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Exhibit 10.2
CONFIDENTIAL
EXECUTIVE AGREEMENT
This Agreement (the "Agreement" ) is made between Red
Hat, Inc., a Delaware corporation (collectively with each of its
subsidiaries, the "Company" ), and [
] an executive-level employee of the Company who has been selected
by the Compensation Committee of the Company for participation in
the Red Hat, Inc. Senior Management Severance Plan (the
"Severance Plan" ) (the "Executive" ) as of
, 20 (the "Effective Date"
).
In consideration of the Company’s adoption of the
Severance Plan under which Executive may become entitled to
Severance Plan benefits, and in satisfaction of a condition of
Executive’s participation in such Severance Plan, the Company
and Executive agree as follows:
Executive acknowledges that Executive’s
undertakings and commitments and the restrictions set forth in this
Agreement, including in particular the non-compete and
non-solicitation undertaking contained herein are a material
inducement for the Company to create and maintain the Severance
Plan and a requirement for Executive to become eligible as a
participant in the Severance Plan. Executive acknowledges that
he/she has received a copy of the Severance Plan and has had the
opportunity to discuss its terms with the Company. Without regard
to whether Executive ultimately receives benefits under the
Severance Plan, Executive undertakes to fully comply with the
provisions hereof and agrees that breach of these provisions will
cause significant financial and other damages to the Company,
including loss of strategic advantages.
(a) During Executive’s employment with the
Company and for a period of twelve (12) months thereafter,
Executive shall not, for himself/herself or any entity, directly or
indirectly: (i) solicit or cause to solicit for the purpose of
diverting, taking away or disrupting, or of attempting to divert,
take away or disrupt, the Company’s relationship or business
with any person or entity who, at any time during the six
(6) months preceding such action was or is a client, customer
or business partner of the Company, or prospective client, customer
or business partner of the Company; (ii) solicit, induce or
attempt to induce, any employee or independent contractor of the
Company to terminate his or her employment or engagement with the
Company; or (iii) hire, recruit or engage as an independent
contractor, or attempt to hire, recruit or engage as an independent
contractor, any person who was employed or otherwise engaged by the
Company within six (6) months prior to such action.
(b) If Executive violates the provisions of this Section 2,
Executive shall continue to be bound by the restrictions set forth
in this Section 2 for an additional period equal to the
aggregate period of such violation.
(a) Definitions . For purposes of this
Agreement, the following terms shall have the following
meanings:
(1) "Restricted Business" is defined as a software or
software-related business that competes with the Company.
"Restricted Business" includes, but is not limited to, the
following companies: Oracle Corp., Novell, Inc., Microsoft Corp,
Sun Microsystems Inc., IBM (International Business Machines Corp.),
Citrix Systems, Inc., VMware, Inc. and/or rPath, Inc.
(2) "Restricted Territory" is defined as: Anywhere within
the United States where the Company has clients and/or has marketed
its products or services at the time Executive leaves employment
with the Company.
(b) Noncompete Period .
(1) During Executive’s employment with the Company and for
a period of twelve (12) months thereafter (the "Non-compete
Period" ), within the Restricted Territory, Executive shall
not, for himself or any entity, be engaged in or provide to a
Restricted Business any services similar to or related to the
services Executive performed for or with the Company and related to
any product or service line that competes with any Company product
or service line existing or planned as of Executive’s
termination from employment with the Company: (i) about which
Executive had access to operational, financial, or strategic
information while employed with the Company; or (ii) for which
Executive was responsible and/or with which Executive was involved;
or (iii) about which Executive was informed during
Executive’s employment with the Company.
(2) At the request of Executive, following a confidential
consultation, the Company will provide its good faith view as to
whether a proposed relationship Executive may wish to pursue
appears likely to violate this Section, provided that such
determination does not prevent the Company from proceeding under
this provision if the services to be provided by Executive change,
the product or service line at the Restricted Business becomes
subject to this Section, or the information provided to the Company
was incomplete or incorrect.
(3) Notwithstanding the foregoing portions of this
Section 3, it shall not be a violation of this section for
Executive to engage in the practice of law, either at a law firm or
with another entity (as long as he or she satisfies his or her
professional obligations to keep and not use the confidences and
Confidential Information of the Company and as long as his or her
employment does not include non-legal duties that may assist a
Restricted Business in competing with the Company).
(c) Executive will be treated as "engaged" in a
Restricted Business if he or she provides services thereto as an
employee, consultant, independent contractor, agent, or other
representative or he or she owns an equity interest in the business
(except for passive
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ownership, directly or indirectly, of not more
than 1% of the outstanding stock of a publicly-held company and of
not more than 5% of the outstanding stock of a private
company).
(d) Effects of Changes to the Severance Plan :
(1) Subject to Section 3(d)(3), if the severance payment
applicable to Executive, as described in Section IV.A.1 of the
Severance Plan on the Effective Date, is reduced by at least
25%, then the Non-compete Period shall be reduced by the same
percentage as the reduction in the severance payment applicable to
Executive.
(2) Subject to Section 3(d)(3), if any of the periods of
continued vesting or extended exercisability of equity compensation
awards applicable to Executive, as described in Section V.A., V.B.,
and V.C. of the Severance Plan, is reduced by at least 25%, then
the Non-Compete Period shall be reduced by the same percentage as
the reduction in the applicable period.
(3) The Non-Compete Period will not be reduced:
(i) under Section 3(d)(1) if the reduction in severance
payment results in Executive’s termination for Good Reason
(because severance will then be based on the pre-reduction base
salary) or if Executive agrees in writing to a reduction in base
salary,
(ii) under Section 3(d)(2) if the reason for the reduced
period is any generally applicable treatment under the relevant
equity incentive plan in connection with a change in control or
other corporate transaction (such as a general cashing out of the
equity awards), or
(iii) under either Section 3(d)(1) or (d)(2) if Executive
does not qualify for severance under Section III.A.1 (because
his/her employment ends for a different reason).
(e) If Executive violates the provisions of this Section 3,
Executive shall continue to be bound by the restrictions set forth
in this Section 3 for an additional period equal to the
aggregate period of such violation.
3A. Alternate Restrictive Covenants. [FOR USE ONLY IN NC/VA
AGREEMENTS:
(a) Non-Solicitation.
(1) If paragraph (a) of the non-solicitation provision in
Section 2 of this Agreement is found by a court of competent
jurisdiction to be invalid or unenforceable because it spans too
long a period of time, then it shall be replaced as follows:
During Executive’s employment with the Company and for a
period of nine (9) months thereafter, Executive shall not, for
himself/herself or any entity, directly or indirectly:
(i) solicit
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or cause to solicit, divert or take away, or
attempt to divert or take away any person or entity who, at any
time during the six (6) months preceding such action was or is
a client, customer or business partner of the Company or
prospective client, customer or business partner of the Company;
(ii) solicit, induce or attempt to induce, any employee or
independent contractor of the Company to terminate his or her
employment or engagement with the Company; or (iii) hire, or
recruit or attempt to hire, or engage or attempt to engage as an
independent contractor, any person who was employed or otherwise
engaged by the Company within six (6) months prior to such
action.
(2) If both the above paragraph and paragraph (a) of the
non-solicitation provision in Section 2 of this Agreement are
found by a court of competent jurisdiction to be invalid or
unenforceable because it spans too long a period of time, then it
shall be replaced as follows:
During Executive’s employment with the Company and for a
period of six (6) months thereafter, Executive shall not, for
himself/herself or any entity, directly or indirectly:
(i) solicit or cause to solicit, divert or take away, or
attempt to divert or take away any person or entity who, at any
time during the six (6) months preceding such action was or is
a client, customer or business partner of the Company or
prospective client, customer or business partner of the Company;
(ii) solicit, induce or attempt to induce, any employee or
independent contractor of the Company to terminate his or her
employment or engagement with the Company; or (iii) hire, or
recruit or attempt to hire, or engage or attempt to engage as an
independent contractor, any person who was employed or otherwise
engaged by the Company within six (6) months prior to such
action.
(b) Non-Competition.
(1) If paragraph (b)(1) of the non-competition provision in
Section 3 of this Agreement is found by a court of competent
jurisdiction to be invalid or unenforceable because it spans too
long a period of time, then it shall be replaced as follows: During
Executive’s employment with the Company and for a period of
nine (9) months thereafter, within the Restricted Territory,
Executive shall not, for himself or any entity, be engaged in or
provide to a Restricted Business any services similar to or related
to the services Executive performed for or with the Company and
related to any product or service line that competes with any
Company product or service line existing or planned as of
Executive’s termination from employment with the Company:
(i) about which Executive had access to operational,
financial, or strategic information while employed with the
Company; or (ii) for which Executive was responsible and/or
with which Executive was involved; or (iii) about which
Executive was informed during Executive’s employment with the
Company.
(2) If both the above paragraph and paragraph (b)(1) of the
non-competition provision in Section 3 of this Agreement are
found by a court of competent jurisdiction to be invalid or
unenforceable because they span too long a period of time, then
paragraph (b)(1) of Section 3 of this Agreement shall be
replaced as follows:
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During Executive’s employment with the
Company and for a period of six (6) months thereafter, within
the Restricted Territory, Executive shall not, for himself or any
entity, be engaged in or provide to a Restricted Business any
services similar to or related to the services Executive performed
for or with the Company and related to any product or service line
that competes with any Company product or service line existing or
planned as of Executive’s termination from employment with
the Company: (i) about which Executive had access to
operational, financial, or strategic information while employed
with the Company; or (ii) for which Executive was responsible
and/or with which Executive was involved; or (iii) about which
Executive was informed during Executive’s employment with the
Company.]
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4.
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Confidential Information
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(a) Confidential Information . Executive
agrees at all times, both during and after the term of his or her
employment with the Company, to hold in the strictest confidence,
and not to use (except for the benefit of the Company at the
Company’s direction) or disclose (without the written
authorization of the Chief Executive Officer (CEO) or the Chairman
of the Board of Directors of the Company ( "Board" )),
regardless of when disclosed to Executive, any and all technical
data, trade secrets, know-how or other confidential or proprietary
information of the Company, including without limitation any and
all information related to the products, product plans,
technologies, inventions, mask works, ideas, processes, formulas,
source and object codes, computer programs, data bases, other works
of authorship, improvements, discoveries, developments, designs and
techniques, research, developmental or experimental work, customer
and business partner lists, employee lists, business plans, sales
or marketing plans or results, markets, prices and costs, financial
information, or other subject matter pertaining to any business of
the Company or any of its licensors, customers, business partners,
consultants or customers (collectively, "Confidential
Information" ). Executive understands that Confidential
Information further includes, but is not limited to, information
pertaining to any aspect of the Company’s business which is
either information not known (or known as a result of a wrongful
act of Executive or of others who were under confidentiality
obligations as to the item or items involved) by actual or
potential competitors of the Company or other third parties not
under confidentiality obligations to the Company, or is otherwise
proprietary information of the Company or its customers or
suppliers, whether of a technical nature or otherwise. Executive
further understands that Confidential Information does not include
(i) any of the foregoing it
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