on March 28, 2007
and 70,000 shares granted on March 28, 2007) pursuant to the
Company’s 2002 Stock Option Plan, as amended (the “
Prior Stock Option Grants ”)) shall become
immediately fully vested and, as applicable, exercisable, effective
as of immediately prior to the termination of Executive’s
employment.
Executive
must execute the release of claims within forty-five (45) days
following the date of termination, and allow the release to become
effective in accordance with its terms. If the release becomes
effective within such time period, and subject to Executive’s
observation of his continuing obligations, the Company will pay the
Cash Severance on the first regular payroll pay date following the
effective date of the release.
B. If the Company (or, if applicable, the successor
entity thereto) determines that these severance payments and
benefits (the “ Payments ”) constitute
“deferred compensation” under Section 409A of the
Internal Revenue Code (together, with any state law of similar
effect, “ Section 409A ”) and
Executive is a “specified employee” of the Company or
any successor entity thereto, as such term is defined in
Section 409A(a)(2)(B)(i) (a “ Specified
Employee ”), then, solely to the extent necessary to
avoid the incurrence of the adverse personal tax consequences under
Section 409A, the timing of the Payments shall be delayed as
follows: on the earliest to occur of (i) the date that is six
months and one day after the termination date, (ii) the date
of the Eligible Employee’s death, or (iii) such earlier
date, as reasonably determined in good faith by the Company (or any
successor entity thereto), as would not result in any of the
Payments being subject to adverse personal tax consequences under
Section 409A (such earliest date, the “ Delayed
Initial Payment Date ”), the Company (or the
successor entity thereto, as applicable) shall (A) pay to
Executive a lump sum amount equal to the sum of the Payments that
Executive would otherwise have received through the Delayed Initial
Payment Date if the commencement of the payment of the Payments had
not been delayed pursuant to this Section 6(B) and
(B) commence paying the balance of the Payments in accordance
with the applicable payment schedules set forth in
Section 6(A) above. For the avoidance of doubt, it is intended
that (1) each installment of the Payments provided in Section
6(A) above is a separate “payment” for purposes of
Section 409A, (2) all Payments satisfy, to the greatest
extent possible, the exemptions from the application of
Section 409A provided under of Treasury
Regulation 1.409A-1(b)(4)-(6), and 1.409A-1(b)(9)(iii), and
(3) the Payments consisting of COBRA premiums also satisfy, to
the greatest extent possible, the exemptions from the application
of Section 409A provided under Treasury
Regulation 1.409A-1(b)(9)(v).
(i) If any payment or benefit (including payments and
benefits pursuant to this Agreement) that Executive would receive
in connection with a Change in Control from the Company or
otherwise (“ Transaction Payment ”) would
(a) constitute a “parachute payment” within the
meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “ Code ”), and (b) but
for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “ Excise Tax
”), then the Company shall cause to be determined, before any
amounts of the Transaction Payment are paid to Executive, which of
the following two alternative forms of payment would maximize
Executive’s after-tax proceeds: (1) payment in full of
the entire amount of the Transaction Payment (a “ Full
Payment ”), or (2) payment of only a part of the
Transaction Payment so that Executive receives the largest payment
possible without the imposition of the Excise Tax (a “
Reduced Payment ”), whichever amount results in
Executive’s receipt, on an after-tax basis, of the greater
amount of the Transaction Payment notwithstanding that all or some
portion of the Transaction Payment may be subject to the Excise
Tax. For purposes of determining whether to make a Full Payment or
a Reduced Payment, the Company shall cause to be taken into account
all applicable federal, state and local income and employment taxes
and the Excise Tax (all computed at the highest applicable marginal
rate, net of the maximum reduction in federal income taxes which
could be obtained from a deduction of such state and local taxes).
If a Reduced Payment is made, (x) the Transaction Payment
shall be paid only to the extent permitted under the Reduced
Payment alternative, and Executive shall have no rights to any
additional payments and/or benefits constituting the Transaction
Payment, and (y) reduction in payments and/or benefits shall occur
in the following order: (1) reduction of other cash payments
(if any); (2) cancellation of accelerated vesting of equity
awards other than stock options; (3) cancellation of
accelerated vesting of stock options; and (4) reduction of
other benefits (if any) paid to Executive. In the event that
acceleration of compensation from Executive’s equity awards
is to be reduced, such acceleration of vesting shall be canceled in
the reverse order of the date of grant.
(ii) The independent registered public accounting firm
engaged by the Company for general audit purposes as of the day
prior to the effective date of the Change in Control shall make all
determinations required to be made under this Section 6(C). If
the independent registered public accounting firm so engaged by the
Company is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Company shall
appoint a nationally recognized independent registered public
accounting firm to make the determinations required hereunder. The
Company shall bear all expenses with respect to the determinations
by such independent registered public accounting firm required to
be made hereunder.
(iii) The independent registered public accounting
firm engaged to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation, to
the Company and Executive within fifteen (15) calendar days
after the date on which Executive’s right to a Transaction
Payment is triggered (if requested at that time by the Company or
Executive) or such other time as reasonably requested by the
Company or Executive. If the independent registered public
accounting firm determines that no Excise Tax is payable with
respect to the Transaction Payment, either before or after the
application of the Reduced Amount, it shall furnish the Company and
Executive with an opinion reasonably
acceptable to
Executive that no Excise Tax will be imposed with respect to such
Transaction Payment. Any good faith determinations of the
accounting firm made hereunder shall be final, binding and
conclusive upon the Company and Executive.
D. Change in Control . For purposes of this
Section 6, “ Change in Control ”
means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following
events:
(i) any Exchange Act Person (as defined in the
Company’s 2007 Equity Incentive Plan) becomes the owner,
directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities other than by virtue of
a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur
(a) on account of the acquisition of securities of the Company
by an investor, any affiliate thereof or any other Exchange Act
Person from the Company in a transaction or series of related
transactions the primary purpose of which is to obtain financing
for the Company through the issuance of equity securities or
(b) solely because the level of ownership held by any Exchange
Act Person (the “ Subject Person ”)
exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition
of voting securities by the Company reducing the number of shares
outstanding, provided that if a Change in Control would occur (but
for the operation of this sentence) as a result of the acquisition
of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the owner of any additional
voting securities that, assuming the repurchase or other
acquisition had not occurred, increases the percentage of the then
outstanding voting securities owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be
deemed to occur;
(ii) there is consummated a merger, consolidation or
similar transaction involving (directly or indirectly) the Company
and, immediately after the consummation of such merger,
consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not own, directly or
indirectly, either (a) outstanding voting securities
representing more than fifty percent (50%) of the combined
outstanding voting power of the surviving entity in such merger,
consolidation or similar transaction or (b) more than fifty
percent (50%) of the combined outstanding voting power of the
parent of the surviving entity in such merger, consolidation or
similar transaction, in each case in substantially the same
proportions as their ownership of the outstanding voting securities
of the Company immediately prior to such transaction;
(iii) there is consummated a sale, lease, exclusive
license or other disposition of all or substantially all of the
consolidated assets of the Company and its subsidiaries, other than
a sale, lease, license or other disposition of all or substantially
all of the consolidated assets of the Company and its subsidiaries
to an entity, more than fifty percent (50%) of the combined voting
power of the voting securities of which are owned by stockholders
of the Company in substantially the same proportions as their
ownership of the outstanding voting securities of the Company
immediately prior to such sale, lease, license or other
disposition; or
(iv) over a twelve month period, individuals who, on
the Effective Date, are members of the Board (the “
Incumbent Board R
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