Exhibit 10.1
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May 31, 2018
Mark McLaughlin
c/o Palo Alto Networks, Inc.
Re:    Updated Terms of Employment
Dear Mark:
This letter agreement (the “Agreement”) is entered into between Palo Alto
Networks, Inc. (“Palo Alto Networks,” the “Company” or “we”) and you. This
Agreement is effective immediately upon your resignation as the Company’s Chief
Executive Officer (“Effective Date”). The Company accepts your resignation as
Chief Executive Officer and expresses appreciation and gratitude for your
service. The purpose of this Agreement is to confirm the updated terms and
conditions of your employment following your resignation as Chief Executive
Officer and to specify your treatment upon certain terminations of your service
with the Company.
1.Position. Beginning on the Effective Date, you will continue to be an employee
of the Company and report to the new Chief Executive Officer and shall perform
such duties and responsibilities as are requested by the new Chief Executive
Officer. While you render services to the Company, you will not engage in any
other employment, consulting or other business activity (whether full-time or
part-time) that would create a conflict of interest with the Company. You may
engage in civic and not-for-profit activities, as long as such activities and
service do not interfere with the performance of your duties hereunder. By
signing this Agreement, you confirm to the Company that you have no contractual
commitments or other legal obligations that would prohibit you from performing
your duties for the Company.
2.Cash Compensation.
(a)Base Salary. Your salary will (i) continue to be at an annualized rate of
$900,000 per year as of the Effective Date and (ii) be reduced to an annualized
rate of $500,000 per year as of August 1, 2018, in each case, payable in
accordance with the Company’s standard payroll schedule. Your salary, as well as
any other cash amounts payable under this Agreement, will be subject to
applicable tax withholdings. Your salary may be adjusted from time to time by
the Company’s Board of Directors (the “Board”) or the Compensation Committee of
the Board (the “Compensation Committee”) in their sole discretion.
(b)Annual Incentive Compensation Payment. You will continue to have the
opportunity to earn a target annual incentive compensation payment of 100% of
your

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annual base salary for the 2018 fiscal year based on the achievement of certain
objectives, as established by the Board and/or the Compensation Committee,
subject to your continued employment through and until the date of payment. The
incentive compensation will be paid no later than March 15 of the year following
the year in which such incentive compensation was earned. As of August 1, 2018,
you will no longer be eligible for any incentive compensation from the Company
(other than payments, if any, related to the 2018 fiscal year).
3.At Will Employment. While we look forward to a continued productive
relationship, your employment with the Company, however, is for an unspecified
period of time and this Agreement creates an at-will employment relationship
that may be terminated (subject to the terms of this Agreement) by you or the
Company at any time for any reason and with or without cause or prior notice.
Upon termination of your employment for any reason, you shall be entitled to
receive any compensation earned and reimbursements due through the effective
date of termination.
4.Termination Benefits.
(a)Vesting Acceleration. In the event that the Company or its successor
terminates your service other than for Cause, then your then-outstanding
unvested time-based equity awards will accelerate as to shares that would have
vested by the date 24 months after your termination of employment (the “Vesting
Acceleration”). Your entitlement to the Vesting Acceleration is subject to your
compliance with subsection (b) below.
(b)Form and Timing of Payment. This Section 4 will not apply unless you (i) have
returned all Company property in your possession and (ii) have executed a
general release of all claims that you may have against the Company and persons
affiliated with the Company.
The release must be in the form prescribed by the Company. You must execute and
return the release on or before the date specified by the Company in the
prescribed form (the “Release Deadline”). The Release Deadline will in no event
be later than 50 days after your separation. If you fail to return the release
on or before the Release Deadline, or if you revoke the release, then you will
not be entitled to the Vesting Acceleration. The Vesting Acceleration will be
provided following the effectiveness of the release within 60 days after your
separation. Notwithstanding the foregoing, if the 60-day period described in the
preceding sentence spans two calendar years and/or if any amounts that become
payable as a result of the Vesting Acceleration are Deferred Payments (as
defined below), then the Vesting Acceleration will be provided on the 60th day
following your termination of service, subject to Section 6.
(c)Definitions. For purposes of this Agreement, “Cause” shall mean:
(i) conviction of any felony or any crime involving moral turpitude or
dishonesty; (ii) participation in intentional fraud or an act of willful
dishonesty against the Company which materially harms the Company; (iii) willful
breach of the Company’s policies which materially harms the Company;
(iv) intentional damage of a substantial amount of the Company’s property;
(v) willful and material breach of this agreement or Employee Invention
Assignment and Confidentiality Agreement; or (vi) a willful failure or refusal
in a

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material respect by you to follow the reasonable policies or directions of the
Company as specified by the Board or the Chief Executive Officer after being
provided with notice of such failure, such notice specifying in reasonable
detail the tasks which must be accomplished and a timeline for the
accomplishment to avoid termination for Cause, and an opportunity to cure within
30 days of receipt of such notice.
5.Section 280G. If any payments and other benefits provided for in this
Agreement or otherwise constitute “parachute payments” within the meaning of
Section 280G of the Code and, but for this Section 5, would be subject to the
excise tax imposed by Section 4999 of the Code, then payments and other benefits
will be payable to you either in full or in such lesser amounts as would result,
after taking into account the applicable federal, state and local income taxes
and the excise tax imposed by Section 4999, on your receipt on an after-tax
basis of the greatest amount of payments and other benefits, by reducing
payments in the following order: (i) cancellation of accelerated vesting of
stock options that are out-of-the-money; (ii) reduction in cash payments;
(iii) cancellation of accelerated vesting of all equity awards that are not
out-of-the-money stock options; and (iv) other employee benefits. In the event
that acceleration of vesting of equity award compensation is to be reduced, such
acceleration of vesting shall be cancelled in the reverse order of the date of
grant.
6.Section 409A. For purposes of this Agreement, a termination of employment will
be determined consistent with the rules relating to a “separation from service”
as defined in Section 409A of the Code and the regulations thereunder
(“Section 409A”). Notwithstanding anything else provided herein, to the extent
any payments provided under this Agreement or otherwise in connection with your
termination of service constitute deferred compensation subject to Section 409A
(“Deferred Payments”), and you are deemed at the time of such termination of
service to be a “specified employee” under Section 409A, then such payment shall
not be made or commence until the earlier of (i) the expiration of the 6-month
period measured from your separation from service from the Company or (ii) the
date of your death following such a separation from service; provided, however,
that such deferral shall only be effected to the extent required to avoid
adverse tax treatment to you including, without limitation, the additional tax
for which you would otherwise be liable under Section 409A(a)(1)(B) in the
absence of such a deferral. The first payment thereof will include a catch-up
payment covering the amount that would have otherwise been paid during the
period between your termination of employment and the first payment date but for
the application of this provision, and the balance of the installments (if any)
will be payable in accordance with their original schedule. To the extent that
any provision of this Agreement is ambiguous as to its compliance with
Section 409A, the provision will be read in such a manner so that all payments
hereunder comply with Section 409A. To the extent any payment under this
Agreement may be classified as a “short-term deferral” within the meaning of
Section 409A, such payment shall be deemed a short-term deferral, even if it may
also qualify for an exemption from Section 409A under another provision of
Section 409A. Payments pursuant to this Agreement are intended to constitute
separate payments for purposes of Section 1.409A‑2(b)(2) of the Treasury
Regulations.
7.Benefits. You will also continue to be eligible to participate in benefit
plans established by the Company for its employees from time to time. Upon your
termination

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of employment with the Company for any reason, you will be paid your salary
through your date of termination.
8.Confidentiality; Compliance with Policies. As an employee of the Company, you
will have access to certain confidential information of the Company and you may,
during the course of your employment, develop certain information or inventions
that will be the property of the Company. To protect the interests of the
Company, as a condition of your employment you were required to sign the
Company’s “Employee Invention Assignment and Confidentiality Agreement” on or
prior to your start date. You represent that your signing of this Agreement and
the Company’s Employee Invention Assignment and Confidentiality Agreement, and
your continued employment with the Company, will not violate any agreement
currently in place between yourself and current or past employers. You agree to
continue to be bound by the policies and procedures of the Company now or
hereafter in effect relating to the conduct of employees.
9.Governing Law: Arbitration. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of California (without regard to
its laws relating to choice-of-law or conflict-of-laws). You and the Company
shall submit to mandatory and exclusive binding confidential arbitration of any
controversy or claim arising out of, or relating to, this Agreement or any
breach hereof or otherwise arising out of, or relating to, your employment with
the Company or the termination thereof, provided, however, that the parties
retain their right to, and shall not be prohibited, limited or in any other way
restricted from, seeking or obtaining injunctive relief from a court having
jurisdiction over the parties related to the improper use, disclosure or
misappropriation of a party’s proprietary, confidential or trade secret
information. Such arbitration shall be conducted through JAMS in the State of
California, Santa Clara County, before a single neutral arbitrator, in
accordance with the JAMS’ then-current rules for the resolution of employment
disputes. The arbitrator shall issue a written decision that contains the
essential findings and conclusions on which the decision is based. You shall
bear only those costs of arbitration you would otherwise bear had you brought a
covered claim in court. Judgment upon the determination or award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. This
agreement to arbitrate does not restrict your right to file administrative
claims you may bring before any government agency where, as a matter of law, the
parties may not restrict the employee’s ability to file such claims (including,
but not limited to, the National Labor Relations Board, the Equal Employment
Opportunity Commission and the Department of Labor). However, the parties agree
that, to the fullest extent permitted by law, arbitration shall be the exclusive
remedy for the subject matter of such administrative claims.
10.Miscellaneous.
(a)Successors. This Agreement shall inure to the benefit of and be binding upon
the Company and any of its successors, and (b) you and your heirs, executors and
representatives in the event of your death. Any successor to the Company shall
be deemed substituted for the Company under the terms of this agreement for all
purposes. In the event of a change in control, the Company agrees to obtain
assumption of this Agreement by its successor.

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(b)Modification. This Agreement, including, but not limited to the at will
provision above, may not be amended or modified other than by a written
agreement designated as an amendment and executed by you and an officer of the
Company, although the Company reserves the right to unilaterally modify your
compensation, benefits, job title and duties.
(c)Severability. If any provision of this Agreement or the application thereof
is held invalid, the invalidity shall not affect other provisions or
applications of this Agreement that can be given effect without the invalid
provisions or applications and to this end the provisions of this Agreement are
declared to be severable.
(d)Complete Agreement. This Agreement (together with the Employee Invention
Assignment and Confidentiality Agreement, the D&O Indemnification Agreement, the
Company’s 2005 Equity Incentive Plan, the Company’s 2012 Equity Incentive Plan
and any equity award agreements issued thereunder) represents the entire
agreement between you and the Company with respect to the material terms and
conditions of your employment, and supersedes and replaces all prior
discussions, negotiations and agreements, including, but not limited to, the
offer letter between you and the Company dated July 21, 2011, as amended on
December 15, 2011.
(e)Counterparts. This Agreement may be executed (i) in counterparts, each of
which shall be an original, with same effect as if the signatures hereto were on
the same instrument; and (ii) by facsimile or pdf. The parties agree that such
facsimile or pdf signatures shall be deemed original signatures for all
purposes.
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PALOALTONETWORKS.COM

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We are extremely excited about your continued employment with Palo Alto
Networks.
Please indicate your acceptance of this Agreement, and confirmation that it
contains our complete agreement regarding the terms and conditions of your
employment, by signing the bottom portion of this Agreement and returning a copy
to me.
For and on behalf of Palo Alto Networks.
/s/ DAN WARMENHOVEN
Dan Warmenhoven, Lead Independent Director

 
Agreed to and accepted:
/s/ MARK MCLAUGHLIN
Mark McLaughlin
 
 
Dated:
May 31, 2018

3000 TANNERY WAY | SANTA CLARA, CA 95054 | MAIN: 408.753.4000 |
PALOALTONETWORKS.COM