Exhibit 10.18
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 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 six (6) 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, 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 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.
(c) 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, 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.e. , earliest granted Equity Award cancelled
last).
5. Assignment . This
Agreement and the rights and obligations of the parties hereto
shall bind and inure to the benefit of any successor of the Company
by reorganization, merger or consolidation and any assignee of all
or substantially all of its business and properties. Neither this
Agreement nor any rights or benefits hereunder may be assigned by
the Executive, except that, upon the Executive’s death, the
Executive’s earned and unpaid economic benefits will be paid
to the Executive’s heirs or beneficiaries.
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6. Notices . For the purpose
of this Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage
prepaid, addressed to the last known residence address of the
Executive or in the case of the Company, to its principal office to
the attention of the Chief Executive Officer of the Company, or to
such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of
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