Intel Corporation McAfee, Inc. August 18, 2010 To: Gerhard Watzinger McAfee, Inc. Special Bonus Program
Exhibit
10.5
Intel Corporation
August
18, 2010
To: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
McAfee,
Inc. Special Bonus Program
We are pleased to provide you with the potential to earn certain bonus opportunities under the
McAfee, Inc. Special Bonus Program, which is an incentive and retention program for selected McAfee
leaders. We are offering you the opportunity to earn the bonuses described in this letter agreement
because we recognize that you are critical to the success of
McAfee’s future business operations
and you have the potential to make a significant impact on
McAfee’s future growth.
1. Time-Based Retention Bonuses:
A. First Retention Bonus. If you are an active employee (including on a statutory or approved
leave of absence) of Intel Corporation or any of its subsidiaries (“the Intel group”) on July 31, 2012
(the “First Retention Date”), you will receive a retention bonus in the amount of $200,000 (the
“First Retention Bonus”). If your employment is terminated without “cause” prior to the First
Retention Date, you will be entitled to receive a pro-rated amount of your First Retention Bonus,
subject to your compliance with Section 1(C) below. The pro-rated amount will be determined by
multiplying your First Retention Bonus amount by a fraction with the numerator equal to the number
of days that have elapsed since the closing of Intel’s purchase of McAfee by merger of
McAfee with a subsidiary of Intel (the “Closing”) and the denominator equal to the number of
days between, and inclusive of, the Closing and July 31, 2012. If your employment is terminated
for “cause” or you voluntarily terminate your employment prior to the First Retention Date, you
will not receive any portion of the First Retention Bonus, even if you are rehired.
For the purpose of this letter, “cause” shall have the meaning of such term as currently set
forth in the Change of Control and Retention Agreement, effective February 1, 2010, entered into by
and between you and McAfee (the “Change of Control Agreement”).
B. Second Retention Bonus. In addition, if you are an active employee (including on a
statutory or approved leave of absence) of the Intel group on July 31, 2013 (the “Second
Retention Date”), you will receive a second retention bonus in the amount of $200,000 (the “Second
Retention Bonus”). If your employment is terminated without “cause” after the First Retention Date
and
prior to the Second Retention Date, you will be entitled to receive a pro-rated
amount of your
Second Retention Bonus. The pro-rated amount will be determined by multiplying your Second
Retention Bonus amount by a fraction with the numerator equal to the number of days that have
elapsed since the First Retention Date and the denominator equal to 365. If your employment is
terminated for “cause” or you voluntarily terminate your employment prior to the Second Retention
Date, you will not receive any portion of the Second Retention Bonus, even if you are rehired.
C. Release. If your employment is terminated without “cause” prior to the First Retention
Date or the Second Retention Date, as applicable, payment of the pro-rated portion of the First
Retention Bonus or the Second Retention Bonus, as determined above, shall be subject to you signing
and not revoking the release of claims attached as Exhibit A to the Change of Control Agreement
(the “Release”) and provided that such Release is effective within sixty (60) days following your
termination of employment. Payment of the pro-rated portion of the First Retention Bonus or the
Second Retention Bonus, as applicable, shall be made within seven (7) calendar days after the
effective date of the Release. In the event the termination occurs at a time during the calendar
year where it would be possible for the Release to become effective in the calendar year following
the calendar year in which your termination occurs, any portion of the First Retention Bonus or the
Second Retention Bonus, as applicable, that would be considered Deferred Compensation Separation
Benefits (as defined in Section 3(g) of the Change of Control Agreement) will be paid on the first
payroll date to occur during the calendar year following the calendar year in which such
termination occurs, or such later time as required by Section 3(g) of the Change of Control
Agreement.
2. Performance Incentive Bonuses:
A. First Incentive Bonus. In addition, if you are an active employee (including on a statutory
or approved leave of absence) of the Intel group on December 31, 2011 (the “First Incentive
Date”), you will be eligible to receive an incentive bonus, the maximum amount of which will be
$300,000 (the “First Incentive Bonus”). The actual amount of the First Incentive Bonus paid shall
be based on the extent to which the performance metrics set forth on Exhibit A, attached hereto,
have been achieved for the 2011 calendar year, as determined by the Senior Vice President and
General Manager of the Software and Services Group of Intel, in his or her sole discretion.
Notwithstanding the foregoing, if your employment is terminated without “cause” prior to the First
Incentive Date, you will be entitled to receive a pro-rated amount of the First Incentive Bonus,
provided that you timely execute and do not revoke a Release in accordance with Section 2(C) below.
The pro-rated amount will be determined by multiplying (i) the product of the First Incentive
Bonus amount and a fraction with the numerator equal to the number of days that have elapsed since
January 1, 2011, and the denominator equal to 365 by (ii) the extent to which the performance
metrics set forth on Exhibit A, attached hereto, are achieved for the 2011 calendar year, as
determined by the Senior Vice President and General Manager of the Software and Services Group
of Intel, in his or her sole discretion.
If your employment is terminated for “cause” or you voluntarily terminate your employment
prior to the First Incentive Date, you will not receive any portion of the First Incentive Bonus,
even if you are rehired.
B. Second Incentive Bonus. In addition, if you are an active employee (including on a
statutory or approved leave of absence) of the Intel group as of January 1, 2012 and remain so
through December 31, 2012, you will be eligible to receive an incentive bonus, the maximum amount
of which will be $300,000 (the “Second Incentive Bonus). The actual amount of the Second Incentive
Bonus paid shall be based on the extent to which the performance metrics set forth on Exhibit A,
attached hereto, have been achieved for the 2012 calendar year, as determined by the Senior Vice
President and General Manager of the Software and Services Group of Intel, in his or her sole
discretion. Notwithstanding the foregoing, if your employment is terminated without “cause” after
the First Incentive Date and prior to the Second Incentive Date, you will be entitled to receive a
pro-rated amount of the Second Incentive Bonus, provided that you timely execute and do not revoke
a Release in accordance with Section 2(C) below. The pro-rated amount will be determined by
multiplying (i) the product of the Second Incentive Bonus amount and a fraction with the numerator
equal to the number of days that have elapsed since January 1, 2012, and the denominator equal to
365 by (ii) the extent to which the performance metrics set forth on Exhibit A, attached hereto,
are achieved for the 2012 calendar year, as determined by the Senior Vice President and General
Manager of the Software and Services Group of Intel, in his or her sole discretion.
If your employment is terminated for “cause” or you voluntarily terminate your employment
prior to the Second Incentive Date, you will not receive any portion of the Second Incentive Bonus,
even if you are rehired.
C. Release. If your employment is terminated without “cause” prior to the First Incentive
Date or the Second Incentive Date, as applicable, payment of the pro-rated portion of the First
Incentive Bonus or the Second Incentive Bonus, as applicable, determined in accordance with Section
2(A) or 2(B), respectively, shall be subject to you signing and not revoking the Release and
provided that such Release is effective within sixty (60) days following your termination of
employment. Subject to Section 3(g) of the Change of Control Agreement, payment of the pro-rated
portion of the First Incentive Bonus or the Second Incentive Bonus, as applicable, shall be made
within seven (7) calendar days after the effective date of the Release or, if later, following the
date achievement is determined in accordance with Section 2(A) or 2(B) above, as applicable.
3. Payment of Bonuses
Each of the bonuses described above will be paid:
| • | in a lump sum, | ||
| • | in your regular payroll currency, | ||
| • | according to the Intel group’s standard payroll practices, | ||
| • | subject to tax withholding and other applicable deductions, | ||
| • | upon a regularly scheduled payroll date, | ||
| • | except as otherwise provided in Section 1(C) above, with respect to the retention bonuses, within thirty (30) days following the First Retention Date or the Second Retention Date, as applicable, and | ||
| • | except as otherwise provided in Section 2(C) above, with respect to the incentive bonuses, within sixty (60) days following the First Incentive Date or the Second Incentive Date, as applicable. |
4. Change of Control and Retention Agreement
The Change of Control Agreement shall continue to be in full force and effect, including with
respect to the conversion to time-based vesting of McAfee Stock Options, McAfee RSUs and
McAfee PSUs that vest on the basis of performance as described in Section 4 of the Change of
Control Agreement, until the Change of Control Agreement expires in accordance with Section 1(a) of
such agreement, except that:
(a) You, McAfee and Intel acknowledge that any change in duties, authority, reporting
relationship or responsibilities that is solely attributable to the
change in McAfee’s status
from that of an independent company to that of a subsidiary of Intel shall not constitute a
change in duties, authority, reporting relationship or responsibilities shall not form the basis
for a resignation for Change of Control Good Reason (within the meaning of the Change of Control
Agreement) under the Change of Control Agreement and will be substantially the same as your duties,
authority, reporting relationship and responsibility in effect immediately prior to Closing. You,
McAfee and Intel agree that a subsequent material reduction, without your consent, in your
duties, authority, reporting relationship or responsibilities from those assigned to you as of and
immediately following the Closing shall constitute Change of Control Period Good Reason to the
extent such reduction would otherwise constitute a Change of Control Period Good Reason in
accordance with the Change of Control Agreement.
(b) You, McAfee and Intel acknowledge that immediately following the eighteen (18) month
anniversary of the Closing Date (as such term is defined in the Agreement and Plan of Merger, dated
August 18, 2010, among Intel, Jefferson Acquisition Corporation, and McAfee (the “Merger Agreement”), the
Change of Control Agreement shall terminate and be of no further effect, provided that if you are
receiving payments under Section 3(c) or 4 of the Change of Control Agreement as of such date, the
Change of Control Agreement shall remain in effect until such payments have been fully paid to you.
(c) You, McAfee and Intel agree that, other than your McAfee Stock Options, McAfee
RSUs and McAfee PSUs that were granted prior to the date the Merger
Agreement was signed (August 18,
2010) and are assumed by Intel pursuant to the Merger Agreement, no stock option, restricted
stock units, performance stock units or other equity incentive awards granted to you by McAfee
or Intel shall be subject to the accelerated vesting provisions of the Change of Control
Agreement.
(d) You further agree and acknowledge that the Change of Control Agreement permanently
superseded in its entirety all prior representations, understandings, undertakings or agreements
(whether oral or written and whether expressed or implied) of you and McAfee, including
specifically any severance payment provisions of any offer letter or similar arrangement entered
into between you and McAfee. After the expiration of the Change of Control Agreement, you will
be eligible for severance benefits only in accordance with
McAfee’s then established plans;
provided, however, that any such severance benefits will be paid or provided at the same time and
in the same form as similar severance benefits would be paid or provided under the Change of
Control Agreement.
5. Miscellaneous
Please note that your employment with McAfee (and following the Closing, with the Intel
group) is and shall continue to be “at-will” and may be terminated at any time, with or without
“cause”, by either you, McAfee, and, following the Closing, Intel. This letter agreement
does not constitute an express or implied promise of continued employment with McAfee or,
following the Closing, the Intel group for any period and does not alter your “at-will”
employment status. Except as otherwise provided herein with respect to the retention and incentive
bonuses, this letter agreement further does not constitute an express or implied promise with
respect to compensation and benefits and McAfee (and, following the Closing, Intel) reserves
the right to modify compensation and benefits at any time, with or without “cause”. You retain any
rights under the Change of Control Agreement as modified herein.
The terms of this letter agreement cannot be modified except in a written document signed by
duly authorized officers of McAfee and Intel and you. If you agree to the terms of this
letter agreement, please sign below and return this letter to ▇▇▇▇▇
▇. ▇▇▇▇▇▇ at McAfee, with a copy to
▇▇▇▇▇ ▇. ▇▇▇▇▇ at Intel. The terms of this letter agreement will expire if the letter agreement is not
accepted, signed and returned by August 19, 2010. You may not assign your rights under this letter
agreement to any other party (whether by operation of law or otherwise).
This letter agreement will be governed by and construed in accordance with the laws of the
State of California (with the exception of its conflict of laws provisions).
Thank you in advance for your continued service to McAfee.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Date: August 18, 2010 | |||
INTEL CORPORATION |
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By: ▇▇▇▇▇ ▇. ▇▇▇▇▇ |
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Date: August 18, 2010 | |||
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
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* * * * *
I ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND AND THAT I
AGREE TO EACH AND EVERY CLAUSE OF THE PRESENT DOCUMENT,
AND THAT I AM FULLY SATISFIED.
AGREE TO EACH AND EVERY CLAUSE OF THE PRESENT DOCUMENT,
AND THAT I AM FULLY SATISFIED.
Agreed and Accepted: |
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Date: August 18, 2010 | |||
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