Exhibit 10.31
3PAR, INC.
EMPLOYMENT
AGREEMENT
This Agreement, originally made by
and between 3PAR, Inc. (the “Company”), and David C-A
Scott (“Executive”) July 30, 2007 (the
“Prior Agreement”), is hereby amended and restated to
comply with Internal Revenue Code (the “Code”)
Section 409A and the final regulations and any guidance
promulgated thereunder (“Section 409A”), effective as
of the last date signed below.
1. Duties and Scope of
Employment .
(a) Positions; CEO Employment
Commencement Date; Duties . The Company shall employ the
Executive as the President and Chief Executive Officer of the
Company reporting to the Board of Directors of the Company (the
“Board”). The period of Executive’s employment
hereunder is referred to herein as the “Employment
Term.” During the Employment Term, Executive shall render
such business and professional services in the performance of his
duties, consistent with Executive’s position within the
Company as shall reasonably be assigned to him by the
Board.
(b) Obligations . During the
Employment Term, Executive shall devote his full business efforts
and time to the Company. Executive agrees, during the Employment
Term, not to actively engage in any other employment, occupation or
consulting activity for any direct or indirect remuneration without
the prior approval of the Board; provided, however, that Executive
may serve in any capacity with any civic, educational or charitable
organization, or as a member of corporate Boards of Directors or
committees thereof, without the approval of the Board, unless there
is a conflict of interest.
(c) Employee Benefits .
During the Employment Term, Executive shall be eligible to
participate in the employee benefit plans maintained by the Company
that are applicable to other senior management to the full extent
provided for under those plans.
2. At-Will Employment .
Executive and the Company understand and acknowledge that
Executive’s employment with the Company constitutes
“at-will” employment. Subject to the Company’s
obligation to provide severance benefits as specified herein,
Executive and the Company acknowledge that this employment
relationship may be terminated at any time, upon written notice to
the other party, with or without good cause or for any or no cause,
at the option either of the Company or Executive.
3. Compensation .
(a) Base Salary . While
employed by the Company, the Company shall pay the Executive as
compensation for his services a base salary at the annualized rate
of three hundred and fifty thousand dollars ($350,000) (the
“Base Salary”). Such salary shall be paid periodically
in accordance with normal Company payroll practices and subject to
the usual, required withholding. Executive’s Base Salary
shall be reviewed annually by the Compensation Committee of the
Board for possible adjustments in light of Executive’s
performance and competitive data.
(b) Target Bonus . Executive
shall be eligible to earn an annual target bonus based upon the
Company’s fiscal year equal to one hundred percent
(100%) of his Base Salary (“Target Bonus”). The
actual bonus, if any, Executive will receive may be greater or
lesser and will depend upon the extent to which the applicable
performance goal(s) specified by the Compensation Committee are
achieved or exceeded. Any Target Bonus earned pursuant hereto will
be paid to Executive within two and one-half months of the end of
the fiscal year to which the Target Bonus relates.
(c) Equity Grants . In
addition to the equity compensation awards that Executive has
already received, Executive will be eligible to receive additional
equity grants on a periodic basis consistent with the normal
compensation practices of the Company.
4. Severance Benefits
.
(a) Involuntary Termination other
than for Cause, Death or Disability; Voluntary Termination for Good
Reason During Change of Control Period . If, within eighteen
(18) months following a Change of Control (the “Change
of Control Period”), Executive’s employment is
terminated (i) involuntarily by the Company other than for
Cause, Death or Disability or (ii) due to a Voluntary
Termination for Good Reason, then, subject to Executive entering
into and not revoking a standard form of release of claims with the
Company within thirty (30) days following termination and
further subject to Executive complying with the provisions of
Section 7 hereof, the Company shall provide Executive with the
following benefits:
(i) Severance Payment . Three
hundred percent (300%) of the Executive’s Base Salary,
payable in a lump-sum thirty (30) days following
Executive’s termination of employment (subject to delayed
payment to avoid additional taxation under
Section 409A);
(ii) Equity Compensation
Accelerated Vesting . One hundred percent (100%) of the
unvested portion of any stock option, restricted stock or other
Company equity compensation held by the Executive shall
automatically be accelerated in full so as to become completely
vested.
(iii) Continued Benefits .
Company-paid group health, dental, vision and life insurance
coverage at the same level of coverage as was provided to such
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
(i) one year from the date of termination, or (ii) the
date upon which the Executive and his dependents become covered
under another employer’s group health, dental, vision or life
insurance plans that provide Executive and his 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 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.
-2-
(b) Involuntary Termination Other
than for Cause or Voluntary Termination for Good Reason Outside of
Change of Control Period; Termination Due to Death or
Disability . If the Executive’s employment with the
Company terminates (i) as a result of the Executive’s
Disability, (ii) due to the death of the Executive,
(iii) involuntarily by the Company for any reason other than
for Cause outside of the Change of Control Period, or (iv) due
to a Voluntary Termination for Good Reason outside of the Change of
Control Period, then, subject to Executive (or his estate or
personal representative) entering into and not revoking a standard
form of release of claims with the Company within thirty
(30) days following termination and further subject to
Executive complying with the provisions of Section 7 hereof
(except in the case of Executive’s death), the Company shall
provide Executive with the following benefits upon such
termination:
(i) Severance Payment . Three
hundred percent (300%) of the Executive’s Base Salary,
payable in a lump-sum thirty (30) days following
Executive’s termination of employment (subject to delayed
payment to avoid additional taxation under
Section 409A);
(ii) Equity Compensation
Accelerated Vesting . Any stock option, restricted stock or
other Company equity compensation held by the Executive shall
receive one year’s accelerated vesting.
(iii) Continued Benefits .
Company-paid group health, dental, vision and life insurance
coverage at the same level of coverage as was provided to such
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
(i) one year from the date of termination, or (ii) the
date upon which the Executive and his dependents become covered
under another employer’s group health, dental, vision, or
life insurance plans that provide Executive and his 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 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.
(c) Voluntary Resignation other
than for Good Reason; Termination For Cause . If the
Executive’s employment terminates by reason of the
Executive’s voluntary resignation (and is not a Voluntary
Termination for Good Reason), or if the Executive is terminated for
Cause, 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.
-3-
5. Golden Parachute Excise
Taxes . In the event that the benefits provided for in this
Agreement or otherwise constitute “parachute payments”
within the meaning of Section 280G of the Code would be
subject to the excise tax imposed by Section 4999 of the Code
(the “Excise Tax”), and the aggregate value of such
parachute payments, as determined in accordance with
Section 280G of the Code and the Treasury Regulations
thereunder is less than the product obtained by multiplying 3.59 by
Executive’s “base amount” within the meaning of
Code Section 280G(b)(3), then such benefits shall be reduced
to the extent necessary (but only to that extent) so that no
portion of such benefits will be subject to the Excise Tax.
Alternatively, in the event that the benefits provided for in this
Agreement or otherwise constitute “parachute payments”
within the meaning of Section 280G of the Code, would be
subject to the Excise Tax, and the aggregate value of such
parachute payments, as determined in accordance with
Section 280G of the Code and the Treasury Regulations
thereunder is equal to or greater than the product obtained by
multiplying 3.59 by Executive’s “base amount”
within the meaning of Code Section 280G(b)(3), then Executive
shall receive (i) a payment from the Company sufficient to pay
such Excise Tax, plus (ii) an additional payment from the
Company sufficient to pay the Excise Tax and federal and state
income and employment taxes arising from the payments made by the
Company to Executive pursuant to this sentence (together, the
“Excise Tax Gross-Up Payment”); provided, however, that
the Excise Tax Gross-Up Payment shall be capped at a maximum of one
million dollars ($1,000,000). The Executive shall receive such
payments no later than the end of the Executive’s taxable
year following the taxable year in which the Executive remitted the
applicable taxes. Unless the Company and Executive otherwise agree
in writing, the determination of Executive’s excise tax
liability and the amount required to be paid under this section
shall be made in writing by a “Big Four” national
accounting firm (the “Accountants”). Any reduction in
payments and/or benefits required by this section shall occur in
the following order: (1) reduction of cash payments;
(2) reduction in vesting acceleration of equity awards; and
(3) reduction of other benefits paid or provided to the
Executive. In the event that acceleration of vesting of equity
awards is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant for the
Executive’s equity awards. If two or more equity awards are
granted on the same date, each award will be reduced on a pro-rata
basis. For purposes of making the calculations required by this
section, 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 Executive
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.
6. Definition of Terms
.
