FORM OF 409A LETTER AMENDMENT TO
OFFICERS’ SEVERANCE, CHANGE IN
CONTROL AND EMPLOYMENT AGREEMENTS
Addendum to Severance and
Change in Control Provisions
Pursuant to the
Letter of Amendment, dated December 17, 2008, the Company and
[___] (“Executive” or “you”) hereby agree
to the following amendments to your severance agreement dated
[___], (the “Severance Agreement”), your change in
control agreement, dated [___] (the “Change in Control
Agreement”), and your offer letter dated [___] (the
“Offer Letter”, and together with the Severance
Agreement and Change in Control Agreement, the
“Agreements”):
• For the purposes of the
Agreements, the definition of “Good Reason” shall be as
follows to attempt to fit that definition within a safe harbor
provision of Section 409A and the rules and regulations
promulgated thereunder:
“Good
Reason” shall mean the occurrence, without Executive’s
written consent, of one or more of the following events:
(i) the Company materially decreases Executive’s
responsibilities, or (ii) the Company materially breaches the
terms of this Agreement; provided that no such event shall
constitute Good Reason hereunder unless (a) Executive shall
have given written notice to the Company of Executive’s
intent to resign for Good Reason within 30 days after
Executive becomes aware of the occurrence of any such event
(specifying in detail the nature and scope of the event),
(b) such event or occurrence shall not have been cured within
30 days of the Company’s receipt of such notice,
(c) any Termination by Executive for Good Reason following
such 30 day cure period must occur no later than the date that
is 30 days following the expiration of such 30 day cure
period.”
• For the purposes of the
Agreements, any reimbursable business expense amounts shall be made
in accordance with applicable Treasury regulations and shall be
paid on or before the last day of your taxable year following the
taxable year in which you incurred the expenses. In addition, these
reimbursable expenses will not affect such amounts provided in any
other taxable year, and your right to reimbursement for such
amounts shall not be subject to liquidation or exchange for any
other benefit. Such provision shall be inserted into the Agreements
as follows:
“
Payments Upon Termination. Upon termination of
Executive’s employment for any reason, the Company shall pay
Executive (i) his Base Salary earned but not yet paid for
services rendered to the Company on or prior to the date on which
the Employment Period ends, (ii) any accrued but unused
vacation days, (iii) any incurred but unpaid reimbursable
business expenses and other insurance related reimbursable
expenses, and (iv) any amounts required under the
Company’s Employee Stock Purchase Plan (or successor plans).
Any reimbursement for expenses payable under subsection
(iii) shall be made in accordance with Treasury
Regulation Section 1.409A-3(i)(1)(iv) and shall be paid
on or before the last day of Executive’s taxable year
following the taxable year in which Executive incurred the
expenses; provided, however, Executive’s right to
reimbursement for such amounts shall not be subject to liquidation
or exchange for any other benefit.”
• Amend the provisions of the
Agreements to require that you sign a release within a defined
period of time in order to receive his severance for termination
without cause or his resignation for
1
good reason.
Such provision shall be inserted into the Agreements as
follows:
“
Termination by the Company Without Cause or Termination by
Executive for Good Reason. Provided that Executive is in
compliance with his obligations under his Proprietary Information
and Inventions Agreement with the Company, in the event
Executive’s employment is terminated by the Company Without
Cause or by Executive for Good Reason, the Company shall
(i) pay Executive any annual bonus payable for services
rendered in any annual bonus period for the year which had been
completed in its entirety prior to the date on which the Employment
Period ends and that had not previously been paid, provided,
however, it is the Company’s intent that any such annual
bonus shall be evaluated by the Board, and if applicable, paid, no
later than December 31 of the calendar year following the
calendar year to which such annual bonus relates,
(ii) continue to make Base Salary payments for (A) a
period 6 months following such termination of employment if
the termination occurs on or before the third anniversary of the
date on which Executive commenced employment with the Company, or
(B) a period 12 months following such termination of
employment if the termination occurs after such third anniversary
date (the period of time such payments are provided, the
“Severance Period”), payable over such 6 month or
12 month period, as the case may be, on the regular payroll
dates of the Company in accordance with the Company’s payroll
practices as in effect on such termination date, and subject to
applicable tax withholding. Such continued Base Salary payments
shall commence upon the first payroll date following the effective
date of the Release Agreement, and the first continued Base Salary
payment shall cover the period between the termination date and
such payment, provided, however, no amount shall be paid pursuant
to this section unless, on or prior to the fifty-fifth (55th) day
following the date of the Executive’s Separation from Service
(as defined in the section entitled “Section 409A
Payment Delay” below), Executive has executed an effective
Release Agreement and any applicable revocation period has expired
. Each installment payment made pursuant to this section
shall be considered a separate payment for purposes of
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) (including, without limitation, for
purposes of Treasury
Regulation Section 1.409A-2(b)(2)(iii)).”
• Amend the definition of
“Change in Control” in the Agreements relating to cash
severance to comply with the definition contained in
Section 409A and the rules and regulations promulgated
thereunder. The foregoing amendment applies only to cash severance
payments. Your potential option acceleration is still governed by
the definition of change in control in your Change in Control
Agreement. As amended, the definition of “Change in
Control” as applied to cash severance payments in the
Agreements shall mean as follows:
“ Cash
Severance Upon Termination Without Cause or for Good Reason.
(a) Subject to the section entitled “Section 409A
Payment Delay” below, in the event a Change in Control which
is also a Cash Severance Change in Control (as defined below)
occurs, and Executive’s employment with the Company is
terminated by the Company Without Cause or by Executive for Good
Reason at any time within the three (3) month period before
the date of such Cash Severance Change in Control or during the
twelve (12) month period following the date of such Cash
Severance Change in Control, Executive will receive severance
compensation
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equal to the
sum of (i) an amount equal to his highest Base Salary in the
calendar year in which the Cash Severance Change in Control occurs,
plus (ii) an amount equal to his target bonus as established
by the Board or its Compensation Committee for the year during
which the termination takes place (or if such target bonus has not
yet been established, the target bonus for the prior year), payable
in accordance with Section (b) below.
For purposes of
this Section (a), “Cash Severance Change in Control”
shall mean and include the following:
(i) the
acquisition, directly or indirectly, by any “person” or
“group” (as those terms are defined in
Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the
rules thereunder) of “beneficial ownersh
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