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Exhibit 10.09 NETAPP, INC. FORM OF CHANGE OF
CONTROL SEVERANCE AGREEMENT (NON-CEO EXECUTIVES)
This Change of Control Severance
Agreement (the "Agreement") is made and entered into by and between
("Executive") and NetApp, Inc. (the "Company"), effective as of
June 19, 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 of 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 of 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
or her employment and to motivate Executive to maximize the value
of the Company upon a Change of 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 of 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 of 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 have an initial term of
three (3) years commencing on the Effective Date (the "Initial
Term"). On the third anniversary of the Effective Date, this
Agreement will renew automatically for an additional one
(1) year term (the "Additional Term") unless either party
provides the other party with written notice of non-renewal at
least sixty (60) days prior to the date of automatic renewal.
Notwithstanding the foregoing sentence, if a Change of Control
occurs at any time during either the Initial Term or an Additional
Term, the term of this Agreement will extend automatically through
date that is twelve (12) months following the effective date
of the Change of Control. If Executive becomes entitled to
severance benefits under
Section 3 during the term of this Agreement, the 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, including (without limitation) any termination that occurs
other than during the period that is on or within twelve
(12) months after a Change of Control as provided herein,
Executive will not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this Agreement and
the payment of accrued but unpaid wages, as required by law, and
any unreimbursed reimbursable expenses.
3. Severance Benefits .
(a)
Termination without Cause or Resignation for Good Reason in
Connection with a Change of 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 occurs during the period that is on or within twelve
(12) months after a Change of Control, and Executive signs and
does not revoke a separation agreement and release of claims with
the Company (in substantially the form attached hereto as
Exhibit A 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; provided, however, that if Executive is
eligible to receive any payments or benefits pursuant to this
Section 3, Executive will not be eligible to receive any
payments or benefits pursuant to any Company severance plan,
policy, or other arrangement).
(ii)
Severance Payment . Executive will receive a lump sum
severance payment (less applicable withholding taxes) equal to the
sum of (A) 200% of Executive’s annual base salary as in
effect immediately prior to Executive’s termination date or
(if greater) at the level in effect immediately prior to the Change
of Control, and (B) 100% of Executive’s target annual
bonus as in effect immediately prior to Executive’s
termination date or (if greater) at the level in effect immediately
prior to the Change of Control.
(iii)
Equity Awards . All outstanding equity awards subject to
time-based vesting will vest as to that portion of the equity award
that would have vested through the twenty-four (24) month period
from Executive’s termination date had Executive remained
employed through such period. Additionally, Executive will be
entitled to accelerated vesting as to an additional 50% of the then
unvested portion of all of Executive’s outstanding equity
awards that are scheduled to vest pursuant to performance-based
criteria, if any. Executive will have one (1) year following
the date of his or her termination in which to exercise any
outstanding stock options or other similar rights to acquire
Company common stock; provided, however, that such post- -2-
termination exercise period will not extend beyond the original
maximum term of the stock option or other similar right to acquire
Company common stock.1
(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) until
the earlier of (A) a period of eighteen (18) 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 following Executive’s
termination date; provided, however, that no severance or other
benefits will be paid or provided until the separation agreement
and release of claims becomes effective, and any severance amounts
or benefits otherwise payable between Executive’s termination
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.
(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 of 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 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
or her 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.
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Section 3(a)(iii) of the Agreement for each of Messrs. Gomo
and Mendoza reads as follows: "Any outstanding equity awards
granted on or before June 19, 2008 will vest in full as to
100% of the unvested portion of the award. All outstanding equity
awards granted after June 19, 2008 and subject to time-based
vesting will vest as to that portion of the equity award that would
have vested through the twenty-four (24) month period from
Executive’s termination date had Executive remained employed
through such period. Additionally, Executive will be entitled to
accelerated vesting as to an additional 50% of the then unvested
portion of all of Executive’s outstanding equity awards
granted after June 19, 2008 that are scheduled to vest
pursuant to performance-based criteria, if any. Executive will have
one (1) year following the date of his or her termination in
which to exercise any outstanding stock options or other similar
rights to acquire Company common stock; provided, however, that
such post-termination exercise period will not extend beyond the
original maximum term of the stock option or other similar right to
acquire Company common stock."
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(e)
Termination not in Connection with a Change of 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 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), the
provisions of Section 3 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
termination of employment following a Change of Control other than
those benefits expressly set forth in this Section 3.
(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
Code and the final regulations and any guidance promulgated
thereunder ("Section 409A") at the time of Executive’s
termination (other than due to death), and 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.
(ii) Any
amount paid under the 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) Amount
paid under the 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. -4-
(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(a) will be either:
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(a)
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delivered in full, or
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(b)
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delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to excise tax
under Section 4999 of the Code,
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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 severance
benefits, notwithstanding that all or some portion of such
severance 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 of Control or such other person or
entity to which the parties mutually agree (the "Accountants"),
whose determination will be conclusive and binding upon Executive
and the Company for all purposes. For purposes of making the
calculations required by this Section 4, 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 will 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 will bear all costs the Accountants may incur
in connection with any calculations contemplated by this
Section 4. 5.
Definition of Terms . The following terms referred to in
this Agreement will have the following meanings:
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(a)
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Cause . "Cause" will mean:
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(i) Executive’s
continued intentional and demonstrable failure to perform his or
her duties customarily associated with Executive’s position
as an employee of the Company or its respective successors or
assigns, as applicable (other than any such failure resulting from
Executive’s mental or physical Disability) after Executive
has received a written demand of performance from the Company with
specifically sets forth the factual basis for the Company’s
belief that Executive has not devoted sufficient time and effort to
the performance of his or her -5-
duties and has failed to cure such non-performance within thirty
(30) days after receiving such notice (it being understood
that if Executive is in good-faith performing his or her duties,
but is not achieving results the Company deems satisfactory for
Executive’s position, it will not be considered to be grounds
for termination of Executive for "Cause");
(ii) Executive’s
conviction of, or plea of nolo contendere to, a felony that the
Board of Directors of the Company (the "Board") reasonably believes
has had or will have a material detrimental effect on the
Company’s reputation or business; or
(iii) Executive’s
commission of an act of fraud, embezzlement, misappropriation,
willful misconduct, or breach of fiduciary duty against, and
causing material harm to, the Company or its respective successors
or assigns, as applicable.
Executive
will receive notice and an opportunity to be heard before the Board
with Executive’s own attorney before any termination for
Cause is deemed effective. Notwithstanding anything to the
contrary, the Board may immediately place Executive on
administrative leave (with full pay and benefits to the extent
legally permissible) but will allow reasonable access to Company
information, employees and business should Executive wish to avail
himself and prepare for his or her opportunity to be heard before
the Board prior to the Board’s termination for Cause. If
Executive avails himself of his or her opportunity to be heard
before the Board, and then fails to make himself
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