AGREEMENT RELATING TO EMPLOYMENT
Exhibit
10.2
Agreement
dated January 3, 2007 by and between NetScout Systems, Inc., a Delaware
corporation (the “Company”),
and Xxxx Xxxxxxx, a founder of the Company (“Xx.
Xxxxxxx”).
INTRODUCTION
AND BACKGROUND
WHEREAS,
the Company wishes to continue the services of Xx. Xxxxxxx for the periods
stated herein, and Xx. Xxxxxxx wishes to provide his services for such period,
all upon the terms and conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
parties, intending to be legally bound, agree as follows:
1.
TITLE
AND DUTIES. The
Company agrees to employ Xx. Xxxxxxx to serve the Company in the capacity of
Chief Executive Officer and such other titles and duties as are assigned to
and
accepted by Xx. Xxxxxxx by the Board of Directors. In accordance with such
position Xx. Xxxxxxx will have appropriate responsibilities, duties and
authority for the management of the Company, sufficient for the accomplishment
of the goals set for him by the Board of Directors to whom he shall be
responsible. Xx. Xxxxxxx shall use his best efforts in directing the business
of
the Company with the objective of providing maximum profit and return on
invested capital, establishing current and long-range objectives, plans and
policies subject to the approval of the Board, and representing the Company
with
its major customers, the financial community and the public.
The
term of this Agreement will be for three (3) years (the “Initial
Term”)
commencing on January 19, 2007, (the “Effective
Date”),
and upon
the expiration of the Initial Term, this Agreement shall automatically renew
for
successive one (1) year periods (each, a “Renewal
Term”),
unless written notice of non-renewal (a “Non-Renewal
Notice”)
is given by either party at least six months prior to the expiration of the
Initial Term or any Renewal Term. The Initial Term and any Renewal Term shall
be
subject to termination as provided below.
2.
BASE
SALARY AND BONUS. During
the term of this Agreement, the Company shall pay Xx. Xxxxxxx a base salary
at
an annual rate of $300,000, which base salary may be increased as determined
by
the Compensation Committee of the Board of Directors subject to the approval
of
the Board of Directors from time to time. The base salary shall be payable
in
installments in accordance with the Company’s regular payroll practices, as such
practices may be modified from time to time, but not less than once a month.
During the term of this Agreement, Xx. Xxxxxxx also will be eligible to receive
a year-end bonus in addition to his base salary. The range and performance
criteria for Xx. Xxxxxxx’x bonuses, as well as the annual award, will be
determined by the Compensation Committee, subject to the approval of the Board
of Directors, in consultation with Xx. Xxxxxxx. Any payments to Xx. Xxxxxxx
under this Agreement will be made subject to withholdings required by law or
authorized by Xx. Xxxxxxx.
3. BENEFITS. Each
year during the term of this Agreement,Xx.
Xxxxxxx will be eligible for and receive all Company benefits, including but
not
limited to, disability insurance coverage of no less than 100% of base salary
(if such coverage provides less than 100%, NetScout will pay the difference
unless and until Xx. Xxxxxxx’x employment terminates because Xx. Xxxxxxx is
Disabled as provided in Section 5), eight (8) weeks of paid vacation, group
life
insurance not to exceed $1,000,000 per year (unless increased by the Company),
and the Company’s medical, dental and vision care plans providing for family
coverage as from time to time in effect, as well as any other benefits generally
made available to senior executives of the Company. Additionally, during the
term of this Agreement, the Company will provide Xx. Xxxxxxx with or will
reimburse Xx. Xxxxxxx for actual costs related to the provision of services
to
him by professional tax and estate planning advisors, provided that such costs
incurred will be reimbursed by the Company as soon as practicable, subject
to
the provisions of Section 9 below.
4.
DEATH
OF XX. XXXXXXX. If
Xx. Xxxxxxx’x employment terminates by reason of death, in addition to the
foregoing Company provided life insurance, the Company will make the payments
and provide for the benefits pursuant to Sections 2 and 3 of Schedule
A
hereto.
5.
DISABILITY. If
Xx. Xxxxxxx’x employment terminates because Xx. Xxxxxxx is Disabled, then the
Company (i) will assist Xx. Xxxxxxx in obtaining any payments due under the
Company’s short term and long term disability policies then in effect to which
he is entitled and (ii) shall make the payments and benefits as set forth on
Schedule
A.
Payments from the Company under this Section 5 shall be subject to the
provisions of Section 9 below. As used herein the terms “Disabled” and
“Disability” shall have the meanings set forth in the disability income
insurance policy provided for Xx. Xxxxxxx by the Company.
6.
TERMINATION
WITHOUT DUE CAUSE. In
the event that Xx. Xxxxxxx is terminated by the Company at any time for any
reason other than Due Cause, Xx. Xxxxxxx terminates his employment with the
Company at any time for any reason or the Company or Xx. Xxxxxxx elects not
to
renew this Agreement for any reason, the Company’s sole liability to Xx. Xxxxxxx
will be to pay the amounts set forth in Schedule
A
hereto.
7.
TERMINATION
FOR DUE CAUSE. In
the event that Xx. Xxxxxxx is terminated for Due Cause he will not be entitled
to any severance payment, and the Company will have all of the rights and
remedies available to it at law and in equity. In such a case, subject to the
Company’s rights and remedies, including, without limitation, those of set-off,
Xx. Xxxxxxx will be paid accrued base salary and vacation through the date
of
such termination and, for the period that he was employed by the Company during
the fiscal year of termination, a bonus to the extent that such bonus has
already been earned by Xx. Xxxxxxx due to the achievement of specific metrics
and is determinable as of the date of termination. Payments under this Section
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shall become payable as of the date of Xx. Xxxxxxx’x termination for Due Cause,
subject to the provisions of Section 9 below.
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“Due
Cause” shall mean any of the following: (i)
criminal conviction for willful fraud, embezzlement or theft against the Company
or any of its affiliates; (ii) Xx. Xxxxxxx is
convicted of, or pleads guilty or no contest to, a felony;
(iii) willful, material nonperformance by Xx. Xxxxxxx (other than by reason
of
illness) of his material duties hereunder and failure to remedy such
nonperformance within 30 days following written notice from the Board of
Directors identifying the nonperformance and the actions required to cure it;
or
(iv) Xx. Xxxxxxx commits
an act of gross negligence, engages in willful,
material misconduct
or otherwise acts with willful disregard for the Company’s best
interests,
and he fails to remedy such conduct within 30 days following written notice
from
the Board of Directors identifying the gross negligence, willful misconduct
or
willful disregard and the actions required to cure it (if such conduct can
be
cured).
Notwithstanding
the foregoing, Xx. Xxxxxxx shall not be deemed to have been terminated for
Due
Cause unless and until there shall have been delivered to him (a) a copy of
a
resolution duly adopted by the unanimous affirmative vote of all of the members
of the Board of Directors (exclusive of Xx. Xxxxxxx) at a meeting of the Board
called and held for the purpose (after reasonable notice to Xx. Xxxxxxx and
an
opportunity for Xx. Xxxxxxx, together with his counsel, to be heard before
the
Board) finding that in the good faith opinion of the Board Xx. Xxxxxxx was
guilty of conduct set forth above and specifying the particulars thereof in
detail; and, if applicable (b) clear and conclusive evidence that Xx. Xxxxxxx
engaged in willful
fraud, embezzlement or theft against the Company or any of its affiliates or
committed an act of gross negligence, engaged in willful, material misconduct
or
otherwise acted with willful disregard for the Company’s best
interests.
8.
COMPANY
CAR. Consistent
with prior practice, during the term of this Agreement, the Company will provide
Xx. Xxxxxxx with or will reimburse Xx. Xxxxxxx for the cost of leasing a company
car of make and model comparable to that provided to senior executives of
companies in the computer hardware or software industries, and the Company
will
reimburse Xx. Xxxxxxx for all operating expenses, maintenance and fees,
including automobile insurance.
9.
SECTION
409A COMPLIANCE. It
is the intention of the parties that no payment or entitlement pursuant to
this
Agreement will give rise to any adverse tax consequences to any person pursuant
to Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”). Any
reimbursements due under any provision of this Agreement shall be paid on the
earlier of (1) the date or dates specifically set forth in this Agreement,
if
any, and (2) March 15 of the year following the year in which the expense is
paid. In the case of any payment on termination (other than in the event of
death or disability within the meaning of Section 409A of the Code or compliance
with the requirements of Proposed Regulation §1.409A-1(b)(iii) or (iv) or any
successor thereto) while Xx. Xxxxxxx is a specified employee within the meaning
of Section 409A of the Code, in no event will such payment be made earlier
than
6 months after the date Xx. Xxxxxxx’x employment with the Company terminates. In
the event that, due to Section 409A of the Code, Xx. Xxxxxxx does not receive
one or more cash payments he would otherwise be due during such six month
period, all such delayed payments
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will be made on the first day after the six month anniversary of his employment termination, and thereafter any remaining payments shall be made in accordance with the previously agreed-upon schedule. Notwithstanding any provision in this Agreement to the contrary, this Agreement shall be interpreted, applied and to the minimum extent necessary, amended, so that this Agreement does not fail to meet, and is operated in accordance with, the requirements of Section 409A of the Code. Any reference in this Agreement to Section 409A of the Code shall also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.
10.
ADVISORY
SERVICES. In
connection with a termination of Xx. Xxxxxxx’x employment, the Company and Xx.
Xxxxxxx will be free to negotiate, but will have no obligation to enter into,
an
agreement whereby Xx. Xxxxxxx renders advisory services to the Company upon
terms and conditions agreed to at such time.
11.
SUCCESSORS
AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. The Company shall require
any
successor to all or substantially all of the business or assets of the Company
to assume and agree to perform this agreement in the same manner and to the
same
extent that the Company would be required to perform it if no such succession
had taken place. Neither this Agreement nor any rights or benefits hereunder
may
be assigned by Xx. Xxxxxxx, except that, upon the death of Xx. Xxxxxxx, his
earned and unpaid economic benefits will be paid as provided herein, or if
not
so provided, to his heirs or beneficiaries.
12. MISCELLANEOUS.
(a) Governing
Law.
The laws of the Commonwealth of Massachusetts shall apply to the construction,
interpretation and enforcement of this Agreement, without application of its
conflicts of laws principles.
(b) Counterparts.
This Agreement may be signed in two (2) counterparts, each of which shall be
deemed an original and both of which shall together constitute one
agreement.
(c) Headings.
The headings of the Sections hereof are inserted for convenience only and shall
not be deemed to constitute a part, or affect the meaning, of this
Agreement.
(d) Complete
Agreement; Modification.
This Agreement sets forth the entire agreement of the parties with respect
to
the subject matter hereof, and supersedes any previous oral or written
communications, negotiations, representations, understandings, or agreements
between them. The Agreement Relating to Employment between Xx. Xxxxxxx and
the
Company (as successor to Frontier Software Development, Inc.), dated as of
June
1, 1994 as amended, is hereby terminated as of the Effective Date. Any
modification of this Agreement shall be effective only if set forth in a written
document signed by Xx. Xxxxxxx and a duly authorized officer or member of the
Board of Directors of the Company other than Xx. Xxxxxxx. Nothing in this
Agreement, nor any termination of Xx. Xxxxxxx’x employment with the Company for
any
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reason, shall affect the enforceability by Xx. Xxxxxxx against the Company of the Indemnification Agreement between him and the Company dated as of September 13, 2006.
(e) Waiver.
No consent to or waiver of any breach or default in the performance of any
obligation hereunder shall be deemed or construed to be a consent to or waiver
of any other breach or default in the performance of any of the same or any
other obligations hereunder. No purported waiver hereunder shall be effective
unless it is in writing and signed by the waiving party.
(f) Severability.
It is the express intent of the parties that in case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
[Signature
Page to Follow]
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NETSCOUT
SYSTEMS, INC.
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XX.
XXXXXXX:
|
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By:
/s/ Xxxxx X.
Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer and
Senior
Vice President, General Operations
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/s/
Xxxx
Xxxxxxx
Xxxx
Xxxxxxx
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SCHEDULE
A
1. Until
the day that Xx. Xxxxxxx turns 65 years of age, the Company will provide him
with the following payments and benefits, subject to the provisions of the
Agreement:
a) Monthly
Payments.
The Company will pay Xx. Xxxxxxx xxxxxxxxx of $16,208 per month, minus any
withholdings as required by law. Such payments will be paid concurrently with
the Company’s regular payroll, but no less than monthly. In order to provide for
a cost of living increase with respect to certain benefits to be borne by Xx.
Xxxxxxx that the monthly payments under this Section 1(a) are intended to cover,
$4,443 of such monthly payments will be adjusted on
the first anniversary, and such adjusted amount each anniversary thereafter,
of
the date that the Company is first required to make such payments by any
percentage increase in the Consumer Price Index (CPI-U), U.S. City Average,
all
items, published
by the United States Bureau of Labor Statistics, during the immediately
preceding twelve (12) month period.
b) Benefits.
The Company will either (a) continue Xx. Xxxxxxx’x family coverage under the
Company’s group health, dental and vision plans at no expense to Xx. Xxxxxxx or
(b) will pay for Xx. Xxxxxxx to obtain similar and comparable benefits.
2. In
the event that Xx. Xxxxxxx dies before the age of 65:
a) The
Company will pay the balance of the severance payments payable under Section
1(a) above to Xx. Xxxxxxx’x wife (or in the event of his wife’s death, his
estate) in a lump sum on a net present value basis as reasonably determined
by
the Company. Such lump sum payment will be paid in the year of death if Xx.
Xxxxxxx dies prior to November 1 and otherwise in January of the year following
the year of death.
b) Until
the date that Xx. Xxxxxxx would have turned the age of 65, the Company will
continue to provide his wife and children with group health, dental and vision
benefits at no expense to them, to the extent they are eligible for coverage
under such group plans, or will pay for them to obtain similar and comparable
benefits for as long as they would have been eligible for coverage if he had
continued to work as an employee of the Company until he turned age 65.
3. With
respect to bonus, Xx. Xxxxxxx will be eligible to receive the bonus provided
for
under Section 2 of the Agreement with respect to the full fiscal year during
which the applicable termination pursuant to the Agreement occurred. Any portion
of such bonus that has already been earned by Xx. Xxxxxxx due to the achievement
of specific metrics and is determinable as of the date of termination will
become payable as of the date of termination, and any other portion of such
bonus will be paid at the same time or times as other executive level officers
of the Company, subject, in each case, to the provisions of Section 9 of the
Agreement.
