Exhibit 10.17
FORM OF SEVERANCE
AGREEMENT
FOR EXECUTIVE
OFFICERS
THIS AGREEMENT, dated May 28,
2009, is made by and between NetScout Systems, Inc. (the “
Company ”), and [
] (the “ Executive ”) residing at
[Address].
WHEREAS, the Company considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the
Company and its stockholders; and
WHEREAS, the Company recognizes that
the provision for reasonable severance arrangements with its
executives is a relevant component to the establishment of a sound
and vital management;
WHEREAS, the Company, as a publicly
held corporation, also recognizes that the possibility of a Change
in Control may exist, and that such possibility and the uncertainty
and questions which it may raise among management may result in the
departure or distraction of the Executive in the performance of the
Executive’s duties, to the detriment of the Company and its
stockholders; and
WHEREAS, it is in the best interests
of the Company and its stockholders to reinforce and encourage the
continued attention and dedication of management personnel,
including the Executive, to their assigned duties without
distraction and to ensure the continued availability to the Company
of the Executive in the event of a Change in Control;
THEREFORE, in consideration of the
foregoing and other respective covenants and agreements of the
parties herein contained, the parties hereto agree as
follows:
1. Defined Terms . The
definitions of capitalized terms used in this Agreement are
provided in Section 12.
2. Term of Agreement . The
term of this Agreement (the “ Term ”) shall
commence on the date hereof and shall continue in effect until the
third anniversary of the date hereof; provided ,
however , that commencing on such third anniversary and on
each anniversary thereafter, the Term shall automatically be
extended for one additional year unless, not later than
August 1 of the preceding year, the Company or the Executive
shall have given notice not to extend the Term. Notwithstanding the
foregoing, the Term shall expire and this Agreement shall be
automatically terminate on the earlier of (a) the first
anniversary of a Change in Control and (b) the termination of
the Executive’s employment with the Company. In the event
that any payment is due under this Agreement, such obligation shall
survive the expiration of the Term.
3. Severance . In the event
that, prior to the occurrence of a Change of Control or within one
year following a Change in Control, (i) the Company (for
purposes of this section, such term to include its successor)
terminates the Executive’s employment other than for Cause,
death or Disability or the Executive terminates his employment for
Good Reason; (ii) the Executive complies fully with all of the
Executive’s obligations under all agreements between the
Company and the Executive; and (iii) within 45 days from the
date of termination the Executive (or in the event of death or
Disability, his heirs or representatives) executes and delivers to
the Company and does not revoke a general release (in a form
reasonably acceptable to the Company and the Executive) releasing
and waiving any and all claims that
the Executive has or may have against the
Company and its directors, officers, employees, agents, successors
and assigns with respect to the Executive’s employment (other
than any obligation of the Company set forth herein which
specifically survives the termination of the Executive’s
employment), then:
(a) The Company will pay the
Executive his then current base salary, less applicable withholding
for taxes and other deductions, for a period of twelve
(12) months following the date that the release contemplated
in Section 3 above is delivered and becomes irrevocable (the
“ Release Effectiveness Dat e”), with such
severance to be paid thereafter in equal installments in accordance
with the Company’s usual payroll schedule commencing on the
first payroll after the Release Effectiveness Date.
(b) Additionally, in
the event of a termination after a Change in Control only, the
Company will pay the Executive an amount equal to the greater of
(1) 50% of the maximum bonus target for the fiscal year in
which the termination occurs and (2) a pro rata portion of the
Executive’s maximum bonus target (based on the number of
months elapsed in the fiscal year in which the termination occurs)
for the fiscal year in which the termination occurs, in either case
less applicable withholding for taxes and other deductions;
provided that only for purposes of determining the payment
under this clause in no event will the maximum bonus used for the
calculation be lower than the bonus target for the fiscal year in
which the Change in Control occurred. The amount payable under this
clause shall be paid in equal installments over the severance
period provided in clause (a) immediately above in accordance
with the Company’s usual payroll schedule.
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(c) Additionally, in the event of a
termination after a Change in Control only, all stock options,
restricted stock units and other equity incentives granted or
issued by the Company prior to the Change in Control under
NetScout’s 2007 Equity Incentive Plan that would have become
exercisable in the one year period following the Executive’s
termination date shall immediately and without further action
become exercisable-effective upon the Release Effectiveness Date.
In the event that upon a Change of Control, an acquiror of the
Company or the successor to Company’s business elects not to
assume the stock options, restricted stock units and other equity
incentives granted or issued by the Company prior to the Change in
Control under NetScout’s 2007 Equity Incentive Plan, then the
acceleration of vesting provided by this clause (c) shall
occur as of the date on which the Change in Control
occurred.
(d) In the event that the Executive
dies during the period in which any required payments are being
made to the Executive pursuant to clauses (a) or
(b) above, any remaining amounts which have not yet been paid
to the Executive pursuant to such clauses shall be paid in one lump
sum payment to the Executive’s estate within 30 days of the
death of the Executive notwithstanding any alternative payment
dates provided in such clauses (but subject to Section 8
below).
4. 280G . If any payment or
benefit the Executive would receive pursuant to this Agreement
(“ Payment ”) would (i) constitute a
“parachute payment” within the meaning of
Section 280G of the Code,
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For the agreement with the
Company’s Senior Vice President, Worldwide Sales Operations,
the following additional provision is included as
Section 3(c), the current Sections 3(c) and 3(d) are Sections
3(d) and 3(e) instead, and such Section 3(e) refers to each of
(a), (b) and (c): “(c) Additionally, in the event of a
termination after a Change in Control only, the Company will pay
the Executive an amount equal to the greater of (1) 50% of the
maximum sales commission target for the fiscal year in which the
termination occurs minus any commissions previously paid to
Executive during such fiscal year and (2) the portion of the
Executive’s maximum commissions target earned for the fiscal
year in which the termination occurs minus any commissions
previously paid to Executive with respect to such fiscal year, in
either case less applicable withholding for taxes and other
deductions; provided that only for purposes of determining
the payment under this clause in no event will the maximum
commissions target used for the calculation be lower than the
commissions target for the fiscal year in which the earlier of the
Executive’s termination of employment or the Change in
Control occurred. The amount payable under this clause shall be
paid in equal installments over the severance period provided in
clause (a) immediately above in accordance with the
Company’s usual payroll schedule.”
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and (ii) but for this sentence, be subject
to the excise tax imposed by Section 4999 of the Code (the
“ Excise Tax ”), then such Payment shall be
adjusted so that it would equal to the Reduced Amount. The
“Reduced Amount” shall be either (x) the largest
portion of the Payment that would result in no portion of the
Payment being subject to the Excise Tax or (y) the total
Payment, whichever amount of (x) or (y), after taking into
account all applicable federal, state and local employment taxes,
income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in your receipt, on an after-tax
basis, of the greater amount of the Payment notwithstanding that
all or some portion of the Payment may be subject to the Excise
Tax. If a reduction in payments or benefits constituting
“parachute payments” is necessary so that the Payment
equals the Reduced Amount, reduction shall occur in the following
order: reduction of cash payments; if applicable, cancellation of
accelerated vesting of stock options, restricted stock units or
other equity incentive awards; and if applicable, reduction of
employee benefits. In the event that acceleration of vesting of
stock options, restricted stock units or other equity incentive
awards compensation (each an “ Equity Award ”)
is to be reduced, such acceleration of vesting shall be cancelled
in the reverse order of the date of grant of your Equity Awards (
i.
